Table of Contents
Grand Duchy of Luxembourg | 200 | None | ||
(State or other jurisdiction of incorporation or organization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification Number) |
Marcelo A. Mottesi, Esq. Milbank, Tweed, Hadley & McCloy LLP 1 Chase Manhattan Plaza New York, New York 10005 (212) 530-5000 | Maurice Blanco, Esq. Davis Polk & Wardwell LLP 450 Lexington Avenue New York, New York 10017 (212) 450-4000 |
Proposed Maximum | Amount of | |||||
Title of Each Class of | Aggregate Offering | Registration | ||||
Securities to be Registered | Price(1)(2) | Fee | ||||
Common shares, par value $1.50 | $492,857,130 | $57,221 | ||||
(1) | Includes offering price of shares which the underwriters have the option to purchase. | |
(2) | Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(a) of the Securities Act of 1933, as amended. |
Table of Contents
The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. |
Underwriting | Proceeds to | |||||||||||||||
Discounts and | Proceeds | Selling | ||||||||||||||
Price to Public | Commissions | to Issuer | Shareholders | |||||||||||||
Per Share | $ | $ | $ | $ | ||||||||||||
Total | $ | $ | $ | $ |
Credit Suisse | Morgan Stanley | Itau BBA |
Banco do Brasil Securities LLC | Rabo Securities |
Table of Contents
Page | ||||||||
1 | ||||||||
12 | ||||||||
14 | ||||||||
17 | ||||||||
20 | ||||||||
47 | ||||||||
54 | ||||||||
55 | ||||||||
56 | ||||||||
57 | ||||||||
58 | ||||||||
59 | ||||||||
61 | ||||||||
70 | ||||||||
73 | ||||||||
81 | ||||||||
135 | ||||||||
149 | ||||||||
210 | ||||||||
232 | ||||||||
242 | ||||||||
245 | ||||||||
247 | ||||||||
256 | ||||||||
258 | ||||||||
265 | ||||||||
275 | ||||||||
276 | ||||||||
277 | ||||||||
279 | ||||||||
F-1 | ||||||||
EX-8.1 | ||||||||
EX-8.2 | ||||||||
EX-10.1 | ||||||||
EX-10.2 | ||||||||
EX-10.3 | ||||||||
EX-10.4 | ||||||||
EX-10.5 | ||||||||
EX-10.6 | ||||||||
EX-10.7 | ||||||||
EX-10.8 | ||||||||
EX-10.9 | ||||||||
EX-10.10 | ||||||||
EX-10.11 | ||||||||
EX-10.12 | ||||||||
EX-10.13 | ||||||||
EX-10.14 | ||||||||
EX-10.15 | ||||||||
EX-10.16 | ||||||||
EX-10.17 | ||||||||
EX-10.18 | ||||||||
EX-10.19 | ||||||||
EX-10.20 | ||||||||
EX-10.21 | ||||||||
EX-10.22 | ||||||||
EX-10.23 | ||||||||
EX-10.24 | ||||||||
EX-10.25 | ||||||||
EX-10.26 | ||||||||
EX-10.27 | ||||||||
EX-10.28 | ||||||||
EX-10.29 | ||||||||
EX-10.30 | ||||||||
EX-10.31 | ||||||||
EX-10.32 | ||||||||
EX-10.33 | ||||||||
EX-10.36 | ||||||||
EX-10.37 | ||||||||
EX-10.38 | ||||||||
EX-10.39 | ||||||||
EX-10.40 | ||||||||
EX-10.41 | ||||||||
EX-10.42 | ||||||||
EX-21.1 | ||||||||
EX-23.1 | ||||||||
EX-23.2 | ||||||||
EX-23.4 |
i
Table of Contents
ii
Table of Contents
Year Ended December 31, 2009 | ||||||||||||
Key Metrics | Farming | Sugar, Ethanol & Energy | Land Transformation | |||||||||
Owned Hectares(1) | 259,914 | 13,221 | — | |||||||||
Leased Hectares | 47,709 | 40,385 | — | |||||||||
Total Planted Hectares(2) | 188,015 | 49,470 | — | |||||||||
Production(3) | Crops, Rice, Coffee: 618,723 tons | Sugar: 52,968 tons | 11,255 hectares | (4) | ||||||||
Milk: 47.5 million liters | Ethanol: 132,492 m3 | |||||||||||
Energy: 128,291 MWh | ||||||||||||
Sales (in thousands)(5) | $216,016 | $97,587 | $18,839 |
(1) | Owned hectares in Farming business includes land used for productive activities (crops, rice, coffee, cattle), land which is potentially croppable and land set aside as legal reserve and other reserves. | |
(2) | Includes owned and leased land planted (including second harvest) with crops, rice and coffee during the 2009/2010 harvest year. | |
(3) | Production in tons of crops, rice and coffee during the 2009/2010 harvest year, and in liters of raw milk, tons of sugar, cubic meters of ethanol and MWh of energy for the period indicated. See “Presentation of Financial and Other Information.” | |
(4) | Consists of undeveloped/undermanaged land put into production. | |
(5) | Sales in Land Transformation business represents capital gain from the sale of one of our farms. |
1
Table of Contents
• | Farming Business: We believe we are one of the largest owners of productive farmland in South America. As of September 30, 2010, we owned 274,663 hectares (excluding sugarcane farms) of farmland in Argentina, Brazil and Uruguay, of which 121,723 hectares are croppable, 18,909 hectares are being evaluated for transformation, 79,645 hectares are suitable for raising beef cattle and are mostly leased to a third party beef processor, constituting a total of 220,277 productive hectares, and 54,387 hectares are legal land reserves pursuant to local regulations or other land reserves. As of September 30, 2010, we held leases or had entered into agriculture partnerships for an additional 37,687 croppable hectares. We own the facilities and have the resources to store and condition 100% of our crop and rice production. We do not depend on third parties to condition our production for sale. Our farming business is subdivided into four main business areas: |
2
Table of Contents
Nine Months Ended | ||||||||||||||||
September 30, | Year Ended December 31, | |||||||||||||||
Sales | 2010 | 2009 | 2008 | 2007 | ||||||||||||
(In thousands of $) | ||||||||||||||||
Crops(1) | 90,008 | 92,029 | 95,987 | 59,293 | ||||||||||||
Rice(2) | 45,436 | 69,350 | 56,925 | 26,422 | ||||||||||||
Coffee | 4,668 | 14,265 | 15,948 | 7,267 | ||||||||||||
Dairy(3) | 10,043 | 11,894 | 14,821 | 17,841 | ||||||||||||
Cattle(4) | 4,127 | 28,478 | 9,357 | 7,258 | ||||||||||||
Total | 154,282 | 216,016 | 193,038 | 118,081 |
Production | 2009/2010 Harvest Year | 2008/2009 Harvest Year | 2007/2008 Harvest Year | |||||||||
Crops (tons)(5) | 524,890 | 317,582 | 351,787 | |||||||||
Rice (tons)(6) | 91,723 | 94,968 | 98,577 | |||||||||
Coffee (tons)(7) | 2,110 | 2,412 | 3,028 | |||||||||
Total | 618,723 | 414,962 | 453,392 |
Nine Months Ended | ||||||||||||||||
September 30, | Year Ended December 31, | |||||||||||||||
2010 | 2009 | 2008 | 2007 | |||||||||||||
Dairy (thousands of liters)(8) | 29,299 | 47,479 | 43,110 | 34,592 | ||||||||||||
Cattle (tons)(4)(9) | 246 | 4,149 | 7,229 | 6,632 |
Planted Area | 2009/2010 Harvest year | 2008/2009 Harvest year | 2007/2008 Harvest year | |||||||||
(In hectares, including second harvest) | ||||||||||||
Crops(10) | 168,241 | 139,518 | 107,027 | |||||||||
Rice | 18,142 | 17,258 | 14,820 | |||||||||
Coffee(11) | 1,632 | 1,632 | 1,632 | |||||||||
Cattle(12) | 87,392 | 106,375 | 124,635 |
(1) | Includes soybeans, corn, wheat, sunflower and cotton, among others. | |
(2) | Sales of processed rice, including rough rice purchased from third parties and processed in our facilities. | |
(3) | Sales of raw milk and whole milk powder produced in 2007 pursuant to an agreement with a third party. | |
(4) | In December 2009, we sold 55,543 head of cattle to a third party. The third party currently leases grazing land from us to raise and fatten the cattle, and our payments under the lease are tied to the market price of beef. See “Business — Farming — Cattle Business.” | |
(5) | Crop production does not include 52,482 tons, 52,960 tons and 53,398 tons of forage produced in the 2009/2010, 2008/2009 and 2007/2008 harvest years, respectively. | |
(6) | Expressed in tons of rough rice produced on owned and leased farms. | |
(7) | As of September 30, 2010, the coffee harvest was ongoing and stood at 91% completion. | |
(8) | Raw milk produced at our dairy farms. | |
(9) | Measured in tons of live weight. Production is the sum of the net increases (or decreases) during a given period in “live weight” of each head of beef cattle. | |
(10) | Includes 4,561 hectares, 5,382 hectares and 4,454 hectares used for the production of forage during the 2009/2010, 2008/2009 and 2007/2008 harvest years, respectively. | |
(11) | Reflects the size of our coffee plantations, which are planted only once every 18 to 20 years. | |
(12) | Comprised of land devoted to raising beef cattle, which, since December 2009, is mostly leased to a third party. See “Business — Farming — Cattle Business.” |
3
Table of Contents
• | Sugar, Ethanol and Energy Business: We believe we are a growing and efficient producer of sugar and ethanol in Brazil. We cultivate and harvest sugarcane which is then processed in our own mills to produce sugar, ethanol and electric energy. As of September 30, 2010, our overall sugarcane plantation consisted of 54,352 hectares, planted over both own and leased land. We currently own and operate two sugar and ethanol mills, Usina Monte Alegre (“UMA”) and Angélica Agroenergia (“Angélica”), with a total crushing capacity of 5.2 million tons of sugarcane per year. |
Nine Months Ended | ||||||||||||||||
September 30, | Year Ended December 31, | |||||||||||||||
Sales | 2010 | 2009 | 2008 | 2007 | ||||||||||||
(In thousands of $) | ||||||||||||||||
Sugar | 49,979 | 26,143 | 20,495 | 17,133 | ||||||||||||
Ethanol | 64,536 | 62,811 | 29,385 | 7,289 | ||||||||||||
Energy | 9,847 | 8,216 | — | — | ||||||||||||
Total(1) | 124,604 | 97,587 | 51,171 | 24,422 |
(1) | Includes sales of sugarcane and other miscellaneous items to third parties of $242 thousand during the first nine months of 2010 and $417 thousand and $1,291 thousand during 2009 and 2008, respectively. |
Nine Months Ended | ||||||||||||||||
September 30, | Year Ended December 31, | |||||||||||||||
Production | 2010 | 2009 | 2008 | 2007 | ||||||||||||
Sugar (tons) | 166,001 | 52,968 | 67,772 | 72,372 | ||||||||||||
Ethanol (cubic meters) | 134,086 | 132,492 | 70,067 | 29,375 | ||||||||||||
Energy (MWh exported) | 100,079 | 128,291 | — | — |
4
Table of Contents
Nine Months | ||||||||
Ended | ||||||||
September 30, | Year Ended December 31, | |||||||
Other Metrics | 2010 | 2009 | 2008 | 2007 | ||||
Sugarcane milled (% owned) | 96% | 94% | 98% | 100% | ||||
Sugarcane crushing capacity (millions of tons) | 5.2 | 3.3 | 1.7 | 0.9 | ||||
% Mechanized planting/harvesting operations — Consolidated | 30% / 77% | 53% /66% | 80% / 32% | 77% / 0% | ||||
% Mechanized planting/harvesting operations — Angélica mill | 38% /100% | 58% / 99% | 100% / 99% | 100% / NA |
• | Land Transformation Business: We believe we are one of the leading companies in South America involved in the acquisition and transformation of land. We acquire farmlands we believe are underdeveloped or underutilized and, by implementing cutting-edge production technology and agricultural best practices, transform the land to be suitable for more productive uses, enhance yields and increase the value of the land. We promote sustainable land use through our land transformation activities, which seek to promote environmentally responsible agricultural production and a balance between production and ecosystem preservation. See “Business — Land Transformation.” |
Nine Months Ended | ||||||||||||||||
September 30, | Year Ended December 31, | |||||||||||||||
2010 | 2009 | 2008 | 2007 | |||||||||||||
Undeveloped/Undermanaged land put into production (hect.) | — | 11,255 | 33,387 | 17,591 | ||||||||||||
Ongoing transformation of croppable land (hect.) | 122,006 | 110,751 | 80,720 | 66,562 | ||||||||||||
Number of farms sold | — | 1 | 3 | 2 | ||||||||||||
Hectares sold | — | 5,005 | 4,857 | 8,714 | ||||||||||||
Capital gains from the sale of land ($ thousands) | — | 18,839 | 15,201 | 33,114 |
• | Unique and strategic asset base. We own strategically located farmland and agro-industrial assets, increasing operating efficiencies and reducing operating and logistical costs. Our diversified asset base creates valuable synergies and economies of scale, including (i) the ability to transfer the technologies and best practices that we have developed across our business lines, (ii) the ability to apply value-adding land transformation strategies to farmland in connection with our farming and sugarcane operations, and (iii) a greater ability to negotiate more favorable terms with our suppliers and customers. Owning a significant portion of the land on which we operate is a key element of our business model. | |
• | Low-cost production leveraging agro-ecological competitive advantages. Each of the commodity products we grow is produced in regions where agro-ecological conditions provide competitive advantages and which, through the implementation of our efficient and sustainable production model, allow us to become one of the lowest cost producers. | |
• | Standardized and scalable agribusiness model applying technological innovation. We have consistently used innovative production techniques to ensure that we are at the forefront of technological improvements and environmental sustainability standards in our industry. We are |
5
Table of Contents
implementing an agribusiness model that consists of specializing our workforce and defining standard protocols to track crop development and control production variables, thereby enhancing management decision-making. We further optimize our agribusiness model through the effective implementation and constant adaptation of a portfolio of advanced agricultural and information technologies and best practices tailored to each region in which we operate and commodity we produce, allowing us to improve our crop yields, reduce operating costs and maximize margins in a sustainable manner. |
• | Unique diversification model to mitigate cash flow volatility. We pursue a unique multi-tier diversification strategy to reduce our exposure to production and market fluctuations that may impact our cash flow and operating results. We seek geographic diversification, thereby lowering our risk exposure to weather-related losses and contributing to stable cash flows. Additionally, we produce a variety of products, which lowers our risk exposure to potentially depressed market conditions of any specific product. Moreover, we process and transform a portion of our agricultural commodities into branded retail products, reducing our commodity price risk and our reliance on the standard market distribution channels for unprocessed products. | |
• | Expertise in acquiring farmland with transformation and appreciation potential. During the last eight years, we have executed transactions for the purchase and disposition of land for over $425 million and sold 22,083 hectares of developed land, generating capital gains of approximately $95 million. We believe we have a superior track record and have positioned ourselves as a key player in the land business in South America. We have developed a methodology to assess farmland and to appraise its potential value with a high degree of accuracy and efficiency by using information generated through sophisticated technology, including satellite images, rain and temperature records, soil analyses, and topography and drainage maps. | |
• | Experienced management team, knowledgeable employees and strong shareholder base. Our people are our most important asset. We have an experienced senior management team with an average of more than 20 years of experience working in our sector and a solid track record of implementing and executing large-scale growth projects. The strength of our human capital and proven track record has allowed us to raise capital from sophisticated investors and retain a strong and diversified shareholder base, including an affiliate of Soros Fund Management, LLC, an affiliate of HBK Investments L.P., an affiliate of Ospraie Management, LLC, a wholly owned subsidiary of Qatar Holding LLC and Stichting Pensioenfonds Zorg en Welzijn, among others. |
• | Expand our farming business through organic growth, leasing and strategic acquisitions. We will continue to seek opportunities for organic growth, target attractive acquisition and leasing opportunities and strive to maximize operating synergies and achieve economies of scale in each of our four main farming business areas. | |
• | Consolidate our sugar and ethanol cluster in the state of Mato Grosso do Sul, Brazil. Our main strategy for our sugar and ethanol business is to build our cluster in Mato Grosso do Sul, Brazil, through the construction of Ivinhema, our second greenfield project. See “Business — Sugar, Ethanol and Energy — Our Mills.” The consolidation of the cluster, which upon completion will have a planned total crushing capacity of 10.3 million tons per year, will generate important synergies, operating efficiencies and economies of scale. Additionally, we plan to continue to monitor closely the Brazilian sugar and ethanol industries and may pursue selective acquisitions that provide opportunities to increase our economies of scale, operating synergies and profitability. | |
• | Further increase our operating efficiencies while maintaining a diversified portfolio. We intend to continue to focus on improving the efficiency of our operations and maintaining a low-cost structure to |
6
Table of Contents
increase our profitability and protect our cash flows from commodity price cycle risk. In addition, we intend to mitigate commodity price cycle risk and minimize our exposure to weather related losses by (i) maintaining a diversified product mix and vertically integrating production of certain commodities and (ii) geographically diversifying the locations of our farms. |
• | Continue to implement our land transformation strategy. We plan to continue to enhance the value of our owned farmland and future land acquisitions by making them suitable for more profitable agricultural activities, thereby seeking to maximize the return on our invested capital in our land assets. |
• | Favorable agro-ecological conditions. Favorable climatic and geographical conditions, highly productive soils, stable temperatures, adequate rainfall levels throughout the year, plentiful availability of water resources and abundant solar energy create some of the most optimal conditions for farming in the world, even allowing for the harvesting of two crops in the same year in some regions. | |
• | High potential for production growth. Farmland is available at attractive prices relative to other regions in the world, and we believe that much of the vast areas of land available in the region are ripe for development and present opportunities for transformation and associated appreciation. | |
• | Low production cost. The ability to farm larger plots of land allows for economies of scale to effectively further reduce operating costs, leading to logistical efficiencies, and has allowed for the adoption and implementation of productive technology in farming and agricultural manufacturing processes. | |
• | Qualified labor pool. South America has access to a vast pool of qualified human resources with strong technical skills and academic backgrounds in the agricultural field. |
7
Table of Contents
* | Does not account for an immaterial amount of shares required to be owned by other persons pursuant to Maltese law. | |
† | 2% is owned pro rata among existing shareholders in amounts corresponding to their ownership of the Company. The 2% ownership held by current members of IFH does not carry any preferential treatment. |
8
Table of Contents
• | Unpredictable weather conditions such as droughts or severe rains, pest infestations and diseases may have an adverse impact on crop production, and may reduce the volume and sugar content of the sugarcane that we grow and harvest. | |
• | We may be exposed to material losses due to volatile prices of agricultural products since we do not fully hedge our agricultural products price risk. We also may not be able to realize gains related to price appreciation on hedged positions. | |
• | A substantial portion of our assets is farmland that is highly illiquid. Therefore, our ability to monetize our farmland portfolio or to realize appreciation on transformed properties may be limited. | |
• | Certain of our subsidiaries in Argentina, Brazil and Uruguay have substantial indebtedness ($403.2 million in the aggregate as of September 30, 2010) which could affect our operations by requiring a substantial portion of their cash from operations to be dedicated to the payment of principal and interest instead of working capital. Certain of our subsidiaries have breached certain financial ratios under their relevant indebtedness agreements in the past which has resulted in an increase in the interest rates charged going forward. | |
• | Our business is seasonal, and our revenues may fluctuate significantly and vary between quarterly periods depending on the growing cycle of our crops. |
9
Table of Contents
• | Engineering, construction and regulatory risks, such as obtaining the necessary permits and licenses, may create delays in or the suspension of the construction of our Ivinhema milland/or significantly increase the amount of our expected investments. | |
• | A reduction in market demand for ethanol or a change in governmental policies reducing the amount of ethanol required to be added to gasoline in Brazil may adversely affect our business. | |
• | Environmental laws are becoming more stringent in Argentina and Brazil. Therefore our capital expenditures for environmental compliance could increase in the future, and we may be subject to denial or revocation of existing environmental permits, adversely affecting the result of our operations. | |
• | IFRS accounting standards require us to make numerous estimates in the compilation and preparation of our financial results and limit the comparability of our financial statements to similar issuers using U.S. GAAP. | |
• | There is a risk that we could be treated as a U.S. domestic corporation for U.S. federal income tax purposes, which could materially increase our U.S. federal income tax liability and subject any dividends we pay to U.S. federal withholding tax. | |
• | Recent changes in Brazilian rules and proposed legislation concerning foreign investment in rural properties may adversely affect our investments. |
10
Table of Contents
11
Table of Contents
Issuer | Adecoagro S.A. | |
Selling Shareholders | See “Underwriting” and “Principal and Selling Shareholders.” | |
Primary Offering | We are offering 21,428,571 common shares. | |
Secondary Offering | The selling shareholders are offering 7,142,857 common shares. | |
Al Gharrafa Transaction | We are selling 7,440,476 common shares (at an assumed price of $13.44 per share, reflecting the price paid by the underwriters in this offering assuming the mid-point of the range set forth on the cover page of this prospectus. | |
If the price per common share to the public is greater than the top of the price range, Al Gharrafa will not be obligated to purchase our common shares, will only have the option to purchase an amount of common shares equivalent to an aggregate purchase price of $100 million at the price paid by the underwriters, and may choose to forego the purchase of common shares. In the event that the aggregate gross proceeds of the offering to the Company and the selling shareholders, excluding the underwriters’ over-allotment option, is less than $400 million, then Al Gharrafa is only obligated to purchase an amount of common shares equivalent to 25% of the aggregate gross proceeds of the offering to the Company and the Selling Shareholders at the price per common share paid by the underwriters. See “Business — Offering Transactions and Sale to Al Gharrafa Investment Company.” | ||
Offering Price Range | Between $13.00 and $15.00 per share. | |
Over-Allotment Option | We have granted the underwriters the right to purchase an additional 4,285,714 common shares within 30 days from the date of this prospectus to cover over-allotments, if any. | |
Use of Proceeds | We estimate that the net proceeds to us in this offering (based on the midpoint of the range set forth on the cover page of this prospectus), after deducting the underwriters’ discounts and commissions and estimated expenses incurred in connection with this offering, will be $283 million. If the underwriters exercise their over-allotment option in full, we estimate that our net proceeds will be approximately $341 million, after deducting the underwriters’ discounts and commissions and estimated expenses incurred in connection with this offering. | |
In addition, we estimate that the net proceeds to us from the sale of shares by us to Al Gharrafa in the Al Gharrafa Transaction, assuming it is consummated will be $100 million, based on an assumed price per share equal to $13.44 per share to be paid by Al Gharrafa, reflecting the price paid by the underwriters in this offering assuming the mid-point of the range set forth on the cover page of this prospectus. See “Summary — The Offering — Al Gharrafa Transaction.” |
12
Table of Contents
We intend to use (i) approximately $230 million of the net proceeds from this offering and, assuming it is consummated, the Al Gharrafa Transaction to finance the construction of Ivinhema, our new sugar and ethanol mill in Brazil, (ii) approximately $145 million for potential investments in the acquisition of farmland and capital expenditures required in the expansion of our farming business, and (iii) the remainder, if any, for working capital and general corporate purposes. See “Use of Proceeds.” | ||
We will not receive any proceeds from the sale of our common shares by the selling shareholders. | ||
Share Capital Before and After Offering andthe Al GharrafaTransaction | Our issued and outstanding share capital consists of 79,999,985 common shares as of the date of this prospectus. Assuming an offering price of $14.00 per share, immediately after the offering and, assuming it is consummated, the Al Gharrafa Transaction, we will have 108,869,032 common shares issued and outstanding, assuming no exercise of the underwriters’ over-allotment option. If the underwriters exercise their over-allotment option in full, we will have 113,154,746 common shares issued and outstanding. | |
Voting Rights | Holders of our common shares are entitled to one vote per common share in all shareholders’ meetings. See “Description of Share Capital — Voting Rights.” | |
Dividends | We currently have no plans to pay dividends following the completion of this offering because we expect to retain our earnings for use in the development and expansion of our business. See “Dividend Policy.” | |
Lock-up Agreements | We have agreed with the underwriters, subject to certain exceptions, not to sell or dispose of any common shares or securities convertible into or exchangeable or exercisable for any common shares during the period commencing on the date of this prospectus until 180 days after the completion of this offering. Our selling shareholders, members of our board of directors, our executive officers and our non-selling shareholders have agreed to similarlock-up restrictions. See “Underwriting.” | |
Transfer Agent | The Bank of New York Mellon (operating with the service name BNY Mellon Shareowner Services). | |
Listing | We have applied to list our common shares on the New York Stock Exchange under the symbol “AGRO”. | |
Risk Factors | See “Risk Factors” beginning on page 20 and the other information included in this prospectus for a discussion of factors you should consider before deciding to invest in our common shares. |
13
Table of Contents
14
Table of Contents
For the Nine Months Ended September 30, | For the Year Ended December 31, | |||||||||||||||||||||||||||
2010 | 2009 | |||||||||||||||||||||||||||
Pro Forma | 2010 | 2009 | Pro Forma | 2009 | 2008 | 2007 | ||||||||||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||||||||||||||
(In thousands of $) | ||||||||||||||||||||||||||||
Statement of Income Data: | ||||||||||||||||||||||||||||
Sales of manufactured products and services rendered | 173,985 | 173,917 | 125,304 | 184,796 | 183,386 | 117,173 | 69,807 | |||||||||||||||||||||
Cost of manufactured products sold and services rendered | (137,219 | ) | (137,169 | ) | (106,407 | ) | (180,965 | ) | (180,083 | ) | (105,583 | ) | (63,519 | ) | ||||||||||||||
Gross profit from manufacturing activities | 36,766 | 36,748 | 18,897 | 3,831 | 3,303 | 11,590 | 6,288 | |||||||||||||||||||||
Sale of agricultural produce and biological assets | 104,969 | 104,969 | 84,827 | 131,391 | 130,217 | 127,036 | 72,696 | |||||||||||||||||||||
Cost of agricultural produce sold and direct agricultural selling expenses(1) | (104,969 | ) | (104,969 | ) | (84,827 | ) | (131,391 | ) | (130,217 | ) | (127,036 | ) | (72,696 | ) | ||||||||||||||
Changes in fair value of biological assets and agricultural produce | (76,759 | ) | (76,967 | ) | 25,724 | 72,097 | 71,668 | 61,000 | 26,935 | |||||||||||||||||||
Changes in net realizable value of agricultural produce after harvest | 7,311 | 7,311 | 8,383 | 12,787 | 12,787 | 1,261 | 12,746 | |||||||||||||||||||||
Gross (loss)/profit from agricultural activities | (69,448 | ) | (69,656 | ) | 34,107 | 84,883 | 84,455 | 62,261 | 39,681 | |||||||||||||||||||
Margin on manufacturing and agricultural activities before operating expenses | (32,682 | ) | (32,908 | ) | 53,004 | 88,714 | 87,758 | 73,851 | 45,969 | |||||||||||||||||||
General and administrative expenses | (41,941 | ) | (41,573 | ) | (41,780 | ) | (52,929 | ) | (52,393 | ) | (45,633 | ) | (33,765 | ) | ||||||||||||||
Selling expenses | (32,844 | ) | (32,836 | ) | (20,603 | ) | (31,764 | ) | (31,169 | ) | (24,496 | ) | (14,762 | ) | ||||||||||||||
Other operating income, net | 8,056 | 8,122 | (4,562 | ) | 13,335 | 13,071 | 17,323 | 2,238 | ||||||||||||||||||||
Excess of fair value of net assets acquired over cost | — | — | — | — | — | 1,227 | 28,979 | |||||||||||||||||||||
Share of loss of joint ventures | (220 | ) | (220 | ) | (306 | ) | (294 | ) | (294 | ) | (838 | ) | (553 | ) | ||||||||||||||
(Loss)/profit from operations before financing and taxation | (99,631 | ) | (99,415 | ) | (14,247 | ) | 17,062 | 16,973 | 21,434 | 28,106 | ||||||||||||||||||
Finance income | 9,364 | 9,364 | 7,002 | 11,553 | 11,553 | 2,552 | 12,925 | |||||||||||||||||||||
Finance costs | (29,745 | ) | (28,843 | ) | (21,814 | ) | (36,115 | ) | (34,216 | ) | (50,860 | ) | (12,458 | ) | ||||||||||||||
Financial results, net | (20,381 | ) | (19,479 | ) | (14,812 | ) | (24,562 | ) | (22,663 | ) | (48,308 | ) | 467 | |||||||||||||||
(Loss)/profit before income tax | (120,012 | ) | (118,894 | ) | (29,059 | ) | (7,500 | ) | (5,690 | ) | (26,874 | ) | 28,573 | |||||||||||||||
Income tax benefit | 29,839 | 29,347 | 11,231 | 5,849 | 5,415 | 10,449 | 59 | |||||||||||||||||||||
(Loss)/profit for the year | (90,173 | ) | (89,547 | ) | (17,828 | ) | (1,651 | ) | (275 | ) | (16,425 | ) | 28,632 | |||||||||||||||
Attributable to: | ||||||||||||||||||||||||||||
Equity holders of the parent | (88,367 | ) | (89,545 | ) | (17,825 | ) | (1,608 | ) | (265 | ) | (19,334 | ) | 29,170 | |||||||||||||||
Non controlling interest | (1,805 | ) | (2 | ) | (3 | ) | (43 | ) | (10 | ) | 2,909 | (538 | ) | |||||||||||||||
(Losses)/Earnings per share/member unit for (loss)/profit attributable to the equity holders of the parent during the year: | ||||||||||||||||||||||||||||
Basic | (1.105 | ) | (0.188 | ) | (0.039 | ) | (0.020 | ) | (0.001 | ) | (0.047 | ) | 0.101 | |||||||||||||||
Diluted | N/A | N/A | N/A | N/A | N/A | N/A | 0.098 |
15
Table of Contents
For the Nine Months Ended | ||||||||||||||||||||
September 30, | For the Year Ended December 31, | |||||||||||||||||||
2010 | 2009 | 2009 | 2008 | 2007 | ||||||||||||||||
Cash Flow Data: | ||||||||||||||||||||
Net cash used in operating activities | (27,089 | ) | (80,870 | ) | (86,299 | ) | (52,453 | ) | (68,041 | ) | ||||||||||
Net cash used in investing activities | (77,473 | ) | (55,798 | ) | (73,894 | ) | (157,489 | ) | (246,905 | ) | ||||||||||
Net cash generated from financing activities | 85,786 | 142,941 | 156,047 | 213,200 | 292,353 | |||||||||||||||
Other Financial Data: | ||||||||||||||||||||
Adjusted Segment EBITDA (unaudited)(2) | ||||||||||||||||||||
Crops | 24,845 | 10,965 | 21,120 | 34,040 | 27,216 | |||||||||||||||
Rice | 579 | 11,578 | 13,244 | 13,966 | 2,014 | |||||||||||||||
Dairy | 1,543 | (365 | ) | 484 | (2,159 | ) | 1,051 | |||||||||||||
Coffee | 90 | (3,034 | ) | (3,550 | ) | (1,693 | ) | (3,440 | ) | |||||||||||
Cattle | 2,807 | (2,099 | ) | 1,525 | (761 | ) | (1,188 | ) | ||||||||||||
Farming subtotal | 29,864 | 17,045 | 32,823 | 43,393 | 25,653 | |||||||||||||||
Ethanol, sugar and energy | 26,758 | (23,800 | ) | (26,903 | ) | (6,979 | ) | (10,146 | ) | |||||||||||
Land transformation | — | — | 18,839 | 15,201 | 33,114 | |||||||||||||||
Corporate | (15,649 | ) | (17,120 | ) | (22,262 | ) | (23,077 | ) | (11,435 | ) | ||||||||||
Adjusted Consolidated EBITDA | 40,973 | (23,875 | ) | 2,497 | 28,538 | 37,186 |
(1) | Consists of two components: (i) the cost of our sold agricultural produce and/or biological assets as appropriate plus (ii) in the case of agricultural produce, the direct costs of selling, including but not limited to, transportation costs, export taxes and other levies. The cost of our agricultural produce sold represents the recognition as an expense of our agricultural produce held in inventory valued at net realizable value. The cost of our biological assets and/or agricultural produce sold at the point of harvest represents the recognition as an expense of our biological assets and/or agricultural produce measured at fair value less costs to sell, generally representing the applicable quoted market price at the time of sale. Accordingly, the line item “Sales of agricultural produce and biological assets” is equal to the line item “Cost of agricultural produce plus direct agricultural selling expenses.” See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates — Biological Assets and Agricultural Produce.” | |
(2) | See “Presentation of Financial and Other Information” for the definition of Adjusted EBITDA and “Selected Consolidated Financial Data” for the reconciliation of Adjusted EBITDA to IFRS measures. |
As of September 30, | As of December 31, | |||||||||||||||||||
2010 | ||||||||||||||||||||
Pro Forma | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||
(Unaudited) | ||||||||||||||||||||
(In thousands of $) | ||||||||||||||||||||
Statement of Financial Position Data: | ||||||||||||||||||||
Biological assets | 124,635 | 124,635 | 230,454 | 125,948 | 102,562 | |||||||||||||||
Inventories | 87,718 | 87,718 | 57,902 | 61,221 | 58,036 | |||||||||||||||
Property, plant and equipment, net | 751,418 | 751,418 | 682,878 | 571,419 | 538,017 | |||||||||||||||
Total assets | 1,279,914 | 1,279,914 | 1,269,174 | 1,028,234 | 945,047 | |||||||||||||||
Non-current borrowings | 265,361 | 265,361 | 203,134 | 4,099 | 62,090 | |||||||||||||||
Total borrowings | 403,219 | 403,219 | 306,781 | 228,313 | 159,925 | |||||||||||||||
Equity attributable to equity holders of the parent | 658,594 | 672,035 | 757,076 | 593,019 | 567,674 | |||||||||||||||
Non controlling interest | 13,516 | 75 | 80 | 45,409 | 49,191 |
16
Table of Contents
Nine Months Ended | ||||||||||||||||||||
September 30, | Year Ended December 31, | |||||||||||||||||||
Sales | 2010 | 2009 | 2009 | 2008 | 2007 | |||||||||||||||
(In $ thousands) | ||||||||||||||||||||
Farming Business | 154,282 | 151,530 | 216,016 | 193,038 | 118,081 | |||||||||||||||
Crops | 90,008 | 69,255 | 92,029 | 95,987 | 59,293 | |||||||||||||||
Soybean(1) | 55,028 | 38,548 | 44,116 | 39,025 | 26,829 | |||||||||||||||
Corn | 22,323 | 10,539 | 14,654 | 22,547 | 11,186 | |||||||||||||||
Wheat | 3,621 | 3,697 | 10,218 | 15,407 | 8,310 | |||||||||||||||
Sunflower | 3,499 | 3,073 | 5,517 | 5,615 | 1,096 | |||||||||||||||
Cotton | 2,108 | 9,093 | 11,905 | 5,813 | 6,941 | |||||||||||||||
Other crops(2) | 3,429 | 4,305 | 5,619 | 7,580 | 4,931 | |||||||||||||||
Rice(3) | 45,436 | 54,495 | 69,350 | 56,925 | 26,422 | |||||||||||||||
Coffee | 4,668 | 8,591 | 14,265 | 15,948 | 7,267 | |||||||||||||||
Dairy(4) | 10,043 | 9,172 | 11,894 | 14,821 | 17,841 | |||||||||||||||
Cattle(5) | 4,127 | 10,017 | 28,478 | 9,357 | 7,258 | |||||||||||||||
Sugar, Ethanol and Energy Business(6) | 124,604 | 58,601 | 97,587 | 51,171 | 24,422 | |||||||||||||||
Sugar | 49,979 | 15,483 | 26,143 | 20,495 | 17,133 | |||||||||||||||
Ethanol | 64,536 | 37,725 | 62,811 | 29,385 | 7,289 | |||||||||||||||
Energy | 9,847 | 5,016 | 8,216 | — | — | |||||||||||||||
Total | 278,886 | 210,131 | 313,603 | 244,209 | 142,503 | |||||||||||||||
Land Transformation Business(7) | — | — | 18,839 | 15,201 | 33,114 |
2009/2010 | 2008/2009 | 2007/2008 | ||||||||||
Production | Harvest Year | Harvest Year | Harvest Year | |||||||||
(In thousands, except for electricity) | ||||||||||||
Farming Business | ||||||||||||
Crops (tons)(8) | 524,890 | 317,582 | 351,787 | |||||||||
Soybean (tons) | 241,848 | 96,982 | 90,724 | |||||||||
Corn (tons) | 180,613 | 115,900 | 153,751 | |||||||||
Wheat (tons) | 49,592 | 41,556 | 61,951 | |||||||||
Sunflower (tons) | 17,193 | 22,128 | 15,841 | |||||||||
Cotton (tons) | 1,068 | 9,218 | 15,748 | |||||||||
Other crops (tons)(2) | 34,576 | 31,799 | 13,772 | |||||||||
Rice(9) (tons) | 91,723 | 94,968 | 98,577 | |||||||||
Coffee (tons)(10) | 2,110 | 2,412 | 3,028 |
17
Table of Contents
Nine Months Ended | ||||||||||||||||
September 30, | Year Ended December 31, | |||||||||||||||
2010 | 2009 | 2008 | 2007 | |||||||||||||
Processed rice(11) (tons) | 64,809 | 108,858 | 81,804 | 86,980 | ||||||||||||
Dairy(12) (thousands of liters) | 29,299 | 47,479 | 43,110 | 34,592 | ||||||||||||
Cattle (tons)(5)(13) | 246 | 4,149 | 7,229 | 6,632 | ||||||||||||
Sugar, Ethanol and Energy Business | ||||||||||||||||
Sugar (tons) | 166,001 | 52,968 | (14) | 67,772 | 72,372 | |||||||||||
Ethanol (cubic meters) | 134,086 | 132,492 | (14) | 70,067 | 29,375 | |||||||||||
Energy (MWh exported) | 100,079 | 128,291 | (14) | — | — | |||||||||||
Land Transformation Business (hectares traded) | — | 5,005 | 4,857 | 8,714 |
2009/2010 | 2008/2009 | 2007/2008 | ||||||||||
Planted Area | Harvest Year | Harvest Year | Harvest Year | |||||||||
(In hectares, including second harvest) | ||||||||||||
Farming Business(15) | ||||||||||||
Crops(16) | 168,241 | 139,518 | 107,027 | |||||||||
Soybean | 87,522 | 63,973 | 47,408 | |||||||||
Corn | 27,720 | 20,200 | 24,189 | |||||||||
Wheat | 21,728 | 18,917 | 15,792 | |||||||||
Sunflower | 14,784 | 16,539 | 7,775 | |||||||||
Cotton | 425 | 3,159 | 3,478 | |||||||||
Other crops(2) | 11,501 | 11,348 | 3,930 | |||||||||
Forage | 4,561 | 5,382 | 4,454 | |||||||||
Rice | 18,142 | 17,258 | 14,820 | |||||||||
Coffee(17) | 1,632 | 1,632 | 1,632 | |||||||||
Total Planted Area | 188,015 | 158,468 | 123,480 | |||||||||
Second Harvest Area | 29,119 | 29,150 | 25,352 | |||||||||
Leased Area | 47,709 | 13,645 | 14,264 | |||||||||
Owned Croppable Area(18) | 111,187 | 115,613 | 83,864 | |||||||||
Cattle Area(19) | 87,392 | 106,375 | 124,635 | |||||||||
Total Productive Area | 198,640 | 221,988 | 208,499 |
Nine Months Ended | ||||||||||||||||
September 30, | Year Ended December 31, | |||||||||||||||
2010 | 2009 | 2008 | 2007 | |||||||||||||
Sugar, Ethanol and Energy Business | ||||||||||||||||
Sugarcane plantation | 54,352 | 49,470 | 32,616 | 22,378 | ||||||||||||
Owned land | 9,098 | 9,085 | 3,369 | 1,366 | ||||||||||||
Leased land | 45,267 | 40,385 | 29,247 | 21,012 | ||||||||||||
Land Transformation Business | ||||||||||||||||
Undeveloped/Undermanaged land put into production (hectares) | — | 11,255 | 33,387 | 17,591 |
(1) | Includes soybean, soybean oil and soybean meal. | |
(2) | Includes barley, rapeseed and sorghum and farming services. | |
(3) | Sales of processed rice including rough rice purchased from third parties and processed in our own facilities, rice seeds and services. |
18
Table of Contents
(4) | Sales of raw milk and whole milk powder produced in 2007 pursuant to an agreement with a third party. | |
(5) | In December 2009, we sold 55,543 head of cattle to a third party. The third party currently leases grazing land from us to raise and fatten the cattle, and our payments under the lease are tied to the market price of beef. See “Business — Farming — Cattle Business.” | |
(6) | Includes sales of sugarcane and other miscellaneous items to third parties of $242 thousand and $377 thousand during the first nine months of 2010 and the first nine months of 2009, respectively and $417 thousand and $1,291 thousand during 2009 and 2008, respectively. | |
(7) | Represents capital gains from the sale of land. | |
(8) | Crop production does not include 52,482 tons, 52,960 tons and 53,398 tons of forage produced in the 2009/2010, 2008/2009 and 2007/2008 harvest years, respectively. | |
(9) | Expressed in tons of rough rice produced on owned and leased farms. The rough rice we produce, along with additional rough rice we purchase from third parties, is ultimately processed and constitutes the product sold in respect of the rice business. | |
(10) | As of September 30, 2010, the coffee harvest was ongoing and stood at 91% completion. | |
(11) | Includes rough rice purchased from third parties and processed in our own facilities. Expressed in tons of processed rice (1 ton of processed rice is approximately equivalent to 1.6 tons of rough rice). | |
(12) | Raw milk produced at our dairy farms. | |
(13) | Measured in tons of live weight. Production is the sum of the net increases (or decreases) during a given period in live weight of each head of beef cattle we own. | |
(14) | Year ended December 31, 2009 production accounts for certain of the sugarcane crop harvested in January 2010 due to a delay in the harvesting process which typically concludes in November/December of each year. | |
(15) | Includes hectares planted in the second harvest. | |
(16) | Includes 4,561 hectares, 5,382 hectares and 4,454 hectares used for the production of forage during the 2009/2010, 2008/2009 and 2007/2008 harvest years, respectively. | |
(17) | Reflects the size of our coffee plantations, which are planted only once every 18 to 20 years. | |
(18) | Does not include potential croppable areas being evaluated for transformation. | |
(19) | Comprised of land devoted to raising beef cattle, which is mostly leased to a third party. See “Business — Farming — Cattle Business.” |
19
Table of Contents
20
Table of Contents
• | prevailing world commodity prices, which historically have been subject to significant fluctuations over relatively short periods of time, depending on worldwide demand and supply; | |
• | changes in the agricultural subsidy levels of certain important producers (mainly the U.S. and the European Union (“E.U.”)) and the adoption of other government policies affecting industry market conditions and prices; | |
• | changes to trade barriers of certain important consumer markets (including China, India, the U.S. and the E.U.) and the adoption of other governmental policies affecting industry market conditions and prices; | |
• | changes in government policies for biofuels; | |
• | world inventory levels,i.e., the supply of commodities carried over from year to year; | |
• | climatic conditions and natural disasters in areas where agricultural products are cultivated; | |
• | the production capacity of our competitors; and | |
• | demand for and supply of competing commodities and substitutes. |
21
Table of Contents
22
Table of Contents
23
Table of Contents
24
Table of Contents
25
Table of Contents
26
Table of Contents
27
Table of Contents
28
Table of Contents
29
Table of Contents
30
Table of Contents
31
Table of Contents
32
Table of Contents
• | labor laws; | |
• | economic growth; | |
• | currency fluctuations; | |
• | inflation; | |
• | exchange and capital control policies; | |
• | interest rates; | |
• | liquidity of domestic capital and lending markets; | |
• | monetary policy; | |
• | liquidity and solvency of the financial system; | |
• | developments in trade negotiations through the World Trade Organization or other international organizations; | |
• | environmental regulations; | |
• | tax laws, including royalties and the effect of tax laws on distributions from our subsidiaries; | |
• | restrictions on repatriation of investments and on the transfer of funds abroad; | |
• | expropriation or nationalization; |
33
Table of Contents
• | import/export restrictions or other laws and policies affecting foreign trade and investment; | |
• | price fixing regulations; | |
• | restrictions on land use or agricultural commodity production; and | |
• | other political, social and economic developments, including political, social or economic instability, in or affecting the country where each business is based. |
34
Table of Contents
35
Table of Contents
36
Table of Contents
37
Table of Contents
38
Table of Contents
39
Table of Contents
40
Table of Contents
41
Table of Contents
• | interest rates; | |
• | monetary policy; | |
• | exchange controls and restrictions on remittances abroad; | |
• | currency fluctuations; | |
• | inflation; | |
• | the liquidity of domestic capital and financial markets; | |
• | tax policy; and | |
• | other political, social and economic policies or developments in or affecting Brazil. |
42
Table of Contents
• | the failure of financial analysts to cover our shares after this offering or changes in financial estimates by analysts; |
43
Table of Contents
• | actual or anticipated variations in our operating results; | |
• | changes in financial estimates by financial analysts, or any failure by us to meet or exceed any such estimates, or changes in the recommendations of any financial analysts that elect to follow our common shares or the common shares of our competitors; | |
• | announcements by us or our competitors of significant contracts or acquisitions; | |
• | future sales of our shares; and | |
• | investor perceptions of us and the industries in which we operate. |
44
Table of Contents
45
Table of Contents
• | the judgment of the U.S. court is enforceable (exécutoire) in the United States; | |
• | the U.S. court had jurisdiction over the subject matter leading to the judgment (that is, its jurisdiction was established in compliance both with Luxembourg private international law rules and with the applicable domestic U.S. federal or state jurisdictional rules); | |
• | the U.S. court has applied to the dispute the substantive law which would have been applied by Luxembourg courts; | |
• | the judgment was granted following proceedings where the counterparty had the opportunity to appear, and if it appeared, to present a defense; | |
• | the U.S. court has acted in accordance with its own procedural laws; and | |
• | the judgment of the U.S. court does not contravene Luxembourg international public policy. |
46
Table of Contents
• | References to the terms “Adecoagro S.A.,” “we,” “us,” “our” and “our company” refer to the registrant, Adecoagro S.A., a corporation organized under the form of asociété anonyme under the laws of the Grand Duchy of Luxembourg, and its subsidiaries, except in the case of historical financial and operating information and results where we are referring to IFH LLC and unless otherwise indicated. | |
• | References to “IFH” and “IFH LP” mean International Farmland Holdings, LP, a limited partnership (previously International Farmland Holdings, LLC, or IFH LLC) organized under the laws of Delaware, and its subsidiaries. | |
• | References to “Adecoagro” mean Adecoagro, LP, a limited partnership (previously Adecoagro, LLC) organized under the laws of Delaware, and its subsidiaries. | |
• | References to “$,” “US$,” “U.S. dollars,” “dollars” and “USD” are to U.S. dollars. | |
• | References to “Argentine Pesos,” “Pesos,” “Ps.” or “ARS” are to Argentine Pesos, the official currency of Argentina. | |
• | References to “Brazilian Real,” “Real,” “Reais” or “R$” are to the Brazilian Real, the official currency of Brazil. | |
• | Unless stated otherwise, references to “sales” are to the combined sales of manufactured products and services rendered plus sales of agricultural produce and biological assets. |
47
Table of Contents
48
Table of Contents
49
Table of Contents
50
Table of Contents
51
Table of Contents
Agricultural weight units and measures | ||||
1 metric ton | 1,000 kg | 1.102 U.S. (short) tons | ||
1 cubic meter | 1,000 liters | |||
1 kilogram (kg) | 2.20462 pounds | |||
1 pound | 0.45359 kg | |||
1 acre | 0.40469 hectares | |||
1 hectare (ha) | 2.47105 acres | |||
Soybean and Wheat | ||||
1 bushel of soybean | 60 pounds | 27.2155 kg | ||
1 bag of soybean | 60 kg | 2.20462 bushels | ||
1 bushel/acre | 67.25 kg/ha | |||
1.00 U.S. dollar/bushel | 2.2046 U.S. dollar/bag | |||
Corn | ||||
1 bushel of corn | 56 pounds | 25.4012 kg | ||
1 bag of corn | 60 kg | 2.36210 bushels | ||
1 bushel/acre | 62.77 kg/ha | |||
1.00 U.S. dollar/bushel | 2.3621 U.S. dollar/bag | |||
Cotton | ||||
1 bale | 480 pounds | 217.72 kg | ||
1 arroba | 14.68 kg | |||
Coffee | ||||
1 bag of coffee | 60 kg | 132.28 pounds | ||
1.00 U.S.$ cents/pound | 1.3228 U.S. dollar/bag | |||
Dairy | ||||
1 liter | 0.264 gallons | 2.273 pounds | ||
1 gallon | 3.785 liters | 8.604 pounds | ||
1 lbs | 0.440 liters | 0.116 gallons | ||
1.00 U.S. dollar/liter | 43.995 U.S. dollar/cwt | 3.785 U.S. dollar/gallon | ||
1.00 U.S. dollar/cwt | 0.023 U.S. dollar/liter | 0.086 U.S. dollar/gallon | ||
1.00 U.S. dollar/gallon | 0.264 U.S. dollar/liter | 11.622 U.S. dollar/cwt | ||
Sugar & Ethanol | ||||
1 kg of TRS equivalent | 0.95 kg of VHP Sugar | 0.59 liters of Hydrated Ethanol | ||
1.00 U.S.$ cents/pound | 22.04 U.S. dollar/ton |
52
Table of Contents
53
Table of Contents
• | our business prospects and future results of operations; | |
• | the implementation of our business strategy, including our development of the Ivinhema project; | |
• | our plans relating to acquisitions, joint ventures, strategic alliances or divestitures; | |
• | the implementation of our financing strategy and capital expenditure plan; | |
• | the maintenance of our relationships with customers; | |
• | the competitive nature of the industries in which we operate; | |
• | the cost and availability of financing; | |
• | future demand for the commodities we produce; | |
• | international prices for commodities; | |
• | the condition of our land holdings; | |
• | the development of the logistics and infrastructure for transportation of our products in the countries where we operate; | |
• | the performance of the South American and world economies; | |
• | weather and other natural phenomena; | |
• | the relative value of the Brazilian Real, the Argentine Peso, and the Uruguayan Peso compared to other currencies; | |
• | developments in, or changes to, the laws, regulations and governmental policies governing our business, including environmental laws and regulations; and | |
• | the factors discussed under the section entitled “Risk Factors” in this prospectus. |
54
Table of Contents
55
Table of Contents
56
Table of Contents
• | The sale of 21,428,571 common shares in this offering at an assumed initial public offering price of $14.00, the midpoint of the estimated price range shown on the cover page of the prospectus, after deducting underwriting discounts and estimated offering expenses; | |
• | The sale of 7,440,476 common shares in the Al Gharrafa Transaction at an assumed price of $13.44 per share, reflecting the price paid by the underwriters in this offering assuming the mid-point of the range set forth on the cover page of this prospectus; and | |
• | The application of the net proceeds as described in “Use of Proceeds,” |
As of September 30, 2010 | ||||||||||||
Pro Forma as | ||||||||||||
Actual | Pro Forma | Adjusted | ||||||||||
(Unaudited) | (Unaudited) | |||||||||||
(In millions of $) | ||||||||||||
Current borrowings | ||||||||||||
Bank borrowings | 137.4 | 137.4 | 137.4 | |||||||||
Obligations under finance leases | 0.5 | 0.5 | 0.5 | |||||||||
Total current borrowings | 137.9 | 137.9 | 137.9 | |||||||||
Non-current borrowings | ||||||||||||
Bank borrowings | 265.3 | 265.3 | 265.3 | |||||||||
Obligations under finance leases | 0.1 | 0.1 | 0.1 | |||||||||
Total non-current borrowings | 265.4 | 265.4 | 265.4 | |||||||||
Total borrowings | 403.2 | 403.2 | 403.2 | |||||||||
Equity attributable to equity holders of the parent | ||||||||||||
Members’ units | 697.3 | — | — | |||||||||
Share capital(1) | — | 120.0 | 163.3 | |||||||||
Share premium(2) | — | 563.3 | 902.9 | |||||||||
Cumulative translation adjustment | 5.6 | 5.5 | 5.5 | |||||||||
Equity-settled compensation | 13.6 | 13.3 | 13.3 | |||||||||
Retained earnings | (44.5 | ) | (43.6 | ) | (43.6 | ) | ||||||
Total equity attributable to equity holders of the parent | 672.4 | 658.6 | 1,041.4 | |||||||||
Total capitalization(3) | 1,075.6 | 1,061.8 | 1,444.6 | |||||||||
(1) | Consists of 79,999,985 shares, $1.50 par value per share or 108,869,032 shares, $1.50 par value, as adjusted. | |
(2) | $7.041792 premium per share or 8.293584 premium per share, as adjusted. | |
(3) | Total capitalization includes total borrowings plus total equity attributable to equity holders of the parent. |
57
Table of Contents
Assumed offering price per common share | $ | 14.0 | ||
Pro forma net tangible book value per common share as of September 30, 2010 | $ | 7.89 | ||
Increase in pro forma net tangible book value per common share attributable to new investors | $ | 1.43 | ||
Pro forma net tangible book value per common share after the offering and the Al Gharrafa Transaction | $ | 9.32 | ||
Dilution per common share to new investors | $ | 4.68 | ||
Percentage of dilution in pro forma net tangible book value per common share | 33 | % |
58
Table of Contents
Exchange Rate | ||||||||||||||||
High | Low | Average | Period End | |||||||||||||
(Peso per dollar) | ||||||||||||||||
Year Ended December 31, | ||||||||||||||||
2006 | 3.11 | 3.03 | 3.07 | 3.07 | ||||||||||||
2007 | 3.18 | 3.06 | 3.11 | 3.15 | ||||||||||||
2008 | 3.45 | 3.01 | 3.16 | 3.45 | ||||||||||||
2009 | 3.85 | 3.45 | 3.73 | 3.80 | ||||||||||||
2010 | 3.99 | 3.79 | 3.91 | 3.98 | ||||||||||||
Month Ended | ||||||||||||||||
July 31, 2010 | 3.94 | 3.93 | 3.93 | 3.94 | ||||||||||||
August 31, 2010 | 3.95 | 3.93 | 3.94 | 3.95 | ||||||||||||
September 30, 2010 | 3.97 | 3.94 | 3.95 | 3.96 | ||||||||||||
October 31, 2010 | 3.96 | 3.95 | 3.96 | 3.96 | ||||||||||||
November 30, 2010 | 3.98 | 3.96 | 3.97 | 3.98 | ||||||||||||
December 31, 2010 | 3.99 | 3.97 | 3.98 | 3.98 |
59
Table of Contents
Exchange Rate | ||||||||||||||||
High | Low | Average | Period End | |||||||||||||
(Real per dollar) | ||||||||||||||||
Year Ended December 31, | ||||||||||||||||
2006 | 2.37 | 2.06 | 2.18 | 2.14 | ||||||||||||
2007 | 2.16 | 1.73 | 1.95 | 1.77 | ||||||||||||
2008 | 2.50 | 1.56 | 1.84 | 2.34 | ||||||||||||
2009 | 2.42 | 1.70 | 1.99 | 1.74 | ||||||||||||
2010 | 1.88 | 1.66 | 1.76 | 1.67 | ||||||||||||
Month Ended | ||||||||||||||||
July 31, 2010 | 1.80 | 1.75 | 1.77 | 1.76 | ||||||||||||
August 31, 2010 | 1.77 | 1.75 | 1.76 | 1.76 | ||||||||||||
September 30, 2010 | 1.74 | 1.69 | 1.72 | 1.69 | ||||||||||||
October 31, 2010 | 1.71 | 1.66 | 1.68 | 1.70 | ||||||||||||
November 30, 2010 | 1.73 | 1.68 | 1.71 | 1.72 | ||||||||||||
December 31, 2010 | 1.71 | 1.67 | 1.69 | 1.67 |
60
Table of Contents
61
Table of Contents
For the Nine Months Ended | ||||||||||||||||||||||||||||||||
September 30, | For the Year Ended December 31, | |||||||||||||||||||||||||||||||
2010 Pro | 2009 Pro | |||||||||||||||||||||||||||||||
Forma | 2010 | 2009 | Forma | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||||||||||||||||||
(In thousands of $) | ||||||||||||||||||||||||||||||||
Statement of Income Data: | ||||||||||||||||||||||||||||||||
Sales of manufactured products and services rendered | 173,985 | 173,917 | 125,304 | 184,796 | 183,386 | 117,173 | 69,807 | 47,145 | ||||||||||||||||||||||||
Cost of manufactured products sold and services rendered | (137,219 | ) | (137,169 | ) | (106,407 | ) | (180,965 | ) | (180,083 | ) | (105,583 | ) | (63,519 | ) | (29,016 | ) | ||||||||||||||||
Gross profit from manufacturing activities | 36,766 | 36,748 | 18,897 | 3,831 | 3,303 | 11,590 | 6,288 | 18,129 | ||||||||||||||||||||||||
Sale of agricultural produce and biological assets | 104,969 | 104,969 | 84,827 | 131,391 | 130,217 | 127,036 | 72,696 | 37,370 | ||||||||||||||||||||||||
Cost of agricultural produce sold and direct agricultural selling expenses(1) | (104,969 | ) | (104,969 | ) | (84,827 | ) | (131,391 | ) | (130,217 | ) | (127,036 | ) | (72,696 | ) | (37,370 | ) | ||||||||||||||||
Changes in fair value of biological assets and agricultural produce | (76,759 | ) | (76,967 | ) | 25,724 | 72,097 | 71,668 | 61,000 | 26,935 | (66 | ) | |||||||||||||||||||||
Changes in net realizable value of agricultural produce after harvest | 7,311 | 7,311 | 8,383 | 12,786 | 12,787 | 1,261 | 12,746 | 3,160 | ||||||||||||||||||||||||
Gross (loss)/profit from agricultural activities | (69,448 | ) | (69,656 | ) | 34,107 | 84,883 | 84,455 | 62,261 | 39,681 | 3,094 | ||||||||||||||||||||||
Margin on manufacturing and agricultural activities before operating expenses | (32,682 | ) | (32,908 | ) | 53,004 | 88,714 | 87,758 | 73,851 | 45,969 | 21,223 | ||||||||||||||||||||||
General and administrative expenses | (41,941 | ) | (41,573 | ) | (41,780 | ) | (52,929 | ) | (52,393 | ) | (45,633 | ) | (33,765 | ) | (13,147 | ) | ||||||||||||||||
Selling expenses | (32,844 | ) | (32,836 | ) | (20,603 | ) | (31,764 | ) | (31,169 | ) | (24,496 | ) | (14,762 | ) | (8,578 | ) | ||||||||||||||||
Other operating income, net | 8,056 | 8,122 | (4,562 | ) | 13,335 | 13,071 | 17,323 | 2,238 | 9,287 | |||||||||||||||||||||||
Excess of fair value of net assets acquired over cost | — | — | — | — | — | 1,227 | 28,979 | — | ||||||||||||||||||||||||
Share of loss of joint ventures | (220 | ) | (220 | ) | (306 | ) | (294 | ) | (294 | ) | (838 | ) | (553 | ) | — | |||||||||||||||||
(Loss)/profit from operations before financing and taxation | (99,631 | ) | (99,415 | ) | (14,247 | ) | 17,062 | 16,973 | 21,434 | 28,106 | 8,785 | |||||||||||||||||||||
Finance income | 9,364 | 9,364 | 7,002 | 11,553 | 11,553 | 2,552 | 12,925 | 2,595 | ||||||||||||||||||||||||
Finance costs | (29,745 | ) | (28,843 | ) | (21,814 | ) | (36,115 | ) | (34,216 | ) | (50,860 | ) | (12,458 | ) | (4,490 | ) | ||||||||||||||||
Financial results, net | (20,381 | ) | (19,479 | ) | (14,812 | ) | (24,562 | ) | (22,663 | ) | (48,308 | ) | 467 | (1,895 | ) | |||||||||||||||||
(Loss)/profit before income tax | (120,012 | ) | (118,894 | ) | (29,059 | ) | (7,500 | ) | (5,690 | ) | (26,874 | ) | 28,573 | 6,890 | ||||||||||||||||||
Income tax benefit/(expense) | 29,839 | 29,347 | 11,231 | 5,849 | 5,415 | 10,449 | 59 | (1,379 | ) | |||||||||||||||||||||||
(Loss)/profit for the year | (90,173 | ) | (89,547 | ) | (17,828 | ) | (1,651 | ) | (275 | ) | (16,425 | ) | 28,632 | 5,511 | ||||||||||||||||||
Attributable to: | ||||||||||||||||||||||||||||||||
Equity holders of the parent | (88,367 | ) | (89,545 | ) | (17,825 | ) | (1,608 | ) | (265 | ) | (19,334 | ) | 29,170 | 5,511 | ||||||||||||||||||
Non controlling interest | (1,805 | ) | (2 | ) | (3 | ) | (43 | ) | (10 | ) | 2,909 | (538 | ) | — | ||||||||||||||||||
(Losses)/Earnings per share/member unit for (loss)/profit attributable to the equity holders of the parent during the year: | ||||||||||||||||||||||||||||||||
Basic | (1.105 | ) | (0.188 | ) | (0.039 | ) | (0.020 | ) | (0.001 | ) | (0.047 | ) | 0.101 | 0.026 | ||||||||||||||||||
Diluted | N/A | N/A | N/A | N/A | N/A | N/A | 0.098 | 0.025 |
62
Table of Contents
For the Nine Months Ended | ||||||||||||||||||||||||
September 30, | For the Year Ended December 31, | |||||||||||||||||||||||
2010 | 2009 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Cash Flow Data: | ||||||||||||||||||||||||
Net cash used in operating activities | (27,089 | ) | (80,870 | ) | (86,299 | ) | (52,453 | ) | (68,041 | ) | (26,160 | ) | ||||||||||||
Net cash used in investing activities | (77,473 | ) | (55,798 | ) | (73,894 | ) | (157,489 | ) | (246,905 | ) | (29,185 | ) | ||||||||||||
Net cash generated from financing activities | 85,786 | 142,941 | 156,047 | 213,200 | 292,353 | 150,626 | ||||||||||||||||||
Other Financial Data: | ||||||||||||||||||||||||
Adjusted Segment EBITDA (unaudited)(2) | ||||||||||||||||||||||||
Crops | 24,845 | 10,965 | 21,120 | 34,040 | 27,216 | 7,333 | ||||||||||||||||||
Rice | 579 | 11,578 | 13,244 | 13,966 | 2,014 | 2,782 | ||||||||||||||||||
Dairy | 1,543 | (365 | ) | 484 | (2,159 | ) | 1,051 | (1,646 | ) | |||||||||||||||
Coffee | 90 | (3,034 | ) | (3,550 | ) | (1,693 | ) | (3,440 | ) | 1,883 | ||||||||||||||
Cattle | 2,807 | (2,099 | ) | 1,525 | (761 | ) | (1,188 | ) | (514 | ) | ||||||||||||||
Farming subtotal | 29,864 | 17,045 | 32,823 | 43,393 | 25,653 | 9,837 | ||||||||||||||||||
Ethanol, sugar and energy | 26,758 | (23,800 | ) | (26,903 | ) | (6,979 | ) | (10,146 | ) | (880 | ) | |||||||||||||
Land transformation | — | — | 18,839 | 15,201 | 33,114 | 7,623 | ||||||||||||||||||
Corporate | (15,649 | ) | (17,120 | ) | (22,262 | ) | (23,077 | ) | (11,435 | ) | (5,629 | ) | ||||||||||||
Adjusted Consolidated EBITDA | 40,973 | (23,875 | ) | 2,497 | 28,539 | 37,186 | 10,951 |
(1) | Consists of two components: (i) the cost of our sold agricultural produce and/or biological assets as appropriate plus (ii) in the case of agricultural produce, the direct costs of selling, including but not limited to, transportation costs, export taxes and other levies. The cost of our agricultural produce sold represents the recognition as an expense of our agricultural produce held in inventory valued at net realizable value. The cost of our biological assets and/or agricultural produce sold at the point of harvest represents the recognition as an expense of our biological assets and/or agricultural produce measured at fair value less costs to sell, generally representing the applicable quoted market price at the time of sale. Accordingly, the line item “Sales of agricultural produce and biological assets” is equal to the line item “Cost of agricultural produce plus direct agricultural selling expenses.” See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates — Biological Assets and Agricultural Produce.” | |
(2) | See “Presentation of Financial and Other Information” for the definition of Adjusted EBITDA and reconciliation table below. |
63
Table of Contents
As of September 30, 2010 | ||||||||||||||||||||||||||||||||||||||||
Sugar, | ||||||||||||||||||||||||||||||||||||||||
Ethanol | Land | |||||||||||||||||||||||||||||||||||||||
Farming | and | Trans- | ||||||||||||||||||||||||||||||||||||||
Crops | Rice | Dairy | Coffee | Cattle | Subtotal | Energy | formation | Corporate | Total | |||||||||||||||||||||||||||||||
(In thousands of $) | ||||||||||||||||||||||||||||||||||||||||
Adjusted EBITDA by Segment (unaudited) | ||||||||||||||||||||||||||||||||||||||||
Profit/(Loss) from Operations Before Financing and Taxation | 23,772 | (926 | ) | 4,243 | (954 | ) | 2,843 | 28,978 | (112,744 | ) | — | (15,649 | ) | (99,415 | ) | |||||||||||||||||||||||||
Initial recognition and changes in fair value of “long term” biological assets(1) (unrealized) | — | — | (2,974 | ) | 884 | (343 | ) | (2,433 | ) | 117,120 | — | — | 114,687 | |||||||||||||||||||||||||||
Adjusted Segment EBIT (unaudited)(2) | 23,772 | (926 | ) | 1,269 | (70 | ) | 2,500 | 26,545 | 4,376 | — | (15,649 | ) | 15,272 | |||||||||||||||||||||||||||
Depreciation and amortization | 1,073 | 1,505 | 274 | 160 | 307 | 3,319 | 22,382 | — | — | 25,701 | ||||||||||||||||||||||||||||||
Adjusted Segment EBITDA (unaudited)(2) | 24,845 | 579 | 1,543 | 90 | 2,807 | 29,864 | 26,758 | — | (15,649 | ) | 40,973 | |||||||||||||||||||||||||||||
Reconciliation to Profit/(Loss) | ||||||||||||||||||||||||||||||||||||||||
Profit/(Loss) for the period | (89,547 | ) | ||||||||||||||||||||||||||||||||||||||
Initial recognition and changes in fair value of “long term” biological assets(1) (unrealized) | 114,687 | |||||||||||||||||||||||||||||||||||||||
Income tax (benefit)/expense | (29,347 | ) | ||||||||||||||||||||||||||||||||||||||
Interest expense, net | 21,182 | |||||||||||||||||||||||||||||||||||||||
Foreign exchange, net | (2,771 | ) | ||||||||||||||||||||||||||||||||||||||
Other financial expenses, net | 1,068 | |||||||||||||||||||||||||||||||||||||||
Adjusted Consolidated EBIT (unaudited)(2) | 15,272 | |||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 25,701 | |||||||||||||||||||||||||||||||||||||||
Adjusted Consolidated EBITDA (unaudited)(2) | 40,973 |
64
Table of Contents
As of September 30, 2009 | ||||||||||||||||||||||||||||||||||||||||
Sugar, | ||||||||||||||||||||||||||||||||||||||||
Ethanol | Land | |||||||||||||||||||||||||||||||||||||||
Farming | and | Trans- | ||||||||||||||||||||||||||||||||||||||
Crops | Rice | Dairy | Coffee | Cattle | Subtotal | Energy | Formation | Corporate | Total | |||||||||||||||||||||||||||||||
(In thousands of $) | ||||||||||||||||||||||||||||||||||||||||
Adjusted EBITDA by Segment (unaudited) | ||||||||||||||||||||||||||||||||||||||||
Profit/(Loss) from Operations Before Financing and Taxation | 9,897 | 10,353 | (784 | ) | (12,885 | ) | (2,165 | ) | 4,416 | (1,543 | ) | — | (17,120 | ) | (14,247 | ) | ||||||||||||||||||||||||
Initial recognition and changes in fair value of “long term” biological assets(1) (unrealized) | — | — | 109 | 9,200 | (197 | ) | 9,112 | (36,186 | ) | — | — | (27,074 | ) | |||||||||||||||||||||||||||
Adjusted Segment EBIT (unaudited)(2) | 9,897 | 10,353 | (675 | ) | (3,685 | ) | (2,362 | ) | 13,528 | (37,729 | ) | — | (17,120 | ) | (41,321 | ) | ||||||||||||||||||||||||
Depreciation and amortization | 1,068 | 1,225 | 310 | 651 | 263 | 3,517 | 13,929 | — | — | 17,446 | ||||||||||||||||||||||||||||||
Adjusted Segment EBITDA (unaudited)(2) | 10,965 | 11,578 | (365 | ) | (3,034 | ) | (2,099 | ) | 17,045 | (23,800 | ) | — | (17,120 | ) | (23,875 | ) | ||||||||||||||||||||||||
Reconciliation to Profit/(Loss) | ||||||||||||||||||||||||||||||||||||||||
Profit/(Loss) for the period | (17,828 | ) | ||||||||||||||||||||||||||||||||||||||
Initial recognition and changes in fair value of “long term” biological assets(1) (unrealized) | (27,074 | ) | ||||||||||||||||||||||||||||||||||||||
Income tax (benefit)/expense | (11,231 | ) | ||||||||||||||||||||||||||||||||||||||
Interest expense, net | 16,567 | |||||||||||||||||||||||||||||||||||||||
Foreign exchange, net | (5,665 | ) | ||||||||||||||||||||||||||||||||||||||
Other financial expenses, net | 3,910 | |||||||||||||||||||||||||||||||||||||||
Adjusted Consolidated EBIT (unaudited)(2) | (41,321 | ) | ||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 17,446 | |||||||||||||||||||||||||||||||||||||||
Adjusted Consolidated EBITDA (unaudited)(2) | (23,875 | ) |
65
Table of Contents
As of December 31, 2009 | ||||||||||||||||||||||||||||||||||||||||
Sugar, | ||||||||||||||||||||||||||||||||||||||||
Ethanol | Land | |||||||||||||||||||||||||||||||||||||||
Farming | and | Trans- | ||||||||||||||||||||||||||||||||||||||
