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EMPRESAS AQUACHILE S.A RESULTS FOR 1ST QUARTER 2014

May 2014


1.

About Empresas AquaChile S.A.

03

2.

Quarterly Summary

04

3.

Analysis of Results

06

4.

Balance Sheet Analysis

13

5.

Cash Flow Analysis

15

6.

Financial Covenants and Productivity Indicators

16

7.

Relevant Events

17

8.

Outlook

18

9.

Consolidated Balance Sheet

19

10.

Consolidated Income Statement

20

11.

Historical Harvests and Smolts Stocking

21

2


ABOUT EMPRESAS AQUACHILE S.A.

Empresas AquaChile is a Chilean Company that produces food from aquaculture-farmed species such as Atlantic salmon, Pacific salmon, Sea trout and tilapia. AquaChile has operations in Chile, Costa Rica, Panama and the United States, selling and marketing their products around the world. The company is made up of a group of companies that strategically farm, produce and commercialize food. It gives employment to more than 5,900 people in Chile, the United States, Costa Rica and Panama and it is one of the main producers of Sea trout and Pacific salmon in the world, being the main provider of fresh Tilapia to the United States. AquaChile is the main Salmon and Sea trout producer in Chile with a market share of 12.2% in 2013 in terms of exported net volume (source: SalmonChile). The Company has 151 aquaculture water licenses, giving them a solid base for growing and diversifying. The company exports their products to more than 300 customers in more than 30 countries. The company is also an important Tilapia producer in Costa Rica and it is starting to harvest in Panama, being one of the main fresh Tilapia provider in the United States with a 26% market share in 2013 (Source: Urner Barry).

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

03


QUARTERLY SUMMARY

Total sales of US$ 225.8 million, 49% more than the reported sales during the first quarter of 2013 and 12% higher than the reported sales for the 4Q13.. Physical sales of 30,775 tons WFE of salmon, 6% higher than the physical sales the same period of the previous year. EBITDA pre fair value adjustment1 of US$ +39.1 million, this is higher than the US$ -21.2 million reported for the same period the previous year and to the US$ +19.2 million reported during the 4Q13. EBITDA margin of +17.3%, which is higher than the -14.0% margin reported for the same period of the previous year and to the +9.5% margin reported for the 4Q13. A US$ +11.1 million profit, higher than the US$ -5.3 million reported for the 1Q13. Ratio of financial leverage of 1.07x, falling from the 1.18x level reported for the 4Q13.

AquaChile reported accumulated sales of US$ 225.8 million on March 31, 2104. This is a 49% increase in comparison within comparison with the same period of 2013 (∆+US$ 74.2 million). This is mainly due to the increase in the valued sale of the Atlantic salmon (∆+US$ 55.3 million) and the Pacific salmon (∆+US$ 15.2 million). At operational level, the EBITDA pre fair value adjustment (this is the pre-value adjustments of the fish biomass at fair value) reached US$ +39.1 million, this is higher than the US$ -21.2 million reported during the first quarter the previous year and higher than the US$ +19.2 million reported during the fourth quarter 2013. This meant that the margin was 17.3% over the company’s consolidated sales. The scenario for the exporting prices during the first quarter 2014 in comparison with the same period the year before, was favorable for all species, making note of the in-

creases seen in the sales price of Atlantic salmon (∆+40%), Sea trout (∆+70%) and Pacific salmon (∆+44%). During the first quarter 2014 the company continued to see a productive improvement and a decrease in the cost of the raw material, which is associated to the growth improvement of the biomass and an improvement in the feed conversion, slowly returning to historical levels. It is important to note that the sanitary and productive improvements seen during this period are due to the decrease of sealice (Caligus) in the environment. This has been achieved due to collaborative actions by the industry to deal with this parasite and this includes the coordination of the bath treatments carried out in wider geographical areas; the coordinated rotation of the drugs that are being used and also to the improvements in applying these treatments.

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

04


QUARTERLY SUMMARY

The Company’s consolidated sales during the 1Q14 were a total of US$ 225.8 million, which is a 49% increase in comparison to the reported valued sales of the 1Q13. In effect there was an increase in the valued sales of Atlantic salmon (∆+196%) and Pacific salmon (∆+40%) during the first quarter, and a 5% decrease in Sea Trout and a 4% decrease in Tilapia in comparison to the same period the previous year. With regards to the sales price, an increase was observed for the price of Atlantic salmon (∆+40%), Sea Trout (∆+70%), Pacific salmon (∆+44%) and Tilapia (∆+4%) in comparison to the same quarter 2013. The consolidated EBITDA reached US$ +39.1 million during the 1Q14, which is a positive comparison to the US$ -21.2 million reported for the same period 2013 and to the US$ +19.2 million reported for the 4Q13. This increase

is explained by the higher margins seen in all the salmon species due to the rise of the sales price together with the improved costs of Atlantic salmon and Sea Trout. AquaChile reported a US$ +11.1 million profit during the 1Q14, which is a positive comparison to the US$ -5.3 million reported for the same period 2013. This favorable variation in comparison to the previous year is mainly due to the increase of the sales price of the salmon, together with the better costs of Atlantic salmon and Sea Trout. The company’s net financial debt was a total of US$ 247.4 million at the close of the 1Q14, reflecting a US$ 29.2 million drop in comparison to the 4Q13. The reason for this drop was the Company’s Cash and Cash equivalent that reached US$ 49.7 million on March 31, 2014, which is higher than the US$ 17.9 million reported on December 31, 2013.

