F-1 1 d108277df1.htm FORM F-1 Form F-1
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As filed with the Securities and Exchange Commission on April 19, 2021

Registration Statement No. 333-            

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form F-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

Camposol Holding PLC

(Exact name of registrant as specified in its charter)

 

 

 

Cyprus   100   Not Applicable
(State or other jurisdiction of incorporation or organization)  

(Primary Standard Industrial

Classification Code Number)

 

(I.R.S. Employer

Identification No.)

81-83 Grivas Digenis Avenue, 1st Floor

Nicosia Jacovides Tower

Nicosia 1090

Cyprus

(357) 22-209-999

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 

 

Cogency Global Inc.

122 East 42nd Street, 18th Floor

New York, NY 10168 (212) 947-7200

(Name and address, including zip code, and telephone number, including area code, of agent for service)

 

 

With copies to:

 

Gregory Harrington

Arnold & Porter Kaye Scholer LLP

601 Massachusetts Ave., NW

Washington, D.C.

(202) 942 5000

(202) 942 5999

 

Samuel B. Dyer Coriat

Chief Executive Officer

Camposol S.A.

Av. El Derby 250

Santiago de Surco

Lima, Peru

(51) (1) 213-6565

 

Adam J. Brenneman

Manuel Silva

Cleary Gottlieb Steen & Hamilton LLP

One Liberty Plaza

New York, New York

(212) 225 2704

(212) 225 3999

 

 

Approximate date of commencement of proposed sale to the public:

As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.  ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933. Emerging growth company.  ☒

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 7 (a)(2)(B) of the Securities Act.  ☐

 

The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012

 

 

CALCULATION OF REGISTRATION FEE

 

 

TITLE OF EACH CLASS OF
SECURITIES TO BE REGISTERED
  

PROPOSED

MAXIMUM

AGGREGATE

OFFERING PRICE(1)(2)

  

AMOUNT OF

REGISTRATION

FEE(3)

Ordinary Shares

  

U.S.$450,000,000

  

U.S.$49,095

 

 

(1)

Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(o) under the Securities Act.

(2)

Includes Ordinary Shares that may be sold upon exercise of the underwriter’s over-allotment option, if any, and Ordinary Shares that may be offered outside the United States pursuant to Regulation S, but that may be resold from time to time in the United States in transactions requiring registration under the Securities Act. See “Underwriting.”

(3)

A fee of U.S.$42,953 was previously paid by Camposol Holding PLC on November 14, 2017 with the filing of Registration Statement No. 333-221545. An additional fee of U.S.$14,317 was previously paid by Camposol Holding PLC on December 29, 2017 with the filing of Registration Statement No. 333-221545. The aggregate fee of U.S.$57,270 (the “Aggregate Fee”) was previously paid, determined at the then applicable rate of U.S.$124.50 per U.S.$1,000,000 of the then- proposed maximum aggregate offering price of U.S.$460,000,000. Pursuant to Rule 457(p) under the Securities Act, the current fee of U.S.$49,095 is offset against the previously paid Aggregate Fee.

 

 

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

 

 

 


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The information in this prospectus is not complete and may be changed. Neither we nor the Selling Shareholders may sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

 

SUBJECT TO COMPLETION PRELIMINARY

PROSPECTUS DATED APRIL 19, 2021

 

LOGO

Ordinary Shares

Camposol Holding PLC

 

 

This is Camposol Holding PLC’s (the “Company”) initial public offering. We are offering ordinary shares of the Company and the selling shareholders named in this prospectus (the “Selling Shareholders”) are offering ordinary shares (collectively, the “Ordinary Shares”) in a combined offering (this “Offering”) consisting of (1) an international offering of              Ordinary Shares in the United States and other countries outside the United States and Peru through the underwriters named in this prospectus, which we refer to as the international offering, and (2) a concurrent public offering directed exclusively to institutional investors in Peru of              Ordinary Shares, registered with the Peruvian Capital Markets Superintendency (Superintendencia del Mercado de Valores or the “SMV”), through the Peruvian placement facilitation agents named in this prospectus, which we refer to as the Peruvian offering. We will not receive any proceeds from the sale of Ordinary Shares by the Selling Shareholders. No public market currently exists for our Ordinary Shares. We expect the initial public offering price of the Ordinary Shares to be between U.S.$             and U.S.$             per share. We have applied to have our Ordinary Shares listed on the New York Stock Exchange (“NYSE”) under the symbol “CMSL”. We will apply to register the Ordinary Shares in the Peruvian Public Registry of the Capital Markets (Registro Público del Mercado de Valores) under the Institutional Investors’ Market Section managed by the SMV, and to list the Ordinary Shares on the Lima Stock Exchange (Bolsa de Valores de Lima or the “LSE”) pursuant to the Institutional Investors’ Market Regulations (Reglamento del Mercado de Inversionistas Institucionales or the “IIM Regulations”) approved by SMV Resolution No. 021-2013-SMV/01, as amended, and the Securities Registration and Exclusion Regulations (Reglamento de Inscripción y Exclusión de Valores Mobiliarios en el Registro Público del Mercado de Valores y en la Rueda de Bolsa), approved by SMV Resolution No. 031-2012-SMV/01, as amended. The closings of the international offering and the Peruvian offering are conditioned upon each other.

We qualify as an “emerging growth company” as defined in Section 2(a) of the Securities Act of 1933 and, as a result, are subject to reduced public company reporting requirements.

 

 

Investing in our Ordinary Shares involves risks. Please read “Risk Factors” beginning on page 41 of this prospectus.

 

    

Per Ordinary

Share

     Total  

Initial public offering price

   U.S.$        U.S.$    

Underwriting discounts and commissions(1)

   U.S.$        U.S.$    

Proceeds to us, before expenses

   U.S.$        U.S.$    

Proceeds to Selling Shareholders, before expenses

   U.S.$        U.S.$    
(1)

See “Underwriting” for additional information regarding total underwriter compensation.

We and the Selling Shareholders have granted an option to the underwriters, exercisable for 30 days after the date of this prospectus, to purchase up to              additional Ordinary Shares at the public offering price, less the underwriting discount.

Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

The underwriters expect to deliver the Ordinary Shares against payment in New York, New York on or about             , 2021, through the Book- Entry facility of The Depositary Trust Company.

 

 

 

Global Coordinators and Joint Bookrunners
BofA Securities    UBS Investment Bank    J. P. Morgan
   Joint Bookrunner   
Scotiabank       Santander

 

 

The date of this prospectus is             , 2021


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LOGO


Table of Contents

TABLE OF CONTENTS

 

     Page  

PRESENTATION OF FINANCIAL MEASURES AND OTHER INFORMATION

     3  

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

     6  

SUMMARY

     9  

THE OFFERING

     30  

SUMMARY SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

     34  

RISK FACTORS

     41  

EXCHANGE RATES

     67  

USE OF PROCEEDS

     68  

DIVIDEND POLICY

     69  

CAPITALIZATION

     71  

DILUTION

     72  

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     73  

SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

     96  

BUSINESS

     99  

INDUSTRY

     134  

REGULATORY ENVIRONMENT

     141  

MANAGEMENT

     154  

CERTAIN TRANSACTIONS WITH RELATED PARTIES

     166  

DESCRIPTION OF CERTAIN MATERIAL AGREEMENTS

     168  

PRINCIPAL AND SELLING SHAREHOLDERS

     171  

DESCRIPTION OF SHARE CAPITAL

     174  

SHARES ELIGIBLE FOR FUTURE SALE

     186  

TAXATION

     188  

UNDERWRITING (CONFLICT OF INTEREST)

     198  

EXPENSES OF THE OFFERING

     209  

LEGAL MATTERS

     210  

EXPERTS

     210  

ENFORCEABILITY OF CIVIL LIABILITIES

     211  

WHERE YOU CAN FIND MORE INFORMATION

     213  

INDEX TO THE FINANCIAL STATEMENTS

     F-1  

APPENDIX A: GLOSSARY OF SELECTED TERMS

     A-1  

 

 

We are responsible for the information contained in this prospectus and in any free writing prospectus we prepare or authorize. Neither the Company, the Selling Shareholders, nor the underwriters have authorized anyone to provide you with information other than that contained in this prospectus or in any free writing prospectus prepared by or on behalf of us or to which we have referred you. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give to you. The information contained in this prospectus or any free writing prospectus is accurate only as of the date of this prospectus or such free writing prospectus, regardless of the time of delivery of this prospectus or any free writing prospectus. Our business, financial condition, results of operations and prospects may have changed since that date.

We and the Selling Shareholders are offering to sell, and seeking offers to buy, Ordinary Shares only in jurisdictions where offers and sales are permitted. None of the Company, the Selling Shareholders nor the underwriters have taken any action to permit a public offering of our Ordinary Shares or the possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than the United States and Peru. You are required to inform yourselves about and to observe any restrictions relating to this Offering and the distribution of this prospectus.

 

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Basis of Presentation

Unless otherwise specified, references herein to “U.S. dollars,” “dollars,” “U.S.$” or “$” are to United States dollars, the legal currency of the United States; references to “sol”, “Sol”, “PEN,” “soles” or “S/” are to the sol, the legal currency of Peru; references to “€,” “Euros” and “EUR” are to the currency introduced at the start of the third stage of European economic and monetary union pursuant to the treaty establishing the European Community, as amended; and references to “Yuan” are to the official currency of the Republic of China.

References in this prospectus to the “Company,” “we,” “us”, “our” or “Camposol Holding” refer to Camposol Holding PLC and its consolidated subsidiaries, unless the context requires otherwise. As used in this prospectus, the terms “fiscal,” “fiscal year” and “fiscal year ended” refer to our fiscal year, which ends on December 31 of such fiscal year. “ Camposol S.A.” or “Camposol” refers to our subsidiary Camposol S.A., a sociedad anónima organized and existing under the laws of Peru.

NOTICE TO RESIDENTS OF PERU

THIS OFFERING WILL BE CONSIDERED A PUBLIC OFFERING DIRECTED EXCLUSIVELY TO “INSTITUTIONAL INVESTORS” (AS SUCH TERM IS DEFINED UNDER THE IIM REGULATIONS). THE ORDINARY SHARES WILL BE REGISTERED WITH THE SMV PURSUANT TO THE PROCEDURES SET FORTH IN TITLE III OF THE IIM REGULATIONS, WHICH IS APPLICABLE TO CONCURRENT U.S. INITIAL PUBLIC OFFERINGS DULY REGISTERED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION AND PERUVIAN PUBLIC OFFERINGS. THE ORDINARY SHARES OFFERED HEREBY ARE SUBJECT TO TRANSFER AND RESALE RESTRICTIONS AND SHALL NOT BE OFFERED OR SOLD IN PERU, EXCEPT (I) THE OFFERING IS REGISTERED WITH THE SMV AND THE SHARES ARE PREVIOUSLY REGISTERED BY THE SMV, (II) IN COMPLIANCE WITH THE IIM REGULATIONS, OR (II) IF SUCH OFFERING IS CONSIDERED A PRIVATE OFFERING UNDER THE PERUVIAN SECURITIES LAWS AND REGULATIONS OF PERU. THE PERUVIAN SECURITIES LAWS ESTABLISH, AMONG OTHER THINGS, THAT AN OFFER DIRECTED EXCLUSIVELY TO INSTITUTIONAL INVESTORS QUALIFIES AS A PRIVATE OFFERING. IN MAKING AN INVESTMENT DECISION, INSTITUTIONAL INVESTORS (AS DEFINED BY THE IIM REGULATIONS) MUST RELY ON THEIR OWN EXAMINATION OF THE TERMS OF THE OFFERING OF THE SHARES TO DETERMINE THEIR ABILITY TO INVEST IN THE SHARES.

NO OFFER OF OR INVITATION TO SUBSCRIBE FOR OR BUY OR SELL THE ORDINARY SHARES CAN BE MADE IN THE REPUBLIC OF PERU, EXCEPT IN COMPLIANCE WITH THE APPLICABLE SECURITIES LAWS OF PERU.

NOTICE TO RESIDENTS IN THE EUROPEAN ECONOMIC AREA

In any European Economic Area (“EEA”) Member State (each, an “EEA Member State”), this communication is only addressed to and is only directed at “qualified investors” in that EEA Member State within the meaning of Regulation (EU) 2017/1129 (the “Prospectus Regulation”). This prospectus has been prepared on the basis that any offer of Ordinary Shares in any EEA Member State will be made pursuant to an exemption under the Prospectus Regulation from the requirement to publish a prospectus for offers of Ordinary Shares. Accordingly, any person making or intending to make an offer of Ordinary Shares which are the subject of the offering contemplated in this prospectus in an EEA Member State may only do so in circumstances in which no obligation arises for us, the Selling Shareholders or the underwriters to publish a prospectus pursuant to Article 3 of the Prospectus Regulation in relation to such offer. Neither us, the Selling Shareholders nor the underwriters have authorized, nor do they authorize, the making of any offer of Ordinary Shares in circumstances in which an obligation arises for us, the Selling Shareholders or the underwriters to publish a prospectus for such offer.

 

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NOTICE TO RESIDENTS OF THE UNITED KINGDOM

In relation to the United Kingdom, this communication is only addressed to and directed at persons in the United Kingdom who are “qualified investors” within the meaning of Regulation (EU) 2017/1129 as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018 (“EUWA”) (the “UK Prospectus Regulation”). This prospectus has been prepared on the basis that any offer in the United Kingdom will be made pursuant to an exemption under the UK Prospectus Regulation from the requirement to publish a prospectus for offers of Ordinary Shares. Accordingly any person making or intending to make any offer within the United Kingdom of Ordinary Shares which are the subject of the offering contemplated in this prospectus may only do so in circumstances in which no obligation arises for us, the Selling Shareholders or the underwriters to publish a prospectus pursuant to Section 85 of the Financial Services and Markets Act 2000 (the “FSMA”) in relation to such offer. Neither us, the Selling Shareholders nor the underwriters have authorized, nor do they authorize, the making of any offer of Ordinary Shares in circumstances in which an obligation arises for us, the Selling Shareholders or the underwriters to publish a prospectus for such offer. In addition, this communication is only being distributed to and is only directed at persons who (i) are outside the United Kingdom; (ii) have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Financial Promotion Order”); (iii) are persons falling within Article 49(2)(a) to (d) (“high net worth companies, unincorporated associations etc.”) of the Financial Promotion Order; (iv) are members or creditors of certain bodies corporate as defined by or within Article 43(2) of the Financial Promotion Order; or (v) are persons to whom an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) in connection with the issue or sale of any securities may otherwise lawfully be communicated or caused to be communicated (all such persons together being referred to as “relevant persons”). The Ordinary Shares are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such Ordinary Shares will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents. This prospectus is not a prospectus that has been approved by the Financial Conduct Authority or any other United Kingdom regulatory authority for the purposes of Section 85 of the FSMA.

In connection with the issue of any Ordinary Shares, the underwriters (if any) acting as Stabilization Managers (or persons acting on behalf of any Stabilization Managers) may over allot Ordinary Shares or effect transactions with a view to supporting the market price of the Ordinary Shares at a level higher than that which might otherwise prevail. However, stabilization may not necessarily occur. Any stabilization action may begin on or after the date on of this prospectus and, if begun, may cease at any time, but it must end no later than the earlier of 30 days after the issue date of the Ordinary Shares and 60 days after the date of the allotment of the Ordinary Shares. Any stabilization action or over allotment must be conducted by the relevant Stabilization Managers (or persons acting on behalf of any Stabilization Managers) in accordance with all applicable laws and rules.

 

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PRESENTATION OF FINANCIAL MEASURES AND OTHER INFORMATION

Financial Statements

Camposol Holding

The Company was incorporated on October 22, 2019 as a limited company under Cyprus law. On February 17, 2021, the Company held a shareholders meeting approving its conversion into a public company limited by shares under Cyprus law. On March 30, 2021, the Company held a shareholders meeting approving its change of name to Camposol Holding PLC. This prospectus includes the audited historical consolidated financial statements of Csol Holding LTD (subsequently renamed Camposol Holding PLC) and Subsidiaries as of and for the years ended December 31, 2019 and 2020 and the related notes thereto, which were prepared in accordance with International Financial Reporting Standards, or “IFRS”, and interpretations issued by the IFRS Interpretations Committee applicable to companies reporting under IFRS, as issued by the International Accounting Standards Board, or the IASB, and audited in accordance with the Public Company Accounting Oversight Board, or PCAOB, standards. The functional currency of the Company is the U.S. dollar. For more information, see “Exchange Rates.”

Non-IFRS Financial Measures

Adjusted EBITDA and Adjusted EBITDA Margin

We have disclosed our historical Adjusted EBITDA and Adjusted EBITDA Margin in this prospectus, which are non-IFRS financial measures. See “Summary Selected Consolidated Financial and Other Data” and “Selected Consolidated Financial and Other Data”. Adjusted EBITDA and Adjusted EBITDA Margin should not be considered as an alternative to profit (loss) or operating cash flow, nor should they be considered as a liquidity measurement, because they do not reflect certain costs involved in our operations, such as finance expenses, taxes, depreciation, capital expenses and other related costs, any of which may have a significant effect on our net profit. Adjusted EBITDA and Adjusted EBITDA Margin are not a measurement of our financial performance under IFRS and should not be considered as an alternative to profit (loss), income (loss) from operating profit or any other performance measures derived in accordance with IFRS.

Adjusted EBITDA and Adjusted EBITDA Margin are presented in this prospectus because they are important metrics used by management as one of the means by which we assess our financial performance. Adjusted EBITDA and Adjusted EBITDA Margin are also frequently used by analysts, investors and other interested parties to evaluate companies in our industry. We use Adjusted EBITDA and Adjusted EBITDA Margin as supplements to IFRS measures of performance to evaluate the effectiveness of our business strategies. This measure, when used in conjunction with related IFRS financial measures, provides investors with additional financial analytical framework which management uses, in addition to historical operating results, as the basis for financial, operational and planning decisions and present measurements that third parties have indicated are useful in assessing our company and its results of operations. You should rely primarily on our IFRS results, and use Adjusted EBITDA and Adjusted EBITDA Margin in a supplemental manner. There is no standard definition of Adjusted EBITDA and Adjusted EBITDA Margin, and our definitions may not be comparable to Adjusted EBITDA and Adjusted EBITDA Margin as used by other companies.

We calculate Adjusted EBITDA as profit (loss) for the period/ year excluding interest net, from operations; income tax expense; depreciation and amortization, net of income taxes; share of profit of investments accounted for using the equity method; net foreign exchange transaction losses, other income and expenses; net gain arising from changes in fair value of biological assets and impairment of fixed assets. We calculate Adjusted EBITDA Margin as Adjusted EBITDA divided by revenue from operations.

 

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The use of Adjusted EBITDA and Adjusted EBITDA Margin, instead of profit (loss) and profit (loss) margin, has limitations as an analytical tool, including the following:

 

   

Adjusted EBITDA and Adjusted EBITDA Margin do not reflect changes in, or cash requirements for, our working capital needs;

 

   

Adjusted EBITDA and Adjusted EBITDA Margin do not reflect our interest expense, or the cash requirements necessary to service interest or principal payments, on our debt;

 

   

Adjusted EBITDA and Adjusted EBITDA Margin do not reflect our tax expense or the cash requirements to pay taxes;

 

   

Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA and Adjusted EBITDA Margin do not reflect any cash requirements for such replacements; and

 

   

Adjusted EBITDA and Adjusted EBITDA Margin do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments.

Industry, Market Data and Other Information

We obtained the statistical data and information included in this prospectus relating to the markets where we operate from reports prepared by government agencies, third party surveys, market research, consultant surveys, industry publications and surveys and other publicly-available sources. Although we believe that these sources are reliable, neither we nor the Selling Shareholders have performed any independent verification with respect to such statistical data and information and, therefore, we and the Selling Shareholders cannot guarantee its accuracy or completeness. Any such market data, information or forecast may prove to be inaccurate because of the method by which we obtain it or because it cannot always be verified with complete certainty given the limits on availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties, including those discussed under the “Risk Factors”. Nothing in this prospectus should be interpreted as a market forecast. In addition, the data that we compile internally and our estimates included in this prospectus have not been verified by an independent source.