Crops | Rice | Dairy | Coffee | Cattle | Subtotal | Energy | formation | Corporate | Total | |||||||||||||||||||||||||||||||
(In thousands of $) | ||||||||||||||||||||||||||||||||||||||||
Adjusted EBITDA by Segment (unaudited) | ||||||||||||||||||||||||||||||||||||||||
Profit/(Loss) from Operations Before Financing and Taxation | 19,054 | 11,792 | 113 | (16,782 | ) | 1,299 | 15,476 | 4,920 | 18,839 | (22,262 | ) | 16,973 | ||||||||||||||||||||||||||||
Initial recognition and changes in fair value of “long term” biological assets(1) (unrealized) | — | — | (32 | ) | 12,662 | (127 | ) | 12,503 | (57,335 | ) | — | — | (44,832 | ) | ||||||||||||||||||||||||||
Adjusted Segment EBIT (unaudited)(2) | 19,054 | 11,792 | 81 | (4,120 | ) | 1,172 | 27,979 | (52,415 | ) | 18,839 | (22,262 | ) | (27,859 | ) | ||||||||||||||||||||||||||
Depreciation and amortization | 2,066 | 1,452 | 403 | 570 | 353 | 4,844 | 25,512 | — | — | 30,356 | ||||||||||||||||||||||||||||||
Adjusted Segment EBITDA (unaudited)(2) | 21,120 | 13,244 | 484 | (3,550 | ) | 1,525 | 32,823 | (26,903 | ) | 18,839 | (22,262 | ) | 2,497 | |||||||||||||||||||||||||||
Reconciliation to Profit/(Loss) | ||||||||||||||||||||||||||||||||||||||||
Profit/(Loss) for the period | (275 | ) | ||||||||||||||||||||||||||||||||||||||
Initial recognition and changes in fair value of “long term” biological assets(1) (unrealized) | (44,832 | ) | ||||||||||||||||||||||||||||||||||||||
Income tax (benefit)/expense | (5,415 | ) | ||||||||||||||||||||||||||||||||||||||
Interest expense, net | 27,750 | |||||||||||||||||||||||||||||||||||||||
Foreign exchange, net | (10,903 | ) | ||||||||||||||||||||||||||||||||||||||
Other financial expenses, net | 5,816 | |||||||||||||||||||||||||||||||||||||||
Adjusted Consolidated EBIT (unaudited)(2) | (27,859 | ) | ||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 30,356 | |||||||||||||||||||||||||||||||||||||||
Adjusted Consolidated EBITDA (unaudited)(2) | 2,497 |
66
Table of Contents
As of December 31, 2008 | ||||||||||||||||||||||||||||||||||||||||
Sugar, | ||||||||||||||||||||||||||||||||||||||||
Ethanol | Land | |||||||||||||||||||||||||||||||||||||||
Farming | and | Trans- | ||||||||||||||||||||||||||||||||||||||
Crops | Rice | Dairy | Coffee | Cattle | Subtotal | Energy | formation | Corporate | Total | |||||||||||||||||||||||||||||||
(In thousands of $) | ||||||||||||||||||||||||||||||||||||||||
Adjusted EBITDA by Segment (unaudited) | ||||||||||||||||||||||||||||||||||||||||
Profit/(Loss) from Operations Before Financing and Taxation | 27,523 | 13,256 | (667 | ) | 864 | 1,289 | 42,265 | (12,955 | ) | 15,201 | (23,077 | ) | 21,434 | |||||||||||||||||||||||||||
Initial recognition and changes in fair value of “long term” biological assets(1) (unrealized) | — | — | (1,840 | ) | (3,355 | ) | (2,567 | ) | (7,762 | ) | (13,448 | ) | — | — | (21,210 | ) | ||||||||||||||||||||||||
Adjusted Segment EBIT (unaudited)(2) | 27,523 | 13,256 | (2,507 | ) | (2,491 | ) | (1,278 | ) | 34,503 | (26,403 | ) | 15,201 | (23,077 | ) | 224 | |||||||||||||||||||||||||
Depreciation and amortization | 6,517 | 710 | 348 | 798 | 517 | 8,890 | 19,424 | — | — | 28,314 | ||||||||||||||||||||||||||||||
Adjusted Segment EBITDA (unaudited)(2) | 34,040 | 13,966 | (2,159 | ) | (1,693 | ) | (761 | ) | 43,393 | (6,979 | ) | 15,201 | (23,077 | ) | 28,538 | |||||||||||||||||||||||||
Reconciliation to Profit/(Loss) | ||||||||||||||||||||||||||||||||||||||||
Profit/(Loss) for the period | (16,425 | ) | ||||||||||||||||||||||||||||||||||||||
Initial recognition and changes in fair value of “long term” biological assets(1) (unrealized) | (21,210 | ) | ||||||||||||||||||||||||||||||||||||||
Income tax (benefit)/expense | (10,449 | ) | ||||||||||||||||||||||||||||||||||||||
Interest expense, net | 21,830 | |||||||||||||||||||||||||||||||||||||||
Foreign exchange, net | 24,932 | |||||||||||||||||||||||||||||||||||||||
Other financial expenses, net | 1,546 | |||||||||||||||||||||||||||||||||||||||
Adjusted Consolidated EBIT (unaudited)(2) | 224 | |||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 28,314 | |||||||||||||||||||||||||||||||||||||||
Adjusted Consolidated EBITDA (unaudited)(2) | 28,538 |
67
Table of Contents
As of December 31, 2007 | ||||||||||||||||||||||||||||||||||||||||
Sugar, | ||||||||||||||||||||||||||||||||||||||||
Ethanol | Land | |||||||||||||||||||||||||||||||||||||||
Farming | and | Trans- | ||||||||||||||||||||||||||||||||||||||
Crops | Rice | Dairy | Coffee | Cattle | Subtotal | Energy | formation | Corporate | Total | |||||||||||||||||||||||||||||||
(In thousands of $) | ||||||||||||||||||||||||||||||||||||||||
Adjusted EBITDA by Segment (unaudited) | ||||||||||||||||||||||||||||||||||||||||
Profit/(Loss) from Operations Before Financing and Taxation | 25,729 | 1,363 | 1,720 | 2,809 | 2,184 | 33,805 | (27,378 | ) | 33,114 | (11,435 | ) | 28,106 | ||||||||||||||||||||||||||||
Initial recognition and changes in fair value of “long term” biological assets(1) (unrealized) | — | — | (1,009 | ) | (6,571 | ) | (3,814 | ) | (11,394 | ) | 11,117 | — | — | (277 | ) | |||||||||||||||||||||||||
Adjusted Segment EBIT (unaudited)(2) | 25,729 | 1,363 | 711 | (3,762 | ) | (1,630 | ) | 22,411 | (16,261 | ) | 33,114 | (11,435 | ) | 27,829 | ||||||||||||||||||||||||||
Depreciation and amortization | 1,487 | 651 | 340 | 322 | 442 | 3,242 | 6,115 | — | — | 9,357 | ||||||||||||||||||||||||||||||
Adjusted Segment EBITDA (unaudited)(2) | 27,216 | 2,014 | 1,051 | (3,440 | ) | (1,188 | ) | 25,653 | (10,146 | ) | 33,114 | (11,435 | ) | 37,186 | ||||||||||||||||||||||||||
Reconciliation to Profit/(Loss) | ||||||||||||||||||||||||||||||||||||||||
Profit/(Loss) for the period | 28,632 | |||||||||||||||||||||||||||||||||||||||
Initial recognition and changes in fair value of “long term” biological assets(1) (unrealized) | (277 | ) | ||||||||||||||||||||||||||||||||||||||
Income tax (benefit)/expense | (59 | ) | ||||||||||||||||||||||||||||||||||||||
Interest expense, net | 4,094 | |||||||||||||||||||||||||||||||||||||||
Foreign exchange, net | (5,971 | ) | ||||||||||||||||||||||||||||||||||||||
Other financial expenses, net | 1,410 | |||||||||||||||||||||||||||||||||||||||
Adjusted Consolidated EBIT (unaudited)(2) | 27,829 | |||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 9,357 | |||||||||||||||||||||||||||||||||||||||
Adjusted Consolidated EBITDA (unaudited)(2) | 37,186 |
68
Table of Contents
As of December 31, 2006 | ||||||||||||||||||||||||||||||||||||||||
Sugar, | ||||||||||||||||||||||||||||||||||||||||
Ethanol | Land | |||||||||||||||||||||||||||||||||||||||
Farming | and | Trans- | ||||||||||||||||||||||||||||||||||||||
Crops | Rice | Dairy | Coffee | Cattle | Subtotal | Energy | formation | Corporate | Total | |||||||||||||||||||||||||||||||
(In thousands of $) | ||||||||||||||||||||||||||||||||||||||||
Adjusted EBITDA by Segment (unaudited) | ||||||||||||||||||||||||||||||||||||||||
Profit/(Loss) from Operations Before Financing and Taxation | 6,436 | 2,632 | 325 | (625 | ) | 264 | 9,032 | (2,241 | ) | 7,623 | (5,629 | ) | 8,785 | |||||||||||||||||||||||||||
Initial recognition and changes in fair value of “long term” biological assets(1) (unrealized) | — | — | (2,289 | ) | 2,431 | (871 | ) | (730 | ) | (2,852 | ) | — | — | (3,582 | ) | |||||||||||||||||||||||||
Adjusted Segment EBIT (unaudited)(2) | 6,436 | 2,632 | (1,964 | ) | 1,806 | (607 | ) | 8,302 | (5,093 | ) | 7,623 | (5,629 | ) | 5,203 | ||||||||||||||||||||||||||
Depreciation and amortization | 897 | 150 | 318 | 77 | 93 | 1,535 | 4,213 | — | — | 5,748 | ||||||||||||||||||||||||||||||
Adjusted Segment EBITDA (Unaudited)(2) | 7,333 | 2,782 | (1,646 | ) | 1,883 | (514 | ) | 9,837 | (880 | ) | 7,623 | (5,629 | ) | 10,951 | ||||||||||||||||||||||||||
Reconciliation to Profit/(Loss) | ||||||||||||||||||||||||||||||||||||||||
Profit/(Loss) for the period | 5,511 | |||||||||||||||||||||||||||||||||||||||
Initial recognition and changes in fair value of “long term” biological assets(1) (unrealized) | (3,582 | ) | ||||||||||||||||||||||||||||||||||||||
Income tax (benefit)/expense | 1,379 | |||||||||||||||||||||||||||||||||||||||
Interest expense, net | 1,754 | |||||||||||||||||||||||||||||||||||||||
Foreign exchange, net | (565 | ) | ||||||||||||||||||||||||||||||||||||||
Other financial expenses, net | 706 | |||||||||||||||||||||||||||||||||||||||
Adjusted Consolidated EBIT (unaudited)(2) | 5,203 | |||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 5,748 | |||||||||||||||||||||||||||||||||||||||
Adjusted Consolidated EBITDA (unaudited)(2) | 10,951 |
(1) | Long-term biological assets are sugarcane, coffee, dairy and cattle. | |
(2) | See “Presentation of Financial and Other Information” for the definitions of Adjusted EBIT and EBITDA. |
As of September 30, | As of December 31, | |||||||||||||||||||||||
2010 Pro | ||||||||||||||||||||||||
Forma | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||
(In thousands of $) | ||||||||||||||||||||||||
Statement of Financial Position Data: | ||||||||||||||||||||||||
Biological assets | 124,635 | 124,635 | 230,454 | 125,948 | 102,562 | 40,900 | ||||||||||||||||||
Inventories | 87,718 | 87,718 | 57,902 | 61,221 | 58,036 | 23,146 | ||||||||||||||||||
Property, plant and equipment, net | 751,418 | 751,418 | 682,878 | 571,419 | 538,017 | 226,404 | ||||||||||||||||||
Total assets | 1,279,914 | 1,279,914 | 1,269,174 | 1,028,234 | 945,047 | 438,083 | ||||||||||||||||||
Non-current borrowings | 265,361 | 265,361 | 203,134 | 4,099 | 62,090 | 9,276 | ||||||||||||||||||
Total borrowings | 403,219 | 403,219 | 306,781 | 228,313 | 159,925 | 37,875 | ||||||||||||||||||
Equity attributable to equity holders of the parent | 658,594 | 672,035 | 757,076 | 593,019 | 567,674 | 319,605 | ||||||||||||||||||
Non controlling interest | 13,516 | 75 | 80 | 45,409 | 49,191 | — |
69
Table of Contents
Nine Months Ended | ||||||||||||||||||||||||
September 30, | Year Ended December 31, | |||||||||||||||||||||||
Sales | 2010 | 2009 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||
(In $ thousands) | ||||||||||||||||||||||||
Farming Business | 154,282 | 151,530 | 216,016 | 193,038 | 118,081 | 54,072 | ||||||||||||||||||
Crops | 90,008 | 69,255 | 92,029 | 95,987 | 59,293 | 23,373 | ||||||||||||||||||
Soybean(1) | 55,028 | 38,548 | 44,116 | 39,025 | 26,829 | 12,071 | ||||||||||||||||||
Corn | 22,323 | 10,539 | 14,654 | 22,547 | 11,186 | 3,114 | ||||||||||||||||||
Wheat | 3,621 | 3,697 | 10,218 | 15,407 | 8,310 | 6,356 | ||||||||||||||||||
Sunflower | 3,499 | 3,073 | 5,517 | 5,615 | 1,096 | 185 | ||||||||||||||||||
Cotton | 2,108 | 9,093 | 11,905 | 5,813 | 6,941 | 732 | ||||||||||||||||||
Other crops(2) | 3,429 | 4,305 | 5,619 | 7,580 | 4,931 | 2,885 | ||||||||||||||||||
Rice(3) | 45,436 | 54,495 | 69,350 | 56,925 | 26,422 | 5,935 | ||||||||||||||||||
Coffee | 4,668 | 8,591 | 14,265 | 15,948 | 7,267 | 3,218 | ||||||||||||||||||
Dairy(4) | 10,043 | 9,172 | 11,894 | 14,821 | 17,841 | 16,523 | ||||||||||||||||||
Cattle(5) | 4,127 | 10,017 | 28,478 | 9,357 | 7,258 | 3,052 | ||||||||||||||||||
Sugar, Ethanol and Energy Business(6) | 124,604 | 58,601 | 97,587 | 51,171 | 24,422 | 30,443 | ||||||||||||||||||
Sugar | 49,979 | 15,483 | 26,143 | 20,495 | 17,133 | 21,183 | ||||||||||||||||||
Ethanol | 64,536 | 37,725 | 62,811 | 29,385 | 7,289 | 9,260 | ||||||||||||||||||
Energy | 9,847 | 5,016 | 8,216 | — | — | — | ||||||||||||||||||
Total | 278,886 | 210,131 | 313,603 | 244,209 | 142,503 | 84,515 | ||||||||||||||||||
Land Transformation Business(7) | — | — | 18,839 | 15,201 | 33,114 | 7,623 |
2009/2010 | 2008/2009 | 2007/2008 | 2006/2007 | |||||||||||||
Production | Harvest Year | Harvest Year | Harvest Year | Harvest Year | ||||||||||||
(In thousands, except for electricity) | ||||||||||||||||
Farming Business | ||||||||||||||||
Crops (tons)(8) | 524,890 | 317,582 | 351,787 | 343,799 | ||||||||||||
Soybean (tons) | 241,848 | 96,982 | 90,724 | 149,619 | ||||||||||||
Corn (tons) | 180,613 | 115,900 | 153,751 | 117,974 | ||||||||||||
Wheat (tons) | 49,592 | 41,556 | 61,951 | 55,075 | ||||||||||||
Sunflower (tons) | 17,193 | 22,128 | 15,841 | 4,435 | ||||||||||||
Cotton (tons) | 1,068 | 9,218 | 15,748 | 9,236 | ||||||||||||
Other crops (tons)(2) | 34,576 | 31,799 | 13,772 | 7,461 | ||||||||||||
Rice(9) (tons) | 91,723 | 94,968 | 98,577 | 98,980 | ||||||||||||
Coffee (tons)(10) | 2,110 | 2,412 | 3,028 | 1,236 |
70
Table of Contents
Nine Months | ||||||||||||||||||||
Ended | ||||||||||||||||||||
September 30, | Year Ended December 31, | |||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
Processed rice(11) (tons) | 64,809 | 108,858 | 81,804 | 86,980 | 10,529 | |||||||||||||||
Dairy(12) (thousand liters) | 29,299 | 47,479 | 43,110 | 34,592 | 26,261 | |||||||||||||||
Cattle (tons)(5)(13) | 246 | 4,149 | 7,229 | 6,632 | 2,945 | |||||||||||||||
Sugar, Ethanol and Energy Business | ||||||||||||||||||||
Sugar (tons) | 166,001 | 52,968 | (14) | 67,772 | 72,372 | 73,427 | ||||||||||||||
Ethanol (cubic meters) | 134,086 | 132,492 | (14) | 70,067 | 29,375 | 25,675 | ||||||||||||||
Energy (MWh exported) | 100,079 | 128,291 | (14) | — | — | — | ||||||||||||||
Land Transformation Business (hectares traded) | — | 5,005 | 4,857 | 8,714 | 3,507 |
2009/2010 | 2008/2009 | 2007/2008 | 2006/2007 | |||||||||||||
Planted Area | Harvest Year | Harvest Year | Harvest Year | Harvest Year | ||||||||||||
(In hectares, including second harvest) | ||||||||||||||||
Farming Business(15) | ||||||||||||||||
Crops(16) | 168,241 | 139,518 | 107,027 | 93,402 | ||||||||||||
Soybean | 87,522 | 63,973 | 47,408 | 51,191 | ||||||||||||
Corn | 27,720 | 20,200 | 24,189 | 14,868 | ||||||||||||
Wheat | 21,728 | 18,917 | 15,792 | 15,908 | ||||||||||||
Sunflower | 14,784 | 16,539 | 7,775 | 2,184 | ||||||||||||
Cotton | 425 | 3,159 | 3,478 | 3,038 | ||||||||||||
Other crops(2) | 11,501 | 11,348 | 3,930 | 3,313 | ||||||||||||
Forage | 4,561 | 5,382 | 4,454 | 2,901 | ||||||||||||
Rice | 18,142 | 17,258 | 14,820 | 14,984 | ||||||||||||
Coffee(17) | 1,632 | 1,632 | 1,632 | 1,597 | ||||||||||||
Total Planted Area | 188,015 | 158,468 | 123,480 | 93,402 | ||||||||||||
Second Harvest Area | 29,119 | 29,150 | 25,352 | 20,517 | ||||||||||||
Leased Area | 47,709 | 13,645 | 14,264 | 5,744 | ||||||||||||
Owned Croppable Area(18) | 111,187 | 115,613 | 83,864 | 67,142 | ||||||||||||
Cattle Area(19) | 87,392 | 106,375 | 124,635 | 118,449 | ||||||||||||
Total Productive Area | 198,640 | 221,988 | 208,499 | 211,851 |
Nine Months | ||||||||||||||||||||
Ended | ||||||||||||||||||||
September 30, | Year Ended December 31, | |||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
Sugar, Ethanol and Energy Business | ||||||||||||||||||||
Sugarcane plantation | 54,352 | 49,470 | 32,616 | 22,378 | 14,780 | |||||||||||||||
Owned land | 9,098 | 9,085 | 3,369 | 1,366 | 815 | |||||||||||||||
Leased land | 45,267 | 40,385 | 29,247 | 21,012 | 13,964 | |||||||||||||||
Land Transformation Business | ||||||||||||||||||||
Undeveloped/Undermanaged land put into production (hectares) | — | 11,255 | 33,387 | 17,591 | 13,051 |
(1) | Includes soybean, soybean oil and soybean meal. | |
(2) | Includes barley, rapeseed and sorghum and farming services. |
71
Table of Contents
(3) | Sales of processed rice including rough rice purchased from third parties and processed in our own facilities, rice seeds and services. | |
(4) | Sales of raw milk and whole milk powder produced in 2007 pursuant to an agreement with a third party. | |
(5) | In December 2009, we sold 55,543 head of cattle to a third party. The third party currently leases grazing land from us to raise and fatten the cattle, and our payments under the lease are tied to the market price of beef. See “Business — Farming — Cattle Business.” | |
(6) | Includes sales of sugarcane and other miscellaneous items to third parties of $242 thousand and $377 thousand during the first nine months of 2010 and the first nine months of 2009, respectively and $417 thousand and $1,291 thousand during 2009 and 2008, respectively. | |
(7) | Represents capital gains from the sale of land. | |
(8) | Crop production does not include 52,482 tons, 52,960 tons and 53,398 tons of forage produced in the 2009/2010, 2008/2009 and 2007/2008 harvest years, respectively. | |
(9) | Expressed in tons of rough rice produced on owned and leased farms. The rough rice we produce, along with additional rough rice we purchase from third parties, is ultimately processed and constitutes the product sold in respect of the rice business. | |
(10) | As of September 30, 2010, the coffee harvest was ongoing and stood at 91% completion. | |
(11) | Includes rough rice purchased from third parties and processed in our own facilities. Expressed in tons of processed rice (1 ton of processed rice is approximately equivalent to 1.6 tons of rough rice). | |
(12) | Raw milk produced at our dairy farms. | |
(13) | Measured in tons of live weight. Production is the sum of the net increases (or decreases) during a given period in live weight of each head of beef cattle we own. | |
(14) | Year ended December 31, 2009 production accounts for certain of the sugarcane crop harvested in January 2010 due to a delay in the harvesting process which typically concludes in November/December of each year. | |
(15) | Includes hectares planted in the second harvest. | |
(16) | Includes 4,561 hectares, 5,382 hectares and 4,454 hectares used for the production of forage during the 2009/2010, 2008/2009 and 2007/2008 harvest years, respectively. | |
(17) | Reflects the size of our coffee plantations, which are planted only once every 18 to 20 years. | |
(18) | Does not include potential croppable areas being evaluated for transformation. | |
(19) | Comprised of land devoted to raising beef cattle, which is mostly leased to a third party. See “Business — Farming — Cattle Business.” |
72
Table of Contents
73
Table of Contents
Purchase consideration ($ thousands): | ||||||||
Fair value of up front payment in cash | 7,900 | |||||||
Present value of seller financing | 11,605 | |||||||
Total purchase consideration(i) | 19,505 | |||||||
Fair value of net assets acquired | 12,482 | |||||||
Goodwill | 7,023 | |||||||
(i) | The difference between the total purchase price of $20.1 million and the total purchase consideration of $19.5 million reflects the discount for the present value of the seller financing of $12.2 million. |
Fair Value of Net | ||||
Assets Acquired as | ||||
of August 23, 2010 | ||||
($ thousands) | ||||
Cash and cash equivalents | 28 | |||
Property, plant and equipment | 14,075 | |||
Investment property | 7,935 | |||
Deferred tax | (6,930 | ) | ||
Other current assets | 1,331 | |||
Other current liabilities | (3,957 | ) | ||
Net assets acquired | 12,482 | |||
74
Table of Contents
Unaudited Pro Forma Consolidated Statement of | ||||||||||||||||
Financial Position | ||||||||||||||||
As of September 30, 2010 | ||||||||||||||||
II | ||||||||||||||||
Pro Forma | ||||||||||||||||
Adjustments | ||||||||||||||||
I | Reorganization | |||||||||||||||
Historical | and Reverse | III | ||||||||||||||
IFH | Stock Split | Notes | Pro forma | |||||||||||||
(All amounts in $ thousands, except as otherwise indicated) | ||||||||||||||||
ASSETS | ||||||||||||||||
Non-Current Assets | ||||||||||||||||
Property, plant and equipment, net | 751,418 | — | 751,418 | |||||||||||||
Investment property | 28,299 | — | 28,299 | |||||||||||||
Intangible assets, net | 28,517 | — | 28,517 | |||||||||||||
Biological assets | 85,445 | — | 85,445 | |||||||||||||
Investments in joint ventures | 6,124 | — | 6,124 | |||||||||||||
Deferred income tax assets | 64,801 | — | 64,801 | |||||||||||||
Trade and other receivables, net | 25,482 | — | 25,482 | |||||||||||||
Other assets | 25 | — | 25 | |||||||||||||
Total Non-Current Assets | 990,111 | — | 990,111 | |||||||||||||
Current Assets | ||||||||||||||||
Biological assets | 39,190 | — | 39,190 | |||||||||||||
Inventories | 87,718 | — | 87,718 | |||||||||||||
Trade and other receivables, net | 100,846 | — | 100,846 | |||||||||||||
Derivative financial instruments | 1,428 | — | 1,428 | |||||||||||||
Cash and cash equivalents | 60,621 | — | 60,621 | |||||||||||||
Total Current Assets | 289,803 | — | 289,803 | |||||||||||||
TOTAL ASSETS | 1,279,914 | — | 1,279,914 | |||||||||||||
MEMBERS EQUITY/ SHAREHOLDERS EQUITY | ||||||||||||||||
Capital and reserves attributable to equity holders of the parent | ||||||||||||||||
Members’ units | 697,289 | (697,289 | ) | A | — | |||||||||||
Share capital | — | 120,000 | A | 120,000 | ||||||||||||
Share premium | — | 563,343 | A | 563,343 | ||||||||||||
Cumulative translation adjustment | 5,654 | (113 | ) | A | 5,541 | |||||||||||
Equity-settled compensation | 13,575 | (271 | ) | A | 13,304 | |||||||||||
Retained earnings | (44,483 | ) | 889 | A | (43,594 | ) | ||||||||||
Equity attributable to equity holders of the parent | 672,035 | (13,441 | ) | 658,594 | ||||||||||||
Non controlling interest | 75 | 13,441 | A | 13,516 | ||||||||||||
TOTAL MEMBERS EQUITY/ SHAREHOLDERS EQUITY | 672,110 | — | 672,110 | |||||||||||||
LIABILITIES | ||||||||||||||||
Non-Current Liabilities | ||||||||||||||||
Trade and other payables | 15,992 | — | 15,992 | |||||||||||||
Borrowings | 265,361 | — | 265,361 | |||||||||||||
Deferred income tax liabilities | 97,404 | — | 97,404 | |||||||||||||
Payroll and social liabilities | 1,224 | — | 1,224 | |||||||||||||
Provisions for other liabilities | 3,688 | — | 3,688 | |||||||||||||
Total Non-Current Liabilities | 383,669 | — | 383,669 | |||||||||||||
Current Liabilities | ||||||||||||||||
Trade and other payables | 62,330 | — | 62,330 | |||||||||||||
Current income tax liabilities | 2,644 | — | 2,644 | |||||||||||||
Payroll and social liabilities | 17,227 | — | 17,227 | |||||||||||||
Borrowings | 137,858 | — | 137,858 | |||||||||||||
Derivative financial instruments | 3,682 | — | 3,682 | |||||||||||||
Provisions for other liabilities | 394 | — | 394 | |||||||||||||
Total Current Liabilities | 224,135 | — | 224,135 | |||||||||||||
TOTAL LIABILITIES | 607,804 | — | 607,804 | |||||||||||||
TOTAL MEMBERS EQUITY/ SHAREHOLDERS EQUITY AND LIABILITIES | 1,279,914 | — | 1,279,914 | |||||||||||||
75
Table of Contents
76
Table of Contents
Unaudited Pro Forma Combined Consolidated Statement of Income | ||||||||||||||||||||||||||||||||||||
For the Nine Month Period Ended September 30, 2010 | ||||||||||||||||||||||||||||||||||||
II | ||||||||||||||||||||||||||||||||||||
Pro forma | V | |||||||||||||||||||||||||||||||||||
Adjustments | Pro Forma | VI | ||||||||||||||||||||||||||||||||||
I | Reorganization | IV | Adjustments | Pro Forma | VII | |||||||||||||||||||||||||||||||
Historical | and Reverse | III | Historical | Dinaluca’s | Adjustments | Pro Forma | ||||||||||||||||||||||||||||||
IFH | Stock Split | Notes | Pro Forma | Dinaluca | Acquisition | Notes | Eliminations | Combined | ||||||||||||||||||||||||||||
(All amounts in $ thousands, except as otherwise indicated) | ||||||||||||||||||||||||||||||||||||
Sales of manufactured products and services rendered | 173,917 | — | 173,917 | 276 | — | (208 | ) | 173,985 | ||||||||||||||||||||||||||||
Cost of manufactured products sold and services rendered | (137,169 | ) | — | (137,169 | ) | (50 | ) | — | — | (137,219 | ) | |||||||||||||||||||||||||
Gross Profit from Manufacturing Activities | 36,748 | — | 36,748 | 226 | — | (208 | ) | 36,766 | ||||||||||||||||||||||||||||
Sales of agricultural produce and biological assets | 104,969 | — | 104,969 | — | — | — | 104,969 | |||||||||||||||||||||||||||||
Cost of agricultural produce sold and direct agricultural selling expenses | (104,969 | ) | — | (104,969 | ) | — | — | — | (104,969 | ) | ||||||||||||||||||||||||||
Initial recognition and changes in fair value of biological assets and agricultural produce | (76,967 | ) | — | (76,967 | ) | — | — | 208 | (76,759 | ) | ||||||||||||||||||||||||||
Changes in net realizable value of agricultural produce after harvest | 7,311 | — | 7,311 | — | — | — | 7,311 | |||||||||||||||||||||||||||||
Gross (Loss)/Profit from Agricultural Activities | (69,656 | ) | — | (69,656 | ) | — | — | 208 | (69,448 | ) | ||||||||||||||||||||||||||
Margin on Manufacturing and Agricultural Activities Before Operating Expenses | (32,908 | ) | — | (32,908 | ) | 226 | — | — | (32,682 | ) | ||||||||||||||||||||||||||
General and administrative expenses | (41,573 | ) | — | (41,573 | ) | (368 | ) | — | — | (41,941 | ) | |||||||||||||||||||||||||
Selling expenses | (32,836 | ) | — | (32,836 | ) | (8 | ) | — | — | (32,844 | ) | |||||||||||||||||||||||||
Other operating income, net | 8,122 | — | 8,122 | (66 | ) | — | — | 8,056 | ||||||||||||||||||||||||||||
Share of loss of joint ventures | (220 | ) | — | (220 | ) | — | — | — | (220 | ) | ||||||||||||||||||||||||||
Loss from Operations Before Financing and Taxation | (99,415 | ) | — | (99,415 | ) | (216 | ) | — | — | (99,631 | ) | |||||||||||||||||||||||||
Finance income | 9,364 | — | 9,364 | — | — | — | 9,364 | |||||||||||||||||||||||||||||
Finance costs | (28,843 | ) | — | (28,843 | ) | (390 | ) | (512 | ) | A | — | (29,745 | ) | |||||||||||||||||||||||
Financial results, net | (19,479 | ) | — | (19,479 | ) | (390 | ) | (512 | ) | — | (20,381 | ) | ||||||||||||||||||||||||
Loss Before Income Tax | (118,894 | ) | — | (118,894 | ) | (606 | ) | (512 | ) | — | (120,012 | ) | ||||||||||||||||||||||||
Income tax benefit | 29,347 | — | 29,347 | 313 | 179 | B | — | 29,839 | ||||||||||||||||||||||||||||
Loss for the Year | (89,547 | ) | — | (89,547 | ) | (293 | ) | (333 | ) | — | (90,173 | ) | ||||||||||||||||||||||||
Attributable to: | ||||||||||||||||||||||||||||||||||||
Equity holders of the parent | (89,545 | ) | 1,791 | A | (87,754 | ) | (88,367 | ) | ||||||||||||||||||||||||||||
Non controlling interest | (2 | ) | (1,791 | ) | A | (1,793 | ) | (1,805 | ) | |||||||||||||||||||||||||||
Losses per member unit/ common share for loss attributable to the equity holders of the parent during the year: | ||||||||||||||||||||||||||||||||||||
Basic | (0.188 | ) | (0.543 | ) | B | (1.097 | ) | (1.105 | ) | |||||||||||||||||||||||||||
Diluted | n/a | n/a | B | n/a | n/a | |||||||||||||||||||||||||||||||
Weighted-average member units/common shares outstanding: | ||||||||||||||||||||||||||||||||||||
Basic | 475,652 | (355,652 | ) | B | 80,000 | 80,000 | ||||||||||||||||||||||||||||||
Diluted | 492,972 | (368,602 | ) | B | 82,913 | 82,913 |
77
Table of Contents
78
Table of Contents
Unaudited Pro Forma Combined Consolidated Statement of Income | ||||||||||||||||||||||||||||||||||||
for the Year Ended December 31, 2009 | ||||||||||||||||||||||||||||||||||||
II | ||||||||||||||||||||||||||||||||||||
Pro forma | V | |||||||||||||||||||||||||||||||||||
Adjustments | Pro Forma | VI | ||||||||||||||||||||||||||||||||||
I | Reorganization | IV | Adjustments | Pro forma | VII | |||||||||||||||||||||||||||||||
Historical | and Reverse | III | Historical | Dinaluca’s | Adjustments | Pro Forma | ||||||||||||||||||||||||||||||
IFH | Stock Split | Notes | Pro forma | Dinaluca | Acquisition | Notes | Eliminations | Combined | ||||||||||||||||||||||||||||
(All amounts in $ thousands, except as otherwise indicated) | ||||||||||||||||||||||||||||||||||||
Continuing Operations: | ||||||||||||||||||||||||||||||||||||
Sales of manufactured products and services rendered | 183,386 | — | 183,386 | 398 | 1,341 | A | (329 | ) | 184,796 | |||||||||||||||||||||||||||
Cost of manufactured products sold and services rendered | (180,083 | ) | — | (180,083 | ) | (159 | ) | (1,052 | ) | A | 329 | (180,965 | ) | |||||||||||||||||||||||
Gross Profit from Manufacturing Activities | 3,303 | — | 3,303 | 239 | 289 | — | 3,831 | |||||||||||||||||||||||||||||
Sales of agricultural produce and biological assets | 130,217 | — | 130,217 | — | 1,863 | A | (689 | ) | 131,391 | |||||||||||||||||||||||||||
Cost of agricultural produce sold and direct agricultural selling expenses | (130,217 | ) | — | (130,217 | ) | — | (1,863 | ) | A | 689 | (131,391 | ) | ||||||||||||||||||||||||
Initial recognition and changes in fair value of biological assets and agricultural produce | 71,668 | — | 71,668 | — | 429 | A | — | 72,097 | ||||||||||||||||||||||||||||
Changes in net realizable value of agricultural produce after harvest | 12,787 | — | 12,787 | — | (1 | ) | A | — | 12,786 | |||||||||||||||||||||||||||
Gross Profit from Agricultural Activities | 84,455 | — | 84,455 | — | 428 | — | 84,883 | |||||||||||||||||||||||||||||
Margin on Manufacturing and Agricultural Activities Before Operating Expenses | 87,758 | — | 87,758 | 239 | 717 | — | 88,714 | |||||||||||||||||||||||||||||
General and administrative expenses | (52,393 | ) | — | (52,393 | ) | (175 | ) | (361 | ) | A | — | (52,929 | ) | |||||||||||||||||||||||
Selling expenses | (31,169 | ) | — | (31,169 | ) | (1 | ) | (594 | ) | A | — | (31,764 | ) | |||||||||||||||||||||||
Other operating income, net | 13,071 | — | 13,071 | 264 | — | — | 13,335 | |||||||||||||||||||||||||||||
Share of loss of joint ventures | (294 | ) | — | (294 | ) | — | — | — | (294 | ) | ||||||||||||||||||||||||||
Profit/(Loss) from Operations Before Financing and Taxation | 16,973 | — | 16,973 | 327 | (238 | ) | — | 17,062 | ||||||||||||||||||||||||||||
Finance income | 11,553 | — | 11,553 | — | — | — | 11,553 | |||||||||||||||||||||||||||||
Finance costs | (34,216 | ) | — | (34,216 | ) | (1,131 | ) | (768 | ) | B | — | (36,115 | ) | |||||||||||||||||||||||
Financial results, net | (22,663 | ) | — | (22,663 | ) | (1,131 | ) | (768 | ) | — | (24,562 | ) | ||||||||||||||||||||||||
Loss Before Income Tax | (5,690 | ) | — | (5,690 | ) | (804 | ) | (1,006 | ) | — | (7,500 | ) | ||||||||||||||||||||||||
Income tax benefit | 5,415 | — | 5,415 | 78 | 356 | C | — | 5,849 | ||||||||||||||||||||||||||||
Loss for the Year from Continuing Operations | (275 | ) | — | (275 | ) | (726 | ) | (650 | ) | — | (1,651 | ) | ||||||||||||||||||||||||
Discontinued operations: | ||||||||||||||||||||||||||||||||||||
(Loss)/Profit for the year from discontinued operations | — | — | — | (151 | ) | 151 | — | — | ||||||||||||||||||||||||||||
Loss for the Year | (275 | ) | — | (275 | ) | (877 | ) | (499 | ) | — | (1,651 | ) | ||||||||||||||||||||||||
Attributable to: | ||||||||||||||||||||||||||||||||||||
Equity holders of the parent | (265 | ) | 5 | A | (260 | ) | (1,608 | ) | ||||||||||||||||||||||||||||
Non controlling interest | (10 | ) | (5 | ) | A | (15 | ) | (43 | ) | |||||||||||||||||||||||||||
Losses per member unit/common share for loss attributable to the equity holders of the parent during the year: | ||||||||||||||||||||||||||||||||||||
Basic | (0.001 | ) | (0.001 | ) | B | (0.003 | ) | (0.020 | ) | |||||||||||||||||||||||||||
Diluted | n/a | n/a | B | n/a | n/a | |||||||||||||||||||||||||||||||
Weighted-average member units/common shares outstanding: | ||||||||||||||||||||||||||||||||||||
Basic | 456,100 | (336,100 | ) | B | 80,000 | 80,000 | ||||||||||||||||||||||||||||||
Diluted | 473,166 | (348,676 | ) | B | 82,993 | 82,993 |
79
Table of Contents
80
Table of Contents
CONDITION AND RESULTS OF OPERATIONS
Manufactured Product & | ||||
Segment | Agricultural Product | Services Rendered | ||
Crops | Soybean Corn Wheat Sunflower Cotton | Soybean oil & soybean meal | ||
Grain drying & conditioning | ||||
Rice | Rough rice | White rice & brown rice | ||
Dairy | Raw milk | Whole milk powder | ||
Coffee | Coffee | Trading | ||
Cattle | Head or kilograms of cattle | Land leasings | ||
Sugar, Ethanol and Energy | Sugarcane | Sugar Ethanol Energy |
81
Table of Contents
82
Table of Contents
83
Table of Contents
Nine-Month | ||||||||||||||||||||||||||||||||
Period Ended | % Change | |||||||||||||||||||||||||||||||
September 30, | Year Ended December 31, | 3Q2009- | 2008- | 2007- | ||||||||||||||||||||||||||||
2010 | 2009 | 2009 | 2008 | 2007 | 3Q2010 | 2009 | 2008 | |||||||||||||||||||||||||
Ton per hectare | ||||||||||||||||||||||||||||||||
Corn | 5.5 | 5.5 | 5.5 | 6.8 | 8.3 | 0.2 | % | (18.5 | )% | (17.8 | )% | |||||||||||||||||||||
Soybean | 3.2 | 1.5 | 1.5 | 2.1 | 3.0 | 117.6 | % | (30.9 | )% | (28.9 | )% | |||||||||||||||||||||
Soybean (second harvest) | 1.9 | 1.6 | 1.6 | 1.7 | 2.9 | 21.3 | % | (7.3 | )% | (39.3 | )% | |||||||||||||||||||||
Cotton | 3.8 | 2.9 | 2.9 | 4.5 | 3.0 | 31.0 | % | (35.6 | )% | 48.9 | % | |||||||||||||||||||||
Wheat | 2.7 | 2.3 | 2.3 | 2.4 | 3.8 | 17.1 | % | (4.4 | )% | (36.2 | )% | |||||||||||||||||||||
Rice | 5.1 | 5.5 | 5.5 | 6.7 | 6.6 | (8.1 | )% | (17.3 | )% | 0.7 | % | |||||||||||||||||||||
Coffee | 1.9 | 1.8 | 1.8 | 2.3 | 1.5 | (21.7 | )% | 23.3 | % | 5.6 | % | |||||||||||||||||||||
Sugarcane | 96.3 | 93.2 | 93.4 | 89.4 | 88.0 | 3.3 | % | 4.5 | % | 1.6 | % |
* | Average yields include all our productive regions. |
84
Table of Contents
• | Initial recognition and changes in the fair value of biological assets and agricultural produce in respect of unharvested biological assets undergoing biological transformation; | |
• | Changes in net realizable value of agricultural produce for inventory carried at its net realizable value; and | |
• | Sales of manufactured products and sales of agricultural produce and biological assets sold to third parties. |
Soybean in $ cents per bushel (CBOT) | Coffee in $ cents per pound (ICE-NY) | |
Sugar in $ cents per pound (ICE-NY) | Ethanol in Reais per cubic meter (ESALQ) | |
85
Table of Contents
Nine-Month Period Ended | ||||||||||||||||||||
September 30, | Year Ended December 31, | |||||||||||||||||||
2010 | 2009 | 2009 | 2008 | 2007 | ||||||||||||||||
Hectares | ||||||||||||||||||||
Crops | 134,562 | 104,986 | 104,986 | 77,221 | 69,984 | |||||||||||||||
Rice | 18,142 | 17,258 | 17,258 | 14,820 | 14,984 | |||||||||||||||
Coffee | 1,632 | 1,632 | 1,632 | 1,632 | 1,597 | |||||||||||||||
Sugar, Ethanol and Energy | 54,352 | 47,798 | 49,470 | 32,616 | 22,378 |
86
Table of Contents
87
Table of Contents
Tax Rate (%) | ||||
Argentina | 35 | |||
Brazil(1) | 34 | |||
Uruguay | 25 |
(1) | Including the Social Contribution on Net Profit (CSLL) |
88
Table of Contents
Biological Asset | ||||||||
No Significant | Significant | |||||||
Biological Growth | Biological Growth | Agricultural Produce | Manufactured Product | |||||
Crops | Crop from planting through approximately 60 days | Crop, approximately 60 days after planting up to the moment of harvest (total period of approximately 3 to 5 months). | Harvested crop (soybean, corn, wheat, etc.) | Crops | ||||
Rice | Rice plant from planting through approximately 60 days | Rice plant, approximately 60 days after planting up to the moment of harvest (total period of approximately 3 to 4 months). | Harvested rough rice | Rice | ||||
Coffee | Coffee tree from planting through approximately 18 months | Coffee tree, approximately 18 months after planting until exhausted in 15-20 harvests (total period of approximately 16 years). | Harvested coffee | Coffee |
89
Table of Contents
Biological Asset | ||||||||
No Significant | Significant | |||||||
Biological Growth | Biological Growth | Agricultural Produce | Manufactured Product | |||||
Dairy | Dairy cow is considered a biological asset from birth/purchase to death or sale. | Raw milk | Processed milk (whole milk powder) and dairy products | |||||
Cattle | Beef cattle are considered a biological asset from birth/purchase to death or sale. | N/A | N/A | |||||
Sugar, ethanol and energy | Sugarcane from planting through approximately 30 days | Sugarcane, approximately 30 days after planting until exhausted in 5-6 harvests (total period of approximately 5.5 years). | Sugarcane | Sugar, ethanol and energy | ||||
VALUATION CRITERIA | Cost, which approximates fair value less accumulated impairment losses, if any. | Fair value (using discounted cash flow valuation) less cost to sell. | Net realizable value, except for rough rice and milk which are valued at cost. | Cost | ||||
For dairy and cattle, fair value less estimated cost to sell. |
90
Table of Contents
• | Production cycles or number of harvests; | |
• | Production area in hectares; | |
• | Estimated crop and rice yields; | |
• | Estimated sucrose content (Total Recoverable Sugar or TRS) for sugarcane; | |
• | Estimated costs of harvesting and other costs to be incurred until the crops and rice reach maturity (mainly costs of pesticides, herbicides and spraying); | |
• | Estimated transportation costs; | |
• | Market prices; and | |
• | Discount rates. |
91
Table of Contents
92
Table of Contents
93
Table of Contents
94
Table of Contents
• | Our Crops segment includes the planting, harvesting and sale to grain traders of grains, oilseeds and fibers (including wheat, corn, soybeans, cotton and sunflowers, among others), and to a lesser extent the provision of grain warehousing and conditioning and handling and drying services to third parties. Production activities in our Crop segment reflect the most productive use of the land to maximize economic return and not the performance of any one underlying crop. Accordingly, the relative mix of underlying crops may change from harvest year to harvest year. A single manager is responsible for the management of operating activity of all crops rather than a manager for each individual crop. | |
• | Our Rice segment consists of planting, harvesting, processing and marketing of rice. | |
• | Our Dairy segment consists of the production and sale of raw milk, which is processed into manufactured products and marketed through our joint venture with Grupo La Lácteo. See “Related Party Transactions — Milk Supply Agreement.” | |
• | Our Coffee segment consists of cultivating coffee and marketing our own and third party coffee production. | |
• | Our Cattle segment consists of purchasing and fattening beef cattle for sale to meat processors and in local livestock auction markets and leasing land. |
95
Table of Contents
Nine-Month Period Ended | ||||||||
September 30, | ||||||||
2010 | 2009 | |||||||
(In thousands of $) | ||||||||
Sales of manufactured products and services rendered | 173,917 | 125,304 | ||||||
Cost of manufactured products sold and services rendered | (137,169 | ) | (106,407 | ) | ||||
Gross Profit from Manufacturing Activities | 36,748 | 18,897 | ||||||
Sales of agricultural produce and biological assets | 104,969 | 84,827 | ||||||
Cost of agricultural produce sold and direct agricultural selling expenses | (104,969 | ) | (84,827 | ) | ||||
Initial recognition and changes in fair value of biological assets and agricultural produce | (76,967 | ) | 25,724 | |||||
Changes in net realizable value of agricultural produce after harvest | 7,311 | 8,383 | ||||||
Gross (Loss)/Profit from Agricultural Activities | (69,656 | ) | 34,107 | |||||
Margin on Manufacturing and Agricultural Activities Before Operating Expenses | (32,908 | ) | 53,004 | |||||
General and administrative expenses | (41,573 | ) | (41,780 | ) | ||||
Selling expenses | (32,836 | ) | (20,603 | ) | ||||
Other operating income, net | 8,122 | (4,562 | ) | |||||
Share of loss of joint ventures | (220 | ) | (306 | ) | ||||
Profit from Operations Before Financing and Taxation | (99,415 | ) | (14,247 | ) | ||||
Finance income | 9,364 | 7,002 | ||||||
Finance costs | (28,843 | ) | (21,814 | ) | ||||
Financial results, net | (19,479 | ) | (14,812 | ) | ||||
(Loss) Before Income Tax | (118,894 | ) | (29,059 | ) | ||||
Income tax benefit | 29,347 | 11,231 | ||||||
(Loss) for the Period | (89,547 | ) | (17,828 | ) | ||||
96
Table of Contents
Nine-Month | Sugar, | |||||||||||||||||||||||||||
Period Ended | Ethanol and | |||||||||||||||||||||||||||
September 30, | Crops | Rice | Dairy | Coffee | Cattle | Energy | Total | |||||||||||||||||||||
(In thousands of $) | ||||||||||||||||||||||||||||
2010 | 211 | 43,694 | — | 2,709 | 2,748 | 124,555 | 173,917 | |||||||||||||||||||||
2009 | 7,893 | 53,375 | 752 | 4,775 | — | 58,509 | 125,304 |
• | a $66.0 million increase in our Sugar, Ethanol and Energy segment due to: (i) a 46.9% increase in the volume of sugar and ethanol sold, measured in Total Recoverable Sugar (“TRS”), from 214 thousand tons of TRS equivalent in the nine-month period ended September 30, 2009 to 315 thousand tons of TRS equivalent in the nine-month period ended September 30, 2010. On average, one metric ton of sugarcane is equivalent to 140 kilograms of TRS equivalent. While a mill can produce either sugar or ethanol, the TRS input requirements differ between the two products. On average, 1.045 kilogram of TRS equivalent is required to produce 1.0 kilogram of sugar, while 1.691 kilograms of TRS equivalent is required to produce a liter of ethanol. The increase in the volume of TRS equivalent sold in the nine-month period ended September 30, 2010 was due to an increase of 115.4% in the volume of sugarcane crushed in our mills, from 1.4 million tons in the nine-month period ended September 30, 2009 to 2.9 million tons in the nine-month period ended September 30, 2010 due to the expansion of the crushing capacity at our Angélica mill, which was partially offset by ourbuild-up of sugar and ethanol inventories as of the end of the period, (ii) a 46.0% increase in the average market price of ethanol, from $375.1 per cubic meter in the nine-month period ended September 30, 2009 to $547.5 per cubic meter in the nine-month period ended September 30, 2010; (iii) a 24.1% increase in the average market price of sugar, from $362.9 per ton in the nine-month period ended September 30, 2009 to $450.3 per ton in the nine-month period ended September 30, 2010, (iv) a 108.5% increase in the volume of energy sold, from 60.2 thousand MWh in the nine-month period ended September 30, 2009 to 125.4 thousand MWh in the nine-month period ended September 30, 2010. The following table sets forth the breakdown of sales by product for the periods indicated. |
Period Ended September 30, | Period Ended September 30, | Period Ended September 30, | ||||||||||||||||||||||||||||||||||
2010 | 2009 | % Change | 2010 | 2009 | % Change | 2010 | 2009 | % Change | ||||||||||||||||||||||||||||
(In millions of $) | (In thousands units) | (In dollars per unit) | ||||||||||||||||||||||||||||||||||
Ethanol(M3) | 64.5 | 37.7 | 71.1 | % | 117.9 | 100.6 | 17.2 | % | 547.5 | 375.1 | 46.0 | % | ||||||||||||||||||||||||
Sugar(Tons) | 50.0 | 15.5 | 222.6 | % | 111.0 | 42.7 | 160.0 | % | 450.3 | 362.9 | 24.1 | % | ||||||||||||||||||||||||
Energy(MWh) | 9.8 | 5.0 | 96.0 | % | 125.4 | 60.2 | 108.3 | % | 78.5 | 83.4 | (5.9 | )% | ||||||||||||||||||||||||
Others | 0.2 | 0.3 | (33.3 | )% | ||||||||||||||||||||||||||||||||
Total | 124.5 | 58.5 | 112.8 | % | ||||||||||||||||||||||||||||||||
• | a $2.7 million increase in our Cattle segment due to the revenues during the nine-month period ended September 30, 2010 from the lease of most of our cattle land to a third party in December 2009 for beef cattle grazing; |
• | a $9.7 million decrease in our Rice segment due to a 26.3% decrease in the volume of white and brown rice sold, mainly as a result of a 20.2% decrease in the volume of rough rice processed in our mills, as a result of a lower volume of rough rice purchased from third parties due to increases in the price of rough |
97
Table of Contents
rice. The decrease in volume was partially offset by a 11.1% increase in price, from $525.6 per ton of rough rice equivalent, which reflects the sale price of white and brown rice, in the nine-month period ended September 30, 2009 to $583.9 per ton of rough rice equivalent in the nine-month period ended September 30, 2010; |
• | a $7.7 million decrease in our Crops segment mainly due to a one-time production and sale of 18.9 thousand tons of soybean meal and oil in a leased industrial facility during the nine-month period ended September 30, 2009; | |
• | a $2.1 million decrease in our Coffee segment resulting from our cessation of coffee trading activities related to third-party production (we continue with the commercialization of our own coffee production); and | |
• | a $0.7 million decrease in our Dairy segment. |
Nine-Month | Sugar, | |||||||||||||||||||||||||||
Period Ended | Ethanol and | |||||||||||||||||||||||||||
September 30, | Crops | Rice | Dairy | Coffee | Cattle | Energy | Total | |||||||||||||||||||||
(In thousands of $) | ||||||||||||||||||||||||||||
2010 | — | (38,783 | ) | — | (2,546 | ) | — | (95,840 | ) | (137,169 | ) | |||||||||||||||||
2009 | (4,969 | ) | (39,053 | ) | (612 | ) | (4,137 | ) | — | (57,636 | ) | (106,407 | ) |
• | a $38.2 million increase in our Sugar, Ethanol and Energy segment as a result of a 46.9% increase in the volume of sugar and ethanol sold coupled with a 55.3% increase in the actual price of sugarcane, which was partially offset by decreases in the operating costs per unit of TRS produced at the Angélica mill as compared to the prior period which had resulted from the unusual, sporadic rainfall pattern observed during the 2009 harvest which led to interruptions in harvesting activities, disruptions to milling operations and less stable production rates during the nine-month period ended September 30, 2009; |
• | a $5.0 million decrease in our Crops segment mainly due to the cost of raw materials (soybeans) associated with the one-time sale of soybean meal and oil during the nine-month period ended September 30, 2009; | |
• | a $1.6 million decrease in our Coffee segment due to a decrease in the volume of coffee traded as a result of the cessation of coffee trading activities since May 2010; | |
• | a $0.6 million decrease in our Dairy segment due to the cessation of whole milk powder selling activities following our entry into the Grupo La Lácteo joint venture; and | |
• | a $0.3 million decrease in our Rice segment due to a 26.3% decrease in the volume of white and brown rice sold which was partially offset by a 34.8% increase in the cost per unit sold, mainly as a result of an increase in the market price of rough rice, which is the main component of the cost. |
Nine-Month | Sugar, | |||||||||||||||||||||||||||
Period Ended | Ethanol and | |||||||||||||||||||||||||||
September 30, | Crops | Rice | Dairy | Coffee | Cattle | Energy | Total | |||||||||||||||||||||
(In thousands of $) | ||||||||||||||||||||||||||||
2010 | 89,797 | 1,742 | 10,043 | 1,959 | 1,379 | 49 | 104,969 | |||||||||||||||||||||
2009 | 61,362 | 1,120 | 8,420 | 3,816 | 10,017 | 92 | 84,827 |
98
Table of Contents
• | a $28.4 million increase in our Crops segment mainly due to: (i) a 28.2% increase in the production area, from 104,986 hectares in the nine-month period ended September 30, 2009 to 134,562 hectares in the nine-month period ended September 30, 2010, and (ii) an increase in average yields obtained in the 2009/2010 harvest as a result of better weather conditions. The following table sets forth the breakdown of sales by product for the periods indicated. |
Period Ended September 30, | Period Ended September 30, | Period Ended September 30, | ||||||||||||||||||||||||||||||||||
2010 | 2009 | % Change | 2010 | 2009 | % Change | 2010 | 2009 | % Change | ||||||||||||||||||||||||||||
(In $ per ton) | ||||||||||||||||||||||||||||||||||||
(In millions | (In thousands | |||||||||||||||||||||||||||||||||||
of $) | of tons) | |||||||||||||||||||||||||||||||||||
Soybean | 55.0 | 31.1 | 77.1 | % | 224.2 | 105.8 | 111.8 | % | 245.5 | 293.6 | (16.4 | )% | ||||||||||||||||||||||||
Corn | 24.0 | 10.6 | 126.1 | % | 190.9 | 94.9 | 101.1 | % | 125.9 | 112.0 | 12.4 | % | ||||||||||||||||||||||||
Cotton | 2.1 | 9.1 | (76.8 | )% | 1.7 | 11.1 | (84.5 | )% | 1,223.3 | 816.5 | 49.8 | % | ||||||||||||||||||||||||
Wheat | 3.6 | 3.7 | (2.0 | )% | 25.0 | 24.6 | 1.6 | % | 144.9 | 150.3 | (3.6 | )% | ||||||||||||||||||||||||
Sunflower | 3.5 | 3.1 | 13.8 | % | 12.8 | 13.6 | (5.8 | )% | 273.8 | 226.5 | 20.9 | % | ||||||||||||||||||||||||
Barley | 0.7 | 2.1 | (64.0 | )% | 5.8 | 16.8 | (65.6 | )% | 128.3 | 122.6 | 4.7 | % | ||||||||||||||||||||||||
Others | 0.8 | 1.7 | (56.0 | )% | — | — | — | |||||||||||||||||||||||||||||
Total | 89.8 | 61.4 | 46.3 | % | 460.3 | 266.8 | 72.5 | % | ||||||||||||||||||||||||||||
• | a $1.6 million increase in our Dairy segment due to a 44.9% increase in the market price of raw milk, from 23.7 cents per liter in the nine-month period ended September 30, 2009 to 34.3 cents per liter in the nine-month period ended September 30, 2010, partially offset by a 17.7% decrease in the volume of liters produced, from 35.6 million liters in the nine-month period ended September 30, 2009 to 29.3 million liters in the nine-month period ended September 30, 2010; and | |
• | a $0.6 million increase in our Rice segment mainly attributable to higher sales of rice seeds to third parties as a result of an increase of the planting area in Argentina, primarily due to better weather conditions; |
• | a $8.5 million decrease in our Cattle segment due to a 93.1% decrease in the number of head of beef cattle sold, from 41.3 thousand head in the nine-month period ended September 30, 2009 to 2.8 thousand head in the nine-month period ended September 30, 2010, as a result of the reduced herd size following the sale of most of our beef cattle herd in December 2009; and | |
• | a $2.8 million decrease in our Coffee segment primarily due to a 35.8% decrease in the volume sold, from 1,683 tons in the nine-month period ended September 30, 2009 to 1,080 tons in the nine-month period ended September 30, 2010 as a result of a decrease in harvested area generated by an increase in the area under pruning, from 276 hectares in the nine-month period ended September 30, 2009 to 406 hectares in the nine-month period ended September 30, 2010. |
99
Table of Contents
Nine-Month | Sugar, | |||||||||||||||||||||||||||
Period Ended | Ethanol and | |||||||||||||||||||||||||||
September 30, | Crops | Rice | Dairy | Coffee | Cattle | Energy | Total | |||||||||||||||||||||
(In thousands of $) | ||||||||||||||||||||||||||||
2010 | 23,390 | 2,571 | 6,795 | (513 | ) | 552 | (109,762 | ) | (76,967 | ) | ||||||||||||||||||
2009 | 683 | 5,398 | 1,788 | (12,469 | ) | 278 | 30,046 | 25,724 |
• | a $139.8 million decrease in our Sugar, Ethanol and Energy segment due to: |
• | a $13.5 million increase, from a loss of $6.1 million in the nine-month period ended September 30, 2009 to a gain of $7.4 million in the nine-month period ended September 30, 2010, generated by the recognition at fair value less cost to sell of sugarcane at the point of harvest due to: (i) a 117.6% increase in harvested area from 13,407 hectares in the nine-month period ended September 30, 2009 to 29,171 hectares in the nine-month period ended September 30, 2010, (ii) a 3.4% increase in yields obtained, from 93.2 tons per hectare in the nine-month period ended September 30, 2009 to 96.3 tons per hectare in the nine-month period ended September 30, 2010, and (iii) a 55.3% increase in the price of sugarcane from $18.7 per ton in the nine-month period ended September 30, 2009 to $29.1 per ton in the nine-month period ended September 30, 2010, as a result of higher sugar and ethanol market prices and higher TRS content in sugarcane, which was partially offset by (iv) a 15.7% increase in actual production costs, from $2,203.2 per hectare in the nine-month period ended September 30, 2009 to $2,549.9 per hectare in the nine-month period ended September 30, 2010, mainly as a result of an increase in transportation costs; and | |
• | a $153.3 million decrease, from a gain of $36.2 million in the nine-month period ended September 30, 2009 to a loss of $117.1 million in the nine-month period ended September 30, 2010 generated by a decrease in price estimates used in the DCF model to determine the fair value of our sugarcane plantations. In the DCF model, the price of future harvested sugarcane is calculated based on estimates of sugar price derived from the NY11 futures contract. Sugar price estimates decreased due to lower sugar market prices and also as a result of an adjustment to this valuation model for sugarcane, which increased the loss to $47.5 million at September 30, 2010. Sugar price estimates as of September 30, 2010 are calculated based on the average of daily prices for sugar future contracts for the period April 1 to September 30, 2010 (i.e.6-month moving average) rather than the single price for future contracts as of year end. The change is expected to mitigate the impact of volatility and seasonality that arises with a single pricing date. | |
• | Of the $109.8 million loss of initial recognition and changes in fair value of biological assets and agricultural produce for the nine-month period ended September 30, 2010, $117.1 million loss represents the unrealized portion, as compared to the $36.2 million gain unrealized portion of the $30.0 million of initial recognition and changes in fair value of biological assets and agricultural produce in the nine-month period ended September 30, 2009; |
• | a $2.8 million decrease in our Rice segment as a result of (i) favorable weather conditions during the end of 2009 which resulted in the recognition at fair value less cost to sell of non-harvested rice of a larger proportion of the planted rice at the end of 2009, which reduced the recognition at fair value less cost to sell of rice at the point of harvest for the nine-month period ended September 30, 2010 by $6.8 million, and (ii) an 8.1% decrease in yields obtained. These effects were partially offset by a 5.1% increase in the production area and a 2.1% decrease in actual production costs (i.e.agrochemical and fertilizer expenses). |
• | Of the $2.6 million of initial recognition and changes in fair value of biological assets and agricultural produce for the nine-month period ended September 30, 2010, $1.6 million represents the unrealized portion, as compared to the $1.7 million unrealized portion of the $5.4 million of |
100
Table of Contents
initial recognition and changes in fair value of biological assets and agricultural produce in the nine-month period ended September 30, 2009; |
• | a $22.7 million increase in our Crops segment mainly due to: |
• | a $21.7 million increase in the recognition at fair value less cost to sell of crops at the point of harvest, from $0.2 million in the nine-month period ended September 30, 2009 to $21.9 million in the nine-month period ended September 30, 2010, mainly due to: (i) higher crop yields, (ii) a 28.2% increase in the production area, from 104,986 hectares in the nine-month period ended September 30, 2009 to 134,562 hectares in the nine-month period ended September 30, 2010 and (iii) a decrease in agrochemical and fertilizer prices, which was partially offset by the favorable weather conditions by the end of 2009, resulting in the recognition at fair value less cost to sell of non-harvested crops of a larger proportion of the planted crops at the end of 2009, which reduced the recognition at fair value less cost to sell of crops at point of harvest for the nine-month period ended September 30, 2010 by $4.4 million compared to a reduction of $0.3 million for the nine-month period ended September 30, 2009. The resulting actual average margin per hectare for our summer crops (i.e.soybean, corn, sunflower and cotton) increased from $10.9 per hectare in the nine-month period ended September 30, 2009 (which is reflective of the impact of the drought) to $198.9 per hectare in the nine-month period ended September 30, 2010; and | |
• | a $1.0 million increase in the recognition at fair value less cost to sell for non-harvested crops as of period-end, from $0.4 million in the nine-month period ended September 30, 2009 to $1.5 million in the nine-month period ended September 30, 2010, due to better weather conditions, which resulted in an increase in the area of non-harvested winter crops attaining significant biological growth as of September 30, 2010. |
Nine-Month Period Ended September 30, | ||||||||||||
2010 | 2009 | % Change | ||||||||||
(In $ per hectare) | ||||||||||||
Corn | 337.9 | 363.9 | (7.1 | )% | ||||||||
Soybean | 374.6 | 295.6 | 26.7 | % | ||||||||
Soybean (second harvest) | 219.7 | 202.7 | 8.4 | % | ||||||||
Cotton | 1,628.5 | 1,768.1 | (7.9 | )% | ||||||||
Wheat | 226.6 | 254.8 | (11.1 | )% |
• | Of the $0.7 million of initial recognition and changes in fair value of biological assets and agricultural produce for the nine-month period ended September 30, 2009, $0.6 million represents the unrealized portion, as compared to the $4.8 million unrealized portion of the $23.4 million of initial recognition and changes in fair value of biological assets and agricultural produce in the nine-month period ended September 30, 2010; |
• | a $12.0 million increase in our Coffee segment due to: |
• | a $2.3 million increase in the recognition at fair value less cost to sell of coffee at the point of harvest, from a loss of $3.2 million in the nine-month period ended September 30, 2009 to a loss of $0.9 million in the nine-month period ended September 30, 2010, due to a 3.0% increase in yields obtained and a 48.0% increase in the actual price of coffee at the point of harvest; and | |
• | a $9.7 million increase in the recognition at fair value less cost to sell of non-harvested coffee, from a loss of $9.3 million in the nine-month period ended September 30, 2009 to a gain of $0.4 million in the nine-month period ended September 30, 2010. The $9.3 million loss of the nine-month period ended September 30, 2009 was mainly generated by a reduction of the area to be harvested in the next 5 years as a result of the adoption of a pruning plan to correct the growth pattern of our coffee |
101
Table of Contents
trees, which impacted the production estimates used in the DCF model used to determine the fair value of our coffee plantations as of September 30, 2009. |
• | Of the $12.5 million loss in initial recognition and changes in fair value of biological assets and agricultural produce for the nine-month period ended September 30, 2009, $9.3 million represents the unrealized portion of the loss, as compared to the $0.4 million unrealized portion of the loss of $0.5 million of initial recognition and changes in fair value of biological assets and agricultural produce in the nine-month period ended September 30, 2010; |
• | a $5.0 million increase in our Dairy segment mainly due to: |
• | a $1.9 million increase in the recognition at fair value less cost to sell of raw milk, from $1.9 million in the nine-month period ended September 30, 2009 to $3.8 million in the nine-month period ended September 30, 2010 due to a 44.9% increase in raw milk market price partially offset by a 17.7% decrease in the volume of liters produced; and | |
• | a $3.1 million increase in the recognition at fair value less cost to sell of the dairy herd, from a loss of $0.1 million in the nine-month period ended September 30, 2009 to a gain of $3.0 million in the nine-month period ended September 30, 2010 as a result of a 78% increase in the market prices of dairy cows. | |
• | Of the $6.8 million in initial recognition and changes in fair value of biological assets and agricultural produce for the nine-month period ended September 30, 2010, $3.0 million gain represents the unrealized portion, as compared to the $0.1 million unrealized portion of the $1.8 million loss in initial recognition and changes in fair value of biological assets and agricultural produce in the nine-month period ended September 30, 2009; and |
• | a $0.3 million increase in our Cattle segment mainly due to an increase in the average market price of cattle. |
Nine-Month | Sugar, | |||||||||||||||||||||||||||
Period Ended | Ethanol and | |||||||||||||||||||||||||||
September 30, | Crops | Rice | Dairy | Coffee | Cattle | Energy | Total | |||||||||||||||||||||
(In thousands of $) | ||||||||||||||||||||||||||||
2010 | 6,287 | N/A | N/A | 1,024 | N/A | N/A | 7,311 | |||||||||||||||||||||
2009 | 7,671 | (19 | ) | N/A | 731 | N/A | N/A | 8,383 |
102
Table of Contents
Nine-Month | Sugar, | |||||||||||||||||||||||||||||||
Period Ended | Ethanol and | |||||||||||||||||||||||||||||||
September 30, | Crops | Rice | Dairy | Coffee | Cattle | Energy | Corporate | Total | ||||||||||||||||||||||||
(In thousands of $) | ||||||||||||||||||||||||||||||||
2010 | (4,544 | ) | (2,571 | ) | (2,087 | ) | (499 | ) | (370 | ) | (15,031 | ) | (16,471 | ) | (41,573 | ) | ||||||||||||||||
2009 | (4,706 | ) | (2,161 | ) | (1,820 | ) | (1,850 | ) | (2,269 | ) | (11,978 | ) | (16,996 | ) | (41,780 | ) |
Nine-Month | Sugar, | |||||||||||||||||||||||||||
Period Ended | Ethanol and | |||||||||||||||||||||||||||
September 30, | Crops | Rice | Dairy | Coffee | Cattle | Energy | Total | |||||||||||||||||||||
(In thousands of $) | ||||||||||||||||||||||||||||
2010 | (1,246 | ) | (5,989 | ) | (245 | ) | (559 | ) | (163 | ) | (24,634 | ) | (32,836 | ) | ||||||||||||||
2009 | (1,367 | ) | (7,132 | ) | (601 | ) | (1,068 | ) | (561 | ) | (9,874 | ) | (20,603 | ) |
Nine-Month | Sugar, | |||||||||||||||||||||||||||||||||||
Period Ended | Ethanol and | Land | ||||||||||||||||||||||||||||||||||
September 30, | Crops | Rice | Dairy | Coffee | Cattle | Energy | Transformation | Corporate | Total | |||||||||||||||||||||||||||
(In thousands of $) | ||||||||||||||||||||||||||||||||||||
2010 | (326 | ) | 152 | — | (570 | ) | 76 | 7,968 | — | 822 | 8,122 | |||||||||||||||||||||||||
2009 | 4,692 | (55 | ) | 15 | 1,133 | 387 | (10,610 | ) | — | (124 | ) | (4,562 | ) |
• | a $18.6 million increase in our Sugar, Ethanol and Energy segment due to themark-to-market effect of future sales contracts for sugar. |
• | a $5.0 million decrease in our Crops segment due to themark-to-market effect of outstanding hedging positions, which positively impacted the nine-month period ended September 30, 2009; and | |
• | a $1.7 million decrease in our Coffee segment due to themark-to-market effect of outstanding hedging positions. |
103
Table of Contents
Year Ended December 31, | ||||||||
2009 | 2008 | |||||||
(In thousands of $) | ||||||||
Sales of manufactured products and services rendered | 183,386 | 117,173 | ||||||
Cost of manufactured products sold and services rendered | (180,083 | ) | (105,583 | ) | ||||
Gross Profit from Manufacturing Activities | 3,303 | 11,590 | ||||||
Sales of agricultural produce and biological assets | 130,217 | 127,036 | ||||||
Cost of agricultural produce sold and direct agricultural selling expenses | (130,217 | ) | (127,036 | ) | ||||
Initial recognition and changes in fair value of biological assets and agricultural produce | 71,668 | 61,000 | ||||||
Changes in net realizable value of agricultural produce after harvest | 12,787 | 1,261 | ||||||
Gross Profit from Agricultural Activities | 84,455 | 62,261 | ||||||
Margin on Manufacturing and Agricultural Activities Before Operating Expenses | 87,758 | 73,851 | ||||||
General and administrative expenses | (52,393 | ) | (45,633 | ) | ||||
Selling expenses | (31,169 | ) | (24,496 | ) | ||||
Other operating income, net | 13,071 | 17,323 |
104
Table of Contents
Year Ended December 31, | ||||||||
2009 | 2008 | |||||||
(In thousands of $) | ||||||||
Excess of fair value of net assets acquired over cost | — | 1,227 | ||||||
Share of loss of joint ventures | (294 | ) | (838 | ) | ||||
Profit from Operations Before Financing and Taxation | 16,973 | 21,434 | ||||||
Finance income | 11,553 | 2,552 | ||||||
Finance costs | (34,216 | ) | (50,860 | ) | ||||
Financial results, net | (22,663 | ) | (48,308 | ) | ||||
(Loss) Before Income Tax | (5,690 | ) | (26,874 | ) | ||||
Income tax benefit | 5,415 | 10,449 | ||||||
(Loss) for the Year | (275 | ) | (16,425 | ) | ||||
Sugar, | ||||||||||||||||||||||||||||
Ethanol and | ||||||||||||||||||||||||||||
Crops | Rice | Dairy | Coffee | Cattle | Energy | Total | ||||||||||||||||||||||
(In thousands of $) | ||||||||||||||||||||||||||||
2009 | 9,667 | 67,317 | 752 | 7,984 | 172 | 97,494 | 183,386 | |||||||||||||||||||||
2008 | 3,134 | 53,280 | 2,171 | 8,544 | 164 | 49,880 | 117,173 |
• | a $47.6 million increase in our Sugar, Ethanol and Energy segment due to a 99.4% increase in the volume of sugar and ethanol sold, from 163 thousand tons of TRS equivalent in 2008 to 325 thousand tons of TRS equivalent in 2009. The increase in the volume of TRS equivalent sold in 2009 was due to an increase of 57.1% in the volume of sugarcane crushed in our mills, from 1.4 million tons in 2008 to 2.2 million tons in 2009, and to a lower level of sugar and ethanol inventories, which had decreased by 44 thousand tons of TRS equivalent as of the end of 2009. The increase in the volume of sugarcane crushed was mainly due to the expansion at our Angélica mill, which commenced operations in 2008. The increase in sales was also due to new sales of electricity in 2009 for a total amount of 128.3 thousand MWh, as a result of the connection of our Angélica mill to the electricity network and the start up of the new boiler and turbo generator at our UMA mill. This was partially offset by a 12.7% decrease in the average market price of ethanol, from $493.0 per cubic meter in 2008 to $430.5 per cubic meter in 2009. The following table sets forth the breakdown of sales by product for the periods indicated. |
Year Ended December 31, | Year Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||||||||||||||
2009 | 2008 | % Change | 2009 | 2008 | % Change | 2009 | 2008 | % Change | ||||||||||||||||||||||||||||
(In millions of $) | (In thousands units) | (In dollars per unit) | ||||||||||||||||||||||||||||||||||
Ethanol(M3) | 62.8 | 29.4 | 113.8 | % | 145.9 | 59.6 | 144.8 | % | 430.5 | 493.0 | (12.7 | )% | ||||||||||||||||||||||||
Sugar(Tons) | 26.1 | 20.5 | 27.6 | % | 75.1 | 59.6 | 25.9 | % | 348.1 | 343.9 | 1.2 | % | ||||||||||||||||||||||||
Energy(MWh) | 8.2 | — | 0 | % | 128.3 | — | 0 | % | 64.0 | — | 0 | % | ||||||||||||||||||||||||
Others | 0.4 | — | 0 | % | ||||||||||||||||||||||||||||||||
Total | 97.5 | 49.9 | 95.5 | % | ||||||||||||||||||||||||||||||||
105
Table of Contents
• | a $14.0 million increase in our Rice segment due to an increase in the volume of white and brown rice sold as a result of an increase in the volume of rough rice processed in our mills, from 119.2 thousand tons of rough rice in 2008 to 157.1 thousand tons of rough rice in 2009. The higher volume of rough rice processed was the result of higher volume of rough rice purchased from third parties. The increase in sales was also due to an increase in sales of processed rice purchased from third parties, from 2.6 thousand tons of rough rice equivalent in 2008 to 25.9 thousand tons of rough rice equivalent in 2009. The increase in volume was partially offset by a 18.5% decrease in price, from $426.7 per ton of rough rice equivalent in 2008 to $347.9 per ton of rough rice equivalent in 2009; and | |
• | a $6.5 million increase in our Crops segment mainly due to a one-time production and sale of 18.9 thousand tons of soybean meal and oil in a leased industrial facility; |
