La Meseta S.A. CompaĂąĂa Cafetera
Coffee to the world
Capitalizing Knowledge
Management Report
2012
www.lameseta.com.co
Management Report
La Meseta S.A. Compañía Cafetera
2012
Coffee to the world
26 188.175
Presence
1. COFFEE TO THE WORLD
Countries
# Exported bags of 70 Kg.
# Exported bags of 70 Kg. each country by 2012
9.825
275
3.915
2.725
285
3.335
260
5.300
2.200
475
GERMANY
AUSTRALIA
BELGIUM
CANADA
CHINA
SLOVENIA
ESTONIA
SPAIN
FRANCE
GREECE
5.882
6.470
875
835
825
275
2.200
1.925
3.300
275
JAPAN
KOREA
LEBANON
MOROCCO
RUSSIA
SOUTH AFRICA
SWEDEN
SINGAPORE
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MEXICO NETHERLANDS
2.493 11.825
6.600
ISRAEL
ITALY
550
275
115.025
TAIWAN
TURKEY
USA
IRELAND
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Management Report
La Meseta S.A. Compañía Cafetera
2012
Coffee to the world
2. STRATEGIC DIRECTION La Meseta S.A. Our purpose Coffee Company La Meseta S.A. has established itself as a solid company, committed to the marketing of coffee to the world, characterized by its efficiency in production, benefit, grinding and exporting of Excelso coffee, while paying special attention to the welfare of the coffee farmer as the basis for the sustainability of our activity in the future.
¿What inspires us? Compañía Cafetera La Meseta S.A. Coffee Company La Meseta S.A. is projected for 2015 as a leader in the marketing of Excelso coffee, recognized for the high quality of its products and processes, with a large group of customers and strategic suppliers, and strict risk management, supported by highly trained personnel, systems for continuous improvement and effectiveness in production.
Corporate Values
Efficiency
Solidity
Austerity
Dedication
Security
Humility
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Finca la Guamera Wet Mill La Meseta
La Insula Wet Mill
La Insula (Santa Rosa) Storage Center
Pitalito Huila Storage Center
06
Thresher La Meseta
Management Report
La Meseta S.A. Compañía Cafetera
2012
Coffee to the world
3. STORAGE STRUCTURE Notice to the Coffee Farmer Coffee Company La Meseta S.A. in 2012 was in direct contact with 1,700 coffee families through its five collection centers and indirectly to about 10,000 families through independent middlemen and farmers' cooperatives.
1 29
10 11
25
28 14
8
4 9 30
23 12
2
17
16 31
18 26 13
5
22
24
7
20
19
3
20
27
21
25
Buy Cities in more than 5 departments DEPARTMENTS 1 ANTIOQUIA 2 CALDAS 3 HUILA 4 RISARALDA 5 TOLIMA 6 OTROS CITIES 7 ACEVEDO 8 ANSERMA 9 BELÉN DE UMBRÍA 10 BETULIA 11 CARAMANTA 12 CHINCHINÁ 13 IBAGÉ 14 LA MERCED 16 MANIZALES 17 MANZANARES 18 MARSELLA 19 NEIVA 20 OPORAPA, ACEVEDO SAN ADOLFO GUADALUPE SAN AGUSTÍN TIMANA GARZÓN SALADO BLANCO 21 ORTEGA 22 PADUA 23 PALESTINA 24 PALO CABILDO 25 PENSILVANIA 26 PEREIRA 27 PITALITO 28 RIO SUCIO 29 SALAMINA 30 SANTA ROSA 31 VILLAMARIA
2% 39,5% 37% 19% 1,5% 1% 0,15% 0,11% 7,30% 0,29% 1,5% 19,96% 0,02% 0,59% 2,5% 12,4 1,66% 0,34% 37,40%
0,51% 0,89% 0,5% 0,05% 0,64% 1,1% 0,01% 0,16% 0,34% 9,2% 2,38%
Consolidation of the Huila Storage Center To ensure the continued growth of the Company, as well as the strong commitment to the improvement of the quality of their product, throughout the year 2012 the assembly and consolidation of the Huila Storage Center has been made. This commitment has enabled the company to improve the perception of the quality of its product because of the high quality coffee found in the south of the country, and an increase in the volume of dry parchment coffee acquired. The Huila Storage Center in 2012 acquired 34% of the company's the raw material becoming the company's main distribution center.
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Management Report
La Meseta S.A. Compañía Cafetera
2012
Coffee to the world
4. CONTEXT OF THE COFFEE FARMER In a still weak international environment, with ups and downs and uncertainty towards the recovery of global economic growth, for the coffee industry 2012 was a year full of challenges. A year in which companies' ability to face a competitive market was tested, as was coffee in Colombia. The coffee export market in Colombia can be considered an oligopoly where 83% of the product is marketed by 11 companies, of which there are 6 multinational holding about 40% of the market, The National Federation of Coffee Farmers with 22%, The Coffee Farmers Cooperative's Export Society, Expocafé, with 6.5%, and 3 private national exporters with about 15%, in which Coffee Company La Meseta SA is found. 17%
Otros
Multinacionales
11%
40%
7%
Exportadores Nacionales
Expocafé La Meseta S.A.
Federación Nacional de Cafeteros
4% 22%
After a 2011 characterized by high prices and in which the commercialization of grain to the exterior became complex, in 2012 the situation worsened, the Colombian Coffee commercialization chain was very demanding. Different agents had a widespread perception that coffee $100,000 per arroba was cheap and the price should increase. This situation resulted in most players in the coffee market taking long positions, which coupled with constant low international grain prices, the dollar and differentials, made the procurement of raw material not an easy task. No one wanted to sell coffee "cheap". Moreover, in the external sector, the major global importers continued being prudent when making commitments with Colombian Coffee. The replacement of Arabica coffee, that our country produces, by Robusta coffee, which of a lower quality and price, by the roasters, and the situation experienced in the past years when the differential reached 100 cents per pound, were situations that pressured differentials
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downward and caused the country's coffee demand to slow despite the low levels of production. The index traded in NY, quotes a bag of Arabica quality coffee at close to $2.30 a pound beginning in 2012, and ended at levels close to $1.45, representing a yearly decrease of 37%. Meanwhile, the dollar also did its own thing, having started 2012 at levels near 1940 COP and ended around 1800, making the Colombian peso one of the most revalued currencies in the world during 2012.