05


ANALYSIS OF RESULTS

SUMMARY OF MAIN CONSOLIDATED FIGURES figures in thus$

1q14

1q13

∆qoq

2013

225,791

151,563

49%

737,875

30,990

-27,166

-

-42,974

39,130

-21,238

-

-15,501

EBITDA PRE FV ADJ. MARGIN

17.3%

-14.0%

-

-2.1%

NET INCOME

11,146

-5,308

-

-9,454

30,775

29,110

6%

116,180

1.03

-0.92

-

-0.33

SALES EBIT PRE FV ADJ.

(1)

EBITDA PRE FV ADJ. (2)

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

5,606

6,074

-8%

23,806

EBIT / KG WFE TILAPIA

-0.15

-0.05

-223%

-0.18

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

The Sales Revenue for the quarter reached US$ 225.8 million, which is higher than the US$ 151.6 million reported during the same period of 2013. In fact the revenues for Atlantic salmon had a 196% increase (∆+ US$ 55.3 million) and

Pacific salmon had a 40% increase (∆+ US$ 15.2 million). On the other hand the revenues for Sea Trout reflected a 5% decrease (∆- US$ 2.2 million) and Tilapia had a 4% decrease (∆- US$ 0.7 million).

06


ANALYSIS OF RESULTS

QUARTERLY SALES TREND (USD MILLIONS) 226 193 166

158

191

202

152

136 103

97

100

96 56

1Q11

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

QUARTERLY CONSOLIDATED SALES ANALYSIS (PRICE AND VOLUME EFFECT) (USD MILLIONS) Sales 1Q13

Atlantic Salmon

Sea Trout

30

17

44

152

11

Pacific Salmon

Tilapia

1 -1

-32

∆ Price

Fish feed

1

Other Sales Incomes 1Q14

6

226

-1

∆ Volume

07


ANALYSIS OF RESULTS

QUARTERLY EBITDA TREND (US$ MILLIONS) 39 33

33

25

19 19

17 12 0.3 -2 -12

-12 -18

1Q11

2Q11

3Q11

-21

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

QUARTERLY NET INCOME TREND (US$ MILLIONS) 37 26

10

11

10 2 -2

-2

-5 -10 -17

-17 -28

1Q11

2Q11

3Q11

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

08


ANALYSIS OF RESULTS

The Consolidated EBITDA pre Fair Value adjustments2 (*) reached US$ +39.1 million during the first quarter of 2014, which is a positive comparison to the US$ -21.2 million for the same period of the previous year and to the US$ +19.2 million for the fourth quarter 2013. The reasons for this improvement were the observed higher margins in all of the salmon species due to an increase in the sales price together with the improvement of the costs for Atlantic salmon and Sea Trout. With all this, the EBITDA margin (EBITDA over common revenues) reported during the 1Q14 is +17.3% in comparison to the -14.0% reported during the same period 2013. The Company recognizes a US$ -15.6 million loss for “Net effect of valuing the biomass at fair value� during the first quarter 2014. This amount is less than the US$ +25.5 million profit reported during the 1Q13. The reason for this is mainly: i) recognizing a higher cost due to the effect of valuing at fair value during the 1Q14 at US$ -32.3 million, this amount

is less than the higher cost of US$ +0.7 million reported during the same period of the previous year, mainly due to the positive difference shown between the prices that the biological assets were valued at for Atlantic salmon and Sea Trout, especially Pacific salmon in December 2013 in comparison to December 2012; ii) the reverse net of US$ +2.0 million during the 1Q13 from the provision of lower value of the finished product carried out in December 2012. This provision was not carried out during 2013 so therefore it did not reverse during the 1Q14; iii) inversely, the US$ +15.8 million deterioration test applied in December 2012 to the biomass did not affect the fair value; it was not necessary to apply this test during 2013 and that is why it did not reverse during the 1Q14. The aforementioned points were partially compensated by a value adjustment of US$ +16.7 million for the biomass being reared, which is higher than the US$ 7 million reported for March 2013 and which is mainly due to higher market prices for Atlantic salmon and Sea Trout, and lower costs capitalized for both species.

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

09


ANALYSIS OF RESULTS

ANALYSIS OF PHYSICAL SALES, VALUED, AND MARGIN BY SEGMENT 1q14

1q13

∆qoq

2013

TON WFE

13,132

6,221

111%

51,293

MUS$

83,401

28,146

196%

287,838

6.35

4.52

40%

5.61

16,767

-7,129

-

-18,108

US$ / KG WFE

1.28

-1.15

-

-0.35

TON WFE

6,261

11,206

-44%

29,716

40,774

43,012

-5%

142,970

6.51

3.84

70%

4.81

9,208

-16,964

-

-28,838

1.47

-1.51

-

-0.97

TON WFE

11,382

11,683

-3%

35,171

MUS$

134,294

figures in thus$

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

US$ / KG WFE MUS$

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

MUS$ US$ / KG WFE MUS$ US$ / KG WFE

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

53,200

37,957

40%

US$ / KG WFE

4.67

3.25

44%

3.82

MUS$

5,856

-2,791

-

8,259

0.51

-0.24

-

0.23

TON WFE

5,606

6,074

-8%

23,806

MUS$

68,508

US$ / KG WFE

TILAPIA SALES VOLUME SALES AVERAGE PRICE EBIT EBIT / KG WFE

16,829

17,565

-4%

US$ / KG WFE

3.00

2.89

4%

2.88

MUS$

-841

-282

-198%

-4,288

US$ / KG WFE

-0.15

-0.05

-223%

-0.18

The Atlantic salmon business increased its revenues 196% during the 1Q14 (∆+ US$ 55.3 million) in comparison to the same period 2013, due to a 111% increase in the sales volume (∆+6.910 tons WFE) and to the 40% in sales prices. The accumulated EBIT Pre FV Adj. Presented a US$ +16.8 million profit which is a positive comparison to the US$ -7.1 million reported for the same period 2013. At unit level, the accumulated EBIT Pre FV Adj. / Kg WFE reached US$ +1.28 / Kg WFE (in comparison to the US$ -1.15 / Kg WFE the same time the previous year). The explanation for the observed increase in the margins is due to an improved observed productivity in the species starting from the third quarter 2013, the observed decrease in the harvesting costs associated to a higher harvesting volume and a decrease in the processing cost associated to the higher volume of larger fish that were processed.