• | a $1.4 million decrease in our Dairy segment. Sales in 2009 correspond to the sale of remaining inventory of whole milk powder produced in previous periods. After the formation of the joint venture, Grupo La Lácteo, we ceased production of whole milk powder. See “— Year ended December 31, 2008 as compared to year ended December 31, 2007 — Sales of Manufactured Products and Services Rendered” for more details; | |
• | sales of manufactured products and services rendered for our Coffee segment remained essentially unchanged from $8.5 million in 2008 to $8.0 million in 2009. These sales reflect the sales of our coffee trader subsidiary Adeco Comércio, Exportação Importação Ltda., which traded coffee between producers from the east-center region of Brazil and roasters in Japan, the E.U. and the U.S. Since May 2010, we are no longer engaged in coffee trading; and | |
• | sales of manufactured products and services rendered for our Cattle segment remained unchanged, from $0.2 million in 2008 to $0.2 million in 2009, and reflect land leased to third parties for beef cattle grazing. |
Sugar, | ||||||||||||||||||||||||||||
Ethanol and | ||||||||||||||||||||||||||||
Crops | Rice | Dairy | Coffee | Cattle | Energy | Total | ||||||||||||||||||||||
(In thousands of $) | ||||||||||||||||||||||||||||
2009 | (5,447 | ) | (56,576 | ) | (613 | ) | (7,120 | ) | — | (110,327 | ) | (180,083 | ) | |||||||||||||||
2008 | (2,807 | ) | (39,862 | ) | (1,849 | ) | (6,978 | ) | — | (54,087 | ) | (105,583 | ) |
• | a $56.2 million increase in our Sugar, Ethanol and Energy segment as a result of a 99.4% increase in the volume of sugar and ethanol sold, further enhanced by greater operating costs, primarily at our Angélica mill, associated mainly with (i) increased costs due to the expansion of operations as they reach full productive potential, (ii) the unusual, sporadic rainfall pattern observed during the 2009 harvest, resulting in interruptions in harvesting activities, disruptions to milling operations and less stable productions rates, and (iii) a 7.7% decrease in the TRS content of the sugarcane, from 135 kilograms per ton of sugarcane in 2008 to 124 kilograms per ton of sugarcane in 2009, due to the rainy weather during the harvest, which increased the cost per unit of sugar and ethanol produced in 2009 as compared to 2008. As the TRS content of the harvested sugarcane decreases, more units of raw input material (sugarcane) and milling is required to produce each unit of output (sugar and ethanol); | |
• | a $16.7 million increase in our Rice segment due to a 55.0% increase in the volume of white and brown rice sold which was partially offset by an 8.4% decrease in the cost per unit sold, as a result of a decrease in the market price of rough rice, which is the main component of the cost; | |
• | a $2.6 million increase in our Crops segment mainly due to cost of raw materials (soybeans) associated with the increase in sales volume of soybean meal and oil; and | |
• | our Coffee segment remained essentially unchanged, from $7.0 million in 2008 to $7.1 million in 2009; |
106
Table of Contents
• | a $1.2 million decrease in our Dairy segment due to the cost of raw materials (raw milk) associated with the decrease in sales volume of whole milk powder. |
Sugar, | ||||||||||||||||||||||||||||
Ethanol and | ||||||||||||||||||||||||||||
Crops | Rice | Dairy | Coffee | Cattle | Energy | Total | ||||||||||||||||||||||
(In thousands of $) | ||||||||||||||||||||||||||||
2009 | 82,362 | 2,033 | 11,142 | 6,281 | 28,306 | 93 | 130,217 | |||||||||||||||||||||
2008 | 92,853 | 3,645 | 12,650 | 7,404 | 9,193 | 1,291 | 127,036 |
• | a $19.1 million increase in our Cattle segment due to the sale of 107.5 thousand head of beef cattle during 2009, including the one-time sale of 55.5 thousand head of beef cattle to a third party in December 2009; |
• | a $10.5 million decrease in our Crops segment mainly due to a decrease of 15% to 40%, depending on the crop, in the average yields obtained, as a result of a severe drought affecting most of the regions in which we operate, which commenced during mid-2008 and lasted until to mid-2009. See “— Introduction — Trends and Factors Affecting Our Results of Operations — Effects of Yield Fluctuations.” The reduction in yields was partially offset by a 36.0% increase in the production area, from 77,221 hectares in 2008 to 104,986 hectares in 2009. See “— Introduction — Trends and Factors Affecting Our Results of Operations — Effects of Yield Fluctuations” for a breakdown of yields obtained by crop. The following table sets forth the breakdown of sales by product for the periods indicated. |
Year Ended December 31, | Year Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||||||||||||||
2009 | 2008 | % Change | 2009 | 2008 | % Change | 2009 | 2008 | % Change | ||||||||||||||||||||||||||||
(In $ per ton) | ||||||||||||||||||||||||||||||||||||
(In millions of $) | (In thousands of tons) | |||||||||||||||||||||||||||||||||||
Soybean | 35.7 | 37.3 | (4.4 | )% | 120.3 | 129.6 | (7.2 | )% | 296.7 | 288.1 | 3.0 | % | ||||||||||||||||||||||||
Corn | 14.7 | 22.5 | (35.0 | )% | 100.5 | 153.3 | (34.4 | )% | 145.8 | 147.1 | (0.9 | )% | ||||||||||||||||||||||||
Cotton | 11.9 | 5.8 | 104.8 | % | 14.9 | 7.6 | 96.1 | % | 799.0 | 764.9 | 4.5 | % | ||||||||||||||||||||||||
Wheat | 10.2 | 15.4 | (33.7 | )% | 62.7 | 84.0 | (25.4 | )% | 163.0 | 183.4 | (11.1 | )% | ||||||||||||||||||||||||
Sunflower | 5.5 | 5.6 | (1.7 | )% | 27.8 | 15.3 | 81.7 | % | 198.5 | 367.0 | (45.9 | )% | ||||||||||||||||||||||||
Barley | 3.1 | 2.8 | 10.3 | % | 21.4 | 14.5 | 47.6 | % | 145.1 | 194.2 | (25.3 | )% | ||||||||||||||||||||||||
Others | 1.3 | 3.5 | (62.9 | )% | — | — | ||||||||||||||||||||||||||||||
Total | 82.4 | 92.9 | (11.3 | )% | 347.6 | 404.3 | (14.0 | )% | ||||||||||||||||||||||||||||
• | a $1.6 million decrease in our Rice segment mainly attributable to lower sales of rice seeds to third parties as a result of a reduction of the planting area in Argentina, due primarily to the drought; | |
• | a $1.5 million decrease in our Dairy segment due to a 20.0% decrease in the market price of raw milk, from 29.3 cents per liter in 2008 to 23.5 cents per liter in 2009. This was partially offset by a 10.1% increase in the volume of liters produced, from 43.1 million liters in 2008 to 47.5 million liters in 2009; | |
• | a $1.2 million decrease in our Sugar, Ethanol and Energy segment due to a decrease in the sale of raw sugarcane as a result of the increase in crushing capacity at our Angélica mill, which eliminated the need to sell the excess raw sugarcane produced in our agricultural operations to third party mills; and |
107
Table of Contents
• | a $1.1 million decrease in our Coffee segment due primarily to a 14.9% decrease in the market price of harvested coffee, from $2,628 per ton in 2008 to $2,237 per ton in 2009, and to a lesser extent to a 0.3% decrease in the volume sold, from 2,817 tons in 2008 to 2,808 tons in 2009, as a result of a 22.5% decrease in yields due to unusually heavy rains at harvest time. |
Sugar, | ||||||||||||||||||||||||||||
Ethanol and | ||||||||||||||||||||||||||||
Crops | Rice | Dairy | Coffee | Cattle | Energy | Total | ||||||||||||||||||||||
(In thousands of $) | ||||||||||||||||||||||||||||
2009 | 6,563 | 12,170 | 3,374 | (16,207 | ) | 4,704 | 61,064 | 71,668 | ||||||||||||||||||||
2008 | 28,005 | 7,854 | 2,633 | 4,485 | 3,788 | 14,235 | 61,000 |
• | a $46.8 million increase in our Sugar, Ethanol and Energy segment due to: |
• | a $2.9 million increase, from $0.8 million in 2008 to $3.7 million in 2009, generated by the recognition at fair value less cost to sell of sugarcane at the point of harvest due to (i) a 44.3% increase in the area harvested from 15,400 hectares in 2008 to 22,222 hectares in 2009, in connection with the expansion of the crushing capacity at our Angélica mill, (ii) a 4.5% increase in yields obtained, from 89.4 tons per hectare in 2008 to 93.4 tons per hectare in 2009, as a result of a higher percentage of new plantations in the total plantation area, and (iii) a 3.9% increase in the price of sugarcane from $21.8 per ton in 2008 to $22.6 per ton in 2009, as a result of higher sugar and ethanol market prices, which were partially offset by a lower TRS content in sugarcane. Actual production costs remained essentially unchanged, from $1,894.2 per hectare in 2008 to $1,944.0 per hectare in 2009; and | |
• | a $43.9 million increase, from $13.4 million in 2008 to $57.3 million in 2009, mainly generated by increases in price and yield estimates used in the DCF model to determine the fair value of our sugarcane plantations. Sugar price estimates were increased as a result of the increase in the market prices for sugar from $11.8 cents per pound as of December 31, 2008 to $27.0 cents per pound as of December 31, 2009 due to negative weather conditions in Brazil and India during 2009 generating a reduction in worldwide inventory. Yield estimates were increased as a result of a higher percentage of new plantations in the total plantation area. A sugarcane plant can be harvested between 5 to 6 times, once per year. The first cut can yield, on average, 120.0 tons per hectare. The yield decreases over time. The last cut can yield, on average, 60.0 tons per hectare. As a result, new plantations generate greater yields and are more valuable. The change in price and yield estimates resulted in an increase in the fair value of our sugarcane plantations from $1,476.8 per hectare in 2008 to $3,329.3 per hectare in 2009. | |
• | Of the $61.0 million of initial recognition and changes in fair value of biological assets and agricultural produce for 2009, $58.7 million represents the unrealized portion, as compared to the $13.7 million unrealized portion of the $14.3 million of initial recognition and changes in fair value of biological assets and agricultural produce in 2008; |
• | a $4.3 million increase in our Rice segment as a result of: |
• | a $2.5 million decrease in gains generated by the recognition at fair value less cost to sell of rice at the point of harvest, from $7.9 million in 2008 to $5.4 million in 2009, due to (i) a 17.3% decrease in yields obtained, from 6.6 tons per hectare in 2008 to 5.5 tons per hectare in 2009, due to the drought (see “— Introduction — Trends and Factors Affecting Our Results of Operations — Effects of Yield Fluctuations”), and (ii) a 25.8% increase in actual production costs, from $576.5 per hectare in 2008 to $725.1 per hectare in 2009, as a result of higher herbicide, fertilizer and seed prices, which was partially offset by a 16.5% increase in the production area, from 14,820 hectares in 2008 |
108
Table of Contents
to 17,258 hectares in 2009. The resulting actual margin per hectare decreased from $530.0 in 2008 to $313.5 in 2009; and |
• | a $6.8 million increase in the gains generated by the recognition at fair value less cost to sell of non-harvested rice as of the year-end, from zero in 2008 to $6.8 million in 2009, due to better weather conditions by the end of 2009, which resulted in an increase in the area of non-harvested rice attaining significant biological transformation as of the end of the period, from zero hectares in 2008 to 11,185 hectares in 2009. | |
• | Of the $7.9 million of initial recognition and changes in fair value of biological assets and agricultural produce for 2008, there was zero unrealized portion, as compared to the $6.8 million unrealized portion of the $12.2 million of initial recognition and changes in fair value of biological assets and agricultural produce in 2009; |
• | a $0.9 increase in our Cattle segment mainly due to a 12.0% increase in the average market price of cattle; and | |
• | a $0.7 million increase in our Dairy segment mainly due to a 26.5% decrease in actual production costs, from $23.0 cents per liter in 2008 to $16.9 cents per liter in 2009, primarily as a result of a decrease in feeding expenses; |
• | a $21.4 million decrease in our Crops segment mainly due to: |
• | a $25.6 million decrease in the recognition at fair value less cost to sell of crops at the point of harvest, from $27.7 million to $2.1 million, mainly due to (i) lower crop yields, which were impacted by the drought, and (ii) higher actual production costs, primarily due to higher fertilizer and agrochemical prices, partially offset by a 36.0% increase in the production area, from 77,221 hectares in 2008 to 104,986 hectares in 2009. The resulting actual margin per hectare for our summer crops (i.e.soybean, corn, sunflower and cotton) decreased from $364.5 per hectare in 2008 to $10.9 per hectare in 2009; and | |
• | a $4.1 million increase in the recognition at fair value less cost to sell for non-harvested crops as of year-end, from $0.3 million in 2008 to $4.4 million in 2009, due to better weather conditions by the end of 2009, which resulted in an increase in the area of non-harvested crops attaining significant biological transformation as of the end of the period, from 8,899 hectares in 2008 to 22,967 hectares in 2009. |
Year Ended December 31, | ||||||||||||
2009 | 2008 | % Change | ||||||||||
(In $ per hectare) | ||||||||||||
Corn | 422.1 | 357.1 | 18.2 | % | ||||||||
Soybean | 295.6 | 266.1 | 11.1 | % | ||||||||
Soybean (second harvest) | 202.7 | 158.5 | 27.9 | % | ||||||||
Cotton | 1,768.1 | 1,151.2 | 53.6 | % | ||||||||
Wheat | 297.6 | 217.7 | 36.7 | % |
• | Of the $28.0 million of initial recognition and changes in fair value of biological assets and agricultural produce for 2008, $0.3 million represents the unrealized portion, as compared to the $4.4 million unrealized portion of the $6.6 million of initial recognition and changes in fair value of biological assets and agricultural produce in 2009; |
• | a $20.7 million decrease in our Coffee segment due to: |
• | a $4.7 million decrease in the recognition at fair value less cost to sell of coffee at the point of harvest, from a gain of $1.1 million in 2008 to a loss of $3.6 million in 2009, due to (i) a 22.5% |
109
Table of Contents
decrease in yields obtained, from 2.3 tons per hectare in 2008 to 1.8 tons per hectare in 2009, due to unusually heavy rains at the moment of harvest, which spoil the unharvested beans, and (ii) a 37.4% decrease in the actual price of coffee at the point of harvest, from $2,419 per ton in 2008 to $1,515 per ton in 2009, as result of lower market prices and lower quality of harvested coffee beans, which were affected by the rains; and |
• | a $16.0 million decrease in the recognition at fair value less cost to sell of non-harvested coffee, from a gain of $3.3 million in 2008 to a loss of $12.7 million in 2009, mainly generated by a reduction of the area to be harvested in the short term as a result of the adoption of a more extensive pruning plan necessary to correct the growth pattern of our coffee trees, which impacted the production estimates used in the DCF model used to determine the fair value of our coffee plantations. The change in the production estimates resulted in a decrease in the fair value of our coffee plantations, from $15,938 per hectare in 2008 to $13,256 per hectare in 2009. | |
• | Of the $4.5 million loss in initial recognition and changes in fair value of biological assets and agricultural produce for 2008, $3.3 million represents the unrealized portion of the loss, as compared to the $12.7 million unrealized portion of the $16.2 million of initial recognition and changes in fair value of biological assets and agricultural produce in 2009. |
Sugar, | ||||||||||||||||||||||||||||
Ethanol and | ||||||||||||||||||||||||||||
Crops | Rice | Dairy | Coffee | Cattle | Energy | Total | ||||||||||||||||||||||
(In thousands of $) | ||||||||||||||||||||||||||||
2009 | 11,362 | 191 | N/A | 1,234 | N/A | N/A | 12,787 | |||||||||||||||||||||
2008 | 2,211 | N/A | N/A | (950 | ) | N/A | N/A | 1,261 |
Sugar, | ||||||||||||||||||||||||||||||||
Ethanol | ||||||||||||||||||||||||||||||||
Crops | Rice | Dairy | Coffee | Cattle | and Energy | Corporate | Total | |||||||||||||||||||||||||
(In thousands of $) | ||||||||||||||||||||||||||||||||
2009 | 6,280 | 2,883 | 2,221 | 2,126 | 2,909 | 13,922 | 22,052 | 52,393 | ||||||||||||||||||||||||
2008 | 3,885 | 398 | 1,835 | 3,308 | 2,206 | 12,646 | 21,355 | 45,633 |
110
Table of Contents
Sugar, | ||||||||||||||||||||||||||||
Ethanol and | ||||||||||||||||||||||||||||
Crops | Rice | Dairy | Coffee | Cattle | Energy | Total | ||||||||||||||||||||||
(In thousands of $) | ||||||||||||||||||||||||||||
2009 | 1,587 | 7,485 | 777 | 1,353 | 1,045 | 18,922 | 31,169 | |||||||||||||||||||||
2008 | 3,959 | 7,647 | 967 | 902 | 473 | 10,548 | 24,496 |
Sugar, | ||||||||||||||||||||||||||||||||||||
Ethanol and | Land | |||||||||||||||||||||||||||||||||||
Crops | Rice | Dairy | Coffee | Cattle | Energy | Transformation | Corporate | Total | ||||||||||||||||||||||||||||
(In thousands of $) | ||||||||||||||||||||||||||||||||||||
2009 | 4,776 | (942 | ) | (108 | ) | 806 | 377 | (10,567 | ) | 18,839 | (210 | ) | 13,071 | |||||||||||||||||||||||
2008 | 4,824 | 29 | 18 | (27 | ) | 16 | 211 | 13,974 | (1,722 | ) | 17,323 |
• | a $10.7 million decrease in our Sugar, Ethanol and Energy segment due to themark-to-market effect of future sales contracts for sugar. For further detail, see “Note 4 — Financial risk management — Derivative financial instruments” of our Consolidated Financial Statements; | |
• | a $1.0 million decrease in our Rice segment mainly due to the recognition of a one-time loss on the sale of old equipment in 2009; |
• | a $4.9 million increase in our Land Transformation segment due to the sale of a farmland in December 2009, which resulted in a $18.9 million gain, compared to the sale of a farmland in May 2008, which generated a $14.0 million gain; | |
• | a $0.8 million increase in our Coffee segment due to themark-to-market effect of outstanding hedging positions that resulted in a gain in 2009; and | |
• | a $0.4 million increase in our Cattle segment due to the collection of government production subsidies in 2009. |
111
Table of Contents
112
Table of Contents
Year Ended December 31, | ||||||||
2008 | 2007 | |||||||
(In thousands of $) | ||||||||
Sales of manufactured products and services rendered | 117,173 | 69,807 | ||||||
Cost of manufactured products sold and services rendered | (105,583 | ) | (63,519 | ) | ||||
11,590 | 6,288 | |||||||
Gross Profit from Manufacturing Activities | ||||||||
Sales of agricultural produce and biological assets | 127,036 | 72,696 | ||||||
Cost of agricultural produce sold and direct agricultural selling expenses | (127,036 | ) | (72,696 | ) | ||||
Initial recognition and changes in fair value of biological assets and agricultural produce | 61,000 | 26,935 | ||||||
Changes in net realizable value of agricultural produce after harvest | 1,261 | 12,746 | ||||||
62,261 | 39,681 | |||||||
Gross Profit from Agricultural Activities | ||||||||
Margin on Manufacturing and Agricultural Activities Before Operating | 73,851 | 45,969 | ||||||
Expenses | ||||||||
General and administrative expenses | (45,633 | ) | (33,765 | ) | ||||
Selling expenses | (24,496 | ) | (14,762 | ) | ||||
Other operating income, net | 17,323 | 2,238 | ||||||
Excess of fair value of net assets acquired over cost | 1,227 | 28,979 | ||||||
Share of loss of joint ventures | (838 | ) | (553 | ) | ||||
Profit from Operations Before Financing and Taxation | 21,434 | 28,106 | ||||||
Finance income | 2,552 | 12,925 | ||||||
Finance costs | (50,860 | ) | (12,458 | ) | ||||
Financial results, net | (48,308 | ) | 467 | |||||
(Loss)/Profit Before Income Tax | (26,874 | ) | 28,573 | |||||
Income tax benefit | 10,449 | 59 | ||||||
(Loss)/Profit for the Year | (16,425 | ) | 28,632 | |||||
Sugar, | ||||||||||||||||||||||||||||
Ethanol and | ||||||||||||||||||||||||||||
Crops | Rice | Dairy | Coffee | Cattle | Energy | Total | ||||||||||||||||||||||
(In thousands of $) | ||||||||||||||||||||||||||||
2008 | 3,134 | 53,280 | 2,171 | 8,544 | 164 | 49,880 | 117,173 | |||||||||||||||||||||
2007 | 2,236 | 24,875 | 13,183 | 5,035 | 56 | 24,422 | 69,807 |
• | a $25.5 million increase in our Sugar, Ethanol and Energy segment due to (i) a 66.4% increase in the volume of sugar and ethanol sold, from 98 thousand tons of TRS equivalent in 2007 to 163 thousand tons of TRS equivalent in 2008. The increase was the result of the commencement of operations at our Angélica mill, which increased the consolidated volume of sugarcane crushed in our mills by 55.6%, |
113
Table of Contents
from 0.9 million tons in 2007 to 1.4 million tons in 2008; (ii) a 25.9% increase in the price of ethanol, from $391.5 per cubic meter in 2007 to $493.0 per cubic meter in 2008; and (iii) a 27.8% increase in the price of sugar, from $269.1 per ton in 2007 to $343.8 per ton in 2008. This increase was partially offset by a reduction in volume sold, generated by a higher level of sugar and ethanol inventories, which increased by 25 thousand tons of TRS equivalent as of the end of 2008. During 2008 our Angélica mill produced only ethanol, which increased consolidated ethanol sales more than consolidated sugar sales. The following table sets forth the breakdown of sales by product for the periods indicated. |
Year Ended December 31, | Year Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||||||||||||||
2008 | 2007 | % Change | 2008 | 2007 | % Change | 2008 | 2007 | % Change | ||||||||||||||||||||||||||||
(In millions of $) | (In thousands units) | (In dollars per unit) | ||||||||||||||||||||||||||||||||||
Ethanol(M3) | 29.4 | 7.3 | 303.1 | % | 59.6 | 18.6 | 221.1 | % | 493.0 | 391.9 | 25.8 | % | ||||||||||||||||||||||||
Sugar(Tons) | 20.5 | 17.1 | 19.6 | % | 59.6 | 63.7 | (6.4 | )% | 343.9 | 269.0 | 27.9 | % | ||||||||||||||||||||||||
Energy(MWh) | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Others | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Total | 49.9 | 24.4 | 104.2 | |||||||||||||||||||||||||||||||||
• | a $28.4 million increase in our Rice segment due to a 117.8% increase in market prices, from $195.9 per ton of rough rice equivalent in 2007 to $426.6 per ton of rough rice equivalent in 2008, which was partially offset by a 1.6% decrease in the volume sold, from 127.0 thousand tons of rough rice equivalent in 2007 to 124.9 thousand tons of rough rice equivalent in 2008, due to a lower volume of rough rice purchased from third parties; | |
• | a $3.5 million increase in our Coffee segment due to a 33.2% increase in the volume sold, from 2,006 tons in 2007 to 2,673 tons in 2008, mainly as a result of an increase in the volume of coffee traded coupled with a 27.4% increase in market price, from $2,509.5 per ton in 2007 to $3,196.8 per ton in 2008; and | |
• | a $0.9 million increase in our Crops segment due to an opportunistic one-time sale of 2,400 tons of soybean meal and oil produced in a leased industrial facility in 2008; |
• | an $11.0 million decrease in our Dairy segment due to a decrease in the production of whole milk powder in leased industrial facilities. The decrease occurred in connection with the formation of Grupo La Lácteo, a joint venture engaged in the processing of raw milk. During 2007, we produced and sold whole milk powder. After the formation of the joint venture we ceased whole milk powder production as all of our raw milk production is sold to Grupo La Lácteo; and | |
• | our Cattle segment remained essentially unchanged, from $0.1 million in 2007 to $0.2 million in 2008. |
Sugar, | ||||||||||||||||||||||||||||
Ethanol and | ||||||||||||||||||||||||||||
Crops | Rice | Dairy | Coffee | Cattle | Energy | Total | ||||||||||||||||||||||
(In thousands of $) | ||||||||||||||||||||||||||||
2008 | (2,807 | ) | (39,862 | ) | (1,849 | ) | (6,978 | ) | — | (54,087 | ) | (105,583 | ) | |||||||||||||||
2007 | (1,552 | ) | (19,064 | ) | (9,824 | ) | (4,539 | ) | — | (28,540 | ) | (63,519 | ) |
• | a $25.5 million increase in our Sugar, Ethanol and Energy segment due to a 66.4% increase in the volume of sugar and ethanol sold, further enhanced by greater operating costs, primarily at our Angélica mill, associated mainly with (i) increased costs mainly due to the expansion of operations as they reach full productive potential and (ii) a 4.3% decrease in the TRS content of sugarcane, from 141 |
114
Table of Contents
kilograms per ton of sugarcane in 2007 to 135 kilograms per ton of sugarcane in 2008, which increased the cost per unit of sugar and ethanol produced. The TRS content suffered a reduction due to a late start of the harvest, which precluded harvesting sugarcane during the months with the highest TRS content (i.e.July to September); |
• | a $20.8 million increase in our Rice segment as a result of an increase in the price of rough rice purchased from third parties and the price of rough rice transferred from our farms to our mills; | |
• | a $2.4 million increase in our Coffee segment due to the increase in the volume of coffee traded; and | |
• | a $1.3 million increase in our Crops segment due to a one-time sale of soybean meal and oil; |
• | an $8.0 million decrease in our Dairy segment due to the decrease in sales of whole milk powder as a result of the transfer of whole milk powder production activities to the joint venture Grupo La Lácteo. |
Sugar, | ||||||||||||||||||||||||||||
Ethanol and | ||||||||||||||||||||||||||||
Crops | Rice | Dairy | Coffee | Cattle | Energy | Total | ||||||||||||||||||||||
(In thousands of $) | ||||||||||||||||||||||||||||
2008 | 92,853 | 3,645 | 12,650 | 7,404 | 9,193 | 1,291 | 127,036 | |||||||||||||||||||||
2007 | 57,057 | 1,547 | 4,658 | 2,232 | 7,202 | — | 72,696 |
• | a $35.8 million increase in our Crops segment mainly due to a 47.2% increase in the production area, from 52,453 hectares in 2007 to 77,221 hectares in 2008, as a result of farmland acquisitions and additional farmland leases, and an increase in market prices of between 3.1% to 50.7%, depending on each crop. The following table sets forth the breakdown of sales by product for the periods indicated. |
Year Ended December 31, | Year Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||||||||||||||
2008 | 2007 | % Change | 2008 | 2007 | % Change | 2008 | 2007 | % Change | ||||||||||||||||||||||||||||
(In millions of $) | (In thousands of tons) | (In $ per ton) | ||||||||||||||||||||||||||||||||||
Soybean | 37.3 | 26.8 | 39.2 | % | 129.6 | 112.2 | 15.5 | % | 288.1 | 239.1 | 20.5 | % | ||||||||||||||||||||||||
Corn | 22.5 | 11.2 | 101.6 | % | 153.3 | 85.7 | 78.9 | % | 147.1 | 130.5 | 12.7 | % | ||||||||||||||||||||||||
Cotton | 5.8 | 6.9 | (16.3 | )% | 7.6 | 6.5 | 16.9 | % | 764.9 | 1,067.8 | (28.4 | )% | ||||||||||||||||||||||||
Wheat | 15.4 | 8.3 | 85.4 | % | 84.0 | 46.7 | 79.9 | % | 183.4 | 177.9 | 3.1 | % | ||||||||||||||||||||||||
Sunflower | 5.6 | 1.1 | 412.3 | % | 15.3 | 4.5 | 240.0 | % | 367.0 | 243.6 | 50.7 | % | ||||||||||||||||||||||||
Barley | 2.8 | 2.8 | 160.5 | % | 14.5 | 8.0 | 81.3 | % | 194.2 | 135.1 | 43.7 | % | ||||||||||||||||||||||||
Others | 3.5 | — | — | |||||||||||||||||||||||||||||||||
Total | 92.9 | 57.1 | 62.7 | % | 404.3 | 263.6 | 53.4 | % | ||||||||||||||||||||||||||||
• | an $8.0 million increase in our Dairy segment due to a 128.4% increase in the volume of raw milk sold, from 18.9 million liters in 2007 to 43.1 million liters in 2008, and a 18.9% increase in market price, from 24.7 cents per liter in 2007 to 29.3 cents per liter in 2008; | |
• | a $5.2 million increase in our Coffee segment due to (i) an 127.9% increase in the volume sold, from 1,236 tons in 2007 to 2,817 tons in 2008, as a result of acquiring new farmland and expanding the production area in existing farmlands and an increase in yields, coupled with (ii) a 45.5% increase in market price, from $1,805.8 per ton in 2007 to $2,628.3 per ton in 2008; | |
• | a $2.1 million increase in our Rice segment mainly due to an increase in the price of rice seeds sold to third parties; |
115
Table of Contents
• | a $2.0 million increase in our Cattle segment due to a 19.5% increase in sales volume, from 33.5 thousand head of cattle in 2007 to 40.6 thousand head of cattle in 2008; and | |
• | a $1.3 million increase in our Sugar, Ethanol and Energy segment due to an increase in sales of raw sugarcane as a result of higher sugarcane production than the milling capacity at our Angélica mill, which generated excess sugarcane that was sold to a third party mill. |
Sugar, | ||||||||||||||||||||||||||||
Ethanol and | ||||||||||||||||||||||||||||
Crops | Rice | Dairy | Coffee | Cattle | Energy | Total | ||||||||||||||||||||||
(In thousands of $) | ||||||||||||||||||||||||||||
2008 | 28,005 | 7,854 | 2,633 | 4,485 | 3,788 | 14,235 | 61,000 | |||||||||||||||||||||
2007 | 20,054 | 1,974 | 2,944 | 5,848 | 5,165 | (9,050 | ) | 26,935 |
• | a $23.3 million increase in our Sugar, Ethanol and Energy segment due to: |
• | a $1.3 million decrease, from $2.1 million in 2007 to $0.8 million in 2008, generated by the recognition at fair value less cost to sell of sugarcane at the point of harvest due to a 27.5% increase in actual production costs, from $1,485 per hectare in 2007 to $1,894 per hectare in 2008, as a result of higher costs at our Angélica mill during the period, partially offset by (i) a 13.3% increase in actual sugarcane prices, from $19.2 per ton in 2007 to $21.8 per ton in 2008, as a result of higher sugar and ethanol market prices, partially offset by a lower TRS content in sugarcane, and (ii) a 52.4% increase in the harvested area from 10,106 hectares in 2007 to 15,400 hectares in 2008, as a result of the expansion at our Angélica mill. Yields obtained remained essentially unchanged, from 89.4 tons per hectare in 2007 to 88.0 tons per hectare in 2008; and | |
• | a $24.6 million increase, from a loss of $11.1 million in 2007 to a gain of $13.5 million in 2008, mainly generated by a change in price and yield estimates used in the DCF model to determine the fair value of our sugarcane plantations. Due to the bad weather in India and to the low sugar content (TRS) of the Brazilian sugarcane production during 2008, demand surpassed production generating a decrease in worldwide stocks. As a result, sugar market prices increased from $10.9 cents per pound as of December 31, 2007 to $11.8 cents per pound as of December 31, 2008. Yield estimates were increased as a result of a higher percentage of new plantations in the total plantation area. The change in price and yield estimates resulted in an increase in the fair value of our sugarcane plantations from $941.9 per hectare in 2007 to $1,476.8 per hectare in 2008. | |
• | Of the $14.2 million of initial recognition and changes in fair value of biological assets and agricultural produce for 2008, $13.4 million represents the unrealized portion, as compared to a $11.1 million unrealized portion of the loss of $9.0 million of initial recognition and changes in fair value of biological assets and agricultural produce for 2007; |
• | an $8.0 million increase in our Crops segment due to: |
• | a $15.8 million increase in the gains generated by the recognition at fair value less cost to sell of summer crops (i.e.soybean, corn, sunflower and cotton) at the point of harvest, from $11.2 million in 2007 to $27.0 million in 2008, due to (i) an increase in market prices, and (ii) a 47.2% increase in the production area, from 52,453 hectares in 2007 to 77,221 hectares in 2008, as a result of farmland acquisitions and new farm leases, which was partially offset by higher actual production costs due to an increase in harvest and tillage expenses, and lower yields obtained due to a higher percentage of area under transformation. The resulting actual margin per hectare increased from $217.5 per hectare in 2007 to $364.5 per hectare in 2008; |
116
Table of Contents
2008 | 2007 | % Change | ||||||||||
(In $ per hectare) | ||||||||||||
Corn | 357.1 | 289.3 | 23.4 | % | ||||||||
Soybean | 266.1 | 192.1 | 38.5 | % | ||||||||
Soybean (second harvest) | 158.5 | 139.5 | 13.6 | % | ||||||||
Cotton | 1,151.2 | 1,215.8 | (5.3 | )% | ||||||||
Wheat | 217.7 | 180.7 | 20.5 | % |
• | a $7.1 million decrease in gains generated by the recognition at fair value less cost to sell of harvested winter crops (i.e.wheat and barley) at the point of harvest, from $7.8 million in 2007 to $0.7 million in 2008, due to lower yields, which were impacted by the commencement of the drought. The resulting actual margin per hectare decreased from $308.6 per hectare in 2007 to $23.4 per hectare in 2008; and | |
• | gains generated by the recognition at fair value less cost to sell of non-harvested crops as of year-end remained essentially unchanged, from $1.0 million in 2007 to $0.3 million in 2008. | |
• | Of the $20.0 million of initial recognition and changes in fair value of biological assets and agricultural produce in 2007, $1.0 million represents the unrealized portion, as compared to the $0.3 million unrealized portion of the $28.0 million of initial recognition and changes in fair value of biological assets and agricultural produce in 2008; |
• | a $5.9 million increase in our Rice segment as a result of an increase in gains generated by the recognition at fair value less cost to sell of rice at the point of harvest due to an increase in rough rice market prices, which was partially offset by a 7.9% increase in actual production costs, from $534.2 per hectare in 2007 to $576.5 per hectare in 2008, primarily driven by an increase in harvesting and tillage expenses. The production area remained essentially unchanged, from 14,984 hectares in 2007 to 14,820 hectares in 2008. Resulting actual margin per hectare increased from $131.8 in 2007 to $530.0 in 2008. |
• | None of the non-harvested rice as of year-end attained significant biological transformation in 2008 and 2007. Therefore, those hectares were valued at cost, which approximates fair value. |
• | a $1.4 million decrease in our Coffee segment due to: |
• | a $1.8 million increase generated by the recognition at fair value less cost to sell of coffee at the point of harvest, from a loss of $0.7 million in 2007 to a gain of $1.1 million in 2008, due to (i) a 58.1% increase in the harvested area, from 835 hectares in 2007 to 1,320 hectares in 2008, as a result of acquiring new farmland and expanding the production area in existing farmlands, (ii) a 55.0% increase in yields, from 1.5 tons per hectare in 2007 to 2.3 tons per hectare in 2008, and (iii) a 45.5% increase in market price, from $1,805.8 per ton in 2007 to $2,628.3 per ton in 2008; and | |
• | a $3.2 million decrease in changes in fair value less cost to sell for non-harvested coffee from a gain $6.6 million in 2007 to a gain $3.4 million in 2008, mainly generated by a change in the price estimates of the DCF model used to determine the fair value of our coffee plantations as of the end of 2007. Price estimates were increased due to an improvement in market prices during 2007. Market prices increased from $126.2 cents per pound as of December 31, 2006 to $136.2 cents per pound as of December 31, 2007. The change in price estimates resulted in an increase in the fair value of our coffee plantations, from $17,146.1 per hectare as of December 31, 2006 to $20,933.3 per hectare as of December 31, 2007. | |
• | Of the $5.8 million of initial recognition and changes in fair value of biological assets and agricultural produce in 2007, $6.6 million represents the unrealized portion, as compared to a |
117
Table of Contents
$3.4 million unrealized portion of the $4.5 million of initial recognition and changes in fair value of biological assets and agricultural produce in 2008; |
• | a $1.4 million decrease in our Cattle segment due to a 21.1% decrease in the average market price of cattle and a 15.7% increase in costs incurred. This increase in costs was due to an increase in feeding and health expenses as a result of an increase in the number of head of cattle confined and fattened in feed lots coupled with an increase in corn prices, the main component of the feeding formula; and | |
• | a $0.3 million decrease in our Dairy segment due to a 97.6% increase in actual production costs, from $14.5 cents per liter in 2007 to $23.0 cents per liter in 2008, primarily as a result of an increase in feeding expenses generated by an increase in corn and soybean prices. |
Sugar, | ||||||||||||||||||||||||||||
Ethanol and | ||||||||||||||||||||||||||||
Crops | Rice | Dairy | Coffee | Cattle | Energy | Total | ||||||||||||||||||||||
(In thousands of $) | ||||||||||||||||||||||||||||
2008 | 2,211 | N/A | N/A | (950 | ) | N/A | N/A | 1,261 | ||||||||||||||||||||
2007 | 12,746 | N/A | N/A | N/A | N/A | N/A | 12,746 |
Sugar, | ||||||||||||||||||||||||||||||||
Ethanol | ||||||||||||||||||||||||||||||||
Crops | Rice | Dairy | Coffee | Cattle | and Energy | Corporate | Total | |||||||||||||||||||||||||
(In thousands of $) | ||||||||||||||||||||||||||||||||
2008 | 3,885 | 398 | 1,835 | 3,308 | 2,206 | 12,646 | 21,355 | 45,633 | ||||||||||||||||||||||||
2007 | 4,428 | 1,003 | 1,822 | 3,131 | 2,504 | 9,789 | 11,088 | 33,765 |
• | a $10.3 million increase in our corporate expenses as a result of (i) the acquisition of certain subsidiaries during 2007 (mainly Pilagá S.R.L., Agro Invest S.A. and Bañado del Salado S.A.), which did not have a full year’s impact on general and administrative expenses until 2008; (ii) an increase in management compensation; and (iii) the implementation of Oracle ERP (enterprise resource planning) and one-time professional service fees related to the first time adoption of IFRS accounting standards; | |
• | a $2.9 million increase in our Sugar, Ethanol and Energy segment as a result of higher technical management salary expenses and related maintenance and fuel costs due to the expansion of our crushing capacity at our Angélica mill; and | |
• | a $0.2 million increase in our Coffee segment due to higher technical management salary expenses and related maintenance and fuel expenses as a result of an increase in the scale of our operation; |
118
Table of Contents
• | a $0.6 million decrease in our Rice segment mainly due to the realization of synergies after the acquisition of Pilagá S.R.L. in 2007, resulting in lower overhead expenses; | |
• | a $0.5 million decrease in our Crops segment mainly due to the sale of our subsidiary La Agraria S.A. in March 2008 following the 2007/2008 harvest; and | |
• | a $0.3 million decrease in our Cattle segment mainly due to a reduction in technical management salary expenses due to the reduction of our cattle herd by 8.9 thousand head of cattle. |
Sugar, | ||||||||||||||||||||||||||||
Ethanol and | ||||||||||||||||||||||||||||
Crops | Rice | Dairy | Coffee | Cattle | Energy | Total | ||||||||||||||||||||||
(In thousands of $) | ||||||||||||||||||||||||||||
2008 | 3,959 | 7,647 | 967 | 902 | 473 | 10,548 | 24,496 | |||||||||||||||||||||
2007 | 1,350 | 5,365 | 2,282 | 465 | 517 | 4,783 | 14,762 |
Sugar, | ||||||||||||||||||||||||||||||||||||
Ethanol and | Land | |||||||||||||||||||||||||||||||||||
Crops | Rice | Dairy | Coffee | Cattle | Energy | Transformation | Corporate | Total | ||||||||||||||||||||||||||||
(In thousands of $) | ||||||||||||||||||||||||||||||||||||
2008 | 4,824 | 29 | 18 | (27 | ) | 16 | 211 | 13,974 | (1,722 | ) | 17,323 | |||||||||||||||||||||||||
2007 | (1,977 | ) | (54 | ) | 74 | 61 | (16 | ) | 362 | 4,135 | (347 | ) | 2,238 |
• | a $9.8 million increase in our Land Transformation segment mainly due to the sale of a farmland in May 2008, which generated a $14.0 million gain, compared to a profit of $4.1 generated by the contribution of our milk processing assets to a joint venture formed with a strategic partner in late 2007; and | |
• | a $6.8 million increase in our Crops segment mainly due to themark-to-market effect of future sales contracts for soybean, corn and wheat. For further detail, see “Note 4 — Financial risk management — Derivative financial instruments” of our Consolidated Financial Statements. |
119
Table of Contents
• | our ability to generate cash flows from our operations; | |
• | the level of our outstanding indebtedness and the interest that we are obligated to pay on such outstanding indebtedness; | |
• | our capital expenditure requirements, which consist primarily of investments in new farmland, in our operations, in equipment and plant facilities and maintenance costs; and | |
• | our working capital requirements. |
120
Table of Contents
121
Table of Contents
122
Table of Contents
123
Table of Contents
124
Table of Contents
• | new debt; | |
• | proceeds from this offering; | |
• | proceeds from the Al Gharrafa Transaction, assuming it is consummated (see “Business — Offering Transactions and Sale to Al Gharrafa Investment Company”); | |
• | the disposition of transformed farmlandand/or subsidiaries; and | |
• | operating cash flow. |
• | to refinance our current debt; | |
• | to meet our budgeted capital expenditures for 2010 and to make capital expenditures in 2011; | |
• | to make investments in new projects related to our business; and | |
• | for other working capital purposes. |
125
Table of Contents
As of | As of | |||||||||||||||
September 30 | December 31, | |||||||||||||||
2010 | 2009 | 2008 | 2007 | |||||||||||||
(In thousands of $) | ||||||||||||||||
Fixed rate: | ||||||||||||||||
Less than 1 year(1) | 47,059 | 30,579 | 95,209 | 59,880 | ||||||||||||
Between 1 and 2 years | 38,682 | 5,724 | 678 | 2,359 | ||||||||||||
Between 2 and 3 years | 20,896 | 5,173 | 191 | 311 | ||||||||||||
Between 3 and 4 years | 7,622 | 5,167 | 127 | 269 | ||||||||||||
Between 4 and 5 years | 6,675 | 5,167 | — | 184 | ||||||||||||
More than 5 years | 2,442 | 5,167 | — | — | ||||||||||||
123,376 | 56,977 | 96,205 | 63,003 | |||||||||||||
Variable rate: | ||||||||||||||||
Less than 1 year(1) | 90,329 | 72,391 | 128,378 | 36,536 | ||||||||||||
Between 1 and 2 years | 86,213 | 68,667 | 703 | 12,886 | ||||||||||||
Between 2 and 3 years | 79,204 | 55,907 | 703 | 11,569 | ||||||||||||
Between 3 and 4 years | 21,914 | 49,511 | 249 | 11,569 | ||||||||||||
Between 4 and 5 years | 21 | 787 | 41 | 10,918 | ||||||||||||
More than 5 years | 1,604 | 1,621 | 1,152 | 10,963 | ||||||||||||
279,285 | 248,884 | 131,226 | 94,441 | |||||||||||||
402,661 | 305,861 | 227,431 | 157,444 |
(1) | The Company plans to partially rollover its short term debt using new available lines of credit, or on using operating cash flow to cancel such debt. |
126
Table of Contents
127
Table of Contents
Financial Ratios | 2009 | 2010 | 2011 | 2012 to 2013 | 2014 to 2018 | |||||||||||||||
Debt Service Coverage Ratio (individual) (pre December 2010 amendment) | >1.00 | >1.00 | >1.00 | >1.00 | >1.30 | |||||||||||||||
Debt Service Coverage Ratio (individual) (post December 2010 amendment) | >1.00 | >0.65 | >1.00 | >1.00 | >1.30 | |||||||||||||||
Liquidity Ratio (individual) | >0.55 | >1.00 | >1.00 | >1.00 | >1.00 | |||||||||||||||
Liquidity Ratio (aggregate) | >1.20 | >0.65 | >1.00 | >1.20 | >1.20 | |||||||||||||||
Interest Coverage Ratio (aggregate) | >3.00 | >2.00 | >2.00 | >4.00 | >4.00 | |||||||||||||||
Net Bank Debt/EBITDA (aggregate) (pre December 2010 amendment) | <3.00 | <4.00 | <3.00 | <3.00 | <3.00 | |||||||||||||||
Net Bank Debt/EBITDA (aggregate) (post December 2010 amendment) | <3.00 | <5.50 | <3.00 | <3.00 | <3.00 |
128
Table of Contents
Financial Ratios | 2010 1Q | 2010 2Q | 2010 3Q | 2010 4Q | 2011 | 2012 | 2013 | |||||||||||||||||||||
EBITDA (aggregate) (in millions of $) | >3.00 | >13.00 | >15.00 | N/A | N/A | N/A | N/A | |||||||||||||||||||||
<115.00/ | <115.00/ | <115.00/ | ||||||||||||||||||||||||||
Total Debt (aggregate) (in millions of $)(1) | <105.00 | <110.00 | <120.00 | <115.00 | <120.00 | <120.00 | <120.00 | |||||||||||||||||||||
Capital Expenditures (aggregate) (in millions of $) | <2.70 | <9.60 | <15.00 | <15.00 | N/A | N/A | N/A | |||||||||||||||||||||
Debt to EBITDA (aggregate) | N/A | N/A | N/A | <5.00 | <4.75 | <4.25 | <3.75 | |||||||||||||||||||||
Total Liabilities to Total Equity (aggregate) | N/A | N/A | N/A | <1.50 | <1.50 | <1.30 | <1.30 | |||||||||||||||||||||
Current Asset to Current Liabilities (aggregate)(2) | N/A | N/A | N/A | >1.30 | >1.10/1.30 | >1.10/1.30 | >1.10/1.30 | |||||||||||||||||||||
Interest Coverage (aggregate) | N/A | N/A | N/A | >1.40 | >2.10 | >2.35 | >2.60 | |||||||||||||||||||||
Debt to Equity (aggregate) | N/A | N/A | N/A | <1.20 | <1.20 | <1.20 | <1.20 | |||||||||||||||||||||
Short-Term Debt to Total Debt (aggregate)(3) | N/A | N/A | N/A | <0.57 | <0.50 | <0.50 | <0.50 | |||||||||||||||||||||
Debt to Equity (individual) | N/A | N/A | N/A | <1.70 | <1.40 | <1.20 | <1.20 |
(1) | From 2011 onwards, for the first, second and third quarters the limit is <120.00, and for the fourth quarter, the limit is <115.00. However, if the Debt to EBITDA (aggregate) is <3.50, there shall be no limit on total debt (aggregate). | |
(2) | From 2011 onwards, for the first, second and third quarters the ratio is >1.10, and for the fourth quarter, the ratio is >1.30. | |
(3) | Measured annually. |
129
Table of Contents
Financial Ratios | 2010 | 2011 to 2013 | 2014 to 2020 | |||||||||
Debt Service Coverage Ratio (individual) (pre December 2010 amendment) | >1.00 | >1.00 | >1.30 | |||||||||
Debt Service Coverage Ratio (individual) (post December 2010 amendment) | >0.65 | >1.00 | >1.30 | |||||||||
Liquidity Ratio (individual) | >1.00 | >1.00 | >1.00 |
Financial Ratios | 2010 | 2011 | 2012 | |||||||||
Interest Coverage Ratio (individual) | >1.65 | >3.10 | >3.50 | |||||||||
Leverage Ratio (individual) | <8.50 | <3.40 | <2.50 | |||||||||
Capital Expenditures (individual) (in millions of R$) | <154.00 | <50.00 | <50.00 |
• | $137.4 million of bank loans, and | |
• | $0.5 million in obligations under finance leases. |
130
Table of Contents
2011 | 2012 | 2013 | Total | |||||||||||||
(In thousands of $) | ||||||||||||||||
Farming | 55,150 | 94,156 | 91,230 | 240,536 | ||||||||||||
Land acquisitions & transformation | 45,550 | 83,156 | 82,421 | 211,127 | ||||||||||||
Rice & dairy facilities | 9,600 | 11,000 | 8,809 | 29,409 | ||||||||||||
Sugar, Ethanol and Energy | 163,250 | 185,605 | 142,340 | 491,195 | ||||||||||||
Maintenance and development of existing mills | 46,843 | 33,847 | 29,490 | 110,180 | ||||||||||||
Ivinhema mill construction | 116,407 | 151,758 | 112,850 | 381,015 | ||||||||||||
Total | 218,399 | 279,761 | 233,570 | 731,731 | ||||||||||||
131
Table of Contents
Less Than | One to Three | Three to Five | ||||||||||||||||||
One Year | Years | Years | Thereafter | Total | ||||||||||||||||
(In millions of $) | ||||||||||||||||||||
Bank loans(1)(2) | 125.3 | 158.8 | 68.0 | 11.9 | 364.0 | |||||||||||||||
Leases | 19.5 | 29.9 | 16.3 | 8.8 | 74.5 | |||||||||||||||
Acquisition of subsidiaries(3)(4) | 2.2 | 6.0 | — | — | — | |||||||||||||||
Total | 144.8 | 188.7 | 84.3 | 20.7 | 438.5 | |||||||||||||||
(1) | Includes interest. | |
(2) | As of September 30, 2010, we entered into 2 new loans facilities with Banco do Brazil and Deutsche Bank (see “— Indebtedness” above). | |
(3) | Related to purchase obligations incurred in connection with the acquisition of La Lácteo S.A. and Usina Monte Alegre Ltda. | |
(4) | On August 23, 2010, we acquired Dinaluca S.A. See “Summary — Recent developments.” |
• | Amendment to IFRS 7 “Financial Instruments: Disclosures” The amendments are entitled “Improving Disclosures about Financial Instruments — Amendments to IFRS 7” and also contain minor changes to IFRS 4 “Insurance Contracts.” The amendments to IFRS 7 relate to disclosures about fair value measurements and disclosures about liquidity risk. The disclosures about fair value measurements specify that a table must be provided for each class of financial instruments on the basis of a three-level fair value hierarchy. Note 12 to the consolidated financial statements include these disclosures. | |
• | Amendments to IAS 36, “Impairment of assets”; IAS 41, “Agriculture”; IAS 32, “Financial Instruments: Presentation” and IAS 1 “Presentation of Financial Statements”; IFRS 2, “Share-based Payment — Vesting Conditions and Cancellations”; IAS 38, “Intangible assets”; IAS 16, “Property, plant and equipment” and IAS 7, “Statement of cash flows”; IAS 19, “Employee benefits”; IAS 20, “Accounting for government grants and disclosure of government assistance”; IAS 27, “Consolidated and separate financial statements”; IAS 28, “Investments in associates,” IAS 32, “Financial Instruments: |
132
Table of Contents
Presentation” and IFRS 7, “Financial instruments: Disclosures”; IAS 29, “Financial reporting in hyperinflationary economies”; IAS 31, “Interests in joint ventures” and IAS 32, “Financial Instruments: Presentation” and IFRS 7, “Financial Instruments: Disclosures”; IAS 38, “Intangible assets”; IAS 40, “Investment property” and IAS 16, “Property, plant and equipment”. The adoption of these amendments did not have an impact on the presentation of our results of operations, financial position or cash flows. See Note 2.1 to the consolidated financial statements for a detailed description of the requirements of each standard. |
• | In January 2008, the IASB published the revised standards IFRS 3 “Business Combinations” and IAS 27 “Consolidated and Separate Financial Statements.” These standards are the result of the second phase of the project carried out together with the Financial Accounting Standards Board (FASB) to reform the accounting methodology for business combinations. The main changes revised IFRS 3 will provide are as follows: | |
• | The revised standard gives the option of measuring non-controlling interests either at fair value or at the proportionate share of the identifiable net assets. This choice can be exercised for each business combination individually. | |
• | In a business combination achieved in stages (step acquisition), the acquirer shall re-measure its previously held equity interest in the acquiree to fair value at the date the acquirer obtains control. Goodwill shall then be determined as the difference between the re-measured carrying amount plus consideration transferred for the acquisition of the new shares, minus net assets acquired and any non-controlling interest. | |
• | Contingent consideration shall be measured at fair value at the acquisition date and classified either as equity, or as asset or liability at the acquisition date. | |
• | Acquisition-related costs incurred in connection with business combinations shall be recognized as expenses. | |
• | For changes in contingent consideration classified as a liability at the acquisition date, goodwill cannot be re-measured subsequently. | |
• | According to the revised IFRS 3, effects from the settlement of relationships existing prior to the business combination shall not be part of the exchange for the acquiree. | |
• | In contrast to the previous version of IFRS 3, the revised standard governs the recognition and measurement of rights that were granted to another entity prior to the business combination and which are now reacquired as part of the business combination (reacquired rights). |
• | Changes in a parent’s ownership interest in a subsidiary that do not result in the loss of control shall only be accounted for within equity. | |
• | If a parent loses control of a subsidiary it shall derecognize the consolidated assets and liabilities. The new requirement is that any investment retained in the former subsidiary shall be recognized at fair value at the date when control is lost; any differences resulting from this shall be recognized in profit or loss. | |
• | When losses attributed to the minority (non-controlling) interests exceed the minority’s interests in the subsidiary’s equity, these losses shall be allocated to the non-controlling interests even if this results in a deficit balance. |
133
Table of Contents
• | Amendments to IFRS 2, “Share-based Payment”; IAS 38, “Intangible Assets”; IFRS 5, “Measurement of non-current assets (or disposal groups) classified asheld-for-sale”; IAS 1, “Presentation of financial statements”; IAS 32, “Financial Instruments: Presentation”; IAS 24, “Related Party Disclosures”; IFRIC 19, “Extinguishing Financial Liabilities with Equity Instruments”. The amendments are not expected to have a material impact on the presentation of our results of operations, financial position or cash flows. See Note 2.1 to the consolidated financial statements for a detailed description of the requirements of each standard. |
134
Table of Contents
135
Table of Contents
Arable Land | Pasture | Forest(1) | ||||||||||||||||||||||||||||||||||||||||||
Share of | Share of | Share of | ||||||||||||||||||||||||||||||||||||||||||
Area | Total Land | Area | Total Land | Area | Total Land | |||||||||||||||||||||||||||||||||||||||
Region/Country Grouping | 1961 | 1991 | 2007 | 2007 | 1961 | 1991 | 2007 | 2007 | 1991 | 2007 | 2007 | |||||||||||||||||||||||||||||||||
(Million ha) | (Percentage) | (Million ha) | (Percentage) | (Million ha) | (Percentage) | |||||||||||||||||||||||||||||||||||||||
Baltic states and CIS(2) | 235.4 | 224.4 | 198.5 | 9.2 | 302.0 | 326.5 | 362.1 | 16.9 | 848.8 | 849.9 | 39.6 | |||||||||||||||||||||||||||||||||
Eastern Europe | 48.7 | 45.0 | 39.7 | 34.9 | 20.0 | 20.4 | 16.6 | 14.6 | 34.7 | 35.9 | 31.6 | |||||||||||||||||||||||||||||||||
Western Europe | 89.0 | 78.6 | 72.8 | 20.4 | 69.7 | 60.7 | 58.9 | 16.5 | 122.5 | 132.9 | 37.2 | |||||||||||||||||||||||||||||||||
Developing Asia | 404.4 | 452.5 | 466.4 | 17.6 | 623.4 | 805.1 | 832.8 | 31.5 | 532.8 | 532.6 | 20.1 | |||||||||||||||||||||||||||||||||
North Africa | 20.4 | 23.0 | 23.1 | 3.8 | 73.4 | 74.4 | 77.3 | 12.9 | 8.1 | 9.1 | 1.5 | |||||||||||||||||||||||||||||||||
Sub-Saharan Africa | 133.8 | 161.3 | 196.1 | 8.3 | 811.8 | 823.8 | 833.7 | 35.3 | 686.8 | 618.2 | 26.2 | |||||||||||||||||||||||||||||||||
Latin America and the Caribbean | 88.7 | 133.6 | 148.8 | 7.3 | 458.4 | 538.5 | 550.1 | 27.1 | 988.3 | 914.6 | 45.1 | |||||||||||||||||||||||||||||||||
North America | 221.5 | 231.3 | 215.5 | 11.5 | 282.3 | 255.4 | 253.7 | 13.6 | 609.2 | 613.5 | 32.9 | |||||||||||||||||||||||||||||||||
Oceania | 33.4 | 48.5 | 45.6 | 5.4 | 444.5 | 431.4 | 393.0 | 46.3 | 211.9 | 205.5 | 24.2 | |||||||||||||||||||||||||||||||||
DEVELOPED COUNTRIES | 633.8 | 632.4 | 576.2 | 10.9 | 1,119.0 | 1,094.1 | 1,083.4 | 20.5 | 1,815.7 | 1,829.0 | 34.7 | |||||||||||||||||||||||||||||||||
DEVELOPING COUNTRIES | 647.6 | 770.9 | 834.9 | 10.8 | 1,967.8 | 2,242.6 | 2,294.8 | 29.7 | 2,252.6 | 2,108.4 | 27.3 | |||||||||||||||||||||||||||||||||
WORLD | 1,281.3 | 1,403.2 | 1,411.1 | 10.8 | 3,086.7 | 3,336.8 | 3,378.2 | 26.0 | 4,068.3 | 3,937.3 | 30.3 |
(1) | Forest data available only from 1991. | |
(2) | CIS means Commonwealth of Independent States. |
136
Table of Contents
2009/2010 (Millions of tons)
137
Table of Contents
• | Emission reduction. As a result of its high oxygen content, when burned, carbon monoxide emissions when vehicles used a 10% or 15% blend of ethanol were found to be on average 15% lower relative to gasoline, according to the tests carried out by the National Renewable Energy Laboratory of the U.S. Department of Energy Office of Energy Efficiency and Renewable Energy. Ethanol blends also reduce emissions of hydrocarbons, a major contributor to the depletion of the ozone layer. Also, |
138
Table of Contents
sugarcane plantations have a positive environmental effect of absorbing carbon dioxide through photosynthesis. |
• | Relevant blending component. As gasoline consumption grows, blending of ethanol can contribute to the preservation of non-renewable fossil fuel sources as well as help to overcome refining capacity constraints. | |
• | Octane enhancer. Ethanol has an octane rating of 115 whereas regular and premium unleaded gasoline sold in the United States have average octane ratings of 87 and 95, respectively. When added to gasoline, ethanol increases the octane rating ofsub-octane fuel for production of regular grade gasoline or to upgrade regular gasoline to premium grades. |
139
Table of Contents
(billions of gallons)
140
Table of Contents
141
Table of Contents
Per Capita | ||||||||||||||||||||
Total Milk | Total Milk | Total Domestic | Domestic | |||||||||||||||||
Year | Production(1) | Exports(1) | Exports (%)(2) | Consumption(1)(3) | Consumption(4) | |||||||||||||||
1990 | 6,093.0 | 950.5 | 15.6 | % | 5,293.8 | 163.9 | ||||||||||||||
1991 | 5,936.9 | 402.7 | 6.8 | % | 6,057.3 | 185.3 | ||||||||||||||
1992 | 6,590.5 | 57.2 | 0.9 | % | 7,120.3 | 213.3 | ||||||||||||||
1993 | 7,002.0 | 306.0 | 4.4 | % | 7,181.8 | 212.6 | ||||||||||||||
1994 | 7,777.0 | 526.6 | 6.8 | % | 7,666.0 | 224.3 | ||||||||||||||
1995 | 8,506.7 | 1,094.2 | 12.9 | % | 7,577.8 | 218.0 | ||||||||||||||
1996 | 8,865.0 | 1,118.0 | 12.6 | % | 7,816.0 | 221.9 | ||||||||||||||
1997 | 9,089.9 | 1,196.5 | 13.2 | % | 8,141.8 | 228.2 | ||||||||||||||
1998 | 9,546.0 | 1,321.7 | 13.8 | % | 8,176.1 | 226.3 | ||||||||||||||
1999 | 10,328.8 | 1,848.0 | 17.9 | % | 8,445.5 | 230.9 | ||||||||||||||
2000 | 9,816.7 | 1,476.0 | 15.0 | % | 8,483.9 | 230.6 | ||||||||||||||
2001 | 9,474.7 | 1,162.7 | 12.3 | % | 8,196.3 | 220.6 | ||||||||||||||
2002 | 8,528.6 | 1,721.3 | 20.2 | % | 7,276.2 | 194.0 | ||||||||||||||
2003 | 7,951.3 | 1,292.1 | 16.3 | % | 6,763.3 | 178.6 | ||||||||||||||
2004 | 9,168.6 | 2,175.6 | 23.7 | % | 7,167.7 | 187.3 | ||||||||||||||
2005 | 9,493.3 | 2,214.7 | 23.3 | % | 7,084.7 | 183.6 | ||||||||||||||
2006 | 10,161.5 | 2,849.7 | 28.0 | % | 7,387.0 | 189.6 | ||||||||||||||
2007 | 9,527.0 | 1,815.2 | 19.1 | % | 7,633.3 | 194.0 | ||||||||||||||
2008 | 10,010.0 | 1,997.9 | 20.0 | % | 8,029.9 | 202.0 | ||||||||||||||
2009 | 10,054.6 | 2,003.8 | 19.9 | % | 8,159.3 | 203.3 |
(1) | In million liters | |
(2) | Total exports as a percentage of total production (in liters) | |
(3) | Production plus imports minus exports minus existing stock | |
(4) | In liters per habitant | |
Source: MAGyP |
142
Table of Contents
143
Table of Contents
144
Table of Contents
145
Table of Contents
146
Table of Contents
147
Table of Contents
• | Perennial Crop. Sugarcane is a perennial crop that does not require planting for five to six harvests, while corn requires annual replanting. | |
• | Lower Feedstock Risk. Integrated operations, with plantations on owned or leased land and owned mills, avoid the margin compression usually faced by corn-based ethanol producers, who normally do not own their corn supply and are subject to volatility in corn prices. | |
• | Sugarcane is Not an Animal Feedstock. Rising prices and the availability of animal feed supplies, such as corn, have been a concern with respect to the increased use of ethanol in the United States and elsewhere. | |
• | Environmental Considerations. Producing ethanol out of sugarcane is more energy efficient than producing ethanol from corn or sugar beets. Because sugarcane producers are energy self-sufficient, the energy conversion ratio of sugarcane-based ethanol is much higher than those of other ethanol feedstocks that use, in most cases, some pollutants and expensive sources of energy. |
148
Table of Contents
Year Ended December 31, 2009 | ||||||||||||
Land | ||||||||||||
Key Metrics | Farming | Sugar, Ethanol & Energy | Transformation | |||||||||
Owned Hectares(1) | 259,914 | 13,221 | — | |||||||||
Leased Hectares | 47,709 | 40,385 | — | |||||||||
Total Planted Hectares(2) | 188,015 | 49,470 | — | |||||||||
Production(3) | Crops, Rice, Coffee: 618,723 tons | Sugar: 52,968 tons | 11,255 hectares | (4) | ||||||||
Milk: 47.5 million liters | Ethanol: 132,492 m3 | |||||||||||
Energy: 128,291 MWh | ||||||||||||
Sales (in thousands)(5) | $ | 216,016 | $ | 97,587 | $ | 18,839 |
(1) | Owned hectares in Farming business includes land used for productive activities (crops, rice, coffee, cattle), land which is potentially croppable and land set aside as legal reserve and other reserves. | |
(2) | Includes owned and leased land planted (including second harvest) with crops, rice and coffee during the 2009/2010 harvest year. | |
(3) | Production in tons of crops, rice and coffee during the 2009/2010 harvest year, and in liters of raw milk, tons of sugar, cubic meters of ethanol and MWh of energy for the period indicated. See “Presentation of Financial and Other Information.” | |
(4) | Consists of undeveloped/undermanaged land put into production. | |
(5) | Sales in Land Transformation business represents capital gain from the sale of one of our farms. |
149
Table of Contents
• | one of the largest owners of productive farmland in South America, with more than 229,000 owned hectares used in productive activities (excluding legal land reserves pursuant to local regulations and other land reserves) located in Argentina, Brazil and Uruguay, producing a wide range of agricultural products. We believe we are also: |
• | a leading producer of agricultural commodities in South America. During the 2009/2010 harvest year, we harvested 168,016 hectares (including 48,001 leased hectares) and produced 524,890 tons of grains, including soybeans, corn, wheat, sunflower and cotton. | |
• | one of the largest producers of rough (unprocessed) rice in the world, planting 18,142 hectares (including 7,311 leased hectares) and producing over 91,000 tons during the 2009/2010 harvest year, which accounted for 8% of the total Argentine production according to Conmasur. We were also the second largest processor and exporter of white rice in Argentina during 2009, accounting for 15% of total white rice produced and 18% of total Argentine white rice exports according to SENASA. | |
• | a leading dairy producer in South America in terms of our cutting-edge technology, productivity per cow and grain conversion efficiencies, producing over 47.5 million liters of raw milk during 2009. | |
• | one of the largest producers of green bean coffee in the world, with 1,632 fully integrated and mechanized hectares devoted to coffee production. |
• | a growing producer of sugar and ethanol in Brazil, where we intend to build what we expect will be one of the most cost-efficient sugarcane crushing clusters in Brazil. In the sugar and ethanol area: |
• | we currently own two sugar and ethanol mills in Brazil with an aggregate installed crushing capacity of 5.2 million tons per year and cogeneration (the generation of electricity from sugarcane bagasse, the fiber portion of sugarcane that remains after the extraction of sugarcane juice) capacity of 112 MW; | |
• | we are currently in the process of obtaining the necessary authorizations to start building our third sugar and ethanol mill in Brazil, which, when combined with our existing Angélica mill, will form a cluster that we believe will allow us to become one of the lowest-cost producers of sugar, ethanol and electric energy from sugarcane in Brazil; and | |
• | we expect our planned cluster to have a total installed sugarcane crushing capacity of 10.3 million tons per year and a cogeneration capacity of 296 MW once it reaches full capacity in 2017, resulting in a total sugarcane crushing capacity of 11.5 million tons per year for our three mills together at that time. |
• | one of the leading companies in South America involved in the acquisition and transformation of undermanaged land to more productive uses, generating higher cash yields. During the last five fiscal years, we sold over 27,000 hectares of developed land, generating capital gains of approximately $95 million. |
• | Farming Business: We believe we are one of the largest owners of productive farmland in South America. As of September 30, 2010, we owned 274,663 hectares (excluding sugarcane farms) of farmland in Argentina, Brazil and Uruguay, of which 121,723 hectares are croppable, 18,909 hectares are being evaluated for transformation, 79,645 hectares are suitable for raising beef cattle and are |
150
Table of Contents
mostly leased to a third party beef processor, constituting a total of 220,277 productive hectares, and 54,387 hectares are legal land reserves pursuant to local regulations or other land reserves. As of September 30, 2010, we held leases or had entered into agriculture partnerships for an additional 37,687 croppable hectares. We own the facilities and have the resources to store and condition 100% of our crop and rice production. We do not depend on third parties to condition our production for sale. Our farming business is subdivided into five business areas: |
151
Table of Contents
Nine Months Ended | ||||||||||||||||
September 30, | Year Ended December 31, | |||||||||||||||
Sales | 2010 | 2009 | 2008 | 2007 | ||||||||||||
(In thousands of $) | ||||||||||||||||
Crops(1) | 90,008 | 92,029 | 95,987 | 59,293 | ||||||||||||
Rice(2) | 45,436 | 69,350 | 56,925 | 26,422 | ||||||||||||
Coffee | 4,668 | 14,265 | 15,948 | 7,267 | ||||||||||||
Dairy(3) | 10,043 | 11,894 | 14,821 | 17,841 | ||||||||||||
Cattle(4) | 4,127 | 28,478 | 9,357 | 7,258 | ||||||||||||
Total | 154,282 | 216,016 | 193,038 | 118,081 |
2009/2010 Harvest | 2008/2009 Harvest | 2007/2008 Harvest | ||||||||||
Production | Year | Year | Year | |||||||||
Crops (tons)(5) | 524,890 | 317,582 | 351,787 | |||||||||
Rice (tons)(6) | 91,723 | 94,968 | 98,577 | |||||||||
Coffee (tons)(7) | 2,110 | 2,412 | 3,028 | |||||||||
Total | 618,723 | 414,962 | 453,392 |
Nine Months Ended | ||||||||||||||||
September 30, | Year Ended December 31, | |||||||||||||||
2010 | 2009 | 2008 | 2007 | |||||||||||||
Dairy (thousands of liters)(8) | 29,299 | 47,479 | 43,110 | 34,592 | ||||||||||||
Cattle (tons)(4)(9) | 246 | 4,149 | 7,229 | 6,632 |
2009/2010 Harvest | 2008/2009 Harvest | 2007/2008 Harvest | ||||||||||
Planted Area | Year | Year | Year | |||||||||
(In hectares, including second harvest) | ||||||||||||
Crops(10) | 168,241 | 139,518 | 107,027 | |||||||||
Rice | 18,142 | 17,258 | 14,820 | |||||||||
Coffee(11) | 1,632 | 1,632 | 1,632 | |||||||||
Cattle(12) | 87,392 | 106,375 | 124,635 |
(1) | Includes soybeans, corn, wheat, sunflower and cotton, among others. | |
(2) | Sales of processed rice, including rough rice purchased from third parties and processed in our facilities. | |
(3) | Sales of raw milk and whole milk powder produced in 2007 pursuant to an agreement with a third party. | |
(4) | In December 2009, we sold 55,543 head of cattle to a third party. The third party currently leases grazing land from us to raise and fatten the cattle, and our payments under the lease are tied to the market price of beef. See “Business — Farming — Cattle Business.” | |
(5) | Crop production does not include 52,482 tons, 52,960 tons and 53,398 tons of forage produced in the 2009/2010, 2008/2009 and 2007/2008 harvest years, respectively. | |
(6) | Expressed in tons of rough rice produced on owned and leased farms. | |
(7) | As of September 30, 2010, the coffee harvest was ongoing and stood at 91% completion. | |