Dollar
Bag
Differential
2000 1950
30 1940
2.5
1900
2
1850
1.5 1800
1800
2.3
25 20 1.45
15
1
10
1750
0.5
5
1700
0
0
2011
2012
24
2011
2012
8
2011
2012
Continuous improvements in Colombia's credit ratings and therefore the world's perception of the country's risk deem Colombia as a highly attractive destination for foreign investment. We believe that although the current exchange rate levels place the country in a complex scenario in terms of the competitiveness of their agricultural products. Chances are most feasible in terms of improved competitiveness, productivity and quality of coffee to face the current situation. Piecewise in the NY exchange, Arabian coffee inventories increased slightly in 2012, due to the widespread replacement by Robusta. This replacement is encouraged due to the large difference in price that Arabic and Robusta came to have, and crops increases in Central America and Brazil. Despite the above situation, global inventories of both coffee grades remain tight and differences between Arabica and Robusta prices have fallen from about $2 to 50 cents per pound. Due to normal coffee cycles, it is feasible to believe coffee roasters should begin considering replacing Robusta coffee for better quality coffees, also considering the current uncertainty of the climate, any downside in Arabica coffee production, by major producer countries, can unleash further increases in the price of Arabica coffee, be it in differentials or NY stock value. The research, development and marketing
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Management Report
2012
departments of large roasters may first need to run an adjustment period on this situation and must continue prudent in the management of risk of further declines. The above situations put the Colombian coffee market in a complex environment that has required companies in 2012 to have a high level of efficiency and competitiveness to stay in business with acceptable levels of profitability. It is important to understand that the situation is particularly difficult for grain producers so La Meseta, being 99% dealer is not directly affected. Aware of this reality and seeking to support the coffee value chain, La Meseta SA has redoubled its efforts and has launched an uncountable amount of projects in search of their competitiveness and in order to take advantage of the complex environment to expand their share in the green coffee market. The proposed goals throughout the
La Meseta S.A. CompaĂąĂa Cafetera
Coffee to the world
made in infrastructure; however, with the support, effort and commitment of the entire team, the most important advances are seen in terms of structuring, organizational development and market intelligence. We are confident progress in these administrative intelligence projects have made a strong appreciation of their know-how the largest acquisition in 2011, making it La Meseta SA Coffee Company's main asset. Our task in this report is to give a clear tour through this series of projects to illustrate the evolution of the company over the last year, well above financial results, which happen to continue in a very satisfactory direction.
year have demanded structured management and reduction of risks and costs that continue today. A significant number of investments have been
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Management Report
La Meseta S.A. CompaĂąĂa Cafetera
2012
Coffee to the world
5. GENERAL INDICATORS 2012 Despite a decrease in the price of coffee of approximately 43% at the end of 2012 in Colombia, La Meseta SA due to its work in positioning has obtained a decrease of only 25% of its total income primarily through a 14% increase in the quantity exported.
Total Gains 187.156.386.831 141.068.759.135 125.948.000.000
2010
2011
2012
Quantities Traded 188.175 165.125
54.896 40.507
Excelso Export
www.lameseta.com.co
National Excelso
35.773
34537
Pasilla threshing
13
Market share Thus, despite strong competition in 2012 by the two large multinationals, La Meseta SA has retained its share of the coffee production market for exporting Excelso Coffee abroad and La Meseta SA is growing stronger as a solid representative of the few national private exporters. 3.61%
3.55%
La Meseta
La Meseta
Others
Others
96.39%
96.45%
In 2012, La Meseta SA saw two momentous processes in terms of their degree of permanence in the long run. First, the shareholders' decision on the recapitalization of earnings by $800 million to reach $2 billion which reaffirms their commitment to the company's and their remuneration to the participation of the financial sector in leveraging their activities. Secondly, following the regulatory requirement and as expected from the previous year, Coffee Company La Meseta SA performed a process of assessment of its assets, which resulted in a revaluation surplus of 3,145,234 primarily represented in land valuation. The above process has allowed us to show the real level of debt held by La Meseta SA which today is 77%, which is seen as very healthy compared to industry standards. The above situations have undoubtedly improved and strengthened the financial structure of the Company and will be a fundamental support for the growth expected in the near future.
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Management Report
La Meseta S.A. CompaĂąĂa Cafetera
2012
Coffee to the world
Heritage Structure Capitalization - Superavit in Recovery 5.000.000.000 4.000.000.000 3.000.000.000
3.145.234.000
2.000.000.000 2.000.000.000 1.000.000.000
1.200.000.000 929.247.322
370.963.780
2011 Others
2012 Capital
Superavit in Recovery
Indebtedness 90% 88% 86% 84% 82%
80.01%
80% 78% 76% 74% 72% 70%
77.04%
2011
2012 Indebtedness
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Management Report
La Meseta S.A. CompaĂąĂa Cafetera
2012
Coffee to the world
6. OUR POLICY OF VALUE Given the known characteristics of the international market, in a context of high liquidity but still with slow growth, in 2012, La Meseta SA has focused on the development and study of their integrated costs system and financial hedging of market risk.This approach has allowed the identification of business benefit, production and export of coffee in order to deepen knowledge and identification opportunities in the coffee production process and different administrative processes to further strengthen the company from within and make it less vulnerable to complex external conditions. This introspective exercise has enabled the company to advance on the safety of their processes as well as on the clarity of their overall functioning, which will surely help the desire to generate always increasing value. Due to the Coffee business in Colombia being a predominantly export business and therefore exposed to the vagaries of the market, the coffee business in Colombia particularly the coffee index in NY, the dollar and differential, demands a constant awareness of the international coffee environment, and the global economic environment as well, in order to achieve a very accurate interpretation of it and adjust our expectations of profitability to the international situation and the industry. The Company has taken the decision in the second half of 2012 to work under an even tighter market risk management, due to the way we evaluate and deepen the various strengths and weaknesses of the company, delving into costs processes and understanding the threats and opportunities of the current international environment of slow growth and uncertainty towards the price of coffee. This risk reduction in turn allowed us to reduce partners' expected returns justified in assuming the least amount of risk and therefore it has become a platform to leverage significant growth in sales
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through competitive pricing for our customers and suppliers despite the complex environment. The zero risk policy has been characterized by closed positions (not speculative) in coffee, dollar and differential. Differential coverage is performed by the delivery sales happening within maximum one month in order not to affect financial costs or inventory turnover, this allows us to negotiate the purchase of raw material at the same time of the sale, so that the rotation consists of only the time necessary for the production process and transit in port. In the same way, during the moment in which the cost of the raw material is agreed upon, the NY price index is negotiated, as well as the price of the dollar through Forward operations with banking and natural coverage with pre-export financing (debt in dollars), the operation of these oversights, like their reflection on the financial statements will be explained later in more detail. Under this work scheme, the approach of the different organizational levels has focused on each of the areas' profound knowledge in order to achieve substantial increases in the quality and efficiency of processes and decreases in costs. All of the organizational areas have witnessed and contributed to this macro-project. In this Management Report, we delve into some achievements in the Administrative, Commercial, and Financial Operations areas under three intervention fields: integrated risk management, information flow for decision-making, and entrepreneurial maneuverability.