The Sea Trout business during the 1Q14 had a 5% drop in its revenues (∆- US$ 2.2 million) in comparison to the same period 2013, due to a 44% drop (∆-4.944 tons WFE) in the sales volume, although there was a 70% increase in the sales price. The accumulated EBIT Pre FV Adj. presented a US$ +9.2 million profit which is a positive comparison to the US$ -17.0 million reported for the same period 2013. At unit level, the accumulated EBIT Pre FV Adj / Kg WFE reached US$ +1.47 / Kg WFE (in comparison to the US$ -1.51 / Kg WFE during the same time the previous year). The explanation for the increase in the observed margins is due to an increase in the price and also a decrease in the costs of the raw material thanks to an improvement in productivity starting from the third quarter 2013.

The Pacific salmon or Coho salmon business saw a 40% increase during the 1Q14 (∆+ US$ 15.2 million) in comparison to the same period 2013, due to a 44% increase in the sales price, which was partly compensated by the 3% decrease in the sales volume (∆- 301 tons WFE). The accumulated EBIT Pre FV Adj. presented a US$ 5.9 million earning which is a positive comparison to the US$ -2.8 million reported for the same period 2013. At unit level, the accumulated EBIT Pre FV Adj. / Kg WFE reached US$ +0.51 / Kg WFE (in comparison to the US$ -0.24 / Kg WFE during the same time last year). The explanation for the increase in the margins is mainly due to the increase in the sales price which was partly compensated by the increase in the cost of the raw material of this species due to a specific increase in mortality caused by SRS in some of the farm sites during the farming season 2013/2014.

The Tilapia business saw a 4% decrease in its revenues (∆- US$ 0.7 million) during the 1Q14 in comparison to the same period 2013, due to an 8% decrease in the sales volume (∆- 468 tons WFE), which was partly compensated by the 4% increase in the sales price. The accumulated EBIT Pre FV Adj. presented a US$ -0.8 million loss which is a negative comparison to the US$ -0.3 million reported for the same period 2013. At unit level the accumulated EBIT Pre FV Adj. / Kg WFE reached US$ -0.15 / Kg WFE (in comparison to the US$ -0.05 / Kg WFE for the same time last year). This lower margin is associated with a lower performance of the production in Costa Rica which presented an increase in the cost of raw material mainly due to the increase in the feed price and also an increase in the conversion factor associated to the rainfall which increases the water turbidity during 2013.

TOTAL SALES VOLUME SALES AVERAGE PRICE EBIT EBIT / KG WFE

TON WFE

36,380

35,184

3%

139,986

MUS$

194,204

126,681

53%

633,610

5.34

3.60

48%

4.53

30,990

-27,166

-

-42,974

0.85

-0.77

-

-0.31

US$ / KG WFE MUS$ US$ / KG WFE

10 Source: AquaChile


ANALYSIS OF RESULTS

CONSOLIDATED INCOME STATEMENT figures in thus$ SALES OPERATIONAL COST

1q14

1q13

∆qoq

2013

225,791

151,563

49%

737,875

-178,639

-164,948

8%

-720,853

OPERATIONAL MARGIN

47,152

-13,385

-

17,022

OTHER COST AND OPERATING EXPENSES (2)

-8,022

-7,853

2%

-32,523

EBITDA PRE FV ADJ.

39,130

-21,238

-

-15,501

DEPRECIATION & AMORTIZATION

-8,140

-5,927

37%

-27,473

EBIT PRE FV ADJ.

30,990

-27,166

-

-42,974

NET REVENUES FROM BIOLOGICAL ASSETS (3)

-15,572

25,540

-

47,693

EBIT POST FV ADJ.

15,418

-1,625

-

4,718

FINANCIAL EXPENSES

-2,328

-2,065

13%

-9,269

(1)

FINANCIAL INCOME

134

210

-36%

589

1,231

-226

-

-5,998

INCOME TAXES

-3,310

-1,602

107%

505

NET INCOME

11,146

-5,308

-

-9,454

OTHER NON OPERATING ITEMS (4)

1 “Cost of sales” deducted “Adjustment from depreciation and amortization expenses” 2 “Distribution costs” plus “Administration expenses” 3 “Fair Value of biological assets harvested and sold” plus “Fair Value of biological assets for the year” (See Note 11 to the Financial Statements. Biological Assets) 4 “Other income, by function” plus “Other expenses, by function” plus “Exchange rate differences” plus “Results from adjustment units” Note: All the figures are obtained directly from the Income Statement and the note 16 (PP&E) from the company Financial Statements. Source: AquaChile

11


ANALYSIS OF RESULTS

Operational Costs saw a total of US$ -178.6 million in the quarter, which is an 8% increase to the 1Q13, which is mainly explained by the improvement of the sales costs of Atlantic salmon and Sea Trout. Also if one compares the operational cost (measured as a percentage over sales) this reached a 79.1% of the revenues, 29.7 percentage points below the percentage reported during the 1Q13 and 7.5 percentage points lower than the percentage reported for the 4Q13.