Rounding

Certain figures and some percentages included in this prospectus have been subject to rounding adjustments. Accordingly, the totals included in certain tables contained in this prospectus may not correspond to the arithmetic aggregation of the figures or percentages that precede them.

Implications of Being an Emerging Growth Company

As a company with less than U.S.$1.07 billion in revenue during our last fiscal year, we qualify as an “Emerging Growth Company” pursuant to the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An Emerging Growth Company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement in the assessment of the Emerging Growth Company’s internal control over financial reporting. As an Emerging Growth Company, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not Emerging Growth Companies including, but not limited to, exemptions from the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, and any Public Company Accounting Oversight Board, or PCAOB, rules, including any future audit rule promulgated by the PCAOB (unless the SEC determines otherwise). Accordingly, the information about us available to you will not be the same as, and may be more limited than, the information available to shareholders of a non-emerging growth company. We have availed

 

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ourselves in this prospectus of the reduced reporting requirements with respect to financial data. Furthermore, we are not required to present selected financial information or any management’s discussion herein for any period prior to the earliest audited period presented in connection with this prospectus.

We will remain an Emerging Growth Company until the earliest of (1) the last day of our fiscal year during which we have total annual gross revenues of at least U.S.$1.07 billion; (2) the last day of our fiscal year following the fifth anniversary of the completion of this Offering; (3) the date on which we have, during the previous 3-year period, issued more than U.S.$1.07 billion in non-convertible debt; or (4) the date on which we are deemed to be a “Large Accelerated Filer” under the Securities Exchange Act of 1934, or the Exchange Act. When we are no longer deemed to be an Emerging Growth Company, we will not be entitled to the exemptions provided in the JOBS Act discussed above. If we choose to take advantage of any of these reduced reporting burdens, the information that we provide shareholders may be different than you might receive from other public companies.

In addition, we will report under the Exchange Act as a non-U.S. company with foreign private issuer status. As a “foreign private issuer”, we are subject to reporting obligations that, in certain respects, are less detailed and less frequent than those of U.S. domestic reporting companies. For example, we will not be required to issue quarterly reports, proxy statements that comply with the requirements applicable to U.S. domestic reporting companies, or individual executive compensation information that is as detailed as that required of U.S. domestic reporting companies. We will also have four months after the end of each fiscal year to file our annual reports with the SEC and will not be required to file current reports as frequently or promptly as U.S. domestic reporting companies. Furthermore, our officers, directors and principal shareholders are exempt from the insider reporting and short-swing profit recovery requirements in Section 16 of the Exchange Act.

 

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus includes “forward-looking statements” within the meaning of U.S. securities laws, or collectively, forward-looking statements. Forward-looking statements include statements that may relate to our plans, objectives, goals, strategies, future events, future revenue or performance, capital expenditures, financing needs and other information that is not historical information. Many of these statements appear, in particular, under the headings “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Summary—Recent Developments—Expectations for the First Quarter of 2021 Results” and “Business.” Forward-looking statements can often be identified by the use of terminology such as “subject to”, “believe,” “anticipate,” “plan,” “expect,” “intend,” “estimate,” “project,” “envision,” “predict,” “target,” “contemplate,” “potential,” “may,” “will,” “should,” “would,” “could,” “can,” the negatives thereof, variations thereon and similar expressions, or by discussions of strategy. In addition, any statements or information that refer to expectations, beliefs, plans, projections, objectives, performance or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking. In particular, forward-looking statements in this prospectus include, but are not limited to, statements about:

 

   

our ability to implement our goals and strategies;

 

   

the size of our addressable markets and our ability to commercialize product candidates;

 

   

our ability to identify optimal production windows;

 

   

our ability to maintain the size of our distribution network;

 

   

our ability to maintain our relationships with our merchants and agents;

 

   

the expected growth of our company and our products;

 

   

our ability to continue to develop new and attractive products;

 

   

our future business development, results of operations and financial condition;

 

   

our ability to continue to develop new technologies and upgrade our existing technologies;

 

   

competition in our industry;

 

   

the proposed use of proceeds of this Offering;

 

   

projected revenue, profits, earnings and other estimated financial information;

 

   

adverse effects in the global economy, including adverse effects as a result of the COVID-19 outbreak and related economic shutdowns and their impact on the Peruvian, Colombian, Uruguayan, Mexican or Chilean economies, or other global or local epidemics and the Peruvian, Colombian, Uruguayan, Mexican or Chilean government’s response; and

 

   

developments in, or changes to, the laws, regulation and governmental policies governing our business and industry.

All forward-looking statements, including, without limitation, our examination of historical operating trends, are based upon our current expectations and various assumptions. Certain assumptions made in preparing the forward-looking statements include:

 

   

our ability to manage our growth effectively;

 

   

the absence of material adverse changes in our industry or the local, regional and global economy;

 

   

expectations regarding industry trends and the size and growth rates of addressable markets;

 

   

our ability to maintain good business relationships with our strategic partners and international distributors;

 

   

our ability to handle the effects of the COVID-19 outbreak (and any similar future events) and related economic shutdowns in our businesses and in the global economy;

 

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our ability to comply with current and future regulatory standards;

 

   

our ability to manage and integrate acquisitions;

 

   

our ability to retain key personnel; and

 

   

our ability to raise sufficient debt or equity financing to support our continued growth.

We believe there is a reasonable basis for our expectations and beliefs, but they are inherently uncertain. We may not realize our expectations, and our beliefs may not prove correct. Actual results could differ materially from those described or implied by such forward-looking statements. The following uncertainties and factors, among others (including those set forth under “Risk Factors”), could affect future performance and cause actual results to differ materially from those matters expressed in or implied by forward-looking statements:

 

   

changes in demand for, and prices of, fruits and vegetables;

 

   

our ability to obtain, maintain and renew all licenses, permits, quota shares and other authorizations associated with our land, processing plants or otherwise required in connection with our business;

 

   

the availability of qualified personnel to work on our land and in our processing plants;

 

   

other governmental policies affecting our business, including agriculture, food processing and trade policies;

 

   

our ability to generate cash and to obtain sufficient financing for our operations and our future expansion plans;

 

   

our ability to integrate and benefit from our recent acquisitions, as well as other joint ventures and strategic alliances;

 

   

our ability to comply with laws and regulations;

 

   

industry conditions, including the cyclicality of the agricultural industry, and unpredictability of the weather;

 

   

our ability to meet changes in customer preferences;

 

   

the effects of economic, political or social conditions and changes in foreign exchange policy or other conditions affecting our principal export markets;

 

   

increases in our operating costs or our inability to meet efficiency or cost reduction objectives, including increases in the cost of personnel;

 

   

possible disruptions to commercial activities due to natural and human-induced disasters, including terrorist activities and armed conflict;

 

   

the outcome of pending regulatory and legal proceedings;

 

   

economic, political, regulatory and other risks associated with international operations;

 

   

the risk of losing our “foreign private issuer” status;

 

   

our ability to retain key executives and attract and retain qualified personnel;

 

   

a prolonged duration of the economic adverse effects derived from the COVID-19, including extensions in shutdowns and their impact on the Peruvian, Colombian, Uruguayan, Mexican or Chilean economies;

 

   

our ability to manage organizational growth; and

 

   

additional factors discussed under the sections entitled “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business.”

 

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The preceding list is not intended to be an exhaustive list of all of our forward-looking statements and should be read with other cautionary statements in this prospectus. The forward-looking statements are based on our beliefs, assumptions and expectations of future performance, taking into account the information currently available to us. These statements are only predictions based upon our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements. In particular, you should consider the numerous risks provided under “Risk Factors” in this prospectus. Although we have attempted to identify important risk factors, there may be other risk factors not presently known to us or that we presently believe are not material that could also cause actual results and developments to differ materially from those made in or suggested by the forward-looking statements contained in this prospectus.

 

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SUMMARY

This summary highlights certain information contained elsewhere in this prospectus. This summary does not contain all of the information that may be important to you. You should read and carefully consider the following summary together with the entire prospectus, especially the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of this prospectus and our audited consolidated financial statements and the notes thereto appearing elsewhere in this prospectus before deciding to invest in our Ordinary Shares. For more information on our business refer to the “Business” section of this prospectus. Some of the statements in this prospectus constitute forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in such forward-looking statements as a result of certain factors, including those discussed in the “Risk Factors” and other sections of this prospectus. See “Cautionary Note Regarding Forward-Looking Statements.”

Our Company

We are a global provider of fresh and healthy foods, serving retail and wholesale consumers in over 40 countries across the globe, such as Costco, Walmart, OGL, ALDI, Edeka, Sam’s Club, Publix, Kaufland, Tesco and Lidl, among others. Our offering is sustained by our recognized value proposition: high consistency, superior quality and full traceability. The strategic location of our fields in some of the most economically stable countries in South America (Peru, Colombia, Chile and Uruguay) according to Fitch Solutions, gives us flexibility to produce year-round, considering the production cycles of all our products collectively. This enable us to sell and distribute products globally when supplies are low and prices are high in North America, Europe and China resulting in strong operating margins. We optimize our operations to supply products that are in high demand, which today include fresh produce such as blueberries, avocados and tangerines. We control our entire value chain: research and product development, growing fields, processing facilities, and sales and distribution channels. We hold a 20-year track record of success introducing and scaling new on-trend products in the demanding European and United States markets, mainly through world-class retailers and wholesalers. Moreover, our sustainable production practices address the demand by consumers and our retail customers for socially-responsible and environmentally-friendly products.



 

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LOGO



 

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Below we present our existing product offering to our retailers clients.

 

LOGO

During 2020, we sold our products in over 40 countries worldwide and sold directly to five of the world’s top 10 food retailers as determined by the National Federation of Retailers based on top 100 retailers in 2020 for their sales in 2019, among others. We operate through commercial and distribution offices in the United States, the Netherlands, China and Switzerland, and a Costa Rican branch of our Swiss commercial office. As of December 31, 2020, we had 10,040 planted hectares of land (9,918 hectares for current products and 122 hectares undergoing research & development (“R&D”)). During 2020, we employed on average 15,313 production workers and 946 administrative employees.



 

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The map below shows the location and number of our owned and rented (planted and unplanted) fields:

Location of our Owned and Rented Fields (Planted and Unplanted) and Distribution Centers

 

LOGO

Our Market Opportunity

We focus on fast-growing produce categories as consumer preferences are shifting towards healthier and more convenient products. Fresh produce is one of the fastest growing food categories, with avocado and blueberries playing an outsized role in this growth, due to their health benefits and convenience.

Strong demand for healthy, fresh and convenient foods alongside favorable demographic changes promotes our products. Hispanic households consume approximately 45% more avocadoes than non-Hispanic households. In the United States, the Hispanic population is increasing at a higher pace than the non-Hispanic population. According to a study by Immersive Youth Marketing, 71% of Americans prefer to buy natural and/or organic foods over conventional foods if prices are comparable. Social media users generally reflect a positive view on avocadoes and blueberries and are usually favored by millennials with increasingly higher spending capability.

According to the Food and Agriculture Organization of the United Nations (“FAOSTAT”), global production of avocados increased from 2.8 million MT in 2000 to 7.3 million MT in 2019 and global production of blueberries increased from 211,000 MT in 2000 to 823,000 MT in 2019. In the United States, blueberries are one of the most consumed fruits and are known for their overall health benefits, taste and versatility for a variety of situations, including snacking and baking. We believe that blueberries will continue to be a high growing product with the increase in healthy eating and because of their nutritional characteristics, given that blueberries are a fat-free, sodium-free and cholesterol-free fruit rich in Vitamin C and Vitamin K, with proven brain health benefits. Also, we believe the continued increase in demand of blueberries in the United States, particularly in periods of low supply when prices tend to be higher, will be supplied by imports from Mexico and South America. We are well-positioned to capitalize on this by expanding our production window in a disciplined manner to drive revenue while closely analyzing pricing and supply dynamics.



 

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According to Trademap, the aggregate global value of the avocado and blueberries markets was estimated in U.S.$11.2 billion in 2020, growing from U.S.$5.8 billion in 2015. These markets have had a jointly annual growth rate of 14.2% since 2015 to 2020.

The table below indicates the year-by-year annual retail sales and the CAGR(1) from 2015 to 2020 in the United States for the products indicated:

Year-by-Year Product U.S. Annual Retail Sales CAGR(1)

Unit: Metric tons

 

Year

   Blueberries     Mangoes     Avocados     Tangerines     Grapes  

2015

     129,839       93,683       336,929       405,014       750,068  

2016

     143,490       101,428       340,385       444,749       700,669  

2017

     147,504       109,633       336,486       487,885       739,157  

2018

     162,183       114,580       404,297       509,939       740,642  

2019

     195,812       127,825       410,158       514,180       750,652  

2020

     214,758       148,625       493,286       562,438       791,292  

CAGR 2015-2020 (%)

     10.6     9.7     7.9     6.8     1.1

Source: IRI Sales data

(1) 

Compound Annual Growth Rate

Key Strengths

We believe our competitive strengths have contributed to our historical success and will enable us to capitalize on future growth opportunities. Our principal strengths include the following:

- We operate in a large and growing market with supportive tailwinds, and have a diversified and well-balanced product portfolio consisting mainly of avocados, blueberries and tangerines with a global footprint.

We have built a reputation for providing key global retailers with a variety of high-quality, consistent, traceable, socially-responsible and environmentally-friendly products. We are currently present in five of the world’s top ten food retailers as determined by the National Federation of Retailers based on the top 100 ranking of retailers by sales in 2019, and have been able to establish strong relationships with many of these retailers in a relatively short period of time, as demonstrated by our relationship with Walmart, to which we began selling in 2011 and which awarded us for our performance as a supplier in 2017 and 2019. In 2019 and 2020, 41% and 54% of our total sales were directly to retailers. In 2020, we sold approximately 72% of our fresh blueberries and 54% of our fresh avocados directly to retailers. We are focused on expanding our relationships with these retailers through our unique value proposition and commercial and distribution offices. Our global footprint allows us to serve consumers in a wide variety of markets. We are uniquely positioned to address the health and wellness demands from millennials and other new generation of consumers and costumers, as well as of a growing middle class in developing countries that is focused on “quality” food. Our unique position and capability to produce our healthy and wellness oriented products places us above the competition and provides us with an advantage. According to a study undertaken by the United States Department of Agriculture—USDA comparing food purchase decisions of millennial households to those of other generations, millennials (i) have a stronger preference for fruits and vegetables, (ii) make fewer trips to the grocery store per month, and (iii) spend less time in food presentation, preparation and cleaning, purchasing a larger portion of ready-to-eat foods. Furthermore, according to the same study, millennials work with trusted sources on food and nutrition claims,



 

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such us (i) nutritionists, in the 65% of cases, (ii) dieticians, in the 58% of cases, (iii) family and friends, in the 57% of cases, (iv) personal trainers, in the 45% of cases, and (v) packaging claims, in the 26% of cases. We expect that health and wellness trends will continue to drive consumption patterns and increased foot traffic in fresh food aisles. Indeed, fresh produce represents one of the fastest growing food categories, growing at a 2.1% CAGR from 2015, which is significantly higher compared to other food categories such us, sauces & dressing, seafood, hot drinks, staple food and meat which will increase at CAGRs of 1.5%, 1.4%, 1.2%, 0.7% and 0.1%, respectively, and confectionery and milk which will remain with a neutral increase. Consequently, we believe that we are well-positioned to capture consumers’ shifts towards fresh products.

We are present in the fastest growing fresh produce sub-categories. U.S. per capita consumption CAGR for the ten year period ended 2019 increased by 9%, 6%, 5%, 4% and 1% for blueberries, avocadoes, tangerines, mangoes and grapes, respectively. For the ten year period ended 2019, blueberries, avocadoes, tangerines, mangoes and grapes where five of the six top products. We are a relevant player in the U.S. market. In 2019, the blueberry imports to the U.S. market totaled U.S.$1,237 million, of which 39.2% was from Peru, 23.5% was from Mexico and 37.2% was from other countries. In the case of Peru, its blueberry imports to the U.S market were U.S.$162.1 million in 2017, U.S.$284.4 million in 2018 and U.S.$484.9 million in 2019, growing at a 73% CAGR from 2017 to 2019. In the case of Mexico, its blueberry imports to the U.S market were U.S.$219.4 million in 2017, U.S.$289.6 million in 2018 and U.S.$291.1 million in 2019, growing at a 15% CAGR from 2017 to 2019. Our competitive advantages to serve the U.S. market with our blueberries are, among others, the ability to time the market and enter when prices are high and supply is low, higher yields due to location, the offering of branded products and the closeness of our plantations in Peru and, in the case of Mexico, we are studying the future development of blueberries in a region close to its primary market, the United States. In 2019, the avocado imports to the U.S. market totaled U.S.$2,761 million, in which 8.2% was from Peru, 0.1% was from Colombia and 91.7% was from other countries. In the case of Peru, its avocado imports to the U.S market were of U.S.$164.6 million in 2017, U.S.$177.4 million in 2018 and U.S.$225.9 million in 2019, growing at a 17% CAGR from 2017 to 2019. In the case of Colombia, its avocado imports to the U.S market were U.S.$0.1 million in 2017, U.S.$0.6 million in 2018 and U.S.$3.6 million in 2019, growing at a 581% CAGR from 2017 to 2019. Our competitive advantages to serve the U.S. market with our avocados are, among others, higher yields due to location and infrastructure, the production of both Hass and Ettinger varieties, the offering of branded products, and the closeness of our plantations in Peru and Colombia. In 2019, tangerine imports to the U.S. market totaled U.S.$423 million, in which 33.4% was from Peru, 7.1% was from Uruguay and 59.4% was from other countries. In the case of Peru, its tangerine imports to the U.S market were U.S.$91.2 million in 2017, U.S.$89.2 million in 2018 and U.S.$141.2 million in 2019, growing at a 24% CAGR from 2017 to 2019. In the case of Uruguay, its tangerine imports to the U.S. market were U.S.$15.5 million in 2017, U.S.$15.0 million in 2018 and U.S.$30.2 million in 2019, growing at a 40% CAGR from 2017 to 2019. Our competitive advantages to serve the U.S. market with our tangerines are that are an easy-to-peel and seedless product in line with healthy and convenient trends and the closeness of our plantations in Peru and Uruguay.

We expect that health and wellness trends will continue to drive consumption patterns and increased foot traffic in fresh food aisles. Indeed, fresh produce is one of the fastest growing food categories, growing at a 2.1% CAGR from 2015, and we believe that we are well-positioned to capture consumers’ shifts towards fresh products. Our fresh blueberries, fresh avocados, easy-peeler tangerines and seedless grapes and mangoes have gained increasing popularity as natural, healthy and convenient snacking alternatives, high in fiber, gluten free, high in antioxidants and low in carbohydrates, looking to address the consumption preferences and health and wellness demands from millennials, other new generations of consumers and customers and the growing middle class in developing countries that is focused on “quality” food. Our health and wellness value proposition also increases the attractiveness of our products with retailers who in turn are pivoting to address the demands of new generations.



 

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- We are well positioned to deliver strong volume growth through our properties and rented lands in strategic locations in Peru, Colombia, Chile, Mexico and Uruguay. This allows us to produce year-round and secure constant supply to our customers.