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Management Report
La Meseta S.A. CompaĂąĂa Cafetera
2012
Coffee to the world
7. ADMINISTRATIVE MANAGEMENT 2012 was a defining year for La Meseta in terms of organizational structure and administrative management. If the operational area honorably defended itself during the complex present and brought forth La Meseta in 2012, we believe the administrative area undertook definite projects to project the company towards further growth in the future. Although the operation answered well for itself in the present, we care and redouble efforts in managing the future that we believe will be capitalized on the near future. Human Resource Management The human resources area is remarkably represents a deepening of the company's vocation in the administrative area, understanding of processes, planning, control and flow of information for decision-making. This is how it has grown from 22 employees in the administrative area in 2011 to 28 employees in 2012.
Payroll Distribution 2011 -2012 90 80 70 60 50 40 30 20 10 0
78 61
28 22 15
17 9
11 12
10
4
Braceros Production Administrative
2011
Insula
7
Santa Rosa
0
4
Pitalito Huila
Total
2012
The consolidation of the hierarchical organizational levels that began in 2011 reached significant maturity levels in 2012. Throughout the first semester a comprehensive training program was developed for all the levels of the company, with emphasis on managers and leaders, with the objective of developing by the end of year the first formal strategic planning and budgeting process. This training plan resulted in the creation of the Management Committee composed of the Chiefs of Operations, Human Resources, Accounting, Marketing and Sales, as well as the Administrative Assistant Manager, Deputy Manager of Operations, Commercial
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Management and General Management. This interdisciplinary team was formed for the rational pursuit of the fulfillment of organizational objectives through target areas and performance indicators to promote continued growth. A product of the 2012 training plan with the accompanying developed system of cost processes, the La Meseta Strategic Plan for the year 2013 was developed as an alternative to deal with the complex situation facing the sector and to gain greater market share In tandem with the Management Committee, a system of middle management and operational growth forecast has been developed and matured for the promotion of all employees of the organization. This plan seeks through the use of the young average age of the company payroll to encourage their training and growth within the company in order to support and generate business growth in the future. This work focus has achieved a reduction in the rate of absenteeism due to illness, especially, three day recurrent disabilities were controlled starting from the first quarter (6 days on average in the first quarter to 3 days on average in the last quarter), by means of follow-ups on workers with recurring behaviors and the scheduling holidays and breaks. Internal Control A safe company is a company in full control of its vital risks; this is how the development of the internal audit area for the understanding, monitoring and continuous improvement of all internal processes began. The 2012 Internal audit has achieved standardization, on par with the SIME 2, of the internal control system of the company's 5 storage centers: Santa Rosa, Insula, Meseta, Huila and Trilladora. Starting from the internal control challenge that has been the opening of a distribution center in the department of Huila has been taken as a pilot project to standardize the process of this branch's internal control, achieving control and weekly monitoring of all operations and activities as well as certain financial results. This monitoring and control model has also begun being implemented at the other storage centers within the Company, becoming a vital source of uniform information and operations for the management with significant savings in time and security. Additionally, the Shareholders in their decision to redouble control efforts, in late 2012 hired a full-time recognized tax auditor for the supporting of the whole internal control system. In different situations, this feedback factor has been present in the everyday support of continuous improvement of organizational processes and activities Information Systems At the level of the development of their information systems, 2012 was also a defining year for the company. After a couple of years of allowing SIME (La Meseta
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Management Report
La Meseta S.A. CompaĂąĂa Cafetera
2012
Coffee to the world
Information System, a proprietary system developed for the specific processes of purchase, production, marketing and risk management) to mature, there has been a unification of the database in the central Meseta Trilladora. Thus, the control of the company's information is consolidated into a central server located in La Meseta Trilladora's grounds through the information system SIME version 2 and the Mekano ERP system. In companies exposed to international market volatility, speed, timeliness and reliability of information becomes one of the most important values. Thus after two years in this primary stage of comprehensive systematization of operations of the company, has been achieved in 2012 the integration of all your information. This advancement will allow us in the near future to further detail the processes of costs of different branches and strengthen comprehensive organizational control. Have been strengthened in this way the flow of information for decision-making and comprehensive risk management.
Administrative System and Controlled by the Systems Coordination Central Office Storage
LAN Local Area Network: There is a synchronization of data entry and processed information of each of the nodes or workstations. Each node has a speciďŹ c role according to their area but considering the source of the primary data, in the Purchase and Negotiation Product. Thresher headquarters has approximately 22 local nodes that interact simultaneously with analog communication (Structured cabling) under computer settings and security levels, all at the same time.
La Guamera Storage La Insula Storage Santa Rosa Storage Pitalito Huila Storage
Interaction of the Chief Export (Supports Export coasts and Financial Benefits it)
Servidor de Datos Head of Accounting
Chief Operating Coordination Human Resource
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Treasury Coordinator
Assistant Treasury
Accounting Assistant
Accounting Assistant 2
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Market Opening As aforementioned, 2012 continued with a strong market opening plan seeking the diversification of La Meseta's customers, after analysis of the risk posed by rely on a small number of customers who are liable to stop and reduce the volume of purchases. The previous program hand-in-hand with the consolidation of the commercial department, headed by the commercial manager, Chief of marketing and sales, along with the strengthening of the export logistics department, which already counts with three people who led to a growth in exports by 14% despite less than comfortable conditions of the international coffee market for the sale of Colombian Arabica coffee.
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Management Report
La Meseta S.A. CompaĂąĂa Cafetera
2012
Coffee to the world
8. COMMERCIAL AND MARKETING MANAGEMENT Additional to the above, for direct presence in markets in the Middle East, Korea and Italy, representation contracts with international agents have been agreed upon. Consequently achieving significant increases in major markets with a very important growth potential for quality coffees reaching a share of 14% of La Meseta's coffee exports in these three markets in 2012.
frequently visited by professionals from the worldwide coffee marketing chain. These activities, coupled with the increase in the quantity exported by La Meseta SA under its own packaging, have begun to put La Meseta as representative and remembered vendor when buying Colombian coffee which has become a fundamental guarantee for the permanence of our operations
Special Coffees Security of Markey Opening Processes Thanks to the experience gained by the commercialization of Excelso in the coffee market and with the intent of increasingly improving the quality of the processes and products. In 2012, the commercial and marketing department has expanded towards the special coffees market in terms of in cup quality and traceability. A product resulting from these efforts has been able to profile and position coffee from La Meseta Coffee Farm as Estate Coffee. Estate Coffee is a coffee from a particular source with special cup characteristics, which is produced by means of keeping the best quality standards, helping to ensure the traceability and consistency of the product. This aspect adds significant value to the quality of the harvest product. The intention of the company is to bring more and more producers of high quality coffee to international markets so that they can get additional premiums and values effort and good production practices Publicity and Marketing To support this trade expansion process, advertising and marketing work has intensified primarily through our website, www.lameseta.com.co, with constant updates and integration with social networks like twitter, Facebook or professional networks like linkedin,
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Being aware that growth brings its risks, the commercial department has developed and updated its sales protocol according to the needs of a widening international market. Within this commercial protocol, a number of steps to ensure the safety of the entire sales process, pricing, shipping and freight payment has been defined, which has led us to increase the use of methodologies, such as credit letters and bank collections, ensuring the successful completion of every business. Likewise, we expanded in sales, under Incoterms CIF and C&F, despite not being the most used shipping method by Colombian exporters in seeking to advance the value chain and achieve a closer relationship with new customers. As a result of all the processes described, in 2012, the customer base of the company was increased by 130%. These results will surely be reflected in improved profit margins in the near future.