(8) | Raw milk produced at our dairy farms. | |
(9) | Measured in tons of live weight. Production is the sum of the net increases (or decreases) during a given period in “live weight” of each head of beef cattle. | |
(10) | Includes 4,561 hectares, 5,382 hectares and 4,454 hectares used for the production of forage during the 2009/2010, 2008/2009 and 2007/2008 harvest years, respectively. | |
(11) | Reflects the size of our coffee plantations, which are planted only once every 18 to 20 years. | |
(12) | Comprised of land devoted to raising beef cattle, which, since December 2009, is mostly leased to a third party. See ���Business — Farming — Cattle Business.” |
152
Table of Contents
• | Sugar, Ethanol and Energy Business: We believe we are a growing and efficient producer of sugar and ethanol in Brazil. We cultivate and harvest sugarcane which is then processed in our own mills to produce sugar, ethanol and electric energy. As of September 30, 2010, our overall sugarcane plantation consisted of 54,352 hectares, planted over both own and leased land. We currently own and operate two sugar and ethanol mills, UMA and Angélica, with a total crushing capacity of 5.2 million tons of sugarcane per year. UMA is a small but efficient mill with over 75 years of history which is located in the state of Minas Gerais, Brazil, with a sugarcane crushing capacity of 1.2 million tons per year, full cogeneration capacity and an associated sugar brand with strong presence in the regional retail market (Açúcar Monte Alegre). We plant and harvest 99% of the sugarcane milled at UMA, with the remaining 1% acquired from third parties. Angélica is a new, advanced mill, which we built in the state of Mato Grosso do Sul, Brazil, and which has a current sugarcane crushing capacity of 4 million tons per year, highly mechanized harvest and two high pressure boilers and three turbo-generators with the capacity to use all the sugarcane bagasse by-product to generate electricity that is used to power the mill, with excess electricity being sold to the grid, resulting in the mill having full cogeneration capacity. We plant and harvest over 91% of the sugarcane milled at Angélica and are able to vary the product slate between ethanol and sugar with a 60%/40% production ratio for both sugar and ethanol. |
153
Table of Contents
Nine Months | ||||||||||||||||
Ended September 30, | Year Ended December 31, | |||||||||||||||
Sales | 2010 | 2009 | 2008 | 2007 | ||||||||||||
(In thousands of $) | ||||||||||||||||
Sugar | 49,979 | 26,143 | 20,495 | 17,133 | ||||||||||||
Ethanol | 64,536 | 62,811 | 29,385 | 7,289 | ||||||||||||
Energy | 9,847 | 8,216 | — | — | ||||||||||||
Total(1) | 124,604 | 97,587 | 51,171 | 24,422 |
(1) | Includes sales of sugarcane and other miscellaneous items to third parties of $242 thousand during the first nine months of 2010 and $417 thousand and $1,291 thousand during 2009 and 2008, respectively. |
Nine Months | ||||||||||||||||
Ended September 30, | Year Ended December 31, | |||||||||||||||
Production | 2010 | 2009 | 2008 | 2007 | ||||||||||||
Sugar (tons) | 166,001 | 52,968 | 67,772 | 72,372 | ||||||||||||
Ethanol (cubic meters) | 134,086 | 132,492 | 70,067 | 29,375 | ||||||||||||
Energy (MWh exported) | 100,079 | 128,291 | — | — |
Nine Months | ||||||||
Ended September 30, | Year Ended December 31, | |||||||
Other Metrics | 2010 | 2009 | 2008 | 2007 | ||||
Sugarcane milled (% owned) | 96% | 94% | 98% | 100% | ||||
Sugarcane crushing capacity (millions of tons) | 5.2 | 3.3 | 1.7 | 0.9 | ||||
% Mechanized planting/harvesting operations — Consolidated | 30%/77% | 53%/66% | 80%/32% | 77%/0% | ||||
% Mechanized planting/harvesting operations — Angélica mill | 38%/100% | 58%/99% | 100%/99% | 100%/NA |
• | Land Transformation Business: We believe we are one of the leading companies in South America involved in the acquisition and transformation of land. We acquire farmlands we believe are underdeveloped or underutilized and, by implementing cutting-edge production technology and agricultural best practices, transform the land to be suitable for more productive uses, enhance yields and increase the value of the land. During the eight-year period since our inception, we have effectively put into production 134,080 hectares of land that was previously undeveloped or undermanaged. During 2009, we put into production 11,255 hectares and in addition continued the transformation process of over 110,000 hectares we own. We realize and capture land transformation value through the strategic disposition of assets that have reached full development potential. We believe that the rotation of our land portfolio allows us to re-allocate capital efficiently, maximizing our return on invested capital. Our current owned land portfolio consists of 287,884 hectares, distributed throughout our operating regions as follows: 84% in Argentina, 13% in Brazil, and 3% in Uruguay. During the last five years, we have traded 27,169 hectares of developed land, generating capital gains of approximately $95 million. |
154
Table of Contents
Nine Months | ||||||||||||||||
Ended | ||||||||||||||||
September 30, | Year Ended December 31, | |||||||||||||||
2010 | 2009 | 2008 | 2007 | |||||||||||||
Undeveloped/Undermanaged land put into production (hect.) | — | 11,255 | 33,387 | 17,591 | ||||||||||||
Ongoing transformation of croppable land (hect.) | 122,006 | 110,751 | 80,720 | 66,562 | ||||||||||||
Number of farms sold | — | 1 | 3 | 2 | ||||||||||||
Hectares sold | — | 5,005 | 4,857 | 8,714 | ||||||||||||
Capital gains from the sale of land ($ thousands) | — | 18,839 | 15,201 | 33,114 |
• | Unique and strategic asset base. We own strategically located farmland and agro-industrial assets in Argentina, Brazil and Uruguay. We engage in continued improvement of our operations and practices, resulting in the reduction of operating costs and an increase in productivity, ultimately enhancing the value of our properties and generating capital gains. Our operations also benefit from strategically located industrial facilities throughout Argentina and Brazil, increasing operating efficiencies and reducing operating and logistical costs. We are vertically integrated where economics and returns are attractive, where the efficiency of our primary operation is significantly enhanced, or where lack of a competitive market results in the absence of a transparent price determination mechanism. Our diversified asset base creates valuable synergies and economies of scale, including (i) the ability to |
155
Table of Contents
transfer the technologies and best practices that we have developed across our business lines, (ii) the ability to apply value-adding land transformation strategies to farmland in connection with our farming and sugarcane operations, and (iii) a greater ability to negotiate more favorable terms with our suppliers and customers. Owning a significant portion of the land on which we operate is a key element of our business model. |
• | Low-cost production leveraging agro-ecological competitive advantages. Each of the commodity products we grow is produced in regions where agro-ecological conditions provide competitive advantages and which, through the implementation of our efficient and sustainable production model, allow us to become one of the lowest cost producers. |
• | Our grain and oilseed production is based in the Argentine humid pampas region where soil fertility, regular rainfalls, temperate climate, availability of land and proximity to ports contribute to the reduced use of fertilizers and agrochemicals, high productivity and stable yields and efficient logistics, ultimately resulting in one of the lowest costs per ton of grain produced and delivered. The tables presented below show the average cost per ton for the production of soybeans and corn in main production regions according to Agri Benchmark’s “Cash Crop Report 2009” which we have compared to our costs. Agri benchmark is a network of agricultural research and advisory economists that report on usable farming land around the globe. The two principal sponsoring organizations of Agri benchmark are The German Agricultural Society (Deutsche Landwirtschafts-Gesellschaft DLG) and the Institute of Farm Economics of the Johann Heinrich von Thünen-Institute, both based in Germany. In an effort to normalize existing farm data, the Agri benchmark project, as it is commonly referred, employs the “typical farm” approach to enable comparison of farm production statistics across different countries. A “typical farm” is an existing farm or data set describing a farm, in a specific region that represents a major share of the crop production, employing the prevailing system of production for the product considered. The “typical farm” also reflects the prevailing form and scale of enterprise used in the specific region and type of labor organization. Accordingly, the “typical farm” approach facilitates comparison across regions by employing a norm for collecting data, analyzing costs and returns and presenting results. Agri-benchmark uses cost of production as a criterion to measure competitiveness between agricultural farms and firms. The costs used for purposes of this presentation by Agribenchmark and the Company relate to operating and direct production costs. Operating costs include all mechanical operations costs needed to produce a specific crop, such as diesel, machinery, contractors, hired labor and family labor. Direct costs include input costs such as irrigation, insecticide, fungicide, herbicide, potash, phosphate, nitrogen and seeds. The sum of operating and direct costs strongly correlate with production costs at the farm level. |
156
Table of Contents
157
Table of Contents
Code | Country | Area(ha) | Region | |||
CN5XI | China | 5 | Xi’an | |||
KA16000NK | Kazakhstan | 16000 | North Kazakhstan | |||
RU10000BS | Russia | 10000 | Western Russia | |||
UA2500ZH | Ukraine | 2500 | Zhytomyr | |||
BG4040PLE | Bulgaria | 4040 | Pleven | |||
CZ1200JM | Czech Republic | 1200 | Jihomoravsky | |||
CZ4000JC | Czech Republic | 4000 | Stredocesky | |||
DE1300SA | Germany | 1300 | Saxony-Anhalt | |||
DE1600MVP | Germany | 1600 | Mecklenburg-Western Pomerania | |||
DE240NI | Germany | 240 | Lower Saxony | |||
DE360W | Germany | 360 | Westphalia | |||
DK1200SL | Denmark | 1200 | Lolland | |||
DK605FYN | Denmark | 605 | Isle of Funen | |||
FR150BI | France | 150 | Beauce Irr | |||
FR200CHBS | France | 200 | Ch. Berri sec | |||
FR230PICB | France | 230 | Picardie | |||
HU1100TC | Hungary | 1100 | Tolna County | |||
HU115NGP | Hungary | 115 | North Great Plain | |||
PL2000ST | Poland | 2000 | Stargard | |||
RO600TR | Romania | 600 | South Romania | |||
SE335SK | Sweden | 335 | Skane | |||
SE550LAV | Sweden | 550 | Middle | |||
UK255EA | United Kingdom | 255 | East Anglia | |||
UK440SUFF | United Kingdom | 440 | Suffolk | |||
UK800CAM | United Kingdom | 800 | Cambridge | |||
CA1700SAS | Canada | 1700 | Saskatchewan | |||
CA6000SAS | Canada | 6000 | Saskatchewan | |||
US700IA | United States | 700 | Iowa | |||
US900ND | United States | 900 | North Dakota | |||
AU650NSW | Australia | 650 | New South Wales | |||
ZA2500OV | South Africa | 2500 | Overberg Region | |||
AR330ZN | Argentina | 330 | Zona Nucleo (Corn belt) | |||
AR900WBA | Argentina | 900 | Western Buenos Aires | |||
BR1300MT | Brazil | 1300 | Mato Grosso | |||
BR195PR | Brazil | 195 | Parana | |||
ZA1800NC | South Africa | 1800 | Prieska Region | |||
ZA2100EFS | South Africa | 2100 | Eastern Free State |
158
Table of Contents
Code | Country | Area(ha) | Region | |||
RU10000BS | Russia | 10000 | Western Russia | |||
UA2500ZH | Australia | 2500 | South Australia | |||
CZ1200JM | Czech Republic | 1200 | Jihomoravsky | |||
CZ4000JC | Czech Republic | 4000 | Stredocesky | |||
FRI50BI | France | 50 | Beauce Irr | |||
HU1100TC | Hungary | 1100 | Tolna County | |||
HU115NGP | Hungary | 115 | North Great Plain | |||
IT240ER | Italy | 240 | Emila-Romagna | |||
RO600TR | Romania | 600 | South Romania | |||
US700IA | United States | 700 | Iowa | |||
US810WNE | United States | 810 | West Nebraska | |||
US900ND | United States | 900 | North Dakota | |||
AR330ZN | Argentina | 330 | Zona Nucleo (Corn belt) | |||
AR700SBA | Argentina | 700 | South Buenos Aires | |||
AR900WBA | Argentina | 900 | Western Buenos Aires | |||
BR1300MT | Brazil | 1300 | Mato Grosso | |||
BR195PR | Brazil | 195 | Parana | |||
ZA1700WFS | South Africa | 1700 | Western Free State | |||
ZA2100EFS | South Africa | 2100 | Eastern Free State |
159
Table of Contents
• | Our cotton and coffee production is focused in western Bahia, Brazil. This region is excellent for producing high quality cotton fiber and specialty coffee at a low cost due to its ideal climate, well drained soils, high altitude, availability of water for irrigation, and absence of frosts. | |
• | Our rice operation is located in the northeast provinces of Argentina, one of the best rice farming regions in the world due to plentiful sunlight, abundant availability of water for low cost irrigation and large potential for expansion. The below table shows the average cost per ton for the production of rice for select regions using data from the United States Department of Agriculture (USDA) and Instituto FNP (FNP, a Brazilian agricultural consulting company), which we have compared to our costs. USDA and FNP data represents regional average production costs. Specifically, the USDA reviews historical accounts based on the actual costs incurred by producers, and looks at all participants in the production process, including farm operators, landlords, contractors and contractees. Using such data based on producer surveys, which are conducted every four to eight years, the USDA produces annual estimates which are updated each year with estimates of annual price, acreage and production changes. Rice production costs produced by FNP are estimated from information provided by specialists from the Rice Institute of Rio Grande do Sul and by private agronomist consultants of Mato Grosso who provide local technical assistance. These specialists gather information from surveys conducted with local producers representative of a specific region. FNP calculates costs per hectare using the prices of inputs, and estimates overhead and post-harvest costs, yielding a historical average for each region. Overall, the costs evaluated by the USDA and FNP include operating costs and input costs, such as fertilizer, agrochemicals, seeds and irrigation costs. Additionally, overhead costs were included in the analysis due to the fact that rice operations normally require higher overhead costs than corn and soybean production. The Company’s data includes the same production cost items included in such third party data, and includes the weighted average costs of all of its rice farms (both owned and leased). The weighted average was calculated taking into account the size of each farm in terms of hectares, and each item of operating and direct costs was then divided by the actual yield (tons per hectare) resulting in a weighted average cost per ton. Data from the USDA and FNP consists of cost per area (acre for USDA and hectare for FNP), with details for each item of cost (operating, agrochemicals, irrigation, etc.). Each cost item is then divided by the respective rice yield presented by each third party source. Accordingly, the Company’s data represents actual average costs, compared against such third party’s regional average costs for each of the U.S. and Brazil. |
160
Table of Contents
• | Our dairy operation is situated in the Argentine humid pampas region, where cow feed (grains, oilseeds and forage) is efficiently and abundantly produced at a low cost and climate and sanitary conditions are optimal for cow comfort, which enhances productivity, cow reproduction rates and milk quality. The tables presented below show the average cost of producing a liter of milk in the major export regions of the world in 2008 according to Rabobank’s November 2009 research report titled “Dairy Beyond the Global Financial Crisis” compared to our production costs for 2008 and 2009. Rabobank’s data reflects estimates of the cost of producing milk in average farms in 2008. These costs reflect average on-farm production costs expressed in U.S. cents per liter, and consider all farmwork expenses such as feed, nutrition, labor and repairs, among others. The Company has provided a complete measure of its average on-farm milk production costs for 2008 and 2009, aggregating its costs for milk production in all of its dairy farms and dividing the total by total production to arrive at a cost figure per liter. |
161
Table of Contents
Source: | Rabobank research report dated November 2009 — “Dairy Beyond the Global Financial Crisis”. Rabobank acknowledges that while efforts were made to compare costs using similar approaches between countries, differences among approaches to measuring costs in different countries remain. |
• | We produce sugarcane in the center-south region of Brazil, which has the lowest production costs in the world, significantly lower than other major sugar producing regions, including India, China, the United States, the United Kingdom, France and Germany. |
• | Standardized and scalable agribusiness model applying technological innovation. We have consistently used innovative production techniques to ensure that we are at the forefront of technological improvements and environmental sustainability standards in our industry. We are implementing an agribusiness model that consists of specializing our workforce and defining standard protocols to track crop development and control production variables, thereby enhancing management decision-making. We further optimize our agribusiness model through the effective implementation and constant adaptation of a portfolio of advanced agricultural and information technologies and best practices tailored to each region in which we operate and commodity we produce, allowing us to improve our crop yields, reduce operating costs and maximize margins in a sustainable manner. |
• | In our farming business, we use “no-till” technology as the cornerstone of our crop production and have been able to implement this technique in areas within our production regions where it had not been used before. Furthermore, we also utilize crop rotation, second harvests, integrated pest management, balanced fertilization, water management and mechanization. Additionally, we use the innovative silo bag storage method, utilizing large polyethylene bags with a capacity of180-200 tons which can be left on the field for 12 months, resulting in low-cost, scalable and flexible storage on the field during harvest, which we believe allows us to expand our crop storage capacity at a low cost, generate important logistic and freight savings by moving our production in the off-season when freight fares are lower, and time the entry of our production into the market at optimal price points. See “— Farming — Storage and Conditioning.” |
162
Table of Contents
• | In our dairy business, we believe that we were the first company in South America to implement the “free-stall” infrastructure in dairy operations, resulting in more efficient conversion of feed to raw milk and higher production rates per cow compared to our peers in the region. | |
• | In our sugar, ethanol and energy business, our Angélica mill (i) has a highly mechanized planting and harvesting operation, which has increased our sugarcane production, reduced our operating costs and contributed to environmental sustainability by eliminating the need to burn the sugarcane before harvest; (ii) has the capacity to use all the bagasse (a by-product of the sugar and ethanol production process) that is produced, with no incremental cost, to cogenerate 96 MW of clean and renewable electricity; (iii) is what we believe to be one of the largest continuously operating sugar plants in Brazil designed for enhanced efficiency and non-stop processing, producing 1,800 tons of sugar per day; and (iv) has the ability to recycle by-products such as filter cake and vinasse by using them as fertilizers in our sugarcane fields, as well as recycling water and other effluents, generating important savings in input costs and protecting the environment. |
• | Unique diversification model to mitigate cash flow volatility. We pursue a unique multi-tier diversification strategy to reduce our exposure to production and market fluctuations that may impact our cash flow and operating results. We seek geographic diversification by spreading our portfolio of farmland and agro-industrial assets across different regions of Argentina, Brazil and Uruguay, thereby lowering our risk exposure to weather-related losses and contributing to stable cash flows. Additionally, we produce a variety of products, including cotton, coffee, soybeans, corn, wheat, sunflower, rice, barley, sorghum, safflower, rapeseed, raw milk, sugar, ethanol and electric energy, which lowers our risk exposure to potentially depressed market conditions of any specific product. Moreover, through vertical integration in the rice, dairy, sugar, ethanol and energy businesses, and to a lesser extent in our coffee business, we process and transform a portion of our agricultural commodities into branded retail products, reducing our commodity price risk and our reliance on the standard market distribution channels for unprocessed products. Finally, our commercial committee defines our commercial policies based on market fundamentals and the consideration of logistical and production data to develop a customized sale/hedge risk management strategy for each product. | |
• | Expertise in acquiring farmland with transformation and appreciation potential. During the last eight fiscal years, we have executed transactions for the purchase and disposition of land for over $425 million and sold 27,169 hectares of developed land, generating capital gains of approximately $95 million. We believe we have a superior track record and have positioned ourselves as a key player in the land business in South America. Our business development team has gained extensive expertise in evaluating and acquiring farmland throughout South America and has a solid understanding of the productivity potential of each region and of the potential for land transformation and appreciation. To date, we have analyzed over 4 million hectares of farmland spread throughout the regions in which we operate and other productive regions in the world. We have developed a methodology to assess farmland and to appraise its potential value with a high degree of accuracy and efficiency by using information generated through sophisticated technology, including satellite images, rain and temperature records, soil analyses, and topography and drainage maps. Our management team has gained extensive experience in transforming and maximizing the appreciation potential of our land portfolio through the implementation of our agribusiness techniques described above. We also have an extensive track record rotating our asset portfolio to generate capital gains and monetize the transformation and appreciation generated through our operations. | |
• | Experienced management team, knowledgeable employees and strong shareholder base. Our people are our most important asset. We have an experienced senior management team with an average of more than 20 years of experience working in our sector and a solid track record of implementing and executing large scale growth projects such as land transformations, greenfield developments of industrial plants, and integrating acquisitions within our organization. Recruiting technically qualified employees at each of our farms and operating sites is a main focus of our senior management and a key to our success. The strength of our human capital and proven track record has allowed us to raise |
163
Table of Contents
capital from sophisticated investors and retain a strong and diversified shareholder base, including an affiliate of Soros Fund Management, LLC, an affiliate of HBK Investments L.P., an affiliate of Ospraie Management, LLC, a wholly owned subsidiary of Qatar Holding LLC and Stichting Pensioenfonds Zorg en Welzijn, among others. |
• | Expand our farming business through organic growth, leasing and strategic acquisitions. We will continue to seek opportunities for organic growth, target attractive acquisition and leasing opportunities and strive to maximize operating synergies and achieve economies of scale in each of our four main farming business areas (coffee, rice, crops and dairy). We plan to continue expanding and consolidating our crop production in Argentina, Brazil, Uruguay and elsewhere in South America. We also intend to continue expanding our rice segment in terms of production and processing capacity, consolidating our leading position in Argentina and increasing our presence throughout Brazil, Uruguay and other regions, to become a leading regional player. We plan to expand our current dairy production capacity using the “free-stall” model. We believe that the know-how and skills gained from the construction of our first “free-stall” module can be easily replicated, allowing us toscale-up our production efficiently and at a fast rate. | |
• | Consolidate our sugar and ethanol cluster in the state of Mato Grosso do Sul, Brazil. Our main strategy for our sugar and ethanol business is to build our cluster in Mato Grosso do Sul, Brazil, through the construction of Ivinhema, our second greenfield project, which we expect to reach a full crushing capacity of 6.3 million tons per year by 2017. See “Business — Sugar, Ethanol and Energy — Our Mills.” Completion of Ivinhema will allow us to complete our advanced cluster with a planned total crushing capacity of 10.3 million tons per year. The consolidation of the cluster will generate important synergies, operating efficiencies and economies of scale such as (i) one centralized management team, reducing total administration cost per ton of sugarcane milled; (ii) a large sugarcane plantation supplying two mills, allowing for non-stop harvesting; and (iii) a reduction in the average distance from the sugarcane fields to the mills, generating important savings in sugarcane transportation expenses. We believe that Ivinhema will allow us to become one of the most efficient and low cost producers of sugar, ethanol and energy in Brazil. Additionally, we plan to continue to monitor closely the Brazilian sugar and ethanol industries and may pursue selective acquisitions that provide opportunities to increase our economies of scale, operating synergies and profitability. | |
• | Further increase our operating efficiencies while maintaining a diversified portfolio. We intend to continue to focus on improving the efficiency of our operations and maintaining a low-cost structure to increase our profitability and protect our cash flows from commodity price cycle risk. We seek to maintain our low-cost platform by (i) making additional investments in advanced technologies, including those related to agricultural, industrial and logistical processes and information technology, (ii) improving our economies of scale through organic growth, strategic acquisitions, and more efficient production methods, and (iii) fully utilizing our resources to increase our production margins. In addition, we intend to mitigate commodity price cycle risk and minimize our exposure to weather related losses by (i) maintaining a diversified product mix and vertically integrating production of certain commodities and (ii) geographically diversifying the locations of our farms. | |
• | Continue to implement our land transformation strategy. We plan to continue to enhance the value of our owned farmland and future land acquisitions by making them suitable for more profitable agricultural activities, thereby seeking to maximize the return on our invested capital in our land assets. In addition, we expect to continue rotating our land portfolio through strategic dispositions of certain properties in order to realize and monetize the transformation and appreciation value created by our |
164
Table of Contents
land transformation activities. We also plan to leverage our knowledge and experience in land asset-management to identify superior buying and selling opportunities. |
165
Table of Contents
* | Does not account for an immaterial amount of shares required to be owned by other persons pursuant to Maltese law. |
166
Table of Contents
† | 2% is owned pro rata among existing shareholders in amounts corresponding to their ownership of the company. The 2% ownership held by current members of IFH does not carry any preferential treatment. |
• | Our “Farming” line of business consists of: |
• | Our “Crops” business, which involves the planting, harvesting and sale of grains, oilseeds and fibers (including soybeans, corn, wheat, sunflower and cotton among others), and to a lesser extent the provision of grain warehousing/conditioning and handling and drying services to third parties; | |
• | Our “Rice” business, which involves the planting, harvesting, processing and marketing of rice; | |
• | Our “Coffee” business, which involves the cultivation of coffee beans and the marketing of our own and third party coffee production; | |
• | Our “Dairy” business, which involves the production and sale of raw milk which is processed into manufactured products and marketed through our joint venture company La Lácteo S.A. See “Related Party Transactions — Milk Supply Agreement”; and | |
• | Our “Cattle” business, which involves leasing grazing land to third-parties and fattening cattle for sale to meat processors and local purchasers in livestock auctions. |
167
Table of Contents
• | Our “Sugar, Ethanol and Energy” line of business consists of the cultivation of sugarcane which is processed in our own sugar mills, transformed into sugar, ethanol and electric energy and marketed; | |
• | Our “Land Transformation” line of business includes transforming land to be suitable for more productive uses, enhancing yields and identifying and capitalizing on land trading opportunities. |
Harvest Year | ||||||||||||||||||||||||||||||||
2009/2010 | 2008/2009 | 2007/2008 | 2006/2007 | 2005/2006 | 2004/2005 | 2003/2004 | 2002/2003 | |||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||
Crops (tons) | 524,890 | 317,582 | 351,787 | 343,799 | 205,645 | 171,424 | 102,253 | 73,242 | ||||||||||||||||||||||||
Rice(1) (tons) | 91,723 | 94,968 | 98,577 | 98,980 | 51,726 | 43,190 | 37,236 | 19,446 | ||||||||||||||||||||||||
Coffee(2) (tons) | 2,110 | 2,412 | 3,028 | 1,236 | 533 | — | — | — |
Nine Months | ||||||||||||||||||||||||||||||||
Ended Sept. 30, | Year Ended December 31, | |||||||||||||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | 2005 | 2004 | 2003 | |||||||||||||||||||||||||
Dairy(3) (thousands of liters) | 29,299 | 47,479 | 43,110 | 34,592 | 22,561 | 18,520 | 18,538 | 19,923 | ||||||||||||||||||||||||
Cattle (tons)(4)(5) | 246 | 4,149 | 7,229 | 6,632 | 2,945 | 2,629 | 2,242 | 1,231 |
(1) | Expressed in tons of rough rice produced farms we own or lease. | |
(2) | As of September 30, 2010, the coffee harvest was ongoing and stood at 91% completion. | |
(3) | Raw milk produced. | |
(4) | Measured in tons of live weight. Production is the sum of the net increases (or decreases) during a given period in live weight of each head of beef cattle we own. | |
(5) | In December 2009, we sold 55,543 head of cattle to a third party. The third party currently leases most of our grazing land to raise and fatten the cattle. Lease prices under the lease agreements are tied to the market price of cattle. See “— Cattle Business.” |
168
Table of Contents
Harvest Year | ||||||||||||
Product Area | 2009/2010 | 2008/2009 | 2007/2008 | |||||||||
(In hectares) | ||||||||||||
Soybeans(1) | 87,522 | 63,973 | 47,408 | |||||||||
Corn(1) | 27,720 | 20,200 | 24,189 | |||||||||
Wheat | 21,728 | 18,917 | 15,792 | |||||||||
Sunflower | 14,784 | 16,539 | 7,775 | |||||||||
Cotton | 425 | 3,159 | 3,478 | |||||||||
Other crops | 11,501 | 11,348 | 3,930 | |||||||||
Forage | 4,561 | 5,382 | 4,454 | |||||||||
Total(2) | 168,016 | 139,518 | 107,027 |
(1) | Includes hectares planted in second harvests. | |
(2) | Includes 4,561 hectares, 5382 hectares and 4,454 hectares used for the production of forage during the 2009/2010, 2008/2009 and 2007/2008 harvest years, respectively. |
Harvest Year | ||||||||||||
Crop Production | 2009/2010 | 2008/2009 | 2007/2008 | |||||||||
(In tons) | ||||||||||||
Soybeans | 241,848 | 96,982 | 90,724 | |||||||||
Corn | 180,613 | 115,900 | 153,751 | |||||||||
Wheat | 49,592 | 41,556 | 61,951 | |||||||||
Sunflower | 17,193 | 22,128 | 15,841 | |||||||||
Cotton | 1,068 | 9,218 | 15,748 | |||||||||
Other crops | 34,576 | 31,799 | 13,772 | |||||||||
Total | 524,704 | 317,582 | 351,787 |
September 30, | Year Ended December 31, | |||||||||||||||||||
Sales | 2010 | 2009 | 2009 | 2008 | 2007 | |||||||||||||||
(In thousands of $) | ||||||||||||||||||||
Soybeans(1) | 55,028 | 38,548 | 44,116 | 39,025 | 26,829 | |||||||||||||||
Corn | 22,323 | 10,539 | 14,654 | 22,547 | 11,186 | |||||||||||||||
Wheat | 3,621 | 3,697 | 10,218 | 15,407 | 8,310 | |||||||||||||||
Sunflower | 3,499 | 3,073 | 5,517 | 5,615 | 1,096 | |||||||||||||||
Cotton | 2,108 | 9,093 | 11,905 | 5,813 | 6,941 | |||||||||||||||
Other crops(2) | 3,429 | 4,305 | 5,619 | 7,580 | 4,931 | |||||||||||||||
Total | 90,008 | 69,255 | 92,029 | 95,987 | 59,293 |
(1) | Includes sales of soybean oil and soybean meal accounting for $8,420 thousands and $1,692 thousands for the years ended December 31, 2009 and 2008, respectively. | |
(2) | Includes other crops and farming services. |
169
Table of Contents
170
Table of Contents
171
Table of Contents
172
Table of Contents
Harvest Year | ||||||||||||
Rice Product Area & Production | 2009/2010 | 2008/2009 | 2007/2008 | |||||||||
Owned planted area (hectares) | 10,831 | 13,417 | 11,981 | |||||||||
Leased planted area (hectares) | 7,311 | 3,840 | 2,839 | |||||||||
Total rice planted (hectares) | 18,142 | 17,258 | 14,820 | |||||||||
Rough rice production (tons) | 91,723 | 94,968 | 98,577 |
173
Table of Contents
Nine-Month | ||||||||||||||||
Period Ended | ||||||||||||||||
September 30, | Year Ended December 31, | |||||||||||||||
Processed Rice Production | 2010 | 2009 | 2008 | 2007 | ||||||||||||
(In tons) | ||||||||||||||||
Rough rice processed — own | 42,382 | 94,968 | 98,577 | 98,980 | ||||||||||||
Rough rice processed — third party | 52,651 | 62,083 | 20,131 | 27,732 | ||||||||||||
Total rough rice processed | 95,333 | 157,051 | 119,164 | 126,712 | ||||||||||||
White rice | 49,610 | 77,440 | 66,841 | 70,300 | ||||||||||||
Brown rice | 4,191 | 11,559 | 2,557 | 4,940 | ||||||||||||
Broken rice | 11,008 | 19,859 | 12,407 | 11,739 | ||||||||||||
Total processed rice | 64,809 | 108,858 | 81,804 | 86,980 |
Nine-Month | ||||||||||||||||
Period Ended | ||||||||||||||||
September 30, | Year Ended December 31, | |||||||||||||||
Processed Rice Sales | 2010 | 2009 | 2008 | 2007 | ||||||||||||
(In thousands of $) | ||||||||||||||||
Total Sales | 45,436 | 69,350 | 56,925 | 26,422 |
174
Table of Contents
Harvest Year | ||||||||||||
Coffee Production & Sales | 2009/2010 | 2008/2009 | 2007/2008 | |||||||||
Coffee plantation (hectares) | 1,632 | 1,632 | 1,597 | |||||||||
Coffee pruning area (hectares) | 406 | 241 | — | |||||||||
Coffee production (tons) | 2,407 | 2,412 | 3,028 |
Nine-Month | ||||||||||||||||
Period Ended | ||||||||||||||||
September 30, | Year Ended December 31, | |||||||||||||||
2010 | 2009 | 2008 | 2007 | |||||||||||||
(In thousands of $) | ||||||||||||||||
Coffee sales (thousands of $) | 4,668 | 14,265 | 15,948 | 7,267 |
175
Table of Contents
Nine-Month | ||||||||||||||||
Period Ended | ||||||||||||||||
September 30, | Year Ended December 31, | |||||||||||||||
Dairy Herd & Production | 2010 | 2009 | 2008 | 2007 | ||||||||||||
Total dairy herd (head) | 9,669 | 9,743 | 9,587 | 8,838 | ||||||||||||
Average milking cows | 4,246 | 4,594 | 4,377 | 3,837 | ||||||||||||
Average daily production (liters per cow) | 25.3 | 28.3 | 26.9 | 24.7 | ||||||||||||
Total production (thousands of liters) | 29,299 | 47,479 | 43,110 | 34,592 |
Nine-Month | ||||||||||||||||
Period Ended | ||||||||||||||||
September 30, | Year Ended December 31, | |||||||||||||||
2010 | 2009 | 2008 | 2007 | |||||||||||||
(In thousands of $) | ||||||||||||||||
Sales (thousands of $) | 10,043 | 11,894 | 14,821 | 17,841 |
176
Table of Contents
177
Table of Contents
Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(Head of cattle) | ||||||||||||
Breeding(1) | — | 79,784 | 91,263 | |||||||||
Fattening | 2,804 | 15,881 | 13,278 | |||||||||
Total | 2,804 | 95,665 | 104,541 |
(1) | For classification purposes, upon birth, all calves are considered to be in the breeding process. |
178
Table of Contents
Storage Capacity | Nominal | |||
Crops (tons) | 28,800 | |||
Rice (tons) | 112,900 |
Drying Capacity | Nominal | |||
Crops (tons/day) | 2,400 | |||
Rice (tons/day) | 4,900 |
179
Table of Contents
180
Table of Contents
• | Renewable: Sugarcane ethanol, unlike coal or oil, which can be depleted, is produced from sugarcane plants that grow back year after year, provided that they are replanted every six to eight years. | |
• | Sustainable: Sugarcane only needs to be replanted every five to seven years, as a semi-perennial crop. It can be harvested without uprooting the plant, and therefore its cultivation has less of an impact on the soil and the surrounding environment. The mechanization of the harvesting and planting process further improves sustainable agricultural management. | |
• | Energy Efficient: Sugarcane is highly efficient in converting sunlight, water and carbon dioxide into stored energy. The energy output of sugarcane is equal to nine times the energy input used in the production process, whereas the energy output of corn ethanol is only about 1.9 to 2.3 times the energy input used in its production process. Sugarcane produces seven times more energy compared to corn in ethanol production. | |
• | Low Carbon Emissions: Compared to gasoline, sugarcane ethanol reduces greenhouse gases by more than 61%, which is the greatest reduction of any other liquid biofuel produced today in large quantities. Ethanol made from sugarcane is deemed an advanced biofuel by the United States EPA. | |
• | Synergies: The main raw material used in the production of electricity in sugar mills is bagasse, which is a by-product of the sugarcane milling process, allowing for a renewable source of co-generated electricity. |
181
Table of Contents
Nine-Month | ||||||||||||||||
Period Ended | ||||||||||||||||
September 30, | Year Ended December 31, | |||||||||||||||
2010 | 2009 | 2008 | 2007 | |||||||||||||
Grown on our owned and leased land (tons) | 2,810,050 | 2,075,531 | 1,376,763 | 889,355 | ||||||||||||
Purchased from third parties (tons) | 130,830 | 139,498 | 29,695 | 1,792 | ||||||||||||
Total (tons) | 2,940,879 | 2,215,029 | 1,406,458 | 891,147 |
182
Table of Contents
Capital Expenditures | R$ millions | US$ per ton(1) | ||||||
Industrial equipment | 520.5 | 70 | ||||||
Agricultural equipment | 131.3 | 18 | ||||||
Sugarcane planting cost | 248.5 | 34 | ||||||
Total | 900.3 | 121 |
(1) | Considers a weighted average R$/US$ exchange rate of 1.855. |
183
Table of Contents
Nine-Month | ||||||||||||||||
Period Ended | ||||||||||||||||
September 30, | Year Ended December 31, | |||||||||||||||
2010 | 2009 | 2008 | 2007 | |||||||||||||
Sugar | 166,001 | 52,968 | 67,772 | 72,372 | ||||||||||||
Ethanol | 134,086 | 132,492 | 70,067 | 29,375 | ||||||||||||
Energy | 100,079 | 128,291 | — | — |
184
Table of Contents
Nine-Month | ||||||||||||||||
Period Ended | ||||||||||||||||
September 30, | Year Ended December 31, | |||||||||||||||
2010 | 2009 | 2008 | 2007 | |||||||||||||
(In thousands of $) | ||||||||||||||||
Sugar | 49,979 | 26,143 | 20,495 | 17,133 | ||||||||||||
Ethanol | 64,536 | 62,811 | 29,385 | 7,289 | ||||||||||||
Energy | 9,847 | 8,216 | — | — | ||||||||||||
Total(1) | 124,604 | 97,587 | 51,171 | 24,422 |
(1) | Includes sales of sugarcane and other miscellaneous items to third parties of $242 thousand during the first nine months of 2010 and $417 thousand and $1,291 thousand during 2009 and 2008, respectively. |
185
Table of Contents
186
Table of Contents
• | It is a clean and renewable energy; | |
• | It complements hydropower, the main source of Brazilian energy, as it is generated during the sugarcane harvest period (April to December) when water reservoirs are at their lowest level; | |
• | It requires a short period of time to start operations; and | |
• | It requires only a small investment in transmission lines when plants are located close to consumer centers. |
187
Table of Contents
Nominal Storage Capacity | Angélica | UMA | Total | |||||||||
Ethanol (cubic meters) | 120,800 | 27,000 | 147,900 | |||||||||
Sugar (tons) | 90,000 | 36,400 | 126,400 |
188
Table of Contents
189
Table of Contents
190
Table of Contents
Total Land | ||||||||||||
Year Ended December 31, | Acquisition | Divestitures | Holdings | |||||||||
(In hectares) | ||||||||||||
2002 | 74,924 | 74,924 | ||||||||||
2003 | 74,924 | |||||||||||
2004 | 34,659 | 109,583 | ||||||||||
2005 | 22,103 | 131,686 | ||||||||||
2006 | 5,759 | 3,507 | 133,938 | |||||||||
2007 | 113,833 | 8,714 | 239,057 | |||||||||
2008 | 43,940 | 4,857 | 278,140 | |||||||||
2009 | 5,005 | 273,135 | ||||||||||
2010* | 14,749 | 287,884 |
* | Through September 30, 2010. |
191
Table of Contents
Cushman | ||||||||||||||||
Gross Size | Book Value | Valuation | ||||||||||||||
Farm | State, Country | (Hectares) | (000’s $) | (000’s $) | Current Use | |||||||||||
El Meridiano | Buenos Aires, Argentina | 6,302 | 15,837 | 40,729 | Grains | |||||||||||
La Alegría | Buenos Aires, Argentina | 2,439 | 4,771 | 9,930 | Grains | |||||||||||
Las Horquetas | Buenos Aires, Argentina | 2,089 | 2,232 | 8,761 | Grains & Cattle | |||||||||||
San Carlos | Buenos Aires, Argentina | 4,239 | 4,000 | 26,701 | Grains | |||||||||||
Santa Regina | Buenos Aires, Argentina | 3,618 | 3,725 | 19,761 | Grains | |||||||||||
El Orden | Santa Fe, Argentina | 6,860 | 5,073 | 9,321 | Grains & Cattle | |||||||||||
La Carolina | Santa Fe, Argentina | 8,297 | 6,135 | 12,185 | Grains & Cattle | |||||||||||
La Rosa | Santa Fe, Argentina | 4,087 | 5,144 | 16,383 | Grains & Cattle | |||||||||||
San José | Santa Fe, Argentina | 7,630 | 1,279 | 5,361 | Grains | |||||||||||
San Joaquín | Santa Fe, Argentina | 37,082 | 11,115 | 38,235 | Rice, Grains & Cattle | |||||||||||
Carmen | Santa Fe, Argentina | 10,020 | 19,708 | 85,382 | Grains | |||||||||||
Abolengo | Santa Fe, Argentina | 7,476 | 19,135 | 86,041 | Grains | |||||||||||
La Guarida | Santiago de Estero, Argentina | 15,451 | 11,400 | 20,326 | Grains & Cattle | |||||||||||
Santa Lucía | Santiago de Estero, Argentina | 17,495 | 27,585 | 39,765 | Grains & Cattle | |||||||||||
Los Guayacanes | Salta, Argentina | 7,241 | 17,759 | 31,548 | Grains | |||||||||||
La Garrucha | Salta, Argentina | 3,607 | 8,846 | 15,510 | Grains | |||||||||||
Ombú | Formosa, Argentina | 18,320 | 8,198 | 18,752 | Grains & Cattle | |||||||||||
Oscuro | Corrientes, Argentina | 33,429 | 7,718 | 43,937 | Rice, Grains & Cattle | |||||||||||
Itá Caabó | Corrientes, Argentina | 26,650 | 19,917 | 52,878 | Rice, Grains & Cattle | |||||||||||
San Agustín | Corrientes, Argentina | 5,067 | 2,161 | 12,896 | Rice, Grains & Cattle | |||||||||||
Alto Alegre | Tocantins, Brazil | 6,082 | 5,130 | 11,152 | Grains & Cotton | |||||||||||
Conquista | Tocantins, Brazil | 4,325 | 5,130 | 10,165 | Grains & Cotton | |||||||||||
Lagoa de Oeste | Bahia, Brazil | 1,132 | 2,274 | 4,249 | Coffee | |||||||||||
Palmeira | Bahia, Brazil | 1,000 | 2,678 | 2,717 | Coffee | |||||||||||
Heloisa | Bahia, Brazil | 800 | 2,128 | 2,702 | Coffee | |||||||||||
Mimoso | Bahia, Brazil | 902 | 2,656 | 3,021 | Coffee | |||||||||||
Rio de Janeiro | Bahia, Brazil | 10,012 | 20,484 | 32,438 | Grains & Coffee | |||||||||||
Bela Manhá | Mato Grosso do Sul, Brazil | 381 | 1,459 | 1,750 | Sugarcane | |||||||||||
Ouro Verde | Mato Grosso do Sul, Brazil | 683 | 2,367 | 2,912 | Sugarcane | |||||||||||
Don Fabrício | Mato Grosso do Sul, Brazil | 3,304 | 11,552 | 14,248 | Sugarcane | |||||||||||
Takuarê | Mato Grosso do Sul, Brazil | 490 | 2,074 | 2,015 | Sugarcane |
192
Table of Contents
Cushman | ||||||||||||||||
Gross Size | Book Value | Valuation | ||||||||||||||
Farm | State, Country | (Hectares) | (000’s $) | (000’s $) | Current Use | |||||||||||
Agua Branca | Mato Grosso do Sul, Brazil | 1,614 | 6,429 | 6,371 | Sugarcane | |||||||||||
Nossa Senhora Aparecida | Mato Grosso do Sul, Brazil | 540 | 1,926 | 1,807 | Sugarcane | |||||||||||
Sapálio | Mato Grosso do Sul, Brazil | 6,062 | 22,626 | 25,085 | Sugarcane | |||||||||||
Carmen (Agua Santa) | Mato Grosso do Sul, Brazil | 146 | 819 | 739 | Sugarcane | |||||||||||
La Macarena | Rio Negro, Uruguay | 5,086 | 12,983 | 30,555 | Grains & Cattle | |||||||||||
La Pecuaria | Duranzo, Uruguay | 3,177 | 8,315 | 13,761 | Grains | |||||||||||
Dinaluca | Corrientes, Argentina | 14,749 | 21,537 | 23,500 | Rice | |||||||||||
Total | 287,884 | 334,306 | 783,587 |
193
Table of Contents
Relevant | ||||||
Facility | Province, Country | Operational Data | Current Use | |||
“Christophersen” | Santa Fe, Argentina | 18,700 tons of storage capacity. 2,400 tons per day of drying capacity | Seedbed and stockpiling plant, classification of wheat and soybean seeds | |||
“La Lácteo”(1) | Córdoba, Argentina | 250,000 liters per day processed | Dairy processing facilities Rice genetic improvement program | |||
“Semillero Itá Caabó” | Corrientes, Argentina | |||||
“Molino San Agustín” | Corrientes, Argentina | Processing capacity of 3,500 tons of brown rice monthly, and husk rice drying capacity of 450 tons per day | Brown rice processing and drying plant | |||
“Molino Ala — Mercedes” | Corrientes, Argentina | Installed capacity of 5,000 tons of white rice monthly, and husk rice drying capacity of 2,400 tons per day | Rice processing and drying plant | |||
“Molino Ala — San Salvador” | Entre Ríos, Argentina | Installed capacity of 5,000 tons of white rice monthly, and husk rice drying capacity of 1,100 tons per day | Rice processing and drying plant | |||
“Angélica Agroenergía” | Mato Grosso do Sul, Brazil | Installed milling capacity of 4.0 million tons of sugarcane annually, 330,000 tons of VHP sugar and over 220,000 cubic meters of ethanol, and over 250,000 MWh | Sugar and ethanol mill producing hydrated ethanol, anhydrous ethanol and VHP sugar. Sells energy to local network | |||
“Usina Monte Alegre” | Monte Belo, Brazil | Present milling capacity of 1.2 million tons of sugarcane annually, 120,000 tons of VHP and white sugar and over 40,000 cubic meters of ethanol | Sugar mill producing VHP and white sugar and hydrated ethanol. Sells energy to local network |
(1) | Joint venture of which we own 50%. |
194
Table of Contents
• | Analyzing market fundamentals and marketing scenarios (short, medium and long term); | |
• | Determining the strike price for each product based on production costs; and | |
• | Establishing the volumes to be hedged and sold pre- and post-harvest, considering: (i) the logistical capacity of each region, (ii) production estimates, (iii) post-harvest premiums, (iv) storage and freight costs, and (v) interest rates. Since most producers typically concentrate their sales at harvest, we at times store a percentage of our production to be sold post-harvest to achieve higher prices and lower logistical costs. |
195
Table of Contents
2009/2010 | Brazil | |
# of Mills(1) | 457 | |
Sugarcane crushed | 602.0 million tons | |
Ethanol Production | 25.8 billion liters | |
Sugar Production | 33.0 million tons |
(1) | Based on Center-South region only |
196
Table of Contents
197
Table of Contents
198
Table of Contents
199
Table of Contents
200
Table of Contents
201
Table of Contents
202
Table of Contents
203
Table of Contents
204
Table of Contents
205
Table of Contents
206
Table of Contents
September 30, | As of December 31, | |||||||||||||||
2010 | 2009 | 2008 | 2007 | |||||||||||||
Farming and Land Transformation | 1,349 | 1,231 | 1,235 | 1,065 | ||||||||||||
Sugar and Ethanol | 3,830 | 3,567 | 2,848 | 2,015 | ||||||||||||
Administrative | 578 | 492 | 461 | 427 | ||||||||||||
Total | 5,757 | 5,290 | 4,544 | 3,507 |
207
Table of Contents
208
Table of Contents
209
Table of Contents
210
Table of Contents
211
Table of Contents
• | The National Registry of Trade and Control of Seeds (Registro Nacional del Comercio y Fiscalizacion de Semillas, or “RNCFS”), whose records are maintained by INASE, under which any person who imports, exports, produces, processes analysis of, identifies or sells seeds should be registered. Trading of seeds may only be conducted by a person registered in the registry, who will also be responsible for properly labeling the seeds. In addition, planting or propagating seeds by third parties must also be conducted by a registered person. | |
• | The National Registry of Seed Varieties (Registro Nacional de Cultivares, or “RNC”), whose records are maintained by INASE, under which every new seed is identified in order to be commercialized, requiring registration according to specific regulations and compliance with certain requirements. Any variety of seed registered with the RNC and consequently incorporated into the National Catalogue of Seed Varieties may be legally marketed in Argentina. RNC registration must be carried out by an agricultural engineer, who shall specify the seed name, its origin and its most remarkable characteristics. | |
• | The National Registry of Property of Seed Varieties (Registro Nacional de la Propiedad de Cultivares, or “RNPC”), whose records are maintained by INASE, the main purpose of which is to protect the property rights of those who create or discover new seeds for a period ranging between 10 and 20 years, depending on the type of seed registered. These rights are freely transferable, and such transfers must be registered with the RNPC. |
212
Table of Contents
213
Table of Contents
214
Table of Contents
215
Table of Contents
216
Table of Contents
217
Table of Contents
218
Table of Contents
219
Table of Contents
220
Table of Contents
221
Table of Contents
222
Table of Contents
223
Table of Contents
224
Table of Contents
225
Table of Contents
226
Table of Contents
227
Table of Contents
• | Protection of the environment, air, water, soil and landscape quality; | |
• | Conservation of biodiversity and coastal configuration and structure; | |
• | Reduction and appropriate management of hazardous toxic substances and wastes of any kind; | |
• | Prevention, elimination, mitigation of and compensation for negative environmental impacts; and | |
• | Regional and international environmental cooperation and participation in solving global environmental problems. |
228
Table of Contents
229
Table of Contents
230
Table of Contents
231
Table of Contents
Name | Position | Date of Appointment | Age | Initial Term | ||||||||||
Abbas Farouq Zuaiter | Chairman | 2011 | 43 | 1 year | ||||||||||
Alan Leland Boyce | Director | 2011 | 50 | 2 years | ||||||||||
Guillaume van der Linden | Director | 2011 | 51 | 1 year | ||||||||||
Paulo Albert Weyland Vieira | Director | 2011 | 44 | 2 years | ||||||||||
Mariano Bosch | Director | 2011 | 40 | 3 years | ||||||||||
Plínio Musetti | Director | 2011 | 56 | 3 years | ||||||||||
Mark Schachter | Director | 2011 | 31 | 1 year | ||||||||||
Julio Moura Neto | Director | 2011 | 58 | 3 years | ||||||||||
Andrés Velasco Brañes | Director | 2011 | 50 | 2 years |
232
Table of Contents
233
Table of Contents
Name | Position | Year Designated | Age | |||||||
Mariano Bosch | Chief Executive Officer | 2002 | 41 | |||||||
Carlos A. Boero Hughes | Chief Financial Officer | 2008 | 44 | |||||||
Emilio F. Gnecco | Chief Legal Officer | 2005 | 34 | |||||||
Walter Marcelo Sanchez | Chief Commercial Officer | 2002 | 47 | |||||||
Mario José Ramón Imbrosciano | Director of Business Development | 2003 | 40 | |||||||
Leonardo Berridi | Country Manager for Brazil | 2004 | 51 | |||||||
Marcelo Vieira | Director of Sugar and Ethanol Operations | 2005 | 58 | |||||||
Ezequiel Garbers | Country Manager for Argentina and Uruguay | 2003 | 44 |
234
Table of Contents
235
Table of Contents
• | execute any acts or contracts on our behalf aimed at fulfilling our corporate purpose, including those for which a special power of attorney is required; |
236
Table of Contents
• | carry out any transactions; | |
• | agree, establish, authorize and regulate our operations, services and expenses; | |
• | delegate special tasks to directors, regulate the formation and operation of committees and fix the remuneration and compensation of expenses of advisorsand/or staff with special duties, with a charge to overhead; | |
• | appoint, suspend or remove agents or employees, establish their duties, remuneration, and bonuses and grant them the powers that it deems advisable; | |
• | grant signature authorization to directors and officers, grant general or special powers of attorney, including those to prosecute; | |
• | call regular and special shareholders’ meetings and establish agendas, submit for the shareholders’ approval our inventory, annual report, balance sheet, statement of income and exhibits, propose depreciation, amortization and reserves that it deems advisable, establish the amount of gains and losses, propose the distribution of earnings and submit all this to the shareholders’ meeting for consideration and resolution; | |
• | fix the date for the payment of dividends established by the shareholders’ meeting and make their payment; and | |
• | make decisions relating to the issuance, subscription or payment of shares pursuant to our articles of incorporation and decision of the regular or special shareholders’ meetings. |
237
Table of Contents
238
Table of Contents
Number of | ||||||||||||||||||||
Plan under | ordinary shares to | Exercise price | ||||||||||||||||||
which options | be issued upon | per ordinary | ||||||||||||||||||
were awarded | exercise of option | share ($) | Date of Grant | Expiration date | ||||||||||||||||
Directors and Executive Officers | ||||||||||||||||||||
Mariano Bosch | 2004 | * | $ | 5.82674 | 5/1/2004 | 5/1/2014 | ||||||||||||||
2004 | * | $ | 5.82674 | 8/1/2005 | 8/1/2015 | |||||||||||||||
2004 | * | $ | 5.82674 | 6/1/2006 | 6/1/2016 | |||||||||||||||
2004 | * | $ | 7.10862 | 6/1/2006 | 6/1/2016 | |||||||||||||||
2004 | * | $ | 8.62358 | 7/1/2006 | 7/1/2016 | |||||||||||||||
2007 | * | $ | 12.81883 | 11/13/2007 | 11/13/2017 | |||||||||||||||
2007 | * | $ | 13.40150 | 1/30/2009 | 1/30/2019 | |||||||||||||||
Carlos A. Boero Hughes | 2004 | * | $ | 5.82674 | 8/25/2008 | 8/25/2018 | ||||||||||||||
2004 | * | $ | 7.10862 | 8/25/2008 | 8/25/2018 | |||||||||||||||
2007 | * | $ | 12.81883 | 8/25/2008 | 8/25/2018 | |||||||||||||||
2007 | * | $ | 13.40150 | 1/30/2009 | 1/30/2019 | |||||||||||||||
Emilio F. Gnecco | 2004 | * | $ | 5.82674 | 6/1/2007 | 6/1/2017 | ||||||||||||||
2004 | * | $ | 8.62358 | 6/1/2007 | 6/1/2017 | |||||||||||||||
2007 | * | $ | 12.81883 | 11/13/2007 | 11/13/2017 | |||||||||||||||
2007 | * | $ | 13.40150 | 1/30/2009 | 1/30/2019 | |||||||||||||||
Walter Marcelo Sanchez | 2004 | * | $ | 5.82674 | 5/1/2004 | 5/1/2014 | ||||||||||||||
2004 | * | $ | 5.82674 | 8/1/2005 | 8/1/2015 | |||||||||||||||
2004 | * | $ | 5.82674 | 6/1/2006 | 6/1/2016 |
239
Table of Contents
Number of | ||||||||||||||||||||
Plan under | ordinary shares to | Exercise price | ||||||||||||||||||
which options | be issued upon | per ordinary | ||||||||||||||||||
were awarded | exercise of option | share ($) | Date of Grant | Expiration date | ||||||||||||||||
2004 | * | $ | 7.10862 | 6/1/2006 | 6/1/2016 | |||||||||||||||
2004 | * | $ | 8.62358 | 7/1/2006 | 7/1/2016 | |||||||||||||||
2007 | * | $ | 12.81883 | 11/13/2007 | 11/13/2017 | |||||||||||||||
2007 | * | $ | 13.40150 | 1/30/2009 | 1/30/2019 | |||||||||||||||
Mario José Ramón Imbrosciano | 2004 | * | $ | 5.82674 | 5/1/2004 | 5/1/2014 | ||||||||||||||
2004 | * | $ | 5.82674 | 8/1/2005 | 8/1/2015 | |||||||||||||||
2004 | * | $ | 5.82674 | 6/1/2006 | 6/1/2016 | |||||||||||||||
2004 | * | $ | 7.10862 | 6/1/2006 | 6/1/2016 | |||||||||||||||
2004 | * | $ | 8.62358 | 7/1/2006 | 7/1/2016 | |||||||||||||||
2007 | * | $ | 12.81883 | 11/13/2007 | 11/13/2017 | |||||||||||||||
2007 | * | $ | 13.40150 | 1/30/2009 | 1/30/2019 | |||||||||||||||
Leonardo Berridi | 2004 | * | $ | 5.82674 | 5/1/2004 | 5/1/2014 | ||||||||||||||
2004 | * | $ | 5.82674 | 8/1/2005 | 8/1/2015 | |||||||||||||||
2004 | * | $ | 5.82674 | 6/1/2006 | 6/1/2016 | |||||||||||||||
2004 | * | $ | 7.10862 | 6/1/2006 | 6/1/2016 | |||||||||||||||
2004 | * | $ | 8.62358 | 7/1/2006 | 7/1/2016 | |||||||||||||||
2007 | * | $ | 12.81883 | 11/13/2007 | 11/13/2017 | |||||||||||||||
2007 | * | $ | 13.40150 | 1/30/2009 | 1/30/2019 | |||||||||||||||
Marcelo Vieira | 2004 | 51,487 | $ | 5.82674 | 2/1/2006 | 2/1/2016 | ||||||||||||||
2004 | 56,370 | $ | 8.62358 | 7/1/2007 | 7/1/2017 | |||||||||||||||
2007 | 102,576 | $ | 12.81883 | 11/13/2007 | 11/13/2017 | |||||||||||||||
2007 | 62,818 | $ | 13.40150 | 1/30/2009 | 1/30/2019 | |||||||||||||||
Ezequiel Garbers | 2004 | * | $ | 5.82674 | 5/1/2004 | 5/1/2014 | ||||||||||||||
2004 | * | $ | 5.82674 | 8/1/2005 | 8/1/2015 | |||||||||||||||
2004 | * | $ | 5.82674 | 6/1/2006 | 6/1/2016 | |||||||||||||||
2004 | * | $ | 7.10862 | 6/1/2006 | 6/1/2016 | |||||||||||||||
2004 | * | $ | 8.62358 | 7/1/2006 | 7/1/2016 | |||||||||||||||
2007 | * | $ | 12.81883 | 11/13/2007 | 11/13/2017 | |||||||||||||||
2007 | * | $ | 13.40150 | 1/30/2009 | 1/30/2019 | |||||||||||||||
Directors and executive officers as a group | 2,996,971 | (1) |
* | Upon the exercise of all options that are exercisable within 60 days of the date of this prospectus, would beneficially own less than 1% of total number of outstanding shares. |
(1) | Consists of 2,465,210 options exercisable within 60 days from the date of this prospectus and 531,761 unvested options. |
240
Table of Contents
241
Table of Contents
• | our directors and executive officers as a group; | |
• | each person known to us to own beneficially more than 5% of our common shares; and | |
• | each selling shareholder participating in this offering. |
Shares Beneficially | ||||||||||||||||||||
Owned After this | ||||||||||||||||||||
Offering and the Al | ||||||||||||||||||||
Shares Beneficially | Gharrafa | |||||||||||||||||||
Owned Prior to this | Number of | Transaction | ||||||||||||||||||
Offering and the Al | Shares to be | (assuming it is | ||||||||||||||||||
Gharrafa Transaction | Sold in this | consummated) | ||||||||||||||||||
Number | Percent | Offering | Number | Percent | ||||||||||||||||
Principal and Selling Shareholders: | ||||||||||||||||||||
Pampas Humedas LLC(1) | 27,158,693 | 32.56 | 3,112,155 | 24,046,538 | 21.42 | |||||||||||||||
HBK Master Fund LP(2) | 20,471,770 | 24.54 | 2,357,391 | 18,114,379 | 16.13 | |||||||||||||||
Stichting Pensioenfonds Zorg en Welzijn(3) | 10,807,824 | 12.96 | — | 10,807,824 | 9.63 | |||||||||||||||
Ospraie Special Opportunities Master Holdings Ltd.(4) | 9,368,025 | 11.23 | 1,078,758 | 8,289,267 | 7.38 | |||||||||||||||
Al Gharrafa Investment Company(5) | 5,185,308 | 6.22 | — | 12,625,784 | 11.24 | |||||||||||||||
Liuede Holdings Ltd(6) | 916,180 | 1.10 | 91,618 | 824,562 | 0.73 | |||||||||||||||
Black River Commodity Inv. Part. Fund LLC(7) | 870,866 | 1.04 | 100,283 | 770,583 | 0.69 | |||||||||||||||
IXE Banco, S.A. Fideicomiso F/466(8) | 573,375 | 0.69 | 66,026 | 507,349 | 0.45 | |||||||||||||||
Farallon Capital Offshore Investors II LP(9) | 498,492 | 0.60 | 57,403 | 441,089 | 0.39 | |||||||||||||||
IFH Blocker, Ltd(9) | 498,492 | 0.60 | 57,403 | 441,089 | 0.39 | |||||||||||||||
Farallon Capital Partners LP(9) | 447,920 | 0.54 | 51,579 | 396,341 | 0.35 | |||||||||||||||
Cobra CA Holdings Ltd(10) | 438,756 | 0.53 | 50,524 | 388,232 | 0.35 | |||||||||||||||
Agricultural Real Estate Partners LP(11) | 368,503 | 0.44 | 40,000 | 328,503 | 0.29 | |||||||||||||||
Etiel Societe Anonyme(12) | 353,795 | 0.42 | 40,740 | 313,055 | 0.28 | |||||||||||||||
Xango Corporation(13) | 186,344 | 0.22 | 18,634 | 167,710 | 0.15 | |||||||||||||||
Camillia Group Corp(14) | 33,638 | 0.04 | 3,874 | 29,764 | 0.03 | |||||||||||||||
Marcelo M. Bosch(15) | 33,211 | 0.04 | 3,824 | 29,387 | 0.03 | |||||||||||||||
Inigo Herrera(16) | 32,426 | 0.04 | 3,734 | 28,692 | 0.03 | |||||||||||||||
Sudip V. Thakor(17) | 32,426 | 0.04 | 3,734 | 28,692 | 0.03 | |||||||||||||||
Warren Machol(18) | 32,318 | 0.04 | 3,722 | 28,596 | 0.03 | |||||||||||||||
David Perez(19) | 12,634 | 0.02 | 1,455 | 11,179 | 0.01 | |||||||||||||||
Directors and Executive Officers | ||||||||||||||||||||
Abbas Farouq Zuaiter | — | — | — | * | * | |||||||||||||||
Alan Leland Boyce | 1,030,310 | 1.24 | — | 1,030,310 | 0.92 | |||||||||||||||
Guillaume van der Linden | — | — | — | * | * | |||||||||||||||
Paulo Albert Weyland Vieira | — | — | — | * | * | |||||||||||||||
Mariano Bosch(20) | 737,553 | 0.88 | — | 737,553 | 0.66 | |||||||||||||||
Plínio Musetti | — | — | — | * | * | |||||||||||||||
Mark Schachter | — | — | — | * | * | |||||||||||||||
Julio Moura Neto | — | — | — | * | * | |||||||||||||||
Andrés Velasco Brañes | — | — | — | * | * | |||||||||||||||
Carlos A. Boero Hughes | * | * | — | * | * | |||||||||||||||
Emilio F. Gnecco | * | * | — | * | * |
242
Table of Contents
Shares Beneficially | ||||||||||||||||||||
Owned After this | ||||||||||||||||||||
Offering and the Al | ||||||||||||||||||||
Shares Beneficially | Gharrafa | |||||||||||||||||||
Owned Prior to this | Number of | Transaction | ||||||||||||||||||
Offering and the Al | Shares to be | (assuming it is | ||||||||||||||||||
Gharrafa Transaction | Sold in this | consummated) | ||||||||||||||||||
Number | Percent | Offering | Number | Percent | ||||||||||||||||
Walter Marcelo Sanchez | * | * | — | * | * | |||||||||||||||
Mario José Ramón Imbrosciano | * | * | — | * | * | |||||||||||||||
Leonardo Berridi | * | * | — | * | * | |||||||||||||||
Marcelo Vieira(21) | 1,132,376 | 1.36 | — | 1,040,758 | 0.93 | |||||||||||||||
Ezequiel Garbers | * | * | — | * | * | |||||||||||||||
Directors and executive officers as a group | 5,197,586 | 6.23 | — | 5,105,968 | 4.55 |
* | Owns less than 1% based on the total number of outstanding shares of 79,999,985 as of the date of this prospectus. | |
(1) | The address of Pampas Humedas LLC isc/o Soros Fund Management LLC 888 Seventh Avenue, New York, NY 10106. | |
(2) | The address of HBK Master Fund LP is Maples Corporate Services Ltd.: PO BOX 309, Ugland House, George Town, Grand Cayman KY1-1104, Cayman Islands / Notice Address: HBK Master Fund L.P.c/o HBK Services LLC, Attn: Legal department, 2101 Cedar Sring Road, Suite 700, Dallas TX 75201, USA. | |
(3) | The address of Stichting Pensioenfonds Zorg en Welzijn is P.O.BOX 4001 NL-3700 KA Zeist The Netherlands. | |
(4) | The address of Ospraie Special Opportunities Master Holdings Ltd is Ospraie Advisors L.P.: 320 Park Avenue, 27th floor, New York, NY 10022, USA. | |
(5) | The address of Al Gharrafa Investment Company is Walker House, 87 Main Street, George Town, Grand Cayman, KY1-9005, Cayman Islands. The increase in the ownership of Al Gharrafa Investment Company following the offering reflects the purchase of 7,440,476 shares by Al Gharrafa under the Al Gharrafa Transaction, assuming it is consummated. Qatar Holding LLC, the parent company of Al Gharrafa Investment Company, and its affiliates made investments in Credit Suisse Group AG in 2007 and 2008. | |
(6) | The address of Liuede Holdings Ltd, a company wholly owned by Marcelo Vieira, one of our officers, is Trident Trust Company (B.V.I.) Limited, Trident Chambers, P.O. Box 146, Road Town, Tortola, British Virgin Islands. | |
(7) | The address of Black River Commodity Inv. Part. Fund LLC is Black River Asset Management LLC: 12700 Whitewater Drive, Minnetonka, MN 55343, USA. | |
(8) | The address of IXE Banco, S.A. Fideicomiso F/466 is Paseo de la Reforma 505, Piso 45, Colonia Cuauhtémoc 06500, Mexico, DF. | |
(9) | The address of Farallon Capital Offshore Investors II LP, IFH Blocker, Ltd and Farallon Capital Partners LP is Farallon Capital Management L.L.C.: 1 Maritime Plaza, Ste 2100, San Francisco, CA 94105, USA. | |
(10) | The address of Cobra CA Holdings Ltd is Trident Trust Company (B.V.I.) Limited, Trident Chambers, P.O. Box 146, Road Town, Tortola, British Virgin Islands. | |
(11) | The address of Agricultural Real Estate Partners LP is PO BOX 297, Wabash, IN 46992, USA. | |
(12) | The address of Etiel Societe Anonyme is Trident Trust Company (B.V.I.) Limited, Trident Chambers, P.O. Box 146, Road Town, Tortola, British Virgin Islands. | |
(13) | The address of Xango Corporation is Trident Trust Company (B.V.I.) Limited, Trident Chambers, P.O. Box 146, Road Town, Tortola, British Virgin Islands. | |
(14) | The address of Camillia Group Corp is Marcy Building, 2nd Floor, Purcell Estate, P.O. Box 2416, Road Town, Tortola, British Virgin Islands. | |
(15) | The address of Marcelo M. Bosch is Posadas 1349, piso 10, Capital Federal, CP 1011, Argentina. |
243
Table of Contents
(16) | The address of Inigo Herrera is Rambla Pacheco 28, La Brava, Punta del Este, Uruguay. | |
(17) | The address of Sudip V. Thakor is 51 Gilliam Lane, Riverside, CT 06878, USA. | |
(18) | The address of Warren Machol is 500 NW Ridge Rd., Jackson WY 83001. | |
(19) | The address of David Perez is 19333 Collins Avenue, Suite 804, Sunny Isles Beach, FL 33160, USA. | |
(20) | Includes 606,609 shares issuable upon exercise of options held by Mr. Bosch that are exercisable within 60 days of the date of this prospectus. | |
(21) | Includes 216,198 shares issuable upon exercise of options held by Mr. Vieira that are exercisable within 60 days of the date of this prospectus. Mr. Vieira is the owner of Linede Holdings Ltd, one of the selling shareholders in this offering. |
244
Table of Contents
245
Table of Contents
246
Table of Contents
247
Table of Contents
248
Table of Contents
249
Table of Contents
• | the prior authorization of the general meeting of shareholders (at the quorum and majority for ordinary resolutions), which authorization sets forth the terms and conditions of the proposed repurchase and in particular the maximum number of shares to be repurchased, the duration of the period for which the authorization is given (which may not exceed five years) and, in the case of repurchase for consideration, the minimum and maximum consideration per share, must have been obtained; | |