NET EFFECT OF THE FAIR VALUE ADJUSTMENT OF THE BIOMASS Fair Value of the biological assets of the year: At the close of each period, the natural growth effect of the fish biomass that is being reared, expressed in the reasonable value of the same (sales prices minus the estimated costs at the point of sale), is recognized according to the assessment done on each farm site and it is based on the existing fish biomass at the close of each month. The details include the total number of fish that are being reared, their estimated average weight and the cost of the fish biomass. In its calculation, the estimated cost is done by estimating the average weight that the biomass are currently at, multiplied by the value per kilogram of the market price. The market price is obtained by the international index prices or else by the most recent sale carried out close to the closing of the financial statements. The resulting higher or lower value is reported in the Income Statement, under the concept “Fair Value for the Biological assets of the year”. This concept meant a US$ +16.7 million profit for the 1Q14, which is a negative comparison to the US$ +24.8 million profit reported for the 1Q13, which can be broken down in the following way: i) US$ +16.7 million (US$ +7.0 million during the 1Q13) correspond to the “Value adjustment of the fish biomass that is being reared”, ii) US$ 0 million (US$ +15.8 million during the 1Q13) correspond to the reverse of the deterioration test carried out on the biomass that was in

the water and was projected to be harvested without being susceptible to the fair value adjustment; and finally iii) US$ 0 million (US$ +2.0 million during the 1Q13) correspond to the reverse of the net value provision carried out on the finished products. The higher cost of the harvested and sold part due to the reevaluation is reported in the Income statement under the concept “Fair Value of the harvested and sold biological assets” which reached a US$ -32.3 million loss during the 1Q14 (US$ +0.7 million for the 1Q13). The net value of both revaluing effects are expressed under the line “Net effect of the fair value adjustment to the biomass” and it reached US$ -15.6 million during the 1Q14, this is a lower number than the US$ +25.5 million reported for the 1Q13. (For more details see Note 10 of the Financial Statements: Biological Assets). The Other Operational Costs and Expenses presented a 2% increase in comparison to the same period last year. In fact, the Distribution Costs presented a ∆+3,6% increase, due to an increase in the commercial activity and the sales of the company, while the Administration Expenses did not show any significant changes (∆+0,32%). The non-operational results for the quarter presented a US$ -0.96 million loss, this amount can be positively compared to the US$ -2.1 million loss observed during the same period the previous year, mainly explained by the profit due to the type of exchange rate of the US$ 1.1 million reported for the first quarter 2014, this is higher than the US$ -0.5 million loss reported for the same period the previous year The expenses for the income taxes presented a US$ -3.3 million provision in comparison to the US$ -1.6 million the same period the previous year. The company presented a US$ +11.1 million profit for the 1Q14, which is a positive comparison to the US$ -5.3 million loss reported the same period 2013.

12


BALANCE SHEET ANALYSIS

CONSOLIDATED BALANCE SHEET 2012 figures in thus$

2013

2014

1q12

2q12

3q12

4q12

1q13

2q13

3q13

4q13

1q14

CURRENT ASSETS

445,298

410,090

470,823

434,232

486,530

440,131

420,735

475,711

496,337

4.3%

NON CURRENT ASSETS

382,420

402,711

442,510

397,594

396,059

409,874

410,542

423,345

410,387

-3.1%

TOTAL ASSETS

827,718

812,801

913,333

831,826

882,589 850,005

831,277 899,056

906,724

0.9%

CURRENT LIABILITIES

146,755

125,350

175,516

176,554

200,549

214,043

195,261

227,429

224,698

-1.2%

NON CURRENT LIABILITIES

228,153

252,356

312,720

258,739

290,840

272,680

274,664

268,149

267,681

-0.2%

∆1q14 o 4q13

TOTAL LIABILITIES

374,908

377,706 488,237

435,292

491,389 486,723 469,925

495,578

492,379

-0.6%

EQUITY

431,228

414,012 404,099

387,654

382,443 354,309

352,709

394,173

405,205

2.8%

8,643

9,305

9,140

-1.8%

831,277 899,056

906,724

0.9%

MINORITY INTEREST

TOTAL EQUITY AND LIABILITIES

21,582

21,083

20,998

8,879

827,718

812,801

913,333

831,826

8,757

8,973

882,589 850,005

Source: AquaChile

Current Assets presented a 4.3% increase (∆+ US$ 20.6 million) in comparison to the numbers observed during the 4Q13. The explanation for the above is: i) the increase of US$ 31.8 million in the “Cash and Cash Equivalent” account associated to the positive operational cash flow reported during the first quarter of this year due to the observed prices in the market and fewer investment in fixed assets and work capital requirements; ii) a US$ 8.4 million increase in the “Trade Debtors and other receivable, checking accounts” associated to the higher level of sales in the Salmon and Sea trout segments. This was partly compensated by the US$ 20.7 million decrease in the “Current and non-

current biological asset” account mainly associated to the reverse of the fair value of the fish biomass in the water due to the harvesting that was carried out during the first quarter 2014 and valued on December 31, 2013. Non-current assets presented a 3.1% decrease (∆- US$ 13.0 million) in comparison to the numbers observed for the 4Q13. This is mainly explained by: i) a US$ 3.8 million decrease in the “Properties, plants and equipment”; ii) a US$ 5.7 million decrease in the “Non-current biological assets”; and iii) a US$ 3.4 million decrease in the “Assets for deferred taxes”.