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With the emphasis on financial hedging and stabilize profit margins, La Meseta's leadership has been able to focus on projects of great importance in reducing costs and increasing operational efficiency. Under this scenario, several key projects, including the strengthening of the company's entire operational area through the creation of the Chief of Operations. In 2012, the chief of operations had taken Comprehensive Control of the production, quality, maintenance, and operational logistics areas as the objective, seeking to ensure the reduction of the production cost, agility in proper rotation, and the company's product quality. 2012 focused on structuring and staff training for what would be the company's operational strategy, which is why during first half of the year, store coordination and maintenance were developed accompanied by the construction of the company's
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Management Report
2012
La Meseta S.A. CompaĂąĂa Cafetera
Coffee to the world
9. OPERATIONS MANAGEMENT general store, the workshop and warehouse for spare parts, processes that will streamline the ability to respond to emergency maintenance. In the second half, staff training and incorporation of qualified personnel (SENA technologist) for handling electronic machines. The standardization of the company's operational functions approach was able to optimize the direct labor associated with the process and has placed staff, according to their profiles and strengths, in areas where their performance is superior. In the framework of this process, the structuring of the Quality Department to cover in full production shifts was allowed, thereby ensuring the quality of production processes and the coffee. In late 2012, this production doubled with the same staff and has achieved recertification in BASC, which identifies meeting with quality and safety standards of the various operational processes. In terms of infrastructure, La Meseta's tirlladora and stow methodology was redesigned to optimize the use of space, as well as the purchasing of a truck to achieve greater efficiency and flexibility in inventory management, and the loading and unloading processes. Additionally, at the end of 2011 the expansion of the storage facility was consolidated, and supplemented by the equipping of offices for the operations department, a modern quality laboratory, and a well-equipped auditorium and an area for corporate and stakeholder meetings. Lastly, the company underwent and achieved an application process for an energy and unregulated market surtax exemption, which also resulted in cost reduction. Transportation In 2012 our own freight to port unit was consolidated. A project that began in 2011 with the acquisition of three trucks, in leased, in order to ensure efficiency and speed in transporting goods to port, also looking to increase security on all goods transport processes. The transport unit was established, and in 2012 it proved to have positive financial results.
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Management Report
La Meseta S.A. CompaĂąĂa Cafetera
2012
Coffee to the world
10. FINANCIAL RESULTS 2012 was a year of consolidation and positioning for the company. La Meseta has been aware of the state of the coffee marketing business cycle in Colombia and challenges for the sector. This state has been faced with a large iron positivism and belief that the coffee business's opportunities have no borders. It is for this conviction that in the current, complex year, as described above, an emphasis on the development of administrative and sales projects, in order to ensure the future growth of the company, has been taken. A reflection of this policy is the distribution of the participation of the various items of the statement of results in which one can identify two situations: 1) The increase in gross margin of 5% to 6% in 2012 due to a stronger focus on the more valuable external coffee market, 2) the strong broadcasting of the company from its perspective from the operating department towards the sales and administration department, a category which increased 765,183,930 among which are promotional, outreach, personnel, training activities, that although by accounting policy are expenses, are intangible assets that we believe will be capitalized on the short term.
State Involvement Analysis Result 2011 - 2012 0,2%
0,2% Net Profit
101,0% 100,0% 99,0%
1,63%
1,10%
Provision for taxes
3,0%
4,5%
Admon and Sales Expenses
Financial
98,0%
Cost of production
97,0% 96,0% 95,0% 94,0% 93,0% 92,0%
95,0%
94,0%
2011
2012
91,0%
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Another important aspect to analyze is the category of decreased net non-operating expenses that went from $ 3,043,134,548 in 2011 to $ 1,556,150,497 in 2012. This decrease can be explained by three factors: the approximately 37% decrease in the price of coffee, the decrease in the cost of our debt, and what we consider most important, the accounting results of the difference account in exchange and the net results of forward operations.
Results not operational 1.500.000.000% 1.000.000.000% 500.000.000% (500.000.000%)
Others expenses
601.548.601
Others income
197.278.802 257.989.660
94.130.058
2012
2011 (651.167.132)
(1.000.000.000%)
(520.684.779)
(1.500.000.000%)
(1.870.604.238)
(2.000.000.000%)
(2.086.939.572)
(2.500.000.000%)
(526.027.988)
Financial Expenses Exchange Difference Financial Income Forward
(3.000.000.000%) (3.500.000.000%)
(94.808.457)
The positive net worth reflects the company's strong forward hedging policy in 2012, compared with the constant risk of the revaluation of the Peso obtaining an income of 258 million Pesos. Moreover it is important to understand the difference in the accounting change as a difference arising from the difference between the value of the export invoice in pesos, which should be accounted for according to the date of the BL, and the value of pesos received by the monetization of the invoice that takes place later. From the above paragraph one can interpret these differences, positive as operational differences resulting from normal elapse of the coffee export business. Although by accounting policies, these accounts are part of the operational component of a business like La Meseta, and it is crucial to read them as operational when interpreting the results, as they are not the result of speculation but of hedging activities. Thus, for the financial reading, we have a "second operating profit," in which we add
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Management Report
La Meseta S.A. CompaĂąĂa Cafetera
2012
Coffee to the world
these differences of 455,268,458 leaving a total of $2,540,146,017 to cover financial expenses by $2,086,939,572 and respond to the financing structure. Additional to the exchange coverage with Forward operations, the currency risk is naturally covered with dollar debt acquired by the company in 2011 and throughout 2012. In late 2012, the financial structure of the company's product considerably became product of the commercial appraisal of its assets. This has enabled La Meseta to lower its debt level from 88% to 77%, representing a great strength to the financial sector.
Financial Structure Dec. 2011 Heritage
Financial Structure Dec. 2012 Heritage
12%
Passive Noncurrent
23%
Passive Noncurrent
43%
45%
Passive Current
40%
37%
Passive Current
La Meseta SA has been characterized by the speed of rotation of its inventory and accounts receivable, reasons that have enabled it to leverage a representative sales level from a relatively small asset structure. Such rotation sample sales results were obtained in 2011, reaching the figure of 187 billion a cash cycle of 28 days.