We own the majority of our productive land (except for 720 hectares in Peru, 176 hectares in Chile and 61 hectares in Mexico, which are rented) and grow, harvest, pack and process substantially all of our products. We distribute our products directly to retailers and wholesalers globally. As a result, we control all processes in the value chain, which allows us to trace our products back to the parcel of land from which they were harvested, and to the seeds, inputs, people or services used in our sustainable and socially-responsible growing process. We source approximately 83% of our sales from our own fields and 5% from rented fields. In the next 5 to 10 years we plan to reach a level in which approximately 30% of our sales are sourced from third party growers, without reducing our own production. Our intent is to partner with growers that share our same objectives and values in promoting sustainable development and promoting social growth. This business model differentiates us and has been key to quickly building strong relationships with top retailers and the development of “The Berry that Cares” and “Camposol Cares From Farm to Family” campaigns. We source our products from a wide variety of locations that benefit from favorable climate conditions that allow for superior yields and year-round supply, accessible water supply and reduced exposure to conflicted areas. This allows us to continue to improve our commitment to sustainable development and social inclusion.

- Our diversified sourcing grants us access to complementary growing seasons, and mitigates the impact of periodic, geographically- specific disruptions.

We are one of the few companies of scale in our industry that can serve our retail partners during “off-season” time periods given the unique climatological conditions of the countries where we grow our products. Currently, our production fields are located in areas in which the climate is temperate throughout the year, facilitating our strategic production cycles and lowering agricultural risks. This contributes to our ability to drive higher yields on average, supply our retail partners year-round and provide our products during favorable commercial windows, such as in the northern hemisphere’s winter months when supply is low. Below find a calendar showing the harvest season of each of our products1.

 

1 

This calendar containing the start and end of the harvest season of each of our main products is subject to change, in particular, due to delays in harvesting of our crops, either by internal or external factors. For more information, see “Risk Factors—Risks Related to our Business and Industry—Our results are seasonal, and any circumstance that adversely affects our business during high seasons would have a disproportionately significant effect on our annual results of operations and cash flows.”



 

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LOGO

As shown in the chart below, our average yield per hectare between 2019 and 2018 for blueberries was 16.1 metric tons, higher compared to our average yields per hectare of 12.0 metric tons in 2020, and higher as well compared to the average yields per hectare of 11.2, 7.0 and 6.4 metric tons registered by Mexico, the United States and the world, respectively, between 2019 and 2018. In the case of avocados, our average yield per hectare between 2019 and 2018 was 14.9 metric tons, higher compared to our average yields per hectare of 13.5 metric tons in 2020, and higher as well compared to the average yields per hectare of 10.6, 9.8 and 6.8 metric tons registered by Mexico, the world and the United States, respectively, between 2019 and 2018. In the case of tangerines, our average yield per hectare between 2019 and 2018 was 41.9 metric tons, higher compared to our average yields per hectare of 29.6 metric tons in 2020, and higher as well compared to the average yields per hectare of 29.5, 14.7 and 12.8 metric tons registered by the United States, Mexico and the world, respectively, between 2019 and 2018. In the case of grapes, our average yield per hectare in 2020 was 34.7 metric tons, higher compared to our average yields per hectare of 28.0 metric tons between 2019 and 2018, and higher as well compared to the average yields per hectares of 24.4, 10.7 and 10.0 metric tons registered by the United States, Mexico and the world, respectively, between 2019 and 2018. In the case of mangoes, our average yield per hectare in 2020 was 28.0 metric tons, higher compared to our average yields per hectare of 17.8 metric tons between 2019 and 2018, and higher as well compared to the average yields per hectares of 24.4, 10.7 and 10.0 metric tons registered by the United States, Mexico and the world, respectively, between 2019 and 2018. During the past six years, we have enhanced this value proposition by developing our R&D capabilities, continually improving our production capabilities, and building and expanding our commercial and logistics platform.



 

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LOGO

In recent years, we have identified and invested in purchasing and leasing arable lands and planting throughout Latin America, with the objective of diversifying our production capacity and the expectation of generating sustainable growing opportunities. In the case of blueberries and avocados, we are undergoing volume growth by adding third party growers to our already established networks. In the next five to ten years, we expect that the 30% of our sales will be sourced from third party growers. In the case of avocados, we acquired 4,109 hectares of land in the departments of Risaralda, Quindio and Valle del Cauca in Colombia, with the primary objective of expanding our production window from 15 to 52 weeks, and thereby increasing our presence in our sales markets throughout the year. We expect that these lands will reach peak production by 2025. As of December 31, 2020, we were harvesting avocados on 241 hectares of planted fields. Our geographical diversity provides us with ample opportunities to access the markets and reduces disruptions due to location specific incidents.

Moreover, we purchased 1,521 hectares in Uruguay (Salto province), a traditional citrus-producing region, to further expand our volumes of tangerines and to complement our Peruvian production window, expanding our production window to more than eight weeks and increasing our commercial presence from three to more than six months of the year. As of December 31, 2020, we have 749 hectares planted of which 217 hectares are already in production. We expect to complete the planting of the remaining area in 2022 and to reach peak production by 2028.

In addition, in 2020 we leased 176 hectares in Chile (Sexta region) to conduct a pilot project with cherries, to test the agricultural hypothesis for high scale production. We planted 150 hectares of cherries in 2020 with the expectation of generating know-how for future projects. In 2020, we also leased 61 hectares in Mexico (Los



 

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Mochis region), an initiative to study the future development of our blueberry business in a region closer to our primary market, the United States. Further, in 2020 we planted 92 hectares of lemon in Trujillo, Peru, as part of our initial R&D with this product. If we decide to develop a lemon business, we will replicate our recent experience in tangerines and expand our citric portfolio. We believe we can take advantage of our existing commercial relationship with top retailers that are our clients, considering that the United States, Europe and Mexico are the main markets for lemons.

- Highly-experienced, results-oriented management team supported by a controlling shareholder focused on corporate governance and growth.

We believe our management team is a key driver to our success and positions us well for long-term growth. Our day-to-day operations are led by Chief Executive Officer Samuel Barnaby Dyer Coriat and Chief Financial Officer Andres Daniel Colichón Sas, each of whom has a track record of success at Camposol and other leading organizations. Samuel B. Dyer has been a member of Camposol’s board of directors since 2008, a position which enabled him to contribute to the transformation of the company into a leading commercial organization employing the principles of corporate governance and social responsibility, and has been chairman of the board since 2011. Mr. Dyer served as Camposol’s CEO from October 2011 to October 2015, with the goal of continuing to consolidate the company’s leadership in the agro-industrial sector. He is currently the chairman of the Strategy and Investments Committee of our board and rejoined as CEO of Camposol in March 2021. Mr. Dyer has a wide experience in leading roles in Copeinca, a Peruvian fishing company, where he served as operations manager and chief executive officer. Andres Colichón Sas has over 20 years of experience as a CFO in leading companies in diverse sectors in the infrastructure, protein, and energy sectors before joining Camposol. During that time, Mr. Colichon has successfully led and deployed initiatives ranging from complex project finance transactions, to all sorts of structured, capital markets, M&A and derivative transactions. Moreover, he has also had a key role leading corporate reorganizations, as well as deployed various transformational digitalization initiatives. Part of Mr. Colichon’s background includes more than three years as a consultant in McKinsey & Co., where his work concentrated in strategy, mining operations and banking. During his almost four years at Camposol, Mr. Colichon has led several initiatives to enhance the financial flexibility of the company, and has also been in charge of implementing the new ERP SAP S/4 Hanna that went live in July 2020 during the pandemic. He has also led the global reorganization that is currently in place. The leaders of our primary operating businesses are José Antonio Gómez Bazan and Juan Manuel Güell Camacho, all of whom have extensive experience with Camposol and other organizations in related industries. Our management team is supported by the controlling shareholder of the Company, the Dyer Coriat family, which has consistently maintained a strong focus on corporate governance and growth. The Dyer Coriat family has an extensive track record of success in the fresh produce, fishing and agro-industrial sectors, with leadership and corporate governance experience at Camposol and Copeinca.



 

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LOGO

Also, we have strong corporate governance practices including a board of directors composed of nine members, of which five are independent directors. The independent directors are deemed to be independent by us as they did not have any material connection with us or the selling shareholders. Independent directors are also part of the following committees of the board: (i) the audit, internal control and risks committee, (ii) the governance, compensation and social responsibility committee, (iii) the strategy and investments committee, and (iv) the innovation and technology committee.

Our Strategy

Our vision is to become the preferred global supplier of healthy, fresh and convenient food. To reach this goal, we intend to:

Capitalize on strong growth trends by continuing to expand our global consumer base as well as gaining market share.

We continue to expand our global reach not only in the places where we produce our products but also in the high-income countries where we sell our products. We plan to increase our penetration and volumes of sales into already consolidated markets, such us the United States and Europe as well as promote increased access to high population centers in east Asia. Our plan focuses on growers and clients that share our same values and desires of promoting sustainable development and social impact investment. Through this strategy, we intend to increase our consumer base as well as our market share with suppliers.

Engage in measured expansion into third party sourcing on the back of a well-established logistics and distribution platform to enhance future growth.

We plan to increase our volume growth adding third party growers to our already established network. Currently, we own the majority of our productive land (except for 720 hectares in Peru, 176 hectares in Chile and 61 hectares in Mexico, which are rented). We source approximately 83% of our sales from our own fields and



 

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5% from rented fields. In the next 5 to 10 years we plan to reach a level in which approximately 30% of our sales are sourced from third party growers, without reducing our own production. Our intent is to partner with growers that share our same objectives and values in promoting sustainable development and promoting social growth.

We also continue to develop our third party product sourcing and commercialization business. Over the last ten years we consolidated a high scale fresh product farming, logistic and commercialization platform based on our own production fields. Over the past two years we have been working to leverage on our existing model, and as of December 31, 2020, 12% of our sold volumes come from third party production channeled through our logistic and commercial platforms. This process requires maintaining traceability and thus we are relying heavily on technology to guarantee visibility along the value chain. In the future, we expect that approximately 30% of our revenues may come from third party production. With this initiative, we will not only capitalize on our existing capabilities but also provide even more stable sourcing for our retail clients.

Further consolidate our existing fresh produce operations

Over the next few years, we plan to focus on consolidating our current operations. Our goal is to consolidate our production volume of blueberries between our fields in Peru and Mexico. We expect to have 2,897 hectares of productive blueberries in Peru by 2023. As for Mexico, we have leased 61 hectares of land and have commenced planting new varieties a blueberries. We believe we can take advantage of the closeness between Mexico and the United States, our primary market for this product, and extend our market window for blueberries between January and April, months in which the Peruvian season is in its tail. We will consolidate our production volume of avocado between our productive lands in Colombia and Peru. In Colombia, we currently have 2,125 planted hectares and our goal is to reach more than 4,000 planted hectares in the medium term. We will consolidate our production of tangerines between our planted fields in Peru and Uruguay. Our goal is to reach a total of 1,303 hectares of producing fields between our Peruvian and Uruguayan operations by 2023. For such purpose, we have acquired lands in Uruguay and expect to conclude planting in 2021, which will allow us to increase our presence in the market with this product.

Additionally, we are revising our core operations procedures to make them more efficient and flexible, which will then continue with the digital transformation of our operations. This process started three years ago and is still ongoing. To date it has begun to generate positive results, such as the reduction of operating costs, improvements in commercial effectiveness and increasing efficiencies through our value chain. It is one of our main priorities to continue implementing technological improvements.

Successful track record of introducing and rapidly scaling new products supported by strong R&D process.

We continue to identify on-trend “super food” products and evaluate how these products will interact with our platform of diverse growing environments. We are currently evaluating and testing over eight types of new products, including persimmon, dragon fruit, cherries, lychees and lemon. Also, through ongoing R&D efforts, we are continuing to improve our existing products through breeding programs, biological pest control programs and testing of new seed types. As of December 2020, as part of our introduction of organic blueberries, 283.4 hectares had already been certified as USDA organic, and we plan to substantially increase our organic production in the short to medium term. Recently, we leased 176 hectares in Chile, where we are conducting onsite testing of new varieties of cherries. Further, in 2020 we planted 92 hectares of lemon in Trujillo, Peru, starting our tests with such product. We plan to continue to identify, develop and launch new products.

We have leading R&D programs and facilities complemented by partnerships with key research institutions in Peru, Chile, the United States, Mexico and the Netherlands. These R&D capabilities allow us to improve the quality of existing products, introduce new products to our portfolio, and quickly scale up production. We are



 

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constantly testing new products in on-trend categories and adjusting our product mix to optimize sales and profits. In 2009, we identified avocados as a more profitable product for our portfolio than some of our legacy products. Similarly, in 2013 we began to test production of blueberry varieties and are now a key global producer. As of December 2020, we had more than eight crops being tested by our R&D team.

Further, we are trying to develop packaging that could travel through alternative sales channels. In China, for example, there are deficient-quality cold supply chains because they were originally created to store dry products instead of fresh products. As a result, fresh products may experience multiple breakdowns affecting their “shelf life” resulting in customer dissatisfaction with the quality of the products they receive. We are collaborating with different online platforms, one of them Alibaba, to offer solutions to this issue. For such purpose, we have developed a top seal clamshell that produces a controlled atmosphere environment through a micro perforated plastic membrane that modifies the natural respiration rate of fruits. Control atmosphere technology extends the “shelf life” of fresh products and keeps the food in a safe condition. We are testing this technology in Alibaba’s platforms and supply chain network. Also, we are trying to improve customer satisfaction on ripe avocados and fresh blueberries by developing modified atmosphere packaging that could improve the quality and consumer experience on direct channels.

Further diversify our geographic presence.

We are focused on diversifying our geographic presence into key markets. For example, we believe that the Chinese market represents an important opportunity as healthy-conscious consumption continues to rise due to an expanding middle class, urbanization and changing eating habits. We began exporting avocados to China in 2014 and blueberries in 2016. We opened a commercial office in Shanghai, China, in 2017 to strengthen and develop relationships with retailers, such as Walmart, Sam’s Club, Carrefour, Yonghui, Olé, and Alibaba. We have also generated awareness of our brand, our products and their benefits with Chinese consumers.

Further, we are developing a new commercial strategy for our businesses which includes giving more relevance to our commercial office in Switzerland. From March 2021, our commercial team will be transferred to Switzerland, from where it will establish and implement our commercial strategy and provide business intelligence assistance to all our offices across the globe. Also, the Costa Rica branch of our Swiss commercial office will be in charge of the allocation of our products and billing and collections of our sales. We believe these measures will provide a more global and diversified perspective to our businesses and reduce labor and tax costs in Peru, which have increased due to the New Agricultural Law.

We are also analyzing new opportunities to consolidate our leadership through additional planting of current products in other geographies. For example, China has favorable climate conditions for avocado production, with extensive land available. Mexico has better labor conditions for growth than Peru and can deliver better quality to the United States due to its proximity and Colombia’s endemic climate and geographical conditions are favorable for avocados. As of December 31, 2020, we owned approximately 20,567 hectares of land and had rented 957 hectares, totaling 21,524 hectares, of which 73% are located in Peru and 28% are located in our operations in Colombia, Uruguay, Chile and Mexico. These actions demonstrate our commitment to driving revenue growth in new geographies.

Develop and maintain a best-in-class commercial and logistics platform in the regions where we operate.

We aim to become the leading strategic supplier for the key retailers in the markets in which we operate. Our strong business model and robust infrastructure enable us to meet our client’s standards regarding product quality and reliability of services. Through the continued development of our commercial and distribution offices, we are focused on developing and pursuing commercial relationships with retailers and supermarkets worldwide. As a result, in 2020 we sold approximately 72% of our fresh blueberries and 54% of our fresh



 

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avocados directly to retailers. We continue to focus on building strong brand recognition with our clients and the end customers. Current branding efforts include our “The Berry that Cares” and “Camposol Cares From Farm to Family” initiatives and the continued commercialization of products under the Camposol brand. The “Camposol Cares From Farm to Family” campaign seeks to differentiate Camposol by demonstrating that Camposol-branded products can be traced back to sustainable and environmentally-conscious growing practices. The campaign also aims to increase brand recognition by continuing to focus on health and wellness branding. We are also able to benefit from increasing penetration into leading retailers by leveraging existing relationships and product purchases as we continue to harvest and roll out new products to clients. Furthermore, our best-in-class customer service and consistent delivery of fresh and high-quality products have resulted in a loyal retail client base.

Commitment to our sustainable business model.

Our sustainability practices are widely recognized by our stakeholders, the communities that surround our operations, our workers, authorities, major retailers, food safety administrations and our consumers. We also believe that we are at the forefront of responsible and sustainable production practices with a solid commitment to transparency and the continuous improvement of our sustainability performance. We have been an active member of the United Nations Global Compact since 2008, which encourages businesses worldwide to adopt sustainable and socially responsible policies and to report on their implementation. We report in our annual sustainability reports our performance according to the GRI (Global Reporting Initiative) indicators such as the consumption of water, the consumption of electricity, solid waste generation, climate change impact of our operations, job creation and turnover, pest management, biodiversity of the ecosystems where our products are harvested, among others. We are adherents to the sustainable development and pesticide levels requirements set forth by Global G.A.P., a private sector body that sets voluntary standards for the certification of agricultural products.

As one of the few vertically-integrated global produce companies, we are able to ensure complete internal control of our supply chain from our own farms to the supermarket shelf to provide sustainably-produced products consumers can trust. We strive to provide consumers with the highest quality products based on environmentally sustainable management, which envisions the rational and efficient use of natural resources (water), the conservation of local flora and fauna, reforestation, and Environmental Adaptation and Management Programs (PAMAs) or similar environmental instruments, which includes all our actions to assuage environmental issues for our operations. Camposol also participates in the Blue Certificate program that the Peruvian Water National Authority (Autoridad Nacional del Agua, or the “ANA”) leads. This program rewards responsible water users participating in the “Water Footprint Program” who successfully executed the commitments assumed to measure their Water Footprint Measurement Report, Water Footprint Reduction Plan and Shared Value Program, creating a positive impact on nearby communities. In 2019, Camposol became the first Peruvian agro-industrial company to obtain a Blue Certificate recognition, which has been annually-renewed by Camposol and is effective until June 27, 2021.

We actively participate in the Water Efficiency Initiative promoted by SuizAgua consisting on the development of methodologies to reduce water usage across the value chain. Camposol holds a reforestation program consisting of the plantation of trees in several deforested areas in Peru and the constant control and monitor of air quality in our productive locations. We earned a first place in the “Caring for the Environment” category for the use of our water treatment plant and receive an Environmental National Reward Antonio Brack EGG in the eco-efficiency category for our environmental protection practices. We are a company with a strong moral purpose, providing high-quality jobs and a superior product while remaining good stewards of our human and natural resources. Our primary goal is to provide the best and healthiest food for families around the world.

We received from SENATI an award for our fair labor practices and contribution to the professional development of citizens in Piura and Arellano Marketing named us as the most desirable place to work across the aquaculture and agriculture industries in Peru. Further, Merco recognized us as one of the top 50 companies in Peru for being a leader in the development of talent. Our labor practices are certified by the Sedex Member



 

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Ethical Trade Audit - SMETA, through its Ethical Trading Initiative, which is an audit in good practices for ethic audit practices and its monitoring practices are based on the conventions of the International Labour Organization. Also, our working conditions have been certified by Global G.A.P. Risk Assessment on Social Practice (GRASP) which evaluates social practices in the productive lands on health, safety and wellness aspects of the workers.

Our social responsibility concerns include the well-being of our team members at and outside the job. We provide a vast network of programs covering workplace safety, maternity leave and education for the children of team members. Environmental care is also part of our corporate DNA. Our methods and strategies are carefully chosen to reduce environmental contamination. We are privileged to work in beautiful lands where delicate ecosystems must be preserved and low-impact farming practices are essential. Our environmental practices are certified by Rainforest Alliance under the Rules for Sustainable Agriculture based on three fundamental pillars, the social, economic and environmental. As part of our workers first initiative, we provide several key programs to foster employee support and wellness. For example, the Wawa Wasi center offers daycare to the children of our workers (more than 1,000 since its creation) and the Prenatal Care program provides education and basic services to pregnant employees and relatives of employees. We provide a number of programs to foster community development and support, such as the El Chao Medical Center.