13


BALANCE SHEET ANALYSIS

Current Liabilities presented a 1.2% decrease (∆- US$ 2.7 million) in comparison to the numbers observed for the 4Q13. This is explained by: i) a US$ 3.3 million decrease in the “Trade accounts receivable and other receivable accounts”; and ii) a US$ 1.9 million decrease in the “Other non-financial current liabilities” account. The previous is partly compensated by a US$ 2.7 million increase in the “Other financial current liabilities” associated to an increase in the accrued interests and those not paid during the period, and a new credit line contracted by the affiliate Grupo ACl dedicated to producing tilapia in Costa Rica.

Non-current liability presented a 0.2% decrease (∆- US$ 0.5 million) in comparison to the numbers observed for the 4Q13. This can be explained mainly by the US$ 0.2 million decrease in the “Liabilities for non-current deferred taxes” account. The Total Equity (including the Non-controlling interests) of the company presented a US$ 10.9 million increase in comparison to December 2013, which is mainly explained by the reported US$ +11.1 million profit during the first quarter 2014.

AQUACHILE FINANCIAL DEBT

2012

2013

2014

cifras en miles de us$

1q12

2q12

3q12

4q12

1q13

2q13

3q13

4q13

1q14

∆1q14 o 1q13

(I) OTHERS FINANTIAL LIABITIES CURRENT

13,197

11,799

12,820

9,111

11,259

25,253

31,409

31,579

34,251

8.5%

(II) OTHERS FINANTIAL LIABITIES NON CURRENT

185,469 198,773 251,882 251,705

281,356 266,039 266,446 262,894

262,812

0.0%

TOTAL INTEREST BEARING DEBT (I) + (II)

198,666 210,572 264,702 260,816

292,615 291,293 297,854 294,473

297,063

0.9%

CASH AND CASH EQUIVALENTS

104,305

17,935

49,697

177.1%

255,430 280,091 283,828 276,537

247,366

-10.5%

NET INTEREST BEARING DEBT

64,066

62,408

12,922

94,361 146,507 202,295 247,893

37,185

11,201

14,026

Source: AquaChile

On the other hand, the Net financial Debt of AquaChile reached US$ 247.4 million, showing a US$ 29.2 million decrease in comparison to the close of the 4Q13. The reason for this decrease is the increase in the Company’s Cash and Cash Equivalent which reached US$ 49.7 million on March 31, 2014; this is US$ 17.9 million higher than what was re-

ported on December 31, 2013. This increase is associated with a positive operational cash flow for the period, as a consequence of observed market prices and the lower level of investments in fixed assets and working capital requirements. This latest point is due to lower productive growth in the company, to a more moderate level. 14


CASH FLOW ANALYSIS

CONSOLIDATED CASH FLOW

figures in thus$

1q14

1q13

NET CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES

35,997

4,988

NET CASH FLOWS FROM (USED IN) INVESTMENT ACTIVITIES

-5,039

-10,370

1,121

29,708

NET INCREASE (DECREASE) OF CASH AND CASH EQUIVALENTS

32,079

24,326

CASH AND CASH EQUIVALENT AT THE START OF THE PERIOD

17,935

12,922

49,697

37,185

NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES

CASH AND CASH EQUIVALENT AT THE END OF THE PERIOD Source: AquaChile

The following is the behavior of the main consolidated Cash flow components on March 31, 2014 in comparison to March 31, 2013:

associated to the favorable scenario of the observed market prices and to the lower investment level in work capital explained by the decrease in the company’s growth rate in production.

On March 31, 2014 the company presented a total net cash flow for the year of US$ +32.1 million. During this same period the previous year it reported a cash flow of US$ 24.3 million.

This investment activity represented a US$ -5.0 million expenditure on March 31, 2014. During the same period the previous year the expenditure was US$ -10.4 million.

The operational activities at March 31, 2014 generated a US$ +36.0 million cash flow, this is higher than the US$ +5.0 million reported for the same period 2013. This increase is

The financial activities generated a cash flow of US$ +1.1 million on March 31, 2014, less than the US$ +29.7 million generated this same period 2013.

15


FINANCIAL COVENANTS AND PRODUCTIVITY INDICATORS

FINANCIAL COVENANTS The company’s financial liability contracts consider the financial obligations (covenants) calculated by the Consolidated Financial Statements of the Empresas AquaChile S.A. on December 31, 2011 and March 31st, June 30th, September 30th, and December 31st of the following years and it refers to keeping the maximum level of indebtedness (net financial leverage), to a minimum level of coverage of the net financial expenses and net financial debt over the maximum EBITDA.

However, given the low price scenario that the salmon industry presented in 2012 and beginning of 2013, the company agreed with the creditor banks to suspend the measure of these covenants that include the EBITDA in its calculation until June 2014 inclusive.

NET LEVERAGE (1)

1q14

2013

covenant

status as of 03.31.2014

1.07

1,18

< or = 1.10x

ACCOMPLISH

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

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

TONS WFE

1q14

1q13

2013 102,252

36,915

28,810

#

19.0

19.0

42.0

TONS WFE

1,943

1,516

2,435

#

38

44

40

TONS WFE

785

655

2,556

ATLANTIC SALMON

KG / M3

5.4

6.1

8.4

PACIFIC SALMON

KG / M3

1.1

1.5

9.7

SEA TROUT

KG / M3

5.1

4.6

5.9

SALMON AND SEA TROUT HARVEST / USED FISH FARMS* FARMING DENSITY**

SURVIVAL CLOSED GROUP*** ATLANTIC SALMON

%

89%

91%

83%

PACIFIC SALMON

%

85%

84%

86%

SEA TROUT

%

85%

72%

76%

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

The company presents a Salmon and Sea Trout harvest (in tons WFE) / harvested farm sites or in harvest during the period March 31, 2014 of 1,943 tons WFE. The farming densities on March 31, 2014 from the on-growing aquaculture sea licenses per species are the following: i) Atlantic salmon: 5.4 Kg / m3; ii) Pacific salmon: 1.1 Kg / m3; and iii) Sea Trout: 5.1 Kg/ m3. On the other hand, the survival rates observed for the closed groups at March 31, 2014 were the following: i) Atlantic salmon 89%; ii) Pacific salmon: 85%; and iii) Sea trout: 85%. 16