Management Area Day 0
16 days
13 days
Inventories CxP
1 Day
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Day 29
C x Receivable Effective cycle 2011 28 Days
29
Product of the constant price declines in 2012 and due to long positions in coffee producers and traders, La Meseta to ensure constant supply of raw material is forced to get coffee on deposit. Coffee on deposit is a modality in which the coffee farmer delivers his product to commercializing companies in exchange for a percentage of the value of it, but without agreeing on a final price. As a result of providers' deposits that charged large amounts of coffee throughout the year and true to its zero risk policy, La Meseta met the challenge of a large amount of coffee accumulated on deposit but that could not sell because a final purchase price had not been agreed upon. Thus the cash cycle in the year 2012 increased significantly due to the increase in inventory turnover, demanding in the second half of the year focus on a procedure for these types of purchases where the business cycle is protected as well as the financial costs of the Company. Management Area Day 0
Day 44
35.84 days
8.19 days
Inventories CxP
C x Receivable Cash Cycle 2012 42 Days
2 Days
By 2013 it is expected to consolidate the Company's activity indicators and achieve a cash cycle of 25 days to enable us to increase the volume of transactions with debt levels close to the current. The healing of the company's accounts receivable as well as the efficient rotation that has characterized it, have enabled a significant leverage and liquidity levels as the driven current ration of 1.88 in 2012 to provide peace of mind about the ability of the company to meet its short-term obligations like interest coverage on the EBITDA that have remained at very acceptable levels. Ebitda/ Financial expendetures
2011
2011
1.588
1.48
In the same way as the expectations of the financial sector are covered with the operations of the company and its capital is safe, despite the low net margin Net Income/sales due to the high income of the company, the shareholder returns also was successful in difficult years like 2011 and 2012, represented the return on equity.
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La Meseta S.A. CompaĂąĂa Cafetera
2012
Coffee to the world
Return on Equity 20.00% 15.00%
16.40%
10.00% 10.20% 5.00% 0.00%
2011
2012
It is important to note that the return on equity is given according to the equity level before the assessment made in the month of December, on which were given the expectations of partners throughout 2012. The challenge for La Meseta in 2013 is to maintain return on equity levels close, after valuations obtained so that the focus of work will be the increased profit margin and therefore the operating and net profits.
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La Meseta S.A. Compañía Cafetera
Coffee to the world
11. LEGALITY, COMPLIANCE AND HEALTH In 2012, La Meseta S.A Coffee Company had commercial relationships with Jorge Hernán Muñoz Castaño from dry parchment coffee buying. The Company has a total of 25 Microsoft Windows Professional OPL licenses, 13 OEM licenses and 27 Office Home and Business 2010 licenses. As for computer security the company has 25 Kaspersky BusinessSpace Security licenses. Additionally free licensing works with Microsoft Security Essentials 4.0, and starter office. As information systems, the company has 1 server, nine local nodes and 3 web nodes for the Mekano information system. Additionally it has an unlimited license to use the information system in its version 2.0 SIME. La Meseta is covered against various physical and legal risks by the insurance company Provisora de Seguros SA, all facilities, coffee warehouses have risk policies as well as a tort policy for transporting goods and values have. The only claim presented was a fire in a silo storage facility in Santa Rosa where minor losses were compensated by the insurance company, in addition to this there were no complaints which is indicative of the efficient operations and risk management. Transition to NIIF In 2012, La Meseta Coffee Company SA began the transition process of to full IFRS with comprehensive training their accounting staff as well as hiring a Statutory Auditor with knowledge and experience in international standards. In 2013, we will delve further in the preparation stage and will transition in 2014 to begin the implementation in 2015. The Company, as can be corroborated in its opinion expressed by the tax inspector, is free of problems and labor, commercial and tax disputes, meeting its goal of total health to face the daily challenges of the market.
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OPINION Manizales, March 1st, 2013 General Assembly of Partners LA MESETA S.A. Ciudad
LA MESETA S.A. General Assembly: We have examined the Balance Sheet for LA MESETA S.A, for December 31st of years 2012 and 2011. The corresponding income statements, changes in equity statements, statements of financial position, and cash flow statements for the years ended on those dates, and disclosures made by The Notes on the Financial Statements that have been prepared as required by Decree 2649 of 1993, that has been replaced by Law 1314 of the year 2009 and Law 222 of the year 1995, forming with them an indivisible whole. These financial statements were prepared and certified under the responsibility of the Administration. One of our responsibilities is to express an opinion on said certified Financial Statements, and if there is agreement among them. Our examination was conducted in accordance with generally accepted auditing standards and accordingly, it included the obtaining of necessary information for the faithful performance of our duties. Tests were conducted on accounting documents and records and other audit procedures were applied. In our opinion, the aforementioned financial statements, taken faithfully from the books and attached to this report, fairly present the financial position of LA MESETA S.A, to December 31st of years 2012 and 2011, as well as the results of its operations, the changes in equity, changes in financial position and cash flows for the years then ending in the above dates, in accordance with accounting standards generally accepted in Colombia and that are applied uniformly. These financial statements are consistent with the Management Report, prepared as required by Law 222 of the year 1995, which included the management's expression of the software's validity and the compliance with copyright rules established by law 603 of the year 2000. This Statutory Auditor further finds that the company complies with the standards established by the Comprehensive Social Security System, according to Articles 11 and 12 of Decree 1406 of the year 1999 "Whereby regulatory provisions, of Law 100 of the year 1993, partially regulated by Article 91 of Law 488 of 24 December 1998, are
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Coffee to the world
adopted for the commissioning of the only Registry of Contributors of Comprehensive Social Security System and other provisions." Based on the scope of our review, we conceptualize that the accounting is done in accordance with legal regulations and accounting techniques; registered operations and administrative actions comply with the bylaws, the provisions of General Assembly and decisions of the Board of directors. That the correspondence, proof of the accounts and minute books are kept and preserved properly, and there are adequate internal control measures. We leave further evidence that the software used by the company is licensed and therefore complies with intellectual property rules as is stated in the company's documents received and in which cases it certifies. On that aspect as already noted, the Legal Representative was also listed in the annual report, in addition to the adequate conservation and custody of company or third party assets possibly in the Representative's possession. Reports on Internal Control were presented as they were tested during the year and the administration was in charge of their implementation. Sincerely,
