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CAMPOSOL HOLDING PLC

CONSOLIDATED FINANCIAL STATEMENTS


FOR THE YEAR ENDED 31 DECEMBER 2008

CAMPOSOL HOLDING PLC


CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2008

Contents

General information

Page

Directors report

2-3

Independent auditors report

4-5

Consolidated Income statement

Consolidated Balance sheet

Consolidated Cash flow statement

Consolidated Statement of changes in equity

Notes to the financial statements

10 - 55

GENERAL INFORMATION

Directors
Samuel Dyer Ampudia
Christian Selmer
Samuel Barnaby Dyer Coriat
Synne Syrrist
Pavlos Aristodemou
Frixos Savvides
Gianfranco Castagnola

Chairman
Deputy Chairman

Company Secretary
Altruco Secretarial Limited
Arch. Kyprianou & Ag. Andreou,
Pavlides Court, 5th Floor
3036 Limassol,
Cyprus

Registered office
Arch. Kyprianou & Ag. Andreou,
Pavlides Court, 5th Floor
3036 Limassol,
Cyprus

Independent auditors
Ernst & Young Cyprus Ltd
Cyprus

-1-

DIRECTORS REPORT

The Directors submit their report together with the audited financial statements for the year ended 31
December 2008.
Activities
Camposol Holding PLC is the holding company of the Camposol Group (the Group). The Group
continued during the yerar its agricultural activities and is the largest business in the export market for
asparagus.
Financial Results
The profit attributable to the shareholders of the Company was USD 985.000, compared to USD
11.037.000 for the period since incorporation on 9 July 2007 to 31 December 2007.
The seasonal nature of the business means that the bulk of sales are made in the second half of each
year. Turnover in 2008 increased to USD 141 million, compared to sales for the whole of 2007 (including
the pre-incorporation period) of USD 126 million.
Future Developments
The Group sets as its strategic priorities for the five years 2009-2013 the maintenance of its position as a
global leader in the asparagus market and the diversification in new products, such as red table grapes
and manadarins, to satisfy demand.
Risk Management
Like other agricultural businesses the Group is exposed to risks, the most significant of which are natural
phenomena such as the cold and hot ocean currents of El Nino and La Nina which impact agricultural
production, adverse movements in the market prices for fruit and vegetables, interest rate risk and liquidity
risk.
The Group monitors and manages these risks through various control mechanisms. Detailed information
relating to risk management is set out in Note 32 to the financial statements.
Share capital
On 3 March 2008 the Company made a voluntary offer to the shareholders of Camposol AS to exchange
their shares and warrants for shares and warrants in Camposol Holding PLC. The offer period started on 5
March and expired on 14 March 2008. As a result of this reorganisation, the Company issued 27 925 070
ordinary shares to the shareholders of Camposol AS.
On 6 May 2008 the Company issued a further 1 908 750 shares for a total consideration of USD 15
million.
As stated in Note 21, the Company has granted 1 035 000 share options to directors and managers of the
Camposol Group .
In addition, 3.628.344 warrants granted to Dyer Coriat Holding S.L. in Camposol AS may be exercised to
acquire shares in Camposol Holding PLC.
In May 2008 the shares of the Company were listed on the Oslo Axess Stock Exchange.

-2-

DIRECTORS REPORT (continued)

Directors
The Directors of the Company at the date of this report are as shown on page 1.
The Directors who served during the year and up to the date of this report are the following:

Altruco Management Ltd


Altruco Ltd
Samuel Dyer Ampudia
Christian Selmer
Samuel Barnaby Dyer Coriat
Synne Syrrist
Pavlos Aristodemou
Frixos Savvides
Gianfranco Castagnola

Appointed
9 July 2007
8 November 2007
15 January 2008
15 January 2008
15 January 2008
15 January 2008
15 January 2008
15 January 2008
10 June 2008

Resigned
15 January 2008
15 January 2008

All of the Directors shall hold office until the next General Meeting and are eligible for re-appointment by
the shareholders.
Independent auditors
Ernst & Young Cyprus Ltd have expressed their willingness to continue in office. A resolution proposing
their re-appointment and fixing their remuneration will be put to the shareholders at the Annual General
Meeting.

By order of the Board

Altruco Secretarial Limited


Secretary
Cyprus
22 April 2009

-3-

Independent Auditors Report


To the Members of Camposol Holding PLC

Report on the Consolidated Financial Statements


We have audited the consolidated financial statements of Camposol Holding PLC (the Company) and its
subsidiaries (the Group) on pages 6 to 55 which comprise the consolidated balance sheet as at 31
December 2008, and the consolidated income statement, consolidated statement of changes in equity and
consolidated cash flow statement for the year then ended, and a summary of significant accounting
policies and other explanatory notes.
Board of Directors Responsibility for the Financial Statements
The Companys Board of Directors is responsible for the preparation and fair presentation of these
consolidated financial statements in accordance with International Financial Reporting Standards as
adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113. This
responsibility includes: designing, implementing and maintaining internal control relevant to the
preparation and fair presentation of financial statements that are free from material misstatement, whether
due to fraud or error; selecting and applying appropriate accounting policies; and making accounting
estimates that are reasonable in the circumstances.
Auditors Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with International Standards on Auditing. Those Standards require
that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance
whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditor's judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entity's
preparation and fair presentation of the financial statements, in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates made by the Board of Directors, as well as
evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Opinion
In our opinion, the consolidated financial statements give a true and fair view of the financial position of
the Group as of 31 December 2008, and of its financial performance and its cash flows for the year then
ended in accordance with International Financial Reporting Standards as adopted by the European Union
and the requirements of the Cyprus Companies Law, Cap. 113.

-4-

Report on Other Legal Requirements


Pursuant to the requirements of the Cyprus Companies Law, Cap. 113, we report the following:
We have obtained all the information and explanations we considered necessary for the purposes of
our audit.
In our opinion, proper books of account have been kept by the Company.
The Companys financial statements are in agreement with the books of account.
In our opinion and to the best of our information and according to the explanations given to us, the
consolidated financial statements give the information required by the Cyprus Companies Law, Cap.
113, in the manner so required.
In our opinion, the information given in the report of the Board of Directors on pages 2 to 3 is
consistent with the consolidated financial statements.
Other Matter
This report, including the opinion, has been prepared for and only for the Companys members as a body
in accordance with Section 156 of the Cyprus Companies Law, Cap.113 and for no other purpose. We do
not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to
whose knowledge this report may come to.

Ernst & Young Cyprus Ltd


Certified Public Accountants and Registered Auditors
Nicosia
22 April 2009

-5-

CONSOLIDATED INCOME STATEMENT

For the year


ended
31 December
2008

For the period


09 July to
31 December
2007

Notes
USD 000

USD 000

Revenue
5
Cost of sales
6
Gross profit
Change in fair value of biological assets
16
Cost of crops during the period
16
Net adjustment from change in fair value of biological assets
Profit after adjustment for biological assets

(
(
(
(
(
(
(

140,705)
110,362)
30,343)
28,660)
11,584)
17,076)
47,419)

(
(
(
(
(
(
(

36,192)
25,952)
10,240)
16,945)
5,001)
11,944)
22,184)

Administrative expenses
Selling expenses
Other income
Other expenses

7
8
10
10

(
(
(
(
(
(

12,659)
16,286)
733)
4,806)
33,018)
14,401)

(
(
(
(
(
(

3,397)
4,472)
52828
309)
7,650)
14,534)

15
11
11
32

(
(
(
(
(
(
(
(

79)
1,975)
11,374)
)
4,042)
881)
104)
985)

(
(
(
(
(
(
(
(

741)
779)
798)
937)
85)
12,752)
1,715)
11,037)

985)

Operating profit
Share of loss of associated companies
Finance income
Finance costs
Change in fair value of derivative financial instrument
Currency translation differences
Profit before income tax
Income tax income / (expense)
Profit for the year

12

Attributable to:
Equity shareholders of the parent
Minority interests
Basic earnings per ordinary share
(expressed in US dollars per share)
Diluted earnings per ordinary share
(expressed in US dollars per share)

(
(
(

)
985)

(
(
(

11,037)
)
11,037)

13

0.034)

0.452)

13

0.029)

0.381)

The accompanying notes are an integral part of the financial statements.

-6-

CONSOLIDATED BALANCE SHEET

As at 31 December
2008
2007
USD000
USD000

Notes
Assets
Non-current assets
Property, plant and equipment
Investments in associated companies
Intangible assets
Non-current portion of biological assets

14
15
3
16

Current assets
Prepaid expenses
Embedded derivative in debt instrument
Current portion of biological assets
Inventories
Other accounts receivable
Trade accounts receivable
Cash and short-term deposits

24
16
17
18
19
20

(
(
(
(
(

120,360)
274)
27,580)
99,962)
248,176)

(
(
(
(
(

94,057)
353)
27,042)
77,555)
199,007)

(
(
(
(
(
(
(
(
(

598)
741)
15,386)
58,037)
14,077)
25,822)
5,770)
120,431)
368,607)

(
(
(
(
(
(
(
(
(

1,785)
379)
9,133)
38,287)
19,447)
43,369)
89,766)
202,166)
401,173)

21 (
(
21
21 (
32 (
(
(
(
(

507)
212,318)
4,114
745)
11,093)
14,545)
221,136)
88)
221,224)

(
(

(
(

459)
189,453)
6,133
257
)
11,037)
207,339)
88)
207,427)

24 (
22 (
26 (
(

56,826)
10,094)
19,707)
86,627)

(
(
(
(

65,523)
12,262)
16,503)
94,288)

8)
9,528)
25,126)
9,638)
)
16,456)
60,756)
147,383)
368,607)

(
(
(
(
(
(
(
(
(

597)
68,613)
18,976)
8,283)
1,511)
1,478)
99,458)
193,746)
401,173)

Total assets
Equity and liabilities
Equity attributable to shareholders of the parent
Share capital
Share premium
Share warrants
Share options
Net unrealized loss on cash flow hedge
Retained earnings
Minority interests
Total equity
Non-current liabilities
Long- term debt
Deferred income tax
Other payables
Current liabilities
Accounts payable to related companies
Current portion of long-term debt
Trade payables
Other payables
Income tax payable
Bank loans

27
24
25
26

(
(
(
(
(
28 (
(
(
(

Total liabilities
Total equity and liabilities
The accompanying notes are an integral part of the financial statements.

-7-

(
(
(

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Note
Incorporation 9 July 2007
Private placement
Discount on share premium
- fees and expenses
Warrants and options (Note 21)
Profit for the period
Balance as of 31 December 2007
Issue of shares
- fees and expenses
Net unrealized loss on cash flow
hedge)
Stock options
Options and warrants expired
Translations adjustment
Profit for the year
Balance as of 31 December 2008

21
32
21
21

Number
of shares
(
(
(
(
(
(
(
(
(

2,570)
26,771)
- )
- )
- )
- )
29,341)
3,063)
- )

Share
capital
USD000
(
38)
(
421)
(
- )
(
- )
(
- )
(
- )
(
459)
(
48)
(
- )

(
(
(
(
(
(

- )
- )
- )
- )
- )
32,404)

(
(
(
(
(
(

- )
- )
- )
- )
- )
507)

Share
premium
USD000
(
- )
( 183,435)
( 12,851)
(
6,833)
(
)
(
- )
( 189,453)
( 23.774)
(
909)

Share
options
USD000
(
)
(
)
(
)
)
(
257)
(
)
(
257)
(
)
(
)

Share
warrants
USD000
(
(
(
(
( 6,133
(
( 6,133
(
(
-

(
(

(
(

- )
- )
212.318)

(
(
(
(
(
(

(
(
(
(
(
(

)
)

)
561)
73)
)
)
745)

(2.019)
4.114)

The accompanying notes are an integral part of the financial statements.

-8-

)
)
)
)
)
)
)
)
)
)
)
(
)
)

Cash flow
hedge
USD000
(
(
(
(
(
(
(
(
(
(
(
(
(
(

)
)
)
)
)
)
)
)
)

(
(
(
(
(
(
(
(
(

Retained
earnings
USD000
)
)
)
)
)
11,037)
11,037)
)
)

11,093)
)
)
(
)
)
11,093)

(
(
(
(
(

)
)
2.092 (
431)
985)
14.545)

Equity
attributable to the
shareholders of
the parent
USD000
(
38)
(
183,856)
(
12,851)
(
6,833)
(
6,390)
(
11,037)
(
207,339)
(
23.822)
(
909)
(
(
(
(

11,093)
561)
)
431)
985)
221,136)

(
(
(
(
(
(
(
(
(
(
(
(
(
(
(

Minority
interests
USD000
- )
88)
- )
- )
- )
- )
88)
- )
- )
-

)
)
)
)
88)

(
(
(
(
(
(
(
(
(

Total
equity
USD000
38)
183, 944)
12,851)
6,833)
6,390)
11,037)
207,427)
23.822)
909)

(
(
)
(
(
(

11,093)
561)
( - )
431)
985)
221,224)

CONSOLIDATED CASH FLOW STATEMENT


For the year
ended
31 December
2008

For the period


09 July to
31 December
2007

Notes
USD000

USD000

29

Cash flows from operating activities


Collections
Payment to suppliers and employees
Interest paid
Other collections
Income tax paid
Net cash used in operating activities
Cash flows from investing activities
Purchases of property, plant and equipment
Purchases of intangibles
Acquisition of subsidiaries
Cash from company acquired
Proceeds from sale of property, plant and equipment
Interest received on bank deposits
Net cash used in investing activities
Cash flows from financial activities
Bank loans and overdrafts
Prepayment of borrowings
Incorporation contribution
Payment to Camposol AS shareholders
Capital contribution, net of transaction cost
Proceeds from/ (repayment of) long-term debt, net
Net cash (used in) / provided by financial activities
Net increase in cash and cash equivalents during the period
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of year

3
3

24
21

20

(
(
(
(
(
(

158,252)
174,308)
11,292)
8,774)
2,129)
20,703)

(
(
(
(
(
(

16,044)
45,507)
1,346)
918)
3,196)
33,087)

(
(
(
(
(
(
(

29,714)
1,746)
)
)
140
1,416)
29,904)

(
(
(
(
(
(
(

9,308)
)
149,520)
2,579)
727)
94)
155,428)

(
(
(
(
(
(
(

14,978)
7,000 )
)
320)
21,003)
62,050)
33,389)

(
(
(
(
(
(
(

)
30,346)
38)
)
176,999)
131,590)
278,281)

(
(
(

83,996)
89,766)
5,770)

(
(
(

89,766)
)
89,766)

The accompanying notes are an integral part of the financial statements.