• | the repurchase may not reduce our net assets on a non-consolidated basis to a level below the aggregate of the issued share capital and the reserves that we must maintain pursuant to Luxembourg law or its articles of incorporation; and | |
• | only fully paid up shares may be repurchased. |
250
Table of Contents
251
Table of Contents
252
Table of Contents
253
Table of Contents
254
Table of Contents
255
Table of Contents
256
Table of Contents
257
Table of Contents
258
Table of Contents
259
Table of Contents
260
Table of Contents
• | dealers in securities or currencies; | |
• | insurance companies; | |
• | tax-exempt organizations; | |
• | brokers or dealers in securities or currencies and traders in securities that elect to mark to market; | |
• | certain financial institutions; | |
• | partnerships or other pass-through entities; | |
• | holders whose functional currency for U.S. federal income tax purposes is not the U.S. dollar; | |
• | U.S. expatriates; | |
• | holders that hold our common shares as part of a hedge, straddle or conversion or other integrated transaction; or | |
• | holders that own, directly, indirectly, or constructively, 10% or more of the total combined voting power of our common shares. |
261
Table of Contents
• | an individual who is a citizen or resident of the United States; | |
• | a corporation, or any other entity taxable as a corporation, created or organized in or under the laws of the United States or any State thereof, including the District of Columbia; | |
• | an estate, the income of which is subject to U.S. federal income taxation regardless of its source; | |
• | a trust (a) if a court within the United States is able to exercise primary supervision over its administration and one or more U.S. persons have the authority to control all of its substantial decisions or (b) that has a valid election in effect under applicable Treasury regulations to be treated as a U.S. person. |
262
Table of Contents
263
Table of Contents
264
Table of Contents
Number | ||
Underwriter | of Shares | |
Credit Suisse Securities (USA) LLC | ||
Morgan Stanley & Co. Incorporated | ||
Itau BBA USA Securities Inc. | ||
Deutsche Bank Securities Inc. | ||
Banco do Brasil Securities LLC | ||
Rabo Securities USA, Inc. | ||
Total | 28,571,428 | |
Per Share | Total | |||||||||||||||
Without | With | Without | With | |||||||||||||
Over-Allotment | Over-Allotment | Over-Allotment | Over-Allotment | |||||||||||||
Underwriting Discounts and Commissions paid by us | $ | $ | $ | $ | ||||||||||||
Expenses payable by us | $ | $ | $ | $ | ||||||||||||
Underwriting Discounts and Commissions paid by selling shareholders | $ | N/A | $ | N/A | ||||||||||||
Expenses payable by the selling shareholders | $ | N/A | $ | N/A |
265
Table of Contents
• | Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum. |
266
Table of Contents
• | Over-allotment involves sales by the underwriters of shares in excess of the number of shares the underwriters are obligated to purchase, which creates a syndicate short position. The short position may be either a covered short position or a naked short position. In a covered short position, the number of shares over-allotted by the underwriters is not greater than the number of shares that they may purchase in the over-allotment option. In a naked short position, the number of shares involved is greater than the number of shares in the over-allotment option. The underwriters may close out any covered short position by either exercising their over-allotment optionand/or purchasing shares in the open market. | |
• | Syndicate covering transactions involve purchases of the common shares in the open market after the distribution has been completed in order to cover syndicate short positions. In determining the source of shares to close out the short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through the over-allotment option. If the underwriters sell more shares than could be covered by the over-allotment option, a naked short position, the position can only be closed out by buying shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there could be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in the offering. | |
• | Penalty bids permit the representatives to reclaim a selling concession from a syndicate member when the common shares originally sold by the syndicate member is purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions. |
267
Table of Contents
• | the purchaser is entitled under applicable provincial securities laws to purchase the common shares without the benefit of a prospectus qualified under those securities laws, | |
• | where required by law, that the purchaser is purchasing as principal and not as agent, | |
• | the purchaser has reviewed the text above under Resale Restrictions, and | |
• | the purchaser acknowledges and consents to the provision of specified information concerning its purchase of the common shares to the regulatory authority that by law is entitled to collect the information. |
268
Table of Contents
269
Table of Contents
270
Table of Contents
271
Table of Contents
272
Table of Contents
273
Table of Contents
274
Table of Contents
275
Table of Contents
276
Table of Contents
277
Table of Contents
Thousands of $ | ||||
SEC registration fee | 53 | |||
FINRA filing fee | 50 | |||
NYSE listing fee | 125 | |||
Printing and engraving expenses | 170 | |||
Legal fees and expenses | 2,505 | |||
Accounting fees and expenses | 1,750 | |||
Miscellaneous | 700 | |||
Total | 5,353 | |||
278
Table of Contents
279
Table of Contents
Page | ||||
F-2 | ||||
F-3 | ||||
F-4 | ||||
F-5 | ||||
F-6 | ||||
F-7 | ||||
F-8 | ||||
F-10 |
Page | ||||
F-90 | ||||
F-91 | ||||
F-92 | ||||
F-93 | ||||
F-94 | ||||
F-95 | ||||
F-96 | ||||
F-97 |
Page | ||||
A-1 | ||||
A-2 | ||||
A-3 | ||||
A-4 | ||||
A-5 | ||||
A-6 | ||||
A-7 | ||||
A-8 |
F-1
Table of Contents
by | /s/ Mariano C. Tomatis (Partner) |
F-2
Table of Contents
F-3
Table of Contents
Consolidated Interim Statements of Financial Position
as of September 30, 2010 and December 31, 2009
(All amounts in US$ thousands, except units and per unit data and as otherwise indicated)
Pro Forma | |||||||||||||||||
Unaudited | |||||||||||||||||
September 30, | December 31, | September 30, | |||||||||||||||
Note | 2010 | 2009 | 2010 | ||||||||||||||
ASSETS | |||||||||||||||||
Non-Current Assets | |||||||||||||||||
Property, plant and equipment, net | 6 | 751,418 | 682,878 | 751,418 | |||||||||||||
Investment property | 7 | 28,299 | 21,246 | 28,299 | |||||||||||||
Intangible assets, net | 8 | 28,517 | 21,859 | 28,517 | |||||||||||||
Biological assets | 9 | 85,445 | 170,347 | 85,445 | |||||||||||||
Investments in joint ventures | 10 | 6,124 | 6,506 | 6,124 | |||||||||||||
Deferred income tax assets | 20 | 64,801 | 45,113 | 64,801 | |||||||||||||
Trade and other receivables, net | 12 | 25,482 | 22,065 | 25,482 | |||||||||||||
Other assets | 25 | 34 | 25 | ||||||||||||||
Total Non-Current Assets | 990,111 | 970,048 | 990,111 | ||||||||||||||
Current Assets | |||||||||||||||||
Biological assets | 9 | 39,190 | 60,107 | 39,190 | |||||||||||||
Inventories | 13 | 87,718 | 57,902 | 87,718 | |||||||||||||
Trade and other receivables, net | 12 | 100,846 | 106,212 | 100,846 | |||||||||||||
Derivative financial instruments | 1,428 | 99 | 1,428 | ||||||||||||||
Cash and cash equivalents | 14 | 60,621 | 74,806 | 60,621 | |||||||||||||
Total Current Assets | 289,803 | 299,126 | 289,803 | ||||||||||||||
TOTAL ASSETS | 1,279,914 | 1,269,174 | 1,279,914 | ||||||||||||||
MEMBERS EQUITY | |||||||||||||||||
Capital and reserves attributable to equity holders of the parent | |||||||||||||||||
Members’ units | 15 | 697,289 | 697,289 | — | |||||||||||||
Share capital | — | — | 120,000 | ||||||||||||||
Share premium | — | — | 563,343 | ||||||||||||||
Cumulative translation adjustment | 5,654 | 2,567 | 5,541 | ||||||||||||||
Equity-settled compensation | 13,575 | 12,158 | 13,304 | ||||||||||||||
Retained earnings | (44,483 | ) | 45,062 | (43,594 | ) | ||||||||||||
Equity attributable to equity holders of the parent | 672,035 | 757,076 | 658,594 | ||||||||||||||
Non controlling interest | 75 | 80 | 13,516 | ||||||||||||||
TOTAL MEMBERS EQUITY | 672,110 | 757,156 | 672,110 | ||||||||||||||
LIABILITIES | |||||||||||||||||
Non-Current Liabilities | |||||||||||||||||
Trade and other payables | 18 | 15,992 | 6,822 | 15,992 | |||||||||||||
Borrowings | 19 | 265,361 | 203,134 | 265,361 | |||||||||||||
Derivative financial instruments | — | 280 | — | ||||||||||||||
Deferred income tax liabilities | 20 | 97,404 | 107,045 | 97,404 | |||||||||||||
Payroll and social security liabilities | 21 | 1,224 | 1,106 | 1,224 | |||||||||||||
Provisions for other liabilities | 22 | 3,688 | 3,326 | 3,688 | |||||||||||||
Total Non-Current Liabilities | 383,669 | 321,713 | 383,669 | ||||||||||||||
Current Liabilities | |||||||||||||||||
Trade and other payables | 18 | 62,330 | 62,098 | 62,330 | |||||||||||||
Current income tax liabilities | 2,644 | 222 | 2,644 | ||||||||||||||
Payroll and social security liabilities | 21 | 17,227 | 10,079 | 17,227 | |||||||||||||
Borrowings | 19 | 137,858 | 103,647 | 137,858 | |||||||||||||
Derivative financial instruments | 3,682 | 12,607 | 3,682 | ||||||||||||||
Provisions for other liabilities | 22 | 394 | 1,652 | 394 | |||||||||||||
Total Current Liabilities | 224,135 | 190,305 | 224,135 | ||||||||||||||
TOTAL LIABILITIES | 607,804 | 512,018 | 607,804 | ||||||||||||||
TOTAL MEMBERS EQUITY AND LIABILITIES | 1,279,914 | 1,269,174 | 1,279,914 | ||||||||||||||
F-4
Table of Contents
Consolidated Interim Statements of Income
for the nine-month periods ended September 30, 2010 and 2009
(All amounts in US$ thousands, except units and per unit data and as otherwise indicated)
Pro Forma | |||||||||||||||||
Unaudited | |||||||||||||||||
September 30, | September 30, | September 30, | |||||||||||||||
Note | 2010 | 2009 | 2010 | ||||||||||||||
Sales of manufactured products and services rendered | 23 | 173,917 | 125,304 | 173,917 | |||||||||||||
Cost of manufactured products sold and services rendered | 24 | (137,169 | ) | (106,407 | ) | (137,169 | ) | ||||||||||
Gross Profit from Manufacturing Activities | 36,748 | 18,897 | 36,748 | ||||||||||||||
Sales of agricultural produce and biological assets | 23 | 104,969 | 84,827 | 104,969 | |||||||||||||
Cost of agricultural produce sold and direct agricultural selling expenses | 24 | (104,969 | ) | (84,827 | ) | (104,969 | ) | ||||||||||
Initial recognition and changes in fair value of biological assets and agricultural produce | (76,967 | ) | 25,724 | (76,967 | ) | ||||||||||||
Changes in net realizable value of agricultural produce after harvest | 7,311 | 8,383 | 7,311 | ||||||||||||||
Gross (Loss)/Profit from Agricultural Activities | (69,656 | ) | 34,107 | (69,656 | ) | ||||||||||||
Margin on Manufacturing and Agricultural Activities Before Operating Expenses | (32,908 | ) | 53,004 | (32,908 | ) | ||||||||||||
General and administrative expenses | 24 | (41,573 | ) | (41,780 | ) | (41,572 | ) | ||||||||||
Selling expenses | 24 | (32,836 | ) | (20,603 | ) | (32,836 | ) | ||||||||||
Other operating income, net | 26 | 8,122 | (4,562 | ) | 8,122 | ||||||||||||
Share of loss of joint ventures | (220 | ) | (306 | ) | (220 | ) | |||||||||||
Loss from Operations Before Financing and Taxation | (99,415 | ) | (14,247 | ) | (99,415 | ) | |||||||||||
Finance income | 27 | 9,364 | 7,002 | 9,364 | |||||||||||||
Finance costs | 27 | (28,843 | ) | (21,814 | ) | (28,843 | ) | ||||||||||
Financial results, net | 27 | (19,479 | ) | (14,812 | ) | (19,479 | ) | ||||||||||
Loss Before Income Tax | (118,894 | ) | (29,059 | ) | (118,894 | ) | |||||||||||
Income tax benefit | 20 | 29,347 | 11,231 | 29,347 | |||||||||||||
Loss for the Period | (89,547 | ) | (17,828 | ) | (89,547 | ) | |||||||||||
Attributable to: | |||||||||||||||||
Equity holders of the parent | (89,545 | ) | (17,825 | ) | (87,754 | ) | |||||||||||
Non controlling interest | (2 | ) | (3 | ) | (1,793 | ) | |||||||||||
Losses per member unit for loss attributable to the equity holders of the parent during the period: | |||||||||||||||||
Basic | 28 | (0.188 | ) | (0.039 | ) | (1.097 | ) | ||||||||||
Diluted | 28 | n/a | n/a | n/a | |||||||||||||
F-5
Table of Contents
Consolidated Interim Statements of Comprehensive Income
for the nine-month periods ended September 30, 2010 and 2009
(All amounts in US$ thousands, except units and per unit data and as otherwise indicated)
September 30, | September 30, | |||||||
2010 | 2009 | |||||||
Loss for the period | (89,547 | ) | (17,828 | ) | ||||
Other comprehensive income: | ||||||||
Exchange differences on translating foreign operations | 3,084 | 83,351 | ||||||
Other comprehensive income for the period | 3,084 | 83,351 | ||||||
Total comprehensive (loss)/income for the period | (86,463 | ) | 65,523 | |||||
Attributable to: | ||||||||
Equity holders of the parent | (86,458 | ) | 65,536 | |||||
Non controlling interest | (5 | ) | (13 | ) |
F-6
Table of Contents
Consolidated Interim Statements of Changes in Members’ Equity
for the nine-month periods ended September 30, 2010 and 2009
(All amounts in US$ thousands, except units and per unit data and as otherwise indicated)
Attributable to Equity Holders of the Parent | ||||||||||||||||||||||||||||
Members’ | Cumulative | Non | Total | |||||||||||||||||||||||||
Contributed | Translation | Equity-settled | Retained | Controlling | Members’ | |||||||||||||||||||||||
Capital | Adjustment | Compensation | Earnings | Subtotal | Interest | Equity | ||||||||||||||||||||||
Balance at January 1, 2009 | 628,188 | (89,774 | ) | 9,278 | 45,327 | 593,019 | 45,409 | 638,428 | ||||||||||||||||||||
Total comprehensive income for the period | — | 83,361 | — | (17,825 | ) | 65,536 | (13 | ) | 65,523 | |||||||||||||||||||
Employee unit options granted | — | — | 2,346 | — | 2,346 | — | 2,346 | |||||||||||||||||||||
Capital contribution | 69,101 | — | — | — | 69,101 | — | 69,101 | |||||||||||||||||||||
Subsidiaries spin-off | — | — | — | — | — | (45,311 | ) | (45,311 | ) | |||||||||||||||||||
Balance at September 30, 2009 | 697,289 | (6,413 | ) | 11,624 | 27,502 | 730,002 | 85 | 730,087 | ||||||||||||||||||||
Balance at January 1, 2010 | 697,289 | 2,567 | 12,158 | 45,062 | 757,076 | 80 | 757,156 | |||||||||||||||||||||
Total comprehensive loss for the period | — | 3,087 | — | (89,545 | ) | (86,458 | ) | (5 | ) | (86,463 | ) | |||||||||||||||||
Employee unit options granted | — | — | 1,417 | — | 1,417 | — | 1,417 | |||||||||||||||||||||
Balance at September 30, 2010 | 697,289 | 5,654 | 13,575 | (44,483 | ) | 672,035 | 75 | 672,110 | ||||||||||||||||||||
F-7
Table of Contents
Consolidated Interim Statements of Cash Flows
for the nine-month periods ended September 30, 2010 and 2009
(All amounts in US$ thousands, except units and per unit data and as otherwise indicated)
September 30, | September 30, | |||||||||
Note | 2010 | 2009 | ||||||||
Cash flows from operating activities: | ||||||||||
Loss for the period | (89,547 | ) | (17,828 | ) | ||||||
Adjustments for: | ||||||||||
Income tax benefit | 20 | (29,347 | ) | (11,231 | ) | |||||
Depreciation | 6 | 25,435 | 17,231 | |||||||
Amortization | 8 | 266 | 215 | |||||||
Gain from the disposal of other property items | 26, 28 | (329 | ) | 156 | ||||||
Employee unit options granted | 25 | 1,417 | 2,346 | |||||||
Gain/(loss) from derivative financial instruments | 26, 27 | (11,307 | ) | 4,032 | ||||||
Interest and other expense, net | 27 | 25,836 | 19,835 | |||||||
Initial recognition and changes in fair value of non harvested biological assets (unrealized) | 106,264 | (26,092 | ) | |||||||
Changes in net realizable value of agricultural produce after harvest (unrealized) | (3,007 | ) | (642 | ) | ||||||
Provision and allowances | (831 | ) | 1,444 | |||||||
Share of loss from joint venture | 220 | 306 | ||||||||
Foreign exchange gains, net | 27 | (2,771 | ) | (5,665 | ) | |||||
Changes in operating assets and liabilities: | ||||||||||
Decrease/(increase) in trade and other receivables | 3,788 | (49,070 | ) | |||||||
Increase in inventories | (26,809 | ) | (12,193 | ) | ||||||
Increase in biological assets | (1,746 | ) | (10,051 | ) | ||||||
Decrease in other assets | 9 | 61 | ||||||||
Increase in derivative financial instruments | 773 | 4,944 | ||||||||
(Decrease)/increase in trade and other payables | (6,370 | ) | 14,780 | |||||||
Increase in payroll and social security liabilities | 7,266 | 5,873 | ||||||||
Increase in provisions for other liabilities | 119 | 762 | ||||||||
Net cash used in operating activities before interest and taxes paid | (671 | ) | (60,787 | ) | ||||||
Interest paid | (21,928 | ) | (13,523 | ) | ||||||
Income tax paid | (4,490 | ) | (6,560 | ) | ||||||
Net cash used in operating activities | (27,089 | ) | (80,870 | ) | ||||||
F-8
Table of Contents
Consolidated Interim Statements of Cash Flows (Continued)
for the nine-month periods ended September 30, 2010 and 2009
(All amounts in US$ thousands, except units and per unit data and as otherwise indicated)
September 30, | September 30, | |||||||||||
Note | 2010 | 2009 | ||||||||||
Cash flows from investing activities: | ||||||||||||
Acquisition of subsidiary, net of cash acquired | 30 | (7,872 | ) | — | ||||||||
Purchases of property, plant and equipment | 6 | (77,735 | ) | (61,376 | ) | |||||||
Purchases of intangible assets | 8 | (30 | ) | (377 | ) | |||||||
Interest received | 27 | 1,514 | 331 | |||||||||
Proceeds from sale of property, plant and equipment | 6 | 1,175 | 5,624 | |||||||||
Proceeds from disposal of subsidiary | 5,475 | — | ||||||||||
Net cash used in investing activities | (77,473 | ) | (55,798 | ) | ||||||||
Cash flows from financing activities: | ||||||||||||
Capital contribution | — | 69,101 | ||||||||||
Proceeds from long-term borrowings | 19 | 78,048 | 80,000 | |||||||||
Payments of long-term borrowings | 19 | (14,422 | ) | — | ||||||||
Net increase/(decrease) in short-term borrowings | 19 | 22,160 | (6,160 | ) | ||||||||
Net cash generated from financing activities | 85,786 | 142,941 | ||||||||||
Net (decrease)/increase in cash and cash equivalents | (18,776 | ) | 6,273 | |||||||||
Cash and cash equivalents at beginning of period | 74,806 | 93,360 | ||||||||||
Effect of exchange rate changes on cash | 4,591 | (10,412 | ) | |||||||||
Cash and cash equivalents at end of period | 60,621 | 89,221 | ||||||||||
F-9
Table of Contents
1. | General information, Reorganization and reverse split of Adecoagro’s common shares |
F-10
Table of Contents
2. | Summary of significant accounting policies |
F-11
Table of Contents
2.1 | Basis of preparation |
(a) | Standards, amendments and interpretations to existing standards effective in 2010 and adopted by the Group in 2010. |
• | The revised standard gives the option of measuring non-controlling interests either at fair value or at the proportionate share of the identifiable net assets. This choice can be exercised for each business combination individually. | |
• | In a business combination achieved in stages (step acquisition), the acquirer shall remeasure its previously held equity interest in the acquiree at the date the acquirer obtains control. Goodwill shall then be determined as the difference between the remeasured carrying amount plus consideration transferred for the acquisition of the new shares and any non-controlling interest, minus net assets acquired. | |
• | Contingent consideration shall be measured at fair value at the acquisition date and classified either as equity, or as asset or liability at the acquisition date. Contingent consideration shall be recognized subsequently in accordance with the classification determined at the acquisition date. | |
• | Acquisition-related costs incurred in connection with business combinations shall be recognized as expenses. |
F-12
Table of Contents
• | For changes in contingent consideration classified as a liability at the acquisition date, goodwill cannot be remeasured subsequently. | |
• | According to the revised IFRS 3, effects from the settlement of relationships existing prior to the business combination shall not be part of the exchange for the acquiree. | |
• | In contrast to the previous version of IFRS 3, the revised standard governs the recognition and measurement of rights that were granted to another entity prior to the business combination and which are now reacquired as part of the business combination (reacquired rights). |
• | Changes in a parent’s ownership interest in a subsidiary that do not result in the loss of control shall only be accounted for within equity. | |
• | If a parent loses control of a subsidiary it shall derecognize the consolidated assets and liabilities. The new requirement is that any investment retained in the former subsidiary shall be recognized at fair value at the date when control is lost; any differences resulting from this shall be recognized in profit or loss. | |
• | When losses attributed to the non-controlling interests exceed the non-controlling interests in the subsidiary’s equity, these losses shall be allocated to the non-controlling interests even if this results in a deficit balance. |
F-13
Table of Contents
(b) | Standards, amendments and interpretations to existing standards that are effective in 2010 but not relevant to the Group’s operations. |
F-14
Table of Contents
(c) | Standards, amendments and interpretations to existing standards that are not yet effective. |
F-15
Table of Contents
• | Contingent consideration arrangements arising from business combinations with acquisition dates preceding the application of IFRS 3 (as revised in 2008) are to be accounted for in accordance with the guidance in the previous version of IFRS 3 (as issued in 2004). | |
• | The choice of measuring non-controlling interests at fair value or at the proportionate share of the acquiree’s net assets applies only to instruments that represent present ownership interests and entitle their holders to a proportionate share of the net assets in the event of liquidation. All other components of non-controlling interest are measured at fair value unless another measurement basis is required by IFRS. | |
• | The application guidance in IFRS 3 applies to all share-based payment transactions that are part of a business combination, including un-replaced and voluntarily replaced share-based payment awards. |
F-16
Table of Contents
(d) | Standards, amendments and interpretations to existing standards that are not yet effective and not relevant to Group’s operations. |
2.2. | Seasonality of operations |
F-17
Table of Contents
2.3. | Scope of consolidation |
(a) | Subsidiaries |
(b) | Transactions and non controlling interest |
F-18
Table of Contents
(c) | Joint ventures |
2.4. | Segment reporting |
2.5. | Foreign currency translation |
(a) | Functional and presentation currency |
(b) | Transactions and balances |
(c) | Group companies |
• | assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position; |
F-19
Table of Contents
• | income and expenses for each statement of income are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and | |
• | all resulting exchange differences are recognized as a separate component of equity. |
2.6. | Property, plant and equipment |
Farmland improvements | 5-25 years | |
Buildings and facilities | 20 years | |
Furniture and fittings | 10 years | |
Computer equipment | 3-5 years | |
Machinery and equipment | 4-10 years | |
Vehicles | 4-5 years |
2.7. | Investment property |
F-20
Table of Contents
2.8. | Leases |
2.9. | Goodwill |
2.10. | Negative goodwill |
2.11. | Other intangible assets |
F-21
Table of Contents
2.12. | Impairment of assets |
2.13. | Biological assets |
F-22
Table of Contents
• | Growing crops: |
• | Growing herd and cattle: |
F-23
Table of Contents
• | Coffee: |
• | Sugarcane root: |
2.14. | Inventories |
F-24
Table of Contents
2.15. | Financial assets |
(a) | Financial assets at fair value through profit or loss |
(b) | Loans and receivables |
(c) | Recognition and measurement |
F-25
Table of Contents
(d) | Offsetting financial instruments |
2.16. | Derivative financial instruments and hedging activities |
2.17. | Trade receivables |
2.18. | Cash and cash equivalents |
F-26
Table of Contents
2.19. | Trade payables |
2.20. | Borrowings |
2.21. | Provisions |
2.22. | Current and deferred income tax |
F-27
Table of Contents
2.23. | Revenue recognition |
2.24. | Farmlands sales |
F-28
Table of Contents
2.25. | Earnings per member unit |
2.26. | Dividend distribution |
2.27. | Equity-settled unit-based payments |
2.28. | Termination benefits |
2.29. | Research and development |
3. | Financial risk management |
F-29
Table of Contents
September 30, 2010 | ||||||||||||||||||||
Functional Currency | ||||||||||||||||||||
Net Monetary Position | Argentine | Brazilian | Uruguayan | |||||||||||||||||
(Liability)/Asset | Peso | Reais | Peso | US Dollar | Total | |||||||||||||||
Argentine Peso | 4,764 | — | — | — | 4,764 | |||||||||||||||
Brazilian Reais | — | (159,880 | ) | — | — | (159,880 | ) | |||||||||||||
US Dollar | (100,442 | ) | (115,846 | ) | (100 | ) | 2,311 | (214,077 | ) | |||||||||||
Uruguayan Peso | — | — | 618 | — | 618 | |||||||||||||||
Total | (95,678 | ) | (275,726 | ) | 518 | 2,311 | (368,575 | ) | ||||||||||||
F-30
Table of Contents
September 30, 2009 | ||||||||||||||||||||
Functional Currency | ||||||||||||||||||||
Net Monetary Position | Argentine | Brazilian | Uruguayan | |||||||||||||||||
(Liability)/Asset | Peso | Reais | Peso | US Dollar | Total | |||||||||||||||
Argentine Peso | 4,696 | — | — | — | 4,696 | |||||||||||||||
Brazilian Reais | — | (188,789 | ) | — | — | (188,789 | ) | |||||||||||||
US Dollar | (97,429 | ) | 973 | 1,175 | 49,764 | (45,517 | ) | |||||||||||||
Uruguayan Peso | — | — | (198 | ) | — | (198 | ) | |||||||||||||
Total | (92,733 | ) | (187,816 | ) | 977 | 49,764 | (229,808 | ) | ||||||||||||
September 30, 2010 | ||||||||||||||||||||
Functional Currency | ||||||||||||||||||||
Argentine | Brazilian | Uruguayan | ||||||||||||||||||
Net Monetary Position | Peso | Reais | Peso | US Dollar | Total | |||||||||||||||
Argentine Peso | n/a | — | — | — | — | |||||||||||||||
Brazilian Reais | — | n/a | — | — | — | |||||||||||||||
US Dollar | (10,044 | ) | (11,585 | ) | (10 | ) | n/a | (21,639 | ) | |||||||||||
Uruguayan Peso | — | — | n/a | — | — | |||||||||||||||
(Increase) or decrease in (Loss) Before Income Tax | (10,044 | ) | (11,585 | ) | (10 | ) | — | (21,639 | ) | |||||||||||
September 30, 2009 | ||||||||||||||||||||
Functional Currency | ||||||||||||||||||||
Argentine | Brazilian | Uruguayan | ||||||||||||||||||
Net Monetary Position | Peso | Reais | Peso | US Dollar | Total | |||||||||||||||
Argentine Peso | n/a | — | — | — | — | |||||||||||||||
Brazilian Reais | — | n/a | — | — | — | |||||||||||||||
US Dollar | (9,743 | ) | 97 | 118 | n/a | (9,528 | ) | |||||||||||||
Uruguayan Peso | — | — | n/a | — | ||||||||||||||||
(Increase) or decrease in (Loss) Before Income Tax | (9,743 | ) | 97 | 118 | — | (9,528 | ) | |||||||||||||
• | Raw material price risk |
F-31
Table of Contents
• | End-product price risk |
• | Liquidity risk |
F-32
Table of Contents
Less than | Between | Between 2 | Over | |||||||||||||||||
At 30 September 2010 | 1 Year | 1 and 2 Years | and 5 Years | 5 Years | Total | |||||||||||||||
Trade and other payables | 53,524 | 6,437 | 1,584 | 2,371 | 63,916 | |||||||||||||||
Borrowings (excluding finance lease liabilities) | 137,388 | 124,895 | 136,332 | 4,046 | 402,661 | |||||||||||||||
Finance leases | 470 | 88 | — | — | 558 | |||||||||||||||
Derivative financial instruments | 3,682 | — | — | — | 3,682 | |||||||||||||||
Total | 195,064 | 131,420 | 137,916 | 6,417 | 470,817 | |||||||||||||||
Less than | Between | Between 2 | Over | |||||||||||||||||
At 31 December 2009 | 1 Year | 1 and 2 Years | and 5 Years | 5 Years | Total | |||||||||||||||
Trade and other payables | 53,161 | 5,145 | — | — | 58,306 | |||||||||||||||
Borrowings (excluding finance lease liabilities) | 102,970 | 135,403 | 60,632 | 6,856 | 305,861 | |||||||||||||||
Finance leases | 677 | 243 | — | — | 920 | |||||||||||||||
Derivative financial instruments | 12,607 | 280 | — | — | 12,887 | |||||||||||||||
Total | 169,415 | 141,071 | 60,632 | 6,856 | 377,974 | |||||||||||||||
• | Interest rate risk |
F-33
Table of Contents
September 30, 2010 | ||||||||||||||||
Functional Currency | ||||||||||||||||
Argentine | Brazilian | Uruguayan | ||||||||||||||
Rate per Currency Denomination | Peso | Reais | Peso | Total | ||||||||||||
Fixed rate: | ||||||||||||||||
Argentine Peso | 3,773 | — | — | 3,773 | ||||||||||||
Brazilian Reais | — | 62,502 | — | 62,502 | ||||||||||||
US Dollar | 49,579 | 8,386 | — | 57,965 | ||||||||||||
Subtotal Fixed-rate borrowings | 53,352 | 70,888 | — | 124,240 | ||||||||||||
Variable rate: | ||||||||||||||||
Argentine Peso | — | — | — | — | ||||||||||||
Brazilian Reais | — | 111,976 | — | 111,976 | ||||||||||||
US Dollar | 50,376 | 115,861 | 208 | 166,445 | ||||||||||||
Subtotal Variable-rate borrowings | 50,376 | 227,837 | 208 | 278,421 | ||||||||||||
Total borrowings as per analysis | 103,728 | 298,725 | 208 | 402,661 | ||||||||||||
Finance leases | 187 | 371 | — | 558 | ||||||||||||
Total borrowings at September 30, 2010 | 103,915 | 299,096 | 208 | 403,219 | ||||||||||||
F-34
Table of Contents
September 30, 2009 | ||||||||||||||||
Functional Currency | ||||||||||||||||
Argentine | Brazilian | Uruguayan | ||||||||||||||
Rate per Currency Denomination | Peso | Reais | Peso | Total | ||||||||||||
Fixed rate: | ||||||||||||||||
Argentine Peso | 234 | — | — | 234 | ||||||||||||
Brazilian Reais | — | 6,082 | — | 6,082 | ||||||||||||
US Dollar | 54,620 | — | — | 54,620 | ||||||||||||
Uruguayan Peso | — | — | — | — | ||||||||||||
Subtotal Fixed-rate borrowings | 54,854 | 6,082 | — | 60,936 | ||||||||||||
Variable rate: | ||||||||||||||||
Argentine Peso | 50 | — | — | 50 | ||||||||||||
Brazilian Reais | — | 135,385 | — | 135,385 | ||||||||||||
US Dollar | 49,444 | 59,387 | — | 108,831 | ||||||||||||
Subtotal Variable-rate borrowings | 49,493 | 194,772 | — | 244,266 | ||||||||||||
Total borrowings as per analysis | 104,347 | 200,854 | 305,202 | |||||||||||||
Finance leases | 262 | 498 | — | 759 | ||||||||||||
Total borrowings as per statement of financial position | 104,609 | 201,352 | — | 305,962 | ||||||||||||
September 30, 2010 | ||||||||||||||||
Functional Currency | ||||||||||||||||
Argentine | Brazilian | Uruguayan | ||||||||||||||
Rate per Currency Denomination | Peso | Reais | Peso | Total | ||||||||||||
Variable rate: | ||||||||||||||||
Argentine Peso | — | — | — | — | ||||||||||||
Brazilian Reais | — | 1,120 | — | 1,120 | ||||||||||||
US Dollar | 504 | 1,159 | 2 | 1,665 | ||||||||||||
Total effects on Loss Before Income Tax | 504 | 2,279 | 2 | 2,785 | ||||||||||||
September 30, 2009 | ||||||||||||||||
Functional Currency | ||||||||||||||||
Argentine | Brazilian | Uruguayan | ||||||||||||||
Rate per Currency Denomination | Peso | Reais | Peso | Total | ||||||||||||
Variable rate: | �� | |||||||||||||||
Argentine Peso | — | — | — | — | ||||||||||||
Brazilian Reais | — | 1,354 | — | 1,354 | ||||||||||||
US Dollar | 494 | 594 | — | 1,088 | ||||||||||||
Total effects on Loss Before Income Tax | 494 | 1,948 | — | 2,443 | ||||||||||||
F-35
Table of Contents
F-36
Table of Contents
September 30, | December 31, | |||||||
2010 | 2009 | |||||||
Total Debt | 403,219 | 306,781 | ||||||
Total Equity | 672,110 | 757,156 | ||||||
Total Capital | 1,075,329 | 1,063,937 | ||||||
Gearing Ratio | 0.37 | 0.29 | ||||||
F-37
Table of Contents
September 30, 2010 | ||||||||||||||||
Market | ||||||||||||||||
Notional | Value Asset/ | |||||||||||||||
Type of Derivative Contract | Tons | Amount | (Liability) | (Loss)/Gain | ||||||||||||
Futures: | ||||||||||||||||
Sale | ||||||||||||||||
Corn | 4,500 | 133 | (58 | ) | (58 | ) | ||||||||||
Wheat | 6,300 | 179 | 9 | 9 | ||||||||||||
Soybean | 24,600 | 241 | (682 | ) | (682 | ) | ||||||||||
Coffee | 1,854 | 7,905 | (447 | ) | (447 | ) | ||||||||||
Total | 37,254 | 8,458 | (1,178 | ) | (1,178 | ) | ||||||||||
December 31, 2009 | ||||||||||||||||
Market | ||||||||||||||||
Notional | Value Asset/ | |||||||||||||||
Type of Derivative Contract | Tons | Amount | (Liability) | (Loss)/Gain | ||||||||||||
Futures: | ||||||||||||||||
Sale | ||||||||||||||||
Corn | 26.8 | 3,835 | (19 | ) | (19 | ) | ||||||||||
Soybean | 20.1 | 4,740 | (184 | ) | (184 | ) | ||||||||||
Sugar | 92.2 | 42,283 | (11,712 | ) | (11,712 | ) | ||||||||||
Coffee | 0.5 | 16 | 99 | 99 | ||||||||||||
Total | 139.6 | 50,874 | (11,816 | ) | (11,816 | ) | ||||||||||
• | Floating-to-fixed interest rate swaps |
F-38
Table of Contents
4. | Critical accounting estimates and judgments |
(a) | Group’s financial positions, results of operations and cash flows |
F-39
Table of Contents
F-40
Table of Contents
(b) | Business combinations — purchase price allocation |
(c) | Impairment testing |
F-41
Table of Contents
Key Assumptions | September 30, 2010 | |
Financial projections | Covers 8 years for Ivinhema Covers 4 years for all others | |
Yield average growth rates | 1-3% | |
Future pricing increases | 2% per annum | |
Future cost increases | 2% per annum | |
Discount rates | 9.7% | |
Perpetuity rate | 2.5% |
September 30, | ||||
CGU/Operating Segment | 2010 | |||
Ivinhema/Sugar, ethanol and energy | 9,373 | |||
UMA/Sugar, ethanol and energy | 3,516 | |||
Alfenas/Coffee | 1,097 | |||
Closing net book amount of goodwill allocated to CGUs (Note 8) | 13,986 | |||
Closing net book amount of PPE items and other assets | 87,800 | |||
Total assets allocated to 3 CGUs | 101,786 | |||
(d) | Biological assets |
F-42
Table of Contents
(e) | Fair value of derivatives and other financial instruments |
(f) | Income taxes |
F-43
Table of Contents
(g) | Allowance for trade receivables |
5. | Segment information |
• | The Group’s‘Farming’is further comprised of five reportable segments: |
• | The Group’s‘Crops’Segment consists of planting, harvesting and sale of grains, oilseeds and fibers (including wheat, corn, soybeans, cotton and sunflowers, among others), and to a lesser extent the provision of grain warehousing/conditioning and handling and drying services to third parties. Each underlying crop in the Crops segment does not represent a separate operating segment. Management seeks to maximize the use of the land through the cultivation of one or more type of crops. Types and surface amount of crops cultivated may vary from harvest year to harvest year depending on several factors, some of them out of the Group’s control. Management is focused on the long-term performance of the productive land, and to that extent, the performance is assessed considering the aggregated combination, if any, of crops planted in the land. A single manager is responsible for the management of operating activity of all crops rather than for each individual crop. | |
• | The Group’s‘Rice’Segment consists of planting, harvesting, processing and marketing of rice; | |
• | The Group’s‘Dairy’Segment consists of the production of raw milk, which is processed into manufactured products and marketed through the Group’s joint venture La Lácteo; |
F-44
Table of Contents
• | The Group’s‘Coffee’Segment consists of cultivating coffee beans and marketing own and third party’s coffee production; | |
• | The Group’s‘Cattle’Segment consists of purchasing and fattening of beef cattle for sale to meat processors and local livestock auction markets. In December 2009, the Group strategically decided to sell a significant amount of heads of cattle from owned farmlands to Quickfood S.A., an international third party meat processor. Additionally, the contract provides for the third party to lease the Group’s farmland under an operating lease agreement to raise and fatten the purchased cattle. As required by the Antitrust Law, the Group reported this transaction to the Argentine Antitrust Commission for formal approval. As of the date of these consolidated interim financial statements, the authorization is still pending. The Group does not have any evidence which may indicate this transaction will not be formally approved. |
• | The Group’s‘Sugar, Ethanol and Energy’Segment consists of cultivating sugarcane which is processed in owned sugar mills, transformed into ethanol, sugar and electricity and marketed; | |
• | The Group’s‘Land Transformation’Segment comprises the (i) identification and acquisition of underdeveloped and undermanaged farmland businesses for which the Group generally closes a deal for a price lower than the land’s fair value (generating gains); and (ii) realization of value through the strategic disposition of assets (generating profits). |
F-45
Table of Contents
Farming | Sugar, | |||||||||||||||||||||||||||||||||||||||
Farming | Ethanol and | Land | ||||||||||||||||||||||||||||||||||||||
Crops | Rice | Dairy | Coffee | Cattle | Subtotal | Energy | Transformation | Corporate | Total | |||||||||||||||||||||||||||||||
Sales of manufactured products and services rendered | 211 | 43,694 | — | 2,709 | 2,748 | 49,362 | 124,555 | — | — | 173,917 | ||||||||||||||||||||||||||||||
Cost of manufactured products sold and services rendered | — | (38,783 | ) | — | (2,546 | ) | — | (41,329 | ) | (95,840 | ) | — | — | (137,169 | ) | |||||||||||||||||||||||||
Gross Profit from Manufacturing Activities | 211 | 4,911 | — | 163 | 2,748 | 8,033 | 28,715 | — | — | 36,748 | ||||||||||||||||||||||||||||||
Sales of agricultural produce and biological assets | 89,797 | 1,742 | 10,043 | 1,959 | 1,379 | 104,920 | 49 | — | — | 104,969 | ||||||||||||||||||||||||||||||
Cost of agricultural produce sold and direct agricultural selling expenses | (89,797 | ) | (1,742 | ) | (10,043 | ) | (1,959 | ) | (1,379 | ) | (104,920 | ) | (49 | ) | — | — | (104,969 | ) | ||||||||||||||||||||||
Initial recognition and changes in fair value of biological assets and agricultural produce | 23,390 | 2,571 | 6,795 | (513 | ) | 552 | 32,795 | (109,762 | ) | — | — | (76,967 | ) | |||||||||||||||||||||||||||
Gain from changes in net realizable value of agricultural produce after harvest | 6,287 | — | — | 1,024 | — | 7,311 | — | — | — | 7,311 | ||||||||||||||||||||||||||||||
Gross Profit/(Loss) from Agricultural Activities | 29,677 | 2,571 | 6,795 | 511 | 552 | 40,106 | (109,762 | ) | — | — | (69,656 | ) | ||||||||||||||||||||||||||||
Margin on Manufacturing and Agricultural Activities Before Operating Expenses | 29,888 | 7,482 | 6,795 | 674 | 3,300 | 48,139 | (81,047 | ) | — | — | (32,908 | ) | ||||||||||||||||||||||||||||
General and administrative expenses | (4,544 | ) | (2,571 | ) | (2,087 | ) | (499 | ) | (370 | ) | (10,071 | ) | (15,031 | ) | — | (16,471 | ) | (41,573 | ) | |||||||||||||||||||||
Selling expenses | (1,246 | ) | (5,989 | ) | (245 | ) | (559 | ) | (163 | ) | (8,202 | ) | (24,634 | ) | — | — | (32,836 | ) | ||||||||||||||||||||||
Other operating income, net | (326 | ) | 152 | — | (570 | ) | 76 | (668 | ) | 7,968 | — | 822 | 8,122 | |||||||||||||||||||||||||||
Share of loss of joint ventures | — | — | (220 | ) | — | — | (220 | ) | — | — | — | (220 | ) | |||||||||||||||||||||||||||
Profit/(Loss) from Operations Before Financing and Taxation | 23,772 | (926 | ) | 4,243 | (954 | ) | 2,843 | 28,978 | (112,744 | ) | — | (15,649 | ) | (99,415 | ) | |||||||||||||||||||||||||
Depreciation and amortization | 1,073 | 1,505 | 274 | 160 | 307 | 3,319 | 22,382 | — | — | 25,701 | ||||||||||||||||||||||||||||||
Initial recognition and changes in fair value of biological assets (unrealized) | 4,815 | 1,583 | 2,974 | (884 | ) | 343 | 8,831 | (117,120 | ) | — | — | (108,289 | ) | |||||||||||||||||||||||||||
Initial recognition and changes in fair value of agricultural produce (unrealized) | — | — | — | 261 | — | 261 | 1,764 | — | — | 2,025 | ||||||||||||||||||||||||||||||
Initial recognition and changes in fair value of biological assets and agricultural produce (realized) | 18,575 | 988 | 3,821 | 110 | 209 | 23,703 | 5,594 | — | — | 29,297 | ||||||||||||||||||||||||||||||
Gain from changes in net realizable value of agricultural produce after harvest (unrealized) | 2,739 | — | — | 268 | — | 3,007 | — | — | — | 3,007 | ||||||||||||||||||||||||||||||
Gain from changes in net realizable value of agricultural produce after harvest (realized) | 3,548 | — | — | 756 | — | 4,304 | — | — | — | 4,304 | ||||||||||||||||||||||||||||||
Property, plant and equipment, net | 215,745 | 43,327 | 4,201 | 24,665 | 18,855 | 306,793 | 444,625 | — | — | 751,418 | ||||||||||||||||||||||||||||||
Investment property | — | — | — | — | 28,299 | 28,299 | — | — | — | 28,299 | ||||||||||||||||||||||||||||||
Goodwill | 13.261 | — | — | 1,096 | — | 14,357 | 12,888 | — | — | 27,245 | ||||||||||||||||||||||||||||||
Biological assets | 12,688 | 4,525 | 7,060 | 22,755 | 691 | 47,719 | 76,916 | — | — | 124,635 | ||||||||||||||||||||||||||||||
Investment in joint ventures | — | — | 6,124 | — | — | 6,124 | — | — | — | 6,124 | ||||||||||||||||||||||||||||||
Inventories | 22,543 | 16,370 | 956 | 4,450 | 15 | 44,334 | 43,384 | — | — | 87,718 | ||||||||||||||||||||||||||||||
Total segment assets | 264.237 | 64,222 | 18,341 | 52,966 | 47,860 | 447,626 | 577,813 | — | — | 1,025,439 | ||||||||||||||||||||||||||||||
Borrowings | 53,759 | 41,566 | 10,391 | 17,497 | — | 123,213 | 280,006 | — | — | 403,219 | ||||||||||||||||||||||||||||||
Total segment liabilities | 53,759 | 41,566 | 10,391 | 17,497 | — | 123,213 | 280,006 | — | — | 403,219 | ||||||||||||||||||||||||||||||
F-46
Table of Contents
Farming | Sugar, | |||||||||||||||||||||||||||||||||||||||
Farming | Ethanol and | Land | ||||||||||||||||||||||||||||||||||||||
Crops | Rice | Dairy | Coffee | Cattle | Subtotal | Energy | Transformation | Corporate | Total | |||||||||||||||||||||||||||||||
Sales of manufactured products and services rendered | 7,893 | 53,375 | 752 | 4,775 | — | 66,795 | 58,509 | — | — | 125,304 | ||||||||||||||||||||||||||||||
Cost of manufactured products sold and services rendered | (4,969 | ) | (39,053 | ) | (612 | ) | (4,137 | ) | — | (48,771 | ) | (57,636 | ) | — | — | (106,407 | ) | |||||||||||||||||||||||
Gross Profit from Manufacturing Activities | 2,924 | 14,322 | 140 | 638 | — | 18,024 | 873 | — | — | 18,897 | ||||||||||||||||||||||||||||||
�� | ||||||||||||||||||||||||||||||||||||||||
Sales of agricultural produce and biological assets | 61,362 | 1,120 | 8,420 | 3,816 | 10,017 | 84,735 | 92 | — | — | 84,827 | ||||||||||||||||||||||||||||||
Cost of agricultural produce sold and direct agricultural selling expenses | (61,362 | ) | (1,120 | ) | (8,420 | ) | (3,816 | ) | (10,017 | ) | (84,735 | ) | (92 | ) | — | — | (84,827 | ) | ||||||||||||||||||||||
Initial recognition and changes in fair value of biological assets and agricultural produce | 683 | 5,398 | 1,788 | (12,469 | ) | 278 | (4,322 | ) | 30,046 | — | — | 25,724 | ||||||||||||||||||||||||||||
Gain from changes in net realizable value of agricultural produce after harvest | 7,671 | (19 | ) | — | 731 | — | 8,383 | — | — | — | 8,383 | |||||||||||||||||||||||||||||
Gross Profit/(Loss) from Agricultural Activities | 8,354 | 5,379 | 1,788 | (11,738 | ) | 278 | 4,061 | 30,046 | — | — | 34,107 | |||||||||||||||||||||||||||||
Margin on Manufacturing and Agricultural Activities Before Operating Expenses | 11,278 | 19,701 | 1,928 | (11,100 | ) | 278 | 22,085 | 30,919 | — | — | 53,004 | |||||||||||||||||||||||||||||
General and administrative expenses | (4,706 | ) | (2,161 | ) | (1,820 | ) | (1,850 | ) | (2,269 | ) | (12,806 | ) | (11,978 | ) | — | (16,996 | ) | (41,780 | ) | |||||||||||||||||||||
Selling expenses | (1,367 | ) | (7,132 | ) | (601 | ) | (1,068 | ) | (561 | ) | (10,729 | ) | (9,874 | ) | — | — | (20,603 | ) | ||||||||||||||||||||||
Other operating income, net | 4,692 | (55 | ) | 15 | 1,133 | 387 | 6,172 | (10,610 | ) | — | (124 | ) | (4,562 | ) | ||||||||||||||||||||||||||
Share of loss of joint ventures | — | — | (306 | ) | — | — | (306 | ) | — | — | — | (306 | ) | |||||||||||||||||||||||||||
Profit/(Loss) from Operations Before Financing and Taxation | 9,897 | 10,353 | (784 | ) | (12,885 | ) | (2,165 | ) | 4,416 | (1,543 | ) | — | (17,120 | ) | (14,247 | ) | ||||||||||||||||||||||||
Depreciation and amortization | 1,068 | 1,225 | 310 | 651 | 263 | 3,517 | 13,929 | — | — | 17,446 | ||||||||||||||||||||||||||||||
Initial recognition and changes in fair value of biological assets (unrealized) | 641 | 1,718 | (109 | ) | (9,200 | ) | 197 | (6,753 | ) | 36,186 | — | — | 29,433 | |||||||||||||||||||||||||||
Initial recognition and changes in fair value of agricultural produce (unrealized) | — | — | — | (2,295 | ) | — | (2,295 | ) | (1,046 | ) | — | — | (3,341 | ) | ||||||||||||||||||||||||||
Initial recognition and changes in fair value of biological assets and agricultural produce (realized) | 42 | 3,680 | 1,897 | (974 | ) | 81 | 4,726 | (5,094 | ) | — | — | (368 | ) | |||||||||||||||||||||||||||
Gain from changes in net realizable value of agricultural produce after harvest (unrealized) | 55 | — | — | 587 | — | 642 | — | — | — | 642 | ||||||||||||||||||||||||||||||
Gain from changes in net realizable value of agricultural produce after harvest (realized) | 7,616 | (19 | ) | — | 144 | — | 7,741 | — | — | — | 7,741 | |||||||||||||||||||||||||||||
As of December 31, 2009: | ||||||||||||||||||||||||||||||||||||||||
Property, plant and equipment, net | 248,594 | 31,282 | 10,652 | 2,680 | 767 | 293,975 | 388,903 | — | — | 682,878 | ||||||||||||||||||||||||||||||
Investment property | — | — | — | — | 21,246 | 21,246 | — | — | — | 21,246 | ||||||||||||||||||||||||||||||
Goodwill | 6,110 | — | — | 1,067 | 237 | 7,414 | 12,539 | — | — | 19,953 | ||||||||||||||||||||||||||||||
Biological assets | 27,467 | 11,524 | 4,313 | 21,634 | 815 | 65,753 | 164,701 | — | — | 230,454 | ||||||||||||||||||||||||||||||
Investment in joint ventures | — | — | 6,506 | — | — | 6,506 | — | — | — | 6,506 | ||||||||||||||||||||||||||||||
Inventories | 23,832 | 9,460 | 1,086 | 1,992 | 716 | 37,086 | 20,816 | — | — | 57,902 | ||||||||||||||||||||||||||||||
Total segment assets | 306,003 | 52,266 | 22,557 | 27,373 | 23,781 | 431,980 | 586,959 | — | — | 1,018,939 | ||||||||||||||||||||||||||||||
Borrowings | 63,893 | 39,850 | 9,963 | 3,493 | — | 117,199 | 189,582 | — | — | 306,781 | ||||||||||||||||||||||||||||||
Total segment liabilities | 63,893 | 39,850 | 9,963 | 3,493 | — | 117,199 | 189,582 | — | — | 306,781 | ||||||||||||||||||||||||||||||
F-47
Table of Contents
September 30, | December 31, | |||||||
2010 | 2009 | |||||||
Total reportable assets as per Segment Information | 1,025,439 | 1,018,939 | ||||||
Intangible assets (excluding goodwill) | 1,271 | 1,906 | ||||||
Deferred income tax assets | 64,801 | 45,113 | ||||||
Trade and other receivables | 126,328 | 126,328 | ||||||
Other assets | 25 | 34 | ||||||
Derivative financial instruments | 1,428 | 99 | ||||||
Cash and cash equivalents | 60,621 | 74,806 | ||||||
Total assets as per the Statement of Financial Position | 1,279,914 | 1,269,174 | ||||||
September 30, | December 31, | |||||||
2010 | 2009 | |||||||
Total reportable liabilities as per Segment Information | 403,219 | 306,781 | ||||||
Trade and other payables | 78,322 | 68,920 | ||||||
Deferred income tax liabilities | 97,404 | 107,045 | ||||||
Payroll and social liabilities | 18,451 | 11,185 | ||||||
Provisions for other liabilities | 4,082 | 4,978 | ||||||
Current income tax liabilities | 2,644 | 222 | ||||||
Derivative financial instruments | 3,682 | 12,887 | ||||||
Total liabilities as per the Statement of Financial Position | 607,804 | 512,018 | ||||||
F-48
Table of Contents
Argentina | Brazil | Uruguay | Total | |||||||||||||
Property, plant and equipment | 237,587 | 490,676 | 23,155 | 751,418 | ||||||||||||
Investment property | 28,299 | — | — | 28,299 | ||||||||||||
Intangible assets | 221 | 1,050 | — | 1,272 | ||||||||||||
Goodwill | 27,245 | — | — | 27,245 | ||||||||||||
Investment in joint ventures | 6,124 | — | — | 6,124 | ||||||||||||
Non-current portion of biological assets | 7,099 | 78,345 | — | 85,445 | ||||||||||||
Initial recognition and changes in fair value of biological assets and agricultural produce | (30,126 | ) | (108,072 | ) | (979 | ) | (76,967 | ) | ||||||||
Changes in net realizable value of agricultural produce after harvest | 7,277 | 234 | (200 | ) | 7,311 | |||||||||||
Sales of manufactured products sold and services rendered | 45,950 | 127,967 | — | 173,917 | ||||||||||||
Sales of agricultural produce and biological assets | 88,537 | 12,156 | 4,276 | 104,969 |
Argentina | Brazil | Uruguay | Total | |||||||||||||
As of December 31, 2009 | ||||||||||||||||
Property, plant and equipment | 228,723 | 430,175 | 23,980 | 682,878 | ||||||||||||
Investment property | 21,246 | — | — | 21,246 | ||||||||||||
Intangible assets | 243 | 1,663 | — | 1,906 | ||||||||||||
Goodwill | 6,347 | 13,606 | — | 19,953 | ||||||||||||
Investment in joint ventures | 6,506 | — | — | 6,506 | ||||||||||||
Non-current portion of biological assets | 4,379 | 165,968 | — | 170,347 | ||||||||||||
For the nine — month period ended September 30, 2009 | ||||||||||||||||
Initial recognition and changes in fair value of biological assets and agricultural produce | 6,795 | 17,005 | 1,924 | 25,724 | ||||||||||||
Changes in net realizable value of agricultural produce after harvest | 5,369 | 2,279 | 736 | 8,383 | ||||||||||||
Sales of manufactured products sold and services rendered | 53,392 | 71,912 | — | 125,304 | ||||||||||||
Sales of agricultural produce and biological assets | 62,470 | 18,323 | 4,034 | 84,827 |
F-49
Table of Contents
6. | Property, plant and equipment |
Machinery, | ||||||||||||||||||||||||||||||||
Equipment, | ||||||||||||||||||||||||||||||||
Farmland | Buildings | Furniture | Computer | Work in | ||||||||||||||||||||||||||||
Farmlands | Improvements | and Facilities | and Fittings | Equipment | Vehicles | Progress | Total | |||||||||||||||||||||||||
Nine-month period ended September 30, 2009 | ||||||||||||||||||||||||||||||||
Opening net book amount | 320,479 | 863 | 70,346 | 109,761 | 871 | 1,024 | 68,075 | 571,419 | ||||||||||||||||||||||||
Exchange differences | (1,650 | ) | (28 | ) | 14,000 | 32,769 | 236 | (78 | ) | 19,390 | 64,639 | |||||||||||||||||||||
Additions | 1,810 | 63 | 4,043 | 24,631 | 308 | 516 | 33,105 | 64,476 | ||||||||||||||||||||||||
Transfers | — | — | 15,079 | 34,565 | 102 | — | (49,746 | ) | — | |||||||||||||||||||||||
Disposals | (2,766 | ) | — | (56 | ) | (2,849 | ) | (2 | ) | (107 | ) | — | (5,780 | ) | ||||||||||||||||||
Reclassification to non-income tax credits(*) | — | — | — | (4,884 | ) | — | — | — | (4,884 | ) | ||||||||||||||||||||||
Depreciation charge (Note 24) | — | — | (3,457 | ) | (13,333 | ) | (200 | ) | (241 | ) | — | (17,231 | ) | |||||||||||||||||||
Closing net book amount | 317,873 | 898 | 99,955 | 180,660 | 1,315 | 1,114 | 70,824 | 672,639 | ||||||||||||||||||||||||
At September 30, 2009 | ||||||||||||||||||||||||||||||||
Cost | 317,873 | 3,523 | 117,620 | 232,853 | 2,008 | 2,595 | 70,824 | 747,296 | ||||||||||||||||||||||||
Accumulated depreciation | — | (2,625 | ) | (17,665 | ) | (52,193 | ) | (693 | ) | (1,481 | ) | — | (74,657 | ) | ||||||||||||||||||
Net book amount | 317,873 | 898 | 99,955 | 180,660 | 1,315 | 1,114 | 70,824 | 672,639 | ||||||||||||||||||||||||
Nine-month period ended September 30, 2010 | ||||||||||||||||||||||||||||||||
Opening net book amount | 299,872 | 434 | 102,654 | 170,648 | 1,382 | 1,062 | 106,826 | 682,878 | ||||||||||||||||||||||||
Exchange differences | (5,741 | ) | (25 | ) | 715 | 3,534 | 19 | (39 | ) | 2,504 | 967 | |||||||||||||||||||||
Additions | 299 | — | 709 | 23,500 | 277 | 292 | 60,869 | 85,946 | ||||||||||||||||||||||||
Acquisition of subsidiary (Note 30) | 13,666 | — | 375 | 33 | — | 1 | — | 14,075 | ||||||||||||||||||||||||
Transfers | — | 153 | 59,098 | 64,222 | 33 | — | (123,506 | ) | — | |||||||||||||||||||||||
Disposals | — | (153 | ) | (235 | ) | (323 | ) | (32 | ) | (103 | ) | — | (846 | ) | ||||||||||||||||||
Reclassification to non-income tax credits(*) | — | — | — | — | — | — | (6,167 | ) | (6,167 | ) | ||||||||||||||||||||||
Depreciation charge (Note 24) | — | (149 | ) | (5,556 | ) | (19,237 | ) | (302 | ) | (191 | ) | — | (25,435 | ) | ||||||||||||||||||
Closing net book amount | 308,096 | 260 | 157,760 | 242,377 | 1,377 | 1,022 | 40,526 | 751,418 | ||||||||||||||||||||||||
At September 30, 2010 | ||||||||||||||||||||||||||||||||
Cost | 308,096 | 3,061 | 183,306 | 324,136 | 2,502 | 2,711 | 40,526 | 864,338 | ||||||||||||||||||||||||
Accumulated depreciation | — | (2,801 | ) | (25,546 | ) | (81,759 | ) | (1,125 | ) | (1,689 | ) | — | (112,920 | ) | ||||||||||||||||||
Net book amount | 308,096 | 260 | 157,760 | 242,377 | 1,377 | 1,022 | 40,526 | 751,418 | ||||||||||||||||||||||||
F-50
Table of Contents
(*) | Brazilian federal tax law allows entities to take a percentage of the total cost of the assets purchased as a tax credit. The procedure adopted initially was to recognize such credits proportionally to the depreciation of these fixed assets on a monthly basis. During 2009, the Group elected to change the procedure to recognize these federal tax credits separately when the assets is purchased and, as permitted, the tax credits already “embedded” within the cost of the assets were reclassified to tax credit (See Note 12). |
7. | Investment property |
September 30, | September 30, | |||||||
2010 | 2009 | |||||||
At January 1 | 21,246 | — | ||||||
Acquisition of subsidiary (Note 30) | 7,935 | — | ||||||
Exchange differences | (882 | ) | — | |||||
At September 30 year | 28,299 | — | ||||||
September 30, | September 30, | |||||||
2010 | 2009 | |||||||
Rental income | 2,748 | — |
F-51
Table of Contents
8. | Intangible assets |
Goodwill | Trademarks | Software | Total | |||||||||||||
Nine-month period ended September 30, 2009 | ||||||||||||||||
Opening net book amount | 16,621 | 1,276 | 211 | 18,108 | ||||||||||||
Exchange differences | 3,040 | 358 | 75 | 3,473 | ||||||||||||
Additions | — | 223 | 154 | 377 | ||||||||||||
Amortization charge(i) (Note 24) | — | (137 | ) | (78 | ) | (215 | ) | |||||||||
Closing net book amount | 19,661 | 1,720 | 362 | 21,743 | ||||||||||||
At September 30, 2009 | ||||||||||||||||
Cost | 19,661 | 2,337 | 598 | 22,596 | ||||||||||||
Accumulated amortization | — | (617 | ) | (236 | ) | (853 | ) | |||||||||
Net book amount | 19,661 | 1,720 | 362 | 21,743 | ||||||||||||
Nine-month period ended September 30, 2010 | ||||||||||||||||
Opening net book amount | 19,953 | 1,556 | 350 | 21,859 | ||||||||||||
Exchange differences | 269 | (201 | ) | 10 | 78 | |||||||||||
Additions | — | — | 30 | 30 | ||||||||||||
Acquisition of subsidiary (Note 30) | 7,023 | — | — | 7,023 | ||||||||||||
Disposals | — | (207 | ) | — | (207 | ) | ||||||||||
Amortization charge(i) (Note 24) | — | (160 | ) | (106 | ) | (266 | ) | |||||||||
Closing net book amount | 27,245 | 988 | 284 | 28,517 | ||||||||||||
At September 30, 2010 | ||||||||||||||||
Cost | 27,245 | 1,824 | 649 | 29,718 | ||||||||||||
Accumulated amortization | — | (836 | ) | (365 | ) | (1,201 | ) | |||||||||
Net book amount | 27,245 | 988 | 284 | 28,517 | ||||||||||||
(i) | For the nine-month period ended September 30, 2010 an amount of US$106 and US$160 of amortization charges are included in “General and administrative expenses” and “Selling expenses”, respectively. There were no impairment charges for any of the periods presented. | |
(i) | For the nine-month period ended September 30, 2009 an amount of US$78 and US$137 of amortization charges are included in “General and administrative expenses” and “Selling expenses”, respectively. There were no impairment charges for any of the periods presented. |
F-52
Table of Contents
9. | Biological assets |
September 30, | December 31, | September 30, | ||||||||||
2010 | 2009 | 2009 | ||||||||||
Beginning of the period | 230,454 | 125,948 | 125,948 | |||||||||
Increase due to purchases | 681 | 296 | 65 | |||||||||
Disposal of subsidiary | — | (86 | ) | — | ||||||||
Initial recognition and changes in fair value of biological assets(i) | (76,967 | ) | 71,668 | 25,724 | ||||||||
Decrease due to harvest | (183,427 | ) | (84,990 | ) | (82,513 | ) | ||||||
Decrease due to sales | (2,084 | ) | (37,014 | ) | (9,907 | ) | ||||||
Costs incurred during the period | 157,279 | 136,625 | 112,774 | |||||||||
Exchange differences | (1,301 | ) | 18,007 | 16,268 | ||||||||
End of the period | 124,635 | 230,454 | 188,359 | |||||||||
(i) | Biological asset with a production cycle of more than one year (that is, sugarcane, coffee and cattle) generated ‘Initial recognition and changes in fair value of biological assets’ amounting to US$(102,927) for the nine-month period ended September 30, 2010 (2009: US$19,643). In 2010, an amount of US$(84,482) (2009: US$12,214) was attributable to price changes, and an amount of US$(18,446) (2009: US$7,429) was attributable to physical changes. |
September 30, | December 31, | |||||||
2010 | 2009 | |||||||
Non-current | ||||||||
Cattle for dairy production(i) | 7,060 | 4,313 | ||||||
Other cattle(ii) | 40 | 66 | ||||||
Sown land — coffee(iii) | 21,342 | 18,540 | ||||||
Sown land — sugarcane(iii) | 57,003 | 147,428 | ||||||
85,445 | 170,347 | |||||||
Current | ||||||||
Other cattle(iv) | 651 | 749 | ||||||
Sown land — coffee(v) | 1,413 | 3,094 | ||||||
Sown land — sugarcane(v) | 19,913 | 17,273 | ||||||
Sown land — crops(ii) | 12,688 | 27,467 | ||||||
Sown land — rice(ii) | 4,525 | 11,524 | ||||||
39,190 | 60,107 | |||||||
Total biological assets | 124,635 | 230,454 | ||||||
(i) | Classified as bearer and mature biological assets. |
F-53
Table of Contents
(ii) | Classified as consumable and immature biological assets. | |
(iii) | Classified as bearer and immature biological assets. | |
(iv) | As of September 30, 2010, and amount of US$411 (December 31, 2009: 493) was classified as consumable and mature biological assets, and an amount of US$240 (December 31, 2009: 256) was classified as consumable and immature biological assets. | |
(v) | As of September 30, 2010, and amount of US$7,010 (December 31, 2009: nil) was classified as bearer and mature biological assets, and an amount of US$14,316 (December 31, 2009: 20,367) was classified as bearer and immature biological assets. |
10. | Investments in joint ventures |
F-54
Table of Contents
September 30, | December 31, | |||||||
2010 | 2009 | |||||||
Assets: | ||||||||
Non-current assets | 4,806 | 5,008 | ||||||
Current assets | 6,045 | 5,689 | ||||||
10,851 | 10,697 | |||||||
Liabilities: | ||||||||
Non-current liabilities | 421 | 740 | ||||||
Current liabilities | 4,305 | 3,451 | ||||||
4,727 | 4,191 | |||||||
Net assets of joint venture | 6,124 | 6,506 | ||||||
September 30, | December 31, | |||||||
2010 | 2009 | |||||||
Income | 9,467 | 2,268 | ||||||
Expenses | (9,687 | ) | (2,562 | ) | ||||
Loss after income tax | (220 | ) | (294 | ) | ||||
11. | Financial instruments by category |
F-55
Table of Contents
Assets at Fair | Subtotal | |||||||||||||||||||
Loans and | Value through | Financial | Non-Financial | |||||||||||||||||
Receivables | Profit and Loss | Assets | Assets | Total | ||||||||||||||||
September 30, 2010 | ||||||||||||||||||||
Assets as per statement of financial position | ||||||||||||||||||||
Trade and other receivables | 41,063 | — | 41,063 | 85,265 | 126,328 | |||||||||||||||
Derivative financial instruments | — | 1,428 | 1,428 | — | 1,428 | |||||||||||||||
Cash and cash equivalents | 60,621 | — | 60,621 | — | 60,621 | |||||||||||||||
Total | 107,975 | 1,428 | 109,403 | 85,265 | 188,377 | |||||||||||||||
Liabilities at | Other | |||||||||||||||||||
Fair Value | Financial | Subtotal | ||||||||||||||||||
through Profit | Liabilities at | Financial | Non-Financial | |||||||||||||||||
and Loss | Amortized Cost | Liabilities | Liabilities | Total | ||||||||||||||||
Liabilities as per statement of financial position | ||||||||||||||||||||
Trade and other payables | — | 63,916 | 63,916 | 14,406 | 78,322 | |||||||||||||||
Borrowings (excluding finance lease liabilities) | — | 402,661 | 402,661 | — | 402,661 | |||||||||||||||
Finance leases | — | 558 | 558 | — | 558 | |||||||||||||||
Derivative financial instruments | 3,682 | — | 3,682 | — | 3,682 | |||||||||||||||
Total | 3,682 | 471,603 | 475,285 | 14,406 | 485,223 | |||||||||||||||
Assets at Fair | Subtotal | |||||||||||||||||||
Loans and | Value through | Financial | Non-Financial | |||||||||||||||||
Receivables | Profit and Loss | Assets | Assets | Total | ||||||||||||||||
December 31, 2009 | ||||||||||||||||||||
Assets as per statement of financial position | ||||||||||||||||||||
Trade and other receivables | 60,904 | — | 60,904 | 67,373 | 128,277 | |||||||||||||||
Derivative financial instruments | — | 99 | 99 | — | 99 | |||||||||||||||
Cash and cash equivalents | 74,806 | — | 74,806 | — | 74,806 | |||||||||||||||
Total | 135,710 | 99 | 135,809 | 67,373 | 203,182 | |||||||||||||||
F-56
Table of Contents
Liabilities at | Other | |||||||||||||||||||
Fair Value | Financial | Subtotal | ||||||||||||||||||
through Profit | Liabilities at | Financial | Non-Financial | |||||||||||||||||
and Loss | Amortized Cost | Liabilities | Liabilities | Total | ||||||||||||||||
Liabilities as per statement of financial position | ||||||||||||||||||||
Trade and other payables | — | 58,306 | 58,306 | 10,614 | 68,920 | |||||||||||||||
Borrowings (excluding finance lease liabilities) | — | 305,861 | 305,861 | — | 305,861 | |||||||||||||||
Finance leases | — | 920 | 920 | — | 920 | |||||||||||||||
Derivative financial instruments | 12,887 | — | 12,887 | — | 12,887 | |||||||||||||||
Total | 12,887 | 365,087 | 377,974 | 10,614 | 388,588 | |||||||||||||||
Assets/Liabilities | ||||||||||||||||
at Fair Value | Other Financial | |||||||||||||||
Loans and | through Profit | Liabilities at | ||||||||||||||
Receivables | and Loss | Amortized Cost | Total | |||||||||||||
September 30, 2010 | ||||||||||||||||
Interest income(i) | 1,514 | — | — | 1,514 | ||||||||||||
Interest expense(i) | — | — | (22,696 | ) | (22,696 | ) | ||||||||||
Foreign exchange gains/(losses)(ii) | 13,765 | — | (14,342 | ) | (577 | ) | ||||||||||
Loss from derivative financial instruments(iii) | — | 11,307 | — | 11,307 | ||||||||||||
Net result | 15,278 | 11,307 | (37,038 | ) | (10,453 | ) | ||||||||||
F-57
Table of Contents
Assets/Liabilities | ||||||||||||||||
at Fair Value | Other Financial | |||||||||||||||
Loans and | through Profit | Liabilities at | ||||||||||||||
Receivables | and Loss | Amortized Cost | Total | |||||||||||||
September 30, 2009 | ||||||||||||||||
Interest income(i) | 331 | — | — | 331 | ||||||||||||
Interest expense(i) | — | — | (16,898 | ) | (16,898 | ) | ||||||||||
Foreign exchange gains/(losses)(ii) | 41,436 | — | (33,030 | ) | 8,406 | |||||||||||
Loss from derivative financial instruments(iii) | — | (4,031 | ) | — | (4,031 | ) | ||||||||||
Net result | 41,767 | (4,031 | ) | (49,928 | ) | (12,192 | ) | |||||||||
(i) | Included in “Financial results, net” in the statement of income. | |
(ii) | Included in “Financial results, net” in the statement of income. | |
(iii) | Included in “Other operating income, net” and “Financial results, net” in the statement of income. |
F-58
Table of Contents
2010 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets | ||||||||||||||||
Derivative financial instruments | 1,428 | — | — | 1,428 | ||||||||||||
Total assets | 1,428 | — | — | 1,428 | ||||||||||||
Liabilities | ||||||||||||||||
Derivative financial instruments | 1,493 | 2,190 | — | 3,683 | ||||||||||||
Total liabilities | 3,683 | 2,190 | — | 3,683 | ||||||||||||
Valuation Model | ||||||
Concept | Pricing Method | (Derivatives) Parameters | Pricing Model | |||
Futures | Quoted price | — | — | |||
Options | Quoted price | — | — | |||
Options/OTC | Quoted price | — | Montecarlo | |||
Foreign-currency interest-rate swaps | Theoretical price | Swap curve; Money market interest-rate curve;Foreign-exchange curve. | Present value method | |||
Interest-rate swaps | Theoretical price | Swap curve; Money market interest-rate curve | Present value method |
F-59
Table of Contents
12. | Trade and other receivables, net |
September 30, | December 31, | |||||||
2010 | 2009 | |||||||
Non current | ||||||||
Prepaid expenses | 1,291 | 4,263 | ||||||
Income tax credits | 4,593 | 4,241 | ||||||
Non-income tax credits(i) | 12,836 | 11,279 | ||||||
Cash collateral | 2,993 | 1,858 | ||||||
Other receivables | 3,769 | 424 | ||||||
Non current portion | 25,482 | 22,065 | ||||||
Current | ||||||||
Trade receivables | 32,766 | 47,894 | ||||||
Receivables from related parties (Note 31) | 2,542 | 2,554 | ||||||
Less: Allowance for trade receivables | (948 | ) | (906 | ) | ||||
Trade receivables — net | 34,360 | 49,542 | ||||||
Prepaid expenses | 10,151 | 5,530 | ||||||
Advances to suppliers | 7,818 | 10,167 | ||||||
Income tax credits | 6,961 | 6,569 | ||||||
Non-income tax credits(i) | 31,793 | 23,500 | ||||||
Cash collateral | 3,311 | 2,763 | ||||||
Prepayments(ii) | 2,490 | — | ||||||
Escrow deposits (iii) | 1,028 | 1,028 | ||||||
Receivable from disposal of subsidiary(iv) | — | 5,475 | ||||||
Receivable with related parties (Note 31) | 12 | 796 | ||||||
Other receivables | 2,922 | 842 | ||||||
Subtotal | 66,486 | 56,670 | ||||||
Current portion | 100,846 | 106,212 | ||||||
Total trade and other receivables, net | 126,328 | 128,277 | ||||||
(i) | Includes US$6,167 and US$8,631 reclassified from property, plant and equipment as of September 30, 2010 and December 31, 2009, respectively. | |
(ii) | Relates to transaction costs incurred due to the Reorganization and the proposed initial public offering. Those costs will be either deducted from equity or expensed, in case the public offering is not materialized. These transaction costs have been provided for and recognized within trade and other payables in the line item ‘provisions’. | |
(iii) | In connection with certain acquisitions, the Group deposited a portion of the consideration that would otherwise have been delivered to the sellers into an escrow account with a third party escrow agent to secure specified indemnification obligations of the sellers under the respective agreements. | |
(iv) | Relates to the sale of a subsidiary (comprising mainly of a farmland business). |
F-60
Table of Contents
September 30, | December 31, | |||||||
2010 | 2009 | |||||||
Currency | ||||||||
US Dollar | 27,158 | 23,620 | ||||||
Argentine Peso | 39,888 | 29,504 | ||||||
Uruguayan Peso | 1,012 | 6,036 | ||||||
Brazilian Reais | 58,270 | 69,117 | ||||||
126,328 | 128,277 | |||||||
September 30, | December 31, | |||||||
2010 | 2009 | |||||||
Up to 3 months | 3,143 | 8,790 | ||||||
3 to 6 months | 441 | 1,208 | ||||||
Over 6 months | 1,692 | 1,257 | ||||||
5,276 | 11,255 | |||||||
September 30, | September 30, | |||||||