Implications of Being an Emerging Growth Company

As a company with less than U.S.$1.07 billion in revenue during our last fiscal year, we qualify as an “Emerging Growth Company” pursuant to the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An Emerging Growth Company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement in the assessment of the Emerging Growth Company’s internal control over financial reporting. The JOBS Act also provides that an Emerging Growth Company need not comply with any new or revised financial accounting standard until such date that a non-reporting company is required to comply with such new or revised accounting standard. Furthermore, we are not required to present selected financial information or any management’s discussion herein for any period prior to the earliest audited period presented in connection with this prospectus.

We will remain an Emerging Growth Company until the earliest of (1) the last day of our fiscal year during which we have total annual gross revenues of at least U.S.$1.07 billion; (2) the last day of our fiscal year following the fifth anniversary of the completion of this Offering; (3) the date on which we have, during the previous three-year period, issued more than U.S.$1.07 billion in non-convertible debt; or (4) the date on which we are deemed to be a “Large Accelerated Filer” under the Securities Exchange Act of 1934, or the Exchange Act. When we are no longer deemed to be an Emerging Growth Company, we will not be entitled to the exemptions provided in the JOBS Act discussed above. If we choose to take advantage of any of these reduced reporting burdens, the information that we provide shareholders may be different than you might receive from other public companies.

Summary Risk Factors

Investing in our Ordinary Shares is speculative and involves substantial risk. You should carefully consider all of the information in this prospectus prior to investing in our Ordinary Shares. There are numerous risk factors related to our business that are described under “Risk Factors” and elsewhere in this prospectus. These risks could materially and adversely impact our business, results of operations, financial condition and future prospects, which could cause the trading price of our Ordinary Shares to decline and could result in a loss of your investment. Among these important risks are the following:

Risks Related to our Business and Industry

 

   

our fruits and vegetables products are subject to price fluctuations;

 



 

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even when we successfully develop marketable products, consumer preferences can evolve over time;

 

   

climate change and global warming could adversely impact us by increasing our productions costs, reducing our production yields and decreasing our harvesting windows;

 

   

the sale and distribution of our products depend on the continued availability of transportation and logistics infrastructure and services and the growth of our supply is dependent, in part, on improvements thereto, which may not occur on a timely basis, if at all;

 

   

the long-growth cycle of fruits and the cost associated make it difficult for us to meet change in demand from the market;

 

   

our operations may be affected by climatic events, such as El Niño and La Niña;

 

   

we and our growers are subject to the risks that are inherent in farming;

 

   

we are dependent on exports to the United States and Europe, and to certain extent, China, so our sales could be affected by economic, political and social developments in such markets;

 

   

changes in laws and regulations (or the interpretations thereof) in our production locations or any of our principal export markets may adversely affect our business, financial condition and results of operations;

 

   

illegal occupations may affect the use of our agricultural properties, which could adversely affect our operations and results of operations;

 

   

we face competition from other fruit, and vegetable producers located throughout the world and are subject to consumer product substitution;

 

   

we currently experience limited competition during our windows of production and our competitors may be able in the future to provide similar products or different varieties that appeal more to our customers during the same windows of production;

 

   

water shortages, any failure to maintain existing licenses for water rights or the unavailability of a supply of clean water could adversely affect our business;

 

   

we are subject to certain operating and financial restrictions on our business, including with respect to the declaration and payments of dividends, as a result of current indebtedness;

 

   

environmental regulation may adversely affect our business;

 

   

our results are seasonal, and any circumstance that adversely affects our business during high seasons would have a disproportionately significant effect on our annual results of operations and cash flows;

 

   

the land and processing plants we operate or manage may be temporarily interrupted or suffer loss or damage which may not be covered by our insurance policies;

 

   

we are exposed to foreign exchange rate risk;

 

   

our products may be subject to contamination, as a result of which we may be subject to product recalls or other liabilities that could cause us to incur significant additional costs;

 

   

we are subject to labor risks and a dispute with one or more of our labor unions could have an adverse effect on our results of operations;

 

   

labor shortages or increases in labor costs could slow our growth or harm our business;

 

   

we have a highly-skilled senior management team, as well as other key personnel, and our business may be disrupted if we lose their services; and

 

   

we may experience difficulties in managing our Corporate Reorganization activities and the final outcome may not be as effective as anticipated. Further, potential income tax and dividend tax benefits may not materialize and, if they do, might be lost.



 

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Risks Related to the Latin American Countries in which we Operate

 

   

the economic effects in Latin America and around the world of the outbreak and economic shutdown caused by the COVID-19 pandemic is adversely affecting the economies in which we produce and those to where we sell our products, and the impact could be material;

 

   

economic and political developments in Latin America could affect our business, financial condition and results of operations;

 

   

the implementation of certain laws by the Latin American governments, most notably restrictive exchange rate policies, could have an adverse effect on our business, financial condition and results of operations;

 

   

changes to agricultural regulations could adversely affect the industry;

 

   

the economies of Latin American countries could be adversely affected by economic developments in Latin American or global markets;

 

   

the laws of Latin American countries include anti-bribery and anti-corruption legislation which could be less stringent than that of other jurisdictions, and our risk management and internal controls may not be successful in preventing or detecting all violations of law or of company-wide policies;

 

   

inflation could adversely affect our financial condition and results of operations; and

 

   

market volatility generated by distortions in the international financial markets may affect the Latin American capital markets.

Risks Relating to this Offering

 

   

our share price is likely to be volatile and the market price of our Ordinary Shares after this Offering may drop below the price you pay;

 

   

an active trading market for our Ordinary Shares may not be sustained;

 

   

substantial future sales of our Ordinary Shares, or the perception that these sales could occur, may cause the price of our Ordinary Shares to drop significantly, even if our business is performing well;

 

   

we are an “Emerging Growth Company” and we cannot be certain whether the reduced requirements applicable to emerging growth companies will make our Ordinary Shares less attractive to investors;

 

   

we will incur significant increased costs as a result of operating as a public company, and our management will be required to devote substantial time to corporate governance standards;

 

   

we will be a “foreign private issuer” and our disclosure obligations will be different from those of U.S. domestic reporting companies. As a foreign private issuer, we will be subject to different U.S. securities laws and rules than a domestic U.S. issuer, which could limit the information publicly available to our shareholders;

 

   

if securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our share price and trading volume could decline;

 

   

insiders have substantial control over us which could delay or prevent a change in corporate control or result in the entrenchment of management or the Board of Directors;

 

   

our controlling shareholders will continue to have significant influence over us after this Offering, and their interests could conflict with yours;

 

   

changes to U.S. federal income tax rules and regulations could have material U.S. federal income tax consequences for the Company and the shareholders; and



 

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we may not be able to obtain timely authorizations for this initial public offering in Uruguay, a jurisdiction in which one of our subsidiaries operates.

Risks Related to Cyprus Law

 

   

the rights of our shareholders are governed by Cyprus law and our articles of association, and differ in some important respects from the typical rights of shareholders under U.S. state laws;

 

   

you will not be able to benefit from certain anti-takeover protections;

 

   

you may not be able to exercise your pre-emptive rights in relation to future issuances of Ordinary Shares;

 

   

we may be deemed to be a tax resident outside of Cyprus;

 

   

we may be subject to defense tax in Cyprus; and

 

   

our interest expenses may not be deductible.

As a result of these risks and other risks described under “Risk Factors” there is no guarantee that we will experience growth or profitability in the future.

Corporate Structure

We operate as a holding company and through our wholly-owned subsidiaries, including our main operating subsidiary Camposol, which owns a series of subsidiaries contributing to our consolidated activities. The following organizational chart sets forth in summary form certain of our direct and indirect subsidiaries, shareholders and certain related parties, as of the date of this prospectus:

 

LOGO



 

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Company Information

The legal address of Camposol Holding is 81-83 Grivas Digenis Avenue, 1st Floor, Nicosia Jacovides Tower, Nicosia 1090, Cyprus, and its telephone number is +357 22-209-999. Camposol Holding is incorporated in Cyprus as a public company limited by shares, under registration number 403333.

The complete mailing address of the Company’s principal executive offices is Av. El Derby 250, Santiago de Surco, Lima, Peru and its telephone number is +(51) (1) 213-6565.

Our Principal and Selling Shareholders

Camposol S.A. was founded and began operations in 1997. In October 2007, Dyer Coriat Holding S.L. (a company controlled by the Dyer and Coriat families and since renamed Generación del Pacífico Grupo S.L. (“Generación del Pacífico”)) and a group of investors acquired Camposol Holding PLC from its previous controlling shareholders with the proceeds from a U.S.$184.0 million private placement carried out by Camposol AS. Through a corporate reorganization that took place in 2008, Camposol Holding PLC became the holding company of the Camposol group of companies (the “Camposol group”) and listed its shares on the Oslo Stock Exchange (Oslo Børs).

On December 12, 2013, following the settlement of the mandatory takeover bid offer dated September 24, 2013, the Cyprus Securities and Exchange Commission approved the application submitted by Dyer Coriat Holding S.L. (since renamed Generación del Pacífico) to acquire from the minority shareholders all the shares of the issued share capital of Camposol Holding PLC which Dyer Coriat Holding S.L. did not own (directly or indirectly) at that time. The squeeze-out was effective as of December 13, 2013. On December 20, 2013, the shares of Camposol Holding PLC were delisted from the Oslo Stock Exchange. In April 2014, the shareholders of Camposol Holding PLC voted to convert Camposol Holding PLC, from a “PLC” (a public company limited by shares) to a “Limited” company (a private company limited by shares). On August 7, 2017, the shareholders of Camposol Holding Ltd. voted to convert Camposol Holding Ltd. back to a “PLC”.

On September 10, 2014, following a stock option purchase agreement entered on September 10, 2013, Osterlin Luis Dyer Ampudia, William Paul Dyer Osorio, Sergio Ivan Dyer Osorio, Rodrigo Israel Dyer Fernandez and Yazmin Ellie Dyer Osorio, executed their option to purchase shares from Generación del Pacífico. After the execution of the stock option purchase, Generación del Pacífico owned 82.6% of the total outstanding shares of Camposol Holding PLC.

In 2019, the Camposol group began implementing a new legal structure for its global business segregating its shrimp farming business from its agricultural business. On October 22, 2019, the Company was incorporated as a limited company under Cyprus law under the name Csol Holding LTD. On February 17, 2021, the Company held a shareholders meeting approving its conversion from a limited company to a public company. On March 30, 2021, the Company held a shareholders meeting approving the change of its name to Camposol Holding PLC. As of the date of this prospectus, all of the operating companies, assets and brands related to our agribusiness, including Camposol S.A., have been transferred to the Company.



 

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The legal entities that have been combined and included in our audited financial statements included in this prospectus (except for certain related party balances that were not contributed to the Company and are not related to our agribusiness) and their activities are as follows:

 

     Principal activity    Country of
incorporation
   Direct or indirect
interests as of
31 December
 

Company

   2020     2019  

Camposol S.A.

   Agribusiness    Peru      100     100

Nor Agro Perú S.A.C.

   Farmland owner    Peru      100     100

Muelles y Servicios Paita S.R.L.

   Farmland owner    Peru      100     100

Inversiones Agrícolas Inmobiliarias S.A.C.

   Farmland owner    Peru      99.99     99.99

Camposol Europa S.L.

   Distribution    Spain      87.27     87.27

Camposol Trade España S.L.

   Distribution    Spain      100     —    

Camposol Fresh B.V.

   Distribution    Netherlands      100     100

Grainlens S.A.C.

   Holding    Peru      100     100

Blacklocust S.A.C.

   Holding    Peru      100     100

Camposol Cyprus Limited

   Holding    Cyprus      100     —    

Persea, Inc.

   Holding    United States      100     100

Camposol Fresh U.S.A., Inc.

   Distribution    United States      100     100

Camposol Switzerland GMBH

   Distribution    Switzerland      100     —    

Camposol Colombia S.A.S.

   Agriculture    Colombia      100     100

Camposol Foods Trading (Shangai) Co Ltd.

   Distribution    China      100     100

Camposol Fresh Foods Trading Co Ltd.

   Distribution    China      100     100

Aliria S.A.C.

   R&D    Peru      100     —    

Camposol Uruguay S.R.L.

   Agriculture    Uruguay      100     —    

Arándanos Campasolinos S.A.P.I. de C.V.

   Agriculture    Mexico      100     —    

Camposol Chile SpA

   Agriculture    Chile      100     100

Asociación para la Certificación de Productores Agrícolas Proveedores de Camposol

   Agriculture    Peru      100     100

The following table sets forth the share ownership of Camposol Holding PLC, as adjusted to reflect the reorganization:

 

     Outstanding Shares  

Samuel Barnaby Dyer Coriat(1)(2)

     33,037,345  

Piero Martin Dyer Coriat(1)(2)

     33,037,345  

Sheyla Dyer Coriat(1)

     16,518,671  

Osterlin Luis Dyer Ampudia

     9,072,107  

Sergio Dyer Osorio

     2,911,357  

William Paul Dyer Osorio(2)

     2,251,318  

Yazmin Dyer Osorio

     1,986,202  

Rodrigo Dyer Fernandez

     1,185,651  

Risger S.A.

     4  
  

 

 

 

Total

     100,000,000  

 

(1) 

Samuel Barnaby Dyer Coriat, Piero Martin Dyer Coriat and Sheyla Dyer Coriat control Camposol Holding PLC.

(2) 

Samuel Barnaby Dyer Coriat, Piero Martin Dyer Coriat and William Paul Dyer Osorio serve as directors of Camposol Holding PLC.



 

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The following table sets forth our share ownership prior to the Offering, as adjusted to reflect the number of shares being offered by our Selling Shareholders and the shares that our Selling Shareholders will beneficially own after the Offering including the full exercise of the over- allotment option by the underwriters:

 

     Shares Beneficially Owned

Prior to the Offering

     Number of
Shares
being
Offered
    Shares
Beneficially
Owned
After the
Offering
    Shares Beneficially
Owned after the
Offering and the

Full Exercise of the

Over-allotment Option

 

Samuel Barnaby Dyer Coriat(1)(2)

     33,037,345        33.04     %       %  

Piero Martin Dyer Coriat(1)(2)

     33,037,345        33.04     %       %  

Sheyla Dyer Coriat(1)

     16,518,671        16.52     %       %  

Osterlin Luis Dyer Ampudia

     9,072,107        9.07     %       %  

Sergio Dyer Osorio

     2,911,357        2.91     %       %  

William Paul Dyer Osorio(2)

     2,251,318        2.25     %       %  

Yazmin Dyer Osorio

     1,986,202        1.98     %       %  

Rodrigo Dyer Fernandez

     1,185,651        1.18     %       %  

Risger S.A.

     4        0.01     %       %  

Total

     100,000,000        100.0     100.0     100.0

 

(1) 

Samuel Barnaby Dyer Coriat, Piero Martin Dyer Coriat and Sheyla Dyer Coriat control Camposol Holding PLC.

(2) 

Samuel Barnaby Dyer Coriat, Piero Martin Dyer Coriat and William Paul Dyer Osorio serve as directors of the Company.

The address of our principal and Selling Shareholders is Av. El Derby 250, piso 4, Santiago de Surco, Lima, Peru.



 

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THE OFFERING

The following is a brief summary of the terms of this Offering and should be read together with the more detailed information and financial data and statements contained elsewhere in this prospectus. For a more complete description of our Ordinary Shares, see “Description of Share Capital” in this prospectus.

 

Issuer

Camposol Holding PLC

 

The global offering:

We and the Selling Shareholders are offering an aggregate of                  Ordinary Shares of the Company in a public global offering, consisting of an international offering and a concurrent Peruvian offering exclusively directed to Institutional Investors (as such term is defined under the IIM).

 

International offering:

We and the Selling Shareholders are offering an aggregate of                  Ordinary Shares in the United States and elsewhere outside Peru.

 

Peruvian offering:

Concurrently with the international offering, we and the Selling Shareholders are offering an aggregate of                  Ordinary Shares in a public offering in Peru directed exclusively to Institutional Investors (as such term is defined under the IIM Regulations) pursuant to the IIM Regulations. The Peruvian offering does not require a separate prospectus and certain additional conditions applicable to the Peruvian offering will be made available to the Institutional Investors in Peru through an offer notice to be made public shortly before the Peruvian offering, in compliance with Peruvian law.

 

Peruvian SMV Registration:

The Ordinary Shares will be registered with the Peruvian Public Registry of the Capital Markets (Registro Público del Mercado de Valores) under the Institutional Investors’ Market Section managed by the SMV, and the Ordinary Shares will be listed on the LSE pursuant to the IIM Regulations and the Securities Registration and Exclusion Regulations (Reglamento de Inscripción y Exclusión de Valores Mobiliarios en el Registro Público del Mercado de Valores y en la Rueda de Bolsa), approved by SMV Resolution No. 031-2012-SMV/01, as amended. The documents to be submitted to the SMV and the LSE will not be part of the registration statement of which this prospectus forms a part and are not and will not be incorporated by reference herein.

 

  Additionally, a market maker agreement will be entered into with a Peruvian securities broker duly authorized by the SMV and the LSE. Pursuant to Peruvian regulations, Market Makers are securities brokers that provide services for issuers or investors in an effort to maintain or increase the liquidity of the market for a certain security. As such, Market Makers buy and sell a specific security (i.e. the Company shares) for their own account and for a specific amount duly authorized by the LSE.

 

Selling Shareholders:

Samuel Barnaby Dyer Coriat


 

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Piero Martin Dyer Coriat

Sheyla Dyer Coriat

 

  Osterlin Luis Dyer Ampudia

 

  Sergio Dyer Osorio

 

  William Paul Dyer Osorio

Yazmin Dyer Osorio

Rodrigo Dyer Fernandez

Risger S.A.

 

Underwriters:

BofA Securities, Inc.

 

  UBS Securities LLC

 

  J.P. Morgan Securities LLP

 

  Scotia Capital (USA) Inc.

 

  Santander Investment Securities Inc.

 

Type of Offering:

Initial public offering of Ordinary Shares to be made by Camposol Holding and the Selling Shareholders pursuant to a global offering, consisting of an international offering and a concurrent Peruvian offering.

 

Public offering price:

We currently expect that the initial public offering price will be between U.S.$             and U.S.$             per Ordinary Share.

 

Over-allotment option:

We and the Selling Shareholders have granted the underwriters an option, exercisable within 30 days of the date of this prospectus, to purchase up to an additional Ordinary Shares to cover over-allotments, if any, in connection with this Offering.

 

Ordinary shares to be outstanding after this Offering:

             Ordinary Shares (or              Ordinary Shares if the over-allotment option is exercised in full).

 

Use of proceeds:

We estimate that the net proceeds from this Offering will be approximately U.S.$             million, based upon an assumed initial public offering price of U.S.$             per ordinary share, the midpoint of the estimated price range set forth on the cover page of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us. If the underwriters exercise their over-allotment option in full, we estimate that the net proceeds will be approximately U.S.$             million after deducting underwriting discounts and commissions and estimated offering expenses payable by us.


 

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  We will use between U.S.$50 million and U.S.$100 million from the proceeds of the primary portion of the offering to fund our capital expenditures for the year 2021 and the prepayment of the existing short-term debt as described below.

 

Financial Institution

   Interest     Outstanding Amount
at March 31, 2021
     Maturity Date  

Banco Internacional del Perú - Interbank

     0.93   U.S.$ 10,000,000        August 14, 2021  

Banco Internacional del Perú - Interbank

     0.93   U.S.$ 10,000,000        August 14, 2021  

Banco BBVA Peru

     1.25   U.S.$ 10,000,000        July 15, 2021  

Banco BBVA Peru

     1.25   U.S.$ 10,000,000        July 15, 2021  

Scotiabank Perú

     1.30   U.S.$ 10,000,000        August 6, 2021  

Scotiabank Perú

     0.88   U.S.$ 5,000,000        July 7, 2021  

Scotiabank Perú

     0.88   U.S.$ 5,000,000        July 8, 2021  
    

 

 

    

Total:

     U.S.$ 60,000,000     

We will not receive any proceeds from the sale of the Ordinary Shares by the Selling Shareholders.