Originally Signed C.P. HECTOR JAIME CORREA PINZON Statutory AuditorT.P. 9388-T C & A LTDA RIP No 985
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MANAGEMENT REPORT OF THE STATUTORY AUDITOR Manizales, March 10th, 2013 SHAREHOLDERDS COFFEE COMPANY LA MESETA S.A. The City Ref: Management Report of the Statutory Auditor. In fulfillment of our duties as Statutory Auditors of the Company Coffee La Meseta SA, which includes a comprehensive audit, allowing us to present the most outstanding aspects of the Company's activities. FINANCIAL AUDIT The review of financial information, verifying the reasonableness of the Company's monthly financial statements has been conducted, and a review and verification of financial information that should be reported annually to the Superintendency of Corporations and the various State control bodies that is carried out. Review, verification and analysis of all information, which by evidence and physical documents should be proven in accounting, as evidence of the entity's income and expenses. Performing bank reconciliations supported in bank reconciliations that are performed every month in the Company. COMPLIANCE AUDIT: From the legal point of view, the Company met, throughout the year 2012, with statutory obligations, guidelines and directives issued by the Superintendency of Companies, Fiscal, Administrative and Labor, which allows to conclude the Company's strength before the State's control and supervision entities. On the tax side, the Statutory Auditor performs an accompaniment tax review and verification, an activity that is performed in conjunction with the accounting area, reviewing tax returns for and IVA and tax withholdings, Reteica, Income and Statement of Industry and Commerce before and after its presentation. Counseling in the processing and production of magnetic media, as part of the value added of the Statutory Auditor, for timely delivery to the Dian. As for labor, the payment of payroll taxes and contributions to the social security system are reviewed and verified monthly, and are made within the time limits previously set by government entities. Up to December 31, 2012, it was verified that the appropriate financial information corresponds to the information found in the company's software, which effectively presents no discomfort. MANAGEMENT AUDIT: The main aspect that should be highlighted in the Company is the commitment generated by the
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Coffee to the world
Administration led by the Management, in order to adopt, within the organizational culture, continuous quality improvement and ongoing training for the Company's Human Resources. Check the conformity of the Company's management with legal, technical, administrative, financial and accounting, and the application of international financial reporting standards. INTERNAL CONTROL AUDIT: Identify and report accordingly the situations that endanger the viability of the Company. Recommend corrective action, preventive or improvement. Continually perform surprise cash counts of officials responsible for managing these funds. It is important to note that they are implementing appropriate processes and internal control procedures, some of them recommended by the Statutory Auditor, but implemented by the Administration and the Internal Control Office, as it is responsible. This does not mean that no hazardous situations could arise, which are inherent to the activities that are performed daily in the Company and understanding that internal control is under construction. The Statutory Auditor performs audit programs in Cash and Banks, Payroll, Accounts Receivable (accounts payable circularization) and others, all aimed at improving these processes and procedures used, so that staff is aware of their roles and a culture is self-control is generated. As can be seen, our Statutory Auditor performs a Comprehensive Audit process, advisory, consulting and permanent support. Any concerns will gladly be attended to, Best wishes, proceso de Auditoría Integral, de asesoría, consultoría y acompañamiento permanente. Originally Signed
C.P.HECTOR JAIME CORREA PINZÓN C & A Ltda. Statutory Auditor T.P. 9388Trip No 985
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ESTADOS FINANCIEROS
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ESTADO DE GANANCIAS RETENIDAS (DEFICIT ACUMULADO) COMPARATIVO A DICIEMBRE 31 DE 2012
2012
SUPERAVIT ACUMULADO GANANCIA DEL EJERCICIO
2011
VARIACION
836.322.589 241.716.458
521.512.136 349.789.392
314.810.453 -108.072.934
1.078.039.047
871.301.528
206.737.519
APROPIACIONES PARA RESERVAS DIVIDENDOS DECRETADOS EN ACCIONES DIVIDENDOS DECRETADOS EN EFECTIVO
24.171.646 800.000.000 0
34.978.939 0 0
0 0 0
GANANCIA ACUMULADA DIC 31
253.867.401
836.322.589
206.737.519
SUBTOTAL
EL REP RESENTA NTE LEGA L Y EL CONTA DOR P UB LICO DEJA N CONSTA NCIA CON SU FIRM A , QUE HA N VERIFICA DO P REVIA M ENTE LA S A FIRM A CIONES CONTENIDA S EN LOS ESTA DOS FINA NCIEROS, CONFORM E A L REGLA M ENTO, Y QUE LA S M ISM A S SE HA N TOM A DO FIELM ENTE DE LOS LIB ROS
JORGE HERNAN MUﾃ前Z CASTAﾃ前 Representante Legal
42
FRANCISCA MILENA PINILLA SALAZAR Contador TP 112930 - T
HECTOR JAIME CORREA PINZON C.C. 15.911.728 de Riosucio REVISOR FISCAL C&A LTDA T.P. 9388 - T (Ver opinion Adjunta)
Management Report
La Meseta S.A. Compaﾃｱﾃｭa Cafetera
2012
Coffee to the world
ESTADO DE CAMBIOS EN LA SITUACION FINANCIERA A DICIEMBRE 31 DE 2011 2012 ACTIVO CORRIENTE PASIVO CORRIENTE
CAPITAL DE TRABAJO UTILIDAD DEL EJERCICIO MAS PARTIDAS QUE NO IMPLICAN EROGACION DE FONDOS: DEPRECIACION AMORTIZACION DIFERIDOS AJUSTE POR INFLACION PATRIMONIO INGRESOS GENERADOS POR OPERACION
2011
VARIACION
16.839.263.168 8.937.244.735
15.364.570.106 7.572.906.238
1.474.693.062 1.364.338.497
7.902.018.433
7.791.663.868
110.354.565
241.716.458 0 0 149.032.921 286.608.305 0
349.789.392 0 0 77.676.784 89.230.810 0
-108.072.934 0 0 71.356.137 197.377.495 0
677.357.684
516.696.986
160.660.698
800.000.000 -1.171.141.413 -919.513.958
0 -739.823.766 -493.475.290
800.000.000 -431.317.647 -426.038.668
-613.297.687
-716.602.070
103.304.383
-1.938.369.453 414.717.201 0
-2.559.520.707 -195.750.969 0
621.151.254 610.468.170 0
-1.523.652.252
-2.755.271.676
1.231.619.424
910.354.566
2.038.669.607
-1.128.315.041
FUENTES: INCREMENTO CAPITAL SOCIAL INCREMENTO DIFERIDOS INCREMENTO COMPRA PROP. PLTA Y EQUIPO TOTAL FUENTES APLICACIONES OBLIGACIONES FRAS A LARGO PLAZO PROVISION IMPUESTOS VARIACION INTANGIBLES TOTAL APLICACIONES
VARIACION DEL CAPITAL DE TRABAJO
EL REPRESENTA NTE LEGAL Y EL CONTA DOR P UB LICO DEJA N CONSTA NCIA CON SU FIRM A , QUE HA N VERIFICA DO P REVIA M ENTE LAS A FIRM A CIONES CONTENIDA S EN LOS ESTA DOS FINA NCIEROS, CONFORM E A L REGLAM ENTO, Y QUE LAS M ISM A S SE HA N TOM A DO FIELM ENTE DE LOS LIB ROS
JORGE HERNAN MUﾃ前Z CASTAﾃ前
FRANCISCA MILENA PINILLA SALAZAR
HECTOR JAIME CORREA PINZON
Representante Legal
Contador
C.C. 15.911.728 de Riosucio
TP 112930 - T
REVISOR FISCAL C&A LTDA T.P. 9388 - T (Ver opinion Adjunta)
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43
ESTADO DE FLUJOS DE EFECTIVO PARA EL AÑO TERMINADO EN 2012 2012 Flujos de efectivo proven. actividades operativas: Utilidad o pérdida del ejercicio PARTIDAS QUE NO AFECTAN EL EFECTIVO Depreciacion neta Amortizaciones Otros Resultado neto de ajustes por inflación FLUJO DE EFECTIVO ACTIVIDADES OPER.