2010 | 2009 | |||||||
At January 1 | 906 | 391 | ||||||
Charge of the period | 224 | 339 | ||||||
Acquisition of subsidiary | 14 | — | ||||||
Unused amounts reversed | (159 | ) | — | |||||
Used during the year | — | (27 | ) | |||||
Exchange differences | (37 | ) | (125 | ) | ||||
At September 30 | 948 | 638 | ||||||
F-61
Table of Contents
13. | Inventories |
September 30, | December 31, | |||||||
2010 | 2009 | |||||||
Raw materials | 26,601 | 23,843 | ||||||
Finished goods | 49,327 | 30,338 | ||||||
Stocks held by third parties | 11,781 | 3,299 | ||||||
Others | 9 | 422 | ||||||
87,718 | 57,902 | |||||||
F-62
Table of Contents
14. | Cash and cash equivalents |
September 30, | December 31, | |||||||
2010 | 2009 | |||||||
Cash at bank and on hand | 27,130 | 72,903 | ||||||
Short-term bank deposits | 33,491 | 1,903 | ||||||
60,621 | 74,806 | |||||||
15. | Members’ interest |
Number of | Total Members’ | |||||||
Membership Units | Contributed Capital | |||||||
At January 1, 2009 | 445,608,339 | 628,188 | ||||||
Contributed capital | 30,043,850 | 69,101 | ||||||
At September 30, 2009 | 475,652,189 | 697,289 | ||||||
At January 1, 2010 | 475,652,189 | 697,289 | ||||||
At September 30, 2010 | 475,652,189 | 697,289 | ||||||
16. | Equity-settled unit-based payments |
May | May | May | Feb | Oct | Dec | Jan | Nov | |||||||||||||||||||||||||
Grant Date | 2004 | 2005 | 2006 | 2006 | 2006 | 2007 | 2009 | 2009 | ||||||||||||||||||||||||
Expected volatility | 39 | % | 37 | % | 36 | % | 36 | % | 36 | % | 36 | % | 21 | % | 22 | % | ||||||||||||||||
Expected life | 5.77 | 5.37 | 4.97 | 5.05 | 4.80 | 6.50 | 6.50 | 6.50 | ||||||||||||||||||||||||
Risk free rate | 3.46 | % | 3.56 | % | 4.46 | % | 4.13 | % | 4.14 | % | 3.22 | % | 1.85 | % | 2.31 | % | ||||||||||||||||
Expected dividend yield | 1 | % | 1 | % | 1 | % | 1 | % | 1 | % | 1 | % | 0 | % | 0 | % | ||||||||||||||||
Fair value per option | $ | 0.38 | $ | 0.36 | $ | 0.52 | $ | 0.43 | $ | 0.51 | $ | 0.82 | $ | 0.60 | $ | 0.65 | ||||||||||||||||
Possibility of ceasing employment before vesting | 0 | % | 0 | % | 0 | % | 0 | % | 0 | % | 0.24 | % | 0.69 | % | 1.04 | % | ||||||||||||||||
Exercise price | $ | 1 | $ | 1 | $ | 1 | $ | 1.22 | $ | 1.48 | $ | 2.2 | $ | 2.3 | $ | 2.3 |
F-63
Table of Contents
Jan | Jan | Jun | Sep | Sep | ||||||||||||||||
Grant Date | 2010 | 2010 | 2010 | 2010 | 2010 | |||||||||||||||
Expected volatility | 22 | % | 22 | % | 22 | % | 22 | % | 22 | % | ||||||||||
Expected life | 6.50 | 6.50 | 6.50 | 6.50 | 6.50 | |||||||||||||||
Risk free rate | 2.34 | % | 2.34 | % | 1.79 | % | 1.41 | % | 1.41 | % | ||||||||||
Expected dividend yield | 0 | % | 0 | % | 0 | % | 0 | % | 0 | % | ||||||||||
Fair value per option | $ | 0.62 | $ | 0.58 | $ | 0.54 | $ | 0.52 | $ | 0.56 | ||||||||||
Possibility of ceasing employment before vesting | 1.33 | % | 1.33 | % | 1.83 | % | 2.03 | % | 2.03 | % | ||||||||||
Exercise price | $ | 2.2 | $ | 2.3 | $ | 2.3 | $ | 2.3 | $ | 2.2 |
September 30, 2010 | September 30, 2009 | |||||||||||||||
Average | Average | |||||||||||||||
Exercise | Exercise | |||||||||||||||
Price per | Price per | |||||||||||||||
Unit | Options | Unit | Options | |||||||||||||
(Thousands) | (Thousands) | |||||||||||||||
At January 1 | 1.15 | 13,992 | 1.15 | 13,992 | ||||||||||||
Granted | — | — | — | — | ||||||||||||
Forfeited | 1.33 | (940 | ) | — | — | |||||||||||
Exercised | — | — | — | — | ||||||||||||
Expired | — | — | — | — | ||||||||||||
At September 30 | 1.15 | 13,052 | 1.15 | 13,992 | ||||||||||||
F-64
Table of Contents
Exercise | Units | |||||||||||
Price per | September 30, | September 30, | ||||||||||
Unit | 2010 | 2009 | ||||||||||
(In thousands) | ||||||||||||
Expiry date: | ||||||||||||
May 1, 2014 | 1.00 | 3,926 | 3,926 | |||||||||
May 1, 2015 | 1.00 | 3,333 | 3,333 | |||||||||
May 1, 2016 | 1.00 | 1,572 | 1,869 | |||||||||
February 16, 2016 | 1.22 | 641 | 641 | |||||||||
October 1, 2016 | 1.48 | 3,580 | 4,223 |
September 30, 2010 | September 30, 2009 | |||||||||||||||
Average | Average | |||||||||||||||
Exercise | Exercise | |||||||||||||||
Price per | Price per | |||||||||||||||
Unit | Options | Unit | Options | |||||||||||||
(Thousands) | (Thousands) | |||||||||||||||
At January 1 | 2.24 | 11,831 | 2.20 | 7,648 | ||||||||||||
Granted | 2.25 | 1,152 | 2.30 | 4,078 | ||||||||||||
Forfeited | 2.20 | (464 | ) | — | — | |||||||||||
Exercised | — | — | — | — | ||||||||||||
Expired | — | — | — | — | ||||||||||||
At September 30 | 2.24 | 12,519 | 2.24 | 11,726 | ||||||||||||
F-65
Table of Contents
Exercise | Units | |||||||||||
Price per | September 30, | September 30, | ||||||||||
Unit | 2010 | 2009 | ||||||||||
(In thousands) | ||||||||||||
Expiry date: | ||||||||||||
Dec 1, 2017 | 2.20 | 7,184 | 7,648 | |||||||||
Jan 30, 2019 | 2.30 | 4,078 | 4,078 | |||||||||
Nov 1, 2019 | 2.30 | 104 | — | |||||||||
Jan 30, 2020 | 2.20 | 204 | — | |||||||||
Jan 30, 2020 | 2.30 | 471 | — | |||||||||
Jun 30, 2020 | 2.30 | 130 | — | |||||||||
Sep 1, 2020 | 2.30 | 257 | — | |||||||||
Sep 1, 2020 | 2.20 | 91 | — |
Exercisable Units | ||||
In thousands | ||||
2010 | 17,663 | |||
2009 | 14,467 |
17. | Legal and other reserves |
F-66
Table of Contents
18. | Trade and other payables |
September 30, | December 31, | |||||||
2010 | 2009 | |||||||
Non-current | ||||||||
Trade payables | 4,168 | 5,047 | ||||||
Payable from acquisition of subsidiary (Note 30) | 5,802 | — | ||||||
Amounts due to related parties (Note 31) | 4,468 | — | ||||||
Taxes payable | 1,132 | 1,391 | ||||||
Other payables | 422 | 384 | ||||||
15,992 | 6,822 | |||||||
Current | ||||||||
Trade payables | 44,882 | 50,377 | ||||||
Payable from acquisition of subsidiary (Note 30) | 5,802 | — | ||||||
Advances from customers | 1,544 | 871 | ||||||
Amounts due to related parties (Note 31) | — | 330 | ||||||
Taxes payable | 3,689 | 3,527 | ||||||
Provisions | 2,490 | — | ||||||
Contingent consideration arising on a business combination | 1,083 | 4,825 | ||||||
Other payables | 2,840 | 2,168 | ||||||
62,330 | 62,098 | |||||||
Total trade and other payables | 78,322 | 68,920 | ||||||
F-67
Table of Contents
19. | Borrowings |
September 30, | December 31, | |||||||
2010 | 2009 | |||||||
Non-current | ||||||||
Syndicated loan(*) | 22,500 | 22,086 | ||||||
BNDES loan(*) | 71,967 | 78,459 | ||||||
IDB facility(*) | 54,055 | 63,643 | ||||||
Brazil Loan(*) | 30,429 | — | ||||||
Deustche Bank loan(*) | 44,000 | — | ||||||
Other bank borrowings | 42,322 | 38,703 | ||||||
Obligations under finance leases | 88 | 243 | ||||||
265,361 | 203,134 | |||||||
Current | ||||||||
Bank overdrafts | 1,458 | — | ||||||
Syndicated loan(*) | 10,000 | 10,242 | ||||||
BNDES loan(*) | 11,735 | 10,267 | ||||||
IDB facility(*) | 17,316 | 17,282 | ||||||
Brazil Loan(*) | 4,258 | — | ||||||
Deustche Bank loan(*) | 6,368 | — | ||||||
Other bank borrowings | 86,253 | 65,179 | ||||||
Obligations under finance leases | 470 | 677 | ||||||
137,858 | 103,647 | |||||||
Total borrowings | 403,219 | 306,781 | ||||||
(*) | The Group was in compliance with the related covenants under the respective loan agreements. |
F-68
Table of Contents
September 30, | December 31, | |||||||
2010 | 2009 | |||||||
Fixed rate: | ||||||||
Less than 1 year | 47,059 | 30,579 | ||||||
Between 1 and 2 years | 38,682 | 5,724 | ||||||
Between 2 and 3 years | 20,896 | 5,173 | ||||||
Between 3 and 4 years | 7,622 | 5,167 | ||||||
Between 4 and 5 years | 6,675 | 5,167 | ||||||
More than 5 years | 2,442 | 5,167 | ||||||
123,376 | 56,977 | |||||||
Variable rate: | ||||||||
Less than 1 year | 90,329 | 72,391 | ||||||
Between 1 and 2 years | 86,213 | 68,667 | ||||||
Between 2 and 3 years | 79,204 | 55,907 | ||||||
Between 3 and 4 years | 21,914 | 49,511 | ||||||
Between 4 and 5 years | 21 | 787 | ||||||
More than 5 years | 1,604 | 1,621 | ||||||
279,285 | 248,884 | |||||||
402,661 | 305,861 | |||||||
• | Syndicated Loan and BNDES Loan Facility |
F-69
Table of Contents
2009 | 2010 | 2011 | 2012 to 2013 | 2014 to 2018 | ||||||||||||||||
Financial ratios: | ||||||||||||||||||||
Debt Service Coverage Ratio (individual) | > 1.00 | > 1.00 | > 1.00 | > 1.00 | > 1.30 | |||||||||||||||
Liquidity Ratio (individual) | > 0.55 | > 1.00 | > 1.00 | > 1.00 | > 1.00 | |||||||||||||||
Liquidity Ratio (aggregate) | > 1.20 | > 0.65 | > 1,00 | > 1.20 | > 1.20 | |||||||||||||||
Interest Coverage Ratio (aggregate) | > 3.00 | > 2.00 | > 2.00 | > 4.00 | > 4.00 | |||||||||||||||
Net Bank Debt/EBITDA (aggregate) | < 3.00 | < 4.00 | < 3.00 | < 3.00 | < 3.00 |
• | IDB Facility |
F-70
Table of Contents
F-71
Table of Contents
2010 1Q | 2010 2Q | 2010 3Q | 2010 4Q | 2011 | 2012 | 2013 | ||||||||||||||||||||||
Financial ratios: | ||||||||||||||||||||||||||||
EBITDA (aggregate) (in millions of $) | > 3.00 | > 13.00 | > 15.00 | N/A | N/A | N/A | N/A | |||||||||||||||||||||
Total Debt (aggregate) (in millions of $) | < 105.00 | < 110.00 | < 120.00 | < 115.00 | < 115.00 | < 115.00 | < 115.00 | |||||||||||||||||||||
Capital Expenditures (aggregate)(in millions of $) | < 2.70 | < 9.60 | < 15.00 | < 15.00 | N/A | N/A | N/A | |||||||||||||||||||||
Debt to EBITDA (aggregate) | N/A | N/A | N/A | < 5.00 | < 4.75 | < 4.25 | < 3.75 | |||||||||||||||||||||
Total Liabilities to Total Equity (aggregate) | N/A | N/A | N/A | < 1.50 | < 1.50 | < 1.30 | < 1.30 | |||||||||||||||||||||
Current Asset to Current Liabilities (aggregate)(i) | N/A | N/A | N/A | > 1.30 | > 1.10/1.30 | > 1.10/1.30 | > 1.10/1.30 | |||||||||||||||||||||
Interest Coverage (aggregate) | N/A | N/A | N/A | > 1.40 | > 2.10 | > 2.35 | > 2.60 | |||||||||||||||||||||
Debt to Equity (aggregate) | N/A | N/A | N/A | < 1.20 | < 1.20 | < 1.20 | < 1.20 | |||||||||||||||||||||
Short-Term Debt to Total Debt (aggregate)(ii) | N/A | N/A | N/A | < 0.57 | < 0.50 | < 0.50 | < 0.50 | |||||||||||||||||||||
Debt to Equity (individual) | N/A | N/A | N/A | < 1.70 | < 1.40 | < 1.20 | < 1.20 |
(i) | From 2011 onwards, for the first, second and third quarters the ratio is >1.10. From 2011 onwards, for the fourth quarter the ratio is >1.30. | |
(ii) | Measured annually. |
F-72
Table of Contents
Financial Ratios | 2010 to 2013 | 2014 to 2020 | ||||||
Debt Service Coverage Ratio (individual) | >1.00 | >1.30 | ||||||
Liquidity Ratio (individual) | >1.00 | >1.00 |
Financial Ratios | 2010 | 2011 | 2012 | |||||||||
Interest Coverage Ratio (individual) | >1.65 | >3.10 | >3.50 | |||||||||
Leverage Ratio (individual) | <8.50 | <3.40 | <2.50 | |||||||||
Capital Expenditures (individual) (in millions of R$) | <154.00 | <50.00 | <50.00 |
F-73
Table of Contents
September 30, | December 31, | |||||||
2010 | 2009 | |||||||
Currency | ||||||||
Argentine Peso | 3,960 | 88 | ||||||
US Dollar | 224,410 | 158,797 | ||||||
Uruguayan Peso | — | 40 | ||||||
Brazilian Reais | 174,849 | 147,856 | ||||||
403,219 | 306,781 | |||||||
September 30, | December 31, | |||||||
2010 | 2009 | |||||||
Not later than one year | 499 | 719 | ||||||
Later than one year and not later than five years | 88 | 243 | ||||||
587 | 962 | |||||||
Future finance charges on finance leases | (29 | ) | (42 | ) | ||||
Present value of finance lease liabilities | 558 | 920 | ||||||
September 30, | December 31, | |||||||
2010 | 2009 | |||||||
Not later than one year | 470 | 677 | ||||||
Later than one year and not later than five years | 88 | 243 | ||||||
558 | 920 | |||||||
20. | Taxation |
F-74
Table of Contents
September 30, | September 30, | |||||||
2010 | 2009 | |||||||
Current income tax | (3,257 | ) | (6,551 | ) | ||||
Deferred income tax | 32,604 | 17,782 | ||||||
Income tax benefit | 29,347 | 11,231 | ||||||
Income Tax | ||||
Tax Jurisdiction | Rate | |||
Argentina | 35 | % | ||
Brazil | 34 | % | ||
Uruguay | 25 | % |
September 30, | December 31, | |||||||
2010 | 2009 | |||||||
Deferred income tax asset to be recovered after more than 12 months | 62,025 | 44,139 | ||||||
Deferred income tax asset to be recovered within 12 months | 2,776 | 974 | ||||||
Deferred income tax assets | 64,801 | 45,113 | ||||||
September 30, | September 30, | |||||||
2010 | 2009 | |||||||
Beginning of period | 61,932 | 75,914 | ||||||
Exchange differences | (3,655 | ) | (2,612 | ) | ||||
Acquisition of subsidiary (Note 30) | 6,930 | — | ||||||
Income tax benefit | (32,604 | ) | (17,782 | ) | ||||
End of period | 32,603 | 55,520 | ||||||
F-75
Table of Contents
Property, Plant | Biological | |||||||||||||||
Deferred Income Tax Liabilities | and Equipment | Assets | Others | Total | ||||||||||||
At January 1, 2009 | 86,198 | 8,189 | 240 | 94,627 | ||||||||||||
Charged/(credited) to the statement of income | (1,194 | ) | 5,472 | 189 | 4,467 | |||||||||||
Exchange differences | (4,080 | ) | (644 | ) | 392 | (4,332 | ) | |||||||||
At September 30, 2009 | 80,924 | 13,017 | 821 | 94,762 | ||||||||||||
At January 1, 2010 | 78,852 | 27,004 | 1,189 | 107,045 | ||||||||||||
Charged/(credited) to the statement of income | (1,374 | ) | (11,288 | ) | (3,309 | ) | (15,971 | ) | ||||||||
Acquisition of subsidiary | 6,930 | — | — | 6,930 | ||||||||||||
Exchange differences | (2,269 | ) | 1,478 | 191 | (600 | ) | ||||||||||
At September 30, 2010 | 82,139 | 17,194 | (1,929 | ) | 97,404 | |||||||||||
Equity-Settled | ||||||||||||||||||||||||
Tax Loss | Unit-Based | Biological | ||||||||||||||||||||||
Deferred Income Tax Assets | Provisions | Carryforwards | Compensation | Assets | Others | Total | ||||||||||||||||||
At January 1, 2009 | 440 | 13,725 | 3,226 | — | 1,322 | 18,713 | ||||||||||||||||||
Charged/(credited) to the statement of income | 5,055 | 14,793 | 814 | — | 1,587 | 22,249 | ||||||||||||||||||
Exchange differences | 138 | (2,157 | ) | — | — | 299 | (1,720 | ) | ||||||||||||||||
At September 30, 2009 | 5,633 | 26,361 | 4,040 | — | 3,208 | 39,242 | ||||||||||||||||||
�� | ||||||||||||||||||||||||
At January 1, 2010 | 1,265 | 36,405 | 4,225 | — | 3,218 | 45,113 | ||||||||||||||||||
Charged/(credited) to the statement of income | 2,829 | (8,614 | ) | 491 | 21,953 | (26 | ) | 16,633 | ||||||||||||||||
Exchange differences | 38 | 2,961 | — | (408 | ) | 464 | 3,055 | |||||||||||||||||
At September 30, 2010 | 4,132 | 30,752 | 4,716 | 21,545 | 3,656 | 64,801 | ||||||||||||||||||
F-76
Table of Contents
Tax Loss | ||||||
Jurisdiction | Carry Forward | Expiration Period | ||||
Argentina | 327 | 5 years | ||||
Brazil | 117,444 | No expiration date |
September 30, | September 30, | |||||||
2010 | 2009 | |||||||
Tax calculated at the tax rates applicable to profits in the respective countries | (40,279 | ) | (7,619 | ) | ||||
Non-deductible items | 714 | 429 | ||||||
Unused tax losses, net | 7,710 | (2,669 | ) | |||||
Others | 2,508 | (1,372 | ) | |||||
Income tax benefit | (29,347 | ) | (11,231 | ) | ||||
21. | Payroll and social security liabilities |
September 30, | December 31, | |||||||
2010 | 2009 | |||||||
Non-current | ||||||||
Social security payable | 1,224 | 1,106 | ||||||
1,224 | 1,106 | |||||||
Current | ||||||||
Salaries payable | 5,900 | 2,446 | ||||||
Social security payable | 1,889 | 1,831 | ||||||
Provision for vacations | 6,001 | 4,802 | ||||||
Provision for bonuses | 3,437 | 1,000 | ||||||
17,227 | 10,079 | |||||||
Total payroll and social security liabilities | 18,451 | 11,185 | ||||||
22. | Provisions for other liabilities |
F-77
Table of Contents
�� | ||||||||||||
Labor, Legal and | Tax and Social | |||||||||||
Other Claims | Security | Total | ||||||||||
At January 1, 2009 | 809 | 792 | 1,601 | |||||||||
Additions | 1,813 | 1,111 | 2,924 | |||||||||
Used during year | (185 | ) | (180 | ) | (365 | ) | ||||||
Exchange differences | (26 | ) | 113 | 87 | ||||||||
At September 30, 2009 | 2,411 | 1,835 | 4,246 | |||||||||
At January 1, 2010 | 3,370 | 1,608 | 4,978 | |||||||||
Additions | 344 | — | 344 | |||||||||
Used during year | (759 | ) | (573 | ) | (1,332 | ) | ||||||
Exchange differences | 48 | 44 | 91 | |||||||||
At September 30, 2010 | 3,003 | 1,079 | 4,082 | |||||||||
September 30, | December 31, | |||||||
2010 | 2009 | |||||||
Non current | 3,688 | 3,326 | ||||||
Current | 394 | 1,652 | ||||||
4,082 | 4,978 | |||||||
F-78
Table of Contents
23. | Sales |
September 30, | September 30, | |||||||
2010 | 2009 | |||||||
Sales of manufactured products and services rendered: | ||||||||
Ethanol | 64,536 | 37,725 | ||||||
Sugar | 49,979 | 15,483 | ||||||
Rice | 43,327 | 52,440 | ||||||
Energy | 9,847 | 5,016 | ||||||
Rental income | 2,720 | — | ||||||
Coffee | 2,709 | 4,775 | ||||||
Services | 606 | 1,350 | ||||||
Soybean oil and meal | — | 7,478 | ||||||
Powder milk | — | 752 | ||||||
Others | 193 | 285 | ||||||
173,917 | 125,304 | |||||||
F-79
Table of Contents
September 30, | September 30, | |||||||
2010 | 2009 | |||||||
Sales of agricultural produce and biological assets: | ||||||||
Soybean | 55,028 | 31,070 | ||||||
Cattle for dairy production | 705 | 306 | ||||||
Other cattle | 1,379 | 10,017 | ||||||
Corn | 22,323 | 10,539 | ||||||
Cotton | 2,108 | 9,093 | ||||||
Milk | 9,338 | 8,114 | ||||||
Wheat | 3,621 | 3,697 | ||||||
Coffee | 1,959 | 3,816 | ||||||
Sunflower | 3,499 | 3,073 | ||||||
Barley | 741 | 2,059 | ||||||
Seeds | 1,823 | 2,201 | ||||||
Sorghum | 1,711 | 90 | ||||||
Others | 734 | 752 | ||||||
104,969 | 84,827 | |||||||
Total sales | 278,886 | 210,131 | ||||||
24. | Expenses by nature |
F-80
Table of Contents
September 30, | September 30, | |||||||
2010 | 2009 | |||||||
Cost of agricultural produce and biological assets sold | 92,520 | 75,990 | ||||||
Raw materials and consumables used in manufacturing activities | 89,445 | 74,656 | ||||||
Services | 9,115 | 13,379 | ||||||
Salaries and social security expenses (Note 25) | 34,350 | 30,182 | ||||||
Depreciation and amortization | 25,701 | 17,446 | ||||||
Taxes(*) | 1,801 | 7,245 | ||||||
Maintenance and repairs | 7,854 | 5,375 | ||||||
Lease expense and similar arrangements(**) | 2,197 | 1,223 | ||||||
Freights | 16,100 | 8,944 | ||||||
Export taxes/selling taxes | 21,245 | 7,090 | ||||||
Fuel and lubricants | 5,347 | 1,637 | ||||||
Others | 10,872 | 10,450 | ||||||
Total expenses by nature | 316,547 | 253,617 | ||||||
(*) | Excludes export taxes and selling taxes. | |
(**) | Relates to various cancellable operating lease agreements for office and machinery equipment. |
25. | Salaries and social security expenses |
September 30, | September 30, | |||||||
2010 | 2009 | |||||||
Wages and salaries | 26,138 | 22,664 | ||||||
Social security costs | 6,795 | 5,172 | ||||||
Equity-settled unit-based compensation | 1,417 | 2,346 | ||||||
34,350 | 30,182 | |||||||
Number of employees | 5,757 | 5,382 | ||||||
F-81
Table of Contents
26. | Other operating income, net |
September 30, | September 30, | |||||||
2010 | 2009 | |||||||
Gain/(loss) from commodity derivative financial instruments | 7,238 | (4,823 | ) | |||||
Gain/(loss) from disposal of other property items | 329 | (156 | ) | |||||
Others | 555 | 417 | ||||||
8,122 | (4,562 | ) | ||||||
27. | Financial results, net |
September 30, | September 30, | |||||||
2010 | 2009 | |||||||
Finance income: | ||||||||
— Interest income | 1,514 | 331 | ||||||
— Foreign exchange gains, net | 2,771 | 5,665 | ||||||
— Gain from interest rate/foreign exchange rate derivative financial instruments | 4,069 | 791 | ||||||
— Other income | 1,010 | 215 | ||||||
Finance income | 9,364 | 7,002 | ||||||
Finance costs: | ||||||||
— Interest expense | (22,696 | ) | (16,898 | ) | ||||
— Taxes | (1,493 | ) | (1,648 | ) | ||||
— Other expenses | (4,654 | ) | (3,268 | ) | ||||
Finance costs | (28,843 | ) | (21,814 | ) | ||||
Total financial results, net | (19,479 | ) | (14,812 | ) | ||||
28. | Earnings per member unit |
(a) | Basic |
September 30, | September 30, | |||||||
2010 | 2009 | |||||||
Loss attributable to equity holders of the Group | (89,545 | ) | (17,825 | ) | ||||
Weighted average number of membership units in issue (thousands) | 475,652 | 454,506 | ||||||
Basic losses per unit | (0.188 | ) | (0.039 | ) | ||||
(b) | Diluted |
F-82
Table of Contents
September 30, | September 30, | |||||||
2010 | 2009 | |||||||
Loss attributable to equity holders of the Group | (89,545 | ) | (17,825 | ) | ||||
Weighted average number of membership units in issue (thousands) | 475,652 | 454,506 | ||||||
Adjustments for: | ||||||||
Weighted average number of membership units that would have been issued at average market price (thousands) | 17,320 | 9,537 | ||||||
Weighted average number of membership units for diluted earnings per unit (thousands) | 492,972 | 464,043 | ||||||
Diluted earnings per unit | n/a | (*) | n/a | (*) | ||||
(*) | The effects of anti-dilutive potential membership units are ignored in the earnings per unit calculation. All units are anti-dilutive in a loss period because they would decrease a loss per unit. |
29. | Disclosure of leases and similar arrangements |
September 30, | December 31, | |||||||
2010 | 2009 | |||||||
No later than 1 year | 6,357 | 11,681 | ||||||
Later than 1 year and no later than 5 years | 2,074 | 3,824 | ||||||
Thereafter | 641 | 487 | ||||||
9,072 | 15,992 | |||||||
F-83
Table of Contents
September 30, | September 30, | |||||||
2010 | 2009 | |||||||
Rental income | 2,748 | — |
September 30, | December 31, | |||||||
2010 | 2009 | |||||||
No later than 1 year | 3,535 | 2,370 | ||||||
Later than 1 year and no later than 5 years | 14,138 | 9,483 | ||||||
Thereafter | 14,727 | 11,853 | ||||||
32,400 | 23,706 | |||||||
F-84
Table of Contents
30. | Business combinations |
Purchase consideration: | ||||
Cash paid | 7,900 | |||
Present value of seller financing(*) | 11,605 | |||
Total purchase consideration | 19,505 | |||
Fair value of net assets acquired | 12,482 | |||
Goodwill | 7,023 | |||
(*) | Discounted at present value as of the date of acquisition. |
F-85
Table of Contents
Fair Value | Book Value(*) | |||||||
Cash and cash equivalents | 28 | 28 | ||||||
Property, plant and equipment | 14,075 | 1,729 | ||||||
Investment property | 7,935 | 766 | ||||||
Deferred tax | (6,930 | ) | (101 | ) | ||||
Other current assets | 1,331 | 1,331 | ||||||
Other current liabilities | (3,957 | ) | (3,957 | ) | ||||
Net assets acquired | 12,482 | (204 | ) | |||||
(*) | Carrying amounts of assets, liabilities and contingent liabilities in Dinaluca’s books, determined in accordance with IFRS, immediately before the combination are not disclosed separately, as Dinaluca did not report IFRS information. Book values correspond to accounting records maintained under local GAAP prior to the acquisition. |
Cash paid | 7,900 | |||
Cash and cash equivalents in subsidiary acquired | (28 | ) | ||
Cash outflow on acquisition | 7,872 | |||
F-86
Table of Contents
31. | Group companies |
Country of | 2010 | 2009 | ||||||||||||
Incorporation | Ownership | Ownership | ||||||||||||
and | Percentage Held | Percentage Held | ||||||||||||
Activities | Operation | if not 100% | if not 100% | |||||||||||
Details of principal subsidiary undertakings: | ||||||||||||||
Operating companies (unless otherwise stated): | ||||||||||||||
Americas | ||||||||||||||
Adeco Agropecuaria S.A. | (a) | Argentina | — | — | ||||||||||
Pilagá S.R.L. | (a) | Argentina | 99.84 | % | 99.84 | % | ||||||||
Cavok S.A. | (a) | Argentina | — | — | ||||||||||
Establecimientos El Orden S.A. | (a) | Argentina | — | — | ||||||||||
Bañado del Salado S.A. | (a) | Argentina | — | — | ||||||||||
Agrícola Ganadera San José S.R.L. | (a) | Argentina | — | — | ||||||||||
Santa Regina Agropecuaria S.R.L. | (a) | Argentina | — | — | ||||||||||
La Paz Agropecuaria S.R.L. | (a) | Argentina | (i) | (i) | ||||||||||
Agro Invest S.A. | (a) | Argentina | — | — | ||||||||||
Forsalta S.A. | (a) | Argentina | — | — | ||||||||||
Dinaluca S.A. | (a) | Argentina | (ii) | (ii) | ||||||||||
Adeco Agropecuaria Brazil Ltda. | (b) | Brazil | — | — | ||||||||||
Adecoagro Comercio Exportação e importação Ltda (f.k.a. Alfenas Café Ltda) | (c) | Brazil | — | — | ||||||||||
Angélica Agroenergia Ltda. | (b) | Brazil | — | — | ||||||||||
Usina Monte Alegre Ltda. | (b) | Brazil | — | — | ||||||||||
Fazenda Mimoso Ltda. | (c) | Brazil | — | — | ||||||||||
Ivinhema Agronergia Ltda. (f.k.a. Amandina Agroenergía Ltda.) | (b) | Brazil | — | — | ||||||||||
Kelizer S.C.A. | (a) | Uruguay | — | — | ||||||||||
Adecoagro Uruguay S.R.L. | (a) | Uruguay | — | — | ||||||||||
Holdings companies: | ||||||||||||||
Americas | ||||||||||||||
Adeco Brazil Participacoes Ltda. | — | Brazil | — | — | ||||||||||
Adeco Agro LLC | — | United States | — | — | ||||||||||
Ladelux S.C.A. | — | Uruguay | — | — | ||||||||||
Asia | ||||||||||||||
AFI(L) LTD. | — | Malaysia | — | — | ||||||||||
Europe | ||||||||||||||
Kadesh Hispania S.L. | — | Spain | — | — | ||||||||||
Leterton España S.L. | — | Spain | — | — | ||||||||||
Details of principal joint venture undertakings: | ||||||||||||||
Americas | ||||||||||||||
Grupo La Lácteo | (d) | Canada | 50.00 | % | 50.00 | % |
(a) | Mainly crops, cattle and others | |
(b) | Mainly sugarcane, ethanol and energy | |
(c) | Mainly coffee | |
(d) | Mainly dairy |
(i) | Sold in December 2009. | |
(ii) | Acquired in August 2010 (Note 30). |
F-87
Table of Contents
32. | Related-party transactions |
Income (Loss) Included in | Balance Receivable | |||||||||||||||||||||
the Statement of Income | (Payable) | |||||||||||||||||||||
Description of | September 30, | September 30, | September 30, | December 31, | ||||||||||||||||||
Related Party | Relationship | Transaction | 2010 | 2009 | 2010 | 2009 | ||||||||||||||||
Grupo La Lácteo | Joint venture | Sales of goods | 9,338 | 8,114 | — | — | ||||||||||||||||
Receivables from related parties (Note 12) | — | — | 2,542 | 2,554 | ||||||||||||||||||
Mario Jorge de Lemos Vieira/ Cia Agropecuaria Monte Alegre/ | (i) | Cost of manufactured products sold and services rendered(ii) | (2,626 | ) | (686 | ) | — | — | ||||||||||||||
Alfenas Agricola Ltda/ Marcelo Weyland Barbosa | Receivables from related parties (Note 12) | — | — | 12 | 796 | |||||||||||||||||
Vieira/ Paulo | Payables (Note 18) | — | — | — | (330 | ) | ||||||||||||||||
Albert Weyland Vieira | ||||||||||||||||||||||
Marcelo Weyland | (i) | Tax charge | (3,991 | ) | — | — | — | |||||||||||||||
Barbosa Vieira/ Paulo Albert | ||||||||||||||||||||||
Weyland Vieira/ | Payables (Note 18) | — | — | (4,468 | ) | — | ||||||||||||||||
Mario Jorge de Lemos Vieira/ Corina de Almeida Leite | ||||||||||||||||||||||
Management and selected employees | Employment | Compensation selected employees (iii) | (3,529 | ) | (4,911 | ) | (13,575 | ) | (12,158 | ) |
(i) | Shareholder or affiliate of shareholder of the Company. | |
(ii) | Relates to agriculture partnership agreements (“parceria”). | |
(iii) | Includes compensation expense under equity-settled unit-based payments (Note 16). |
33. | Events after the date of the statement of financial position |
• | Debt Service Coverage Ratio (individual) shall be equal to or greater than 0.65 for the fiscal year ended December 31, 2010 (prior 1,00). |
F-88
Table of Contents
• | Net bank debt / EBTIDA Ratio (aggregate) shall be less than or equal to 5.5 in 2010 (prior 4.00). |
• | Debt Service Coverage Ratio (individual) shall be equal to or greater than 0.65 for the fiscal year ended December 31, 2010 (prior 1.00). |
F-89
Table of Contents
by | /s/ Mariano C. Tomatis (Partner) |
F-90
Table of Contents
F-91
Table of Contents
Note | 2009 | 2008 | 2007 | |||||||||||
ASSETS | ||||||||||||||
Non-Current Assets | ||||||||||||||
Property, plant and equipment, net | 7 | 682,878 | 571,419 | 538,017 | ||||||||||
Investment property | 8 | 21,246 | — | — | ||||||||||
Intangible assets, net | 9 | 21,859 | 18,108 | 23,215 | ||||||||||
Biological assets | 10 | 170,347 | 75,701 | 57,945 | ||||||||||
Investments in joint ventures | 11 | 6,506 | 7,508 | 8,881 | ||||||||||
Deferred income tax assets | 22 | 45,113 | 18,713 | 9,052 | ||||||||||
Trade and other receivables, net | 12,13 | 22,065 | 8,612 | 4,018 | ||||||||||
Other assets | 34 | 87 | 2,234 | |||||||||||
Total Non-Current Assets | 970,048 | 700,148 | 643,362 | |||||||||||
Current Assets | ||||||||||||||
Biological assets | 10 | 60,107 | 50,247 | 44,617 | ||||||||||
Inventories | 14 | 57,902 | 61,221 | 58,036 | ||||||||||
Trade and other receivables, net | 12,13 | 106,212 | 75,928 | 79,158 | ||||||||||
Derivative financial instruments | 12 | 99 | 2,019 | 258 | ||||||||||
Other financial assets | 12 | — | — | 1,699 | ||||||||||
Cash and cash equivalents | 12,15 | 74,806 | 93,360 | 70,686 | ||||||||||
Total Current Assets | 299,126 | 282,775 | 254,454 | |||||||||||
Spin-off assets | 16 | — | 45,311 | 47,231 | ||||||||||
TOTAL ASSETS | 1,269,174 | 1,028,234 | 945,047 | |||||||||||
MEMBERS EQUITY | ||||||||||||||
Capital and reserves attributable to equity holders of the parent | ||||||||||||||
Members’ units | 17 | 697,289 | 628,188 | 476,125 | ||||||||||
Share capital | — | — | — | |||||||||||
Share premium | — | — | — | |||||||||||
Cumulative translation adjustment | 2,567 | (89,774 | ) | 21,512 | ||||||||||
Equity-settled compensation | 12,158 | 9,278 | 5,376 | |||||||||||
Retained earnings | 45,062 | 45,327 | 64,661 | |||||||||||
Equity attributable to equity holders of the parent | 757,076 | 593,019 | 567,674 | |||||||||||
Minority interest | 80 | 45,409 | 49,191 | |||||||||||
TOTAL MEMBERS EQUITY | 757,156 | 638,428 | 616,865 | |||||||||||
LIABILITIES | ||||||||||||||
Non-Current Liabilities | ||||||||||||||
Trade and other payables | 12,20 | 6,822 | 6,090 | 6,788 | ||||||||||
Borrowings | 12,21 | 203,134 | 4,099 | 62,090 | ||||||||||
Derivative financial instruments | 12 | 280 | — | — | ||||||||||
Deferred income tax liabilities | 22 | 107,045 | 94,627 | 109,713 | ||||||||||
Payroll and social liabilities | 23 | 1,106 | 834 | 761 | ||||||||||
Provisions for other liabilities | 24 | 3,326 | 777 | 3,082 | ||||||||||
Total Non-Current Liabilities | 321,713 | 106,427 | 182,434 | |||||||||||
Current Liabilities | ||||||||||||||
Trade and other payables | 12,20 | 62,098 | 46,670 | 33,404 | ||||||||||
Current income tax liabilities | 222 | 1,487 | 7,940 | |||||||||||
Payroll and social liabilities | 23 | 10,079 | 6,025 | 4,855 | ||||||||||
Borrowings | 12,21 | 103,647 | 224,214 | 97,835 | ||||||||||
Derivative financial instruments | 12 | 12,607 | 4,159 | 1,002 | ||||||||||
Provisions for other liabilities | 24 | 1,652 | 824 | 712 | ||||||||||
Total Current Liabilities | 190,305 | 283,379 | 145,748 | |||||||||||
TOTAL LIABILITIES | 512,018 | 389,806 | 328,182 | |||||||||||
TOTAL MEMBERS EQUITY AND LIABILITIES | 1,269,174 | 1,028,234 | 945,047 | |||||||||||
F-92
Table of Contents
Consolidated Statements of Income
for the years ended December 31, 2009, 2008 and 2007
(All amounts in US$ thousands, except units and per unit data and as otherwise indicated)
Pro Forma | |||||||||||||||||||||
Unaudited | |||||||||||||||||||||
Note | 2009 | 2008 | 2007 | 2009 | |||||||||||||||||
Sales of manufactured products and services rendered | 25 | 183,386 | 117,173 | 69,807 | 183,386 | ||||||||||||||||
Cost of manufactured products sold and services rendered | 26 | (180,083 | ) | (105,583 | ) | (63,519 | ) | (180,083 | ) | ||||||||||||
Gross Profit from Manufacturing Activities | 3,303 | 11,590 | 6,288 | 3,303 | |||||||||||||||||
Sales of agricultural produce and biological assets | 25 | 130,217 | 127,036 | 72,696 | 130,217 | ||||||||||||||||
Cost of agricultural produce sold and direct agricultural selling expenses | 26 | (130,217 | ) | (127,036 | ) | (72,696 | ) | (130,217 | ) | ||||||||||||
Initial recognition and changes in fair value of biological assets and agricultural produce | 71,668 | 61,000 | 26,935 | 71,668 | |||||||||||||||||
Changes in net realizable value of agricultural produce after harvest | 12,787 | 1,261 | 12,746 | 12,787 | |||||||||||||||||
Gross Profit from Agricultural Activities | 84,455 | 62,261 | 39,681 | 84,455 | |||||||||||||||||
Margin on Manufacturing and Agricultural Activities Before Operating Expenses | 87,758 | 73,851 | 45,969 | 87,758 | |||||||||||||||||
General and administrative expenses | 26 | (52,393 | ) | (45,633 | ) | (33,765 | ) | (52,393 | ) | ||||||||||||
Selling expenses | 26 | (31,169 | ) | (24,496 | ) | (14,762 | ) | (31,169 | ) | ||||||||||||
Other operating income, net | 28 | 13,071 | 17,323 | 2,238 | 13,071 | ||||||||||||||||
Excess of fair value of net assets acquired over cost | 32 | — | 1,227 | 28,979 | — | ||||||||||||||||
Share of loss of joint ventures | 11 | (294 | ) | (838 | ) | (553 | ) | (294 | ) | ||||||||||||
Profit from Operations Before Financing and Taxation | 16,973 | 21,434 | 28,106 | 16,973 | |||||||||||||||||
Finance income | 29 | 11,553 | 2,552 | 12,925 | 11,553 | ||||||||||||||||
Finance costs | 29 | (34,216 | ) | (50,860 | ) | (12,458 | ) | (34,216 | ) | ||||||||||||
Financial results, net | 29 | (22,663 | ) | (48,308 | ) | 467 | (22,663 | ) | |||||||||||||
(Loss)/Profit Before Income Tax | (5,690 | ) | (26,874 | ) | 28,573 | (5,690 | ) | ||||||||||||||
Income tax benefit | 22 | 5,415 | 10,449 | 59 | 5,415 | ||||||||||||||||
(Loss)/Profit for the Year | (275 | ) | (16,425 | ) | 28,632 | (275 | ) | ||||||||||||||
Attributable to: | |||||||||||||||||||||
Equity holders of the parent | (265 | ) | (19,334 | ) | 29,170 | (260 | ) | ||||||||||||||
Minority interest | (10 | ) | 2,909 | (538 | ) | (15 | ) | ||||||||||||||
(Losses)/Earnings per member unit for (loss)/ profit attributable to the equity holders of the parent during the year: | |||||||||||||||||||||
Basic | 30 | (0.001 | ) | (0.047 | ) | 0.101 | (0.003 | ) | |||||||||||||
Diluted | 30 | n/a | n/a | 0.098 | n/a |
F-93
Table of Contents
Consolidated Statements of Comprehensive Income
for the years ended December 31, 2009, 2008 and 2007
(All amounts in US$ thousands, except units and per unit data and as otherwise indicated)
2009 | 2008 | 2007 | ||||||||||
(Loss)/Profit for the year | (275 | ) | (16,425 | ) | 28,632 | |||||||
Other comprehensive income: | ||||||||||||
Exchange differences on translating foreign operations | 91,293 | (115,725 | ) | 19,508 | ||||||||
Other comprehensive income/(loss) for the year | 91,293 | (115,725 | ) | 19,508 | ||||||||
Total comprehensive income/(loss) for the year | 91,018 | (132,150 | ) | 48,140 | ||||||||
Attributable to: | ||||||||||||
Equity holders of the parent | 91,036 | (130,895 | ) | 48,437 | ||||||||
Minority interest | (18 | ) | (1,255 | ) | (297 | ) |
F-94
Table of Contents
Consolidated Statements of Changes in Members’ Equity
for the years ended December 31, 2009, 2008 and 2007
(All amounts in US$ thousands, except units and per unit data and as otherwise indicated)
Attributable to Equity Holders of the Parent | ||||||||||||||||||||||||||||
Members’ | Cumulative | Total | ||||||||||||||||||||||||||
Contributed | Translation | Equity-Settled | Retained | Minority | Members’ | |||||||||||||||||||||||
Capital | Adjustment | Compensation | Earnings | Subtotal | Interest | Equity | ||||||||||||||||||||||
Balance at January 1, 2007 | 278,613 | 2,245 | 3,256 | 35,491 | 319,605 | — | 319,605 | |||||||||||||||||||||
Total comprehensive income for the year | — | 19,267 | — | 29,170 | 48,437 | (297 | ) | 48,140 | ||||||||||||||||||||
Employee unit options granted | — | — | 2,120 | — | 2,120 | — | 2,120 | |||||||||||||||||||||
Capital contribution | 197,512 | — | — | — | 197,512 | — | 197,512 | |||||||||||||||||||||
Minority interest in subsidiaries acquired | — | — | — | — | — | 49,488 | 49,488 | |||||||||||||||||||||
Balance at December 31, 2007 | 476,125 | 21,512 | 5,376 | 64,661 | 567,674 | 49,191 | 616,865 | |||||||||||||||||||||
Total comprehensive loss for the year | — | (111,561 | ) | — | (19,334 | ) | (130,895 | ) | (1,255 | ) | (132,150 | ) | ||||||||||||||||
Employee unit options granted | — | — | 3,902 | — | 3,902 | — | 3,902 | |||||||||||||||||||||
Capital contribution | 152,063 | — | — | — | 152,063 | — | 152,063 | |||||||||||||||||||||
Disposal of subsidiary | — | 275 | — | — | 275 | — | 275 | |||||||||||||||||||||
Disposal of minority interest in subsidiaries | — | — | — | — | — | (2,527 | ) | (2,527 | ) | |||||||||||||||||||
Balance at December 31, 2008 | 628,188 | (89,774 | ) | 9,278 | 45,327 | 593,019 | 45,409 | 638,428 | ||||||||||||||||||||
Total comprehensive income for the year | — | 91,301 | — | (265 | ) | 91,036 | (18 | ) | 91,018 | |||||||||||||||||||
Employee unit options granted | — | — | 2,880 | — | 2,880 | — | 2,880 | |||||||||||||||||||||
Capital contribution | 69,101 | — | — | — | 69,101 | — | 69,101 | |||||||||||||||||||||
Disposal of subsidiary | — | 1,040 | — | — | 1,040 | — | 1,040 | |||||||||||||||||||||
Subsidiaries spin-off | — | — | — | — | — | (45,311 | ) | (45,311 | ) | |||||||||||||||||||
Balance at December 31, 2009 | 697,289 | 2,567 | 12,158 | 45,062 | 757,076 | 80 | 757,156 | |||||||||||||||||||||
F-95
Table of Contents
Consolidated Statements of Cash Flows
for the years ended December 31, 2009, 2008 and 2007
(All amounts in US$ thousands, except units and per unit data and as otherwise indicated)
Note | 2009 | 2008 | 2007 | |||||||||||
Cash flows from operating activities: | ||||||||||||||
(Loss)/Profit for the year | (275 | ) | (16,425 | ) | 28,632 | |||||||||
Adjustments for: | ||||||||||||||
Income tax benefit | 22 | (5,415 | ) | (10,449 | ) | (59 | ) | |||||||
Depreciation | 7 | 30,059 | 28,144 | 9,129 | ||||||||||
Amortization | 9 | 297 | 170 | 228 | ||||||||||
Gain from the disposal of other property items | 28,28 | (337 | ) | (479 | ) | (205 | ) | |||||||
Employee unit options granted | 27 | 2,880 | 3,902 | 2,120 | ||||||||||
Loss/(gain) from derivative financial instruments | 28 | 7,486 | (1,848 | ) | 1,654 | |||||||||
Interest expense, net | 29 | 27,750 | 21,830 | 4,094 | ||||||||||
Initial recognition and changes in fair value of non harvested biological assets (unrealized) | (55,841 | ) | (26,322 | ) | (8,989 | ) | ||||||||
Changes in net realizable value of agricultural produce after harvest (unrealized) | (127 | ) | 99 | (2,393 | ) | |||||||||
Provision and allowances | 4,013 | (367 | ) | 1,785 | ||||||||||
Share of loss from joint venture | 11 | 294 | 838 | 553 | ||||||||||
Foreign exchange (gains)/ losses, net | 29 | (10,903 | ) | 24,932 | (5,971 | ) | ||||||||
Gain from the sale of farmland businesses | 28 | (18,839 | ) | (13,974 | ) | — | ||||||||
Gain on acquisition of joint ventures | 11,28 | — | — | (4,135 | ) | |||||||||
Excess of fair value of net assets acquired over cost | 32 | — | (1,227 | ) | (28,979 | ) | ||||||||
Changes in operating assets and liabilities: | ||||||||||||||
Increase in trade and other receivables | (30,388 | ) | (28,383 | ) | (18,351 | ) | ||||||||
Decrease/(increase) in inventories | 3,442 | (3,289 | ) | (23,158 | ) | |||||||||
Increase in biological assets | (20,103 | ) | (26,813 | ) | (10,256 | ) | ||||||||
(Increase)/decrease in other assets | (5 | ) | 2,198 | (112 | ) | |||||||||
Decrease/(increase) in derivative financial instruments | 3,162 | 3,720 | (1,252 | ) | ||||||||||
Decrease in other financial assets at fair value through profit or loss | — | 1,699 | — | |||||||||||
Increase/(decrease) in trade and other payables | 11,508 | 13,039 | (327 | ) | ||||||||||
Increase in payroll and social security liabilities | 4,327 | 1,247 | 2,080 | |||||||||||
Decrease in provisions for other liabilities | (165 | ) | (2,599 | ) | (1,845 | ) | ||||||||
Net cash from operating activities before interest and taxes paid | (47,180 | ) | (30,357 | ) | (55,757 | ) | ||||||||
Interest paid | (25,797 | ) | (16,312 | ) | (5,551 | ) | ||||||||
Income tax paid | (13,322 | ) | (5,784 | ) | (6,733 | ) | ||||||||
Net cash used in operating activities | (86,299 | ) | (52,453 | ) | (68,041 | ) | ||||||||
Cash flows from investing activities: | ||||||||||||||
Acquisition of subsidiaries, net of cash acquired | 32 | — | — | (127,469 | ) | |||||||||
Purchases of property, plant and equipment | 7 | (97,817 | ) | (186,296 | ) | (130,171 | ) | |||||||
Purchases of intangible assets | 9 | (315 | ) | — | (144 | ) | ||||||||
Interest received | 29 | 472 | 1,494 | 6,746 | ||||||||||
Proceeds from sale of property, plant and equipment | 7 | 7,341 | 3,467 | 4,133 | ||||||||||
Proceeds from disposal of subsidiaries | 16 | 16,425 | 25,146 | — | ||||||||||
Acquisition of minority interest in subsidiaries | 32 | — | (1,300 | ) | — | |||||||||
Net cash used in investing activities | (73,894 | ) | (157,489 | ) | (246,905 | ) | ||||||||
Cash flows from financing activities: | ||||||||||||||
Capital contributions from members | 17 | 69,101 | 175,453 | 174,122 | ||||||||||
Proceeds from long-term borrowings | 21 | 80,000 | 18,605 | 50,689 | ||||||||||
Net increase in short-term borrowings | 21 | 6,946 | 19,142 | 67,542 | ||||||||||
Net cash generated from financing activities | 156,047 | 213,200 | 292,353 | |||||||||||
Net (decrease)/ increase in cash and cash equivalents | (4,146 | ) | 3,258 | (22,593 | ) | |||||||||
Cash and cash equivalents at beginning of year | 93,360 | 70,686 | 106,190 | |||||||||||
Effect of exchange rate changes on cash | (14,408 | ) | 19,416 | (12,911 | ) | |||||||||
Cash and cash equivalents at end of year | 74,806 | 93,360 | 70,686 | |||||||||||
F-96
Table of Contents
1. | General information, Reorganization and reverse split of Adecoagro’s common shares |
F-97
Table of Contents
2. | Summary of significant accounting policies |
2.1. | Basis of preparation |
F-98
Table of Contents
(a) | Standards, amendments and interpretations to existing standards effective in 2009 and adopted by the Group in 2009 |
• | Level 1: At the top level of the fair value hierarchy, fair values are determined based on quoted prices because the best objective evidence of the fair value of a financial asset or financial liability is quoted prices in an active market; | |
• | Level 2: If the market for a financial instrument is not active, an entity can establish fair value by using a valuation technique. Valuation techniques include using recent arm’s length market transactions between knowledgeable willing parties, reference to the current fair value of another instrument that is substantially the same, discounted cash flow analysis and option pricing models. Fair value is estimated on the basis of the results of a valuation technique that makes maximum use of market inputs, and relies as little as possible on entity-specific inputs; | |
• | Level 3: The valuation techniques used at this level are not based on observable market data |
F-99
Table of Contents
• | Puttable instruments that are subordinate to all other classes of instruments and that entitle the holder to a pro rata share of the entity’s net assets in the event of the entity’s liquidation. A puttable instrument is a financial instrument that gives the holder the right to put the instrument back to the issuer for cash or another financial asset or is automatically put back to the issuer on the occurrence of an uncertain future event or the death or retirement of the instrument holder. | |
• | Instruments, or components of instruments, that are subordinate to all other classes of instruments and that impose on the entity an obligation to deliver to another party a pro rata share of the net assets of the entity only on liquidation. |
F-100
Table of Contents
F-101
Table of Contents
(b) | Standards, amendments and interpretations to existing standards effective in 2009 but have been early adopted by the Group in prior periods. |
F-102
Table of Contents
(c) | Standards, amendments and interpretations to existing standards that are effective in 2009 but not relevant to the Group’s operations. |
F-103
Table of Contents
(d) | Standards, amendments and interpretations to existing standards that are not yet effective. |
• | The revised standard gives the option of measuring non-controlling interests either at fair value or at the proportionate share of the identifiable net assets. This choice can be exercised for each business combination individually. | |
• | In a business combination achieved in stages (step acquisition), the acquirer shall remeasure its previously held equity interest in the acquiree at the date the acquirer obtains control. Goodwill shall then be determined as the difference between the remeasured carrying amount plus consideration transferred for the acquisition of the new shares and any non-controlling interest, minus net assets acquired. | |
• | Contingent consideration shall be measured at fair value at the acquisition date and classified either as equity, or as asset or liability at the acquisition date. Contingent consideration shall be recognized subsequently in accordance with the classification determined at the acquisition date. | |
• | Acquisition-related costs incurred in connection with business combinations shall be recognized as expenses. | |
• | For changes in contingent consideration classified as a liability at the acquisition date, goodwill cannot be remeasured subsequently. | |
• | According to the revised IFRS 3, effects from the settlement of relationships existing prior to the business combination shall not be part of the exchange for the acquiree. | |
• | In contrast to the previous version of IFRS 3, the revised standard governs the recognition and measurement of rights that were granted to another entity prior to the business combination and which are now reacquired as part of the business combination (reacquired rights). |
F-104
Table of Contents
• | Changes in a parent’s ownership interest in a subsidiary that do not result in the loss of control shall only be accounted for within equity. | |
• | If a parent loses control of a subsidiary it shall derecognize the consolidated assets and liabilities. The new requirement is that any investment retained in the former subsidiary shall be recognized at fair value at the date when control is lost; any differences resulting from this shall be recognized in profit or loss. | |
• | When losses attributed to the minority (non-controlling) interests exceed the minority’s interests in the subsidiary’s equity, these losses shall be allocated to the non-controlling interests even if this results in a deficit balance. |
F-105
Table of Contents
F-106
Table of Contents
(e) | Standards, amendments and interpretations to existing standards that are not yet effective and not relevant to Group’s operations. |
2.2. | Scope of consolidation |
(a) | Subsidiaries |
F-107
Table of Contents
(b) | Transactions and minority interests |
(c) | Joint ventures |
2.3. | Segment reporting |
F-108
Table of Contents
2.4. | Foreign currency translation |
(a) | Functional and presentation currency |
(b) | Transactions and balances |
(c) | Group companies |
• | assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position; | |
• | income and expenses for each statement of income are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and | |
• | all resulting exchange differences are recognized as a separate component of equity |
2.5. | Property, plant and equipment |
F-109
Table of Contents
Farmland improvements | 5-25 years | |
Buildings and facilities | 20 years | |
Furniture and fittings | 10 years | |
Computer equipment | 3-5 years | |
Machinery and equipment | 4-10 years | |
Vehicles | 4-5 years |
2.6. | Investment property |
2.7. | Leases |
2.8. | Goodwill |
F-110
Table of Contents
2.9. | Negative goodwill |
2.10. | Other intangible assets |
2.11. | Impairment of assets |
F-111
Table of Contents
2.12. | Biological assets |
• | Growing crops: |
F-112
Table of Contents
• | Growing herd and cattle: |
• | Coffee: |
• | Sugarcane root: |
F-113
Table of Contents
2.13. | Inventories |
2.14. | Financial assets |
(a) | Financial assets at fair value through profit or loss |
(b) | Loans and receivables |
F-114
Table of Contents
(c) | Recognition and measurement |
(d) | Offsetting financial instruments |
2.15. | Derivative financial instruments and hedging activities |
F-115
Table of Contents
2.16. | Trade receivables |
2.17. | Cash and cash equivalents |
2.18. | Trade payables |
2.19. | Borrowings |
2.20. | Provisions |
2.21. | Current and deferred income tax |
F-116
Table of Contents
2.22. | Revenue recognition |
F-117
Table of Contents
2.23. | Farmlands sales |
2.24. | Earnings per member unit |
2.25. | Dividend distribution |
2.26. | Equity-settled unit-based payments |
F-118
Table of Contents
2.27. | Termination benefitts |
2.28. | Assets held for sale and discontinued operations |
2.29. | Research and development |
3. | Explanation of transition to IFRS |
F-119
Table of Contents
F-120
Table of Contents
4. | Financial risk management |
• | Exchange rate risk |
2009 | ||||||||||||||||||||
Functional Currency | ||||||||||||||||||||
Argentine | Brazilian | Uruguayan | ||||||||||||||||||
Net Monetary Position (Liability)/Asset | Peso | Reais | Peso | US Dollar | Total | |||||||||||||||
Argentine Peso | 25,438 | — | — | — | 25,438 | |||||||||||||||
Brazilian Reais | — | (28,337 | ) | — | — | (28,337 | ) | |||||||||||||
US Dollar | (86,786 | ) | (148,252 | ) | (2,483 | ) | 52,471 | (185,050 | ) | |||||||||||
Uruguayan Peso | — | — | 5,260 | — | 5,260 | |||||||||||||||
Total | (61,348 | ) | (176,589 | ) | 2,777 | 52,471 | (182,689 | ) | ||||||||||||
F-121
Table of Contents
2008 | ||||||||||||||||||||
Functional Currency | ||||||||||||||||||||
Argentine | Brazilian | Uruguayan | ||||||||||||||||||
Net Monetary Position (Liability)/Asset | Peso | Reais | Peso | US Dollar | Total | |||||||||||||||
Argentine Peso | (17,028 | ) | — | — | — | (17,028 | ) | |||||||||||||
Brazilian Reais | — | (29,343 | ) | — | — | (29,343 | ) | |||||||||||||
US Dollar | (45,461 | ) | (106,180 | ) | (3,105 | ) | 83,959 | (70,787 | ) | |||||||||||
Uruguayan Peso | — | — | 547 | — | 547 | |||||||||||||||
Total | (62,489 | ) | (135,523 | ) | (2,558 | ) | 83,959 | (116,611 | ) | |||||||||||
2007 | ||||||||||||||||||||
Functional Currency | ||||||||||||||||||||
Argentine | Brazilian | Uruguayan | ||||||||||||||||||
Net Monetary Position (Liability)/Asset | Peso | Reais | Peso | US Dollar | Total | |||||||||||||||
Argentine Peso | (10,393 | ) | — | — | — | (10,393 | ) | |||||||||||||
Brazilian Reais | — | (37,685 | ) | — | — | (37,685 | ) | |||||||||||||
US Dollar | (25,074 | ) | (56,667 | ) | 1,080 | 74,170 | (6,491 | ) | ||||||||||||
Uruguayan Peso | — | — | (9 | ) | — | (9 | ) | |||||||||||||
Total | (35,467 | ) | (94,352 | ) | 1,071 | 74,170 | (54,578 | ) | ||||||||||||
2009 | ||||||||||||||||||||
Functional Currency | ||||||||||||||||||||
Argentine | Brazilian | Uruguayan | ||||||||||||||||||
Net Monetary Position | Peso | Reais | Peso | US Dollar | Total | |||||||||||||||
Argentine Peso | n/a | — | — | — | — | |||||||||||||||
Brazilian Reais | — | n/a | — | — | — | |||||||||||||||
US Dollar | (8,679 | ) | (14,825 | ) | (248 | ) | n/a | (23,752 | ) | |||||||||||
Uruguayan Peso | — | — | n/a | — | — | |||||||||||||||
(Increase) or decrease in (Loss) Before Income Tax | (8,679 | ) | (14,825 | ) | (248 | ) | — | (23,752 | ) | |||||||||||
2008 | ||||||||||||||||||||
Functional Currency | ||||||||||||||||||||
Argentine | Brazilian | Uruguayan | ||||||||||||||||||
Net Monetary Position | Peso | Reais | Peso | US Dollar | Total | |||||||||||||||
Argentine Peso | n/a | — | — | — | — | |||||||||||||||
Brazilian Reais | — | n/a | — | — | — | |||||||||||||||
US Dollar | (4,546 | ) | (10,618 | ) | (310 | ) | n/a | (15,474 | ) | |||||||||||
Uruguayan Peso | — | — | n/a | — | — | |||||||||||||||
(Increase) or decrease in (Loss) Before Income Tax | (4,546 | ) | (10,618 | ) | (310 | ) | — | (15,474 | ) | |||||||||||
F-122
Table of Contents
2007 | ||||||||||||||||||||
Functional Currency | ||||||||||||||||||||
Argentine | Brazilian | Uruguayan | ||||||||||||||||||
Net Monetary Position | Peso | Reais | Peso | US Dollar | Total | |||||||||||||||
Argentine Peso | n/a | — | — | — | — | |||||||||||||||
Brazilian Reais | — | n/a | — | — | — | |||||||||||||||
US Dollar | (2,507 | ) | (5,667 | ) | 108 | n/a | (8,066 | ) | ||||||||||||
Uruguayan Peso | — | — | n/a | — | — | |||||||||||||||
(Decrease) or increase in Profit Before Income Tax | (2,507 | ) | (5,667 | ) | 108 | — | (8,066 | ) | ||||||||||||
• | Raw material price risk |
• | End-product price risk |
F-123
Table of Contents
• | Liquidity risk |
Less than | Between | Between 2 | Over | |||||||||||||||||
At 31 December 2009 | 1 Year | 1 and 2 Years | and 5 Years | 5 Years | Total | |||||||||||||||
Trade and other payables | 53,161 | 5,145 | — | — | 58,306 | |||||||||||||||
Borrowings (excluding finance lease liabilities) | 102,970 | 135,403 | 60,632 | 6,856 | 305,861 | |||||||||||||||
Finance leases | 677 | 243 | — | — | 920 | |||||||||||||||
Derivative financial instruments | 12,607 | 280 | — | — | 12,887 | |||||||||||||||
Total | 169,415 | 141,071 | 60,632 | 6,856 | 377,974 | |||||||||||||||
Less than | Between | Between 2 | Over | |||||||||||||||||
At 31 December 2008 | 1 Year | 1 and 2 Years | and 5 Years | 5 Years | Total | |||||||||||||||
Trade and other payables | 39,782 | 2,679 | — | — | 42,461 | |||||||||||||||
Borrowings (excluding finance lease liabilities) | 223,587 | 1,381 | 1,311 | 1,152 | 227,431 | |||||||||||||||
Finance leases | 627 | 255 | — | — | 882 | |||||||||||||||
Derivative financial instruments | 4,159 | — | — | — | 4,159 | |||||||||||||||
Total | 268,155 | 4,315 | 1,311 | 1,152 | 274,933 | |||||||||||||||
Less than | Between | Between 2 | Over | |||||||||||||||||
At 31 December 2007 | 1 Year | 1 and 2 Years | and 5 Years | 5 Years | Total | |||||||||||||||
Trade and other payables | 28,510 | — | — | — | 28,510 | |||||||||||||||
Borrowings (excluding finance lease liabilities) | 96,416 | 15,245 | 34,636 | 11,147 | 157,444 | |||||||||||||||
Finance leases | 1,419 | 1,062 | — | — | 2,481 | |||||||||||||||
Derivative financial instruments | 1,002 | — | — | — | 1,002 | |||||||||||||||
Total | 127,347 | 16,307 | 34,636 | 11,147 | 189,437 | |||||||||||||||
F-124
Table of Contents
• | Interest rate risk |
2009 | ||||||||||||||||
Functional Currency | ||||||||||||||||
Argentine | Brazilian | Uruguayan | ||||||||||||||
Rate per Currency Denomination | Peso | Reais | Peso | Total | ||||||||||||
Fixed rate: | ||||||||||||||||
Argentine Peso | 88 | — | — | 88 | ||||||||||||
Brazilian Reais | — | 7,241 | — | 7,241 | ||||||||||||
US Dollar | 49,608 | — | — | 49,608 | ||||||||||||
Uruguayan Peso | — | — | 40 | 40 | ||||||||||||
Subtotal Fixed-rate borrowings | 49,696 | 7,241 | 40 | 56,977 | ||||||||||||
Variable rate: | ||||||||||||||||
Argentine Peso | — | — | — | — | ||||||||||||
Brazilian Reais | — | 139,695 | — | 139,695 | ||||||||||||
US Dollar | 49,992 | 59,197 | — | 109,189 | ||||||||||||
Subtotal Variable-rate borrowings | 49,992 | 198,892 | — | 248,884 | ||||||||||||
Total borrowings as per analysis | 99,688 | 206,133 | 40 | 305,861 | ||||||||||||
Finance leases | 257 | 663 | — | 920 | ||||||||||||
Total borrowings as per statement of financial position | 99,945 | 206,796 | 40 | 306,781 | ||||||||||||
F-125
Table of Contents
2008 | ||||||||||||||||
Functional Currency | ||||||||||||||||
Argentine | Brazilian | Uruguayan | ||||||||||||||
Rate per Currency Denomination | Peso | Reais | Peso | Total | ||||||||||||
Fixed rate: | ||||||||||||||||
Argentine Peso | 35,343 | — | — | 35,343 | ||||||||||||
Brazilian Reais | — | 5,560 | — | 5,560 | ||||||||||||
US Dollar | 53,599 | — | 1,703 | 55,302 | ||||||||||||
Subtotal Fixed-rate borrowings | 88,942 | 5,560 | 1,703 | 96,205 | ||||||||||||
Variable rate: | ||||||||||||||||
Argentine Peso | — | — | — | — | ||||||||||||
Brazilian Reais | — | 22,425 | — | 22,425 | ||||||||||||
US Dollar | — | 108,801 | — | 108,801 | ||||||||||||
Subtotal Variable-rate borrowings | — | 131,226 | — | 131,226 | ||||||||||||
Total borrowings as per analysis | 88,942 | 136,786 | 1,703 | 227,431 | ||||||||||||
Finance leases | — | 882 | — | 882 | ||||||||||||
Total borrowings as per statement of financial position | 88,942 | 137,668 | 1,703 | 228,313 | ||||||||||||
2007 | ||||||||||||||||
Functional Currency | ||||||||||||||||
Argentine | Brazilian | Uruguayan | ||||||||||||||
Rate per Currency Denomination | Peso | Reais | Peso | Total | ||||||||||||
Fixed rate: | ||||||||||||||||
Argentine Peso | 34,589 | — | — | 34,589 | ||||||||||||
Brazilian Reais | — | 2,808 | — | 2,808 | ||||||||||||
US Dollar | 25,606 | — | — | 25,606 | ||||||||||||
Subtotal Fixed-rate borrowings | 60,195 | 2,808 | — | 63,003 | ||||||||||||
Variable rate: | ||||||||||||||||
Argentine Peso | — | — | — | — | ||||||||||||
Brazilian Reais | — | 35,525 | — | 35,525 | ||||||||||||
US Dollar | — | 58,916 | — | 58,916 | ||||||||||||
Subtotal Variable-rate borrowings | — | 94,441 | — | 94,441 | ||||||||||||
Total borrowings as per analysis | 60,195 | 97,249 | — | 157,444 | ||||||||||||
Finance leases | — | 2,481 | — | 2,481 | ||||||||||||
Total borrowings as per statement of financial position | 60,195 | 99,730 | — | 159,925 | ||||||||||||
F-126
Table of Contents
2009 | ||||||||||||||||
Functional Currency | ||||||||||||||||
Argentine | Brazilian | Uruguayan | ||||||||||||||
Rate per Currency Denomination | Peso | Reais | Peso | Total | ||||||||||||
Variable rate: | ||||||||||||||||
Argentine Peso | — | — | — | — | ||||||||||||
Brazilian Reais | — | (1,397 | ) | — | (1,397 | ) | ||||||||||
US Dollar | (500 | ) | (592 | ) | — | (1,092 | ) | |||||||||
Total effects on (Loss) Before Income Tax | (500 | ) | (1,989 | ) | — | (2,489 | ) | |||||||||
2008 | ||||||||||||||||
Functional Currency | ||||||||||||||||
Argentine | Brazilian | Uruguayan | ||||||||||||||
Rate per Currency Denomination | Peso | Reais | Peso | Total | ||||||||||||
Variable rate: | ||||||||||||||||
Argentine Peso | — | — | — | — | ||||||||||||
Brazilian Reais | — | (224 | ) | — | (224 | ) | ||||||||||
US Dollar | — | (1,088 | ) | — | (1,088 | ) | ||||||||||
Total effects on (Loss) Before Income Tax | — | (1,312 | ) | — | (1,312 | ) | ||||||||||
2007 | ||||||||||||||||
Functional Currency | ||||||||||||||||
Argentine | Brazilian | Uruguayan | ||||||||||||||
Rate per Currency Denomination | Peso | Reais | Peso | Total | ||||||||||||
Variable rate: | ||||||||||||||||
Argentine Peso | — | — | — | — | ||||||||||||
Brazilian Reais | — | (352 | ) | — | (352 | ) | ||||||||||
US Dollar | — | (589 | ) | — | (589 | ) | ||||||||||
Total effects on Profit Before Income Tax | — | (941 | ) | — | (941 | ) | ||||||||||
F-127
Table of Contents
• | Credit risk |
F-128
Table of Contents
• | Capital risk management |
2009 | 2008 | 2007 | ||||||||||
Total Debt | 306,781 | 228,313 | 159,925 | |||||||||
Total Equity | 757,156 | 638,428 | 616,865 | |||||||||
Total Capital | 1,063,937 | 866,741 | 776,790 | |||||||||
Gearing Ratio | 0.29 | 0.26 | 0.21 | |||||||||
• | Derivative financial instruments |
F-129
Table of Contents
2009 | ||||||||||||||||
Market | ||||||||||||||||
Notional | Value Asset/ | |||||||||||||||
Type of Derivative Contract | Tons | Amount | (Liability) | (Loss)/Gain | ||||||||||||
Futures: | ||||||||||||||||
Sale | ||||||||||||||||
Corn | 26.8 | 3,835 | (19 | ) | (19 | ) | ||||||||||
Soybean | 20.1 | 4,740 | (184 | ) | (184 | ) | ||||||||||
Sugar | 92.2 | 42,283 | (11,712 | ) | (11,712 | ) | ||||||||||
Coffee | 0.5 | 16 | 99 | 99 | ||||||||||||
Total | 139.6 | 50,874 | (11,816 | ) | (11,816 | ) | ||||||||||
2008 | ||||||||||||||||
Market | ||||||||||||||||
Notional | Value Asset/ | |||||||||||||||
Type of Derivative Contract | Tons | Amount | (Liability) | (Loss)/Gain | ||||||||||||
Futures: | ||||||||||||||||
Sale | ||||||||||||||||
Corn | 15.9 | 2,053 | 249 | 249 | ||||||||||||
Soybean | 30.9 | 8,190 | 1,323 | 1,323 | ||||||||||||
Wheat | 1.5 | 208 | 5 | 5 | ||||||||||||
Total | 48.3 | 10,451 | 1,577 | 1,577 | ||||||||||||
2007 | ||||||||||||||||
Market | ||||||||||||||||
Notional | Value Asset/ | |||||||||||||||
Type of Derivative Contract | Tons | Amount | (Liability) | (Loss)/Gain | ||||||||||||
Futures: | ||||||||||||||||
Sale | ||||||||||||||||
Corn | 18.9 | 2,319 | (340 | ) | (340 | ) | ||||||||||
Soybean | 15.4 | 3,577 | (662 | ) | (662 | ) | ||||||||||
Wheat | 23.9 | 4,327 | 258 | 258 | ||||||||||||
Total | 58.2 | 10,223 | (744 | ) | (744 | ) | ||||||||||
F-130
Table of Contents
5. | Critical accounting estimates and judgments |
F-131
Table of Contents
(a) | Group’s financial positions, results of operations and cash flows |
(b) | Business combinations — purchase price allocation |
F-132
Table of Contents
(c) | Impairment testing |
F-133
Table of Contents
• | Current soil productivity and yields; | |
• | Potential soil productivity based on market participant best use of soil property; | |
• | Projected gross margin derived from soil use; | |
• | Rental value obtained for soil use, if applicable; | |
• | Similar comparable farmland property within the topographic area. |
F-134
Table of Contents
December 31, | December 31, | |||||||
CGU/Operating Segment/Country | 2009 | 2008 | ||||||
La Carolina/Crops/Argentina | 189 | 209 | ||||||
La Carolina/Cattle/Argentina | 31 | 34 | ||||||
El Orden/Crops/Argentina | 218 | 240 | ||||||
El Orden/Cattle/Argentina | 36 | 40 | ||||||
La Guarida/Crops/Argentina | 3,141 | 3,187 | ||||||
La Guarida/Cattle/Argentina | 304 | 309 | ||||||
Los Guayacanes/Crops/Argentina | 2,426 | 2,463 | ||||||
Closing net book amount of goodwill allocated to CGUs (Note 9) | 6,345 | 6,482 | ||||||
Closing net book amount of PPE items and other assets | 52,759 | 58,294 | ||||||
Total assets allocated to 7 CGUs | 59,104 | 64,776 | ||||||
Key Assumptions | 2009 | 2008 | ||
Financial projections | Covers 8 years for Ivinhema Covers 4 years for all others | Covers 8 years for Ivinhema Covers 4 years for all others | ||
Yield average growth rates | 1-3% | 1-2% | ||
Future pricing increases | 2% per annum | 2% per annum | ||
Future cost increases | 2% per annum | 2% per annum | ||
Discount rates | 9.81% | 12.4% | ||
Perpetuity rate | 2.5% | 2.5% |
F-135
Table of Contents
December 31, | December 31, | |||||||
CGU/ Operating Segment | 2009 | 2008 | ||||||
Ivinhema/Sugar, ethanol and energy | 9,120 | 6,796 | ||||||
UMA/Sugar, ethanol and energy | 3,421 | 2,549 | ||||||
Alfenas/Coffee | 1,067 | 794 | ||||||
Closing net book amount of goodwill allocated to CGUs (Note 9) | 13,608 | 10,139 | ||||||
Closing net book amount of PPE items and other assets | 90,157 | 85,981 | ||||||
Total assets allocated to 3 CGUs | 103,765 | 96,120 | ||||||
(d) | Biological assets |
F-136
Table of Contents
(e) | Fair value of derivatives and other financial instruments |
(f) | Income taxes |
(g) | Allowance for trade receivables |
6. | Segment information |
• | The Group’s‘Farming’is further comprised of five operating segments: |
• | The Group’s‘Crops’Segment consists of planting, harvesting and sale of grains, oilseeds and fibers (including wheat, corn, soybeans, cotton and sunflowers, among others), and to a lesser extent the provision of grain warehousing/conditioning and handling and drying services to third parties. Each underlying crop in the Crops segment does not represent a separate operating segment. Management |
F-137
Table of Contents
seeks to maximize the use of the land through the cultivation of one or more type of crops. Types and surface amount of crops cultivated may vary from harvest year to harvest year depending on several factors, some of them out of the Group’s control. Management is focused on the long-term performance of the productive land, and to that extent, the performance is assessed considering the aggregated combination, if any, of crops planted in the land. A single manager is responsible for the management of operating activity of all crops rather than for each individual crop. |
• | The Group’s‘Rice’Segment consists of planting, harvesting, processing and marketing of rice; | |
• | The Group’s‘Dairy’Segment consists of the production of raw milk, which is processed into manufactured products and marketed through the Group’s joint venture La Lácteo; | |
• | The Group’s‘Coffee’Segment consists of cultivating coffee beans and marketing own and third party’s coffee production; | |
• | The Group’s‘Cattle’Segment consists of purchasing and fattening of beef cattle for sale to meat processors and local livestock auction markets. In December 2009, the Group strategically decided to sell a significant amount of heads of cattle from owned farmlands to Quickfood S.A., an international third party meat processor for cash consideration of US$14.7 million. Additionally, the contract provides for the third party to lease the Group’s farmland under an operating lease agreement to raise and fatten the purchased cattle. As required by the Antitrust Law, the Group reported this transaction to the Argentine Antitrust Commission for formal approval. As of the date of these consolidated financial statements, the authorization is still pending. The Group does not have any evidence which may indicate this transaction will not be formally approved. |
• | The Group’s‘Sugar, Ethanol and Energy’Segment consists of cultivating sugarcane which is processed in owned sugar mills, transformed into ethanol, sugar and electricity and marketed; | |
• | The Group’s‘Land Transformation’Segment comprises the (i) identification and acquisition of underdeveloped and undermanaged farmland businesses for which the Group generally closes a deal for a price lower than the land’s fair value (generating gains); and (ii) realization of value through the strategic disposition of assets (generating profits). |
F-138
Table of Contents
Farming | Sugar, | |||||||||||||||||||||||||||||||||||||||
Farming | Ethanol and | Land | ||||||||||||||||||||||||||||||||||||||
Crops | Rice | Dairy | Coffee | Cattle | Subtotal | Energy | Transformation | Corporate | Total | |||||||||||||||||||||||||||||||
Sales of manufactured products and services rendered | 9,667 | 67,317 | 752 | 7,984 | 172 | 85,892 | 97,494 | — | — | 183,386 | ||||||||||||||||||||||||||||||
Cost of manufactured products sold and services rendered | (5,447 | ) | (56,576 | ) | (613 | ) | (7,120 | ) | — | (69,756 | ) | (110,327 | ) | — | — | (180,083 | ) | |||||||||||||||||||||||
Gross Profit from Manufacturing Activities | 4,220 | 10,741 | 139 | 864 | 172 | 16,136 | (12,833 | ) | — | — | 3,303 | |||||||||||||||||||||||||||||
Sales of agricultural produce and biological assets | 82,362 | 2,033 | 11,142 | 6,281 | 28,306 | 130,124 | 93 | — | — | 130,217 | ||||||||||||||||||||||||||||||
Cost of agricultural produce sold and direct agricultural selling expenses | (82,362 | ) | (2,033 | ) | (11,142 | ) | (6,281 | ) | (28,306 | ) | (130,124 | ) | (93 | ) | — | — | (130,217 | ) | ||||||||||||||||||||||
Initial recognition and changes in fair value of biological assets and agricultural produce | 6,563 | 12,170 | 3,374 | (16,207 | ) | 4,704 | 10,604 | 61,064 | — | — | 71,668 | |||||||||||||||||||||||||||||
Gain from changes in net realizable value of agricultural produce after harvest | 11,362 | 191 | — | 1,234 | — | 12,787 | — | — | — | 12,787 | ||||||||||||||||||||||||||||||
Gross Profit from Agricultural Activities | 17,925 | 12,361 | 3,374 | (14,973 | ) | 4,704 | 23,391 | 61,064 | — | — | 84,455 | |||||||||||||||||||||||||||||