 

  A U.S.$1.00 increase or decrease in the assumed initial public offering price of U.S.$            per ordinary share, the midpoint of the estimated price range set forth on the cover page of this prospectus, would increase or decrease the net proceeds to us from this Offering by approximately U.S.$            million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. An             % increase or decrease in the number of Ordinary Shares offered by us would increase or decrease the net proceeds to us from this Offering by approximately U.S.$            million, assuming the assumed initial public offering price remains the same and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us

 

Conflicts of Interest:

Scotiabank Perú S.A.A., an affiliate of Scotia Capital (USA) Inc., will receive proceeds from this offering through the repayment of U.S.$20 million of existing short-term debt. Therefore, Scotia Capital (USA) Inc. is deemed to have a conflict of interest within the meaning of Rule 5121 of the Financial Industry Regulatory Authority, Inc. (“Rule 5121”). For more information, see “Underwriting (Conflict of Interest)—Conflicts of Interest.”

 

Proposed NYSE trading symbol:

NYSE: “CMSL”

 

Risk factors:

See “Risk Factors” beginning on page 37 and the other information included in this prospectus for a discussion of factors you should consider carefully before investing in our Ordinary Shares.


 

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Dividend policy:

Our Board of Directors has adopted a policy of paying up to 50% of our net profit as dividends distribution on a yearly basis. Any future determination regarding the declaration of dividends reservation of part of the profits and distributions to shareholders will depend on a range of factors, including the availability of distributable profits, our liquidity and financial position, restrictions imposed by our financing arrangements, tax considerations, planned acquisitions and other relevant factors. The declaration and payment of dividends is limited by the terms of our existing indebtedness. For more information, see “Risk Factors—Risks Related to our Business and Industry—We are subject to certain operating and financial restrictions on our business, including with respect to the declaration and payment of dividends, as a result of current indebtedness.”

 

Lock-up:

In connection with this Offering, for a period of 180 days from the date of this prospectus, our Selling Shareholders and our directors and officers will not, without the prior written consent of BofA Securities, Inc., UBS Securities LLC and J.P. Morgan Securities LLP sell, dispose of or hedge any Ordinary Shares or any securities convertible into or exchangeable for our Ordinary Shares. See “Underwriting.”

 

Pre-emptive rights:

Under the law of Cyprus, existing holders of shares in Cypriot public companies are entitled to pre-emptive rights on the issue of new shares in that company (provided such shares are paid in cash). The Selling Shareholders will waive their pre-emptive rights for a period of five years, including the pre-emptive rights for this Offering.

 

Voting rights:

Shareholders are allowed one vote per share. Each Shareholder is entitled to attend general meetings, to address the meeting and to exercise any voting rights of such shareholder.

 

Taxation:

For a summary of certain U.S. federal income tax and certain Cyprus tax consequences of the acquisition, ownership and disposition of our Ordinary Shares, see “Taxation.”

 

  The total number of Ordinary Shares outstanding before and after this Offering is based             on Ordinary Shares outstanding as of             , 2021.


 

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SUMMARY SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

The following table presents our summary selected consolidated financial information, as of and for the years indicated, in each case in accordance with IFRS. This information should be read in conjunction with, and is qualified in its entirety by reference to, our audited consolidated financial statements and the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” appearing elsewhere in this prospectus.

We have derived the consolidated statement of financial position as of December 31, 2020 and 2019 and the consolidated statement of comprehensive income and consolidated statement of cash flows for the years ended December 31, 2020 and 2019 from our audited consolidated financial statements included elsewhere in this prospectus.

Consolidated Statement of Comprehensive Income:

 

     Year ended
December 31,
 
     2020      2019  
     (in thousands
of U.S. Dollars, except
for per share data)
 

Revenue

     343,245        326,638  

Cost of sales:

     

Cost of sales

     (177,913      (156,908

Depreciation of bearer plants

     (22,493      (19,164

Gross profit before adjustment for biological assets

     142,839        150,566  

Net gain arising from changes in fair value of biological assets

     23,981        10,163  
  

 

 

    

 

 

 

Gross profit after adjustment for biological assets

     166,820        160,729  
  

 

 

    

 

 

 

Selling expenses

     (44,916      (37,659

Administrative expenses

     (22,090      (25,428

Other income

     1,115        6,410  

Other expenses

     (10,208      (5,009

Net foreign exchange transactions (losses) gains

     (663      2,517  
  

 

 

    

 

 

 

Operating profit

     90,058        101,560  
  

 

 

    

 

 

 

Share of profit of investments accounted for using the equity method

     1,708        81  

Financial income

     816        1,001  

Financial cost

     (34,997      (21,851
  

 

 

    

 

 

 

Profit before income tax

     57,585        80,791  
  

 

 

    

 

 

 

Income tax (expense) benefit

     (27,754      2,843  
  

 

 

    

 

 

 

Profit for the year

     29,831        83,634  
  

 

 

    

 

 

 

Other comprehensive income:

     

Item that may be reclassified to profit or loss:

     

Currency translation adjustment

     (1,223      (2,131

Item that will not be reclassified to profit or loss:

     

Revaluation surplus (land)(1)

     243,639        —    

Deferred income tax of revaluation surplus

     (71,025      —    
  

 

 

    

 

 

 

Total comprehensive income for the year

     201,222        81,503  

 

1 

There is no a comparable measure in the year ended December 31, 2019, because in 2020 the Company changed the way in which it accounts for land. For the 2019 year, land was accounted on a cost basis and since 2020 has been accounted on a fair value basis. The adjustment reflects the change in valuation calculated on a cost basis to a calculation on a fair value basis.



 

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     Year ended
December 31,
 
     2020      2019  
     (in thousands
of U.S. Dollars,
except for the per
share)
 

Profit attributable to:

     

Owners of the parent

     29,143        83,263  

Non-controlling interests

     688        371  

Total comprehensive income for the year attributable to:

     

Owners of the parent

     200,700        81,322  

Non-controlling interest

     522        181  

Earnings per share - Basic and Diluted

     0.29        0.83  

Consolidated Statement of Financial Position (at period end):

 

     At December 31,  
     2020      2019  
     (in thousands of U.S.
dollars, except for the
number of shares
outstanding)
 

Cash and cash equivalents

     33,991        27,788  

Working capital(1)

     146,812        116,672  

Total assets

     1,112,850        790,083  

Long-term debt(2)

     354,615        313,910  

Total equity and liabilities

     1,112,850        790,083  

Total equity

     406,980        227,758  

Share capital

     10,000        10,000  

Number of shares outstanding (thousands of shares)

     100,000        100,000  

 

(1) 

Total current assets minus total current liabilities.

(2) 

Only includes the non-current portion.

Consolidated Statement of Cash Flows:

 

     For the year ended
December 31,
 
     2020      2019  
     (in thousands of U.S.
dollars)
 

Cash paid to suppliers and employees

     (231,354      (244,793

Interest paid

     (21,845      (21,092

Net cash generated from operating activities

     85,700        74,240  

Net cash used in investing activities

     (71,405      (105,658

Net cash (used in) generated from financing activities

     (8,092      26,701  


 

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Non-IFRS information and other information:

 

     For the year ended
December 31,
 
     2020     2019  
     (in thousands of U.S.
dollars, except margins
and dividends declared
per share)
 

Profit for the year margin(1)

     8.69     25.60

Aggregate amount of dividends paid

     —         10,000  

Adjusted EBITDA(2)

     116,825       120,241  

Adjusted EBITDA Margin(2)

     34.0     36.8

 

(1) 

We calculate Profit for the year margin as Profit for the year from our operations divided by Revenue. This indicator allows investors and management to evaluate the margin of our operations.

(2) 

Adjusted EBITDA and Adjusted EBITDA Margin are non-IFRS measures. See “Presentation of Financial Measures and Other Information” for a discussion of how we define and calculate these measures and why we believe they are important. A reconciliation of Adjusted EBITDA to profit for the period, the most directly comparable measure calculated in accordance with IFRS, is set forth below and is included in “Selected Consolidated Financial and Other Data”.

Reconciliation:

 

     For the year ended
December 31,
 
     2020     2019  
     (in thousands of
U.S. dollars, except
Adjusted EBITDA
Margin)
 

Profit for the year

     29,831       83,634  

Interest net(3)

     34,181       20,850  

Income tax (expense) benefit

     27,754       (2,843

Depreciation and amortization

     18,499       13,598  

Depreciation of bearer plants

     22,493       19,164  

Share of profit of investments accounted for using the equity method

     (1,708     (81

Net foreign exchange transactions (losses) gains(4)

     663       (2,517

Other income

     (1,115     (6,410

Other expenses

     10,208       5,009  

Net gain arising from changes in fair value of biological assets

     (23,981     (10,163
  

 

 

   

 

 

 

Adjusted EBITDA

     116,825       120,241  
  

 

 

   

 

 

 

Adjusted EBITDA Margin(5)

     34.0     36.8

 

(3) 

We calculate interest net by adding financial income and financial cost.

(4) 

Gains/Losses due to the translation of currencies into our functional currency, the U.S. dollar.

(5) 

We calculate Adjusted EBITDA Margin as Adjusted EBITDA divided by Revenue.

 



 

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Recent Developments

COVID-19

During 2020, our operations were not significantly impacted by the public health crisis and related economic shutdown caused by the Coronavirus Disease 2019 (“COVID-19”) pandemic. In Peru, during the initial months of the pandemic, our ability to transport workers to our production lands was limited to 50% due to sanitary protocols mandated by the government of Peru. This measure temporarily increased our transportation cost for around four months until the Peruvian government raised the transportation occupancy rate to 100%. Our plants and facilities continued to operate and were not required to shut down. The mandatory lockdowns ordered by governments around the world during the initial months of the COVID-19 pandemic caused the temporary closure of restaurants, hotels and the majority of participants in the food service channel. These events generated a redirection of avocados used to serve to the food service channel, to be offered and sold to the retail and wholesale channels, reducing the price of avocados in these channels. Demand for tangerines increased during the period in parallel with a global increase in demand for citrus fruits, raising prices for tangerines. Deliveries to our main customers around the world continued. We have procured the necessary personal protective equipment and have implemented appropriate health and safety measures in our offices and throughout our properties. We have not experienced any closure or suspension of operations due to the COVID 19 pandemic.

During the last six months of 2019, we began to implement a system to get on-line control of the transportation, access, and deployment of personnel in the fields in Peru, which system was fully operational towards the end of 2019 and was a key factor in our efforts to mitigate the risks of a shutdown due to the COVID-19 pandemic. With the system, we were able to track every worker from the moment he or she was in transit to the workplace. We implemented health protocols starting at the commencement of the transportation point in order to minimize the probability of an outbreak inside the facilities. Moreover, we keep track of all our workers while in our operations and were able to isolate any active or suspected cases.

New Agricultural Law

On January 1, 2021, a significant new law went into effect in Peru, the Agricultural Labor Regime and Incentives under the Agrarian and Irrigation, Agro-exporter and Agro-industrial Sector Law (Ley del Régimen Laboral Agrario y de Incentivos para el Sector Agrario y Riego, Agroexportador y Agroindustrial) (the “New Agricultural Law”). This law was enacted following a national work stoppage by agricultural workers during November and December of 2020, seeking the repeal of the Agricultural Sector Promotion Law and the enactment of a new agricultural law with wage increases and additional labor benefits.

The New Agricultural Law has reduced benefits granted to agricultural companies, such as Camposol, by the repealed Agricultural Sector Promotion Law (Ley de Promoción del Sector Agrario), which may result in increased overall labor costs for Camposol. Under the New Agricultural Law, Camposol may qualify for certain benefits, such as (i) a discounted health insurance contribution (EsSalud) of 7% of the monthly salary until December 31, 2022 (it will be further increased to 8% as of January 1, 2023 and to 9% as of January 1, 2025), (ii) until December 31, 2025, 20% depreciation rate for hydraulic infrastructure, and (iii) until the end of 2022, a 15% income tax rate (it will be further progressively increased until 2028 when the applicable income tax rate will become equal to the general income tax rate (29.5%)). The increase in the income tax rate may significantly impact the profitability and margins of our businesses.

In order to mitigate the tax impact of the New Agricultural Law, we are developing a new commercial strategy for our businesses which includes giving more relevance to our commercial office in Switzerland, which includes transitioning management operations. From March 2021, our commercial team has been transferred to Switzerland and this office will establish and implement our commercial strategy and provide business intelligence assistance to all our offices across the globe. Also, the Costa Rica branch of our Swiss commercial



 

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office will be in charge of the allocation of our products and billing and collections of our sales. We believe these measures will, among others, reduce the labor and tax costs in Peru resulting from the New Agricultural Law. We have also implemented changes to the weekly work time with employees working five instead of six days per week, a reduction in overtime payments and a flexible incentive bonus to increase productivity, among others. In addition, we are measuring our productivity in detail in an effort to maximize it. We plan to hire fewer workers than usual during the blueberry harvest season to compensate for increased labor costs but in a way that would not reduce our harvest volumes.

Chief Executive Officer

On March 1, 2021, Mr. Samuel Barnaby Dyer Coriat, the Chairman of our Board of Directors and one of our largest individual shareholders, became the new Chief Executive Officer of Camposol, replacing Mr. Jorge Luis Ramirez Rubio.

Corporate Reorganization

We operate as a holding company and through our wholly-owned subsidiaries, including our main operating subsidiary Camposol, which owns a series of subsidiaries contributing to our consolidated activities. In order to improve business efficiencies and promote growth and investment, we have implemented a global corporate reorganization. Camposol’s original parent company was incorporated on July 9, 2007 as a limited company under Cyprus law under the name Camposol Holding Limited. On October 18, 2017, Camposol Holding Limited was converted to a public company limited by shares under Cyprus law with the name “Camposol Holding PLC.”

For the purpose of segregating Camposol Holding PLC’s agricultural business (Camposol and related subsidiaries) from the shrimp farming business (Marinasol S.A.), on October 22, 2019, the Company was incorporated as a limited company under Cyprus law. Through a series of capital stock increases and spin-offs, all of our operating companies related to our agribusiness, including Camposol, were transferred, directly or indirectly, to the Company. On February 17, 2021, the Company held a shareholders meeting approving its conversion from a limited company to a public company. On March 30, 2021, the Company held a shareholders meeting approving the change of its name to Camposol Holding PLC.

To face the global competitive environment, the Company continues to implement a new legal structure of its global business with the purpose of attracting new investments for the agricultural business as well as simplifying the corporate governance and isolate the risks associated with each of its businesses (the “Corporate Reorganization”). The Corporate Reorganization was initiated in 2019 with the goal of expanding the Company’s global operations, align processes and capture synergies under a global strategy which will enable it to better compete in the worldwide market. As discussed above, the fresh produce business segment was separated from the shrimp farming business. For such purposes, a new Cyprus sub holding entity, Camposol Cyprus Limited and fully owned by the Company, was created.

On October 7, 2020, a new principal company named Camposol Switzerland GmbH was incorporated in Schwyz, Switzerland. Camposol Switzerland GmbH will also operate through a branch in Costa Rica and potentially through one or more additional branches located outside Switzerland. The Costa Rica branch provides Camposol Switzerland GmbH with logistics, language, time-zone, cost, geographical advantage related to the production locations and other benefits. Further, Camposol Switzerland GmbH will have the role of standardizing quality production processes, identify best practices, deploy knowledge and know-how, define and manage transportation and shipping practices, manage lead times and cost practices. Camposol Switzerland GmbH will also centralize costs by having purchase leverage with third parties and coordinate the global supply chain as well as direct pricing directive.



 

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Once the Corporate Reorganization is complete, the planned supply chain structure will consist of our productive and growing subsidiaries in Peru, Colombia, Uruguay, Chile and Mexico supplying our products to our trading entities in Switzerland as well as through Camposol Switzerland GmbH’s branch in Costa Rica. Our trading subsidiaries including Camposol Switzerland GmbH’s branches and Camposol Trading Switzerland will then commercialize our products to our distribution entities such as Camposol Fresh U.S.A., Inc., Camposol Fresh Food Trading (Shanghai) Co. Ltd., Camposol Trade España S.L. and Camposol Fresh B.V., among others. Finally, our distribution entities will supply our products to our global customers. Camposol Switzerland GmbH’s branches will also supply products directly to our retail customers.

The standard income tax rate applicable to our Peruvian subsidiaries ranged between 29.5% and 15% for 2019 and 2020. The New Agricultural Law will progressively increase the minimum income tax rate to a single minimum tax rate of 29.5% in 2028. The standard income tax rate applicable to non-Peruvian subsidiaries ranged between 33% and 25% for the same period.

Under the new Corporate Reorganization and through the operations of Camposol Switzerland GmbH, we might be able to obtain a reduced income tax rate on profits allocated to the foreign operational branches of Camposol Switzerland GmbH. The profits allocable to the Swiss head office would be subject to a tax close to 12%. This applicable tax rate may change and is in no way a guarantee. The tax rate is also subject to Swiss, Costa Rica and Cyprus governmental approvals and revisions, as well as authorizations and applicable tax regimes at the level of the operational branches and as such is subject to multiple uncertainties and thus change.

Under the Swiss Withholding Tax Act, dividend distributions made by a Swiss corporation are subject to Swiss withholding tax of 35% unless the dividend is paid out of qualifying capital contribution reserves. Foreign recipients of a dividend paid by a Swiss corporation may claim a partial or full refund of the Swiss withholding tax based on a double tax treaty or the Switzerland-EU agreement. Under specific tax considerations relating to the Swiss withholding tax, Camposol Switzerland GmbH’s direct shareholder, Camposol Cyprus Limited, may be eligible to claim relief pursuant to the double taxation treaty in force between Switzerland and Cyprus. Consequently, the Swiss withholding tax on dividend distributions from Camposol Switzerland GmbH may be reduced to 0% if certain specific conditions are met. There is no guarantee that we and our subsidiaries will be able to meet the tax requirements of the jurisdictions in which we are taxed.

For purposes of completing the Corporate Reorganization, we need to complete some internal steps, such us the acquisition of our Colombian, Chilean and Uruguayan subsidiaries by our Spanish subsidiary, cash contributions and redemption of shares in some of our subsidiaries.

The Company expects to conclude the final stage of its Corporate Reorganization by December 2021.

Expectations for the First Quarter of 2021 Results

Our condensed consolidated interim financial statements for the first quarter of 2021 are not yet available. The preliminary information for the first quarter 2021 results included in this Registration Statement on Form F-1 has been prepared by, and is the responsibility of, the Company’s management. Gaveglio Aparicio y Asociados S. Civil de R. L., member firm of PricewaterhouseCoopers International Limited, has neither audited, reviewed, examined, compiled nor applied agreed-upon procedures with respect to the accompanying preliminary information for the first quarter of 2021 results contained herein and, accordingly, Gaveglio Aparicio y Asociados S. Civil de R. L. does not express an opinion or any other form of assurance on such information or its achievability. The Gaveglio Aparicio y Asociados S. Civil de R. L. report included in this Registration Statement on Form F-1 relates to the Company’s historical financial information. It does not extend to the preliminary information for the first quarter of 2021 results and should not be read to do so.



 

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We expect that our total volume sold for the first quarter of 2021 will range from 26,547 MT to 28,067 MT, representing an increase of approximately 0.9% to 6.7% as compared to the first quarter of 2020. We expect that for the first quarter of 2021, our blueberry volumes will range from 6,002 MT to 6,402 MT, our avocado volumes will range from 768 MT to 888 MT, and our other products volumes will range from 19,777 MT to 20,777 MT. Additionally, we expect our revenues from operations for the first quarter of 2021 will range from U.S.$80.8 million to U.S.$87.4 million, representing an increase of approximately 27.0% to 37.4% as compared to the first quarter of 2020. We expect that for the first quarter of 2021, our blueberry revenues will range from U.S.$37.2 million to U.S.$40.2 million, our avocado revenues will range from U.S.$2.4 million to U.S.$3.0 million, and our other products revenues will range from U.S.$41.2 million to U.S.$44.2 million.