RELEVANT EVENTS

RELEVANT EVENTS

On March 11, 2014 the Securities and Insurance Commission (SVS) were told of the changes in Administration: the Company’s Board of Directors in an extraordinary session acknowledged and agreed to accept the voluntary resignation presented by Mr. Alfonso Márquez de la Plata Cortés from the position of General Manager of the Company, for personal reasons. The Board agreed to have it written in the Minutes all the Directors’ deep appreciation of Mr. Alfonso Márquez de la Plata Cortés for the valuable work that he carried out for more than 10 years in executive positions of Empresas AquaChile S.A. Due to this resignation, the Board agreed to assign Mr. Torben Petersen as the Company’s General Manager as of April 1, 2014. Mr. Torben Petersen has had a broad and wellknown career and experience in the salmon industry, and has also been linked to the company through the Salmones Chaicas S.A. project, an affiliate of the Company. On April 2, 2014 the Essential Fact was sent communicating the damage caused by the fire in the Facilities of the

Processing Plant located in Cardonal, in Puerto Montt. There exists a fire insurance and contents and coverage to damages due to detained contracts. On April 24, 2014 an Ordinary Shareholders’ Meeting was held where they adopted the following agreements: The Annual Report, Balance, Financial Statements and the Report from the External Auditing Company was approved, all of these are in reference to the close of the year on December 31, 2013; the remuneration of all members of the Board was fixed for the year 2014; the Board’s expense account for 2013 was approved; the remuneration for the members on the Board of Directors Committee was fixed as also the budget of the Board of Directors Committee for the year 2014; the firm Pricewaterhouse Coopers was assigned as the independent external auditors for examining the accounting, inventory, balance and financial statements of the year 2014; and the El Mostrador newspaper was assigned for carrying out the company’s publications.

17


OUTLOOK

GROWTH AND PROJECTED HARVEST VOLUME FOR THE 2Q14 A 25% decrease in the total harvest in comparison to the same period the previous year A 26% decrease in the salmon harvests in comparison to the same period the previous year A 23% decrease in the Tilapia harvest in comparison to the same period the previous year The harvesting plans for the second quarter 2014 projects 16,235 WFE tons of Salmon and Sea Trout, and 5,124 WFE tons of Tilapia.

HISTORICAL AND PROJECTED HARVESTS 2012

2013

2014

1q12

2q12

3q12

4q12

2012

1q13

2q13

3q13

4q13

2013

1q14

2q14

â&#x2C6;&#x2020;qoq

wfe tons

Real

Real

Real

Real

Real

Real

Real

Real

Real

Real

Real

Proj.

2q14P/2q13

ATLANTIC SALMON

2,181

3,873

6,120

4,959

17,132

7,527

16,529

15,249

13,814

53,119

14,720

10,134

-39%

TROUT

10,367

7,661

7,424

7,652

33,104

11,876

5,298

5,780

5,186

28,139

11,073

6,101

15%

PACIFIC SALMON

13,801

0

648

20,124

34,574

9,407

0

12

11,575

20,994

11,122

0

-

26,350

11,534

14,192

32,735

84,810

28,810

21,827

21,041

30,574

102,252

36,915

16,235

-26%

TILAPIA COSTA RICA & PANAMA

5,368

5,607

5,359

5,007

21,341

6,074

6,627

6,485

4,620

23,806

5,633

5,124

-23%

TOTAL SALMONIDS AND TILAPIA

31,718

17,141

19,551

37,742

106,151

34,884

28,454

27,525

35,195

126,058

42,548

21,359

-25%

TOTAL SALMONIDS

Source: AquaChile

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

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


CONSOLIDATED BALANCE SHEET

CONSOLIDATED BALANCE SHEET 2011 figures in thus$ CURRENT ASSETS CASH AND CASH EQUIVALENTS OTHER FINANCIAL ASSETS - CURRENT OTHER NON FINANCIAL ASSETS - CURRENT ACCOUNTS RECEIVABLES - CURRENT ACCOUNTS RECEIVABLESWITH RELATED COMPANIES - CURRENT BIOLOGICAL ASSETS - CURRENT - INVENTORY