-9-

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

CORPORATE INFORMATION
The consolidated financial statements of Camposol Holding PLC (hereinafter the Company) as of 31
December 2008 were approved by the Companys Board of Directors on 22 April 2009.
Camposol Holding PLC (hereinafter the Company) was incorporated in Cyprus on 9 July 2007, under the
name Halemondi Holdings Limited, as a private company under the provisions of the Cyprus Companies
Law, Cap. 113, and was converted to a Public limited liability company on November 8, 2007. The name
of the company was changed to Camposol Holding PLC on 11 February.2008.
th

The registered office of the Company is at Arch. Kyprianou & Ayiou Andreou, Pavlides Court 5 Floor,
3036 Limassol, Cyprus.
The Company remained dormant during the period 9 July to 31 December 2007.
On 3 March 2008 the Company made a voluntary offer to acquire all the issued shares in Camposol AS in
exchange for shares in the Company. The shareholders of Camposol AS became shareholders in the
Company, holding the same number of shares and warrants in the Company as they did in Camposol AS.
As a result of this exchange, Camposol AS became a wholly-owned subsidiary.
This transaction does not represent a business combination and is outside the scope of IFRS 3 (2007).
There is no economic substance in terms of any real alteration to the composition or ownership of the
Group. Accordingly the consolidated financial statements are presented as a continuation of the Camposol
AS group using the pooling of interests method. In applying the pooling of interests method, the financial
statement items of the combining enterprises for the period in which the combination occured and for any
comparative periods disclosed are presented as if they had been combned from the beginning of the
earliest period presented.
As from May 2008 the shares of the Company are listed on the Oslo Axess stock exchange.
Camposol AS was established on 5 September 2007, and financed through a Private Placement on 8
October 2007. On 17 October 2007 Camposol AS acquired 100% of the shares in Siboure Holding Ltd
(before Siboure Holdings Inc.) which held 100% of Camposol S.A.
Camposol AS was liquidated on 22 December 2008 with no impact on the Groups financial statements as
all rights and obligations were transferred to Camposol Holding PLC.
The subsidiaries and their activities are as follows:
Company
Camposol S.A.
Campoinca S.A.
Preco Precio Economico S.A.C.
Sociedad Agricola Las
Dunas S.R.L.
Prodex S.A.C.
Balfass S.A.
Vegetales del Norte S.A.C.
Muelles y Servicios Paita S.A.C.
Marinazul S.A.
Marinasol S.A.
Camposol Europa S.L.
Crofton Finance Ltd.
Madoca Corp.
Grainlens Ltd
Blacklocust Ltd
Siboure Holding Ltd

Principal
Activity

Country of
incorporation

Agribusiness
Agriculture
Retail

Peru
Peru
Peru

Agriculture
Agriculture
Agriculture
Agriculture
Services
Shrimp farming
Fish canning
Distribution
Real state
Holding
Holding
Holding
Holding

Peru
Peru
Peru
Peru
Peru
Peru
Peru
Spain
British Virgin Islands
Panama
Cyprus
Cyprus
Cyprus

10

Direct or indirect equity interest


as of 31 December
2008
2007
%
%
100.00
100.00
100.00
100.00
50.00
50.00
99.99
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00

99.99
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


1

CORPORATE INFORMATION (continued)


Camposol S.A. is a Peruvian agribusiness corporation incorporated in the city of Lima on 31 January 1997
and is the worlds largest producer and exporter of asparagus. Camposol S.A. contributes substantially all
the Groups revenue and net profit for the period.
The legal domicilie of Camposol S.A. is Calle Augusto Tamayo 180, District of San Isidro, Province of
Lima, and Department of Lima, Peru. In addition, the Company has a commercial office located at
Carretera Panamericana Norte Km. 497.5, District of Chao, Province of Viru, Department of La Libertad,
and three production establishments or agricultural lands located at Carretera Panamericana Norte Kms.
510, 512, y 527 in the Department of La Libertad, Peru. Camposol S.A. also has two offices in the
department of Piura, Peru.
The Group has management control of Preco Precio Economico S.A.C, which remained dormant and had
no income or expenses in 2008.
The table below presents details of the agricultural land where the Group develops its activities:
Land

Mar verde
Huangala - Terra
Agricultor
Gloria
Agroms
Pur Pur
Vir - San Jos
Compositan
Yakuy Minka
Santa Ana
Santa Anita
Santa Julia
Mara Auxiliadora
La Merced
Ocoto Alto
Ocoto Bajo
Ica
Tumbes

Geographic Area

La Libertad
Piura
La Libertad
La Libertad
La Libertad
La Libertad
La Libertad
La Libertad
La Libertad
Piura
Piura
Piura
Piura
Piura
Piura
Piura
Ica
Tumbes

Area in Hectares (Ha)


2008

2007

2,496
2,662
1,726
1,018
414
246
416
3,778
2,762
3,370
128
2,105
1,980
1,000
112
31
175
462
24,881

2,496
2,662
1,726
1,018
414
246
416
3,778
2,762
3,370
404
19,292

During 2008 the Group acquired additional agricultural land to support future growth.
The Group owns the following planted areas:
Area in Hectares (Ha)
2008
2007
Asparagus
Avocados
Mangoes
Grapes
Tangerine

2,993
1,207
415
97
57
4,769

3,318
840
499
4,657

The Group also has 560 Ha (400 Ha in 2007) of area ready to plant pepper and 253 Ha for Shrimp
farming. As of 31 December 2008 the Group did not have any pepper planted in its designated area,
while at 31 December 2007 it had 268 Ha.
11

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


2

SIGNIFICANT ACCOUNTING POLICIES


The basis of preparation and accounting policies used in preparing the consolidated financial statements
for the year ended 31 December 2008 are set out below.
a) Basis of preparation
The consolidated financial statements have been prepared on historical cost basis, except for biological
assets and derivative financial instruments which have been measured at fair value.
The financial statements are presented in United States dollars (USD). Where relevant, there are amounts
expressed in Peruvian nuevo soles (PEN), Euro (), and Norwegian Kroner (NOK)..
The consolidated financial statements have been prepared in accordance with International Financial
Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and as
adopted by the European Union (EU).
The accounting policies adopted are consistent with those of the previous financial year except for the
adoption as from 1 January 2008, of the following new and amended IFRS and IFRIC Interpretations:
Amendments to IAS 39 and IFRS 7: Reclassification of Financial Instruments
IFRIC 11, IFRS 2: Group and Treasury Share Transactions
IFRIC 12, Service Concession Arrangements
IFRIC14, IAS19: The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their
Interaction
Adoption of the above did not have any effect on the financial statements of the Group.
Standards, interpretations and amendments to published standards that are not yet effective
Up to the date of approval of the financial statements, certain new standards, interpretations and
amendments to existing standards have been published that are not yet effective for the current reporting
period and which the Group has not early adopted, as follows:
Standards and Interpretations issued by the IASB and adopted by the EU
IFRS 8 Operating Segments (effective for annual periods beginning on or after 1 January 2009)
IFRS 8 replaces IAS 14 Segment Reporting and adopts a management-based approach to segment
reporting. The information reported would be that which management uses internally for evaluating the
performance of its operating segments and allocating resources to those segments. This information may
be different from that reported in the balance sheet and income statement and entities will need to provide
explanations and reconciliations of the differences. The management anticipate that the adoption of this
standard in future periods will only have impact on the disclosures to the financial statements of the
Group.
Amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards and IAS 27
Consolidated and Separate Financial Statements (effective for annual periods beginning on or after 1
January 2009)
IFRS 1 has been amended to allow an entity, in its separate financial statements, to determine the cost of
its investments in subsidiaries, jointly controlled entities or associates (in its opening IFRS financial
statements) at cost or at deemed cost. This determination is made for each investment, rather than being
a policy decision. The revisions to IAS 27 are to be applied prospectively and will affect future acquisitions
and transactions with minority interests.
IFRS 2 Share-based Payment (Revised) (effective for annual periods beginning on or after 1 January
2009). The amendments to IFRS 2 clarify the definition of a vesting condition and prescribe the treatment
for an award that is effectively cancelled. These amendments will not have any impact on the Groups
financial statements.
12

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


2

SIGNIFICANT ACCOUNTING POLICIES (continued)


IAS 1 Presentation of Financial Statements (Revised) (effective for annual periods beginning on or after 1
January 2009)
The main revisions to IAS 1 are the introduction of a new statement of comprehensive income that
combines all items of income and expense recognised in profit or loss together with other comprehensive
income and the requirement to present restatements of financial statements or retrospective application of
a new accounting policy as at the beginning of the earliest comparative period, i.e. a third column on the
balance sheet. The management anticipate that the adoption of this standard in future periods will only
have impact on the disclosures to the financial statements of the Group.
IAS 23 Borrowing Costs (Revised) (effective for annual periods beginning on or after 1 January 2009)
The revised IAS 23 requires the capitalisation of borrowing costs that are directly attributable to the
acquisition, construction or production of a qualifying asset. The option in the current standard to expense
borrowing costs to the income statement in case of a qualifying asset has been eliminated. In accordance
with the transitional requirements of the standard, the Group will adopt this as a prospective change.
Accordingly, borrowing costs will be capitalised on qualifying assets with a commencement date after 1
January 2009. No changes will be made for borrowing costs incurred to this date that have been
expensed.
IAS 32 Financial Instruments: Presentation and IAS 1 Presentation of Financial Statements Puttable
Financial Instruments and Obligations Arising on Liquidation (effective for annual periods beginning on or
after 1 January 2009)
The revisions provide a limited scope exemption for puttable instruments to be classified as equity if they
fulfil a number of specified features. The management anticipate that the adoption of this standard in
future periods will only have impact on the disclosures and presentation of the financial statements of the
Group.
Improvements to IFRSs (effective for annual periods beginning on or after 1 January 2009)
In May 2008 IASB issued its first omnibus of amendments to its standards, primarily with a view to
removing inconsistencies and clarifying wording. IASB has separated the 34 amendments of this edition
in two Parts: Part I deals with amendments resulting in accounting changes, and Part II deals with editorial
or terminology amendments with minimal impact. There are separate transitional provisions for each
standard. The Group is currently assessing their impact on its financial statements.
IFRIC 13 Customer Loyalty Programmes (effective for annual periods beginning on or after 1 July 2008)
IFRIC 13 requires customer loyalty award credits to be accounted for as a separate component of the
sales transaction in which they are granted and therefore part of the fair value of the consideration
received is allocated to the award credits and deferred over the period that the award credits are fulfilled.
The Management does not expect that its adoption will have an impact on its financial statements of the
Group.
Standards and Interpretations issued by the IASB but not yet adopted by the EU
Revised IFRS 3 Business Combinations and Amended IAS 27 Consolidated and Separate Financial
Statements (effective for annual periods beginning on or after 1 July 2009)
IFRS 3 (revised) introduces a number of changes in the accounting for business combinations occurring
after this date that will impact the amount of goodwill recognised, the reported results in the period that an
acquisition occurs, and future reported results. IAS 27 (amended) requires that a change in the ownership
interest of a subsidiary (without loss of control) is accounted for as an equity transaction. Therefore, such
transactions will no longer give rise to goodwill, nor they will give rise to a gain or loss. Furthermore, the
amended standard changes the accounting for losses incurred by the subsidiary as well as the loss of
control of a subsidiary. Other consequential amendments were made to IAS 7 Statement of Cash Flows,
IAS 12 Income Taxes, IAS 21 The Effects of Changes in Foreign Exchange Rates, IAS 28 Investment
in Associates and IAS 31 Interests in Joint Ventures.
The application of this standard will be prospectively and will affect future acquisitions and transactions
with minority interests.
13

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2

SIGNIFICANT ACCOUNTING POLICIES (continued)


Revised IFRS 1 First-time Adoption of International Financial Reporting Standards (effective for annual
periods beginning on or after 1 January 2009)
This revision of IFRS 1 is effective for entities applying IFRSs for the first time and there is no impact on
the financial statements of the Group.
Amendment to IAS 39 Financial Instruments: Recognition and Measurement Eligible Hedged Items
(effective for annual periods beginning on or after 1 July 2009)
The Amendment clarifies that an entity is permitted to designate a portion of the fair value changes or
cash flow variability of a financial instrument as a hedged item. The Group does not expect this
Amendment to impact its financial statements.
IFRIC 15 Agreement for the Construction of Real Estate (effective for annual periods beginning on or
after 1 January 2009)
The Interpretation is to be applied retrospectively. It clarifies when and how revenue and related expenses
from the sale of a real estate unit should be recognised if an agreement between a developer and a buyer
is reached before the construction of the real estate is completed. Furthermore, the interpretation
provides guidance on how to determine whether an agreement is within the scope of IAS 11 Construction
contracts or IAS 18 Revenue. The Group does not expect that this Interpretation will have a material
impact on its financial statements.
IFRIC 16 Hedges of a Net Investment in a Foreign Operation (effective for annual periods beginning on
or after 1 October 2008)
IFRIC 16 provides guidance on the accounting for a hedge of a net investment. As such, it provides
guidance on identifying the foreign currency risks that qualify for hedge accounting in the hedge of a net
investment, where within the group the hedging instruments can be held in the hedge of a net investment
and how an entity should determine the amount of foreign currency gain or loss, relating to both the net
investment and the hedging instrument, to be recycled on disposal of the net investment. The
Interpretation is to be applied prospectively. The Group is currently assessing which accounting policy to
adopt for the recycling on disposal of the net investment.
IFRIC 17 Distribution of Non cash Assets to Owners (effective for annual periods beginning on or after 1
July 2009)
IFRIC 17 applies to all non-reciprocal distributions of non-cash assets, including those giving the
shareholders a choice of receiving non-cash assets or cash, provided that all owners of the same class of
equity instruments are treated equally and the non-cash assets are not ultimately controlled by the same
parties both before and after the distribution, and as such, excluding transactions under common control.
The Group does not expect that this Interpretation will have any impact on its financial statements.
IFRIC 18 Transfer of Assets from Customers (effective for annual periods beginning on or after 1 July
2009)
IFRIC 18 applies to all entities that receive from customers an item of property, plant and equipment or
cash for the acquisition or construction of such items. The asset must then be used to provide ongoing
access to a supply of goods, services or both. The Interpretation is not relevant to the Group's operations.
Amendment to IFRS 7, Improving Disclosures about Financial Instruments (effective for annual periods
beginning on or after 1 January 2009)
The amendments are intended to enhance the disclosures for fair value measurement and liquidity risk.
Entities will be required to use a 3-level hierarchy of disclosures for financial instruments recorded at fair
value. The Group will provide the additional disclosures in its financial statements for 2009.
Amendments to IFRIC 9 and IAS 39, Embedded Derivatives (effective for annual periods ending on or
after 30 June 2009)
The Amendments require an entity to assess whether an embedded derivative must be separated from a
host contract when the entity reclassifies a hybrid financial asset out of the fair value through profit or loss
category. The amendment is not expected to have any impact on the Group financial statements.
14

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


2

SIGNIFICANT ACCOUNTING POLICIES (continued)


b) Significant accounting judgments, estimates and assumptions
The preparation of the Group's consolidated financial statements requires management to make
judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets
and liabilities, and the disclosure of contingent liabilities, at the reporting date. However, uncertainty about
these assumptions and estimates could result in outcomes that require a material adjustment to the
carrying amount of the asset or liability affected in future periods.
The most significant use of judgment is the estimation of the fair value of biological assets, including
asparagus, avocados, mangoes, artichokes, pepper and shrimp. The inputs to the valuation models are
derived from observable market data where possible, but where observable market data are not
available, judgment is required to establish fair values. The judgments include considerations of
plantation volumes, cost per ton, depletion and the discount rate used to estimate the present values.
The valuation of biological assets is described in more detail in Note 2 (j).
Other significant areas of estimation uncertainty and critical judgments made by management in preparing
the consolidated financial statements are as follows. Information about such judgments and estimates is
given in the relevant accounting policies and other the Notes to the financial statements.
-