In the view of our management, the preliminary financial information above was prepared on a reasonable basis, reflects the best currently available estimates and judgments, and presents, to the best of management’s knowledge and belief, our preliminary performance for the first quarter of 2021 in terms of volumes sold and revenues. However, this information is not a fact and no assurances can be given that our actual volumes and revenues for the first quarter of 2021 will not differ from these preliminary amounts. Readers of this prospectus are cautioned not to place undue reliance on the preliminary information. These preliminary amounts are based on management’s internal estimates and are subject to further internal review by management and approval by our board of directors. Our actual volumes sold and revenues for the first quarter of 2021 may vary from these preliminary amounts.



 

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RISK FACTORS

Investing in our Ordinary Shares is speculative and involves substantial risk. You should carefully consider all of the information in this prospectus prior to investing in our Ordinary Shares. There are numerous risk factors related to our business that are described under “Risk Factors” and elsewhere in this prospectus. These risks could materially and adversely impact our business, results of operations, financial condition and future prospects, which could cause the trading price of our Ordinary Shares to decline and could result in a loss of your investment. Among these important risks are the following:

Risks Related to our Business and Industry

Our fruits and vegetables products are subject to price fluctuations.

Our financial performance and future development depend to a considerable extent on the market prices of the fruits and vegetables products that we produce and sell. Most of the products we sell are soft commodities, and market prices generally follow a cyclical pattern. In particular, the consumption level of fruits and vegetables is an important force that drives prices. Our fresh products are more price sensitive than our frozen products, mainly due to the ability to store frozen products for longer periods. The prices for fresh products vary according to the global volume supplied and price of comparable fresh products offered during the same time period. For example, in 2019 blueberry prices in commercial windows decreased due to significant increases in volumes from Peruvian exporters. In addition, prices of our products may vary because of differences in their quality. In 2019, our blueberries suffered a deterioration in quality due to adverse climate conditions while harvested, affecting their ability to be exported to China. As a result, we reorient our distributions of these blueberries to the European and United States markets which resulted in us receiving lower prices. We cannot assure you that high price levels will be maintained, and if suppliers increase volume without a concomitant increase in demand in future years, prices may decrease, which may affect the profitability of this segment.

The supply, and therefore pricing, of agricultural products is subject to wide fluctuations due to factors that are beyond our control, such as weather, acreage planted, governmental farm programs, incentives and policies, changes in foreign exchange rates, development in trade negotiations, changes in global demand resulting from population growth and changes in standards of living and consumer preferences, global production of similar and competitive crops and outbreaks of disease and natural disasters which produce temporary imbalances in demand and supply. These factors have historically caused volatility in the agricultural industry and, consequently, in the availability and price of the agricultural products we produce and distribute. A prolonged decline in the market prices of agricultural products due to any of the foregoing factors could adversely affect our business, financial condition and operating results.

Even when we successfully develop marketable products, consumer preferences can evolve over time.

Consumer preferences evolve over time and our success depends on our ability to identify the tastes and dietary habits of consumers and offer products that appeal to those preferences. We need to continue to respond to changing consumer preferences and develop new products that are appealing to our consumers and aligned to their preferences. It takes substantial time and effort to develop products that are suitable to grow on the location of our land holdings and to then scale those operations in order to profitably sell these products. If our current products including blueberries, avocados and other products like tangerines, mangoes and grapes fail to meet consumer preferences or if we are unable to introduce new products that meet consumer preferences on a timely basis, then our return on those investments and our sales could suffer. As a result, changing consumer preferences for our products could materially and adversely affect our business, financial condition and operating results.

 

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Climate change and global warming could adversely impact our operations by increasing our productions costs, reducing our production yields and decreasing our harvesting windows.

Recent and increasing climate and weather pattern shifts throughout the world and in Latin America where we have our production fields may have an adverse impact in our operations by increasing our production and transportation costs as well as reducing our production yields and volumes. Climate change serves to exponentially increase and multiply the regularity and strength of natural disasters. Further, climate change and global warming might aggravate the effects of pollution, pandemics and pest insects.

Adverse weather conditions caused by climate change and global warming could also adversely affect our supply chain and our ability to transport workers to our working fields as well. Moreover, transportation of our products from our producing countries to the consumer countries might be impaired by climate change and its effects.

The sale and distribution of our products depend on the continued availability of transportation and logistics infrastructure and services and the growth of our supply is dependent, in part, on improvements thereto, which may not occur on a timely basis, if at all.

Our products are delivered by truck to ports and shipped in chartered container vessels to markets in Europe, the United States and Asia, among other destinations. Due to the location of our fields, we rely heavily on one main highway in Peru, the Pan-American highway. Moreover, we use the services provided by port terminal operators who are exposed to changes in law and port regulations that may, for example, require the hiring of additional, higher-paid unionized workers. We also purchase and sell ocean freight services globally. In contrast to the well-established transportation and logistical operations and infrastructure supporting avocado exports, blueberry exports demand more complex preparation and means of distribution, including outlets from our facilities to ports and shipping to other countries.

Our supply chain relies on the availability of dependable and efficient transportation and logistics services and infrastructure. A natural disaster, an accident, human error, rising fuel costs, rising costs due to market concentration of transportation providers, port congestion, social unrest, increased violence, a strike, work slowdown or other labor action, or other circumstances, could result in disruptions in regional and international transportation systems that could materially and adversely affect our logistics and distribution operations and ultimately could adversely affect our business, financial condition and operating results.

Substantial infrastructure development by persons and entities outside our control is required for our operations to grow. Areas requiring expansion include, but are not limited to, additional port cargo capacity and additional storage facilities. Any delay or failure in making improvements to, or in expanding, transportation and logistics operations and infrastructure may hurt the growth potential of the demand for, or prices of, our products, prevent our products’ delivery, impose additional costs on us or otherwise have an adverse effect on our business, financial condition and operating results.

The long growth cycle of fruits and the associated costs make it difficult for us to meet change in demand from the market.

Planting new fruit can take years before the plants will bear harvestable fruit. In Peru, for example, avocado trees typically take three years to grow and begin production and another three years to mature and achieve peak stable yields. By December 31, 2020, 54% of our avocado plants had entered their fully-productive stage. However, avocado trees have a tendency to adopt an alternate bearing cycle that results in a large crop of small avocados in one year, followed by a small crop of large avocados the next year, and such is the case with our avocado trees. To reduce the impact of this alternate bearing cycle, we have invested in taking the DNA from our most productive avocado trees and planting new, more productive trees. Consequently, we may not be able to grow fruit fast enough to meet an increase in demand. In addition, planting and growing new fruit crops is capital

 

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intensive and we may not recover the investment in planting such crops should demand fall prior to being able to harvest the new crops. An inability to meet market demand as it changes could have an adverse effect on our business, financial condition and operating results.

We and our growers are subject to the risks that are inherent in farming.

Our results of operations may be adversely affected by numerous factors over which we have little or no control and that are inherent in farming, including reductions in the market prices for our products, adverse weather (including but not limited to, drought, high winds, earthquakes and/or wildfire), unforeseen conditions of our biological assets and growing conditions, pest and disease problems, and new government regulations regarding farming and the marketing of agricultural products, among others.

Our operations may be affected by climatic events, such as El Niño and La Niña.

As we are involved in a fruits and vegetables business, we are subject to inherent risks associated with changes in weather patterns and natural phenomena that can disrupt and adversely affect our operations. Although the Peruvian lands on which our products are grown generally enjoy favorable growing conditions due to stable weather patterns and the absence of extreme weather patterns such as frost or heavy rain, natural phenomena (such as “El Niño” or “La Niña”) can threaten production during certain seasons and in certain of our planting regions. Because we produce a variety of fruits and vegetables, and in different countries, such phenomena affect each crop differently and it is difficult to predict the consequences of any such phenomena on our operations as a whole, as changes in weather patterns can have either a positive or negative effects on us, depending on the particular product.

In terms of unusual temperature conditions, La Niña generally means that the winter is colder than usual, and this can have either a positive or negative effect on our production, depending on the particular product. For example, in the case of avocados, the cold weather reduces the growth rate of the fruit, and by harvest time the fruit typically weighs less than an avocado grown under typical conditions. However, since as of the date of this prospectus we have not experienced “La Niña” with this product yet, we cannot confirm the extent of the impact that any such phenomenon would have on our avocado production. On the other hand, El Niño, which can usually be predicted some months in advance, increases both summer and winter temperatures. El Niño reduces avocado volumes depending on the time of the year in which it occurs.

El Niño also heightens the risk of flooding and infrastructure damage, particularly, in the Northern part of Peru where our plantations are located, and could therefore create disruptions to our supply chain. Consequently, El Niño can have a negative effect on production should it occur during the harvest season, and therefore can limit the ability of fruits and vegetables businesses, such as ours, of generating cash flow.

For example, during the first quarter of 2017, a specific phenomenon known as “El Niño Costero”, a variation of El Niño in which there was an irregular increase in the temperature of the ocean surface along the coast of Peru and Ecuador which resulted in massive rainfall and floods, caused heavy losses in several regions along the Northern coastline of Peru, including Trujillo, Piura and Tumbes, where the Company has some operations. The Peruvian government estimated that it would need to invest approximately S/23,338 million to repair public infrastructure, such as roads and bridges, and cities in the 13 regions where the impact of the phenomenon was most significant. No material impact on yields was seen during this period: avocado year on year volume change went from 10.5% in the first half of 2016 to 15.4% in the first half of 2017, and blueberry year on year volume change went from 4.7% in the first half of 2016 to 5.7% in the first half of 2017. However, we cannot assure you that a recurrence of this phenomenon, or the occurrence of any other climatic phenomena, will not have any significant impact on our supply-chain and therefore on our business, financial condition and operating results.

In Colombia, analyzing the recent past, there is no record of El Niño having a substantial negative impact in the region where we operate. However, La Niña’s lower temperatures could affect production yields. In El Salto,

 

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Uruguay, given its latitude, La Niña could bring hail that could damage the crops. In both cases, we have studied the land and looked for locations that help us to mitigate these risks (i.e. planting at different altitudes or close to bodies of water).

In Mexico, in Los Mochis plantation, extreme high temperatures can reach up to 113 degrees Fahrenheit and reach temperatures as low as 26 degrees Fahrenheit, which in turn could have a substantial negative impact on our production yield.

In the Patagua Cerro of Chile, our crops are subject to sub-freezing temperatures and volatile rainfall amounts, which in turn could have a substantial negative impact on our production yield.

Our financial position, including our revenue and results of operations, among others, may be adversely affected by adverse weather conditions and climate change. We have little or no control over adverse weather conditions caused by climate change including, but not limited to flooding, drought, extreme high and low temperatures, and wildfires, among others. Climate change could also adversely affect our operations by causing changes to seasonal growing conditions including increases and changes in pest and disease problems.

We are dependent on exports to the United States and Europe, and to a certain extent, China, so our sales could be affected by economic, political and social developments in such markets.

Exports account for a considerable proportion of our total sales, with North America accounting for 58% of foreign sales, Europe accounting for 33%, and Asia accounting for 6% (with 4% to China, 1% to Japan, and 1% to Korea) in 2020. In recent years, the principal markets for our products have been the United States, Germany, China, the United Kingdom and Spain. The United States is currently the largest importer of blueberries in the world, and has also seen increasing sales of Hass avocados in recent years. The imposition of tariffs, quotas, trade barriers, import bans or any other restrictions by the European Union, the United Kingdom, the United States, China or any of our export countries would affect our pricing structure, competitiveness and our ability to sell into these countries, and it may be difficult to place our products in other countries. With respect to the United States, the former President of the United States, Donald J. Trump, and his Administration expressed support for policies that could have negatively impact existing trade agreements, such as the United States-Peru Free Trade Agreement (FTPA) and other existing and proposed trade agreements, and promoted greater restrictions on free trade generally, including significant increases on tariffs on goods imported into the United States. There can be no assurances that future presidents will not continue or return to these types of policies or that other countries will not react to such policies by restricting their own trade policies. Should such policies be undertaken it could adversely affect our business, financial condition and operating results.

Additionally, our ability to compete effectively in our export markets could be materially and adversely affected by a number of factors beyond our control, including deterioration in macroeconomic conditions, exchange rate volatility or government subsidies. For example, depreciation of the currency in the markets to which we export against the U.S. dollar could also have an adverse impact on us as long as we are collecting revenues in local currency. This could take the form of reduced demand, losses on receivables resulting from customers’ inability to pay their debts, or other factors. Moreover, the demand for our products may decrease materially if there are any unforeseen events such as outbreak of wars, terrorist attacks or other political, economic or social events in our principal markets that lead to a protracted economic downturn. If our ability to sell our products competitively in one or more of our significant export markets were impaired by any such development, we might not be able to reallocate our products to other markets on equally favorable terms, and our business, financial condition and operating results might be adversely affected.

Changes in laws and regulations (or the interpretations thereof) in our production locations or any of our principal export markets may adversely affect our business, financial condition and results of operations.

Our industry is subject to numerous statutes, rules, and regulations, including health regulations. To operate our land and production plants, for example, we must comply with certain administrative requirements, such as

 

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acquiring appropriate permits, licenses, concessions, authorizations, certifications and registrations, some of which are granted for fixed terms and therefore require periodic renewal. Fresh fruits and vegetables production as well as trade thereof are subject to extensive government policies and regulations. Governmental policies affecting the fruits and vegetables industry, such as taxes, tariffs, duties, subsidies and import and export restrictions on agricultural commodities and commodity products, can influence which crops are planted and the trade in unprocessed or processed commodity products, the volume and types of imports and exports, and industry profitability. In addition, international trade disputes can adversely affect agricultural commodity trade by limiting or disrupting trade between countries or regions. Future government policies or changes to existing policies may adversely affect the supply of, demand for, and prices of products we produce and distribute, restrict our ability to do business in our existing and target markets, reduce our access to water to irrigate our fields and otherwise adversely affect our business, financial condition and operating results.

Compliance with such government policies and regulations may require us to incur costs and capital expenditures on an ongoing basis. Such regulations may require us to obtain and maintain authorizations, permits and licenses for, among other things, the use of water for irrigation and breeding purposes, construction of new facilities, and the installation and operation of new equipment used in our operations. Such authorizations, permits and licenses may be subject to periodic renewal and challenges from third parties. Regulatory agencies may take enforcement actions against us for any failure to comply with applicable laws and regulations. Such enforcement actions could include the imposition of fines, revocation of licenses, suspension of operations or imposition of criminal liability for non-compliance.

Furthermore, we depend substantially on a large labor force to operate our business. Labor is subject to regulation in all the countries where we operate, and such regulation is subject to changes which may or may not be foreseeable. Future changes in labor regulations applicable to us could have a material adverse effect on our business, financial condition and operating results.

In addition to being required to comply with Peruvian, Colombian, Uruguayan, Chilean and Mexican regulations, the governments of countries in which we sell our products, including in the European Union, the United Kingdom, the United States, China, Japan and Canada, from time to time consider new regulatory proposals relating to raw materials, food safety and environmental regulations. If adopted, such regulations could lead to disruptions in the distribution of our products and increase our operational costs, which, in turn, could affect our results of operations and cash flows. To the extent that we increase our product prices as a result of such changes, our sales volume and revenues may be adversely affected. Furthermore, governments may change regulations or impose taxes or duties on certain imports, which may have an adverse effect on our business, financial condition and operating results.

The governments in which we operate and produce our products as well as those in which we sell our products might or have already implemented regulations aimed at preventing climate change which could in turn adversely affect our operations. Regional, national and international regulatory bodies have increased regulatory oversight aimed at reducing climate change and global warming. Our failure to comply with current or future laws, regulations, rules, or policies that apply to us may subject us to revocation of licenses or to civil or regulatory proceedings, including fines, injunctions, recalls, suspension of operations, imposition of criminal liability for non-compliance or seizures, which may have a material adverse effect on our business, financial condition and operating results.

Illegal occupations may affect the use of our agricultural properties, which could adversely affect our operations and results of operations.

Invasions or illegal occupations of rural land by members of certain native or farming communities are a common occurrence in certain regions of Peru, including those where we currently operate. Remedies such as police protection or eviction procedures are often inadequate, insufficient or take a long time to be resolved. As a result, we cannot assure you that our agricultural properties will not be subject to trespass or occupation. Any

 

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trespass or occupation may materially impair the use of our lands and adversely affect our operations and the value of such land.

In 2011, a significant portion of our 1,090 hectares in the “Fundo Huangalá” parcel, located in Piura, Peru, was trespassed upon and occupied by a group of local residents. We cannot assure you that future occupation to our agricultural properties will not occur. Any occupation of a significant portion of our agricultural properties could have a material adverse effect on our business, financial condition and operating results. In August 2016, the leader of the occupying group, Mr. Claudio Guirón, was convicted to four months of imprisonment on probation and ordered to pay damages to Camposol in the amount of S/5,000.00. As the defendant failed to file an appeal, the court’s decision became final in October 2016. Furthermore, in February and May 2016 other groups of local residents occupied 15 hectares of uncultivated land located in “Fundo Huangalá” destroying part of the boundary hedges, sowing seeds and installing irrigation equipment. Two separate complaints were filed in connection with the aforementioned incidents and investigations are being conducted by the Regional Prosecutor of Sullana. Given that no specific individuals have been identified yet as the potential offenders, the prosecutor has not, as of the date of this prospectus, pressed charges against any of the persons who trespassed into and occupied our property. Currently, there are 306.9 hectares of uncultivated land located in “Fundo Huangalá” illegaly occupied by two groups of local residents named “Asociación de Ganaderos Señor Cautivo –San Vicente de Piedra Rodada” and “Asociación de Campesinos sin Tierra Juan Velazco Alvarado”, and Camposol has made contact with their leaders in order to reach a peaceful agreement. If we are unable to seek remedy against illegal occupations or if occupations impair the use of our lands there may be a material effect on our business, financial condition and operating results.

We face competition from other fruit and vegetable producers located throughout the world and are subject to consumer product substitution.

We have several competitors for our products around the world. Some competitors for certain products are larger than we are and have greater financial resources than we do. Competition is based on price, logistics, service offerings and geographic location. With respect to our main products, we face competition from producers in diverse parts of the world. For example, our main competition in the avocado market comes from producers located in California, Mexico and South Africa, and our main competition in the blueberry market comes from producers located in Peru, Chile and Argentina. Accordingly, our competitors operate in diverse regions characterized by different weather patterns, geographies and regulatory regimes, as well as varying labor, production, transportation and other costs. Many of the risks associated with the industry are inherently local; for example, a natural disaster or labor disruption in Peru may affect our crop yields, but are unlikely to affect simultaneously those of our North American, Asian or African competitors.

Furthermore, the market for our products is highly price competitive and sensitive to product substitution. Consumers have been shown to change their fruit and vegetable purchasing preferences based on material changes in price. For example, consumers may substitute peaches for mangoes, depending on the prices offered. Competition could cause us to lose market share, exit certain lines of business, or reduce prices, each of which could adversely affect our business, financial condition and operating results.

In addition, potential changes to international trade regulations and agreements, as well as other political and economic arrangements (including direct or indirect subsidies) may benefit agro-industrial companies or traders operating in countries other than where our operations are currently located or adversely affect our export costs when we engage in international transactions. We cannot guarantee you that we will be able to compete on the basis of price or other factors with companies that in the future may benefit from favorable regulations, trading or other agreements or that we will be able to maintain our export costs.

 

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We currently experience limited competition during our windows of production and our competitors may be able in the future to provide similar products or different varieties that appeal more to our customers during the same windows of production.