Margin on Manufacturing and Agricultural Activities Before Operating Expenses | 22,145 | 23,102 | 3,513 | (14,109 | ) | 4,876 | 39,527 | 48,231 | — | — | 87,758 | |||||||||||||||||||||||||||||
General and administrative expenses | (6,280 | ) | (2,883 | ) | (2,221 | ) | (2,126 | ) | (2,909 | ) | (16,419 | ) | (13,922 | ) | — | (22,052 | ) | (52,393 | ) | |||||||||||||||||||||
Selling expenses | (1,587 | ) | (7,485 | ) | (777 | ) | (1,353 | ) | (1,045 | ) | (12,247 | ) | (18,922 | ) | — | — | (31,169 | ) | ||||||||||||||||||||||
Other operating income, net | 4,776 | (942 | ) | (108 | ) | 806 | 377 | 4,909 | (10,467 | ) | 18,839 | (210 | ) | 13,071 | ||||||||||||||||||||||||||
Share of loss of joint ventures | — | — | (294 | ) | — | — | (294 | ) | — | — | — | (294 | ) | |||||||||||||||||||||||||||
Profit from Operations Before Financing and Taxation | 19,054 | 11,792 | 113 | (16,782 | ) | 1,299 | 15,476 | 4,920 | 18,839 | (22,262 | ) | 16,973 | ||||||||||||||||||||||||||||
Depreciation and amortization | 2,066 | 1,452 | 403 | 570 | 353 | 4,844 | 25,512 | — | — | 30,356 | ||||||||||||||||||||||||||||||
Initial recognition and changes in fair value of biological assets (unrealized) | 4,433 | 6,759 | 32 | (12,662 | ) | 127 | (1,311 | ) | 57,335 | — | — | 56,024 | ||||||||||||||||||||||||||||
Initial recognition and changes in fair value of agricultural produce (unrealized) | 1,485 | — | — | (3,043 | ) | — | (1,558 | ) | 1,375 | — | — | (183 | ) | |||||||||||||||||||||||||||
Initial recognition and changes in fair value of biological assets and agricultural produce (realized) | 645 | 5,411 | 3,342 | (502 | ) | 4,577 | 13,473 | 2,354 | — | — | 15,827 | |||||||||||||||||||||||||||||
Gain from changes in net realizable value of agricultural produce after harvest (unrealized) | 134 | — | — | (7 | ) | — | 127 | — | — | — | 127 | |||||||||||||||||||||||||||||
Gain from changes in net realizable value of agricultural produce after harvest (realized) | 11,228 | 191 | — | 1,241 | — | 12,660 | — | — | — | 12,660 | ||||||||||||||||||||||||||||||
Property, plant and equipment, net | 248,594 | 31,282 | 10,652 | 2,680 | 767 | 293,975 | 388,903 | — | — | 682,878 | ||||||||||||||||||||||||||||||
Investment property | — | — | — | — | 21,246 | 21,246 | — | — | — | 21,246 | ||||||||||||||||||||||||||||||
Goodwill | 6,110 | — | — | 1,067 | 237 | 7,414 | 12,539 | — | — | 19,953 | ||||||||||||||||||||||||||||||
Biological assets | 27,467 | 11,524 | 4,313 | 21,634 | 815 | 65,753 | 164,701 | — | — | 230,454 | ||||||||||||||||||||||||||||||
Investment in joint ventures | — | — | 6,506 | — | — | 6,506 | — | — | — | 6,506 | ||||||||||||||||||||||||||||||
Inventories | 23,832 | 9,460 | 1,086 | 1,992 | 716 | 37,086 | 20,816 | — | — | 57,902 | ||||||||||||||||||||||||||||||
Total segment assets | 306,003 | 52,266 | 22,557 | 27,373 | 23,781 | 431,980 | 586,959 | — | — | 1,018,939 | ||||||||||||||||||||||||||||||
Borrowings | 63,893 | 39,850 | 9,963 | 3,493 | — | 117,199 | 189,582 | — | — | 306,781 | ||||||||||||||||||||||||||||||
Total segment liabilities | 63,893 | 39,850 | 9,963 | 3,493 | — | 117,199 | 189,582 | — | — | 306,781 | ||||||||||||||||||||||||||||||
F-139
Table of Contents
Farming | Sugar, | |||||||||||||||||||||||||||||||||||||||
Farming | Ethanol and | Land | ||||||||||||||||||||||||||||||||||||||
Crops | Rice | Dairy | Coffee | Cattle | Subtotal | Energy | Transformation | Corporate | Total | |||||||||||||||||||||||||||||||
Sales of manufactured products and services rendered | 3,134 | 53,280 | 2,171 | 8,544 | 164 | 67,293 | 49,880 | — | — | 117,173 | ||||||||||||||||||||||||||||||
Cost of manufactured products sold and services rendered | (2,807 | ) | (39,862 | ) | (1,849 | ) | (6,978 | ) | — | (51,496 | ) | (54,087 | ) | — | — | (105,583 | ) | |||||||||||||||||||||||
Gross Profit from Manufacturing Activities | 327 | 13,418 | 322 | 1,566 | 164 | 15,797 | (4,207 | ) | — | — | 11,590 | |||||||||||||||||||||||||||||
Sales of agricultural produce and biological assets | 92,853 | 3,645 | 12,650 | 7,404 | 9,193 | 125,745 | 1,291 | — | — | 127,036 | ||||||||||||||||||||||||||||||
Cost of agricultural produce sold and direct agricultural selling expenses | (92,853 | ) | (3,645 | ) | (12,650 | ) | (7,404 | ) | (9,193 | ) | (125,745 | ) | (1,291 | ) | — | — | (127,036 | ) | ||||||||||||||||||||||
Initial recognition and changes in fair value of biological assets and agricultural produce | 28,005 | 7,854 | 2,633 | 4,485 | 3,788 | 46,765 | 14,235 | — | — | 61,000 | ||||||||||||||||||||||||||||||
Gain from changes in net realizable value of agricultural produce after harvest | 2,211 | — | — | (950 | ) | — | 1,261 | — | — | — | 1,261 | |||||||||||||||||||||||||||||
Gross Profit from Agricultural Activities | 30,216 | 7,854 | 2,633 | 3,535 | 3,788 | 48,026 | 14,235 | — | — | 62,261 | ||||||||||||||||||||||||||||||
Margin on Manufacturing and Agricultural Activities Before Operating Expenses | 30,543 | 21,272 | 2,955 | 5,101 | 3,952 | 63,823 | 10,028 | — | — | 73,851 | ||||||||||||||||||||||||||||||
General and administrative expenses | (3,885 | ) | (398 | ) | (1,835 | ) | (3,308 | ) | (2,206 | ) | (11,632 | ) | (12,646 | ) | — | (21,355 | ) | (45,633 | ) | |||||||||||||||||||||
Selling expenses | (3,959 | ) | (7,647 | ) | (967 | ) | (902 | ) | (473 | ) | (13,948 | ) | (10,548 | ) | — | — | (24,496 | ) | ||||||||||||||||||||||
Other operating income, net | 4,824 | 29 | 18 | (27 | ) | 16 | 4,860 | 211 | 13,974 | (1,722 | ) | 17,323 | ||||||||||||||||||||||||||||
Excess of fair value of net assets acquired over cost | — | — | — | — | — | — | — | 1,227 | — | 1,227 | ||||||||||||||||||||||||||||||
Share of loss of joint ventures | — | — | (838 | ) | — | — | (838 | ) | — | — | — | (838 | ) | |||||||||||||||||||||||||||
Profit from Operations Before Financing and Taxation | 27,523 | 13,256 | (667 | ) | 864 | 1,289 | 42,265 | (12,955 | ) | 15,201 | (23,077 | ) | 21,434 | |||||||||||||||||||||||||||
Depreciation and amortization | 6,517 | 710 | 348 | 798 | 517 | 8,890 | 19,424 | — | — | 28,314 | ||||||||||||||||||||||||||||||
Initial recognition and changes in fair value of biological assets (unrealized) | 332 | — | 1,840 | 3,355 | 2,567 | 8,094 | 13,448 | — | — | 21,542 | ||||||||||||||||||||||||||||||
Initial recognition and changes in fair value of agricultural produce (unrealized) | 3,551 | — | — | 931 | — | 4,482 | 298 | — | — | 4,780 | ||||||||||||||||||||||||||||||
Initial recognition and changes in fair value of biological assets and agricultural produce (realized) | 24,122 | 7,854 | 793 | 199 | 1,221 | 34,189 | 489 | — | — | 34,678 | ||||||||||||||||||||||||||||||
Gain from changes in net realizable value of agricultural produce after harvest (unrealized) | — | — | — | (99 | ) | — | (99 | ) | — | — | — | (99 | ) | |||||||||||||||||||||||||||
Gain from changes in net realizable value of agricultural produce after harvest (realized) | 2,211 | — | — | (851 | ) | — | 1,360 | — | — | — | 1,360 | |||||||||||||||||||||||||||||
Property, plant and equipment, net | 232,465 | 50,804 | 12,069 | 12,523 | 33,041 | 340,902 | 230,517 | — | — | 571,419 | ||||||||||||||||||||||||||||||
Spin-off assets | — | — | — | — | — | — | — | 45,311 | — | 45,311 | ||||||||||||||||||||||||||||||
Goodwill | 3,610 | — | — | 794 | 383 | 4,787 | 11,834 | — | — | 16,621 | ||||||||||||||||||||||||||||||
Biological assets | 21,059 | 6,908 | 4,732 | 25,453 | 19,629 | 77,781 | 48,167 | — | — | 125,948 | ||||||||||||||||||||||||||||||
Investment in joint ventures | — | — | 7,508 | — | — | 7,508 | — | — | — | 7,508 | ||||||||||||||||||||||||||||||
Inventories | 21,201 | 9,212 | — | 5,326 | 878 | 36,617 | 24,604 | — | — | 61,221 | ||||||||||||||||||||||||||||||
Total segment assets | 278,335 | 66,924 | 24,309 | 44,096 | 53,931 | 467,595 | 315,122 | 45,311 | — | 828,028 | ||||||||||||||||||||||||||||||
Borrowings | 45,322 | 36,258 | 9,065 | — | — | 90,645 | 137,668 | — | — | 228,313 | ||||||||||||||||||||||||||||||
Total segment liabilities | 45,322 | 36,258 | 9,065 | — | — | 90,645 | 137,668 | — | — | 228,313 | ||||||||||||||||||||||||||||||
F-140
Table of Contents
Farming | Sugar, | |||||||||||||||||||||||||||||||||||||||
Farming | Ethanol and | Land | ||||||||||||||||||||||||||||||||||||||
Crops | Rice | Dairy | Coffee | Cattle | Subtotal | Energy | Transformation | Corporate | Total | |||||||||||||||||||||||||||||||
Sales of manufactured products and services rendered | 2,236 | 24,875 | 13,183 | 5,035 | 56 | 45,385 | 24,422 | — | — | 69,807 | ||||||||||||||||||||||||||||||
Cost of manufactured products sold and services rendered | (1,552 | ) | (19,064 | ) | (9,824 | ) | (4,539 | ) | — | (34,979 | ) | (28,540 | ) | — | — | (63,519 | ) | |||||||||||||||||||||||
Gross Profit from Manufacturing Activities | 684 | 5,811 | 3,359 | 496 | 56 | 10,406 | (4,118 | ) | — | — | 6,288 | |||||||||||||||||||||||||||||
Sales of agricultural produce and biological assets | 57,057 | 1,547 | 4,658 | 2,232 | 7,202 | 72,696 | — | — | — | 72,696 | ||||||||||||||||||||||||||||||
Cost of agricultural produce sold and direct agricultural selling expenses | (57,057 | ) | (1,547 | ) | (4,658 | ) | (2,232 | ) | (7,202 | ) | (72,696 | ) | — | — | — | (72,696 | ) | |||||||||||||||||||||||
Initial recognition and changes in fair value of biological assets and agricultural produce | 20,054 | 1,974 | 2,944 | 5,848 | 5,165 | 35,985 | (9,050 | ) | — | — | 26,935 | |||||||||||||||||||||||||||||
Gain from changes in net realizable value of agricultural produce after harvest | 12,746 | — | — | — | — | 12,746 | — | — | — | 12,746 | ||||||||||||||||||||||||||||||
Gross Profit from Agricultural Activities | 32,800 | 1,974 | 2,944 | 5,848 | 5,165 | 48,731 | (9,050 | ) | — | — | 39,681 | |||||||||||||||||||||||||||||
Margin on Manufacturing and Agricultural Activities Before Operating Expenses | 33,484 | 7,785 | 6,303 | 6,344 | 5,221 | 59,137 | (13,168 | ) | — | — | 45,969 | |||||||||||||||||||||||||||||
General and administrative expenses | (4,428 | ) | (1,003 | ) | (1,822 | ) | (3,131 | ) | (2,504 | ) | (12,888 | ) | (9,789 | ) | — | (11,088 | ) | (33,765 | ) | |||||||||||||||||||||
Selling expenses | (1,350 | ) | (5,365 | ) | (2,282 | ) | (465 | ) | (517 | ) | (9,979 | ) | (4,783 | ) | — | — | (14,762 | ) | ||||||||||||||||||||||
Other operating income, net | (1,977 | ) | (54 | ) | 74 | 61 | (16 | ) | (1,912 | ) | 362 | 4,135 | (347 | ) | 2,238 | |||||||||||||||||||||||||
Excess of fair value of net assets acquired over cost | — | — | — | — | — | — | — | 28,979 | — | 28,979 | ||||||||||||||||||||||||||||||
Share of loss of joint ventures | — | — | (553 | ) | — | — | (553 | ) | — | — | — | (553 | ) | |||||||||||||||||||||||||||
Profit from Operations Before Financing and Taxation | 25,729 | 1,363 | 1,720 | 2,809 | 2,184 | 33,805 | (27,378 | ) | 33,114 | (11,435 | ) | 28,106 | ||||||||||||||||||||||||||||
Depreciation and amortization | 1,487 | 651 | 340 | 322 | 442 | 3,242 | 6,115 | — | — | 9,357 | ||||||||||||||||||||||||||||||
Initial recognition and changes in fair value of biological assets (unrealized) | 997 | — | 1,009 | 6,571 | 3,814 | 12,391 | (11,117 | ) | — | — | 1,274 | |||||||||||||||||||||||||||||
Initial recognition and changes in fair value of agricultural produce (unrealized) | 8,105 | — | — | (595 | ) | — | 7,510 | 205 | — | — | 7,715 | |||||||||||||||||||||||||||||
Initial recognition and changes in fair value of biological assets and agricultural produce (realized) | 10,952 | 1,974 | 1,935 | (128 | ) | 1,351 | 16,084 | 1,862 | — | — | 17,946 | |||||||||||||||||||||||||||||
Gain from changes in net realizable value of agricultural produce after harvest (unrealized) | 2,393 | — | — | — | — | 2,393 | — | — | — | 2,393 | ||||||||||||||||||||||||||||||
Gain from changes in net realizable value of agricultural produce after harvest (realized) | 10,353 | — | — | — | — | 10,353 | — | — | — | 10,353 | ||||||||||||||||||||||||||||||
Property, plant and equipment, net | 252,508 | 54,087 | 16,500 | 8,546 | 34,793 | 366,434 | 171,583 | — | — | 538,017 | ||||||||||||||||||||||||||||||
Spin-off assets | — | — | — | — | — | — | — | 47,231 | — | 47,231 | ||||||||||||||||||||||||||||||
Goodwill | 7,362 | — | — | 1,049 | 420 | 8,831 | 12,326 | — | — | 21,157 | ||||||||||||||||||||||||||||||
Biological assets | 24,105 | 3,434 | 4,448 | 27,632 | 21,865 | 81,484 | 21,078 | — | — | 102,562 | ||||||||||||||||||||||||||||||
Investment in joint ventures | — | — | 8,881 | — | — | 8,881 | — | — | — | 8,881 | ||||||||||||||||||||||||||||||
Inventories | 33,283 | 7,951 | — | 3,395 | 337 | 44,966 | 13,070 | — | — | 58,036 | ||||||||||||||||||||||||||||||
Total segment assets | 317,258 | 65,472 | 29,829 | 40,622 | 57,415 | 510,596 | 218,057 | 47,231 | — | 775,884 | ||||||||||||||||||||||||||||||
Borrowings | 30,097 | 24,078 | 6,020 | — | — | 60,195 | 99,730 | — | — | 159,925 | ||||||||||||||||||||||||||||||
Total segment liabilities | 30,097 | 24,078 | 6,020 | — | — | 60,195 | 99,730 | — | — | 159,925 | ||||||||||||||||||||||||||||||
F-141
Table of Contents
2009 | 2008 | 2007 | ||||||||||
Total reportable assets as per Segment Information | 1,018,939 | 828,028 | 775,884 | |||||||||
Intangible assets (excluding goodwill) | 1,906 | 1,487 | 2,058 | |||||||||
Deferred income tax assets | 45,113 | 18,713 | 9,052 | |||||||||
Trade and other receivables | 128,277 | 84,540 | 83,176 | |||||||||
Other assets | 34 | 87 | 2,234 | |||||||||
Derivative financial instruments | 99 | 2,019 | 258 | |||||||||
Other financial assets | — | — | 1,699 | |||||||||
Cash and cash equivalents | 74,806 | 93,360 | 70,686 | |||||||||
Total assets as per the Statement of Financial Position | 1,269,174 | 1,028,234 | 945,047 | |||||||||
2009 | 2008 | 2007 | ||||||||||
Total reportable liabilities as per Segment Information | 306,781 | 228,313 | 159,925 | |||||||||
Trade and other payables | 68,920 | 52,760 | 40,192 | |||||||||
Deferred income tax liabilities | 107,045 | 94,627 | 109,713 | |||||||||
Payroll and social liabilities | 11,185 | 6,859 | 5,616 | |||||||||
Provisions for other liabilities | 4,978 | 1,601 | 3,794 | |||||||||
Current income tax liabilities | 222 | 1,487 | 7,940 | |||||||||
Derivative financial instruments | 12,887 | 4,159 | 1,002 | |||||||||
Total liabilities as per the Statement of Financial Position | 512,018 | 389,806 | 328,182 | |||||||||
F-142
Table of Contents
Argentina | Brazil | Uruguay | Total | |||||||||||||
Property, plant and equipment | 228,723 | 430,175 | 23,980 | 682,878 | ||||||||||||
Investment property | 21,246 | — | — | 21,246 | ||||||||||||
Intangible assets | 243 | 1,663 | — | 1,906 | ||||||||||||
Goodwill | 6,347 | 13,606 | — | 19,953 | ||||||||||||
Investment in joint ventures | 6,506 | — | — | 6,506 | ||||||||||||
Non-current portion of biological assets | 4,379 | 165,968 | — | 170,347 | ||||||||||||
Initial recognition and changes in fair value of biological assets and agricultural produce | 26,995 | 42,348 | 2,325 | 71,668 | ||||||||||||
Gain from changes in net realizable value of agricultural produce after harvest | 10,001 | 1,794 | 992 | 12,787 | ||||||||||||
Sales of manufactured products sold and services rendered | 68,020 | 115,366 | — | 183,386 | ||||||||||||
Sales of agricultural produce and biological assets | 99,661 | 25,304 | 5,252 | 130,217 |
Argentina | Brazil | Uruguay | Total | |||||||||||||
Property, plant and equipment | 267,945 | 284,046 | 19,428 | 571,419 | ||||||||||||
Intangible assets | 252 | 1,235 | — | 1,487 | ||||||||||||
Goodwill | 6,483 | 10,138 | — | 16,621 | ||||||||||||
Investment in joint ventures | 7,508 | — | — | 7,508 | ||||||||||||
Non-current portion of biological assets | 17,342 | 58,359 | — | 75,701 | ||||||||||||
Initial recognition and changes in fair value of biological assets and agricultural produce | 31,124 | 26,639 | 3,237 | 61,000 | ||||||||||||
Gain from changes in net realizable value of agricultural produce after harvest | 1,442 | 343 | (524 | ) | 1,261 | |||||||||||
Sales of manufactured products sold and services rendered | 54,990 | 62,026 | 157 | 117,173 | ||||||||||||
Sales of agricultural produce and biological assets | 92,120 | 24,653 | 10,263 | 127,036 |
Argentina | Brazil | Uruguay | Total | |||||||||||||
Property, plant and equipment | 298,501 | 217,499 | 22,017 | 538,017 | ||||||||||||
Intangible assets | 291 | 1,767 | — | 2,058 | ||||||||||||
Goodwill | 7,781 | 13,376 | — | 21,157 | ||||||||||||
Investment in joint ventures | 8,881 | — | — | 8,881 | ||||||||||||
Non-current portion of biological assets | 18,179 | 39,766 | — | 57,945 | ||||||||||||
Initial recognition and changes in fair value of biological assets and agricultural produce | 24,920 | 153 | 1,862 | 26,935 | ||||||||||||
Gain from changes in net realizable value of agricultural produce after harvest | 14,636 | (1,839 | ) | (51 | ) | 12,746 | ||||||||||
Sales of manufactured products sold and services rendered | 39,800 | 30,007 | — | 69,807 | ||||||||||||
Sales of agricultural produce and biological assets | 53,573 | 15,815 | 3,308 | 72,696 |
F-143
Table of Contents
7. | Property, plant and equipment |
Machinery, | ||||||||||||||||||||||||||||||||
Equipment, | ||||||||||||||||||||||||||||||||
Farmland | Buildings and | Furniture and | Computer | Work in | ||||||||||||||||||||||||||||
Farmlands | Improvements | Facilities | Fittings | Equipment | Vehicles | Progress | Total | |||||||||||||||||||||||||
At January 1, 2007 | ||||||||||||||||||||||||||||||||
Cost | 165,194 | 662 | 15,414 | 43,166 | 136 | 803 | 9,629 | 235,004 | ||||||||||||||||||||||||
Accumulated depreciation | — | (450 | ) | (3,035 | ) | (4,764 | ) | (49 | ) | (302 | ) | — | (8,600 | ) | ||||||||||||||||||
Net book amount | 165,194 | 212 | 12,379 | 38,402 | 87 | 501 | 9,629 | 226,404 | ||||||||||||||||||||||||
Year ended December 31, 2007 | ||||||||||||||||||||||||||||||||
Opening net book amount | 165,194 | 212 | 12,379 | 38,402 | 87 | 501 | 9,629 | 226,404 | ||||||||||||||||||||||||
Exchange differences | 9,558 | (4 | ) | 1,610 | 8,119 | (2 | ) | (7 | ) | 7,389 | 26,663 | |||||||||||||||||||||
Additions | 47,164 | 111 | 3,412 | 14,166 | 105 | 359 | 64,854 | 130,171 | ||||||||||||||||||||||||
Acquisition of subsidiary | 152,573 | 1,048 | 9,028 | 3,171 | 24 | 377 | 1,614 | 167,835 | ||||||||||||||||||||||||
Transfers | — | — | 1,033 | 207 | — | — | (1,240 | ) | — | |||||||||||||||||||||||
Disposals | (190 | ) | (7 | ) | (252 | ) | (2,732 | ) | (2 | ) | (18 | ) | (726 | ) | (3,927 | ) | ||||||||||||||||
Depreciation charge (Note 26) | — | (307 | ) | (1,664 | ) | (6,907 | ) | (36 | ) | (215 | ) | — | (9,129 | ) | ||||||||||||||||||
Closing net book amount | 374,299 | 1,053 | 25,546 | 54,426 | 176 | 997 | 81,520 | 538,017 | ||||||||||||||||||||||||
At December 31, 2007 | ||||||||||||||||||||||||||||||||
Cost | 374,299 | 3,448 | 35,828 | 69,973 | 326 | 1,905 | 81,520 | 567,299 | ||||||||||||||||||||||||
Accumulated depreciation | — | (2,395 | ) | (10,282 | ) | (15,547 | ) | (150 | ) | (908 | ) | — | (29,282 | ) | ||||||||||||||||||
Net book amount | 374,299 | 1,053 | 25,546 | 54,426 | 176 | 997 | 81,520 | 538,017 | ||||||||||||||||||||||||
Year ended December 31, 2008 | ||||||||||||||||||||||||||||||||
Opening net book amount | 374,299 | 1,053 | 25,546 | 54,426 | 176 | 997 | 81,520 | 538,017 | ||||||||||||||||||||||||
Exchange differences | (43,094 | ) | (119 | ) | (10,235 | ) | (29,346 | ) | (253 | ) | 126 | (27,270 | ) | (110,191 | ) | |||||||||||||||||
Additions | 740 | 189 | 59,759 | 110,181 | 1,294 | 308 | 13,825 | 186,296 | ||||||||||||||||||||||||
Acquisition of subsidiary | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Transfers | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Disposals | (11,466 | ) | (30 | ) | (798 | ) | (2,187 | ) | (3 | ) | (75 | ) | — | (14,559 | ) | |||||||||||||||||
Depreciation charge (Note 26) | — | (230 | ) | (3,926 | ) | (23,313 | ) | (343 | ) | (332 | ) | — | (28,144 | ) | ||||||||||||||||||
Closing net book amount | 320,479 | 863 | 70,346 | 109,761 | 871 | 1,024 | 68,075 | 571,419 | ||||||||||||||||||||||||
At December 31, 2008 | ||||||||||||||||||||||||||||||||
Cost | 320,479 | 3,488 | 84,554 | 148,621 | 1,364 | 2,264 | 68,075 | 628,845 | ||||||||||||||||||||||||
Accumulated depreciation | — | (2,625 | ) | (14,208 | ) | (38,860 | ) | (493 | ) | (1,240 | ) | — | (57,426 | ) | ||||||||||||||||||
Net book amount | 320,479 | 863 | 70,346 | 109,761 | 871 | 1,024 | 68,075 | 571,419 | ||||||||||||||||||||||||
F-144
Table of Contents
Machinery, | ||||||||||||||||||||||||||||||||
Equipment, | ||||||||||||||||||||||||||||||||
Farmland | Buildings and | Furniture and | Computer | Work in | ||||||||||||||||||||||||||||
Farmlands | Improvements | Facilities | Fittings | Equipment | Vehicles | Progress | Total | |||||||||||||||||||||||||
Year ended December 31, 2009 | ||||||||||||||||||||||||||||||||
Opening net book amount | 320,479 | 863 | 70,346 | 109,761 | 871 | 1,024 | 68,075 | 571,419 | ||||||||||||||||||||||||
Exchange differences | 5,131 | (665 | ) | 18,053 | 35,981 | 321 | (112 | ) | 21,568 | 80,277 | ||||||||||||||||||||||
Additions | 2,602 | 279 | 7,319 | 26,242 | 427 | 574 | 65,063 | 102,506 | ||||||||||||||||||||||||
Transfers | — | — | 12,815 | 34,961 | 104 | — | (47,880 | ) | — | |||||||||||||||||||||||
Transfers to investment property (Note 8) | (21,246 | ) | — | — | — | — | — | — | (21,246 | ) | ||||||||||||||||||||||
Disposals | (2,797 | ) | (16 | ) | (71 | ) | (3,943 | ) | (11 | ) | (166 | ) | — | (7,004 | ) | |||||||||||||||||
Reclassification to non-income tax credits(*) | — | — | — | (8,631 | ) | — | — | — | (8,631 | ) | ||||||||||||||||||||||
Disposals of subsidiary | (4,297 | ) | — | (26 | ) | (61 | ) | — | — | — | (4,384 | ) | ||||||||||||||||||||
Depreciation charge (Note 26) | — | (27 | ) | (5,782 | ) | (23,662 | ) | (330 | ) | (258 | ) | — | (30,059 | ) | ||||||||||||||||||
Closing net book amount | 299,872 | 434 | 102,654 | 170,648 | 1,382 | 1,062 | 106,826 | 682,878 | ||||||||||||||||||||||||
At December 31, 2009 | ||||||||||||||||||||||||||||||||
Cost | 299,872 | 3,086 | 122,644 | 233,170 | 2,205 | 2,560 | 106,826 | 770,363 | ||||||||||||||||||||||||
Accumulated depreciation | — | (2,652 | ) | (19,990 | ) | (62,522 | ) | (823 | ) | (1,498 | ) | — | (87,485 | ) | ||||||||||||||||||
Net book amount | 299,872 | 434 | 102,654 | 170,648 | 1,382 | 1,062 | 106,826 | 682,878 | ||||||||||||||||||||||||
(*) | Brazilian federal tax law allows entities to take a percentage of the total cost of the assets purchased as a tax credit. The procedure adopted initially was to recognize such credits proportionally to the depreciation of these fixed assets on a monthly basis. During 2009, the Group elected to change the procedure to recognize these federal tax credits separately when the assets is purchased and, as permitted, the tax credits already “embedded” within the cost of the assets were reclassified to tax credit. (See Note 13). |
F-145
Table of Contents
8. | Investment property |
2009 | 2008 | 2007 | ||||||||||
Beginning of the year | — | — | — | |||||||||
Transfers(i) | 21,246 | — | — | |||||||||
End of the year | 21,246 | — | — | |||||||||
2009 | 2008 | 2007 | ||||||||||
Rental income | 172 | — | — |
(i) | Transferred from property, plant and equipment. Relates to farmland rented out to third parties. See Note 31 for details. |
F-146
Table of Contents
9. | Intangible assets |
Goodwill | Trademarks | Software | Total | |||||||||||||
At January 1, 2007 | ||||||||||||||||
Cost | 5,430 | 1,570 | 201 | 7,201 | ||||||||||||
Accumulated amortization | — | (136 | ) | (104 | ) | (240 | ) | |||||||||
Net book amount | 5,430 | 1,434 | 97 | 6,961 | ||||||||||||
Year ended December 31, 2007 | ||||||||||||||||
Opening net book amount | 5,430 | 1,434 | 97 | 6,961 | ||||||||||||
Exchange differences | 1,426 | 275 | 17 | 1,718 | ||||||||||||
Additions | — | — | 144 | 144 | ||||||||||||
Acquisition of subsidiary | 18,243 | 308 | 11 | 18,562 | ||||||||||||
Disposal of subsidiary | (3,942 | ) | — | — | (3,942 | ) | ||||||||||
Amortization charge(i) (Note 26) | — | (185 | ) | (43 | ) | (228 | ) | |||||||||
Closing net book amount | 21,157 | 1,832 | 226 | 23,215 | ||||||||||||
At December 31, 2007 | ||||||||||||||||
Cost | 21,157 | 2,153 | 373 | 23,683 | ||||||||||||
Accumulated amortization | — | (321 | ) | (147 | ) | (468 | ) | |||||||||
Net book amount | 21,157 | 1,832 | 226 | 23,215 | ||||||||||||
Year ended December 31, 2008 | ||||||||||||||||
Opening net book amount | 21,157 | 1,832 | 226 | 23,215 | ||||||||||||
Exchange differences | (3,351 | ) | (397 | ) | (4 | ) | (3,752 | ) | ||||||||
Disposal of subsidiary | (1,185 | ) | — | — | (1,185 | ) | ||||||||||
Amortization charge(i) (Note 26) | — | (159 | ) | (11 | ) | (170 | ) | |||||||||
Closing net book amount | 16,621 | 1,276 | 211 | 18,108 | ||||||||||||
At December 31, 2008 | ||||||||||||||||
Cost | 16,621 | 1,756 | 369 | 18,746 | ||||||||||||
Accumulated amortization and impairment | — | (480 | ) | (158 | ) | (638 | ) | |||||||||
Net book amount | 16,621 | 1,276 | 211 | 18,108 | ||||||||||||
Year ended December 31, 2009 | ||||||||||||||||
Opening net book amount | 16,621 | 1,276 | 211 | 18,108 | ||||||||||||
Exchange differences | 3,332 | 303 | 98 | 3,733 | ||||||||||||
Additions | — | 173 | 142 | 315 | ||||||||||||
Amortization charge(i) (Note 26) | — | (196 | ) | (101 | ) | (297 | ) | |||||||||
Closing net book amount | 19,953 | 1,556 | 350 | 21,859 | ||||||||||||
At December 31, 2009 | ||||||||||||||||
Cost | 19,953 | 2,232 | 609 | 22,794 | ||||||||||||
Accumulated amortization | — | (676 | ) | (259 | ) | (935 | ) | |||||||||
Net book amount | 19,953 | 1,556 | 350 | 21,859 | ||||||||||||
(i) | An amount of US$101; US$11 and US$43 of amortization charges are included in “General and administrative expenses” for the years ended December 31, 2009, 2008 and 2007, respectively. An amount of US$196; US$159 and US$185 of amortization charges are included in “Selling expenses” for the years |
F-147
Table of Contents
ended December 31, 2009, 2008 and 2007, respectively. There were no impairment charges for any of the years presented. |
10. | Biological assets |
2009 | 2008 | 2007 | ||||||||||
Beginning of the year | 125,948 | 102,562 | 40,900 | |||||||||
Increase due to purchases | 296 | 3,276 | 1,663 | |||||||||
Acquisition of subsidiary | — | — | 35,278 | |||||||||
Disposal of subsidiary (Note 16) | (86 | ) | (376 | ) | — | |||||||
Initial recognition and changes in fair value of biological assets(i) | 71,668 | 61,000 | 26,935 | |||||||||
Decrease due to harvest | (84,990 | ) | (54,709 | ) | (30,124 | ) | ||||||
Decrease due to sales | (37,014 | ) | (6,382 | ) | (2,961 | ) | ||||||
Costs incurred during the year | 136,625 | 49,949 | 23,731 | |||||||||
Exchange differences | 18,007 | (29,372 | ) | 7,140 | ||||||||
End of the year year | 230,454 | 125,948 | 102,562 | |||||||||
(i) | Biological asset with a production cycle of more than one year (that is, sugarcane, coffee and cattle) generated ‘Initial recognition and changes in fair value of biological assets’ amounting to US$52,935 for the year ended December 31, 2009 (2008: US$25,141; 2007: US$4,907). In 2009, an amount of US$29,834 (2008: US$29,576; 2007: US$14,794) was attributable to price changes, and an amount of US$23,101 (2008: US$ (4,435); 2007: US$ (9,887)) was attributable to physical changes. |
F-148
Table of Contents
2009 | 2008 | 2007 | ||||||||||
Non-current | ||||||||||||
Cattle for dairy production(i) | 4,313 | 4,732 | 4,448 | |||||||||
Breeding cattle(i) | — | 11,858 | 13,119 | |||||||||
Other cattle(ii) | 66 | 267 | 612 | |||||||||
Sown land — coffee (iii) | 18,540 | 24,763 | 25,026 | |||||||||
Sown land — sugarcane (iii) | 147,428 | 34,081 | 14,740 | |||||||||
170,347 | 75,701 | 57,945 | ||||||||||
Current | ||||||||||||
Breeding cattle(i) | — | 3,543 | 5,325 | |||||||||
Other cattle(iv) | 749 | 3,961 | 2,809 | |||||||||
Sown land — coffee (iii) | 3,094 | 690 | 2,606 | |||||||||
Sown land — sugarcane (iii) | 17,273 | 14,086 | 6,338 | |||||||||
Sown land — crops(ii) | 27,467 | 21,059 | 24,105 | |||||||||
Sown land — rice(ii) | 11,524 | 6,908 | 3,434 | |||||||||
60,107 | 50,247 | 44,617 | ||||||||||
Total biological assets | 230,454 | 125,948 | 102,562 | |||||||||
(i) | Classified as bearer and mature biological assets. | |
(ii) | Classified as consumable and immature biological assets. | |
(iii) | Classified as bearer and immature biological assets. | |
(iv) | As of December 31, 2009, and amount of US$493 (2008: 2,718; 2007: 2,790) was classified as consumable and mature biological assets, and an amount of US$256 (2008: 1,243; 2007: 19) was classified as consumable and immature biological assets. |
F-149
Table of Contents
11. | Investments in joint ventures |
2009 | 2008 | 2007 | ||||||||||
Assets: | ||||||||||||
Non-current assets | 5,008 | 3,621 | 3,874 | |||||||||
Current assets | 5,689 | 10,019 | 13,003 | |||||||||
10,697 | 13,640 | 16,877 | ||||||||||
Liabilities: | ||||||||||||
Non-current liabilities | 740 | 273 | 299 | |||||||||
Current liabilities | 3,451 | 5,859 | 7,697 | |||||||||
4,191 | 6,132 | 7,996 | ||||||||||
Net assets of joint venture | 6,506 | 7,508 | 8,881 | |||||||||
2009 | 2008 | 2007 | ||||||||||
Income | 2,268 | 1,605 | 968 | |||||||||
Expenses | (2,562 | ) | (2,443 | ) | (1,521 | ) | ||||||
Loss after income tax | (294 | ) | (838 | ) | (553 | ) | ||||||
F-150
Table of Contents
12. | Financial instruments by category |
Assets at Fair | Subtotal | |||||||||||||||||||
Loans and | Value through | Financial | Non-Financial | |||||||||||||||||
Receivables | Profit and Loss | Assets | Assets | Total | ||||||||||||||||
December 31, 2009 | ||||||||||||||||||||
Assets as per statement of financial position | ||||||||||||||||||||
Trade and other receivables | 60,904 | — | 60,904 | 67,373 | 128,277 | |||||||||||||||
Derivative financial instruments | — | 99 | 99 | — | 99 | |||||||||||||||
Cash and cash equivalents | 74,806 | — | 74,806 | — | 74,806 | |||||||||||||||
Total | 135,710 | 99 | 135,809 | 67,373 | 203,182 | |||||||||||||||
Liabilities at | Other | |||||||||||||||||||
Fair Value | Financial | Subtotal | ||||||||||||||||||
through Profit | Liabilities at | Financial | Non-Financial | |||||||||||||||||
and Loss | Amortized Cost | Liabilities | Liabilities | Total | ||||||||||||||||
Liabilities as per statement of financial position | ||||||||||||||||||||
Trade and other payables | — | 58,306 | 58,306 | 10,614 | 68,920 | |||||||||||||||
Borrowings (excluding finance lease liabilities) | — | 305,861 | 305,861 | — | 305,861 | |||||||||||||||
Finance leases | — | 920 | 920 | — | 920 | |||||||||||||||
Derivative financial instruments | 12,887 | — | 12,887 | — | 12,887 | |||||||||||||||
Total | 12,887 | 365,087 | 377,974 | 10,614 | 388,588 | |||||||||||||||
F-151
Table of Contents
Assets at Fair | Subtotal | |||||||||||||||||||
Loans and | Value through | Financial | Non-Financial | |||||||||||||||||
Receivables | Profit and Loss | Assets | Assets | Total | ||||||||||||||||
December 31, 2008 | ||||||||||||||||||||
Assets as per statement of financial position | ||||||||||||||||||||
Trade and other receivables | 31,157 | — | 31,157 | 53,383 | 84,540 | |||||||||||||||
Derivative financial instruments | — | 2,019 | 2,019 | — | 2,019 | |||||||||||||||
Cash and cash equivalents | 93,360 | — | 93,360 | — | 93,360 | |||||||||||||||
Total | 124,517 | 2,019 | 126,536 | 53,383 | 179,919 | |||||||||||||||
Liabilities at | Other | |||||||||||||||||||
Fair Value | Financial | Subtotal | ||||||||||||||||||
through Profit | Liabilities at | Financial | Non-Financial | |||||||||||||||||
and Loss | Amortized Cost | Liabilities | Liabilities | Total | ||||||||||||||||
Liabilities as per statement of financial position | ||||||||||||||||||||
Trade and other payables | — | 42,461 | 42,461 | 10,299 | 52,760 | |||||||||||||||
Borrowings (excluding finance lease liabilities) | — | 227,431 | 227,431 | — | 227,431 | |||||||||||||||
Finance leases | — | 882 | 882 | — | 882 | |||||||||||||||
Derivative financial instruments | 4,159 | — | 4,159 | — | 4,159 | |||||||||||||||
Total | 4,159 | 270,774 | 274,933 | 10,299 | 285,232 | |||||||||||||||
Asset at Fair | Subtotal | |||||||||||||||||||
Loans and | Value through | Financial | Non-Financial | |||||||||||||||||
Receivables | Profit and Loss | Assets | Assets | Total | ||||||||||||||||
December 31, 2007 | ||||||||||||||||||||
Assets as per statement of financial position | ||||||||||||||||||||
Trade and other receivables | 51,381 | — | 51,381 | 31,795 | 83,176 | |||||||||||||||
Derivative financial instruments | — | 258 | 258 | — | 258 | |||||||||||||||
Other financial assets(i) | — | 1,699 | 1,699 | — | 1,699 | |||||||||||||||
Cash and cash equivalents | 70,686 | — | 70,686 | — | 70,686 | |||||||||||||||
Total | 122,067 | 1,957 | 124,024 | 31,795 | 155,819 | |||||||||||||||
F-152
Table of Contents
Liabilities at | Other | |||||||||||||||||||
Fair Value | Financial | Subtotal | ||||||||||||||||||
through Profit | Liabilities at | Financial | Non-Financial | |||||||||||||||||
and Loss | Amortized Cost | Liabilities | Liabilities | Total | ||||||||||||||||
Liabilities as per statement of financial position | ||||||||||||||||||||
Trade and other payables | — | 28,510 | 28,510 | 11,682 | 40,192 | |||||||||||||||
Borrowings (excluding finance lease liabilities) | — | 157,444 | 157,444 | — | 157,444 | |||||||||||||||
Finance leases | — | 2,481 | 2,481 | — | 2,481 | |||||||||||||||
Derivative financial instruments | 1,002 | — | 1,002 | — | 1,002 | |||||||||||||||
Total | 1,002 | 188,435 | 189,437 | 11,682 | 201,119 | |||||||||||||||
(i) | Other financial assets comprise investments in money market funds (MMFs) not considered as cash and cash equivalents for purposes of the statement of cash flows. Cash flows relating to purchases and sales of MMFs are shown under operating activities. |
Assets/Liabilities | ||||||||||||||||
at Fair Value | Other Financial | |||||||||||||||
Loans and | through Profit | Liabilities at | ||||||||||||||
Receivables | and Loss | Amortized Cost | Total | |||||||||||||
December 31, 2009 | ||||||||||||||||
Interest income(i) | 472 | — | — | 472 | ||||||||||||
Interest expense(i) | — | — | (29,213 | ) | (29,213 | ) | ||||||||||
Foreign exchange gains/(losses)(ii) | 11,939 | — | (13,936 | ) | (1,997 | ) | ||||||||||
Loss from derivative financial instruments(iii) | — | (7,486 | ) | — | (7,486 | ) | ||||||||||
Net result | 12,411 | (7,486 | ) | (43,149 | ) | (38,224 | ) | |||||||||
F-153
Table of Contents
Assets/Liabilities | ||||||||||||||||
at Fair Value | Other Financial | |||||||||||||||
Loans and | through Profit | Liabilities at | ||||||||||||||
Receivables | and Loss | Amortized Cost | Total | |||||||||||||
December 31, 2008 | ||||||||||||||||
Interest income(i) | 1,494 | — | — | 1,494 | ||||||||||||
Interest expense(i) | — | — | (23,324 | ) | (23,324 | ) | ||||||||||
Foreign exchange gains/(losses)(ii) | — | — | (24,184 | ) | (24,184 | ) | ||||||||||
Gain from derivative financial instruments(iii) | — | 1,848 | — | 1,848 | ||||||||||||
Net result | 1,494 | 1,848 | (47,508 | ) | (44,166 | ) | ||||||||||
Assets/Liabilities | ||||||||||||||||
at Fair Value | Other Financial | |||||||||||||||
Loans and | through Profit | Liabilities at | ||||||||||||||
Receivables | and Loss | Amortized Cost | Total | |||||||||||||
December 31, 2007 | ||||||||||||||||
Interest income(i) | 6,746 | — | — | 6,746 | ||||||||||||
Interest expense(i) | — | — | (10,840 | ) | (10,840 | ) | ||||||||||
Foreign exchange gains/(losses)(ii) | 5,732 | — | — | 5,732 | ||||||||||||
Loss from derivative financial instruments(iii) | — | (1,654 | ) | — | (1,654 | ) | ||||||||||
Net result | 12,478 | (1,654 | ) | (10,840 | ) | (16 | ) | |||||||||
(i) | Included in “Financial results, net” in the statement of income. | |
(ii) | Included in “Financial results, net” in the statement of income. | |
(iii) | Included in “Other operating income, net” in the statement of income. |
F-154
Table of Contents
2009 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets | ||||||||||||||||
Derivative financial instruments | 99 | — | — | 99 | ||||||||||||
Total assets | 99 | — | — | 99 | ||||||||||||
Liabilities | ||||||||||||||||
Derivative financial instruments | 12,607 | 280 | — | 12,887 | ||||||||||||
Total liabilities | 12,607 | 280 | — | 12,887 | ||||||||||||
Valuation Model | ||||||
(Derivatives) | Pricing Method | Parameters | Pricing Model | |||
Futures | Quoted price | — | — | |||
Options | Quoted price | — | — | |||
Foreign-currency interest-rate swaps | Theoretical price | Swap curve; Money market interest-rate curve; Foreign-exchange curve. | Present value method | |||
Interest-rate swaps | Theoretical price | Swap curve; Money market interest-rate curve | Present value method |
F-155
Table of Contents
13. | Trade and other receivables, net |
2009 | 2008 | 2007 | ||||||||||
Non current | ||||||||||||
Prepaid expenses | 4,263 | 295 | 458 | |||||||||
Income tax credits | 4,241 | 3,984 | 548 | |||||||||
Non-income tax credits(i) | 11,279 | 3,521 | 2,013 | |||||||||
Escrow deposits(ii) | — | 600 | 600 | |||||||||
Other receivables | 2,282 | 212 | 399 | |||||||||
Non current portion | 22,065 | 8,612 | 4,018 | |||||||||
Current | ||||||||||||
Trade receivables | 47,894 | 24,670 | 19,638 | |||||||||
Receivables from related parties (Note 34) | 2,554 | 4,368 | 6,340 | |||||||||
Less: Allowance for trade receivables | (906 | ) | (391 | ) | (1,170 | ) | ||||||
Trade receivables — net | 49,542 | 28,647 | 24,808 | |||||||||
Prepaid expenses | 5,530 | 5,016 | 1,351 | |||||||||
Advances to suppliers | 10,167 | 15,714 | 7,841 | |||||||||
Income tax credits | 6,569 | 4,548 | 1,578 | |||||||||
Non-income tax credits(i) | 23,500 | 15,842 | 13,120 | |||||||||
Escrow deposits(ii) | 1,028 | 3,683 | 3,848 | |||||||||
Receivable from disposal of subsidiary(iii) (Note 16) | 5,475 | — | — | |||||||||
Receivable with members(iv) (Note 34) | — | — | 23,390 | |||||||||
Receivable with related parties (Note 34) | 796 | 180 | 438 | |||||||||
Other receivables | 3,605 | 2,298 | 2,784 | |||||||||
Subtotal | 56,670 | 47,281 | 54,350 | |||||||||
Current portion | 106,212 | 75,928 | 79,158 | |||||||||
Total trade and other receivables, net | 128,277 | 84,540 | 83,176 | |||||||||
(i) | Includes US$8,631 reclassified from property, plant and equipment. | |
(ii) | In connection with certain acquisitions, the Group deposited a portion of the consideration that would otherwise have been delivered to the sellers into an escrow account with a third party escrow agent to secure specified indemnification obligations of the sellers under the respective agreements. | |
(iii) | Relates to the sale of a subsidiary (comprising mainly of a farmland business) for which total net proceeds of US$21.9 million have not been fully collected as of year-end. | |
(iv) | Relates to issuance of units for which contributions have not been received as of year end. |
F-156
Table of Contents
2009 | 2008 | 2007 | ||||||||||
Currency | ||||||||||||
US Dollar | 23,620 | 21,504 | 38,075 | |||||||||
Argentine Peso | 29,504 | 35,032 | 28,125 | |||||||||
Uruguayan Peso | 6,036 | 3,516 | 338 | |||||||||
Brazilian Reais | 69,117 | 24,488 | 16,638 | |||||||||
128,277 | 84,540 | 83,176 | ||||||||||
2009 | 2008 | 2007 | ||||||||||
Up to 3 months | 8,790 | 8,686 | 7,717 | |||||||||
3 to 6 months | 1,208 | 1,435 | 1,340 | |||||||||
Over 6 months | 1,257 | 2,670 | — | |||||||||
11,255 | 12,791 | 9,057 | ||||||||||
2009 | 2008 | 2007 | ||||||||||
At January 1 | 391 | 1,170 | 51 | |||||||||
Charge of the year | 664 | 15 | 1,004 | |||||||||
Acquisition of subsidiary | — | — | 218 | |||||||||
Unused amounts reversed | — | (787 | ) | (74 | ) | |||||||
Used during the year | (113 | ) | — | (25 | ) | |||||||
Exchange differences | (36 | ) | (7 | ) | (4 | ) | ||||||
At December 31 | 906 | 391 | 1,170 | |||||||||
F-157
Table of Contents
14. | Inventories |
2009 | 2008 | 2007 | ||||||||||
Raw materials | 23,843 | 20,584 | 16,247 | |||||||||
Finished goods | 30,338 | 40,506 | 38,293 | |||||||||
Stocks held by third parties | 3,299 | — | 3,141 | |||||||||
Others | 422 | 131 | 355 | |||||||||
57,902 | 61,221 | 58,036 | ||||||||||
F-158
Table of Contents
15. | Cash and cash equivalents |
2009 | 2008 | 2007 | ||||||||||
Cash at bank and on hand | 72,903 | 93,153 | 61,375 | |||||||||
Short-term bank deposits | 1,903 | 207 | 9,311 | |||||||||
74,806 | 93,360 | 70,686 | ||||||||||
16. | Disposals |
2009 | 2008 | 2007 | ||||||||||
Farmlands | — | 43,012 | 47,231 | |||||||||
Trade and other receivables, net | — | 2,299 | — | |||||||||
— | 45,311 | 47,231 | ||||||||||
2009 | 2008 | 2007 | ||||||||||
Foreign exchange translation adjustments | — | 4,410 | — | |||||||||
— | 4,410 | — | ||||||||||
F-159
Table of Contents
17. | Members’ interest |
Number of | Total Members’ | |||||||
Membership Units | Contributed Capital | |||||||
At 1 January 2007 | 279,826,472 | 278,613 | ||||||
Contributed capital | 98,691,808 | 197,512 | ||||||
At 31 December 2007 | 378,518,280 | 476,125 | ||||||
Contributed capital | 67,090,059 | 152,063 | ||||||
At 31 December 2008 | 445,608,339 | 628,188 | ||||||
Contributed capital | 30,043,850 | 69,101 | ||||||
At 31 December 2009 | 475,652,189 | 697,289 | ||||||
18. | Equity-settled unit-based payments |
May | May | May | Feb | Oct | Dec | Jan | Nov | |||||||||||||||||||||||||
Grant Date | 2004 | 2005 | 2006 | 2006 | 2006 | 2007 | 2009 | 2009 | ||||||||||||||||||||||||
Expected volatility | 39 | % | 37 | % | 36 | % | 36 | % | 36 | % | 36 | % | 21 | % | 22 | % | ||||||||||||||||
Expected life | 5.77 | 5.37 | 4.97 | 5.05 | 4.80 | 6.50 | 6.50 | 6.50 | ||||||||||||||||||||||||
Risk free rate | 3.46 | % | 3.56 | % | 4.46 | % | 4.13 | % | 4.14 | % | 3.22 | % | 1.85 | % | 2.31 | % | ||||||||||||||||
Expected dividend yield | 1 | % | 1 | % | 1 | % | 1 | % | 1 | % | 1 | % | 0 | % | 0 | % | ||||||||||||||||
Fair value per option | $ | 0.38 | $ | 0.36 | $ | 0.52 | $ | 0.43 | $ | 0.51 | $ | 0.82 | $ | 0.60 | $ | 0.65 | ||||||||||||||||
Possibility of ceasing employment before vesting | 0 | % | 0 | % | 0 | % | 0 | % | 0 | % | 0.47 | % | 1.01 | % | 1.90 | % | ||||||||||||||||
Exercise price | $ | 1 | $ | 1 | $ | 1 | $ | 1.22 | $ | 1.48 | $ | 2.2 | $ | 2.3 | $ | 2.3 |
F-160
Table of Contents
2009 | 2008 | 2007 | ||||||||||||||||||||||
Average | Average | Average | ||||||||||||||||||||||
Exercise | Exercise | Exercise | ||||||||||||||||||||||
Price per | Price per | Price per | ||||||||||||||||||||||
Unit | Options | Unit | Options | Unit | Options | |||||||||||||||||||
(Thousands) | (Thousands) | (Thousands) | ||||||||||||||||||||||
At January 1 | 1.15 | 13,992 | 1.15 | 13,992 | 1.15 | 13,992 | ||||||||||||||||||
Granted | — | — | — | — | — | — | ||||||||||||||||||
Forfeited | — | — | — | — | — | — | ||||||||||||||||||
Exercised | — | — | — | — | — | — | ||||||||||||||||||
Expired | — | — | — | — | — | — | ||||||||||||||||||
At December 31 | 1.15 | 13,992 | 1.15 | 13,992 | 1.15 | 13,992 | ||||||||||||||||||
Exercise | ||||||||||||||||
Price per | Units | |||||||||||||||
Unit | 2009 | 2008 | 2007 | |||||||||||||
(In thousands) | ||||||||||||||||
Expiry Date: | ||||||||||||||||
May 1, 2014 | 1.00 | 3,926 | 3,926 | 3,926 | ||||||||||||
May 1, 2015 | 1.00 | 3,333 | 3,333 | 3,333 | ||||||||||||
May 1, 2016 | 1.00 | 1,869 | 1,869 | 1,869 | ||||||||||||
February 16, 2016 | 1.22 | 641 | 641 | 641 | ||||||||||||
October 1, 2016 | 1.48 | 4,223 | 4,223 | 4,223 |
F-161
Table of Contents
2009 | 2008 | 2007 | ||||||||||||||||||||||
Average | Average | Average | ||||||||||||||||||||||
Exercise | Exercise | Exercise | ||||||||||||||||||||||
Price per | Price per | Price per | ||||||||||||||||||||||
Unit | Options | Unit | Options | Unit | Options | |||||||||||||||||||
(Thousands) | (Thousands) | (Thousands) | ||||||||||||||||||||||
At January 1 | 2.2 | 7,648 | 2.2 | 7,648 | — | — | ||||||||||||||||||
Granted | 2.3 | 4,183 | — | — | 2.2 | 7,648 | ||||||||||||||||||
Forfeited | — | — | — | — | — | — | ||||||||||||||||||
Exercised | — | — | — | — | — | — | ||||||||||||||||||
Expired | — | — | — | — | — | — | ||||||||||||||||||
At December 31 | 2.24 | 11,831 | 2.2 | 7,648 | 2.2 | 7,648 | ||||||||||||||||||
Exercise | ||||||||||||||||
Price per | Units | |||||||||||||||
Unit | 2009 | 2008 | 2007 | |||||||||||||
(In thousands) | ||||||||||||||||
Expiry Date: | ||||||||||||||||
Dec 1, 2017 | 2.2 | 7,648 | 7,648 | 7,648 | ||||||||||||
Jan 30, 2019 | 2.3 | 4,078 | — | — | ||||||||||||
Nov 1, 2019 | 2.3 | 104 | — | — |
Exercisable Units | ||||
In thousands | ||||
2009 | 17,815 | |||
2008 | 13,614 | |||
2007 | 8,347 |
F-162
Table of Contents
19. | Legal and other reserves |
20. | Trade and other payables |
2009 | 2008 | 2007 | ||||||||||
Non-current | ||||||||||||
Trade payables | 5,047 | 2,679 | — | |||||||||
Taxes payable | 1,391 | — | 2,363 | |||||||||
Other payables | 384 | — | — | |||||||||
Contingent consideration arising on a business combination | — | 3,411 | 4,425 | |||||||||
6,822 | 6,090 | 6,788 | ||||||||||
Current | ||||||||||||
Trade payables | 50,377 | 37,975 | 26,610 | |||||||||
Advances from customers | 871 | 446 | 514 | |||||||||
Amounts due to related parties (Note 34) | 330 | 1,087 | 349 | |||||||||
Other payables | 2,168 | 720 | 1,551 | |||||||||
Taxes payable | 3,527 | 2,877 | 1,043 | |||||||||
Contingent consideration arising on a business combination | 4,825 | 3,565 | 3,337 | |||||||||
62,098 | 46,670 | 33,404 | ||||||||||
Total trade and other payables | 68,920 | 52,760 | 40,192 | |||||||||
F-163
Table of Contents
21. | Borrowings |
2009 | 2008 | 2007 | ||||||||||
Non-current | ||||||||||||
Bank borrowings | 202,891 | 3,844 | 61,028 | |||||||||
Obligations under finance leases | 243 | 255 | 1,062 | |||||||||
203,134 | 4,099 | 62,090 | ||||||||||
Current | ||||||||||||
Bank overdrafts | — | 19,771 | 22,909 | |||||||||
Bank borrowings | 102,970 | 203,816 | 73,507 | |||||||||
Obligations under finance leases | 677 | 627 | 1,419 | |||||||||
103,647 | 224,214 | 97,835 | ||||||||||
Total borrowings | 306,781 | 228,313 | 159,925 | |||||||||
2009 | 2008 | 2007 | ||||||||||
Fixed rate: | ||||||||||||
Less than 1 year | 30,579 | 95,209 | 59,880 | |||||||||
Between 1 and 2 years | 5,724 | 678 | 2,359 | |||||||||
Between 2 and 3 years | 5,173 | 191 | 311 | |||||||||
Between 3 and 4 years | 5,167 | 127 | 269 | |||||||||
Between 4 and 5 years | 5,167 | — | 184 | |||||||||
More than 5 years | 5,167 | — | — | |||||||||
56,977 | 96,205 | 63,003 | ||||||||||
Variable rate: | ||||||||||||
Less than 1 year | 72,391 | 128,378 | 36,536 | |||||||||
Between 1 and 2 years | 68,667 | 703 | 12,886 | |||||||||
Between 2 and 3 years | 55,907 | 703 | 11,569 | |||||||||
Between 3 and 4 years | 49,511 | 249 | 11,569 | |||||||||
Between 4 and 5 years | 787 | 41 | 10,918 | |||||||||
More than 5 years | 1,621 | 1,152 | 10,963 | |||||||||
248,884 | 131,226 | 94,441 | ||||||||||
305,861 | 227,431 | 157,444 | ||||||||||
F-164
Table of Contents
• | Syndicated Loan and BNDES Loan Facility |
F-165
Table of Contents
2009 | 2010 | 2011 | 2012 to 2013 | 2014 to 2018 | ||||||||||||||||
Financial ratios: | ||||||||||||||||||||
Debt Service Coverage Ratio (individual) | > 1.00 | > 1.00 | > 1.00 | > 1.00 | > 1.30 | |||||||||||||||
Liquidity Ratio (individual) | > 0.55 | > 1.00 | > 1.00 | > 1.00 | > 1.00 | |||||||||||||||
Liquidity Ratio (aggregate) | > 1.20 | > 0.65 | > 1,00 | > 1.20 | > 1.20 | |||||||||||||||
Interest Coverage Ratio (aggregate) | > 3.00 | > 2.00 | > 2.00 | > 4.00 | > 4.00 | |||||||||||||||
Net Bank Debt / EBITDA (aggregate) | < 3.00 | < 4.00 | < 3.00 | < 3.00 | < 3.00 |
F-166
Table of Contents
2010 1Q | 2010 2Q | 2010 3Q | 2010 4Q | 2011 | 2012 | 2013 | ||||||||||||||||||||||
Financial ratios: | ||||||||||||||||||||||||||||
EBITDA (aggregate) (in millions of $) | > 3.00 | > 13.00 | > 15.00 | N/A | N/A | N/A | N/A | |||||||||||||||||||||
Total Debt (aggregate) (in millions of $) | < 105.00 | < 110.00 | < 120.00 | < 115.00 | < 115.00 | < 115.00 | < 115.00 | |||||||||||||||||||||
Capital Expenditures (aggregate)(in millions of $) | < 2.70 | < 9.60 | < 15.00 | < 15.00 | N/A | N/A | N/A | |||||||||||||||||||||
Debt to EBITDA (aggregate) | N/A | N/A | N/A | < 5.00 | < 4.75 | < 4.25 | < 3.75 | |||||||||||||||||||||
Total Liabilities to Total Equity (aggregate) | N/A | N/A | N/A | < 1.50 | < 1.50 | < 1.30 | < 1.30 | |||||||||||||||||||||
Current Asset to Current Liabilities (aggregate)(i) | N/A | N/A | N/A | > 1.30 | > 1.10/1.30 | > 1.10/1.30 | > 1.10/1.30 | |||||||||||||||||||||
Interest Coverage (aggregate) | N/A | N/A | N/A | > 1.40 | > 2.10 | > 2.35 | > 2.60 | |||||||||||||||||||||
Debt to Equity (aggregate) | N/A | N/A | N/A | < 1.20 | < 1.20 | < 1.20 | < 1.20 | |||||||||||||||||||||
Short-Term Debt to Total Debt (aggregate)(ii) | N/A | N/A | N/A | < 0.57 | < 0.50 | < 0.50 | < 0.50 | |||||||||||||||||||||
Debt to Equity (individual) | N/A | N/A | N/A | < 1.70 | < 1.40 | < 1.20 | < 1.20 |
(i) | From 2011 onwards, for the first, second and third quarters the ratio is >1.10. From 2011 onwards, for the fourth quarter the ratio is >1.30. | |
(ii) | Measured annually. |
2009 | 2008 | 2007 | ||||||||||
Currency | ||||||||||||
Argentine Peso | 88 | 35,343 | 34,589 | |||||||||
US Dollar | 158,797 | 164,103 | 84,522 | |||||||||
Uruguayan Peso | 40 | — | — | |||||||||
Brazilian Reais | 147,856 | 28,867 | 40,814 | |||||||||
306,781 | 228,313 | 159,925 | ||||||||||
F-167
Table of Contents
2009 | 2008 | 2007 | ||||||||||
Non-current | ||||||||||||
Not later than one year | 719 | 801 | 3,872 | |||||||||
Later than one year and not later than five years | 243 | 327 | 1,763 | |||||||||
962 | 1,128 | 5,635 | ||||||||||
Future finance charges on finance leases | (42 | ) | (246 | ) | (3,154 | ) | ||||||
Present value of finance lease liabilities | 920 | 882 | 2,481 | |||||||||
2009 | 2008 | 2007 | ||||||||||
Not later than one year | 677 | 627 | 1,419 | |||||||||
Later than one year and not later than five years | 243 | 255 | 1,062 | |||||||||
920 | 882 | 2,481 | ||||||||||
22. | Taxation |
2009 | 2008 | 2007 | ||||||||||
Current income tax | (1,034 | ) | 903 | (6,321 | ) | |||||||
Deferred income tax | 6,449 | 9,546 | 6,380 | |||||||||
Income tax benefit | 5,415 | 10,449 | 59 | |||||||||
F-168
Table of Contents
Tax Jurisdiction | Income Tax Rate | |||
Argentina | 35 | % | ||
Brazil | 34 | % | ||
Uruguay | 25 | % |
2009 | 2008 | 2007 | ||||||||||
Deferred income tax assets: | ||||||||||||
Deferred income tax asset to be recovered after more than 12 months | (44,139 | ) | (16,068 | ) | (8,912 | ) | ||||||
Deferred income tax asset to be recovered within 12 months | (974 | ) | (2,645 | ) | (140 | ) | ||||||
(45,113 | ) | (18,713 | ) | (9,052 | ) | |||||||
Deferred income tax liabilities: | ||||||||||||
Deferred income tax liability to be recovered after more than 12 months | 100,585 | 92,457 | 106,263 | |||||||||
Deferred income tax liability to be recovered within 12 months | 6,460 | 2,170 | 3,450 | |||||||||
107,045 | 94,627 | 109,713 | ||||||||||
Deferred income tax liabilities, net | 61,932 | 75,914 | 100,661 | |||||||||
2009 | 2008 | 2007 | ||||||||||
Beginning of year | 75,914 | 100,661 | 51,087 | |||||||||
Exchange differences | (7,000 | ) | (11,237 | ) | (270 | ) | ||||||
Acquisition of subsidiary | — | — | 56,224 | |||||||||
Disposal of subsidiary (Note 16) | (533 | ) | (3,964 | ) | — | |||||||
Income tax benefit | (6,449 | ) | (9,546 | ) | (6,380 | ) | ||||||
End of year | 61,932 | 75,914 | 100,661 | |||||||||
F-169
Table of Contents
Property, Plant | Biological | |||||||||||||||
Deferred Income Tax Liabilities | and Equipment | Assets | Others | Total | ||||||||||||
At January 1, 2007 | 50,204 | 5,042 | 205 | 55,451 | ||||||||||||
Charged/(credited) to the statement of income | (409 | ) | (1,996 | ) | (57 | ) | (2,462 | ) | ||||||||
Acquisition of subsidiary | 52,523 | 3,890 | (107 | ) | 56,306 | |||||||||||
Exchange differences | 546 | (206 | ) | 78 | 418 | |||||||||||
At December 31, 2007 | 102,864 | 6,730 | 119 | 109,713 | ||||||||||||
Charged/(credited) to the statement of income | (1,723 | ) | 3,512 | 229 | 2,018 | |||||||||||
Disposal of subsidiary | (3,813 | ) | (151 | ) | — | (3,964 | ) | |||||||||
Exchange differences | (11,130 | ) | (1,902 | ) | (108 | ) | (13,140 | ) | ||||||||
At December 31, 2008 | 86,198 | 8,189 | 240 | 94,627 | ||||||||||||
Charged/(credited) to the statement of income | (5,065 | ) | 20,384 | 670 | 15,989 | |||||||||||
Disposal of subsidiary | (510 | ) | (14 | ) | (9 | ) | (533 | ) | ||||||||
Exchange differences | (1,771 | ) | (1,555 | ) | 288 | (3,038 | ) | |||||||||
At December 31, 2009 | 78,852 | 27,004 | 1,189 | 107,045 | ||||||||||||
Equity-settled | ||||||||||||||||||||
Tax Loss | Unit-based | |||||||||||||||||||
Deferred Income Tax Assets | Provisions | Carryforwards | Compensation | Others | Total | |||||||||||||||
At January 1, 2007 | 182 | 984 | 1,134 | 2,064 | 4,364 | |||||||||||||||
Charged/(credited) to the statement of income | 588 | 2,481 | 726 | 123 | 3,918 | |||||||||||||||
Acquisition of subsidiary | — | — | — | 82 | 82 | |||||||||||||||
Exchange differences | 36 | 214 | — | 438 | 688 | |||||||||||||||
At December 31, 2007 | 806 | 3,679 | 1,860 | 2,707 | 9,052 | |||||||||||||||
Charged/(credited) to the statement of income | (171 | ) | 11,145 | 1,366 | (776 | ) | 11,564 | |||||||||||||
Exchange differences | (195 | ) | (1,099 | ) | — | (609 | ) | (1,903 | ) | |||||||||||
At December 31, 2008 | 440 | 13,725 | 3,226 | 1,322 | 18,713 | |||||||||||||||
Charged/(credited) to the statement of income | 675 | 19,201 | 999 | 1,563 | 22,438 | |||||||||||||||
Exchange differences | 150 | 3,479 | — | 333 | 3,962 | |||||||||||||||
At December 31, 2009 | 1,265 | 36,405 | 4,225 | 3,218 | 45,113 | |||||||||||||||
F-170
Table of Contents
Tax Loss | ||||||||
Jurisdiction | Carry Forward | Expiration Period | ||||||
Argentina | 10,604 | 5 years | ||||||
Brazil | 119,240 | No expiration date |
2009 | 2008 | 2007 | ||||||||||
Tax calculated at the tax rates applicable to profits in the respective countries | (8,100 | ) | (12,789 | ) | (1,613 | ) | ||||||
Non-deductible items | 702 | 488 | 353 | |||||||||
Unused tax losses, net | 688 | 853 | 1,777 | |||||||||
Others | 1,295 | 999 | (576 | ) | ||||||||
Income tax benefit | (5,415 | ) | (10,449 | ) | (59 | ) | ||||||
23. | Payroll and social security liabilities |
2009 | 2008 | 2007 | ||||||||||
Non-current | ||||||||||||
Social security payable | 1,106 | 834 | 761 | |||||||||
1,106 | 834 | 761 | ||||||||||
Current | ||||||||||||
Salaries payable | 2,446 | 1,416 | 767 | |||||||||
Social security payable | 1,831 | 936 | 811 | |||||||||
Provision for vacations | 4,802 | 2,532 | 1,838 | |||||||||
Provision for bonuses | 1,000 | 1,141 | 1,439 | |||||||||
10,079 | 6,025 | 4,855 | ||||||||||
Total payroll and social security liabilities | 11,185 | 6,859 | 5,616 | |||||||||
24. | Provisions for other liabilities |
F-171
Table of Contents
Labor, Legal and | Tax and Social | |||||||||||
Other Claims | Security | Total | ||||||||||
At January 1, 2007 | 216 | 3,539 | 3,755 | |||||||||
Additions | 664 | 191 | 855 | |||||||||
Reversals | (16 | ) | — | (16 | ) | |||||||
Used during year | (14 | ) | (1,511 | ) | (1,525 | ) | ||||||
Exchange differences | (6 | ) | 731 | 725 | ||||||||
At December 31, 2007 | 844 | 2,950 | 3,794 | |||||||||
Additions | 327 | 78 | 405 | |||||||||
Used during year | (240 | ) | (1,570 | ) | (1,810 | ) | ||||||
Exchange differences | (122 | ) | (666 | ) | (788 | ) | ||||||
At December 31, 2008 | 809 | 792 | 1,601 | |||||||||
Additions | 2,549 | 801 | 3,350 | |||||||||
Used during year | (6 | ) | (158 | ) | (164 | ) | ||||||
Exchange differences | 18 | 173 | 191 | |||||||||
At December 31, 2009 | 3,370 | 1,608 | 4,978 | |||||||||
2009 | 2008 | 2007 | ||||||||||
Non current | 3,326 | 777 | 3,082 | |||||||||
Current | 1,652 | 824 | 712 | |||||||||
4,978 | 1,601 | 3,794 | ||||||||||
F-172
Table of Contents
25. | Sales |
2009 | 2008 | 2007 | ||||||||||
Sales of manufactured products and services rendered: | ||||||||||||
Rice | 65,521 | 51,681 | 24,875 | |||||||||
Ethanol | 62,811 | 29,385 | 7,289 | |||||||||
Sugar | 26,143 | 20,495 | 17,133 | |||||||||
Soybean oil and meal | 8,420 | 1,692 | — | |||||||||
Energy | 8,216 | — | — | |||||||||
Coffee | 7,984 | 8,544 | 5,035 | |||||||||
Services | 2,848 | 2,507 | 823 | |||||||||
Powder milk | 720 | 2,171 | 13,183 | |||||||||
Others | 723 | 698 | 1,469 | |||||||||
183,386 | 117,173 | 69,807 | ||||||||||
F-173
Table of Contents
2009 | 2008 | 2007 | ||||||||||
Sales of agricultural produce and biological assets: | ||||||||||||
Soybean | 35,696 | 37,333 | 26,829 | |||||||||
Cattle | 28,639 | 9,548 | 7,418 | |||||||||
Corn | 14,654 | 22,547 | 11,186 | |||||||||
Cotton | 11,905 | 5,813 | 6,941 | |||||||||
Milk | 10,809 | 12,295 | 4,442 | |||||||||
Wheat | 10,218 | 15,407 | 8,310 | |||||||||
Coffee | 6,281 | 7,404 | 2,232 | |||||||||
Sunflower | 5,517 | 5,615 | 1,096 | |||||||||
Barley | 3,106 | 2,816 | 1,081 | |||||||||
Seeds | 2,352 | 3,822 | 1,968 | |||||||||
Sugar cane | 93 | 1,291 | — | |||||||||
Others | 947 | 3,145 | 1,193 | |||||||||
130,217 | 127,036 | 72,696 | ||||||||||
Total sales | 313,603 | 244,209 | 142,503 | |||||||||
26. | Expenses by nature |
F-174
Table of Contents
2009 | 2008 | 2007 | ||||||||||
Cost of agricultural produce and biological assets sold | 116,728 | 104,992 | 66,862 | |||||||||
Raw materials and consumables used in manufacturing activities | 95,959 | 44,444 | 41,816 | |||||||||
Services | 39,374 | 24,136 | 16,836 | |||||||||
Salaries and social security expenses (Note 27) | 37,099 | 40,061 | 23,525 | |||||||||
Depreciation and amortization | 30,356 | 28,314 | 9,357 | |||||||||
Taxes(*) | 20,474 | 12,975 | 8,332 | |||||||||
Maintenance and repairs | 17,046 | 6,713 | 5,824 | |||||||||
Freights | 11,322 | 8,686 | 2,043 | |||||||||
Export taxes/selling taxes | 5,612 | 9,940 | 1,614 | |||||||||
Fuel and lubricants | 5,507 | 4,407 | 2,319 | |||||||||
Lease expense and similar arrangements | 2,764 | 1,782 | 198 | |||||||||
Others | 11,621 | 16,298 | 6,016 | |||||||||
Total expenses by nature | 393,862 | 302,748 | 184,742 | |||||||||
(*) | Excludes export taxes and selling taxes. |
27. | Salaries and social security expenses |
2009 | 2008 | 2007 | ||||||||||
Wages and salaries | 27,777 | 30,516 | 16,268 | |||||||||
Social security costs | 6,442 | 5,643 | 5,137 | |||||||||
Equity-settled unit-based compensation | 2,880 | 3,902 | 2,120 | |||||||||
37,099 | 40,061 | 23,525 | ||||||||||
Number of employees | 5,290 | 4,544 | 3,507 | |||||||||
F-175
Table of Contents
28. | Other operating income, net |
2009 | 2008 | 2007 | ||||||||||
Gain from the sale of subsidiaries (Note 16) | 18,839 | 13,974 | — | |||||||||
Gain on acquisition of joint ventures (Note 11) | — | — | 4,135 | |||||||||
(Loss)/gain from commodity derivative financial instruments | (7,486 | ) | 1,848 | (1,654 | ) | |||||||
Gain from disposal of other property items | 337 | 479 | 205 | |||||||||
Others | 1,381 | 1,022 | (448 | ) | ||||||||
13,071 | 17,323 | 2,238 | ||||||||||
29. | Financial results, net |
2009 | 2008 | 2007 | ||||||||||
Finance income: | ||||||||||||
— Interest income | 472 | 1,494 | 6,746 | |||||||||
— Foreign exchange gains, net | 10,903 | — | 5,971 | |||||||||
— Other income | 178 | 1,058 | 208 | |||||||||
Finance income | 11,553 | 2,552 | 12,925 | |||||||||
Finance costs: | ||||||||||||
— Interest expense | (28,222 | ) | (23,324 | ) | (10,840 | ) | ||||||
— Foreign exchange losses, net | — | (24,932 | ) | — | ||||||||
— Taxes | (2,060 | ) | (1,982 | ) | (1,019 | ) | ||||||
— Loss from interest rate/foreign exchange rate derivative financial instruments | (314 | ) | — | — | ||||||||
— Other expenses | (3,620 | ) | (622 | ) | (599 | ) | ||||||
Finance costs | (34,216 | ) | (50,860 | ) | (12,458 | ) | ||||||
Total financial results, net | (22,663 | ) | (48,308 | ) | 467 | |||||||
30. | Earnings per member unit |
(a) | Basic |
2009 | 2008 | 2007 | ||||||||||
(Loss)/Profit attributable to equity holders of the Group | (265 | ) | (19,334 | ) | 29,170 | |||||||
Weighted average number of membership units in issue (thousands) | 456,100 | 408,558 | 288,209 | |||||||||
Basic (losses)/earnings per unit | (0.001 | ) | (0.047 | ) | 0.101 | |||||||
(b) | Diluted |
F-176
Table of Contents
2009 | 2008 | 2007 | ||||||||||
(Loss)/Profit attributable to equity holders of the Group | (265 | ) | (19,334 | ) | 29,170 | |||||||
Weighted average number of membership units in issue (thousands) | 456,100 | 408,558 | 288,209 | |||||||||
Adjustments for: | ||||||||||||
Weighted average number of membership units that would have been issued at average market price (thousands) | 17,066 | 14,265 | 9,625 | |||||||||
Weighted average number of membership units for diluted earnings per unit (thousands) | 473,166 | 422,823 | 297,834 | |||||||||
Diluted earnings per unit | n/a | (*) | n/a | (*) | 0.098 | |||||||
(*) | The effects of anti-dilutive potential membership units are ignored in the earnings per unit calculation. All units are anti-dilutive in a loss year because they would decrease a loss per unit. |
31. | Disclosure of leases and similar arrangements |
2009 | 2008 | 2007 | ||||||||||
No later than 1 year | 11,681 | 773 | 1,217 | |||||||||
Later than 1 year and no later than 5 years | 3,824 | 1,982 | 1,821 | |||||||||
Thereafter | 487 | — | — | |||||||||
15,992 | 2,755 | 3,038 | ||||||||||
F-177
Table of Contents
2009 | 2008 | 2007 | ||||||||||
Rental income | 172 | — | — |
2009 | 2008 | 2007 | ||||||||||
No later than 1 year | 2,370 | — | — | |||||||||
Later than 1 year and no later than 5 years | 9,483 | — | — | |||||||||
Thereafter | 11,853 | — | — | |||||||||
23,706 | — | — | ||||||||||
F-178
Table of Contents
32. | Business combinations |
% | Country of | |||||||||
Name | Date of Acquisition | Acquired | Incorporation | |||||||
Fazenda Mimoso S.A. | February 23, 2007 | 50 | % | Brazil | ||||||
Pilagá S.A. | March 12, 2007 | 99.84 | % | Argentina | ||||||
Amandina Agroenergía Ltda. | June 28, 2007 | 100 | % | Brazil | ||||||
La Lácteo S.A. | August 06, 2007 | 100 | % | Argentina | ||||||
Bañado del Salado S.A. | December 31, 2007 | 100 | % | Argentina | ||||||
Agro Invest S.A.(*) | December 31, 2007 | 54.25 | % | Argentina |
(*) | Due to the spin-off of the non-retained farmland assets and disposal of minority interest, percentage owned increased to 100% as of December 31, 2009. See “Acquisition of Agro Invest S.A.” below for details. |
F-179
Table of Contents
Purchase consideration: | ||||
Cash paid(*) | 41,079 | |||
Contingent consideration(**) | 3,690 | |||
Total purchase consideration | 44,769 | |||
Fair value of net assets acquired | 71,694 | |||
Excess fair value of net assets acquired over cost | (26,925 | ) | ||
(*) | Includes costs directly attributable to the acquisition. | |
(**) | Discounted at present value as of the date of acquisition. |
Fair Value | Book Value(*) | |||||||
Cash and cash equivalents | 442 | 442 | ||||||
Biological assets | 22,537 | 22,537 | ||||||
Property, plant and equipment | 81,740 | 18,358 | ||||||
Intangible assets | 308 | — | ||||||
Deferred tax liability | (31,018 | ) | (10,182 | ) | ||||
Working capital (excluding current portion of biological assets) | (2,139 | ) | (2,139 | ) | ||||
Net assets | 71,870 | 29,016 | ||||||
Minority interest (0.16)% | (176 | ) | (63 | ) | ||||
Net assets acquired | 71,694 | 28,953 | ||||||
(*) | Carrying amounts of assets, liabilities and contingent liabilities in Pilaga’s books, determined in accordance with IFRS, immediately before the combination are not disclosed separately, as Pilagá did not report IFRS information. Book values correspond to accounting records maintained under local GAAP prior to the acquisition. |
Cash paid | 41,079 | |||
Cash and cash equivalents in subsidiary acquired | (442 | ) | ||
Cash outflow on acquisition | 40,637 | |||
F-180
Table of Contents
F-181
Table of Contents
Purchase consideration: | ||||
Cash paid(*) | 48,086 | |||
Contingent consideration(**) | 3,083 | |||
Total purchase consideration | 51,169 | |||
Fair value of net assets acquired | 45,114 | |||
Goodwill | 6,055 | |||
(*) | Includes costs directly attributable to the acquisition. | |
(**) | Discounted at present value as of the date of acquisition. |
Fair Value | Book Value(*) | |||||||
Cash and cash equivalents | 25 | 25 | ||||||
Biological assets | 6,451 | 6,451 | ||||||
Property, plant and equipment | 48,627 | 7,214 | ||||||
Disposed business(**) | 47,232 | 7,008 | ||||||
Deferred tax liability | (19,429 | ) | (3,157 | ) | ||||
Working capital excluding current portion of biological assets | 9,439 | 9,631 | ||||||
Net assets | 92,345 | 27,172 | ||||||
Minority interest(**) | (47,231 | ) | (12,432 | ) | ||||
Net assets acquired | 45,114 | 14,740 | ||||||
(*) | Carrying amounts of assets, liabilities and contingent liabilities in Agro Invest’s books, determined in accordance with IFRS, immediately before the combination are not disclosed separately, as Agro Invest did not report IFRS information. Book values correspond to accounting records maintained under local GAAP prior to the acquisition. | |
(**) | Farmland businesses disposed of by spin-off in February 2009. |
Cash paid | 48,086 | |||
Cash and cash equivalents in subsidiary acquired | (25 | ) | ||
Cash outflow on acquisition | 48,061 | |||
F-182
Table of Contents
Purchase consideration: | ||||
Cash paid(*) | 24,583 | |||
Contingent consideration(**) | 1,085 | |||
Total purchase consideration | 25,668 | |||
Fair value of net assets acquired | 26,647 | |||
Excess fair value of net assets acquired over cost | (979 | ) | ||
(*) | Includes costs directly attributable to the acquisition. | |
(**) | Discounted at present value as of the date of acquisition. |
Fair Value | Book Value(*) | |||||||
Cash and cash equivalents | 654 | 654 | ||||||
Biological assets | 956 | 1,245 | ||||||
Property, plant and equipment | 35,799 | 5,545 | ||||||
Deferred tax | (10,750 | ) | (172 | ) | ||||
Working capital excluding current portion of biological assets | (12 | ) | (12 | ) | ||||
Net assets acquired | 26,647 | 7,260 | ||||||
(*) | Carrying amounts of assets, liabilities and contingent liabilities in Bañado’s books, determined in accordance with IFRS, immediately before the combination are not disclosed separately, as Bañado did not report IFRS information. Book values correspond to accounting records maintained under local GAAP prior to the acquisition. |
F-183
Table of Contents
Purchase consideration settled in cash | 24,583 | |||
Cash and cash equivalents in subsidiary acquired | (654 | ) | ||
Cash outflow on acquisition | 23,929 | |||
Purchase consideration: | ||||
Cash paid | 12,868 | |||
Total purchase consideration | 12,868 | |||
Fair value of net assets acquired | 4,622 | |||