Determination of functional currency - Note 2 (d);


Determination of useful lives of assets for depreciation purposes - Note 2 (e);
Recognition and determination of useful lives of intangibles assets - Note 2 (f);
Review of asset carrying values and impairment charges - Note 2 (g);
Contingencies - Note 2 (r);
Estimation of fair value of financial instrument (Hedge) Note 2(u);
Estimation of fair value of warrants and stock options Note 2 (x);
Estimation of deferred income and workers profit sharing - Note 22 and 23
Certain income tax matters - Notes 12 and 22.

c) Basis of consolidation
The consolidated financial statements comprise the financial statements of the Company and its
subsidiaries as at 31 December 2008.
(i) Subsidiaries and business combinations
Subsidiaries are those enterprises controlled by the Group regardless of the amount of shares owned by
the Group. Control exists when the Group has the power, directly or indirectly, to govern the financial and
operating policies of an enterprise so as to obtain benefits from its activities. Subsidiaries are consolidated
from the date on which control is transferred to the Group and cease to be consolidated from the date on
which control is transferred out of the Group.
The purchase method of accounting is used to account for the acquisition of subsidiaries. The cost of an
acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities
incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable
assets acquired and liabilities and contingent liabilities assumed in a business combination are measured
initially at their fair values at the acquisition date. The excess of the cost of acquisition over the fair value
of the Groups share of the identifiable net assets acquired is recorded as goodwill. If the cost of
acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is
recognized directly in the income statement.
The financial statements of subsidiaries are prepared for the same reporting period as the parent
company, using consistent accounting policies. All intra-group balances and transactions, including
unrealized profits and losses, are eliminated in full.
15

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


2

SIGNIFICANT ACCOUNTING POLICIES (continued)


(ii) Equity transactions in business combinations
The cost of the business combination is based on the fair value of assets given up, liabilities assumed and
equity instruments issued at the date of the combination.
The fair value of the services rendered in connection with the combination is recorded in equity and
included in the total cost of the business combination.
Also the cost of the combination includes the difference between the fair value of the shares being issued
and the cash consideration to be received in connection with an assumed liability to issue shares as part
of the combination.
(iii) Minority Interests
Minority interests represent the portion of profit or loss and net assets that is not held by the Group and
are presented separately in the consolidated income statement and within equity in the consolidated
balance sheet, separately from parent shareholders' equity. The difference between the consideration and
the book value of the share of the net assets on acquisitions of minority interests is recognised in retained
earnings in equity.
d) Currency translation
The Groups financial information is presented in US dollars, which is its functional currency, the currency
of the primary economic environment in which the holding company and all key subsidiaries operate.
Each entity in the Group determines its own functional currency and items included in the financial
statements of each entity are measured using that functional currency.
Transactions in foreign currencies are initially recorded at the functional currency rate prevailing at the
date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated
at the functional currency spot rate of exchange ruling at the balance sheet date. All differences are taken
to the income statement.
The assets and liabilities of group entities that have a functional currency different from US Dollars are
translated into US Dollars at the rate of exchange prevailing at the balance sheet date and their income
statements are translated at the average exchange rates for the period. The exchange differences arising
on the translation are taken directly to a separate component of equity. On disposal of such foreign
operation, the deferred cumulative amount recognised in equity relating to that particular foreign operation
is recognised in the income statement.
Any goodwill arising on the acquisition of a foreign operation subsequent to 1 January 2005 and any fair
value adjustments to the carrying amounts of assets and liabilities arising on the acquisition are treated as
assets and liabilities of the foreign operation and translated at the closing rate.

16

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


2

SIGNIFICANT ACCOUNTING POLICIES (continued)


e) Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation and impairment losses.
Such cost comprises the purchase price and any cost directly attributable to bringing the asset into
working condition for its intended use. Cost of replacing part of the plant and equipment is recognised in
the carrying amount of the plant and equipment if the recognition criteria are satisfied. All other repair
and maintenance costs are recognised in the income statement as incurred. The present value of the
expected cost for the decommissioning of the asset after its use is included in the cost of the respective
asset if the recognition criteria for a provision are met. Interest borrowing costs are not capitalized and
are expensed as incurred.
The cost / valuation less the residual value of each item of property, plant and equipment is depreciated
over its useful life.
Depreciation is calculated on a straight-line basis over the estimated useful life of individual assets, as
follows:
Years
Buildings
33
Land works for irrigation
70
Plant and equipment
Between 5 and 10
Furniture and fixtures
10
Other equipment
Between 3 and 10
Vehicles
5
Depreciation commences when assets are available for use. Land is not depreciated.
The assets residual values, remaining useful lives and methods of depreciation reviewed at each financial
year end and adjusted prospectively if appropriate.
An assets carrying amount is written-down immediately to its recoverable amount, if the assets carrying
amount is greater than its estimated recoverable amount.
An item of property, plant and equipment is derecognised upon disposal or when no future economic
benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset
(calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is
included in the income statement in the year the asset is derecognised.
f)

Intangible assets

(i) Goodwill
Goodwill is inititially measured at cost being the excess of the cost of the business combination over the
Groups share of the net fair value of of the acquirees identifiable assets , liabilities and contingent
liabilities at the date of acquisition. Goodwill on acquisition of subsidiaries is included in intangible assets.
After initial recognition, goodwill is recognised at cost less any accumulated impairment losses.

17

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


2

SIGNIFICANT ACCOUNTING POLICIES (continued)


Goodwill is tested for impairment annually (as at 31 December) and when circumstances indicate that the
carrying value may be impaired. For the purpose of impairment testing, goodwill acquired in a business
combination is, from the acquisition date, allocated to each of the Groups cash-generating units that are
expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities
of the acquiree are assigned to those units. Impairment is determined for goodwill by assessing the
recoverable amount of each cash-generating unit (or group of cash-generating units) to which the goodwill
relates. Where the recoverable amount of the cash-generating unit is less than their carrying amount an
impairment loss is recognised.
Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed
of, the goodwill associated with the operation disposed of is included in the carrying amount of the
operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this
circumstance is measured based on the relative values of the operation disposed of and the portin of the
cash-generating unit retained.
(ii) Customer Relationships
Customer relationships are initially recognized at cost (fair value at the date of acquisition in a business
combination) and subsequently at cost less amortization over their estimated useful lives of between 2 to
20 years.
The intangible asset is valued using an income approach and the multi-period excess earnings method
The excess of earnings is defined as the difference between:
After-tax operating cash flow generated by the existing customers at the acquisition date; and,
Cost contribution required by the remaining assets (tangible and intangible) for maintaining the
relationships with customer.
The application of the multi-period excess earnings requires the following estimations:
Future sales attributable to the existing customer list at the acquisition date, excluding any sales from
other customers without an established and clear relationship. The sales forecast for each customer,
or customer category, takes into consideration organic sales growth as well as the deterioration rate
for this customer list.
Calculation of operating margins (EBIT), taking into account only costs related to the existing
customer base at the acquisition date.
(iii) Computer Software
Acquired computer software licenses are initially measured at cost which comprises of the costs incurred
to acquire the computer software licenses and and directly attributable costs of preparing the asset for its
intended use . Costs that are directly associated with the development of identifiable and unique software
products controlled by the Group, and that will probably generate economic benefits exceeding costs
beyond one year, are recognized as intangible assets.
Costs associated with maintaining computer software programmers are recognized as an expense as
incurred
Subsequent to initial recognition, computer software licenses are carried at cost less accumulated
amortization over their estimated useful lifes of 4 years and any accumulated impairment loss.

18

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


2

SIGNIFICANT ACCOUNTING POLICIES (continued)


g) Impairment of non-financial assets
The carrying amounts of non-financial assets are reviewed for impairment if events or changes in
circumstances indicate that the carrying value may not be recoverable. At each reporting date the Group
assesses if there are indicators of impairment and if yes, or if an annual impairment testing for an asset is
required, an exercise is undertaken to determine whether the carrying values are in excess of their
recoverable amount. Such review is undertaken on an asset by asset basis, except where such assets do
not generate cash flows independent of other assets, and then the review is undertaken at the cashgenerating unit level.
If the carrying amount of an asset or cash-generating unit exceeds the recoverable amount, the asset is
considered impaired and is written down to its recoverable amount. Impairment losses are recognized in
the income statement.
The recoverable amount of assets is the greater of their value in use or fair value less costs to sell. Fair
value is based on an estimate of the amount that the Group may obtain in a sale transaction on an arms
length basis. In assessing value in use, the estimated future cash flows are discounted to their present
value using a pre-tax discount rate that reflects current market assessments of the time value of money
and the risks specific to the asset. For an asset that does not generate cash inflows largely independent of
those from other assets, the recoverable amount is determined for the cash -generating unit to which the
asset belongs. The Groups cash-generating units are the smallest identifiable groups of assets that
generate cash inflows that are largely independent of the cash inflows from other assets or groups of
assets.
For assets excluding goodwill, an impairment loss is reversed if there has been a change in the estimates
used to determine the recoverable amount. An impairment loss is reversed only to the extent that the
assets carrying amount does not exceed the carrying amount that would have been determined, net of
depreciation or amortization, if no impairment loss had been recognized in prior periods.. Impairment
losses relating to goodwill cannot be reversed in future periods.
h) Leases
The determination of whether an arrangement is or contains a lease is based on the substance of the
arrangement at inception date: whether the fulfillment of the arrangement is dependent on the use of a
specific asset or assets or the arrangement conveys a right to use the asset.
Finance leases that transfer to the Group substantially all risks and benefits incidental to ownership of the
leased items are capitalized at the inception of the lease at the fair value of the leased property , or if
lower, at the present value of the minimum lease payments. Finance lease payments are apportioned
between finance charges and reduction in the lease liability so as to achieve a constant rate of interest on
the remaining balance of the liability. Finance costs are recognised in the income statement. Capitalized
leased assets are depreciated over the shorter of their estimated useful life and the lease term, if there is
no reasonable certainty that the Group will obtain ownership at the end of the lease term.
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are
classified as operating leases. Payments made under operating leases are charged to the income
statement on a straight line basis over the period of the lease.

19

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


2

SIGNIFICANT ACCOUNTING POLICIES (continued)


i)

Investments in associated companies

An associate is an entity in which the Group has significant influence and which is neither a subsidiary nor
an interest in a joint venture.
The investments in shares of the associated companies are recorded using the equity method. Under the
equity method, the investment in the associate is carried at cost plus the post acquisition changes in the
Groups share of net assets of the associate. Goodwill relating to the associate is included in the carrying
amount of the investment and is not amortised or separately tested for impairment. Consequently, the
Groups participation in the associates profits or losses is recognized in the results of the period in which
they occur. In case the associated companies are not able to meet payments for financial obligations
guaranteed by the Group, additional losses woud be recorded.
Where there has been a change recognised directly in the equity of the associate, the Group recognises
its share of any changes and discloses this, when applicable, in the statement of changes in equity.
Unrealised gains and losses resulting from transactions between the Group and the associate are
eliminated to the extent of the interest in the associate.
The share of profit of associates is shown on the face of the income statement. This is the profit
attributable to equity holders of the associate and therefore is profit after tax and minority interests in the
subsidiaries of the associates.
After application of the equity method, the Group determines whether it is necessary to recognise an
additional impairment loss on the Groups investment in its associates. The Group determines at each
balance sheet date whether there is any objective evidence that the investment in the associate is
impaired. If this is the case the Group calculates the amount of impairment as the difference between the
recoverable amount of the associate and its carrying value and recognises the amount in the income
statement.
j)

Biological assets

The biological assets of asparagus, avocados, mangoes, artichokes, pepper, tangerine, grapes and
shrimp are stated at their fair value less point of sale costs. Land, and related facilities are accounted for
under property, plant and equipment.
Fair value is determined using the present value method at current conditions for asparagus, avocados,
mangoes, artichokes, pepper and shrimp.Tangerine and grape, whose fair value cannot be reliably
measured, are stated at cost. Changes in fair value are recognized in income in the period in which they
arise.
For the present value method, assumptions are used to estimate the plantation volumes, cost per ton, and
depletion. Cost of delivery includes all costs associated with getting the harvested agricultural and shrimp
produce to the market, being harvesting and allocated fixed overheads. Future cash flows are discounted
using the pre-tax weighted average cost of capital.
k) Inventories
Inventories are valued at the lower of average cost and net realizable value.
The cost of biological products is determined as the fair value less estimated point of sale costs at the time
of harvest..
The net realizable value is the estimated sale price in the ordinary course of business, less estimated
costs to place inventories in selling condition and commercialization and distribution expenses.

20

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SIGNIFICANT ACCOUNTING POLICIES (continued)


The cost of inventories may not be recovered if those inventories are damaged, on become wholly or
partially obsolete, their selling prices have declined or the estimated costs to be incurred necessary to
make the sale have increased. In such circumstances, inventories are written down to their net realizable
value. The Group determines the provision for obsolescence as follows:
Fresh and frozen products

100% of cost at expiration

Preserved products

50% of cost after 2 years


100% of cost at expiration

The provision is estimated on an item by item basis or for groups of items with similar characteristics
(same crop, market and others).
l)

Accounts receivable

Current trade receivables are recognized initially at fair value and subsequently remeasured at amortized
cost using the effective interest method, less any provision for impairment.
A provision for impairment of trade receivables is estimated when there is objective evidence that the
Group will not be able to collect all amounts due according to the original terms of the invoice. The amount
of the provision is the difference between the carrying amount and the present value of the recoverable
amounts and this difference is recognized in the income statement. Bad debts are written off when they
are assessed as uncollectible.
m) Share capital
Ordinary shares are classified as equity. Any excess over the par value of issued shares is classified as
share premium.
n) Provisions
Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a
past event, it is probable that an outflow of resources will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation. If the effect of the time value of money is material,
provisions are determined by discounting the expected future cash flows at a pre tax rate that reflects
current market assessments of the time value of money and, where appropriate, the risks specific to the
liability. Where discounting is used, the increase in the provision due to the passage of time is recognized
as a financial expense.
Workers profit sharing and other employee benefits
In accordance with Peruvian Legislation the Group is required to provide for workers profit sharing
equivalent to 10% of taxable income in Peru of each year. This amount is charged to the income
statement and is deductible for income tax purposes.
The workers profit sharing liability is presented in Other payables in the balance sheet. The liability is
computed using the balance sheet liability method and reflects the effects of temporary differences
between asset and liability balances for accounting purposes and those determined for tax purpose. The
liability is measured using the workers profit sharing rates expected to be applied to the taxable income in
the years in which these differences are recovered or eliminated. Effects corresponding to changes in
workers` profit sharing rates are recognized in the results of the year in which the change is known.
The Group has no pension or retirement benefit schemes.