2011
241.716.458
349.789.392
149.032.921 286.608.305 0 0 677.357.684
77.676.784 89.230.810 0 0 516.696.986
3.697.407.596 -5.152.947.778 605.087 348.236.849 434.230.797 217.594.613 -127.706.601 77.265.638 25.573.402
-1.161.091.397 -1.176.098.884 -61.557.275 -851.421.242 3.058.861.911 -950.235.504 195.750.969 -667.397.891 65.182.633
197.617.287
-1.031.309.784
-800.000.000 -800.000.000
-66.099.800 -66.099.800
Movimiento neto de propiedad planta y equipo Activos diferidos - Derechos
-919.513.958 -1.171.141.413
-493.475.290 -739.823.766
EFECT. NETO ACTIVIDADES INVERSION
-2.090.655.371
-1.233.299.056
Aumento de capital social Obligaciones financieras
800.000.000 1.912.796.051
0 2.494.338.074
EFECT. NETO ACTIVIDADES FINANCIAC
2.712.796.051
5.076.556.512
19.757.967 236.350.707
163.629.434 72.721.273
256.108.675
236.350.707
0
-1
Movimiento neto del capital de trabajo Cuentas por cobrar Inventarios Cargos diferidos y Gtos pagados por anticipado Sobregiro bancario Obligaciones financieras a corto plazo Cuentas por pagar Pasivos acumulados Pasivos diferidos Prestaciones sociales
EFECT. NETO ACTIVIDADES OPERAC flujo de efectivo en actividades de inversón Aumento Intangibles - Inversiones
Flujo neto de efectivo en actividades de financiación
Incremento neto de efectivo EFECTIVO INICIAL
TOTAL EFECTIVO
EL REP RESENTA NTE LEGA L Y EL CONTA DOR P UB LICO DEJA N CONSTA NCIA CON SU FIRM A , QUE HA N VERIFICA DO P REVIA M ENTE LA S A FIRM A CIONES CONTENIDA S EN LOS ESTA DOS FINA NCIEROS, CONFORM E A L REGLA M ENTO, Y QUE LA S M ISM A S SE HA N TOM A DO FIELM ENTE DE LOS LIB ROS
JORGE HERNAN MUÑOZ CASTAÑO
FRANCISCA MILENA PINILLA SALAZAR
HECTOR JAIME CORREA PINZON
Representante Legal
Contador
C.C. 15.911.728 de Riosucio
TP 112930 - T
REVISOR FISCAL C&A LTDA T.P. 9388 - T (Ver opinion Adjunta)
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Coffee to the world
ESTADO DE CAMBIOS EN EL PATRIMONIO A DICIEMBRE 31 DE 2012 2.012
2.011
VARIACION
PATRIMONIO CAPITAL AUTORIZADO (-) ACCIONES SUSCRIBIR CAPITAL SUSCRITO Y PAGADO RESERVA LEGAL UTIL (O PERD) EJ.ANTERIOR UTILIDAD (O PERD) PTE.EJERCICIO SUPERAVIT POR VALORIZACIONES
4.000.000.000 2.000.000.000 0 2.000.000.000
1.200.000.000 0
2.800.000.000 2.000.000.000
1.200.000.000
92.924.732 36.322.590 241.716.458 0 3.145.234.000 5.516.197.780
575.424 5.178.818 573.703.687 0 0 1.779.457.929
800.000.000 0 92.349.308 31.143.772 -331.987.229 0 3.145.234.000 3.736.739.851
TOTAL AUMENTO PATRIMONIO ENERO A DICIEMBRE 2011-2012 TOTAL AUMENTO VALORIZACIONES ENERO A DICIEMBRE 2011-2012
591.505.851 3.145.234.000
TOTAL AUMENTO A DICIEMBRE 31 DE 2012
3.736.739.851
EL REP RESENTA NTE LEGA L Y EL CONTA DOR P UB LICO DEJA N CONSTA NCIA CON SU FIRM A , QUE HA N VERIFICA DO P REVIA M ENTE LA S A FIRM A CIONES CONTENIDA S EN LOS ESTA DOS FINA NCIEROS, CONFORM E A L REGLA M ENTO, Y QUE LA S M ISM A S SE HA N TOM A DO FIELM ENTE DE LOS LIB ROS
JORGE HERNAN MUﾃ前Z CASTAﾃ前 Representante Legal
www.lameseta.com.co
FRANCISCA MILENA PINILLA SALAZAR Contador TP 112930 - T
HECTOR JAIME CORREA PINZON C.C. 15.911.728 de Riosucio REVISOR FISCAL C&A LTDA T.P. 9388 - T (Ver opinion Adjunta)
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Coffee to the world
NOTES TO THE FINANCIAL STATEMENTS 2012 REPORTING ENTITY La Meseta S. A. Coffee Company, Nit. 900.298.861-9 with headquarters in the city of Chinchiná, Department of Caldas, Colombia, South America, located at Carrera 5 N. 6-30, constituted by Deed No. 482 of the Second Notary of Chinchiná, on June 17, 2009, registered at the Chinchiná Chamber of Commerce on July 6, 2009 under registration No. 00001897 of Book IX, and commercial registration No.17440. Its validity is until December 31, 2040. Its purpose is 1) the purchase, sale, import, export, marketing, distribution, agency and representation for all kinds of domestic or foreign goods. 2) The organization, operation, management and operation of commercial establishments for the marketing of all kinds of goods and, especially, the production of coffee, its threshing, and the purchase, sale and export of coffee in all its forms. To fulfill the objective, the company may, in particular, hold all kinds of acts and contracts related to the management of immovable property, acquire movable or immovable property under any title, dispose of, pledge or mortgage, limit its domain, give them as security to third parties for obligations; lease or rent movable or immovable property; enter into transactions with commercial establishments, participate as a partner or shareholder in the formation of all types of commercial or civil companies and acquire title to any shares, parts or shares in this same class of companies; give, accept, negotiate, pay, endorse, cancel, sell, resell securities of all kinds, to conclude a contract of mutual interest or not, with guarantees or without, conclude bank contracts, in general, perform all types of civil operations and commercial operations, develop business, always in relation to the purpose indicated, but may it be said that society lacks the capacity to perform any act of such nature. 3. The resulting cherry of coffee's benefit could be processed destined to make the final product HUMUS (Organic Fertilizer) to alienate in national and international markets. PARAGRAPH 1: According to the law, within the social objective, acts directly related to it and which are designed to exercise the rights and fulfill legal or conventional obligations brought by the existence of society. PARAGRAPH 2: The company may merge with another company or companies that have the same or similar social objective or proposed, it may likewise absorb or merge with one or more corporations or split. PARAGRAPH 3: The Company can also, for the fulfillment of its purpose, engage in all manner of public or private elicitations and/or contests for the implementation of activities or the provision of services that constitute its corporate purpose. PARAGRAPH 4: Coffee Company La Meseta SA is prohibited from, giving loan guarantees or warranties of any kind, or signing with their signature or their third-