Goodwill | 8,246 | |||
Fair Value | Book Value(*) | |||||||
Cash and cash equivalents | 199 | 199 | ||||||
Biological assets | 2,151 | 8,193 | ||||||
Property, plant and equipment | 209 | 208 | ||||||
Deferred tax | 2,084 | — | ||||||
Working capital excluding current portion of biological assets | (21 | ) | (21 | ) | ||||
Net assets acquired | 4,622 | 8,579 | ||||||
(*) | Carrying amounts of assets, liabilities and contingent liabilities in Amandina’s books, determined in accordance with IFRS, immediately before the combination are not disclosed separately, as Amandina did not report IFRS information. Book values correspond to accounting records maintained under local GAAP prior to the acquisition. |
F-184
Table of Contents
Purchase consideration settled in cash | 12,868 | |||
Cash and cash equivalents in subsidiary acquired | (199 | ) | ||
Cash outflow on acquisition | 12,669 | |||
Fair Value | Book Value(*) | |||||||
Cash and cash equivalents | 525 | 525 | ||||||
Biological assets | 3,342 | 1,339 | ||||||
Property, plant and equipment | 7,625 | 5,279 | ||||||
Deferred tax liability | (4,569 | ) | (1,971 | ) | ||||
Working capital (excluding current portion of biological assets) | (1,473 | ) | (2,925 | ) | ||||
Net assets acquired | 5,450 | 2,247 | ||||||
Minority interest | (2,081 | ) | (794 | ) | ||||
Net assets acquired | 3,369 | 1,453 | ||||||
(*) | Carrying amounts of assets, liabilities and contingent liabilities in the respective subsidiary books, determined in accordance with IFRS, immediately before the combination are not disclosed separately, as the subsidiaries did not report IFRS information. Book values correspond to accounting records maintained under the respective local GAAP prior to the acquisition. |
F-185
Table of Contents
33. | Group companies |
2009 | 2008 | 2007 | ||||||||||||||||
Ownership | Ownership | Ownership | ||||||||||||||||
Country of | Percentage | Percentage | Percentage | |||||||||||||||
Incorporation | Held if not | Held if not | Held if not | |||||||||||||||
Activities | and Operation | 100% | 100% | 100% | ||||||||||||||
Details of principal subsidiary undertakings: | ||||||||||||||||||
Operating companies (unless otherwise stated): | ||||||||||||||||||
Americas | ||||||||||||||||||
Adeco Agropecuaria S.A. | (a) | Argentina | — | — | — | |||||||||||||
Pilagá S.R.L. | (a) | Argentina | 99.84 | % | 99.84 | % | 99.84 | % | ||||||||||
Cavok S.A. | (a) | Argentina | — | — | — | |||||||||||||
Establecimientos El Orden S.A. | (a) | Argentina | — | — | — | |||||||||||||
Bañado del Salado S.A. | (a) | Argentina | — | — | — | |||||||||||||
Agrícola Ganadera San José S.R.L. | (a) | Argentina | — | — | — | |||||||||||||
Santa Regina Agropecuaria S.R.L. | (a) | Argentina | — | — | — | |||||||||||||
La Paz Agropecuaria S.R.L. | (a) | Argentina | (i) | — | — | |||||||||||||
La Agraria S.A. | (a) | Argentina | (ii) | (ii) | — | |||||||||||||
Agro Invest S.A. | (a) | Argentina | — | 54.25 | % | 54.25 | % | |||||||||||
Forsalta S.A. | (a) | Argentina | — | — | — | |||||||||||||
Adeco Agropecuaria Brazil Ltda. | (b) | Brazil | — | — | — | |||||||||||||
Adecoagro Comercio Exportação e importação Ltda (f.k.a. Alfenas Café Ltda) | (c) | Brazil | — | — | — | |||||||||||||
Angélica Agroenergia Ltda. | (b) | Brazil | — | — | — | |||||||||||||
Usina Monte Alegre Ltda. | (b) | Brazil | — | — | — | |||||||||||||
Fazenda Mimoso Ltda. | (c) | Brazil | (iii) | (iii) | 50.00 | % | ||||||||||||
Ivinhema Agronergia Ltda. (f.k.a. Amandina Agroenergía Ltda.) | (b) | Brazil | — | — | — | |||||||||||||
Kelizer S.C.A. | (a) | Uruguay | — | — | — | |||||||||||||
Adecoagro Uruguay S.R.L. | (a) | Uruguay | — | — | — | |||||||||||||
Holdings companies: | ||||||||||||||||||
Americas | ||||||||||||||||||
Adeco Brazil Participacoes Ltda. | — | Brazil | — | — | — | |||||||||||||
Adeco Agro LLC | — | United States | — | — | — | |||||||||||||
Ladelux S.C.A. | — | Uruguay | — | — | — | |||||||||||||
Asia | ||||||||||||||||||
AFI(L) LTD. | — | Malaysia | — | — | — | |||||||||||||
Europe | ||||||||||||||||||
Kadesh Hispania S.L. | — | Spain | — | — | — | |||||||||||||
Leterton España S.L. | — | Spain | — | — | — | |||||||||||||
Details of principal joint venture undertakings: | ||||||||||||||||||
Americas | ||||||||||||||||||
Grupo La Lácteo | (d) | Canada | 50.00 | % | 50.00 | % | 50.00 | % |
(a) | Mainly crops, cattle and others | |
(b) | Mainly sugarcane, ethanol and energy | |
(c) | Mainly coffee | |
(d) | Mainly dairy | |
(i) | Sold in December 2009. | |
(ii) | Sold in May 2008. | |
(iii) | Remaining % acquired in January 2008. |
F-186
Table of Contents
34. | Related-party transactions |
Income (Loss) Included in the | ||||||||||||||||||||||||||||||
Statement of Income | Balance Receivable (Payable) | |||||||||||||||||||||||||||||
Related party | Relationship | Description of Transaction | 2009 | 2008 | 2007 | 2009 | 2008 | 2007 | ||||||||||||||||||||||
Grupo La Lácteo | Joint venture | Sales of goods | 10,849 | 12,617 | 4,491 | — | — | — | ||||||||||||||||||||||
Purchases of goods | (748 | ) | (1,566 | ) | (391 | ) | — | — | — | |||||||||||||||||||||
Receivables from related parties (Note 13) | — | — | — | 2,554 | 4,368 | 6,340 | ||||||||||||||||||||||||
Payables (Note 20) | — | — | — | — | (1,087 | ) | — | |||||||||||||||||||||||
Mario Jorge de Lemos Vieira/ Cia Agropecuaria Monte Alegre/ Alfenas Agricola Ltda/ Marcelo Weyland Barbosa Vieira/ Paulo Albert Weyland Vieira | (i) | Cost of manufactured products sold and services rendered(ii) | (2,155 | ) | (1,764 | ) | (1,403 | ) | — | — | — | |||||||||||||||||||
Receivables from related parties (Note 13) | — | — | — | 796 | 180 | 438 | ||||||||||||||||||||||||
Payables (Note 20) | — | — | — | (330 | ) | — | (349 | ) | ||||||||||||||||||||||
Management and selected employees | Employment | Compensation selected employees (iii) | (8,330 | ) | (9,368 | ) | (6,250 | ) | (12,158 | ) | (9,278 | ) | (5,376 | ) | ||||||||||||||||
Ospraie Special Opportunities Master Holdings Ltd. | (i) | Receivables with members (Note 13) | — | — | — | — | — | 16,271 | ||||||||||||||||||||||
The Ospraie Portfolio Ltd. | (i) | Receivables with members (Note 13) | — | — | — | — | — | 4,325 | ||||||||||||||||||||||
Pampas Húmedas Llc. | (i) | Receivables with members (Note 13) | — | — | — | — | — | 1,495 | ||||||||||||||||||||||
HBK | (i) | Receivables with members (Note 13) | — | — | — | — | — | 979 | ||||||||||||||||||||||
Others | (i) | Receivables with members (Note 13) | — | — | — | — | — | 320 |
(i) | Equity members of the Company. | |
(ii) | Relates to agriculture partnership agreements (“parceria”). | |
(iii) | Includes compensation expense under equity-settled unit-based payments (Note 18). |
35. | Events after the date of the statement of financial position |
F-187
Table of Contents
• | Debt Service Coverage Ratio (individual) shall be equal to or greater than 0.65 for the fiscal year ended December 31, 2010 (prior 1,00). | |
• | Net bank debt / EBTIDA Ratio (aggregate) shall be less than or equal to 5.5 in 2010 (prior 4.00). |
F-188
Table of Contents
F-189
Table of Contents
A-1
Table of Contents
A-2
Table of Contents
Statements of Financial Position
as of June 30, 2010, 2009 and 2008
(All amounts in US$, except as otherwise indicated)
Note | 2010 | 2009 | 2008 | |||||||||||
ASSETS | ||||||||||||||
Non-Current Assets | ||||||||||||||
Property, plant and equipment, net | 6 | 17,748 | 2,126,553 | 2,754,414 | ||||||||||
Investment property | 7 | 2,477,317 | 627,956 | 789,875 | ||||||||||
Deferred income tax assets | 18 | 302,006 | 27,876 | 121,535 | ||||||||||
Total Non-Current Assets | 2,797,071 | 2,782,385 | 3,665,824 | |||||||||||
Current Assets | ||||||||||||||
Biological assets | 8 | — | 38,285 | 729,329 | ||||||||||
Inventories | 11 | — | 595,670 | 837,475 | ||||||||||
Trade and other receivables | 9,10 | 1,331,322 | 1,638,285 | 1,712,918 | ||||||||||
Cash and cash equivalents | 9,12 | 28,350 | 14,500 | 60,917 | ||||||||||
Total Current Assets | 1,359,672 | 2,286,740 | 3,340,639 | |||||||||||
Assets of disposal group classified as held for distribution | 13 | — | — | 988,640 | ||||||||||
TOTAL ASSETS | 4,156,743 | 5,069,125 | 7,995,103 | |||||||||||
SHAREHOLDERS EQUITY | ||||||||||||||
Share capital | 14 | 1,983,471 | 1,983,471 | 1,983,471 | ||||||||||
Share premium | 14 | — | 1,740,102 | 2,728,742 | ||||||||||
Irrevocable contributions | 14 | 152,167 | — | — | ||||||||||
Legal reserve | 15 | — | 2,116 | — | ||||||||||
Voluntary reserve | 15 | — | 40,129 | — | ||||||||||
Cumulative translation adjustment | (361,891 | ) | (368,559 | ) | — | |||||||||
Accumulated deficit | (1,976,523 | ) | (3,380,686 | ) | (778,711 | ) | ||||||||
TOTAL SHAREHOLDERS EQUITY | (202,776 | ) | 16,573 | 3,933,502 | ||||||||||
LIABILITIES | ||||||||||||||
Non-Current Liabilities | ||||||||||||||
Deferred income tax liabilities | 18 | 402,830 | 422,253 | 683,228 | ||||||||||
Total Non-Current Liabilities | 402,830 | 422,253 | 683,228 | |||||||||||
Current Liabilities | ||||||||||||||
Trade and other payables | 9,16 | 163,881 | 645,673 | 644,802 | ||||||||||
Borrowings | 9,17 | 3,606,300 | 3,946,334 | 2,668,889 | ||||||||||
Payroll and social security liabilities | 19 | 3,998 | 18,428 | 38,324 | ||||||||||
Provisions for other liabilities | 20 | 182,510 | 19,864 | 26,358 | ||||||||||
Total Current Liabilities | 3,956,689 | 4,630,299 | 3,378,373 | |||||||||||
TOTAL LIABILITIES | 4,359,519 | 5,052,552 | 4,061,601 | |||||||||||
TOTAL SHAREHOLDERS EQUITY AND LIABILITIES | 4,156,743 | 5,069,125 | 7,995,103 | |||||||||||
A-3
Table of Contents
Statements of Income
for the years ended June 30, 2010 and 2009
(All amounts in US$, except as otherwise indicated)
Note | 2010 | 2009 | ||||||||
Continuing Operations: | ||||||||||
Rental income | 24 | 502,382 | 181,786 | |||||||
Cost of services rendered | 21, 24 | (158,120 | ) | (12,372 | ) | |||||
General and administrative expenses | 21 | (256,477 | ) | (194,539 | ) | |||||
Selling expenses | 21 | (5,392 | ) | (831 | ) | |||||
Other operating income, net | 22 | 130,478 | 4,102 | |||||||
Profit from Operations Before Financing and Taxation | 212,871 | (21,854 | ) | |||||||
Finance costs | 23 | (601,803 | ) | (1,250,196 | ) | |||||
Loss Before Income Tax | (388,932 | ) | (1,272,050 | ) | ||||||
Income tax benefit | 18 | 161,127 | 57,087 | |||||||
Loss for the Year from Continuing Operations | (227,805 | ) | (1,214,963 | ) | ||||||
Discontinued Operations: | ||||||||||
(Loss)/Profit for the year from discontinued operations | 13 | (150,379 | ) | 1,416,126 | ||||||
(Loss)/Profit for the Year | (378,184 | ) | 201,163 | |||||||
A-4
Table of Contents
Statements of Comprehensive Income
for the years ended June 30, 2010 and 2009
(All amounts in US$, except as otherwise indicated)
2010 | 2009 | |||||||
(Loss)/Profit for the year | (378,184 | ) | 201,163 | |||||
Other comprehensive income: | ||||||||
Currency translation differences | 6,668 | (368,559 | ) | |||||
Other comprehensive income/ (loss) for the year | 6,668 | (368,559 | ) | |||||
Total comprehensive loss for the year | (371,516 | ) | (167,396 | ) | ||||
A-5
Table of Contents
Statements of Changes in Shareholders’ Equity
for the years ended June 30, 2010 and 2009
(All amounts in US$, except as otherwise indicated)
Cumulative | Total | |||||||||||||||||||||||||||||||
Share | Share | Irrevocable | Legal | Voluntary | Translation | Accumulated | Shareholders’ | |||||||||||||||||||||||||
Capital | Premium | Contributions | Reserve | Reserve | Adjustment | Deficit | Equity | |||||||||||||||||||||||||
Balance at July 1, 2008 | 1,983,471 | 2,728,742 | — | — | — | — | (778,711 | ) | 3,933,502 | |||||||||||||||||||||||
Distribution of share premium to owners(1) | — | (988,640 | ) | — | — | — | — | (2,760,893 | ) | (3,749,533 | ) | |||||||||||||||||||||
Appropriation to legal and voluntary reserve | — | — | — | 2,116 | 40,129 | — | (42,245 | ) | — | |||||||||||||||||||||||
Total comprehensive loss for the year | — | — | — | ��� | — | (368,559 | ) | 201,163 | (167,396 | ) | ||||||||||||||||||||||
Balance at June 30, 2009 | 1,983,471 | 1,740,102 | — | 2,116 | 40,129 | (368,559 | ) | (3,380,686 | ) | 16,573 | ||||||||||||||||||||||
Conversion of accumulated deficit to share premium(2) | — | (1,740,102 | ) | — | — | — | — | 1,740,102 | — | |||||||||||||||||||||||
Reversal of legal and voluntary reserve | — | — | — | (2,116 | ) | (40,129 | ) | — | 42,245 | — | ||||||||||||||||||||||
Irrevocable contributions | — | — | 152,167 | — | — | — | — | 152,167 | ||||||||||||||||||||||||
Total comprehensive income for the year | — | — | — | — | — | 6,668 | (378,184 | ) | (371,516 | ) | ||||||||||||||||||||||
Balance at June 30, 2010 | 1,983,471 | — | 152,167 | — | — | (361,891 | ) | (1,976,523 | ) | (202,776 | ) | |||||||||||||||||||||
(1) | The Shareholders’ meeting held on September 30, 2008 approved the partial distribution of share premium for a total amount of U$S 1.0 million, representing the book value of assets to be distributed as of that date. The book value of those assets amounted to: (i) U$S 0.3 million of property, plant and equipment; and (ii) U$S 0.7 million of receivables with shareholders. In accordance with IFRIC 17, the distribution was measured at the fair value of the assets to be distributed amounting to U$S 3.7 million. The difference between the fair value and the book value of the assets to be distributed was recognized directly in the statement of income under the line item “Discontinued operations” (see Note 13). | |
(2) | The Shareholders’ meeting held on October 14, 2009 approved the conversion of accumulated deficit to share premium for a total amount of U$S 1.7 million. |
A-6
Table of Contents
Statements of Cash Flows
for the years ended June 30, 2010 and 2009
(All amounts in US$, except as otherwise indicated)
Note | 2010 | 2009 | ||||||||
Cash flows from operating activities: | ||||||||||
(Loss)/Profit for the year | (378,184 | ) | 201,163 | |||||||
Adjustments for: | ||||||||||
Income tax benefit | 18 | (286,363 | ) | (57,450 | ) | |||||
Depreciation | 6,7 | 99,828 | 175,060 | |||||||
Gain from the disposal of property items | 22 | (233,694 | ) | — | ||||||
Gain from distribution of non-cash assets to owners | 13 | — | (2,760,893 | ) | ||||||
Interest expense | 23 | 501,660 | 483,668 | |||||||
Provisions | 20 | 185,751 | — | |||||||
Foreign exchange losses, net | 23 | 42,691 | 675,968 | |||||||
Changes in operating assets and liabilities: | ||||||||||
Decrease in trade and other receivables | 306,963 | 74,633 | ||||||||
Decrease in inventories | 595,670 | 241,805 | ||||||||
Decrease in biological assets | 37,777 | 596,310 | ||||||||
(Decrease)/increase in trade and other payables | (481,792 | ) | 871 | |||||||
Decrease in payroll and social security liabilities | (14,430 | ) | (19,896 | ) | ||||||
Decrease in provisions for other liabilities | — | (1,202 | ) | |||||||
Net cash generated from (used in) operating activities before interest and taxes paid | 375,877 | (389,963 | ) | |||||||
Interest paid | (479,466 | ) | (295,823 | ) | ||||||
Net cash used in operating activities | (103,589 | ) | (685,786 | ) | ||||||
Cash flows from investing activities: | ||||||||||
Purchases of property, plant and equipment | 6 | (17,200 | ) | (98,095 | ) | |||||
Purchases of investment property | 7 | (26,847 | ) | — | ||||||
Proceeds from sale of property items | 7 | 352,388 | — | |||||||
Net cash generated from (used in) investing activities | 308,341 | (98,095 | ) | |||||||
Cash flows from financing activities: | ||||||||||
Irrevocable contributions from shareholders | 14 | 152,167 | — | |||||||
Net (decrease)/increase in short-term borrowings | (404,919 | ) | 413,632 | |||||||
Net cash (used in) generated from financing activities | (252,752 | ) | 413,632 | |||||||
Net decrease in cash and cash equivalents | (48,000 | ) | (370,249 | ) | ||||||
Cash and cash equivalents at beginning of year | 14,500 | 60,917 | ||||||||
Effect of exchange rate changes on cash | 61,850 | 323,832 | ||||||||
Cash and cash equivalents at end of year | 28,350 | 14,500 | ||||||||
A-7
Table of Contents
1. | Purpose of the financial statements and general information |
2. | Summary of significant accounting policies |
A-8
Table of Contents
(a) | Standards, amendments and interpretations to existing standards not yet effective and not early adopted by the Company |
A-9
Table of Contents
(a) | Functional and presentation currency |
• | assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position; |
A-10
Table of Contents
• | income and expenses for each statement of income are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and | |
• | all resulting exchange differences are recognized as a separate component of equity. |
(b) | Transactions and balances |
Buildings and facilities | 10-50 years | |||
Furniture and fittings | 5-10 years | |||
Computer equipment | 3 years | |||
Machinery and equipment | 5-10 years | |||
Vehicles | 5 years |
A-11
Table of Contents
A-12
Table of Contents
• | Growing crops: |
• | Growing herd and Cattle: |
A-13
Table of Contents
(a) | Loans and receivables |
(b) | Recognition and measurement |
(c) | Impairment of financial assets |
(d) | Offsetting financial instruments |
A-14
Table of Contents
A-15
Table of Contents
3. | Explanation of transition to IFRS |
A-16
Table of Contents
• | shareholders’ equity at July 1, 2008 (Note 3.2.2) | |
• | shareholders’ equity at June 30, 2009 (Note 3.2.3) | |
• | net income June 30, 2009 (Note 3.2.4) |
July 1, | June 30, | |||||||
2008 | 2009 | |||||||
Total shareholders’ equity under previous GAAP | 4,765,440 | 490,596 | ||||||
Fair value adjustment on biological assets | (15,214 | ) | — | |||||
Inventory adjustment to cost | (347,241 | ) | (79,646 | ) | ||||
Deferred tax adjustments | (469,483 | ) | (394,377 | ) | ||||
Total shareholders’ equity under IFRS | 3,933,502 | 16,573 | ||||||
A-17
Table of Contents
Effect of | ||||||||||||||||
Previous | Transition to | |||||||||||||||
Note | GAAP | IFRS | IFRS | |||||||||||||
ASSETS | ||||||||||||||||
Non-current assets | ||||||||||||||||
Property, plant and equipment, net | (a) | 4,098,996 | (1,344,582 | ) | 2,754,414 | |||||||||||
Investment property | (b) | — | 789,875 | 789,875 | ||||||||||||
Deferred income tax assets | (c) | — | 121,535 | 121,535 | ||||||||||||
Total non-current assets | 4,098,996 | (433,172 | ) | 3,665,824 | ||||||||||||
Current assets | ||||||||||||||||
Biological assets | (d) | — | 729,329 | 729,329 | ||||||||||||
Inventories | (e) | 1,651,267 | (813,792 | ) | 837,475 | |||||||||||
Trade and other receivables | (f) | 2,424,843 | (711,925 | ) | 1,712,918 | |||||||||||
Cash and cash equivalents | 60,917 | — | 60,917 | |||||||||||||
Total current assets | 4,137,027 | (796,388 | ) | 3,340,639 | ||||||||||||
Assets of disposal group classified as held for distribution | (g) | — | 988,640 | 988,640 | ||||||||||||
TOTAL ASSETS | 8,236,023 | (240,920 | ) | 7,995,103 | ||||||||||||
SHAREHOLDERS EQUITY | ||||||||||||||||
Share capital | 1,983,471 | — | 1,983,471 | |||||||||||||
Share premium | 2,728,742 | — | 2,728,742 | |||||||||||||
Retained earnings/(Accumulated deficit) | (h) | 53,227 | (831,938 | ) | (778,711 | ) | ||||||||||
Total shareholders equity | 4,765,440 | (831,938 | ) | 3,933,502 | ||||||||||||
LIABILITIES | ||||||||||||||||
Non-current liabilities | ||||||||||||||||
Deferred income tax liabilities | (c) | 92,210 | 591,018 | 683,228 | ||||||||||||
Total non-current liabilities | 92,210 | 591,018 | 683,228 | |||||||||||||
Current liabilities | ||||||||||||||||
Trade and other payables | 644,802 | — | 644,802 | |||||||||||||
Borrowings | 2,668,889 | — | 2,668,889 | |||||||||||||
Payroll and social liabilities | 38,324 | — | 38,324 | |||||||||||||
Provisions for other liabilities | 26,358 | — | 26,358 | |||||||||||||
Total current liabilities | 3,378,373 | — | 3,378,373 | |||||||||||||
TOTAL LIABILITIES | 3,470,583 | 591,018 | 4,061,601 | |||||||||||||
TOTAL SHAREHOLDERS EQUITY AND LIABILITIES | 8,236,023 | (240,920 | ) | 7,995,103 | ||||||||||||
A-18
Table of Contents
(a) | Property, plant and equipment, net |
(i) Reclassification of property, plant and equipment to biological assets | (277,992 | ) | ||
(ii) Reclassification of property, plant and equipment to assets of disposal group classified as held for distribution | (276,715 | ) | ||
(iii) Reclassification of property, plant and equipment to investment property | (789,875 | ) | ||
Decrease in property, plant and equipment | (1,344,582 | ) |
(b) | Investment property |
(c) | Deferred income tax assets and liabilities |
(d) | Biological assets |
(i) Reclassification of property, plant and equipment to biological assets | 277,992 | |||
(ii) Fair value adjustment on biological assets | (15,214 | ) | ||
(iii) Reclassification of inventories to biological assets | 466,551 | |||
Increase in biological assets | 729,329 |
(e) | Inventories |
(i) Reclassification of inventories to biological assets | (466,551 | ) | ||
(ii) Inventory adjustment to cost | (347,241 | ) | ||
Decrease in inventories | (813,792 | ) |
(f) | Trade and other receivables |
(g) | Assets of disposal group classified as held for distribution |
(i) Reclassification of property, plant and equipment to assets of disposal group classified as held for distribution | 276,715 | |||
(ii) Reclassification of trade and other receivables to assets of disposal group classified as held for distribution | 711,925 | |||
Increase in assets of disposal group classified as held for distribution | 988,640 |
(h) | Retained earnings/(Accumulated deficit) |
A-19
Table of Contents
Effect of | ||||||||||||||||
Previous | Transition to | |||||||||||||||
Note | GAAP | IFRS | IFRS | |||||||||||||
ASSETS | ||||||||||||||||
Non-current assets | ||||||||||||||||
Property, plant and equipment, net | (a) | 2,754,509 | (627,956 | ) | 2,126,553 | |||||||||||
Investment property | (a) | — | 627,956 | 627,956 | ||||||||||||
Deferred income tax assets | (b) | — | 27,876 | 27,876 | ||||||||||||
Total non-current assets | 2,754,509 | 27,876 | 2,782,385 | |||||||||||||
Current assets | ||||||||||||||||
Biological assets | (c) | — | 38,285 | 38,285 | ||||||||||||
Inventories | (d) | 713,601 | (117,931 | ) | 595,670 | |||||||||||
Trade and other receivables | 1,638,285 | — | 1,638,285 | |||||||||||||
Cash and cash equivalents | 14,500 | — | 14,500 | |||||||||||||
Total current assets | 2,366,386 | (79,646 | ) | 2,286,740 | ||||||||||||
TOTAL ASSETS | 5,120,895 | (51,770 | ) | 5,069,125 | ||||||||||||
SHAREHOLDERS EQUITY | ||||||||||||||||
Share capital | 1,983,471 | — | 1,983,471 | |||||||||||||
Share premium | 1,740,102 | — | 1,740,102 | |||||||||||||
Legal reserve | 2,116 | — | 2,116 | |||||||||||||
Voluntary reserve | 40,129 | — | 40,129 | |||||||||||||
Cumulative translation adjustment | (e) | (492,040 | ) | 123,481 | (368,559 | ) | ||||||||||
Retained earnings/(Accumulated deficit) | (f) | (2,783,182 | ) | (597,504 | ) | (3,380,686 | ) | |||||||||
Total shareholders equity | 490,596 | (474,023 | ) | 16,573 | ||||||||||||
LIABILITIES | ||||||||||||||||
Non-current liabilities | ||||||||||||||||
Deferred income tax liabilities | (b) | — | 422,253 | 422,253 | ||||||||||||
Total non-current liabilities | — | 422,253 | 422,253 | |||||||||||||
Current liabilities | ||||||||||||||||
Trade and other payables | 645,673 | — | 645,673 | |||||||||||||
Borrowings | 3,946,334 | — | 3,946,334 | |||||||||||||
Payroll and social liabilities | 18,428 | — | 18,428 | |||||||||||||
Provisions for other liabilities | 19,864 | — | 19,864 | |||||||||||||
Total current liabilities | 4,630,299 | — | 4,630,299 | |||||||||||||
TOTAL LIABILITIES | 4,630,299 | 422,253 | 5,052,552 | |||||||||||||
TOTAL SHAREHOLDERS EQUITY AND LIABILITIES | 5,120,895 | (51,770 | ) | 5,069,125 | ||||||||||||
A-20
Table of Contents
(a) | Property, plant and equipment, net / Investment property |
(b) | Deferred income tax assets and liabilities |
(c) | Biological assets |
(d) | Inventories |
(i) Reclassification of inventories to biological assets | (38,285 | ) | ||
(ii) Inventory adjustment to cost | (79,646 | ) | ||
Decrease in inventories | (117,931 | ) |
(e) | Cumulative translation adjustment |
(f) | Retained earnings/(Accumulated deficit) |
A-21
Table of Contents
Effect of | ||||||||||||||||
Previous | Transition to | |||||||||||||||
GAAP | IFRS | IFRS | ||||||||||||||
Continuing Operations: | ||||||||||||||||
Rental income | 181,786 | — | 181,786 | |||||||||||||
Sales of biological assets and agricultural produce | (a | ) | 3,733,863 | (3,733,863 | ) | — | ||||||||||
Cost of sales of biological assets, agricultural produce and services rendered | (b | ) | (3,586,407 | ) | 3,574,035 | (12,372 | ) | |||||||||
Production income | (a | ) | (788,165 | ) | 788,165 | — | ||||||||||
Operating expenses | (a | ) | (559,121 | ) | 559,121 | — | ||||||||||
General and administrative expenses | (a | ) | (149,066 | ) | (45,473 | ) | (194,539 | ) | ||||||||
Selling expenses | (a | ) | (543,185 | ) | 542,354 | (831 | ) | |||||||||
Other operating (expenses) income, net | (c | ) | (122,075 | ) | 126,177 | 4,102 | ||||||||||
(Loss)/ Profit From Operations Before Financing and Taxation | (1,832,370 | ) | 1,810,516 | (21,854 | ) | |||||||||||
Finance costs | (d | ) | (1,004,039 | ) | (246,157 | ) | (1,250,196 | ) | ||||||||
(Loss)/ Profit Before Income Tax | (2,836,409 | ) | 1,564,359 | (1,272,050 | ) | |||||||||||
Income tax benefit | (e | ) | — | 57,087 | 57,087 | |||||||||||
(Loss)/ Profit for the Year from Continuing Operations | (2,836,409 | ) | 1,621,446 | (1,214,963 | ) | |||||||||||
Profit for the year from discontinued operations | (f | ) | — | 1,416,126 | 1,416,126 | |||||||||||
(Loss)/ Profit for the Year | (2,836,409 | ) | 3,037,572 | 201,163 | ||||||||||||
(i) Reclassification to discontinued operations (see(a) above) | 3,256,736 | |||
(ii) Measurement of inventories at cost (impact in cost of sales) | 303,980 | |||
(iii) Biological assets adjustment to fair value | 13,318 | |||
Decrease in cost of sales of biological assets, agricultural produce and services rendered | 3,574,035 |
(i) Reclassification to discontinued operations (see(a) above) | 45,105 | |||
(ii) Reclassification of bank debit and credit tax to finance costs(*) | 81,072 | |||
Increase in other operating (expenses) income, net | 126,177 |
(*) | Relates to tax charged on bank debits and credits. |
A-22
Table of Contents
(i) Reclassification to discontinued operations (see(a) above) | (165,085 | ) | ||
(ii) Reclassification of bank debit and credit tax to finance costs(*) | (81,072 | ) | ||
Increase in finance costs | (246,157 | ) |
(*) | Relates to tax charged on bank debits and credits. |
(i) Reclassifications to discontinued operations (see(a),(b) and(c) above) | (1,247,060 | ) | ||
(ii) Measurement of inventories at cost (derecognition of holding gain on inventories) | (87,702 | ) | ||
(iii) Gain from distribution of non-cash assets to owners (Note 13) | 2,760,893 | |||
(iv) Tax impacts on IFRS adjustments | (10,005 | ) | ||
Increase in discontinued operations | 1,416,126 |
4. | Financial risk management |
• | Exchange rate risk |
A-23
Table of Contents
2010 | ||||
Functional Currency | ||||
Net Monetary Position (Liability)/Asset | Argentine Peso | |||
Argentine Peso | (3,531,403 | ) | ||
US Dollar | (111,692 | ) | ||
Total | (3,643,095 | ) | ||
2009 | ||||
Functional Currency | ||||
Net Monetary Position (Liability)/Asset | Argentine Peso | |||
Argentine Peso | (1,200,228 | ) | ||
US Dollar | (3,105,657 | ) | ||
Total | (4,305,885 | ) | ||
2008 | ||||
Functional Currency | ||||
Net Monetary Position (Liability)/Asset | Argentine Peso | |||
Argentine Peso | (669,431 | ) | ||
US Dollar | (2,321,455 | ) | ||
Total | (2,990,886 | ) | ||
• | Liquidity risk |
A-24
Table of Contents
Less than | ||||
At 30 June 2010 | 1 Year | |||
Trade and other payables | 118,090 | |||
Borrowings | 3,708,707 | |||
Total | 3,826,797 | |||
Less than | ||||
At 30 June 2009 | 1 Year | |||
Trade and other payables | 606,159 | |||
Borrowings | 4,019,082 | |||
Total | 4,625,241 | |||
Less than | ||||
At 30 June 2008 | 1 Year | |||
Trade and other payables | 596,734 | |||
Borrowings | 2,694,516 | |||
Total | 3,291,250 | |||
• | Credit risk |
A-25
Table of Contents
• | Capital risk management |
2010 | 2009 | 2008 | ||||||||||
Total Borrowings | 3,606,300 | 3,946,334 | 2,668,889 | |||||||||
Total Equity | (202,776 | ) | 16,573 | 3,933,502 | ||||||||
Total Capital | 3,403,524 | 3,962,907 | 6,602,391 | |||||||||
Gearing Ratio | 1.06 | 1.00 | 0.40 | |||||||||
5. | Critical accounting estimates and judgments |
(a) | Biological assets |
A-26
Table of Contents
(b) | Income taxes |
(c) | Impairment testing |
A-27
Table of Contents
(d) | Company’s financial positions, results of operations and cash flows |
(e) | Discontinued operations |
A-28
Table of Contents
6. | Property, plant and equipment |
Buildings | Furniture | Machinery | ||||||||||||||||||||||||||
and | and | Computer | and | |||||||||||||||||||||||||
Farmlands | Facilities | Fittings | Equipment | Equipment | Vehicles | Total | ||||||||||||||||||||||
At July 1, 2008 | ||||||||||||||||||||||||||||
Cost | 1,920,499 | 2,874,936 | 9,013 | 3,327 | 581,919 | 32,675 | 5,422,369 | |||||||||||||||||||||
Accumulated depreciation | — | (2,152,043 | ) | (6,603 | ) | (3,052 | ) | (481,300 | ) | (24,957 | ) | (2,667,955 | ) | |||||||||||||||
Net book amount | 1,920,499 | 722,893 | 2,410 | 275 | 100,619 | 7,718 | 2,754,414 | |||||||||||||||||||||
Year ended June 30, 2009 | ||||||||||||||||||||||||||||
Opening net book amount | 1,920,499 | 722,893 | 2,410 | 275 | 100,619 | 7,718 | 2,754,414 | |||||||||||||||||||||
Exchange differences | (393,690 | ) | (143,493 | ) | (450 | ) | (35 | ) | (11,853 | ) | (1,375 | ) | (550,896 | ) | ||||||||||||||
Additions | — | 97,864 | — | — | 231 | — | 98,095 | |||||||||||||||||||||
Depreciation charge | — | (148,981 | ) | (473 | ) | (240 | ) | (23,114 | ) | (2,252 | ) | (175,060 | ) | |||||||||||||||
Closing net book amount | 1,526,809 | 528,283 | 1,487 | — | 65,883 | 4,091 | 2,126,553 | |||||||||||||||||||||
At June 30, 2009 | ||||||||||||||||||||||||||||
Cost | 1,526,809 | 2,374,467 | 7,166 | 2,645 | 469,511 | 25,977 | 4,406,575 | |||||||||||||||||||||
Accumulated depreciation | — | (1,846,184 | ) | (5,679 | ) | (2,645 | ) | (403,628 | ) | (21,886 | ) | (2,280,022 | ) | |||||||||||||||
Net book amount | 1,526,809 | 528,283 | 1,487 | — | 65,883 | 4,091 | 2,126,553 | |||||||||||||||||||||
Year ended June 30, 2010 | ||||||||||||||||||||||||||||
Opening net book amount | 1,526,809 | 528,283 | 1,487 | — | 65,883 | 4,091 | 2,126,553 | |||||||||||||||||||||
Exchange differences | — | — | (41 | ) | — | (7,960 | ) | (93 | ) | (8,094 | ) | |||||||||||||||||
Additions | — | — | — | — | 17,200 | — | 17,200 | |||||||||||||||||||||
Disposals | — | — | — | — | (28,403 | ) | — | (28,403 | ) | |||||||||||||||||||
Depreciation charge | — | — | (353 | ) | — | (32,045 | ) | (2,018 | ) | (34,416 | ) | |||||||||||||||||
Transfers to investment property | (1,526,809 | ) | (528,283 | ) | — | — | — | — | (2,055,092 | ) | ||||||||||||||||||
Closing net book amount | — | — | 1,093 | — | 14,675 | 1,980 | 17,748 | |||||||||||||||||||||
At June 30, 2010 | ||||||||||||||||||||||||||||
Cost | — | — | 6,936 | 2,560 | 436,800 | 25,145 | 471,441 | |||||||||||||||||||||
Accumulated depreciation | — | — | (5,843 | ) | (2,560 | ) | (422,125 | ) | (23,165 | ) | (453,693 | ) | ||||||||||||||||
Net book amount | — | — | 1,093 | — | 14,675 | 1,980 | 17,748 | |||||||||||||||||||||
A-29
Table of Contents
7. | Investment property |
2010 | 2009 | |||||||
Beginning of the year | 627,956 | 789,875 | ||||||
Transfers(i) | 2,055,092 | — | ||||||
Additions | 26,847 | — | ||||||
Disposals | (90,291 | ) | — | |||||
Depreciation charge(ii) | (65,412 | ) | — | |||||
Exchange differences | (76,875 | ) | (161,919 | ) | ||||
End of the year | 2,477,317 | 627,956 | ||||||
(i) | Transferred from property, plant and equipment. Relates to farmland and buildings rented out to third parties. See Note 24 for details. | |
(ii) | Included within “Cost of services rendered’ in the statement of income. |
2010 | 2009 | |||||||
Rental income | 502,382 | 181,785 | ||||||
Direct operating expenses | (123,704 | ) | (12,372 | ) |
8. | Biological assets |
2010 | 2009 | |||||||
Beginning of the year | 38,285 | 729,329 | ||||||
Changes in fair value of biological assets(i) | (37,777 | ) | (795,672 | ) | ||||
Decrease due to harvest | — | (2,667,480 | ) | |||||
Decrease due to sales(i) | — | (248,948 | ) | |||||
Costs incurred during the year | — | 3,115,790 | ||||||
Exchange differences | (508 | ) | (94,734 | ) | ||||
End of the year | — | 38,285 | ||||||
(i) | Included within “(Loss)/Profit for the year from discontinued operations” in the statement of income. |
A-30
Table of Contents
2010 | 2009 | 2008 | ||||||||||
Current | ||||||||||||
Sown land — rice(i) | — | 38,285 | 466,551 | |||||||||
Breeding cattle(ii) | — | — | 262,778 | |||||||||
Total biological assets year | — | 38,285 | 729,329 | |||||||||
(i) | Classified as consumable and immature biological assets. | |
(ii) | Classified as bearer and mature biological assets. |
9. | Financial instruments by category |
Non- | ||||||||||||
Loans and | Financial | |||||||||||
Receivables | Assets | Total | ||||||||||
June 30, 2010 | ||||||||||||
Assets as per statement of financial position | ||||||||||||
Trade and other receivables | 52,945 | 1,278,377 | 1,331,322 | |||||||||
Cash and cash equivalents | 28,350 | — | 28,350 | |||||||||
Total | 81,295 | 1,278,377 | 1,359,672 | |||||||||
Other Financial | Non- | |||||||||||
Liabilities at | Financial | |||||||||||
Amortized Cost | Liabilities | Total | ||||||||||
Liabilities as per statement of financial position | ||||||||||||
Trade and other payables | 118,090 | 45,791 | 163,881 | |||||||||
Borrowings | 3,606,300 | — | 3,606,300 | |||||||||
Total | 3,724,390 | 45,791 | 3,770,181 | |||||||||
A-31
Table of Contents
Non- | ||||||||||||
Loans and | Financial | |||||||||||
Receivables | Assets | Total | ||||||||||
June 30, 2009 | ||||||||||||
Assets as per statement of financial position | ||||||||||||
Trade and other receivables | 232,108 | 1,406,177 | 1,638,285 | |||||||||
Cash and cash equivalents | 14,500 | — | 14,500 | |||||||||
Total | 246,608 | 1,406,177 | 1,652,785 | |||||||||
Other Financial | Non- | |||||||||||
Liabilities at | Financial | |||||||||||
Amortized Cost | Liabilities | Total | ||||||||||
Liabilities as per statement of financial position | ||||||||||||
Trade and other payables | 606,159 | 39,514 | 645,673 | |||||||||
Borrowings | 3,946,334 | — | 3,946,334 | |||||||||
Total | 4,552,493 | 39,514 | 4,592,007 | |||||||||
Non- | ||||||||||||
Loans and | Financial | |||||||||||
Receivables | Assets | Total | ||||||||||
June 30, 2008 | ||||||||||||
Assets as per statement of financial position | ||||||||||||
Trade and other receivables | 213,820 | 1,499,098 | 1,712,918 | |||||||||
Cash and cash equivalents | 60,917 | — | 60,917 | |||||||||
Total | 274,737 | 1,499,098 | 1,773,835 | |||||||||
Other Financial | Non- | |||||||||||
Liabilities at | Financial | |||||||||||
Amortized Cost | Liabilities | Total | ||||||||||
Liabilities as per statement of financial position | ||||||||||||
Trade and other payables | 596,734 | 48,068 | 644,802 | |||||||||
Borrowings | 2,668,889 | — | 2,668,889 | |||||||||
Total | 3,265,623 | 48,068 | 3,313,691 | |||||||||
A-32
Table of Contents
Other Financial | ||||
Liabilities at | ||||
Amortized | ||||
Cost | ||||
June 30, 2010 | ||||
Interest expense(i) | (501,660 | ) | ||
Foreign exchange losses, net(i) | (42,691 | ) | ||
Net result | (544,351 | ) | ||
Other Financial | ||||
Liabilities at | ||||
Amortized | ||||
Cost | ||||
June 30, 2009 | ||||
Interest expense(i) | (483,668 | ) | ||
Foreign exchange losses, net(i) | (675,968 | ) | ||
Net result | (1,159,636 | ) | ||
(i) | Included in “Finance costs” in the statement of income. |
10. | Trade and other receivables |
2010 | 2009 | 2008 | ||||||||||
Current | ||||||||||||
Trade receivables | 48,913 | 100,484 | 190,517 | |||||||||
Receivables from related parties (Note 25) | — | 112,415 | — | |||||||||
Trade receivables | 48,913 | 212,899 | 190,517 | |||||||||
Advances to suppliers | 7,148 | 6,877 | 14,098 | |||||||||
Non-income tax credits(i) | 1,271,229 | 1,399,300 | 1,485,000 | |||||||||
Other receivables | 4,032 | 19,209 | 23,303 | |||||||||
Subtotal | 1,282,409 | 1,425,386 | 1,522,401 | |||||||||
Total trade and other receivables | 1,331,322 | 1,638,285 | 1,712,918 | |||||||||
(i) | Relates to value added tax credit and gross revenue tax credit. These taxes are classified as current as they are expected to be realized within twelve months after the reporting period. |
A-33
Table of Contents
11. | Inventories |
2010 | 2009 | 2008 | ||||||||||
Raw materials | — | 38,145 | 49,196 | |||||||||
Finished goods | — | 557,525 | 788,279 | |||||||||
— | 595,670 | 837,475 | ||||||||||
12. | Cash and cash equivalents |
2010 | 2009 | 2008 | ||||||||||
Cash on hand | 302 | 1,873 | 21,414 | |||||||||
Cash at bank | 28,048 | 12,627 | 39,503 | |||||||||
28,350 | 14,500 | 60,917 | ||||||||||
13. | Discontinued operations |
2010 | 2009 | |||||||
Revenues | 768,283 | 4,145,247 | ||||||
Gain from distribution of non-cash assets to owners | — | 2,760,893 | ||||||
Expenses | (1,043,898 | ) | (5,490,377 | ) | ||||
(Loss)/Profit before tax from discontinued operations | (275,615 | ) | 1,415,763 | |||||
Income tax benefit (Note 18) | 125,236 | 363 | ||||||
(Loss)/Profit for the year from discontinued operations | (150,379 | ) | 1,416,126 | |||||
A-34
Table of Contents
2010 | 2009 | |||||||
Operating cash flows | 282,576 | 59,508 | ||||||
Investing cash flows | — | (98,094 | ) | |||||
Total cash flows | 282,576 | (38,586 | ) | |||||
2010 | 2009 | 2008 | ||||||||||
Property, plant and equipment | — | — | 276,716 | |||||||||
Other receivables (Note 25) | — | — | 711,924 | |||||||||
— | — | 988,640 | ||||||||||
14. | Shareholders’ contributions |
Number of | Share | Share | Irrevocable | |||||||||||||||||
Shares | Capital | Premium | Contributions | Total | ||||||||||||||||
At 1 July 2008 | 600,000 | 1,983,471 | 2,728,742 | — | 4,712,213 | |||||||||||||||
Distribution to owners(i) | — | — | (988,640 | ) | — | (988,640 | ) | |||||||||||||
At 30 June 2009 | 600,000 | 1,983,471 | 1,740,102 | — | 3,723,573 | |||||||||||||||
Conversion to share premium(ii) | — | — | (1,740,102 | ) | — | (1,740,102 | ) | |||||||||||||
Irrevocable contributions(iii) | — | — | — | 152,167 | 152,167 | |||||||||||||||
At 30 June 2010 | 600,000 | 1,983,471 | — | 152,167 | 2,135,638 | |||||||||||||||
(i) | The Shareholders’ meeting held on September 30, 2008 approved the partial distribution of share premium for a total amount of U$S 1.0 million. | |
(ii) | The Shareholders’ meeting held on October 14, 2009 approved the conversion of accumulated deficit to share premium. As a consequence of this transaction, share premium was cancelled in order to reduce accumulated deficit for a total amount of U$S 1.7 million. | |
(iii) | Consist of contributions made by shareholders on account of future share issuances. |
15. | Legal and voluntary reserves |
A-35
Table of Contents
16. | Trade and other payables |
2010 | 2009 | 2008 | ||||||||||
Current | ||||||||||||
Trade payables | 118,090 | 564,337 | 338,881 | |||||||||
Amounts due to shareholders (Note 25) | — | 41,822 | 29,421 | |||||||||
Taxes payable | 45,791 | 39,514 | 48,068 | |||||||||
Advances from customers | — | — | 228,432 | |||||||||
Total trade and other payables | 163,881 | 645,673 | 644,802 | |||||||||
17. | Borrowings |
2010 | 2009 | 2008 | ||||||||||
Current | ||||||||||||
Bank overdrafts | 1,336,332 | 254,075 | 347,434 | |||||||||
Bank borrowings(i) | 2,269,968 | 3,692,259 | 2,321,455 | |||||||||
Total borrowings | 3,606,300 | 3,946,334 | 2,668,889 | |||||||||
(i) | As of June 30, 2010 the balance relates to several short-term loans granted by a domestic financial institution (Banco Galicia) for an aggregate amount of US$2.3 million. These loans accrue interest at a fixed interest rate of 15%. As of June 30, 2009 the balance relates to several short-term loans granted by domestic financial institutions such as Banco Galicia and Banco Comafi for aggregate amounts of US$0.6 million and US$3.1 million, respectively. These loans accrue interest at fixed interest rates ranging from 12.0% to 19.5%. As of June 30, 2008 the balance relates to several short-term loans granted by a domestic financial institution (Banco Comafi) for aggregate amounts of US$2.3 million. These loans accrue interest at a fixed interest rate of 8.8%. |
2010 | 2009 | 2008 | ||||||||||
Fixed Rate: | ||||||||||||
On demand | 1,336,332 | 254,075 | 347,434 | |||||||||
1 year | 2,269,968 | 3,692,259 | 2,321,455 | |||||||||
3,606,300 | 3,946,334 | 2,668,889 | ||||||||||
A-36
Table of Contents
2010 | 2009 | 2008 | ||||||||||
Currency | ||||||||||||
US Dollar | — | 3,105,657 | 2,321,455 | |||||||||
Argentine Peso | 3,606,300 | 840,677 | 347,434 | |||||||||
3,606,300 | 3,946,334 | 2,668,889 | ||||||||||
18. | Taxation |
2010 | 2009 | |||||||
Current income tax | — | — | ||||||
Deferred income tax | 286,363 | 57,450 | ||||||
Income tax benefit(i) | 286,363 | 57,450 | ||||||
(i) | For the year ended June 30, 2010, an amount of US$161,127 is included in “income tax benefit” (2009: US$57,087), and an amount of US$125,236 is included in “(loss)/profit for the year from discontinued operations” (2009: US$363). |
2010 | 2009 | 2008 | ||||||||||
Deferred income tax assets: | ||||||||||||
Deferred income tax asset to be recovered after more than 12 months | 302,006 | — | — | |||||||||
Deferred income tax asset to be recovered within 12 months | — | 27,876 | 121,535 | |||||||||
302,006 | 27,876 | 121,535 | ||||||||||
Deferred income tax liabilities: | ||||||||||||
Deferred income tax liability to be recovered after more than 12 months | 388,035 | 406,744 | 574,457 | |||||||||
Deferred income tax liability to be recovered within 12 months | 14,795 | 15,509 | 108,771 | |||||||||
402,830 | 422,253 | 683,228 | ||||||||||
Deferred income tax liabilities, net | 100,824 | 394,377 | 561,693 | |||||||||
2010 | 2009 | |||||||
Beginning of year | 394,377 | 561,693 | ||||||
Income tax benefit | (286,363 | ) | (57,450 | ) | ||||
Exchange differences | (7,190 | ) | (109,866 | ) | ||||
End of year | 100,824 | 394,377 | ||||||
A-37
Table of Contents
Property, Plant | Biological | |||||||||||
Deferred Income Tax Liabilities | and Equipment | Assets | Total | |||||||||
At July 1, 2008 | 596,343 | 86,885 | 683,228 | |||||||||
Credited to the statement of income | (57,087 | ) | (76,060 | ) | (133,147 | ) | ||||||
Exchange differences | (117,003 | ) | (10,825 | ) | (127,828 | ) | ||||||
At June 30, 2009 | 422,253 | — | 422,253 | |||||||||
Credited to the statement of income | (6,003 | ) | — | (6,003 | ) | |||||||
Exchange differences | (13,420 | ) | — | (13,420 | ) | |||||||
At June 30, 2010 | 402,830 | — | 402,830 | |||||||||
Tax loss | ||||||||||||
Deferred Income Tax Assets | Carry Forwards | Inventories | Total | |||||||||
At July 1, 2008 | — | 121,535 | 121,535 | |||||||||
Credited to the statement of income | — | (75,697 | ) | (75,697 | ) | |||||||
Exchange differences | — | (17,962 | ) | (17,962 | ) | |||||||
At June 30, 2009 | — | 27,876 | 27,876 | |||||||||
Charged/(credited) to the statement of income | 307,866 | (27,506 | ) | 280,360 | ||||||||
Exchange differences | (5,860 | ) | (370 | ) | (6,230 | ) | ||||||
At June 30, 2010 | 302,006 | — | 302,006 | |||||||||
Tax Loss | ||||||||
Jurisdiction | Carry Forward | Expiration Period | ||||||
Argentina | 132,514 | 2011 | ||||||
Argentina | 287,214 | 2012 | ||||||
Argentina | 443,146 | 2015 |
A-38
Table of Contents
2010 | 2009 | |||||||
Pre-tax loss from continuing operations | 388,932 | 1,272,050 | ||||||
Pre-tax loss (profit) from discontinued operations | 275,615 | (1,415,763 | ) | |||||
Total pre-tax loss/(profit) | 664,547 | (143,713 | ) | |||||
Statutory income tax rate | 35 | % | 35 | % | ||||
Tax calculated at statutory income tax rate to pre-tax income | 232,591 | (50,300 | ) | |||||
Non-deductible items | (95,984 | ) | (19,985 | ) | ||||
Unused tax losses | 149,756 | — | ||||||
Utilization of previously unrecognized tax losses | — | 91,856 | ||||||
Non-taxable income | — | 35,879 | ||||||
Total income tax benefit | 286,363 | 57,450 | ||||||
Income tax benefit from continuing operations | 161,127 | 57,087 | ||||||
Income tax benefit from discontinued operations | 125,236 | 363 |
19. | Payroll and social security liabilities |
2010 | 2009 | 2008 | ||||||||||
Current | ||||||||||||
Salaries payable | 1,866 | 14,498 | 18,721 | |||||||||
Social security payable | 116 | 2,850 | 18,479 | |||||||||
Provision for vacations | 2,016 | 1,080 | 1,124 | |||||||||
Total payroll and social security liabilities | 3,998 | 18,428 | 38,324 | |||||||||
20. | Provisions for other liabilities |
A-39
Table of Contents
Labor and Legal | ||||
Claims | ||||
At July 1, 2008 | 26,358 | |||
Used during year | (1,202 | ) | ||
Exchange differences | (5,292 | ) | ||
At June 30, 2009 | 19,864 | |||
Additions(i) | 185,751 | |||
Exchange differences | (23,105 | ) | ||
At June 30, 2010 | 182,510 | |||
(i) | In August 2009, the Government of the Province of Corrientes filed a claim against Dinaluca to demand for unpaid amounts under lines of credit granted by the Province of Corrientes during 2001, and for which the Company has established a provision in an amount of $185 thousands. |
21. | Expenses by nature |
2010 | 2009 | |||||||
Bank expenses | 80,519 | 54,475 | ||||||
Depreciation (Note 7) | 99,828 | — | ||||||
Services | 65,933 | 49,416 | ||||||
General expenses | 55,793 | 39,790 | ||||||
Taxes | 47,452 | 38,521 | ||||||
Salaries and social security expenses | 7,562 | 5,283 | ||||||
Maintenance and repairs | 58,292 | 15,890 | ||||||
Others | 4,610 | 4,367 | ||||||
Total expenses by nature from continuing operations | 419,989 | 207,742 | ||||||
A-40
Table of Contents
22. | Other operating income, net |
2010 | 2009 | |||||||
Gain from disposal of investment property items | 233,694 | — | ||||||
Legal claims | (129,662 | ) | — | |||||
Others | 26,446 | 4,102 | ||||||
130,478 | 4,102 | |||||||
23. | Finance costs |
2010 | 2009 | |||||||
Interest expense | 501,660 | 483,668 | ||||||
Foreign exchange losses, net | 42,691 | 675,968 | ||||||
Bank debit and credit tax | 57,452 | 90,560 | ||||||
601,803 | 1,250,196 | |||||||
24. | Disclosure of leases and similar arrangements |
2010 | 2009 | |||||||
Rental income | 502,382 | 181,786 | ||||||
Direct operating expenses | (158,120 | ) | (12,372 | ) |
2010 | 2009 | |||||||
No later than 1 year | 424,144 | 111,695 | ||||||
Later than 1 year and no later than 5 years | 927,245 | — | ||||||
1,351,389 | 111,695 | |||||||
A-41
Table of Contents
25. | Related-party transactions |
Balance Receivable (Payable) | ||||||||||||||||||
Related Party | Relationship | Description of Transaction | 2010 | 2009 | 2008 | |||||||||||||
Abrojo Alto S.A. | (i) | Receivables from related parties (Note 10) | — | 112,415 | — | |||||||||||||
Abrojo Alto S.A. | (i) | Payables to related parties (Note 16) | — | �� | — | (29,421 | ) | |||||||||||
Carlos Miguens | (ii) | Amounts due to shareholders (Note 16)/ Receivables with shareholders (Note 13) | — | (8,260 | ) | 177,981 | ||||||||||||
Cristina Miguens | (ii) | Amounts due to shareholders (Note 16)/ Receivables with shareholders (Note 13) | — | (11,216 | ) | 177,981 | ||||||||||||
Diego Miguens | (ii) | Amounts due to shareholders (Note 16)/ Receivables with shareholders (Note 13) | — | (11,173 | ) | 177,981 | ||||||||||||
Luisa Miguens | (ii) | Amounts due to shareholders (Note 16)/ Receivables with shareholders (Note 13) | — | (11,173 | ) | 177,981 |
Related Party | Relationship | Description of Transaction | 2010 | 2009 | ||||||||||
Abrojo Alto S.A. | (i) | Sales | — | 112,415 | ||||||||||
Carlos Miguens | (ii) | Purchases | — | (8,260 | ) | |||||||||
Cristina Miguens | (ii) | Purchases | — | (11,216 | ) | |||||||||
Diego Miguens | (ii) | Purchases | — | (11,173 | ) | |||||||||
Luisa Miguens | (ii) | Purchases | — | (11,173 | ) | |||||||||
Carlos Miguens | (ii) | Distribution to owners | — | (177,981 | ) | |||||||||
Cristina Miguens | (ii) | Distribution to owners | — | (177,981 | ) | |||||||||
Diego Miguens | (ii) | Distribution to owners | — | (177,981 | ) | |||||||||
Luisa Miguens | (ii) | Distribution to owners | — | (177,981 | ) |
(i) | Subsidiary of the shareholders of the Company. | |
(ii) | Shareholders of the Company. |
26. | Events after the date of the statement of financial position |
A-42
Table of Contents
Table of Contents
Table of Contents
ITEM 6. | INDEMNIFICATION OF DIRECTORS AND OFFICERS |
ITEM 7. | RECENT SALES OF UNREGISTERED SECURITIES |
II-1
Table of Contents
Amount | Membership Units | |||||||||||
Name of Purchaser | Contributed ($) | Issued | Date | |||||||||
Stichting Pensioenfonds Zorg en Welzijn | 100,000,000 | 43,478,261 | Oct. 2008 | |||||||||
Al Gharrafa Investment Company | 50,000,000 | 21,739,130 | Sep. 2009 | |||||||||
Pampas Húmedas LLC | 19,100,854 | 8,304,719 | Jun. 2009 | |||||||||
Black River Commodity Investment Partners Fund LLC | 2,500,000 | 1,086,957 | Dec. 2008 | |||||||||
Roland W. Veit | 204,036 | 88,711 | Dec. 2008 |
Amount | Membership Units | |||||||||||
Name of Purchaser | Contributed ($) | Issued | Date | |||||||||
Ospraie Special Opportunities Master Holdings Ltd | 118,500,000 | 53,863,636 | Nov. 2007 | |||||||||
The Ospraie Portfolio Ltd. | 31,500,000 | 14,318,182 | Nov. 2007 | |||||||||
Al Gharrafa Investment Company | 20,000,000 | 9,090,909 | May. 2008 | |||||||||
Black River Commodity Investment Partners Fund LLC | 9,000,000 | 4,090,909 | Jan. 2008 | |||||||||
Pampas Húmedas LLC | 8,971,097 | 4,077,771 | Nov. 2007 | |||||||||
Farallon Capital Offshore Investors II LP | 8,600,000 | 3,909,091 | Jan. 2008 | |||||||||
IXE Banco S.A., Fideicomiso F/466 | 7,500,000 | 3,409,091 | Nov. 2007 | |||||||||
HBK Master Fund LP | 7,128,903 | 3,240,410 | Nov. 2007 | |||||||||
IFH Blocker Ltd. | 6,700,000 | 3,045,455 | Jan. 2008 | |||||||||
Farallon Capital Partners LP | 4,700,000 | 2,136,364 | Jan. 2008 | |||||||||
Craton Capital LP | 4,500,000 | 2,045,455 | Dec. 2007 | |||||||||
Roland W. Veit(1) | 1,799,800 | 818,091 | Jan. 2008 | |||||||||
Agricultural Real Estate Partners LP | 1,216,836 | 553,107 | Jan. 2008 | |||||||||
Scott Kramer | 349,799 | 158,988 | Dec. 2007 | |||||||||
Olsdmar S.A. | 100,000 | 45,455 | Mar. 2008 | |||||||||
Warren Machol | 99,999 | 45,454 | Feb. 2008 | |||||||||
Argyle LLC | 88,096 | 40,044 | Jan. 2008 | |||||||||
Ulsur International S.A. | 70,000 | 31,818 | May. 2008 | |||||||||
Pablo Navarro | 50,000 | 22,727 | Apr. 2008 | |||||||||
Orlando Editore | 25,000 | 11,364 | May. 2008 | |||||||||
Patrick E. Stahel | 10,757 | 4,890 | Dec. 2007 | |||||||||
David Perez | 7,704 | 3,502 | Jan. 2008 |
(1) | Roland W. Veit made a contribution of $500,000 in cash and $1,299,800 in kind of 2,968,216 shares of Fazenda Mimoso S.A., representing 50% of the outstanding capital stock of such company. |
II-2
Table of Contents
ITEM 8. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES |
Exhibit | ||||
No. | Description | |||
1 | .1* | Underwriting Agreement between Adecoagro S.A., the underwriters named therein and the selling shareholders named therein | ||
3 | .1* | Articles of Incorporation of Adecoagro S.A. | ||
5 | .1* | Opinion of Elvinger, Hoss & Prussen regarding the legality of the shares being registered | ||
8 | .1 | Opinion of Milbank, Tweed, Hadley & McCloy LLP regarding certain U.S. tax matters | ||
8 | .2 | Opinion of Elvinger, Hoss & Prussen regarding certain Luxembourg tax matters | ||
10 | .1 | Loan Agreement, dated December 19, 2008, between Adeco Agropecuaria S.A., Pilagá S.R.L. andInter-American Development Bank | ||
10 | .2 | First Amendment Offer to Loan Agreement, dated February 20, 2009, between Adeco Agropecuaria S.A., Pilagá S.R.L. andInter-American Development Bank | ||
10 | .3 | Second Amendment Offer to Loan Agreement, dated December 29, 2009, between Adeco Agropecuaria S.A., Pilagá S.R.L. andInter-American Development Bank | ||
10 | .4 | Third Waiver Request to Loan Agreement, dated March 30, 2010, between Adeco Agropecuaria S.A., Pilagá S.R.L. andInter-American Development Bank | ||
10 | .5 | Fourth Amendment Offer to Loan Agreement, dated May 14, 2010, between Adeco Agropecuaria S.A., Pilagá S.R.L. andInter-American Development Bank | ||
10 | .6 | Senior Secured Loan Facility, dated July 28, 2010, between Angélica Agroenergia Ltda. and Deutsche Bank AG, London Branch | ||
10 | .7 | Export Prepayment Financing Agreement, dated July 13, 2007, between Angélica Agroenergia Ltda. and a syndicate of banks. | ||
10 | .8 | First Amendment to Export Prepayment Financing Agreement, dated March 4, 2010, between Angélica Agroenergia Ltda. and a syndicate of banks. | ||
10 | .9 | English translation of Financing Agreement through BNDES Repasse, dated February��1, 2008, between Adeco Brasil Participações S.A. and a syndicate of banks. | ||
10 | .10 | English translation of First Amendment to Financing Agreement BNDES Repasse, dated July 1, 2008, between Angélica Agroenergia Ltda. and a syndicate of banks. | ||
10 | .11 | English translation of Second Amendment to Financing Agreement BNDES Repasse, dated March 4, 2010, between Angélica Agroenergia Ltda. and a syndicate of banks. | ||
10 | .12 | English translation of Credit Facility, dated July 30, 2010, between Angélica Agroenergia Ltda. and Banco do Brasil S.A. | ||
10 | .13 | Unit Issuance Agreement, dated February 16, 2006, between International Farmland Holdings LLC and Usina Monte Alegre S.A. |
II-3
Table of Contents
Exhibit | ||||
No. | Description | |||
10 | .14 | Share Purchase and Sale Agreement, dated February 16, 2006, between International Farmland Holdings LLC and Usina Monte Alegre S.A. | ||
10 | .15 | Right of First Offer Agreement, dated February 16, 2006, between International Farmland Holdings LLC and Usina Monte Alegre S.A. | ||
10 | .16 | Supply Offer Letter for milk, dated November 7, 2007, between La Lácteo S.A. and Adeco Agropecuaria S.R.L. | ||
10 | .17 | Amendment to Supply Offer Letter for milk, dated February 1, 2010, between La Lácteo S.A. and Adeco Agropecuaria S.R.L. | ||
10 | .18 | Commercial Contract for sugar, dated March 23, 2010, between Angélica Agroenergia Ltda. and Bunge International Commerce Ltd. | ||
10 | .19 | Amendment to Commercial Contract for sugar, dated June 17, 2010, between Angélica Agroenergia Ltda. and Bunge International Commerce Ltd. | ||
10 | .20 | English translation of Consignment Contract, dated February 19, 2000, between Molinos Ala S.A. (currently Pilagá S.R.L.) and Establecimiento Las Marías S.A.C.I.F.A. | ||
10 | .21 | English translation of Sale Agreement, dated July 8, 2009, between Pilagá S.R.L. and Galicia Warrants S.A. | ||
10 | .22 | English translation of Mortgage, dated July 8, 2009, between Pilagá S.R.L. and Galicia Warrants S.A. | ||
10 | .23 | English translation of Reserve Power Agreement, dated February 6, 2009, between Angélica Agroenergia Ltda. and Câmara de Comercialização de Energia Elétrica. | ||
10 | .24 | English translation of Energy Purchase Contract, dated January 19, 2009, between Usina Monte Alegre Ltda. and Cemig Geração e Transmissão S.A. | ||
10 | .25 | English translation of Energy Distribution Contract, dated June 3, 2008 between Angélica Agroenergia Ltda. and Empresa Energética do Mato Grosso do Sul. | ||
10 | .26 | English translation of First Amendment to Energy Distribution Contract, dated April 6, 2009 between Angélica Agroenergia Ltda. and Empresa Energética do Mato Grosso do Sul. | ||
10 | .27 | English translation of Second Amendment to Energy Distribution Contract, dated May 1, 2010 between Angélica Agroenergia Ltda. and Empresa Energética do Mato Grosso do Sul. | ||
10 | .28 | English translation of Joint Venture Contract, dated December 22, 2009 between Pilagá S.R.L. and COPRA S.A. | ||
10 | .29 | English translation of Sale Agreement for cattle, dated December 14, 2009, between Adeco Agropecuaria S.A. and Quickfood S.A. | ||
10 | .30 | English translation of First Amendment to Sale Agreement for cattle, dated December 16, 2009, between Adeco Agropecuaria S.A. and Quickfood S.A. | ||
10 | .31 | English translation of Second Amendment to Sale Agreement for cattle, dated December 17, 2009, between Adeco Agropecuaria S.A. and Quickfood S.A. | ||
10 | .32 | English translation of Stock Purchase Agreement, dated August 23, 2010, between Kadesh Hispania, S.L., Leterton España, S.L. and Dinaluca S.A. | ||
10 | .33 | Form of Registration Rights Agreement between Adecoagro S.A. and certain shareholders. | ||
10 | .34* | Adecoagro/IFH 2004 Stock Incentive Option Plan | ||
10 | .35* | Adecoagro/IFH 2007/2008 Equity Incentive Plan | ||
10 | .36 | Adecoagro S.A. Restricted Share Plan | ||
10 | .37 | Fifth Amendment Offer to Loan Agreement, dated November 8, 2010, between Adeco Agropecuaria S.A., Pilagá S.R.L. andInter-American Development Bank | ||
10 | .38 | Second Amendment to Export Prepayment Financing Agreement, dated December 14, 2010, between Angélica Agroenergia Ltda. and a syndicate of banks. | ||
10 | .39 | English translation of Third Amendment to Financing Agreement BNDES Repasse, dated December 14, 2010, between Angélica Agroenergia Ltda. and a syndicate of banks. |
II-4
Table of Contents
Exhibit | ||||
No. | Description | |||
10 | .40 | English translation of First Amendment to Credit Facility, dated December 18, 2010, between Angélica Agroenergia Ltda. and Banco do Brasil S.A. | ||
10 | .41 | Stock Subscription Agreement, dated January 6, 2011, between Adecoagro S.A. and Al Gharrafa Investment Company | ||
10 | .42 | English translation of Promise to Sell, dated December 21, 2010, between Kelizer S.C.A. and Las Mesetas S.A. | ||
21 | .1 | Subsidiaries of Adecoagro S.A. | ||
23 | .1 | Consent of PriceWaterhouse & Co. S.R.L. | ||
23 | .2 | Consent of Estudio Supertino S.RL. | ||
23 | .3* | Consent of Elvinger, Hoss & Prussen (contained in Exhibit 5.1) | ||
23 | .4 | Consent of Cushman & Wakefield Argentina S.A. | ||
23 | .5 | Consent of Milbank, Tweed, Hadley & McCloy LLP (contained in Exhibit 8.1) | ||
23 | .6 | Consent of Elvinger, Hoss & Prussen (contained in Exhibit 8.2) | ||
24 | .1 | Powers of Attorney (included on signature page) |
* | To be filed by amendment |
ITEM 9. | UNDERTAKINGS |
II-5
Table of Contents
By: | /s/ Mariano Bosch |
Title: | Chief Executive Officer, Director |
Signature | Title | Date | ||||
/s/ Mariano Bosch Mariano Bosch | Chief Executive Officer, Director | January 13, 2011 | ||||
/s/ Carlos A. Boero Hughes Carlos A. Boero Hughes | Chief Financial Officer, Chief Accounting Officer | January 13, 2011 | ||||
/s/ Abbas Farouq Zuaiter Abbas Farouq Zuaiter | Chairman of the Board of Directors | January 13, 2011 | ||||
/s/ Alan Leland Boyce Alan Leland Boyce | Director | January 13, 2011 |
II-6
Table of Contents
Signature | Title | Date | ||||
/s/ Guillaume van der Linden Guillaume van der Linden | Director | January 13, 2011 | ||||
/s/ Paulo Albert Weyland Vieira Paulo Albert Weyland Vieira | Director | January 13, 2011 | ||||
/s/ Plínio Musetti Plínio Musetti | Director | January 13, 2011 | ||||
/s/ Mark Schachter Mark Schachter | Director | January 13, 2011 | ||||
/s/ Julio Moura Neto Julio Moura Neto | Director | January 13, 2011 | ||||
/s/ Andrés Velasco Brañes Andrés Velasco Brañes | Director | January 13, 2011 |
II-7
Table of Contents
By: | /s/ Donald J. Puglisi |
II-8
Table of Contents
Number | Description | |||
1 | .1* | Underwriting Agreement between Adecoagro S.A., the underwriters named therein and the selling shareholders named therein | ||
3 | .1* | Articles of Incorporation of Adecoagro S.A. | ||
5 | .1* | Opinion of Elvinger, Hoss & Prussen regarding the legality of the shares being registered | ||
8 | .1 | Opinion of Milbank, Tweed, Hadley & McCloy LLP regarding certain U.S. tax matters | ||
8 | .2 | Opinion of Elvinger, Hoss & Prussen regarding certain Luxembourg tax matters | ||
10 | .1 | Loan Agreement, dated December 19, 2008, between Adeco Agropecuaria S.A., Pilagá S.R.L. andInter-American Development Bank | ||
10 | .2 | First Amendment Offer to Loan Agreement, dated February 20, 2009, between Adeco Agropecuaria S.A., Pilagá S.R.L. andInter-American Development Bank | ||
10 | .3 | Second Amendment Offer to Loan Agreement, dated December 29, 2009, between Adeco Agropecuaria S.A., Pilagá S.R.L. andInter-American Development Bank | ||
10 | .4 | Third Waiver Request to Loan Agreement, dated March 30, 2010, between Adeco Agropecuaria S.A., Pilagá S.R.L. andInter-American Development Bank | ||
10 | .5 | Fourth Amendment Offer to Loan Agreement, dated May 14, 2010, between Adeco Agropecuaria S.A., Pilagá S.R.L. andInter-American Development Bank | ||
10 | .6 | Senior Secured Loan Facility, dated July 28, 2010, between Angélica Agroenergia Ltda. and Deutsche Bank AG, London Branch | ||
10 | .7 | Export Prepayment Financing Agreement, dated July 13, 2007, between Angélica Agroenergia Ltda. and a syndicate of banks. | ||
10 | .8 | First Amendment to Export Prepayment Financing Agreement, dated March 4, 2010, between Angélica Agroenergia Ltda. and a syndicate of banks. | ||
10 | .9 | English translation of Financing Agreement through BNDES Repasse, dated February 1, 2008, between Adeco Brasil Participações S.A. and a syndicate of banks. | ||
10 | .10 | English translation of First Amendment to Financing Agreement BNDES Repasse, dated July 1, 2008, between Angélica Agroenergia Ltda. and a syndicate of banks. | ||
10 | .11 | English translation of Second Amendment to Financing Agreement BNDES Repasse, dated March 4, 2010, between Angélica Agroenergia Ltda. and a syndicate of banks. | ||
10 | .12 | English translation of Credit Facility, dated July 30, 2010, between Angélica Agroenergia Ltda. and Banco do Brasil S.A. | ||
10 | .13 | Unit Issuance Agreement, dated February 16, 2006, between International Farmland Holdings LLC and Usina Monte Alegre S.A. | ||
10 | .14 | Share Purchase and Sale Agreement, dated February 16, 2006, between International Farmland Holdings LLC and Usina Monte Alegre S.A. | ||
10 | .15 | Right of First Offer Agreement, dated February 16, 2006, between International Farmland Holdings LLC and Usina Monte Alegre S.A. | ||
10 | .16 | Supply Offer Letter for milk, dated November 7, 2007, between La Lácteo S.A. and Adeco Agropecuaria S.R.L. | ||
10 | .17 | Amendment to Supply Offer Letter for milk, dated February 1, 2010, between La Lácteo S.A. and Adeco Agropecuaria S.R.L. | ||
10 | .18 | Commercial Contract for sugar, dated March 23, 2010, between Angélica Agroenergia Ltda. and Bunge International Commerce Ltd. | ||
10 | .19 | Amendment to Commercial Contract for sugar, dated June 17, 2010, between Angélica Agroenergia Ltda. and Bunge International Commerce Ltd. | ||
10 | .20 | English translation of Consignment Contract, dated February 19, 2000, between Molinos Ala S.A. (currently Pilagá S.R.L.) and Establecimiento Las Marías S.A.C.I.F.A. | ||
10 | .21 | English translation of Sale Agreement, dated July 8, 2009, between Pilagá S.R.L. and Galicia Warrants S.A. |
Table of Contents
Number | Description | |||
10 | .22 | English translation of Mortgage, dated July 8, 2009, between Pilagá S.R.L. and Galicia Warrants S.A. | ||
10 | .23 | English translation of Reserve Power Agreement, dated February 6, 2009, between Angélica Agroenergia Ltda. and Câmara de Comercialização de Energia Elétrica. | ||
10 | .24 | English translation of Energy Purchase Contract, dated January 19, 2009, between Usina Monte Alegre Ltda. and Cemig Geração e Transmissão S.A. | ||
10 | .25 | English translation of Energy Distribution Contract, dated June 3, 2008 between Angélica Agroenergia Ltda. and Empresa Energética do Mato Grosso do Sul. | ||
10 | .26 | English translation of First Amendment to Energy Distribution Contract, dated April 6, 2009 between Angélica Agroenergia Ltda. and Empresa Energética do Mato Grosso do Sul. | ||
10 | .27 | English translation of Second Amendment to Energy Distribution Contract, dated May 1, 2010 between Angélica Agroenergia Ltda. and Empresa Energética do Mato Grosso do Sul. | ||
10 | .28 | English translation of Joint Venture Contract, dated December 22, 2009 between Pilagá S.R.L. and COPRA S.A. | ||
10 | .29 | English translation of Sale Agreement for cattle, dated December 14, 2009, between Adeco Agropecuaria S.A. and Quickfood S.A. | ||
10 | .30 | English translation of First Amendment to Sale Agreement for cattle, dated December 16, 2009, between Adeco Agropecuaria S.A. and Quickfood S.A. | ||
10 | .31 | English translation of Second Amendment to Sale Agreement for cattle, dated December 17, 2009, between Adeco Agropecuaria S.A. and Quickfood S.A. | ||
10 | .32 | English translation of Stock Purchase Agreement, dated August 23, 2010, between Kadesh Hispania, S.L., Leterton España, S.L. and Dinaluca S.A. | ||
10 | .33 | Form of Registration Rights Agreement between Adecoagro S.A. and certain shareholders. | ||
10 | .34* | Adecoagro/IFH 2004 Stock Incentive Option Plan | ||
10 | .35* | Adecoagro/IFH 2007/2008 Equity Incentive Plan | ||
10 | .36 | Adecoagro S.A. Restricted Share Plan | ||
10 | .37 | Fifth Amendment Offer to Loan Agreement, dated November 8, 2010, between Adeco Agropecuaria S.A., Pilagá S.R.L. andInter-American Development Bank | ||
10 | .38 | Second Amendment to Export Prepayment Financing Agreement, dated December 14, 2010, between Angélica Agroenergia Ltda. and a syndicate of banks. | ||
10 | .39 | English translation of Third Amendment to Financing Agreement BNDES Repasse, dated December 14, 2010, between Angélica Agroenergia Ltda. and a syndicate of banks. | ||
10 | .40 | English translation of First Amendment to Credit Facility, dated December 18, 2010, between Angélica Agroenergia Ltda. and Banco do Brasil S.A. | ||
10 | .41 | Stock Subscription Agreement, dated January 6, 2011, between Adecoagro S.A. and Al Gharrafa Investment Company | ||
10 | .42 | English translation of Promise to Sell, dated December 21, 2010, between Kelizer S.C.A. and Las Mesetas S.A. | ||
21 | .1 | Subsidiaries of Adecoagro S.A. | ||
23 | .1 | Consent of PriceWaterhouse & Co. S.R.L. | ||
23 | .2 | Consent of Estudio Supertino S.RL. | ||
23 | .3* | Consent of Elvinger, Hoss & Prussen (contained in Exhibit 5.1) | ||
23 | .4 | Consent of Cushman & Wakefield Argentina S.A. | ||
23 | .5 | Consent of Milbank, Tweed, Hadley & McCloy LLP (contained in Exhibit 8.1) | ||
23 | .6 | Consent of Elvinger, Hoss & Prussen (contained in Exhibit 8.2) | ||
24 | .1 | Powers of Attorney (included on signature page) |
* | To be filed by amendment |