21

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SIGNIFICANT ACCOUNTING POLICIES (continued)


o) Income tax
Current income tax
Current income tax assets and liabilities for the current and prior periods are measured at the amount
expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to
compute the amount are those that are enacted or substantively enacted by the balance sheet date.
Current income tax relating to items recognised directly in equity is recognised in equity and not in
the income statement.
Deferred income tax
Deferred income tax is provided using the liability method on temporary differences at the balance sheet
date between the tax bases of assets and liabilities and their carrying amounts for financial reporting
purposes. Deferred income tax liabilities are recognised for all taxable temporary differences, except:


where the deferred income tax liability arises from the initial recognition of goodwill or of an asset
or liability in a transaction that is not a business combination and, at the time of the transaction,
affects neither the accounting profit nor taxable profit or loss; and
in respect of taxable temporary differences associated with investments in subsidiaries, associates
and interests in joint ventures, where the timing of the reversal of the temporary differences can be
controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred income tax assets are recognised for all deductible temporary differences, carry forward of
unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be
available against which the deductible temporary differences, and the carry forward of unused tax credits
and unused tax losses can be utilised except:


where the deferred income tax asset relating to the deductible temporary difference arises from the
initial recognition of an asset or liability in a transaction that is not a business combination and, at the
time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
in respect of deductible temporary differences associated with investments in subsidiaries,
associates and interests in joint ventures, deferred income tax assets are recognised only to the
extent that it is probable that the temporary differences will reverse in the foreseeable future and
taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced
to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of
the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at
each balance sheet date and are recognised to the extent that it has become probable that future taxable
profit will allow the deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the
year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been
enacted or substantively enacted at the balance sheet date.
Deferred income tax relating to items recognised directly in equity is recognised in equity and not in
the income statement.
Deferred income tax assets and deferred income tax liabilities are offset, if a legally enforceable right
exists to set off current tax assets against current income tax liabilities and the deferred income taxes
relate to the same taxable entity and the same taxation authority.
p) Trade payables
Trade payables are recognized initially at fair value and subsequently measured at amortized cost using
the effective interest method.

22

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


2

SIGNIFICANT ACCOUNTING POLICIES (continued)


q) Borrowings
Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are
subsequently stated at amortized cost. Any difference between the proceeds (net of transaction costs) and
the redemption value is recognized in the income statement over the period of the borrowing using the
effective interest method.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer
settlement of the liability for at least 12 months after the balance sheet date.
r)

Contingencies

Contingent liabilities, other than those recognized in a business combination, are not recognized in the
financial statements. They are disclosed in the notes to the financial statements unless the possibility of
an economic outflow is remote. A contingent asset is not recognized in the financial statements, but is
disclosed where an inflow of economic benefit is probable.
s) Revenue recognition
Revenue comprises the fair value of the consideration received or receivable for the sale of goods and
services in the ordinary course of the Group activities. Revenue is shown net of value-added tax, returns,
rebates and discounts and after eliminating sales within the Group.
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group
and the revenue can be reliably measured. The following specific recognition criteria must also be met
before revenue is recognised:
Sale of goods
Sales of goods are recognized when all risks and rewards of ownership have been transferred to the
buyer, usually on delivery of the goods Sales of goods comprise:

Exports of fresh products


They are mainly fresh products of asparagus, avocado and mango. Some of these exports are
invoiced at a fixed price while others on a preliminary liquidation basis (provisionally priced) which is
determined on current market prices at the date of issuance of the export invoice .
In the case of sales on a preliminary liquidation basis, an adjustment to the provisional price is made
based on current market prices at the date agreed with the customer, usually within a period ranging
from 7 to 30 days after the export delivery.
The price adjustment arrangement is an embedded derivative which is separated from the sales
contract at each reporting date. The value of the provisionally priced fresh products is remeasured
using the forward selling price for the respective quotational period agreed with the customer until this
quotational period ends. The selling price of fresh products can be measured reliably as these
products are actively traded on international markets. The change in value of provisionally priced
contracts is recorded as an adjustment to revenue and of trade receivables.

Exports of preserved products


Revenue is recognized when export delivery conditions are met.

Export of frozen products


Revenue is recognized when export delivery conditions are met.

Domestic sales
Revenue is recognized on delivery.

23

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


2

SIGNIFICANT ACCOUNTING POLICIES (continued)


Change in fair value of biological assets
The net change in the fair value of biological assets as of the date of the balance sheet is recognised in
revenue.
Interest income
Revenue is recognized as interest accrues using the effective interest method.
Docking services rendered
Revenues from these services provided to third-parties are recognized when they are rendered.
t)

Costs and expenses

The cost of sales that corresponds to the cost of production of goods sold, and is recorded
simultaneously with the recognition of revenue.
Other costs and expenses are recognized as accrued and recorded in the periods to which they are
related.
In Peru, Camposol S.A and Marinazul are beneficiaries of a simplified procedure for import duty refund
(Drawback) of customs duties, at a rate of 5% of revenues until 2008. As a counter measure to the global
financial crisis, the Peruvian authorities have increased the Drawback rate for 2009 to 8%.
u) Financial assets
The Groups financial assets comprise cash and bank short-term deposits, trade and other accounts
receivables, and derivative financial instruments.
(i) Initial recognition
The Group recognizes financial assets on its balance sheet when, and only when, it becomes a party to
the contractual provisions of the instrument.
Financial assets are initially recognized at cost, which is the fair value of consideration given including,
any transaction costs incurred.
Financial assets and liabilities are offset and the net amount is reported in the balance sheet only when
there is a legally enforceable right to set off the recognized amounts and there is an intention to settle on a
net basis, or realize the asset and settle the liability simultaneously.
(ii) Subsequent measurement
Loans and receivables are loans and receivables created by the Group providing goods to a debtor and
are not quoted on an active market. They are carried at amortized cost using the effective interest method.
Financial liabilities are carried at amortized cost using the effective interest method.
(iii) De-recognition
A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial
assets) is derecognised when:



the rights to receive cash flows from the asset have expired; or
the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation
to pay the received cash flows in full without material delay to a third party under a pass-through
arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the
asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of
the asset, but has transferred control of the asset.
24

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


2

SIGNIFICANT ACCOUNTING POLICIES (continued)


(iii)

Derivatives

Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are
subsequently remeasured at their fair value at each balance sheet date. Embedded derivatives
incorporated in host contracts of financial instruments are accounted for at its fair value separately from
the host contract if such embedded derivative is not closely related to the host contract.
Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when
the fair value is negative
Any gains or losses arising from changes in fair value on derivatives that do not qualify for hedge
accounting and the ineffective portion of an effective hedge, are taken directly to the income statement.
The Group uses forward exchange contracts as hedges of its exposure to foreign currency risk in
forecasted transactions and firm commitments . For the purpose of hedge accounting, a hedge is
classified as cash flow hedge when hedging exposure to variability in cash flows that is either attributable
to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction
or the foreign currency risk in an unrecognised firm commitment.
For hedges which meet the strict criteria for hedge accounting, the effective portion of the gain or loss on
the hedging instrument is recognised directly in equity, while any ineffective portion is recognised
immediately in the income statement. Amounts taken to equity are transferred to the income statement
when the hedged transaction affects profit or loss, such as when the hedged financial income or financial
expense is recognised.
v) Dividend distribution
Dividend distribution to the Groups shareholders is recognized as a liability in the consolidated financial
statements in the period in which the dividends are approved by the shareholders.
w) Cash and cash equivalents
For the purposes of the cash flow statement, cash and cash equivalents comprise cash in hand and shortterm deposits held with banks with an original maturity of three months or less and which are subject to
insignificant risk of changes in value.
(x) Share-based payments
The Group operates a number of equity-settled share-based compensation plans. The cost of equitysettled transactions is measured by reference to the fair value of the equity instruments at the date on
which they are granted using the Black and Scholes Merton model. The cost, together with the
corresponding increase in equity, is recognized on a straight-line basis over the vesting period in which
the performance and/ or service conditions are fulfilled. At each balance sheet date, the Group revises its
estimates of the number of options that are expected to vest and recognizes the change in cost if any, in
the income statement, with a corresponding adjustment to equity.
(y) Segment Reporting
A business segment is a distinguishable component of the Group engaged in providing products or
services that are subject to risks and returns that are different from those of other business segments. A
geographical segment is a distinguishable component of the Group engaged in providing products or
service within a particular econmic environment that are subject to risk and returns that are different from
those segments operating in other economic environment.
Management considers that the Group operates in one business segment, which is the production and
sale of agricultural products.

25

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


3

BUSINESS COMBINATIONS
On 17 October 2007, Camposol AS acquired 100% of the share capital of Siboure Holding Inc. which was
the parent of the Camposol S.A. group.
The fair value of the identifiable assets and liabilities of the acquiree as at 17 October 2007 and the
corresponding carrying amounts immediately before acquisition were as follows:

(
(
(
(
(
(
(
(
(
(
(
(
(
(
(

Cash and cash equivalents


Property, plant and equipment
Customer relationships
Software
Investment in associates
Inventories
Biological assets
Trade and other receivables and other assets
Borrowings
Deferred tax liabilities
Workers profit sharing
Trade and other payables
Net assets
Goodwill
Total net assets acquired

Purchase consideration:
Cash paid
Direct costs relating to the acquisition

Fair value
USD 000
2,579)
86,012)
9,566)
1,428)
353)
28,538)
69,704)
43,855)
39,570)
10,768)
7,548)
29,694)
154,455)
16,279)
170,734)

Acquirees
carrying amount
USD 000
(
2,579)
(
50,039)
(
-)
(
1,428)
(
353)
(
27,786)
(
69,704)
(
43,855)
(
39,570)
(
4,272)
(
3,165)
(
29,694)
119,043)
(
)
(
119,043)

148,196)
1,324)
149,520)

Fair value of
- warrants to DCH (Note 21)
- discount on share premium paid by DCH
- discount on share premium paid by PL&F
Total consideration

6,133)
12,851)
2,230)
170,734)

Fair value of net assets acquired

(154,455)

Goodwill

16,279)

Cash outflow on acquisition:


Purchase consideration settled in cash(
Cash and cash equivalents in subsidiaries acquired
Cash outflow on acquisition

149,520)
(2,579)
(

(146,941)

At the time of the acquisition, Dyer Coriat Holding S.L (DCH), the founding shareholder, was granted the
right to subscribe for shares in Camposol AS, for a discounted price compared to the price paid by the
other investors in the private placement by Camposol AS. In addition DCH was granted warrants to
subscribe for additional shares, as described in Note 21.
The discounted price represents a type of finder's fee for identifying the acquisition of Camposol SA. and
represents an equity-settled share-based payment. The cost of these services was included in the cost of
the combination and their fair value is measured as the difference between the price per share paid by the
other shareholders and the cash per share paid in by the identified shareholder for the total shares
acquired.

26

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


3

BUSINESS COMBINATIONS (continued)


One shareholder in Camposol SA, Peru Land and Farming LLC (PL&F), had the right to exchange its
holding of 5,25% in Camposol SA with 1,195,950 shares in Camposol AS, at a discounted price
compared to the price paid by the other investors in the private placement by Camposol AS. This right was
accounted for as a liability incurred as part of the cost of the business combination in Camposol AS and
was settled by the issue of the shares in 2008.
The Company did not make any adjustments to the preliminary fair values recognised in 2007.
The amortization of the intangibles is a follows (in thousands of USD)
Accumulated
Amortization Net

Cost
2008
Goodwill
Customer relationships
Software
Total

(
(
(
(

16,279)
9,566)
3,174)
29,019)

(
(
(
(

- )
1,340)
99)
1,439)

(
(
(
(

16,279)
8,226)
3,075)
27,580)

2007
Goodwill
Customer relationships
Software
Total

(
(
(
(

16,279)
9,566)
1,428)
27,273)

(
(
(
(

- )
231)
- )
231)

(
(
(
(

16,279)
9,335)
1,428)
27,042)

Goodwill
The goodwill is attributable mainly to the workforce of the acquired business and the systems and
processes of the acquired companies which do not meet the criteria to be separately recognized in the
financial statements as per IFRS.
An impairment test for goodwill was performed by comparing the value in use of the assets acquired and
their carrying value (including goodwill). To estimate the value in use, the Company has used the following
assumptions:
Projections are based on the Companys forecasts approved by management
A 10-year term of cash flows has been used in the calculation, as the forecasted cash flows can be
based on reasonable and reliable assumptions.
Projections do not include cash inflows or outflows from financing activities or from income tax
payments.
Future cash flows are pre-tax and are estimated at current values (no effect due to inflation has been
considered), thus, the discount rate is a pre-tax real rate.
The discount rate is deemed to be the Companys WACC of 10,7% as this rate is affected by the
specific industry and market risks, therefore it represents market current conditions.
Goodwill is allocated to a single cash-generating unit. The results of reportable segments do not show
significant dispersion, therefore no significant difference would arise from performing the calculation at
a lower level of cash- generating units.
Cash flows projections encompass the entire cash flows expected to be generated in the normal
course of business, including the cash flows that relate to biological assets. All non-current assets
have been grouped as a single asset.
The fair value of the discount in share premium is calculated as the difference between share
premium paid by the investors and share premium paid by the founding shareholder. The fair value of
warrants and options was estimated by external profesional valuers..
Customer relationships
The relationships with customers established over time become a valuable intangible for the Group. The
loyalty of the customers has had a positive impact on sales and profits during the last 10 years of
operation of Camposol Group., allowing it to have foreseeable growth.
27

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

BUSINESS COMBINATIONS (continued)


Predictable commercial relationships generate a set of economic benefits for the Group, including
increased sales and minimization of the risks of sharp fluctuations in sales. Currently, Camposol has a
base of 137 customers, 20 of which explain 70 per cent of sales (according to 2008 commercial statistics).
At the date of acquisition,customer relationships were assigned a fair value using the income approach
and the multi-period excess earnings method to calculate the excess of earnings attributable to customer
relationships during their economic life. The excess of earnings is defined as the difference between:
After-tax operating cash flow generated by the existing customers at the acquisition date; and,
Cost contribution required by the remaining assets (tangible and intangible) for maintaining the
relationships with customer
The application of the multi-period excess earnings requires the following estimations:
Future sales attributable to the existing customers with an established relationship. The sales forecast
for each customer, or customer category, must take into consideration organic sales growth as well as
the deterioration rate for this customer list.
Calculation of operating margins (EBIT), taking into account only costs related to the existing
customer base at the acquisition date.
The useful life of customer relationships is amortised over their estimated useful lives which range from 2
to 20 years.
Annualised revenue
If the acquisition of Camposol SA group had occurred on 1 January 2007, Group revenue in 2007 would
have been USD 125,962 thousands and profit would have been USD 21,785 thousands.
These amounts have been calculated using the Groups accounting policies and by adjusting the results of
the subsidiaries to reflect the additional depreciation and amortization that would have been charged
assuming the fair value adjustments to property, plant and equipment and intangible assets had applied
as from 1 January 2007.

SEGMENT REPORTING
The Group is engaged in producing, processing and commercializing a number of agricultural products, as
fresh, preserved and frozen, which are mainly exported to European markets and the United States of
America. Since all products have similar risks and returns management considers that there is only one
reportable segment.
The products include asparagus, avocado, piquillo pepper, mangoes, arthichoke and shrimp. These are
further distinguished in fresh, canned and frozen products. The Group has decided to discontinue the
production of artichoke and to plant grapes (will be harvested between December 2009 and January
2010) and tangerines which need at least 3 years to start production.
All production and related assets are in Peru.
The analysis of sales below is based on the country / area in which the customer is located. The 2007
amounts are for the period 9 July to 31 December 2007 and the 2008 amounts for the whole year 2008.