2012

2013

2014

1q11

2q11

3q11

4q11

1q12

2q12

3q12

4q12

1q13

2q13

3q13

4q13

1q14

270,584

458,469

392,283

437,132

445,298

410,090

470,823

434,232

486,530

440,131

420,735

475,711

496,337

2%

63,609

177,559

131,661

113,897

104,305

64,066

62,408

12,922

37,185

11,201

14,026

17,935

49,697

34%

∆ 1q14 o 1q13

0

0

0

99

999

516

199

1,165

0

0

0

0

0

-100%

2,683

2,689

4,175

2,693

2,652

4,666

4,456

4,428

4,459

2,867

2,455

1,263

2,548

-43%

63,453

102,609

68,651

96,444

104,811

77,361

92,698

85,338

82,551

95,977

79,577

109,409

117,802

43%

1

66

457

6,603

5,823

6,331

7,913

8,951

8,018

8,697

6,925

8,739

8,668

8%

138,121

172,643

184,224

213,152

221,382

256,499

301,527

314,577

347,044

316,223

311,728

332,538

311,850

-10%

TAX ASSETS - CURRENT

2,717

2,903

3,115

4,244

5,325

651

1,622

6,851

7,273

5,166

6,024

5,827

5,772

-21%

NON CURRENT ASSETS

298,650

336,471

360,229

341,546

382,420

402,711

442,510

397,594

396,059

409,874

410,542

423,345

410,387

4%

96

10,694

11,994

10,694

10,694

10,440

10,289

11,378

11,378

11,378

11,378

11,378

11,378

0%

0

492

1,240

1,329

1,261

1,229

1,256

1,190

1,117

1,052

1,071

1,013

933

-16%

OTHER FINANCIAL ASSETS - NON CURRENT OTHER NON FINANCIAL ASSETS - NON CURRENT DOCUMENTS RECEIVABLES - NON CURRENT

650

650

650

150

150

150

150

150

150

150

150

150

150

0%

ACCOUNTS RECEIVABLES WITH RELATED COMPANIES - NON CURRENT

500

500

500

1,580

1,580

1,580

1,794

1,883

1,972

2,018

2,105

2,222

2,380

21% -62%

INVESTMENTS USING PARTICIPATION METHOD

0

3,000

3,585

4,198

4,179

4,938

4,187

3,595

3,482

3,727

3,737

1,413

1,339

INTANGIBLE ASSETS

35,633

35,510

35,396

37,326

38,250

37,052

37,167

38,962

37,479

37,652

37,712

40,728

40,707

9%

GOODWILL

51,448

51,448

51,448

51,448

51,448

51,448

53,247

54,989

59,349

59,423

59,314

54,989

54,989

-7%

PROPERTIES, PLANTS & EQUIPMENTS

139,807

141,434

144,573

166,287

173,749

186,115

200,277

200,229

201,630

204,053

202,376

234,017

230,203

14%

BIOLOGICAL ASSETS - NON CURRENT

11,842

15,859

29,233

33,145

27,192

26,789

27,533

27,174

23,395

27,062

28,409

26,251

20,515

-12% -15%

ASSETS BY DEFERRED TAX TOTAL ASSETS CURRENT LIABILITIES OTHER FINANCIAL LIABILITIES, CURRENT ACCOUNTS PAYABLE - CURRENT ACCOUNTS PAYABLES WITH RELATED COMPANIES - CURRENT LIABILITIES FOR CURRENT TAXES PROVISIONS FOR EMPLOEYEE BENEFITS - CURRENT

58,674

76,884

81,610

35,389

73,917

82,970

106,610

58,044

56,107

63,359

64,290

51,184

47,793

569,234

794,940

752,512

778,678

827,718

812,801

913,333

831,826

882,589

850,005

831,277

899,056

906,724

3%

93,062

156,437

103,344

130,969

146,755

125,350

175,516

176,554

200,549

214,043

195,261

227,429

224,698

12%

5,856

14,444

8,554

12,009

13,197

11,799

12,820

9,111

11,259

25,253

31,409

31,579

34,251

204%

80,268

136,357

88,893

111,018

122,178

104,776

150,259

154,237

172,493

159,021

134,733

167,311

164,011

-5%

654

1,948

3,014

2,203

3,190

6,169

9,106

10,437

13,943

25,551

23,714

20,340

19,605

41%

5,145

2,640

1,751

3,372

5,536

684

1,006

314

189

11

0

1,896

1,964

941%

0

0

0

16

373

387

473

226

469

518

592

249

700

49%

1,139

1,048

1,132

2,351

2,281

1,535

1,852

2,229

2,196

3,689

4,813

6,054

4,167

90%

NON CURRENT LIABILITIES

435,238

222,002

234,160

196,612

228,153

252,356

312,720

258,739

290,840

272,680

274,664

268,149

267,681

-8%

OTHER FINANCIAL LIABILITIES, NON CURRENT

409,499

176,611

185,319

184,648

185,469

198,773

251,882

251,705

281,356

266,039

266,446

262,894

262,812

-7%

OTHER ACCOUNTS PAYABLE - NON CURRENT

2,880

2,950

3,499

2,735

2,879

2,779

1,034

941

1,151

1,020

1,018

1,267

1,125

-2%

OTHER NON FINANCIAL LIABILITIES - CURRENT

OTHER PROVISIONS - NON CURRENT LIABILITIES BY DEFERRED TAX TOTAL LIABILITIES

31

100

62

0

0

0

0

0

0

0

0

0

0

-

22,828

42,341

45,280

9,229

39,805

50,804

59,804

6,093

8,332

5,621

7,200

3,988

3,744

-55%

528,300

378,439

337,504

327,581

374,908

377,706

488,236

435,293

491,389

486,723

469,925

495,578

492,379

0%

EQUITY

20,228

395,689

394,359

429,713

431,228

414,012

404,099

387,654

382,443

354,309

352,709

394,173

405,205

6%

MINORITY INTEREST

20,706

20,812

20,649

21,384

21,582

21,083

20,998

8,879

8,757

8,973

8,643

9,305

9,140

4%

569,234

794,940

752,512

778,678

827,718

812,801

913,333

831,826

882,589

850,005

831,277

899,056

906,724

3%

TOTAL EQUITY AND LIABILITIES Source: AquaChile

19


CONSOLIDATED INCOME STATEMENT

CONSOLIDATED INCOME STATEMENT 2011 figures in thus$

2012

2013

2014

1q11

2q11

3q11

4q11

1q12

2q12

3q12

4q12

1q13

2q13

3q13

4q13

1q14

∆ qoq

SALES

135,884

96,959

102,569

165,740

157,855

99,839

95,743

56,101

151,563

192,532

191,393

202,387

225,791

49%

OPERATIONAL COST (1)