Due to our locations and climates, we are able to produce fruits and vegetables during periods of time that are considered “off-season” for such products, thus we are able to demand a higher price for such products. If our competitors become able to procure or grow similar products during the “off-season” window when we supply our products, there may be a downward effect on the prices we may charge for our products, affecting our profitability. Additionally, our competitors may develop different varieties of the same fruit and vegetables than what we provide during these “off-season” periods, and such varieties may be more attractive to our customer than our products due to different factors, such as taste, shelf-life and appearance, among other factors. Should we experience increase competition in the manner described, it could have a material adverse effect on our business, financial condition and operating results.

Water shortages, any failure to maintain existing licenses for water rights or the unavailability of a supply of clean water could adversely affect our business.

We currently grow most of our productive crops in an arid, desert region of Northern Peru that is characterized by low levels of rainfall. Therefore, the continued supply of water is essential for our Fresh Produce business unit. We obtain the vast majority of the water used to irrigate our crops pursuant to licenses granted to us by the ANA. These rights permit us to use a system of canals that diverts water from major rivers that are fed by melting snow in the Andes Mountains. These licenses generally do not have an expiration date.

Water rights, including licenses, may be terminated by government authorities or courts under certain circumstances, including: (i) waiver by the titleholder; (ii) annulment declared by the ANA of the resolution approving the corresponding permit, authorization and/or license, based on certain infringements of applicable laws and regulations; and (iii) failure to pay applicable water rights fees. Under Peruvian law, authorities may grant temporary water rights, as well as rights for indefinite periods, such as those licenses that have been granted to us as of the date of this prospectus. Our licenses are subject to our compliance with certain customary legal conditions related to the permitted use of the water. For example, Peruvian law requires that water rights must be used efficiently without adversely affecting water quality or the environment, and taking into account uses with a higher order of priority (such as water for food preparation, human direct consumption, agricultural activities and personal hygiene) and preexisting water rights.

Nevertheless, during 2019, we devised a plan to increase our water supply autonomy in Chao (Trujillo) to approximately seven days. This plan will be deployed during the next five years.

In Colombia, we are located in Pereira, where the main source of water is rainfall. Due to the abundance of water resources, we have not contemplated other sources of water in the medium term. In Uruguay, the main sources of water for agricultural use include rainfall, direct access to the Arapey river and a water well. Additionally, since we are located very close to the “Hidroeléctrica Binacional Salto Grande”, which has a large dam, we are contemplating the implementation of dripping systems in 867 hectares during the next two years. In Mexico, our plantations rely heavily on hydroponic methods of cultivation. In Chile, we are the end users of a water supply channel and could experience water shortages due to high temperatures during summer. We have a reservoir with the capacity to hold the water that we use for up to seven days. We could experience water shortages for multiple reasons, including but limited to, climate change, weather pattern shifts and draining of water wells, among others. Water shortages and restrictions on water supply could have a material adverse impact on our ability to grow our products and in turn affect our sales and revenue.

Although we continue to seek alternative sources of water to minimize the risk of any disruption, the available water supply may be adversely affected by shortages or changes in governmental regulations that may reduce the available volumes of water to which we currently have access. We cannot assure you that water will

 

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be available in sufficient quantities or in an adequate quality to meet our water supply needs. In addition, we cannot assure you that our existing licenses related to water rights will be maintained. If our water supply is reduced or the quality of the supply is diminished, this could adversely affect our business, financial condition and operating results. See “Regulatory Environment—Water Supply Law.”

We are subject to certain operating and financial restrictions on our business, including with respect to the declaration and payment of dividends, as a result of current indebtedness.

Certain of our financing arrangements impose, and the terms of our future financial arrangements may impose, operating and financial restrictions on our business. These arrangements contain covenants restricting our and our subsidiaries’ ability to, among other things, incur additional debt, declare an pay dividends, redeem capital stock and make certain investments, transfer and sell assets, enter into agreements that would limit the ability of subsidiaries to pay dividends or make distributions, create liens, effect a consolidation, merger or sale of assets and enter into transactions with affiliates. Additionally, these arrangements contain requirements that we comply with a number of financial covenants, including maintaining certain financial ratios. Events beyond our control may lead us to be unable to comply with these financial ratios, which would negatively affect our ability to declare and pay dividends on our Ordinary Shares, plan for or react to changes in market conditions, take advantage of business opportunities we believe to be desirable, obtain future financing, fund needed capital expenditures, or withstand a continuing or future downturn in our business. Any of these could materially and affect our business, financial condition and operating results. See “Dividend Policy” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations— Liquidity and Capital Resources.”

Environmental regulation may adversely affect our business.

We are subject to a broad range of environmental laws and regulations which require us to incur costs and capital expenditures on an ongoing basis and expose us to substantial liabilities in the event of non-compliance. These laws and regulations apply mainly to our land and processing plants and cover, among other things, emissions into the atmosphere; use of water and water effluents; disposal of solid waste; management, transportation and disposal of hazardous wastes; and other activities incidental to our business. These laws and regulations also require us to obtain and maintain environmental permits, licenses and authorizations for the construction of new facilities or the installation and operation of new equipment required for our activities. Such permits, licenses and authorizations are subject to periodic renewal and/or compliance with different conditions and obligations. In this regard, government environmental agencies have had in the past and could take enforcement actions against us for any failure to comply with applicable laws and regulations. Such enforcement actions have included and could include the imposition of fines, revocation of permits, licenses and authorizations, suspension of operations or imposition of criminal liability for non-compliance.

As of December 31, 2020, the Peruvian government was developing plans to promote the sustainable development of agricultural activity in Peru. The proposed changes will likely include environmental compliance costs. Compliance with new or modified environmental regulations could require us to make significant capital investments in additional pollution controls or process modifications. These expenditures may not be recoverable and may consequently divert funds away from planned investments in a manner that could adversely affect our business, financial condition and operating results. See “Regulatory Environment—Fresh Produce—Environmental Matters.”

Our results are seasonal, and any circumstance that adversely affects our business during high seasons would have a disproportionately significant effect on our annual results of operations and cash flows.

We produce a diverse range of fruits and vegetables, each of which is subject to its own pattern of planting, growth and harvesting. For example, avocados are typically harvested in Peru from April through July, blueberries are typically harvested in Peru from June to March and mangoes are typically harvested in Peru from November through March. We harvest grapes in Peru during the fourth quarter of the year and avocados in

 

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Colombia from September through May. A delay in harvesting of our crops, either by internal or external factors, such as climate condition, may impact our sales revenue reducing sales revenue for the year in which the harvesting was delay and increasing sales revenue for the year in which sales will be performed. We tend to experience high and low periods of sales revenues, which have a corresponding effect on our cash flows, due to the nature of our business as an agricultural company. Any circumstance that adversely affects our business during high seasons would have a disproportionately significant effect on our annual results of operations and cash flows. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Principal factors affecting our results of operations and financial condition—Seasonality.”

The land and processing plants we operate or manage may be temporarily interrupted or suffer loss or damage which may not be covered by our insurance policies.

We may experience property and casualty loss, or the operation of our land or processing plants may be temporarily interrupted, arising from a number of causes, including adverse weather, collision, governmental or regulatory intervention, fire, flood or other natural calamity, mechanical failure, industrial accidents, repair, maintenance or servicing, communal unrest or acts of terrorism and human error. Any prolonged and/or significant disruption of our production facilities, could disrupt and adversely affect our operations and result in direct losses and liabilities, loss of income or increased costs. Further, any major or sustained disruptions in the supply of utilities such as water or electricity may disrupt our operations or damage our production facilities or inventories. We believe that we maintain insurance at reasonable levels and in line with other companies in our industry. However, if any of the above-mentioned or similar events occur, our insurance may not compensate us for all of our losses and our contingency plan may be inadequate. If so, such events could have a material adverse effect on our business, financial condition and operating results.

We are exposed to foreign exchange rate risk.

Management has determined that the functional currency of our principal operating entities is the U.S. dollar. These entities sell their products in international markets to customers in a number of countries, and sales are influenced by a number of currencies. Most operating costs are incurred in Peru but many are invoiced in U.S. dollars and the price of certain raw materials and supplies are influenced by the U.S. dollar. The borrowings and cash balances of these entities are held in U.S. dollars. Management has used its judgment to determine our functional currency, and concluded that the currency that most accurately represents the economic environment and conditions of these entities is the U.S. dollar. We buy and sell our products and services and obtain funding for our working capital and investments mainly in U.S. dollars and Euros. During the year ended December 31, 2019, 36% of our production costs were related to labor, which are largely incurred in soles. During the year ended December 31, 2020, 41.5% of our production costs were related to labor, which are largely incurred in soles. As a result, our financial results are affected by exchange rate fluctuations between the U.S. dollar and the sol. Furthermore, for the years ended December 31, 2019 and 2020, 32.8% and 35.4% of our total sales, respectively, were made to customers in Europe, with such sales being made mainly in Euros. Because our functional currency is the U.S. dollar, our financial results are affected by the exchange rate between the Euro and the U.S. dollar and between those currencies and the Peruvian sol. Fluctuations in exchange rates could have a significant impact on the portion of our costs denominated in soles, or the portion of our sales denominated in Euros, thus affecting our results of operations. For example, an appreciation of the sol against the Euro and/or the U.S. dollar could have a material adverse effect on our margins. We do not carry out a hedging strategy with derivative financial instruments to cover our exchange risk.

During 2019 and 2020 the Peruvian sol depreciated against the U.S. dollar. As a result of the decision to exit the preserved products business, we expect to reduce our sales to Europe, therefore reducing our exposure to fluctuation in the exchange rate between the Euro and the U.S. dollar. Given the relative sizes and maturity stages of the Colombian and Uruguayan operations, we do not expect substantial increases in our foreign exchange risk exposure in the short to medium term.

 

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Our products may be subject to contamination, as a result of which we may be subject to product recalls or other liabilities that could cause us to incur significant additional costs.

The sale of food products for human consumption involves the risk of injury to consumers. We are subject to risks that include, but are not limited to, spoilage, contamination (including, without limitation, the presence of bacteria, pathogens, foreign objects, substances, chemicals, other agents, or residues introduced during the growing, storage, handling or transportation phases), tampering or other adulteration of products, product recalls, governmental regulations and potential product-liability claims. We cannot guarantee that consumption of our products will not cause a health-related illness in the future or that we will not be subject to claims or lawsuits relating to such matters. Any contamination, recall or other such event affecting any of our products could lead to significant harm to our corporate image, business interruption or unforeseen liabilities, each of which could have a material adverse effect on our financial condition and results of operations. Moreover, claims or liabilities of this nature might not be covered by any rights of indemnity or contribution that we may have against others, which could have a material adverse effect on our business, financial condition and operating results.

We are subject to labor risks and a dispute with one or more of our labor unions could have an adverse effect on our results of operations.

Our business is labor intensive, with labor costs constituting a significant portion of the cost of production. During 2020, we employed on average 15,313 production workers and 946 administrative employees. In the 2020 peak months of blueberry harvesting, we employed a total of 12,795 production workers. During 2018, we employed on average 12,168 production workers and 935 administrative employees in all countries in which we operate. During 2019, we employed on average 15,232 production workers and 1,076 administrative employees in all countries in which we operate.

As of December 31, 2020, approximately 7.5% of our employees were covered by collective bargaining agreements with labor unions. A work slowdown, work stoppage, strike or other labor dispute may occur prior to or upon the expiration of our other labor agreements, and we are unable to estimate the adverse effect of any such work slowdown, stoppage or strike or other dispute on our production and sales. Given our high concentration and dependency of labor in specific tasks, work slowdowns, stoppages, strikes or other labor-related developments affecting us, particularly in high seasons, could have an adverse effect on our business, financial condition and operating results.

We require large numbers of workers and future expansion of our operations will require additional workforce, including in regions of Peru where agricultural workers are not readily available. If we are unable to hire, train and retain qualified employees, our business could be harmed and we may be unable to implement our growth plans.

Labor shortages or increases in labor costs could slow our growth or harm our business.

We depend on production workers to harvest our products. During peak harvest times, competition for production workers with our local competitors has steadily increased in the past few years. We have maintained our employees by offering increased salaries and benefits, which we may not be able to do in the future. Additionally, we have benefited from availability of personnel due to the slowdown in other labor-intensive industries such as mining and construction, which could in the future recover and provide additional competition in the labor market. While in the past we have been able to transport laborers from other parts of the country to our operations, such laborers may be unwilling to do so if there is availability of other labor in the areas in which they are located. If we experience labor shortages or increases to our labor costs it could have a material affect our business, financial condition and operating results.

The New Agricultural Law has reduced certain benefits granted to agricultural companies such as Camposol, although certain benefits set forth in the New Agricultural Law, which is in effect since January 1,

 

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2021, are still in place. These benefits mainly include (i) a discounted health insurance contribution (EsSalud) of 7% of the monthly salary until December 31, 2022 (it will be further increased to 8% as of January 1, 2023 and to 9% as of January 1, 2025), (ii) until December 31, 2025, 20% depreciation rate for hydraulic infrastructure, and (iii) a reduced income tax rate of 15% until the end of 2022 (it will be progressively increased up to 2028 when the applicable income tax rate will become 29.5%). However, the New Agricultural Law has also been strongly criticized by employees and employers. We cannot assure that the New Agricultural Law will not be amended, that the new Peruvian Congress will not modify or repeal such law and/or that riots or protests will not arise seeking to further increase labor benefits granted to employees and reduce benefits granted to employers by the New Agricultural Law. Any such changes could affect the continuity of our operations, our business, financial condition and operating results. For more detail see “Regulatory Environment – Agricultural Labor Regime and Incentives for the Agrarian and Irrigation, Agro-Exporter and Agro-industrial Sector Law, Law No. 31110.”

We have a highly-skilled senior management team, as well as other key personnel, and our business may be disrupted if we lose their services.

Our senior management team possesses extensive operating experience and industry knowledge. We rely upon our senior management to set our strategic direction and manage our business, both of which are crucial to our success. Furthermore, our continued success depends upon our ability to attract and retain a large group of experienced professionals. The loss of the services of our senior management, including the recent departure of our former chief executive officer, Mr. Jorge Luis Ramirez Rubio, or our inability to recruit, train or retain a sufficient number of experienced personnel could have an adverse effect on our operations and profitability. Our ability to retain senior management as well as experienced personnel will in part depend on us having in place appropriate staff remuneration and incentive schemes. The remuneration and incentive schemes we have in place may not be sufficient in retaining the services of our experienced personnel, and this could have a material adverse effect on our business.

An increase in our production expenses relating to the cost of packaging materials, fuel, fertilizers, feedstock or crop protection products could reduce our profitability.

Changes in our production expenses have a major impact on our profitability. Other than labor, our main production expenses relate to the cost of packaging materials, fuel, fertilizers and crop-protection products, which represent a significant portion of our cost of production. Changes in the prices of such materials (which may be linked to changes in global commodity prices), as well as general price inflation, may lead to increases in production expenses. Such increases could have a material adverse impact on our profitability. If we are unable to pass on any increases in our raw materials or other production expenses through higher product prices, or if increases in prices of packaging materials, fuel, fertilizer and/or crop protection products impair our ability to package our products in a cost-effective manner or increase or maintain our crop yields, which could have a material adverse effect on our business, financial condition and operating results.

Various diseases, pests and adverse weather conditions could affect quality and quantity of our agricultural products.

Various diseases, pests, fungi, viruses, drought or floods and certain other weather conditions could affect the quality and quantity of our agricultural products, decreasing the supply of our products and negatively impacting profitability. Adverse weather conditions may be exacerbated by the effects of climate change. The effects of adverse weather conditions may reduce yields of our agricultural activities. Additionally, higher than average temperatures and rainfall can contribute to an increased presence of pest and insects that may adversely impact our agricultural production. The occurrence and effects of disease and plagues can be unpredictable and devastating to agricultural products, potentially rendering all or a substantial portion of the affected harvests unsuitable for sale.

 

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Our agricultural products are also susceptible to fungus and bacteria. Even when only a portion of the production is damaged, our results of operations could be adversely affected because all or a substantial portion of the production costs have been incurred. Although some diseases are treatable, the cost of treatment is high, and we cannot assure you that such events in the future will not adversely affect our operating results and financial condition. In recent years, for example, we have been adversely affected by lower crop yields that have resulted from the El Niño and La Niña weather phenomenon. See “—Our operations may be affected by climatic events, such as El Niño and La Niña.” Furthermore, if we fail to control a given plague or disease and our production is threatened, we may be unable to supply our main customers, which could affect our results of operations and financial condition. We cannot guarantee that we will succeed in preventing contamination in existing or future fields or farms we may acquire or build, as applicable. Future government restrictions regarding the use of certain materials used in agricultural production may increase maintenance costs and/or reduce production.

Increasing changes in weather patterns caused by climate change and global warming may negatively affect the cost and production of our products.

Some of our facilities are located near known earthquake fault zones and the occurrence of an earthquake or other catastrophic disaster could cause damage to our facilities and equipment that could require us to cease or curtail operations.

Peru has experienced severe earthquakes in the past that have caused damage to buildings and other infrastructure and have interrupted commerce. The last significant earthquake in Peru took place in August 2007, when a 6.9 (Richter scale) earthquake affected a large area on the Peruvian coast near the region of Ica. Many of our offices and plants are located in Peru and could be materially adversely affected or disrupted by an earthquake or other natural disaster.

Our production and revenues are highly concentrated on blueberries and avocados.

We derive a substantial portion of our revenues from a limited number of products, and we expect these products to continue to account for a large percentage of our revenues in the near term. As of December 31, 2019, blueberries and avocados accounted for 83.8% of our total sales revenue from our operations (61.4% blueberries and 22.4% avocados). For the year ended December 31, 2020, blueberries and avocados accounted for 72.7% of our total sales revenue (50.8% blueberries and 21.9% avocados). A decrease in the global consumption of blueberries and avocados or a material increase in our production costs would substantially affect our revenues. Our ability to maintain and increase net sales from these products depends on factors including, among others: a decline in demand for any of our more significant products, a decline in the average selling price of our more significant products, failure of our products to achieve continued market acceptance, availability of competitive products at the “off-season” windows we sell our products and changing preferences of consumers. A decrease in the sales or prices for any these products could have a material adverse effect on our business, financial condition and operating results.

We are subject to legal and regulatory proceedings.

We are subject to a variety of legal and regulatory proceedings and legal compliance risks. We, our representatives, and the business in which we operate are at times subject to review or investigation by regulators and other governmental authorities, which could lead to enforcement actions, fines and penalties or the assertion of private litigation, claims and damages.

We have adopted risk management and compliance programs which are evaluated and updated on an annual basis: an Entity-wide Risk Matrix (with the support of our Internal Audit area) and an Environmental Legal Compliance Matrix (within our Legal area). The global and diverse nature of our operations means that legal, regulatory and compliance risks will continue to exist and additional legal and regulatory proceedings and other

 

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contingencies, the outcome of which cannot be predicted with certainty, will arise from time to time. These could have an adverse effect on our production and ultimately on our revenue.

Legal and/or regulatory proceedings initiated against us, even those without merit and/or ultimately decided in our favor, may affect our reputation and business standing. See “Business—Legal Proceedings.”

Our customer concentration may adversely affect our business, financial condition and results of operations.

We are subject to customer concentration risk as a result of five customers representing a significant amount of our revenues. Costco, Walmart, OGL, ALDI and Edeka accounted for approximately 12%, 10%, 9%, 7% and 4%, respectively, of our revenues for the fiscal year ended December 31, 2020. No other direct or wholesale customers accounted for more than 4% of our revenues in the year ended December 31, 2020. Our loss of these companies as a customer or a reduction in the number of purchases from them could have a significant adverse impact on our business, financial condition and operating results.

Investment in acquisition of new land for planting of our products may not be successful and may present risks to our current and future business operations.

We have previously invested in expanding our cultivated land and landholdings to produce more blueberries and avocados. These expansion projects are subject to a number of risks. Such risks include disruption of our ongoing business, potential overpayment for the acquired assets required for the expansion, inability to gain comparable return on new investment operations and difficulties in staffing our expanding operations.