Europe
USA
Peru
Other
28

2008
USD 000

2007
USD 000

90,049
48,520
877
1,259
140,705

25,132
9,942
226
892
36,192

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEGMENT REPORTING (continued)


The following table shows revenues and gross profit by product:

Year 2008
Revenues

Asparagus

Avocado

Artichoke

Pepper

Mango

Shrimp

Other

Total

USD 000

USD 000

USD 000

USD 000

USD 000

USD 000

USD 000

USD 000

62,073

31,611

16,964

13,255

8,620

5,366

2,816

140,705

6,599

20,500

999

530

1,860

771

(916)

30,343

Asparagus

Avocado

Artichoke

Pepper

Mango

Shrimp

Other

Total

USD 000

USD 000

USD 000

USD 000

Gross profit
Period in
2007
Revenues

USD 000

USD 000

USD 000

USD 000

24,402

5,929

4,746

264

827

24

36,192

7,665

1,168

751

195

502

(41)

10,240

Gross profit

REVENUE
Revenue represents the sale of fresh, preserved and frozen biological products and the rendering of
services. The 2007 revenues are for the period 9 July to 31 December 2007 and the 2008 revenues for
the whole year 2008.
2008
USD 000
Asparagus
Avocado
Artichoke
Pepper
Mango
Shrimp
Other
Total

Period in 2007
USD 000

62,073
31,611
16,964
13,255
8,620
5,366
2,816
140,705

24,402
5,929
4,746
264
827
24
36,192

Included within asparagus, avocado and mango revenue is the net change in the fair value of the
embedded derivatives - Note 2(s), which amounted to USD 491,000 in 2008 (USD 627,000 for 2007).
The avocado harvest season in 2007 ended in September, prior to the business combination.
6

COST OF SALES

Cost of inventories recognized as an expenses


Personnel expenses including profit sharing (Note 9)
Depreciation (Note 14)
Custom duties refund (Note 2t)
Total cost of sales

29

(
(
(
(

2008
USD 000

Period in 2007
USD 000

73,210)
38,125)
4,954)
(5,927)
110,362)

(
(
(
(

15,050)
11,234)
875)
(1,207)
25,952)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


7

ADMINISTRATIVE EXPENSES
2008
USD 000
Personnel expenses including profit sharing (Note 9)
Professional fees
Transport and telecommunications
Travel and business expenses
Electricity, maintenance and security
Expense of share based payments - options
Directorss remuneration
Auditors remuneration
Rent of computer equipment
Depreciation (Note 14)
Amortization of computer software (Note 3)
Other expenses
Total

(
(
(
(
(
(
(
(
(
(
(
(

4,891)
2,508)
1,231)
773)
742)
561)
243)
370
210)
144 (
99)
887)
12,659)

Period in 2007
USD 000
(
(
(
(
(
(
(
(
(
(
(

1,936)
231)
58)
362)
65)
257)
78)
320
32)
10)
)
48)
3,510)

SELLING EXPENSES
2008
USD 000
Freight
Amortization of customer relationships (Note 3)
Personnel expenses including profit sharing (Note 9)
Customs
Travel and business expenses
Insurance
Samples, promotions and fairs
Rents and telephone
Third-party services
Depreciation (Note 14)
Other expenses
Total
9

(
(
(
(
(
(
(
(
(
(
(
(

11,930)
1,109)
912)
842)
579)
292)
236)
112)
103)
12)
159)
16,286)

Period in 2007
USD 000
(
(
(
(
(
(
(
(
(
(
(
(

2,142)
231)
324)
731)
97)
98)
95)
65)
658)
)
31)
4,472)

PERSONNEL EXPENSES
2008
USD 000
Salaries and wages
Vacations
Other employees benefits
Share based payments: options
Other expenses
Workers profit sharing (Note 2 (n)
Total
Personnel expenses are allocated as follows:
Cost of sales (Note 6)
Administrative expenses (Note 7)
Directors remuneration Administrative expenses (Note7)
Selling expenses (Note 8)

30

Period in 2007
USD 000

(
(
(
(
(
(
(

38,682)
1,929)
1,168)
561)
2,024)
193)
44,171)

(
(
(
(
(
(
(

11,244)
504)
175)
257)
386)
1,006)
13,572)

(
(

38,125)
4,891)
243
912)
44,171)

(
(

11,234)
1,936)
78
324)
13,572)

(
(

(
(

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


10 OTHER INCOME AND EXPENSES
2008
USD 000
Other income
Insurance claims
Recovery of provision for doubtful receivables
Gain from sale of property, plan and equipment
Other

Other expenses
Provision for doubtful receivables (Notes 18 and 19)
Credit for value added tax not used
Loss on currency derivative
Loss from sale of property, plant and equipment
Other

Period in 2007
USD 000

(
(
(

211)
21
- )
501)
733)

(
(
(
(

54)
19
349)
106)
52,828

(
(
(
(
(
(

3,435)
165)
144)
56)
1,062)
4,806)

(
(
(
(
(
(

( 113)
- )
- )
23 )
173)
309)

The loss on the currency derivative includes the net receipts from the counterparty of USD530,000 and
the loss of USD 674.000 corresponding to the ineffective portion of the hedge (Note 32 a)
11 FINANCE INCOME AND COSTS
2008
USD 000
Income
Interest on bank time deposits
Change in value of embedded derivative in loan (Note 24)
Other finance income
Costs
Interest on bank loans (Notes 24 and 28)
Interest on finance leases
Levy on financial transactions
Interest of suppliers financing
Bank fees
Other finance costs

Period in 2007
USD 000

(
(
(
(

1,416)
362)
197)
1,975)

(
(
(
(

94)
379)
306)
779)

(
(
(
(
(
(
(

8,551)
871)
760)
355)
59)
778)
11,374)

(
(
(
(
(
(
(

489)
73)
)
)
103)
133)
798)

12 INCOME TAX
Income statement
2008
USD 000
Current tax
Deferred tax
Tax income / (expense)

(
(
(

14)
118)
104)

Period in 2007
USD 000
(
(
(

221)
1,494)
1,715)

The only Group company that has generated taxable income was Marinazul S.A. All other companies in
the Group incurred tax losses for which a deferred tax asset was recognised Note 22.
The standard rate of Cyprus income tax for 2008 and 2007 is 10% and for subsidiaries in Peru 15%. The
rate of tax in 2007 for Camposol AS was 28%.

31

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


12 INCOME TAX (continued)
The current tax income / (expense) differs from the theoretical amount that would arise using the
weighted average tax rate applicable to profit before tax of the consolidated companies as follows:
2008 Period in 2007
USD 000
USD 000
Profit before income tax
At statutory income tax rate of 10% (28% in 2007) of the parent(
Difference in tax rate (
Expenses not deductible for tax purposes (
Non taxable revenue
Other
Tax income / (expense)

881)(
(88))(
(44))(
(1,181))(
1,683
(266))(
104
(

12,752)()
(3 571)
1,658

(57))()
124
131
(1,715)))

Profit before income tax only corresponds to Peruvian subsidiaries, therefore taxation charge in the
income statement is based on the Peru tax rate of 15%. The tax rate for the parent in 2007 was 28% since
the ultimate holding company was a tax resident of Norway.
13 BASIC AND DILUTED EARNINGS PER SHARE
Basic earnings per share
Basic earnings per share are calculated by dividing net profit attributable to equity holders of the parent
by the weighted average number of ordinary shares in issue during the year.

Profit attributable to equity holders of the parent (USD 000)


Weighted average number of ordinary shares in issue (thousands)
Basic earnings per share (USD)

2008

2007

985
29,175
0,034

11,037
24,445
0,452

The Company was incorporated on 9 July 2007. One class of 2,570,000 initial shares do not have the right
to vote or participate in dividend distribution and are not taken into account for the purposes of
determining earnings per share.
The share capital was increased through the share exchange with Camposol AS shareholders in March
2008 by 27,925,070 shares and by a private placement towards Fondo de Inversion Agroindustrial
(FIDAF) with 1,908,750 shares. (Note 21).
Diluted earnings per share
Diluted earnings per share are calculated by adjusting the weighted average number of ordinary shares
outstanding to assume conversion of all dilutive potential ordinary shares. The Company has granted
share options which are dilutive. The Company determines the number of potential shares using the
average market share price of the Companys shares for the year.

Profit attributable to equity holders of the Group (USD 000)


Weighted average number of ordinary shares in issue (thousands)
Adjustment for:Share options and warrants (thousands) (Note 21)
Weighted average number of ordinary shares for diluted
earnings per share (thousands)
Diluted earnings per share
32

2008

2007

985
29,175
4,402

11,037
24,445
4,542

33,577
0,029

28,987
0,381

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

14 PROPERTY, PLANT AND EQUIPMENT

Land
USD 000

Buildings
and other
constructions
USD 000

Plant
and
equipment
USD 000

Furniture,
fixtures
and
other
equipment
USD 000

(
(
(
(
(

34,460)
3,073)
)
316)
805)

(
(
(
(
(

13,975)
125)
53)
130)
11,886)

(
(
(
(
(

31,926)
4,302)
160)
44)
6,171)

(
(
(
(
(

38,654)

25,803)

42,195)

Vehicles
USD 000

Construction in
progress
USD 000

Total
USD 000

2,458)
946)
2)
10)
1,414)

(
(
(
(
(

1,619)
1,187)
247)
18)
697)

(
(
(
(
(

10,298)
21,349)
- )
338)
20,973)

(
(
(
(
(

94,736)
30,982)
462)
452)
)

4,806)

3,238)

11,012)

125,708)

2008
Cost
Opening balance
Additions
Retirements
Adjustments
Transfers
Balance as of
31 December
Cumulative Depreciation
Opening balance
Charge for the year
Retirements

(
(
(

)
)
)

(
(
(

119)
595)
52)

(
(
(

317)
3,104)
31)

(
(
(

109)
772)
1)

(
(
(

134)
639)
182)

(
(
(

)
)
)

(
(
(

679)
5,110)
266)

Adjustments
Balance as of
31 December

10)

93)

15)

107)

175)

672)

3,297)

895)

484)

5,348)

Net book value

38,654)

25,131)

38,898)

3,911)

2,754)

11,012)

120,360)

2007
Cost
Opening balance
Additions as of acquisition
date,
Additions after the acquisition
Retirements
Transfers
Balance as of
31 December
Cumulative Depreciation
Charge for the year
Retirements
Balance as of
31 December
Net book value

(
(
(
(

33,454)
1,090)
)
84)

(
(
(
(

13,762)
159)
)
54)

(
(
(
(

27,450)
565)
458)
4,369)

(
(
(
(

4,286)
342)
)
2,170)

(
(
(
(

1,561)
184)
126)
)

(
(
(
(

5,499)
6,968)
)
2,169)

(
(
(
(

86,012)
9,308)
584)
)

34,460)

13,975)

31,926)

2,458)

1,619)

10,298)

94,736)

119)
)

(
(

523)
206)

(
(

109)
)

(
(

134)
)

(
(

)
)

(
(

885)
206)

679)

10,298)

94,057)

(
(

)
)

(
(

119)

317)

109)

134)

34,460)

13,856)

31,609)

2,349)

1,485)

a) The additions to land are described in Note 1. Additions during 2008 also include Project Yakuy
Minka (7A) for USD 17,4 million which consists of land and land preparation, an irrigation channel and
irrigation equipment for crops on 3,654 hectares. The extension of the structure constructed for the water
transfer was of 7.4 kilometers. The total cost of the irrigation channel was USD 10.1 million and its useful
life was estimated at 70 years, with nil residual value.
b) As of 31 December 2008 the balance of construction in progress comprised mainly complementary
works to main 7A Project of USD 3.5 million and Fish preserving plant of USD 3.9 million.
c) As of 31 December 2008, the land, property, plant and equipment captions include fixed assets
acquired under finance leases for USD 5,465,000 (USD 7,561,000 in 2007) net of their corresponding
cumulative depreciation, which are secured on the same assets.
d) As of 31 December 2008, the Group has insured its property, plant and equipment up to a value of
USD 40 million. Management believes that this policy is consistent with international practices in the
industry and takes into account the nature of the assets in the estimating the risk of eventual losses.

33

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


14 PROPERTY, PLANT AND EQUIPMENT (continued)
e) At December 31, 2008 Camposol has fixed assets for the production of artichokes with a net book
value of USD 2,992,000. The Group decided to discontinue the production of artichokes, which culminated
in December 2008. The Group leases all of its artichoke producing land, and does not intend to renew
those leases in 2009. Approximately 30% of the relevant machinery and equipment for this line will be
transferred in 2009 to the production of preserved pepper, preserved asparagus, and frozen plant and
70% of the machinery will be sold to third parties, The realization value is estimated to be higher than
book value as of 31 December 2008.
f) The total depreciation for the year includes the amount based on the fair value of acquired assets in the
business combination for USD 1,454,000 (USD 303,000 in 2007) (Note 6)
g) The allocation of depreciation charge is a s follows:
2007
USD 000

2008
USD 000
Cost of sales (Note 6)
Administrative expenses (Note 7)
Selling expenses (Note 8)
Total

(
(
(
(

4,954)
144)
12)
5,110)

(
(
(
(

875)
10)
)
885)

15 INVESTMENTS IN ASSOCIATED COMPANIES


% share in
the capital stock
%
Empacadora de Frutos Tropicales S.A.C.
Mission Asparragus LLC

40.0
50.0

2008
USD 000

2007
USD 000

274
274

353
353

On 30 September 2006 Camposol S.A. participated in the incorporation of Empacadora de Frutos


Tropicales S.A.C (Empafrut), a Peruvian company engaged in the processing and commercialization of
fresh fruits products, mainly mangoes. The cost of the investment was USD 600,000.
The Groups share in the losses of this company is USD 79,000 (USD 115,000 in 2007). The summarized
financial information for this associated company for the year as a whole :
2008
USD 000
Total assets
Total liabilities
Total revenue
Loss for the year
Total equity (

(
(
(
(

2,219)
1,534)
3,041)
43)
685)

2007
USD 000
(
(
(
(

2,785)
1,878)
3,134)
174)
907)

On 1 December 2006, Camposol S.A. and Mission Produces Inc invested in the incorporation of Mission
Asparagus LLC (Mission Asparagus), a company based in
the United States of America, to
commercialize asparagus in the west coast of this country.
In 2008, the Group initially capitalized a receivable arising from 2007 sales of fresh asparagus to Mission
Asparagus in the amount for USD 1,315,000. Subsequently, the investment in Mission Asparagus was
transferred to Mission Produces Inc without a cash consideration, in exchange for the latter assuming all
debts, liabilities, guarantees and future claims arising from such investment.
34

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


16 BIOLOGICAL ASSETS
The Group measures the value of agricultural plants and shrimps using the expected cash flows for the
production of each of its biological assets. The cash flows included in the projections are discounted at
the rate of 10.7%.
Grape and tangerine are stated at cost as a reliable estimate of fair vallue cannot be made,
The net effect of the IAS 41 fair value adjustment is USD12,884,000 (USD9,137,000 in 2007)
2007
USD 000