-98,739

-74,727

-85,024

-126,364

-126,938

-92,874

-100,839

-67,443

-164,948

-195,922

-184,697

-175,286

-178,639

8%

37,145

22,232

17,545

39,376

30,917

6,966

-5,096

-11,342

-13,385

-3,389

6,695

27,102

47,152

-

OTHER COST AND OPERATING EXPENSES (2)

-4,415

-4,810

-5,297

-6,421

-6,048

-6,674

-6,597

-6,415

-7,853

-8,497

-8,261

-7,912

-8,022

2%

EBITDA PRE FV ADJ.

32,730

17,422

12,248

32,955

24,870

292

-11,693

-17,757

-21,238

-11,886

-1,566

19,190

39,130

-

DEPRECIATION & AMORTIZATION

-4,890

-5,454

-4,105

-4,824

-4,811

-3,927

-3,597

-4,066

-5,927

-7,875

-6,384

-7,287

-8,140

37%

EBIT PRE FV ADJ.

27,840

11,968

8,143

28,131

20,060

-3,635

-15,290

-21,823

-27,166

-19,761

-7,950

11,902

30,990

-

NET REVENUES FROM BIOLOGICAL ASSETS (3)

-9,948

4,211

-7,648

18,278

-22,899

-10,582

-7,037

-3,774

25,540

-10,810

8,246

24,716

-15,572

-

EBIT POST FV ADJ.

17,892

16,179

495

46,409

-2,840

-14,217

-22,327

-25,597

-1,625

-30,571

296

36,619

15,418

-

FINANCIAL EXPENSES

-5,329

-6,115

-1,481

-1,047

-2,050

-1,949

-2,247

-2,243

-2,065

-2,324

-2,201

-2,679

-2,328

13%

100

968

232

333

1,208

-132

-99

1,568

210

121

96

162

134

-36%

OPERATIONAL MARGIN

FINANCIAL INCOME OTHER NON OPERATING ITEMS (4) INCOME TAXES NET INCOME

270

456

-33

-243

-582

755

-11

2,756

-226

-4,832

214

-1,151

1,231

-

-3,432

-1,712

-752

-8,313

5,979

-1,906

14,684

6,091

-1,602

9,683

-335

-7,241

-3,310

107%

9,501

9,776

-1,540

37,137

1,714

-17,448

-9,998

-17,424

-5,308

-27,924

-1,930

25,709

11,146

-

1 “Cost of sales” deducted “Adjustment from depreciation and amortization expenses” 2 “Distribution costs” plus “Administration expenses” 3 “Fair Value of biological assets harvested and sold” plus “Fair Value of biological assets for the year” (See Note 11 to the Financial Statements. Biological Assets) 4 “Other income, by function” plus “Other expenses, by function” plus “Exchange rate differences” plus “Results from adjustment units” Note: All the figures are obtained directly from the Income Statement and the note 16 (PP&E) from the company Financial Statements Source: AquaChile

20


HISTORICAL HARVESTS AND SMOLTS STOCKING

HISTORICAL HARVESTS 2011 wfe tons

2011

real

2012 1q12

2q12

real

real

2013

3q12

4q12

real

real

2012

real

2014

1q13

2q13

3q13

4q13

real

real

real

real

2013

1q14

real

2014/2013

real

∆ qoq

ATLANTIC SALMON

15,224

2,181

3,873

6,120

4,959

17,132

7,527

16,529

15,249

13,814

53,119

14,720

96%

TROUT

26,458

10,367

7,661

7,424

7,652

33,104

11,876

5,298

5,780

5,186

28,139

11,073

-7%

PACIFIC SALMON

25,578

13,801

0

648

20,124

34,574

9,407

0

12

11,575

20,994

11,122

18%

TOTAL SALMONIDS

67,260

26,350

11,534

14,192

32,735

84,810

28,810

21,827

21,041

30,574

102,252

36,915

28%

TILAPIA COSTA RICA & PANAMA

17,232

5,368

5,607

5,359

5,007

21,341

6,074

6,627

6,485

4,620

23,806

5,633

-7%

84,492

31,718

17,141

19,551

37,742

106,151

34,884

28,454

27,525

35,195

126,058

42,548

22%

2011

1q12

2q12

3q12

4q12

2012

1q13

2q13

ATLANTIC SALMON

10,647

5,668

2,392

4,174

3,665

15,899

4,486

TROUT

16,675

4,456

4,481

2,770

2,789

14,495

2,040

10,519

8,576

1,438

0

0

10,014

4,198

4,080

0

37,842

18,699

8,311

6,943

6,454

40,408

10,724

10,613

7,661

TOTAL SALMONIDS AND TILAPIA

Source: AquaChile

HISTORICAL SMOLTS STOCKING 2011 wfe tons

PACIFIC SALMON TOTAL SALMONIDS

real

2012 real

real

real

2013 real

real

real

3q13

4q13

2,534

5,511

4,706

17,237

8%

3,999

2,150

2,196

10,385

-28%

0

8,278

-17%

6,902

35,900

-11%

real

real

real

2013 real

∆ yoy

2013/2012

Source: AquaChile

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NOTE ON FORWARD-LOOKING STATEMENTS

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

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Press release 1q14 empresas aquachile s a