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party obligation goods, except in the case of strengthening, endorsing or guaranteeing third-party transactions in which the company has a direct interest. PRINCIPAL ACCOUNTING POLICIES AND PRACTICES Accounting System: The accounting and financial statements of the Company Coffee La Meseta S. A., comply with the standards and generally accepted accounting practices, regulations of the Superintendency of Companies and expressed legal norms in Colombia, Decrees 2649 and 2650 of 1993 and its amendments. Currency: According to the laws, the currency used by the company for Income and Statement Balance accounts is the Colombian peso. Difference in exchange: The Accounts Receivable and Accounts Payable in foreign currencies are converted into Colombian pesos at the representative market exchange rate at year-end, for the December 31, 2011 the TRM certified by the Financial Superintendence was $1,942.70. The exchange difference generated is recorded in the income statements. Inflation adjustments: Coffee Company La Meseta SA, did not adjusted its nonmonetary assets and liabilities to recognize the effect of inflation, since the 1111 Act of 2006 eliminated them in order to be applied fiscally and Decree 1536 of May 7, 2007 eliminated them accountably. Debtors: The customer portfolio has a rotation of eight days; no provisions were made given that non-performing loans are inexistent. As for other types of debtors, depending on their origin respective steps to follow must be taken. Inventories: are stated at cost of acquisition by the permanent inventory system and its method of valuation is weighted average. Property, plant and equipment: These are recorded at acquisition cost, depreciation is made on the basis of straight line method. Expenditures for repairs and maintenance are charged to the income statement, as they are incurred. For assets that require repairs or maintenance to increase service life, its depreciation must be recalculated in the same proportion. The company employs techniques and procedures for depreciation in fiscal, accounting and tax terms that are applied in Colombia, as well:
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For Buildings For Furniture and fixtures For Computer Equiptment For Vihicles
5% 10% 20% 20%
-
20 years 10 years 5 years 5 years
Deferred: consist of prepaid expenses, where insurance and maintenance are recorded and amortized to one (1) year and deferred assets originating mainly in: Installation and assembly costs amortized to five (5) years and software to three (3 ) years. Valuations and Provisions Property, plant and equipment: Keeping with Decree 2649 of 1993, the company recognizes the valuations or supplies resulting from technical appraisals compared with net book value. The company was founded in 2009, and therefore there was a legal obligation to carry out technical appraisals.As for financial obligations and other creditors should likewise make the respective disclosures depending on origin.Provision for Income Tax: The income tax provision corresponds to the respective tax year, to the highest assessed value resulting from the calculations made by the net income and presumptive income method applying to the said value a effective tax rate of 33% for the tax year 2012. Labor obligations: 95% of the staff is hired for an indefinite term; thus layoffs were deposited in a fund. Recognition of Income and Expenses: Revenues, costs and expenses are accounted for on an accrual basis. NOTE No.1.
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NOTE No.2. Expenses Paid in advance Pre-operating expenses for the creation of the company will be amortized to five (5) years and the licenses to three (3) years.
NOTE No.3. Property, plant and equipment
Appraisal Report For 2012 the company fulfilled its legal obligation to conduct appraisals in accordance with Article 64 of Decree 2649 of December 29, 1993. This Assessment was done to all the assets of the company by the Corporation of Professional Appraisers from Lonja PROLONJAS, thus giving us a detailed report of each asset as it is required by the standard.
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Accumulated depreciation. Accounting depreciation is applied with economic criteria but using the straight-line method and tax depreciation, seeking alternatives to alleviate tax payments in accordance with Colombian regulations, is applied. During 2009, depreciation was not applied because the company was in installation and commissioning. NOTE No. 4.
Intangibles - Rights
Intangibles - Rights are comprised of leasing machinery that the company has acquired through the years 2010 and 2011.
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NOTE No.5.
Financial Obligations
NOTE No.6.
Suppliers
NOTE No.7. Accounts Payable
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NOTE No.8. Income Received in advance
NOTE No.9. Liabiliy Estimates and Provisions
NOTE No.10. Capital During the year 2012, the company declared and paid $ 800 million in dividends, from previous earnings according to the percentage share of each holder, which is as follows:
Legal Reserve The company requires appropriating 10% of its net profits each year, until completing 50% of its subscribed capital. In 2009, a value of $ 5,754,242 was obtained which constituted 10% of the legal reserve amounting to $ 575,424. In 2010 a value of $573.703.687 was obtained which constituted 10% of the legal reserve amounting to $57.370.369 and the rest was retained earnings. In 2011, a value of $349.789.392 was obtained which constituted 10% of the legal reserve amounting to $34.978.939 and the rest was retained earnings.
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NOTE No.11. Income Operating revenues are broken down as follows:
NOTE No.12. Cost of Sales Administrative expenses are broken down as follows:
NOTE No.13. Administrative Expenses Los Gastos de Administraci贸n se descomponen de la siguiente forma:
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NOTE No.13. Selling Expenses
NOTE No.14. Other non-operating income and expenses
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TAXES INCOME The Company calculates its income tax for 2012 on the basis of taxable income. SALES TAX The Company is registered in the Registry of Responsible for Value Added Tax (IVA) filing IVA generated and rediscountable in its Taxes on Sales Payable Account, with its Joint Regime, Exporter, National Seller and Producer status, for 2011 the DIAN was asked to refund IVA worth $ 101,010,000 and for 2012 the value was $98.000.000 INDUSTRY AND TRADE Stating its productive stage in November 2009, Coffee Company La Meseta SA, as a new company, and to comply with the requirements of Articles 394- 395- 397- 402403 of Accord No. 037 December 2008 of Chinchinรก, through Resolution 293 of April 30, 2010 is granted 100% exemption from industry for and commerce tax for the first ten years of work (through 2020) IMPACT OF RECENT REFORMS 1.
Wealth Tax
It was created on a temporary basis and as an aid to the flood emergency, during the fiscal years of 2011-2014. It was established in 1% of the liquid assets to January 1, 2011, payable in 6 installments, two per year. This tax cannot be treated as an expense in the income tax, but it can be charge to Equity Revaluation Account if any, without affecting the results of the exersice. In 2011, the first two installments were paid, totaling $ 3,452,000. 2.
Presumptive Income
The tax rate applicable to the presumptive income from the year 2008 has been reduced from 6% to 3%. 3.
Transfer-Pricing
For purposes of applying the transfer pricing regime transfers will be carried out with related parties or parties abroad. The 2003 reform is clear that you can apply the transfer-pricing regime to "related parties" that are not linked.
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La Meseta S.A. Compañía Cafetera
Coffee to the world
www.lameseta.com.co
NIT. 900298861-9 Large Taxpayers
Street 5 # 6-30 Trilladora La Meseta Chinchiná Caldas, Colombia Phone. (57+6) 840 2030 info@lameseta.com.co