2008
USD 000
Change in fair value of biological assets
Net cost of permanent plantations
and maintenance
Deferred income tax and workers profit sharing
Net effect due to the IAS 41 adjustment

28,660)

16,945)

(
(
(

11,584)
4,192)
12,884)

(
(
(

5,001)
2,807)
9,137)

The net cost of permanent plantations and maintenance of farms is as follows:


2008
USD 000
Permanent plantations
Farming costs:
Product in process
Finished products
Raw material
Depreciation recorded as farming cost
Total

2007
USD 000

11,456)

4,901)

(
(
(
(
(
(

377)
10)
609)
11,234)
350)
11,584)

(
(
(
(
(
(

331)
547)
162)
4,847)
154)
5,001)

Had the Group not applied IAS 41, the amortization of permanent plantations for the 2008 would have
been USD 1,823 thousand (USD 381 thousand for 2007).
The main assumptions used to estimate the fair values of the biological assets were as follows:
Asparagus:
72 lots in Agroms, Pur Pur, Mar Verde, Gloria, Agricultor, Aeropuerto, Oasis, San Jose,
Sincromax, Terra and Yakuy Minka.
Lots have a useful life of 8 years for white asparagus and 10 for green asparagus. The white
asparagus parcels are transformed to green asparagus at the end of the 8 years.
Each harvest cycle lasts 6 months.
Assumes reduction of production in year 2018 due to the Fenomeno del Nio.
Avocados:
25 lots in Frusol and Agroms.
Lots have a useful life of 20 years.
Every harvest cycle lasts 1 year.
Assumes reduction of production in year 2018 due to the Fenomeno del Nio
Lots have their first harvest after 3 years from planting
Mangoes:
8 lots in Atypsa, Balfass and Dunas.
Parcels have a useful life of 20 years.
Every harvest cycle lasts 1 year.
Assumes reduction of production in year 2018 due to the Fenomeno del Nio.
Lots have their first harvest after 3 years from planting
35

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

16 BIOLOGICAL ASSETS (continued)


Grapes:
- 1 lot in groalgre.
- The lots have a useful life of 20 years.
- Each harvest cycle last 1 year.
Tangerine:
- 1 lot from 7A.
- The lots have a useful life of 20 years.
Every harvest cycle lasts 1 year.
Lots have their first harvest after 3 years from planting.
Pepper:
- 6 lots lands from Terra and Yakuy Minka
- The lots have a useful life of 8 months.
- Each harvest cycle last 8 months including preparation, maintenance and harvest.
Shrimps:
- 41 shrimp farms that cover an area of 245 hectares
Each has a useful life of 180 days, approximately 25 weeks.
Each harvest cycle of shrimps lasts approximately 25 weeks, including preparation, maintenance
and harvest.
The movement for the period in the fair value of biological assets is as follows:
2008
Opening
balance
Hectares
Asparagus
Avocados
Mangoes
Pepper
Shrimp
Grapes
Tangerine

(
(
(
(
(
(
(
(

3,318)
840)
499)
268)
224)
)
)
5,149)

Additions /
Deductions
Estimated
change in
market value
USD000
(
(
(
(
(
(
(
(

57,470)
18,370)
7,798)
871)
2,179)
)
)
86,688)

Hectares
(
(
(
(
(
(
(
(

328)
353)
84)
2)
21)
51)
45)
56)

Estimated
change in
market vaue
USD000

Balance as of
December 31, 2008
Estimated
change in
Hectares market vaue
USD000

Less
current
portion
USD000

Non
current
portion
USD000

(
(
(
(
(
(
(
(

(
(
(
(
(
(
(
(

(
(
(
(
(
(
(
(

(
(
(
(
(
(
(
(

14,141)
14,215)
1,747)
37)
976)
888)
150)
28,660)

2,990)
1,193)
415)
266)
245)
51)
45)
5,205)

(
(
(
(
(
(
(
(

71,611)
32,585)
6,051)
908)
3,155)
888)
150)
115,348)

7,885)
3,234)
204)
908)
3,155)
)
)
15,386)

63,726)
29,351)
5,847)
)
)
888)
150)
99,962)

2007
On acquisition date
Estimated
change in
Hectares
market value
USD000
Asparagus
Avocados
Mangoes
Pepper
Artichokes
Shrimp

(
(
(
(
(
(
(

2,673)
858)
499)
235)
835)
250)
5,350)

(
(
(
(
(
(
(

43,465)
15,042)
6,998)
1,117)
1,729)
1,392)
69,743)

Additions
Deductions
Hectares
(
(
(
(
(
(
(

645)
18)
)
33)
835)
26)
201)

Estimated
change in
market value
USD000

Balance as of
December, 31 2007
Estimated
change in
Hectares market vaue
USD000

Less
current
portion
USD000

Non
current
portion
USD000

(
(
(
(
(
(
(

(
(
(
(
(
(
(

(
(
(
(
(
(
(

(
(
(
(
(
(
(

14,005)
3,328)
800)
246)
1,729)
787)
16,945)

3,318)
840)
499)
268)
- )
224)
5,149)

(
(
(
(
(
(
(

57,470)
18,370)
7,798)
871)
- )
2,179)
86,688)

4,750)
476)
857)
871)
)
2,179)
9,133)

52,720)
17,894)
6,941)
)
)
)
77,555)

The increase of USD 28.7 million is explained mainly due to the addition of new planted areas of
asparagus and avocado.

36

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


17 INVENTORIES

Finished products:
Artichokes
Asparagus
Peppers
Avocados
Mangoes
Other
Supplies
Containers
Raw material and others
Product in process
Land pre-operative labors
In-transit raw material and supplies

2008
USD 000

2007
USD 000

6,638
20,997
4,544
95
420
1,104
33,798
9,303
9,441
2,275
98
3,122
58,037

8,722
5,068
3,190
221
142
266
17,609
6,292
4,961
1,165
5,457
1,811
992
38,287

2008
USD 000

2007
USD 000

18 OTHER ACCOUNTS RECEIVABLE

Value added tax


Drawback Import duties
Income tax credit
Due from employees

Prepayments to suppliers
Agreement with Peru Land & Farming
Claims to insurance entities
Other
Less:
Allowance for doubtful accounts

(
(
(
(
(
(
(
(
(

5,315)
4,580)
1,781)
1,232)
680)
)
)
1,033)
14,621)

(
(
(
(
(
(
(
(
(

6,654)
3,276)
)
625)
1,463)
6,912)
255)
415)
19,600)

(
(

544)
14,077)

(
(

153)
19,447)

(
(
(
(

153)
395)
4)
544)

(
(
(
(

Movement in allowance for doubtful accounts:


Opening balance
Additions (Note 10)
Adjustment
Balance at the end of the year

153)
)
)
153)

The receivable from Peru Land & Farming in 2007 related to the consideration for issuance of shares in
Camposol AS.
The drawback recovered during the year 2008 was USD 4,019,000 (USD4,017,000 in 2007)
Receivables from employees do not carry interest and are unsecured.

37

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


19 TRADE ACCOUNTS RECEIVABLE
2008
USD 000
Trade accounts
Third parties
Related companies (Note 27)
Less:
Allowance for doubtful accounts

2007
USD 000

(
(
(

27,627)
10)
27,637)

(
(
(

42,133)
1,361)
43,494)

(
(

1,815)
25,822)

(
(

125)
43,369)

(((
((

125))
3,040))
21
1,315
14
1,815)

((
((

Movement in the allowance for doubtful accounts:


Opening balance
Additions
Recoveries
Write-off of receivable from associate (Note 15)
Adjustments
Balance at the end of the year

(
(
((((

31))
113))
19
-)
)
125))

Trade accounts receivable mainly correspond to invoices for the sale of fresh, preserved and frozen
products. The credit period ranges between 90 and 180 days and do not accrue interest. Sales are usually
made on the basis of export letters of credit.
As of 31 December 2008, the aging analysis of trade receivables is as follows:
Total
USD 000
25,822

Current
USD 000
18,805

31-90
days
USD 000
405

91-180
days
USD 000

181-360
days
USD 000
5

6,592,

More than
361 days
USD 000
15

The time band Between 181 360 days includes mainly accounts receivable from one customer of USD
6,301 thousand, out of which USD 1,800 thousand was recovered during the first quarter of 2009.
As of 31 December 2008 and 2007 over 65% of accounts receivable are pledged as security for the
Credit Suisse loan (Note 24)
The fair value of accounts receivable aproximates their carrying amounts due to their short-term
maturities.
20 CASH AND SHORT-TERM DEPOSITS

Cash
Bank current accounts

2008
USD 000

2007
USD 000

42
5,728
5,770

35
89,731
89,766

The Group has bank current accounts mainly in United States dollars, Euros and Peruvian nuevos soles.
These funds are freely available and bear market floating interest rates.

38

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


21 SHAREHOLDERS EQUITY
Share capital

Authorised
40.000.000 ordinary shares of 0,01 each

4.000.000

Issued and fully paid


Ordinary shares of 0,01 each
Initial shares of 0,01 each

USD000
29.833.820
2.570.000
32.403.820

507

The initial shares are non-voting and do not participate in dividend distributions.
In April 2008, the Company issued 27 925 070 shares to the shareholders of Camposol AS (Norway) in
exchange for an equal number of shares in that company.
In May 2008, the Company issued 1 908 750 new ordinary shares at a price of USD 7,859 per share.
Warrants to shareholders
Dyer Coriat Holding S.L were granted by Camposol AS 3.628.344 warrants to acquire shares in that
company. These were replaced by warrants to acquire shares in Camposol Holding PLC as follows:

Class A
Class B
Class C

Number of
warrants
1,375,000
1,195,652
1,057,692

Exercise price
NOK 40
NOK 46
NOK 52

Exercise period
8 April 2008 - 8 Oct.2008
8 Oct. 2008 - 8 Oct. 2009
8 Oct. 2009 - 8 Oct. 2010

The warrants represent a type of finder's fee to Dyer Coriat Holding S.L for identifying the acquisition of
Camposol SA. and is included in the cost of the combination.
The fair value of the warrants at the grant date was estimated using the Black and Scholes-Merton pricing
model (using inputs for the share issue price, the exercise price, option life, volatility and risk free interest
rate) at USD 6,133,000.
The Class A warrants with a fair value at grant date of USD2,019,000 expired without being exercised
and were reclassified to retained earnings within equity.
Share options
In 2008 the Company has granted 300 000 share options to Directors and 585 000 options to
management. The fair value of the options was estimated at the grant date by an external expert using the
Black and Scholes Merton option pricing formula, at USD 561.000.
The exercise price of the options to Directors and management has been fixed at NOK 40 and can be
exercised in each of the years 2009 to 2012.
Also, the Company has granted 150 000 share options to a former manager, valued at USD257.000.
The exercise price of these options ranges from NOK 40 to 52 and 1/3 can be exercised in each of the
years 2008 to 2010. Options for 50 000 shares, with a fair value at grant date of USD 73.000 expired
without being exercised and were reclassified to retained earnings within equity.

39

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


21 SHAREHOLDERS EQUITY (continued)
Largest 20 Shareholders
As of 31 December 2008, the largest 20 shareholders are:
Investor

Shares

1 Dyer-Coriat Holding S.L.

8,571,000

28.73%

2 Deutsche Bank AG London

4,350,018

14.58%

3 Andean Fisching L.L.C

3,380,100

11.33%

4 Euroclear Bank S.A./N.V. ('BA')

2,559,000

8.58%

5 Fondo de Inversin Agroindustrial FIDAF

1,908,750

6.40%

6 South Winds AS

1,753,000

5.88%

7 Peru Land & Farming LLC

1,195,950

4.01%

8 Bear Stearns Securities Corp.

1,116,500

3.74%

750,000

2.51%

10 Nordea Bank PLC Finland

657,000

2.20%

11 Storebrand Livsforsikring AS

434,800

1.46%

12 Brown Brothers Harriman & Co

404,000

1.35%

13 Deutsche Bank AG London

393,482

1.32%

14 JP Morgan Chase Bank

201,500

0.68%

15 Verdipapirfondet Nordea Avkastning

193,900

0.65%

16 DnB Nor SMB VPF

165,000

0.55%

17 SEB Ensklida ASA Egenhandelskonto

157,000

0.53%

18 MP Pensjon

9 Orkla ASA

137,000

0.46%

19 Verdipapirfondet Nordea Norge Verd

91,300

0.31%

20 Vital Forsikring ASA

77,043

0.26%

1,337,477

4.47%

29,833,820

100.00%

Others
Total

22 DEFERRED INCOME TAX


The movement in the deferred income tax liabilities is as follows:
2008
USD 000
Opening balance
Income statement, note 12
Equity
Adjustment
End of the year

(
(
(
(
(

40

12,262)
118)
1,958)
92)
10,094)

2007
USD 000
(
(
(
(
(

10,768)
1,494)
)
)
12,262)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


22 DEFERRED INCOME TAX (continued)
Deferred tax relates to the following:
2008 Deferred assets Tax losses
Swap valuation (Note 32)
Loss on investments in associates
Provisions
Deferred liability
Valuation of biological assets
Fair value of fixed assets at acquisition
of subsidiary)
Fair value of customer relationships
at acquisition of subsidiary
Depreciation rates
Amortization rates
Other

Opening
balance
USD 000
(
(
(
(
(

)
)
135)
292)
427)

Equity
USD 000

Adjusments
USD 000

(
(
(
(
(

(
(
(
(
(

(
(
(
(
(

)
)
)
)
)

(
(
(
(
(

2,308)
1,958)
44)
636)
4,946)

2,308)
)
91)
344)
2,561)

6,289) (
4,815) (

2,409) (
196) (

) (
) (

49) (
) (

8,747)
4,619

1,260) (

150) (

) (

) (

1,110)

(
(
(
(
(

219)
)
106)
12,689)
12,262)

Opening
balance
USD 000

Deferred liability
Valuation of biological assets
Fair value of fixed assets at acquisition
of subsidiary
Fair value of customer relationships
at acquistion of subsidiary
Depreciation rates
Other

)
1,958)
)
)
1,958)

(
(

(
(
(
(
(

47)
165)
262)
2,443)
118)

2007 -

Deferred assets Loss on investments in associates


Provisions

Balance as of
December 31,
2008
USD 000

Income
statement
USD 000

(
(
(
(
(

)
)
)
)
1,958)

Balance as of
December 31,
2007
USD 000

Income
statement
USD 000

(
(
(

104) (
228) (
332) (

31) (
64) (
95) (

135)
292)
427)

(
(

4,677) (
4,856) (

1,612) (
41) (

6,289)
4,815)

1,291) (

31) (

1,260)

(
(
(
(

170)
106)
11,100)
10,768)

(
(
(
(

49)
)
1,589)
1,494)

41

(
(
(
(

219)
106)
12,689)
12,262)

(
(
(
(
(

)
)
141)
92)
92)

(
(
(
(
(

172)
165)
227)
15,040)
10,094)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


23 WORKERS PROFIT SHARING
In accordance with Peruvian Legislation the Group shall provide for workers profit sharing equivalent to
10% of taxable income of each year.
This amount is charged to the income statement and is considered deductible for income tax purposes.
Movement in workers profit sharing for 2008:

Deferred assets Tax Losses


Swap valuation (Note 32)
Loss on investments in assoicates
Other
Deferred liability
Valuation of biological assets
Revaluation of fixed assets
Customer relationships fair value
Depreciation rates
Amortization rates
Other

Balance as of
December 31,
2007
USD 000

Income
statement
USD 000

Equity
USD000

Adjusments
USD 000

(
(
(
(
(

)
)
100)
436)
536)

(
(
(
(
(

1,494)
)
67)
23)
1,450)

(
(
(
(
(

)
1,450)
)
)
1,450)

(
(
(
(
(

)
)
)
)
)

(
(
(
(
(

1,494)
1,450)
33)
459)
3,436)

(
(
(
(
(
(
(
(

4,569)
3,474)
909)
163)
)
75)
9,190)
8,654)

(
(
(
(
(
(
(
(

1,785)
145)
111)
36)
123)
368)
1,248)
202)

(
(
(
(
(
(
(
(

)
)
)
)
)
)
)
1,450)

(
(
(
(
(
(
(
(

127)
93)
24)
)
)
257)
501)
501)

(
(
(
(
(
(
(
(

6,481)
3,422)
822)
127)
123)
36)
10,939)
7,503)

2007
Opening
balance
USD 000
Deferred assets Loss on investments in associates
Provisions
Deferred liability
Valuation of biological assets
Fixed assets fair value at acquisition
Customer relationships fair value
Depreciation rates
Other

(
(
(
(
(
(
(
(
(
(

Income
statement
USD 000
77) (
) (
77) (
3,375)
3,504)
932)
172)
27)
8,010)
7,933)

Balance as of
December 31,
2007
USD 000

23) (
436) (
459) (

(
(
(
(
(
(
(

1,194)
30)
23)
9)
48)
1,180)
721)

Balance as of
December 31,
2008
USD 000

(
(
(
(
(
(
(

100)
436)
536)
4,569)
3,474)
909)
163)
75)
9,190)
8,654)

The workers profit sharing liability, included in other payables (Note 26) on the balance sheet, has been
determined pursuant to applicable legal provisions.

42

24 LONG-TERM DEBT

Creditor and type of debt

Collateral

Annual Interest Rate and Maturity

Credit Suisse, to finance the capital expenditure


program for 2007 and 2008
Credit Suisse, to finance the reorganisation of
Camposol SA
Banco Interbank for purchase of tractors

Camposol SA fixed assets

9.85% year with installments until year 2012

Camposol SA fixed assets

Banco Interbank for purchase of water equipment

Property subject to financial

Banco Interbank for purchase of tractors

Property subject to financial lease

Banco Interbank for purchase of tractors.

Property subject to financial lease

Banco Interbank for purchase of pick up truck

Property subject to financial lease

Banco Interbank for purchases of mini-bus

Property subject to financial lease

Banco Interbank for purchase of tractors

Property subject to financial lease

Banco Interbank for purchase of a pick up truck

Property subject to financial lease

Banco Interbank for purchase of an hidraulic excavator

Property subject to financial lease

Banco Interbank for purchase of a pick up truck

Property subject to financial lease

Banco Interbank for purchase of trucks

Property subject to financial lease

Banco Interbank for purchase of trucks

Property subject to financial lease

6.13%. Principal and interests payable at maturity on


March 30, 2008.
8.60% per year with 48 monthly installments until
year 2010.
8.60% per year with 48 monthly installments until
year 2010.
8.20% per year with 49 monthly installments until
year 2009.
9.20% per year with 49 monthly installments until
December 2008
8.40% per year with 36 monthly installments until
year 2009.
8.40% per year with 37 monthly installments until
December 2008
7.86% per year with 36 monthly installments until
year 2009.
8.85% per year with 36 monthly installments until
March 2009.
8.90% per year with 10 installments every six months
until 2012
8.90% per year with 36 monthly installments until
year 2010
8.90% per year with 36 monthly installments until
year 2010
7.95% per year with 12 installments every three
months until 2010

Property subject to financial lease

Carried forward:

43

lease

2008
USD000

2007
USD000

55,767

63,383

63,465

148

212

115

176

14

69

22

12

6
2

9
6

97

119

15

25

40

19
56,201

29
127,563

24 LONG-TERM DEBT (continued)


Creditor and type of debt

Guarantee

Annual Interest Rate and Maturity

Brought forward:
Banco Interbank for purchase of water equipment

Property subject to financial lease

Banco Interbank for purchase of an automatic can


seamer
Banco Interbank for purchase of tools and machines

Property subject to financial lease

Banco Interbank for purchase of equipment and


accessories
Banco Interbank for purchase of water equipment

Property subject to financial lease

Banco Interbank for purchase of tractors


accessories
Banco Interbank for purchase of a Sprayer

and

Property subject to financial lease

Property subject to financial lease


Property subject to financial lease
Property subject to financial lease

Banco Interbank for purchase of a pneumatic seed drill

Property subject to financial lease

Banco Interbank for purchase of valves


accessories
Banco Interbank for purchase of a rotary labeler

Property subject to financial lease

and

Property subject to financial lease

Banco Interbank for purchase of a Sprayer

Property subject to financial lease

Banco Interbank for purchase of pipes

Property subject to financial lease

Banco Interbank for purchase of valves

Property subject to financial lease

BBVA Banco Continental for purchase of pipes

Property subject to financial lease

BBVA Banco Continental for purchase of pipes

Property subject to financial lease

Carried forward:

44

8.90% per year with


year 2010
8.90% per year with
year 2013
8.90% per year with
year 2011
7.95% per year with
months until 2010
7.95% per year with
months until 2011
7.95% per year with
months until 2010
7.95% per year with
months until 2010
7.95% per year with
months until 2011
8.20% per year with
months until 2010
8.20% per year with
months until 2011
8.20% per year with
months until 2011
8.20% per year with
months until 2010
8.25% per year with
months until 2010
7.30% per year with
months until 2011
7.30% per year with
months until 2011

2008

2007

56,201

127,563

89

143

267

146

579

778

484

392

978

400

595

861

204

295

26

27

102

148

266

85

152

169

150

216

15

17

2,387

1,260

2,087
64,582

132,500

36 monthly installments until


60 monthly installments until
36 monthly installments until
12 installments every three
12 installments every three
12 installments every three
12 installments every three
12 installments every three
12 installments every three
12 installments every three
12 installments every three
12 installments every three
12 installments every three
12 installments every three
12 installments every three

24 LONG-TERM DEBT (continued)


Creditor and type of debt

Guarantee

Annual Interest Rate and Maturity

Brought forward:
BIF for purchase of a Power Generator Cummins

Property subject to financial lease

Banco Interbank for purchase of a excavator machine

Property subject to financial lease

Banco Interbank for purchase of a truck Daihatsu and


pick up Nissan
Banco Interbank for purchase of a Lab equipment for
larvaes production
Banco Interbank for purchase of Electric cable Celsa

Property subject to financial lease

Banco Interbank for purchase of 2 four- wheel moto


Honda l
Banco Interbank of purchase of a air vacuum cleaner
Maofmadam
Banco Continental for purchase of a Lab larvaes

Property subject to financial lease


Property subject to financial lease
Property subject to financial lease
Property subject to financial lease
Property subject to financial lease

9.00% per year with


2011
9.11% per year with
2012
8.97% per year with
2011
9.10% per year with
months until 2010
8.42% per year with
months until 2010
8.42% per year with
months until 2010
8.42% per year with
months until 2011
7.30% per year with
months until 2011

2008

2007

64,582

132,500

114

160

115

144

24

33

73

74

34

50

14

57

56

1,346
66,354

1,105
134,136

(9,528)
56,826

(68,613)
65,523

48 monthly installments until


20 monthly installments until
48 monthly installments until
12 installments every three
12 installments every three
12 installments every three
12 installments every three
12 installments every three

Less - current portion

45

24 LONG-TERM DEBT (continued)


All loans are in United States Dollars
The term of the non - current portion of long - term debt is as follows:
2008
USD 000

2007
USD 000

17,140
17,306
22,316
64
56,826

7,143
20,505
15,694
22,181
65,523

1 year
2 years
3 years
More than 3 years

Fair values
The carrying amounts of both the short-term long-term borrowings approximate their fair value as the
interest rates of the loans are similar to market interest rates.
Finance leases
The future minimum lease payments under finance leases together with the present value of net minimum
lease payments are as follows:

USD 000
Within one year
After one year but not more than five years
Total minimum lease payments
Less amounts representing finance charges
Present value of minimum lease payments

(
(
(
(
(

Minimum
payments

2008
Present value
of payments

Minimum
payments

USD 000

USD 000

USD 000

4,655) (
7,157) (
11,812) (
1,225)
10,587)

4,317)
6,270)
10,587)

(
(
(
(
(

2007
Present value
of payments

6,094) (
2,328) (
8,422) (
1,134)
7,288)

5,148)
2,140)
7,288)

Credit Suisse loan


In November 2007, Camposol S.A.signed a loan agreement with Credit Suisse for a total amount of USD
65 million to be repaid by November 2012, at a fixed interest rate of 7.85%. Interest Is payable monthly
and amortization of the principal is performed during this period following the payment schedule in the
credit agreement.
On 24 December 2008, Camposol S.A. executed an amendment to the original USD 65 million loan
agreement with Credit Suisse. New covenants were agreed, and an additional margin of 2% was added to
the previous 7.85% interest rate as from 26 August 2008 until the Company reaches a Debt to EBITDA
ratio of 2,5:1x. The interest rate remains at 9.85% as of 31 December 2008.
Camposol S.A. has prepaid USD 7.0 million of the loan. The comparison of the discounted present value
of the cash flows under the new terms of the loan, discounted using the original effective interest rate
differs 1 per cent from the discounted present value of the remaining cash flows of the original loan.
Accordingly, the terms of the new loan and those from the original loans are not substantially different, and
the part early repayment is not accounted for as an extinguishment of the original loan. Accordingly, costs
and fees incurred are recognized as part of amortized cost.
The Group has the option to extend the loan term beyond its original maturity (principal payments may be
deferred 12 months). This option has been accounted for as an embedded derivative which has been
recognized as an asset in the balance sheet at its fair value of USD741,000 ( USD 379,000 in 2007) with a
credit to financial income in the income statement. As a consequence of debt refinancing, in 2008
accounted a financial income USD 362,000 (Note 11).

46

24 LONG-TERM DEBT (continued)


In accordance with the loan contract of Camposol SA with Credit Suisse, that company has to comply with
the following convenants:
-

EBITDA to Interest Expense Ratio - As of the end of each fiscal quarter, the EBITDA to Interest
Expense Ratio shall be at least: (a) for each fiscal quarter in fiscal year 2007, 3.50:lx, (b) for the first
and second fiscal quarters in fiscal year 2008, 4.00: Ix, (c) for the third and fourth fiscal quarters in
fiscal year 2008 and for the first three fiscal quarters of fiscal year 2009, 1.40:lx, (d) for the fourth fiscal
quarter in fiscal year 2009, 2.75:lx and (e) for each fiscal quarter thereafter, 3.50.

The Total Debt to EBITDA Ratio shall not be greater than: (a) as of the end of each fiscal quarter in
fiscal year 2007, 3.50: Ix, (b) as of the end of the first quarter in fiscal year 2008, 3.25: Ix, (c) as of the
end of the second fiscal quarter in fiscal year 2008, 3.00: Ix, (d) as of the end of the third fiscal and
fourth fiscal quarters in fiscal year 2008, 6.25:lx; (e) as of the end of the first fiscal quarter in fiscal
year 2009, 6.35: Ix, (f) as of the end of the second and third fiscal quarters in fiscal year 2009, 6.00:
Ix, (g) as of the end of the fourth fiscal quarter in fiscal year 2009, 3.25:lx and (g) as of the end of each
fiscal quarter thereafter, 2.50:lx

The Tangible Net Worth of the Camposol SA and its consolidated subsidiaries shall not be less than:
(a) (i) $48,000,000, as of December 31, 2007, to the extent that the Cash Contribution constitutes
shareholders' equity on the books and records of the Borrower as of such date in accordance with
Peruvian GAAP or (ii) $33,000,00, as of December 31, 2007, to the extent that the Cash Contribution
constitutes a liability on the books and records of the Borrower as of such date in accordance with
Peruvian GAAP, (b) $112,000,000, as of March 31, 2008 and as of the end of each fiscal quarter
thereafter until the Amendment No. 2 Effective Date and (c) $100,000,000, as of the Amendment No.
2 Effective Date and as of the end of each fiscal quarter thereafter."

the Borrower is required to sell (or cause to be sold) not less than 65 per cent of the consolidated
aggregate export sales of all Products sold during each Coverage Period to Eligible Offtakers
pursuant to Sales Agreements governed by the laws of a country that is a member of the Organisation
for Economic Co-operation and Development.

the Borrower is required to sell (or cause to be sold) less than 35 per cent of the consolidated
aggregate export sales of all Products sold during each Coverage Period to Eligible Offtakers that are
not Affiliates of any Obligor pursuant to Sales Agreements governed by the laws of a country that is a
member of the Organisation for Economic Co- operation and Development.

During the period 2008 and 2007, Camposol SA has complied with all covenants and other agreements
contained in the Credit Agreement with Credit Suisse.
25 TRADE PAYABLES
2008
USD 000
Suppliers
Bills of exchange payable

(
(
(

12,232)
12,894)
25,126)

2007
USD 000
(
(
(

13,940)
5,036)
18,976)

Payables to suppliers are mainly in US dollars, are due within 12 months and do not carry interest.
Bills of exchange represent payables to suppliers mainly in foreign currency which are due within 12
months and carry interest at an average annual rate of 12%.
The average payment terms of trade payables are between 30 to 60 days.

47

26 OTHER PAYABLES

Noncurrent:
Derivative financial instrument (Note 32)
Deferred Workers profit sharing (Note 23)
Agreement with Peru Land & Farming (Note 18)
Current:
Derivative financial instrument (Note 32)
Vacation pay and other payables to employees
Taxes payable
Fair value of liability incurred to Peru Land &
Farming (Note 21)
Board remuneration
Loans from third parties
Others

2008
USD 000

2007
USD 000

12,204
7,503
19,707

937
8,654
6,912
16,503

3,908
2,762
1,238

4,532
791

2,230
310
420
8,283

305
228
1,197
9,638

27 TRANSACTIONS WITH SHAREHOLDERS AND OTHER RELATED PARITES


Transactions
The main transactions carried out between the Group and its shareholders and related companies are as
follows:
2008
USD 000

2007
USD 000

3,447

10
969

6
469

Associates
Mission Asparagus LLC
Sales of finished products
Empacadora de Frutos Tropicales S.A.C.
Sales of finished products
Purchase of services
Enties related to Directors
Apoyo Consultora S.A.C.
Purchase of services

32

Gestion del Pacifico S.A.C


Purchase of services and others

60

Aristodemou Loizides Yiolitis & Co


Purchase of legal services

132

SP of Delaware Inc.Aircraft lease and maintenance

368

48

177

27 TRANSACTIONS WITH SHAREHOLDERS AND OTHER RELATED PARTIES (continued)


Amounts due from / to shareholders and related companies
2008
USD000
Trade accounts receivable (Note 19)
Mission Asparragus LLC
Empacadora de Frutos Tropicales S.A.C.

2007
USD000

1,360
1
1,361

10
10

Trade accounts payable


Mission Asparragus LLC
SP of Delaware Inc.
Empacadora de Frutos Tropicales S.A.C.

146
8

36
182

8
Other payables
D.C. Holding S.L.

Other payables
Copeinca

415
230

Guarantees
In 2001 Camposol S.A. guaranteed a debt contracted by its related entity SP of Delaware Inc. with
Raytheon Aircraft Credit Corporation for the acquisition of an aircraft. As of December 31, 2007 the
outstanding debt amount guaranteed by Camposol S.A. was USD2,178,000, which is being paid in
quarterly installments until year 2013. As of March 31, 2009, Camposol is no longer a guarantor since the
debt was fully paid by SP Delaware Inc.
Compensation of key management personnel of the Group
Salaries of key managers

Remuneration of directors (all non-executive)

2008
USD 000
1,881

2007
USD 000
49

243

78

2008
USD 000

2007
USD 000

4,576
11,500
16,076

1,181
230

28 BANK LOANS AND OVERDRAFTS

Loans :
Banco Interbank
Banco Scotiabank
Commercebank
BBVA Banco Continental
Banco de la Nacin
Overdrafts:
Banco Scotiabank
Banco Interbank

373
7
380
16,456

56
11
1,478
1,478

Loans represent promissory notes with maturities up to 180 days, obtained for working capital, with annual
interest rates between 2.50 per cent and 8.35 per cent (6.30 per cent and 7.19 per cent in 2007).
The overdrafts are in Peruvian Nuevos soles (PEN).

49

29 CASH FLOWS FROM OPERATING ACTIVITIES


Note

2008
USD 000

2007
USD 000

Reconciliation of profit for the year to net cash (used in)


generated from operating activities
Profit for the year
Depreciation
14
Amortization
3
Provision for doubful accounts receivable
18 and 19
Biological assets
16
Embedded derivative
Net cost of fixed assets sold
Interest of bank accounts
Stock options expense
Loss of investments in associates
15
Income tax and workers profit sharing
Change in derivative financial instrument
32
Write-off of accounts receivables
19
Net exchange difference
Increase (decrease) of cash flows from operations due
to changes in assets and liabilities:
Trade receivables
Other receivables
Inventories
Prepaid expenses
Trade payables
Other payables
Net cash used in operating activities
Transactions not affecting cash flows
Fixed assets acquired under financial leases
Share premium increase for fair value of liability with PL&F (Note 21 b)

(
(
(
(
(
(
(
(
(
(
(
(
(

985)
5,110)
1,208)
3,435)
17,076)
362)
56)
1,416)
561)
79)
381)
1,611)
1,315)
431)

(
(
(
(
(
(
(
(
(

11,037)
885)
231)
113)
11,944)
379)
349)
94)
257)
741)
2,721
937)
- )

(
(
(
(
(
(
(

15,822)
3,512)
31,334)
1,187)
7,613)
10,429 )
20,703)

(
(
(
(
(
(
(

13,356)
8,128)
19,275)
2,320)
2,741)
4,387)
33,087)

(
(

1,268)
2,230)

(
(

6,802)
)

30 COMMITMENTS AND GUARANTEES


a) The Group acquired from a third party corporation on October 11, 2007, the lots of land Compositan II
and III, in the Chavimochic Special Project for USD 409,000. The acquisition requires an investment
commitment which is secured by the Group with a bank guarantee for USD 800,000.
b) The commitments and guarantees in respect of the Credit Suisse loan are set out in Note 24 .
c) Camposol SA signed an agreement with Peru Land & Farming, LLC (PL&F) giving them a first option
to purchase avocado production from a designated area of 800 Ha for sale in the United States of
America When the US market opens for Peruvian avocado, PL&F will have the right to purchase
100% of the production from that area. The option will gradually drecrease until year 10, after which it
will maintain a lifetime option for 30% the production of the designated area.

50

31 CONTINGENCIES
a) Labour proceedings
At December 31, 2008, the Group has several contingencies related to industrial operations
amounting to USD 1,289,000. Based on legal advice the potential loss is not significant.
A provision has been recognised for other labour claims for USD 611,000.
b) Tax exposures
Tax authorities may seek to adjust the income tax calculated by the Group companies.
The following table shows the income tax and value added tax returns subject to review by the Tax
Administration corresponding to Camposol and related companies
Years open to tax review
Company

Income Tax

Value AddedTax

Camposol Holding PLC


Camposol S.A.
Preco Precio Economico S.A.C.
Sociedad Agrcola Las Dunas S.R.L.
Prodex S.A.C.
Balfass S.A.
Vegetales del Norte S.A.C.
Crofton Finance Ltd sucursal del Peru
Muelles y Servicios Paita S.A.C.
Marinasol S.A.
Marinazul S.A.
Grainlens Ltd
Blacklocust Ltd
Siboure Holding Ltd
Madoca Corp
Camposol Europa SL
Campoinca SA

2007 - 2008
2004 - 2008
2004 - 2008
2004 - 2007
2004 - 2008
2004 - 2008
2004 - 2008
2007 - 2008
2006 - 2008
2006 - 2008
2006 - 2008
2007 - 2008
2007 - 2008
2007 - 2008
2008
2008
2007 2008

2007 - 2008
Oct 2004- Dec 2008
Dec 2004-Dec 2008
Dec 2004-Nov 2007
Oct 2004- Dec 2008
Oct 2004- Dec 2008
Oct 2004- Dec 2008
Apr 2007 - Dec 2008
Aug 2006 Dec 2008
Dec 2006 Dec 2008
Aug 2006 Dec 2008
2007- 2008
2007- 2008
2007 - 2008
2008
2008
2007 - 2008

32 RISK MANAGEMENT
The Group is exposed to market and operational risks connected with its agricultural activities and
financial risks, including the effect of variations in foreign currency exchange rates, interest rates and
liquidity.
The Groups senior management and the Board of directors oversee the management of these risks and
implement a risk management program aiming at reducing to a minimum any potential adverse effect on
the Groups financial performance.
Market and operational Risks
Almost all of the Groups products are sold in the international market. A further economic slowdown in the
key markets may cause lower sales volumes and prices, and losses on trade receivables.
The financial position and future development of the Group will depend significantly on the sales prices of
its fruit and vegetables produce. The Group produces fresh, frozen and preserved products. Fresh
products tend to be more profitable, followed by frozen products and finally preserved goods. However the
complexity of production and the distribution logistics are greater in the case of fresh and frozen products
compared to preserved goods. In this way there is an inversely proportional relationship between
profitability and commercial complexity of the product type.
51

32. RISK MANAGEMENT (continued)


Fresh products, because of their very nature, have a much quicker rotation and almost no inventory of
finished products. Preserved products may be stored for up to 5 years and this means that in the
distribution chain there are times of very high or very low inventories that have a significant impact on
prices. .
Natural phenomena such as the cold or hot ocean currents of El Nio and La Nia, present a threat to
farming during half of the year.
La Nia generally means that the winter is colder than usual and this has a positive or negative
repercussion on our activities according to the crop. For example, in the case of avocado, the cold
reduces the rate at which the fruit grows and it reaches its period for harvesting at a lower weight per fruit
than usual. In the case of asparagus, however, although growth is slow during the period of the cold
current, the plants that are maturing and will be harvested at the end of the year have volumes well in
excess of the average.
El Nio, which is usually predictable some months in advance, increases the temperature in both
summer and winter. This phenomenon benefits the avocado plant, producing a fruit of greater weight but
on the other hand it reduces the harvest levels of asparagus in the months following warmer weather.
Currency exchange risk
The Group buys and sells its products and services and obtains funding for its working capital and
investments mainly in its functional currency. A minor proportion of the Groups costs are incurred in
Peruvian nuevos soles and therefore the financial results are not significantly affected by exchange rate
fluctuations between the US Dollar and the Nuevo Sol. However, on significant transactions management
evaluates and decides the use of economically hedge contracts to hedge any possible risk .
As of December 31, 2008 and 2007 the Group had the following assets and liabilities in Peruvian nuevos
soles (PEN) and Euros:
2008
PEN 000
Assets Available funds
Accounts receivable
Liabilities Bank overdrafts and loans
Accounts payable
Asset position, net

000

(
(
(

1,170) (
38,513) (
39,683) (

(
(
(
(

864)
30,985)
31,849)
7,834)

(
(
(
(

2007
PEN 000

000
56)
2,843)
2,899)

1,846)
8,569)
10,415)

(
(
(

2,147) (
20,193) (
22,340) (

74)
1,912)
1,986)
8,429)

(
(
(
(

15)
8,310)
8,325)
14,015)

(
(
(
(

2)
)
2)
2,897)

The following table demonstrates the sensitivity to a reasonably possible change in the Peruvian nuevos
soles exchange rate and Euro exchange rate for twelve months, with all other variables held constant, on
the Groups profit before tax:
Increase/
decrease in
PEN rate

Effect on
profit
before tax
USD 000

2008

+4%
-4%

(96)
104)

+4%
-4%

(464)
(465)

2007

+4%
-4%

(180)
(195)

+4%
-4%

(164)
(164)

52

Increase/
Effect on
decrease in
profit
rate
before tax
USD 000

32 RISK MANAGEMENT (continued)


Camposol S.A. has entered into a derivative transaction (Cross Currency SWAP) with Credit Suisse to
hedge its exposure to the risk of adverse changes in the foreign currency rate that will affect the cash
outflows to settle its monthly payroll denominated in Peruvian Nuevos soles amounting to PEN 5,993,000 .
In this context the Group has defined the hedging relationship as a cash flow hedge. The hedging
instrument is the Cross Currency Swap, the hedged item corresponds to the cash outflows in Peruvian
Nuevos soles for the settlement of its payroll in the amount of PEN 5,993,000 (highly probable forecasted
transaction) and the risk hedged corresponds to the exposure to changes in the foreign exchange rate of
Peruvian Nuevos Soles to U.S Dollar.
The fair value of the hedging instrument (Cross Currency Swap) at the end of each quarter was a follows:
As of
November 16, 2007
December 31, 2007
March 31, 2008
June 30, 2008
September, 2008
December, 2008

Fair value
USD 000

Change in fair value


USD 000

(937)
5,809)
(612)
(7,823)
(16,112)

(937)
6,746)
(6,421)
(7,211)
(8,289)

Effectiveness
ratio - %
(retrospective)
100.8
93.2
110.9
106.9

The cash flow hedge is reflected in the financial statements as follows:


USD 000
Net equity Cash flow hedges
Other accounts payable (current) - hedging derivatives (Note 26)
Other accounts payable (non-current) - hedging derivatives (Note 26)
Profit and loss (ineffective portion of hedge) (*)
Deferred income tax assets (Notes 22 and 23)

(*)

11,093
3,908
12,204
1,611
3,408

USD 937,000 for 2007 and USD 674,000 in 2008 (Note 10).

The line of credit with Credit Suisse covers hedge exposure up to USD 15 million, and any excess is
covered by a cash collateral.
The following table demonstrates the sensitivity to a reasonably possible change in the Peruvian nuevos
soles exchange rate with all other variables held constant on the valuation of the cash flow hedge as of 31
December 2008.
Increase/
decrease in
PEN rate
2008

+4%
-4%

53

Effect on
Valuation
Hedge
USD 000
1,505
(1,505)

32 RISK MANAGEMENT (continued)


Interest rate risk
Changes in interest rates impact primarily loans and borrowings by changing either their fair value (fixed
rate debt) or their future cash flows (variable rate debt).
All interest bearing financial assets and liabilities have a fixed interest rate. Their maturity is shown in the
following table.
Within 1
Year
USD 000

Between 1
and 2 years
USD 000

2008 Bank loans


Bills of exchange payable
Long - term debt

16,456
12,894
9,528

2007
Financial assets at fair value
Bank loans
Bills of exchange payable
Long - term debt

109
1,478
5,036
68,278

Between 2
and 5 years
USD 000

Over 5
years
USD 000

Total
USD 000

17,140

39,686

16,456
12,894
66,354

6,590

50,711

109
1,478
5,036
134,136

8,557

Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or
custoner contract leading to a financial loss. The Group is exposed to credit risk on trade and other
receivables and deposits with banks.
The Group places its excess funds with top ranked financial institutions.
The maximum exposure to credit risk is the carrying amount of accounts receivable as shown on the
balance sheet. Sales transactions are carried out with a number of different counterparties, which
mitigates credit risk concentration.
The accounts receivable from a single customer represent 24 per cent of the balance as of December 31,
2008 (38 per cent as of December 31, 2007). However, all new transactions with this customer are being
executed with letters of credit to mitigate credit risk exposure.
In addition, the Group has a multimarket credit insurance coverage over the exports of fresh and
preserved products in an aggregate amount up to USD 42 million at December 31, 2008.(US$15 million
at December 31, 2007).
Liquidity risk
The liquidity risk caused by inability to obtain funds required to meet the Groups investment commitments
associated with financial instruments includes the Groups inability to sell a financial asset in a prompt
manner, at a price that approximates its fair value.
The Group has sufficient credit capacity to have access to credit lines with top ranked financial institutions
under reasonable terms. However, with the current world financial crisis there is risk that banks may revise
the terms of the lines of credit.

54

32 RISK MANAGEMENT (continued)


The table below analyses the Groups financial liabilities into relevant maturity groupings based on the
remaining period at the balance sheet to the contractual maturity date.
Between 1
and 2 years
USD 000

Within 1 year
USD 000

Between 2
and 5 years
USD 000

Total
USD 000

2008 Trade payables


Bank loans
Long-term debt
Interest to be paid

25,126
16,456
9,528
51,110

6,340

17,140
17,140

39,686
39,686

25,126
16,456
66,354
107,936

4,902

4,631

15,873

6,590
6,590

59,268
59,268

18,976
1,478
134,136
154,590

1,240

25,643

27,863

2007 Trade payables


Bank loans
Long-term debt
Interest to be paid

18,976
1,478
68,278
88,732

980

Management manages the risk associated with the amounts included in each of the buckets above
including the development of new bank relationships in order to have adequate funding available all the
time. At December 31, 2008 agreed funding totalled USD 24 million. The strategy of the Group is to
maintain the gearing ratio within acceptable industry standards.
Capital risk management
The Group objectives when managing capital are to safeguard the Groups ability to continue as a going
concern and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by
total capital plus net debt. Net debt is calculated as total borrowings plus trade and other payables, less
cash and cash equivalents. Total capital is calculated as equity as shown in the consolidated balance
sheet, less unrealised gains reserve.
As of December 31, 2008 and 2007, the Groups strategy was to maintain the gearing ratio in no more
than 1. The gearing ratios at December 31, 2008 and 2007 were as follows:
2007
USD 000

2008
USD 000
Bank loans
Long - term debt
Trade and other payables
Less available funds
Net debt

(
(
(
(
(

16,456)
66,354)
54,471)
5,770)
131,511)

(
(
(
(
(

1,478)
134,136)
43,739)
89,766)
89,587)

Equity attributable to shareholders


Retained earnings
Total equity

(
(
(

208,683)
12,453)
221,136)

(
(
(

196,302)
11,037)
207,339)

Equity and net debt

352,647)

296,926)

Gearing ratio

0.37)

0.30)

55