If demand declines and we have increased the size of our blueberry business without experiencing an increase in sales of our blueberries, we will experience reductions in our gross and operating margins and net profit. If we are unable to effectively manage our expanding blueberry business, our expenses may increase more than expected, our revenues could decline or grow more slowly than expected and we may be unable to implement our business strategy, which could materially affect our business, financial condition and operating results.

Entering new markets poses new competitive threats and commercial risks.

We expanded in 2017 into China by opening a commercial office in order to market and sell our products directly to retailers, instead of through third parties or wholesalers. We are also analyzing expansion into new markets. Expanding into new markets requires investments and resources that may not be available as needed. We cannot guarantee that we will be successful in leveraging our capabilities to compete favorably in any new market we enter or that we will be able to recoup our significant investments in our expansion projects into new markets. Operating in an increasing number of markets, each with its own unique consumer preferences and business climates, presents additional challenges that we must meet. We may not compete successfully against future potential competitors, especially those with significantly greater financial resources or brand name recognition in any new market we enter. Our products may not gain consumer acceptance and we may experience difficulties, delays and/or unanticipated costs due to our inexperience in working directly in the new markets we enter. There may be regulatory differences between the markets that we currently operate in and any other new markets we enter, further increasing compliance costs. Our failure to adapt to new regulatory regimes has resulted and may result in our failure to comply with government policies and regulations and enforcement actions against us. Further, in emerging markets, such as Mexico or Chile, our ability to operate successfully depends in part on economic, social and political conditions, such as economic crises, currency inflation, political instability or social protests in these new markets. If we experience any of these issues in entering any new market we may enter in the future, our business, financial condition and operating results could be materially affected.

 

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We are subject to transportation risks.

An extended interruption in our ability to ship or distribute our products could have a material adverse effect on our business, financial position and operating results. We rely on third-party stevedores to load and unload our products at our port locations and third-party trucking companies to transport our products to and from our port locations, and these third parties are therefore a source of transportation risk. If we were to experience an interruption due to a strike, natural disaster or otherwise, we cannot assure that we would be able to find alternative transportation, or be successful in doing so, in a timely and cost-effective manner, which could have a material adverse effect on our business, financial condition and operating result.

We may have limited liquidity and we may not be able to generate sufficient cash flow to service our indebtedness.

As of December 31, 2020, our liquidity relied on cash and cash equivalents on hand of U.S.$34.0 million and our outstanding indebtedness was U.S.$474.4 million, compared to U.S.$27.8 million and U.S.$422.9 million, respectively, as of December 31, 2019. If we are unable to generate sufficient cash from operations for a prolonged period, we have limited liquidity and we may not be able to generate sufficient cash flow to meet our obligations. We finance our working capital and operating needs using a combination of our cash and cash equivalents balance, cash generated from operations, and as needed, the borrowings available from our credit agreements. Adverse climatic conditions could result in diminished, or even negative, cash flow from operations. The most common stress on our operating cash flow generation in past years has come from shortfalls of working capital. Since our operating cash flow generation depends on both our operating fields and substantially on our young fields, as our young fields represent a higher percentage of our total fields, we tend to experience high and low periods of sales revenues, which have a corresponding effect on our liquidity position. See “—Our results are seasonal, and any circumstance that adversely affects our business during high seasons would have a disproportionately significant effect on our annual results of operations and cash flows” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Seasonality.” Other risks and uncertainties that could impact our liquidity include our worldwide sales, our profit margin, our ability to respond to changes in consumer preferences, our ability to collect our receivables in a timely manner, our ability to effectively manage our inventories, unexpected changes in weather conditions and our ability to adapt to change in the regulatory environment, among others. For a description of our indebtedness, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.”

Furthermore, we may require additional cash resources due to changed business conditions or other future developments, including any investments or acquisitions we may decide to pursue. If our existing sources of liquidity are insufficient to satisfy our cash requirements, we may seek to borrow under our existing borrowing arrangements, seek new borrowing arrangements, or sell additional debt or equity securities. The incurrence of additional indebtedness would result in additional debt service obligations, could result in operating and financial covenants that would restrict our operations, and could cause us to further encumber our assets. In addition, there can be no assurance that any additional financing will be available on acceptable terms, if at all. The failure to generate sufficient cash flow or to achieve any of these alternatives could significantly adversely affect our ability to service our indebtedness, including Camposol’s Senior Notes due 2027. Also, our or Camposol’s inability to comply with all our applicable covenants under Camposol’s Senior Notes due 2027 may restrict our alternatives to obtain new indebtedness and negatively affect our liquidity.

We may experience difficulties in managing our Corporate Reorganization activities and the final outcome may not be as effective as anticipated. Further, potential income tax and dividend tax benefits may not materialize and, if they do, might be lost.

In 2019, our corporate family began implementing a Corporate Reorganization in order to improve business efficiencies and promote growth and investment. For the purpose of segregating Camposol Holding PLC’s

 

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agricultural business (Camposol S.A. and related subsidiaries) from the shrimp farming business (Marinasol S.A.), on October 22, 2019, the Company was incorporated as a limited company under Cyprus law as Csol Holding LTD. On February 17, 2021, the Company held a shareholders meeting approving its conversion from a limited company to a public company under the name Csol Holding PLC. On March 30, 2021, the Company held a shareholders meeting approving the change of its name from Csol Holding to Camposol Holding PLC. Through a series of capital stock increases and spin-offs, all of the operating companies related to Camposol’s agribusiness including Camposol S.A. were transferred to the Company.

Once the Corporate Reorganization is complete, the planned supply chain structure will consist of our productive and growing subsidiaries in Peru, Colombia, Uruguay, Chile and Mexico, supplying our products to our trading entities in Switzerland and well as through Camposol Switzerland GmbH’s branch in Costa Rica. Our trading subsidiaries including Camposol Switzerland GmbH’s branches and Camposol Trading Switzerland will then commercialize our products to our distribution entities such as Camposol Fresh U.S.A., Inc., Camposol Foods Trading (Shanghai) Co. Ltd., Camposol Trade España S.L. and Camposol Fresh B.V., among others. Finally, our distribution entities will supply our products to our global costumers. Camposol Switzerland GmbH’s branches will also supply products directly to our retail customers.

The standard income tax rate applicable to our Peruvian subsidiaries ranged between 29.5% and 15% for 2019 and 2020. The New Agricultural Law will progressively increase the minimum income tax rate to a single minimum tax rate of 29.5% in 2028. The standard income tax rate applicable to non-Peruvian subsidiaries ranged between 33% and 25%.

Under the new Corporate Reorganization and through the operations of Camposol Switzerland GmbH, we might be able to obtain a reduced income tax rate on profits allocated to the foreign operational branches of Camposol Switzerland GmbH. The profits allocable to the Swiss head office would be subject to a tax close to 12%. This applicable tax rate may change and is in no way a guarantee. The tax rate is also subject to Swiss, Costa Rica and Cyprus governmental approvals and revisions, as well as authorizations and applicable tax regimes at the level of the operational branches and as such is subject to multiple uncertainties and thus change.

Under the Swiss Withholding Tax Act, dividend distributions made by a Swiss corporation are subject to Swiss withholding tax of 35% unless the dividend is paid out of qualifying capital contribution reserves. Foreign recipients of a dividend paid by a Swiss corporation may claim a partial or full refund of the Swiss withholding tax based on a double tax treaty or the Switzerland-EU agreement. Under specific tax considerations relating to the Swiss withholding tax, Camposol Switzerland GmbH’s direct shareholder, Camposol Cyprus Limited, may be eligible to claim relief pursuant to the double taxation treaty in force between Switzerland and Cyprus. Consequently, the Swiss withholding tax on dividend distributions from Camposol Switzerland GmbH may be reduced to 0% if certain specific conditions are met. There is no guarantee that we and our subsidiaries will be able to meet the tax requirements of the jurisdictions in which we are taxed.

We may not realize, in full or in part, the anticipated benefits, savings and improvements in our cost structure from our Corporate Reorganization efforts due to unforeseen difficulties, delays or unexpected costs. Furthermore, our Corporate Reorganization plan may be disruptive to our operations. If we are unable to realize the expected operational efficiencies and cost savings from the Corporate Reorganization, our operating results, which include net product revenue and financial condition would be adversely affected. There can be no assurance that we will be successful in implementing our Corporate Reorganization program. Future growth would impose significant added responsibilities on members of management, including the need to identify, recruit, maintain and integrate additional employees. Our future financial performance will depend, in part, on our ability to effectively manage any future growth or Corporate Reorganization. We may not be able to comply the applicable tax regulations, including those in Switzerland and Cyprus, that would give us and our subsidiaries tax relief. Other potential changes to global legislation potentially can adversely affect the benefits of the Corporate Restructuring anticipated above.

 

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Risks Related to Latin American Countries in which we Operate

The economic effects in Latin America and around the world of the outbreak and economic shutdown caused by the COVID-19 pandemic is adversely affecting the economies in which we produce and those to where we sell our productivity, and the impact could be material.

The outbreak of the COVID-19 pandemic is currently having an indeterminable adverse impact on the world economy. COVID-19 was reportedly first detected in Wuhan, Hubei Province, China, and first reported to the World Health Organization (“WHO”) country office in China on December 31, 2019. On January 30, 2020, the WHO declared COVID-19 a public health emergency of international concern and on March 11, 2020 declared the outbreak a pandemic. COVID-19 has begun to have numerous worldwide effects on general commercial activity. Many of the main trading partners of Latin American countries, such as China, the European Union, the United Kingdom and the United States, among others, have undertaken various public health measures to control the spread of COVID-19 including mandatory quarantines, forced economic shutdowns and travel restrictions, as well as economic measures to mitigate the impacts of such public health policies on their respective national economy. For instance, in Peru, where a significant part of our operations are located, during the initial months of the pandemic, our ability to transport workers to our production lands was limited to 50% due to sanitary protocols mandated by the government of Peru. This measure increased our transportation cost for around four months, until the Peruvian government raised the occupancy rate to 100%.

Peru, Colombia, Uruguay, Mexico and Chile all experienced severe economic downturns during 2020, mainly due to the economic and public health crisis caused by COVID-19 and related economic shutdown. This in turn has caused increased social and political tensions and high levels of poverty and unemployment. Future government policies to preempt or respond to social unrest could include, among other things, expropriation, nationalization, suspension of the enforcement of creditors’ rights and new taxation policies. These policies could adversely and materially affect the economies of these countries and our business.

Economic and political developments in Latin American could affect our business, financial condition and results of operations.

The vast majority of our production operations are conducted in Peru, Colombia, Uruguay, Mexico and Chile and are dependent upon the performance of these economies. As a result, our business, financial condition and results of operations may be affected by the general conditions of these economies, price instability, inflation, interest rates, regulation, taxation, social instability, political unrest and other developments in or affecting Peru, Colombia, Uruguay, Mexico and Chile, over which we have no control. In the past, these countries have experienced periods of weak economic activity and deterioration in economic conditions. If such conditions return, they may have a material and adverse effect on our business, financial condition or results of operations.

During the past several decades, Peru, Colombia and Mexico have experienced political instability that has included a succession of regimes with differing economic policies. In some instances, governments have imposed controls on prices, exchange rates, local and foreign investment and international trade, restricted the ability of companies to dismiss employees, expropriated private sector assets and prohibited the remittance of profits to foreign investors. We cannot assure you that these governments will continue to pursue open market economic policies that are designed to foster and stimulate economic growth and social stability.

During the past several decades Peru, Colombia and Mexico experienced severe terrorist activity targeted against, among others, the government and the private sector. Despite the suppression of terrorist activity, we cannot assure you that a resurgence of terrorism in these countries will not occur, or that if there is resurgence, it will not disrupt the economy and our business. In addition, Peru, Colombia, Mexico and Chile have, from time to time, experienced social and political turmoil, including riots, nationwide protests, strikes and street demonstrations. Despite these countries’ economic growth and stabilization prior to the economic crisis caused by the COVID-19 pandemic, social and political tensions and high levels of poverty and unemployment continue.

 

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Future government policies to preempt or respond to social unrest could include, among other things, expropriation, nationalization, suspension of the enforcement of creditors’ rights and new taxation policies. These policies could adversely and materially affect the economies of these countries and our business.

On April 11, 2021, the first round of presidential elections were held in Peru. Pedro Castillo with approximately 19.1% of the votes and Keiko Fujimori with approximately 13.3% of the votes advanced to a run-off election to be held on June 6, 2021. Throughout the campaign, the leading candidate, Pedro Castillo, has stated that if elected he would seek a new political constitution that would change the economic model of Peru. During the Presidential campaign, Mr. Castillo has advocated for a state run economy. Any changes in the economies of Peru, Colombia, Uruguay, Mexico and Chile or an increase in political instability may have a negative effect on our business, financial condition and operating results.

The implementation of certain laws by the governments of Latin American countries, most notably restrictive exchange rate policies, could have an adverse effect on our business, financial condition and results of operations.

In the past few decades, the Peruvian and Colombian economies have undergone a major transformation from a highly protected and regulated system to a relatively free-market economy. During this period, protectionist and interventionist laws and policies have been gradually dismantled to create a liberal economy dominated by private sector and market forces. According to the United Nations Economic Commission for Latin America and the Caribbean, the per capita GDP of Latin America and the Caribbean contracted by 4.0% between 2014 and 2019, with an expected regional growth of 1.3% in 2020.

The governments of the countries in which we operate may institute restrictive exchange rate policies in the future. Any such restrictive exchange rate policy could affect our ability to access foreign currency or to engage in foreign exchange activities and make payments on debt instruments in U.S. dollars, and could also have a material adverse effect on our business, financial condition and operating results.

Changes to agricultural regulations could adversely affect the industry

Our agricultural operations qualify for certain tax benefits in certain jurisdictions. We cannot assure you that in the future the provisions set forth in the regulations that are favorable to us will not be amended with less favorable provisions and in turn affect the profitability of our operations.

The economies of the countries in which we currently operate could be adversely affected by economic developments in other Latin American countries or global markets.

Financial and securities markets in Peru, Colombia, Uruguay, Mexico and Chile are influenced, to varying degrees, by economic and market conditions in Latin American and global markets. Although economic conditions vary from country to country, investors’ perceptions of the events occurring in one country may substantially affect capital flows into and securities from issuers in other countries. The economies of the countries in which operate have been adversely affected by the political and economic events that occurred in several emerging economies in the 1990s, including in Mexico in 1994, which impacted the market value of securities in many markets throughout Latin America. The crisis in the Asian markets beginning in 1997 also negatively affected markets throughout Latin America. Similar adverse consequences resulted from the economic crisis in Russia in 1998, the Brazilian devaluation in 1999 and the Argentine crisis in 2001. In addition, these economies continue to be affected by events in the economies of their major regional partners. Furthermore, these economies may be affected by events in developed economies that are trading partners or that affect the global economy. During the global economic and financial crisis, global conditions led to a slowdown in economic growth in several countries in Latin America. In particular, the Peruvian economy suffered the effects of lower commodity prices in the international markets, a decrease in export volumes and a decrease in foreign direct investment inflows resulting in a decline in foreign reserves.

 

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Adverse developments in regional or global markets in the future could adversely affect the economies of the countries in which we operate and, as a result, adversely affect our business, financial condition and results of operations. The 2008 global economic crisis, principally driven by the sub-prime mortgage market in the United States, significantly affected the international financial system, including that of Latin America’s securities market and economy. Additionally, the economic crisis in Europe, beginning with the financial crises in Greece, Spain, Italy and Portugal, reduced the confidence of foreign investors, which caused volatility in the securities markets and affected the ability of companies to obtain financing in the global capital markets. Moreover, the fiscal problems in the United States due to difficulties and delays in increasing the government debt ceiling, culminating in the downgrade of the U.S. long-term sovereign credit rating by Standard & Poor’s on August 6, 2011, has added to an already high risk-avert environment. Further, in 2015, the global economy was negatively affected by China’s economic slowdown, a factor that has affected growth across emerging markets. Global markets have also experience increased volatility in the last few years due to increased tariffs being imposed by the United States and other large economies. Although the United States and Europe have witnessed a slight economic recovery over the last few years, any interruption to the recovery of these or other developed economies, the continued effects of the global crisis in 2008 and 2009, a new economic and/or financial crisis, including as a result of the COVID-19 Pandemic, uncertainty surrounding the implementation and effect of the exit of the United Kingdom of Great Britain and Northern Ireland from the European Union, which could result in economic volatility, or the projected reduced growth of the Chinese economy and its shift away from infrastructure development growth could affect Latin American economies and, consequently, materially adversely affect our business, financial condition and operating results.

The laws of certain Latin American countries include anti-bribery and anti-corruption legislation which could be less stringent than that of other jurisdictions, and our risk management and internal controls may not be successful in preventing or detecting all violations of law or of company-wide policies.

Our business is subject to a significant number of laws, rules and regulations, including those relating to anti-bribery and anti-corruption. The regulatory regime of certain Latin American countries include anti-bribery and anti-corruption legislation which is currently under development and which could be less stringent than anti-bribery and anti-corruption legislation which has been implemented in other jurisdictions.

Our existing compliance processes and internal control systems may not be sufficient to prevent or detect all inappropriate practices, fraud or violations of law by our employees, contractors, agents, officers or any other persons who conduct business with or on behalf of us. We may in the future discover instances in which we have failed to comply with applicable laws and regulations or internal controls. If any of our employees, contractors, agents, officers or other persons with whom we conduct business engage in fraudulent, corrupt or other improper or unethical business practices or otherwise violate applicable laws, regulations or our own internal compliance systems, we could become subject to one or more enforcement actions by local or foreign authorities (including the U.S. Department of Justice) or otherwise be found to be in violation of such laws, which may result in penalties, fines and sanctions and in turn adversely affect our reputation, business, financial condition and operating results.

Inflation could adversely affect our financial condition and results of operations.

Inflationary pressures may also curtail our ability to access foreign financial markets and may lead to further government intervention in the economy, including the introduction of government policies that may adversely affect the overall performance of the economies of the countries in which we operate. Our operating results may be adversely affected by higher inflation. If the countries in Latin America in which we operate experience substantial inflation in the future, our costs may increase and our operating and net margins may decrease, which may adversely affect our business, financial condition and operating results.

 

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Market volatility generated by distortions in the international financial markets may affect the Latin American capital markets.

Volatility in the international markets could adversely affect capital markets in Latin America. In addition, international investors’ reactions to events occurring in one market sometimes demonstrate a “contagion” effect in which an entire region or class of investment is disfavored by international investors. The economy of Latin America and its capital markets could be adversely affected by negative economic or financial developments in other countries. Because we will register the Ordinary Shares in the Peruvian Public Registry of the Capital Markets (Registro Público del Mercado de Valores) under the Institutional Investors Market Section managed by the SMV, and list them on the LSE, adverse effects on the Peruvian capital markets could have a material adverse effect on the price of our Ordinary Shares and our business, financial condition and operating results.

Changes in tax laws may increase our tax burden and, as a result, negatively affect our profitability.

Peru, Colombia, Uruguay, Mexico and Chile may adopt new tax laws or modify existing laws to increase taxes and/or eliminate certain tax benefits applicable to our business. These changes may include modifications in the rate of assessments and, on occasion, enactment of temporary taxes. For example, a decrease in the rate of drawback (benefit to recover import or custom duties previously paid on our fruit and vegetable operations) may affect our financial performance.

These countries may impose new taxes or increase taxes in the agro-industry business or cease favorable tax treatment for the agricultural industry. The imposition of new taxes or increases on the rates of existing taxes could negatively affect our overall financial performance.

In Peru, the reduced income tax rate of 15% applicable to individuals or legal entities cultivating land, such as Camposol, has been increased according to the New Agricultural Law. We cannot assure that the New Agricultural Law will not be amended and/or that the new Peruvian Congress will not modify or repeal such law increasing Camposol’s tax burden. Any such changes could affect the results of our operations, our business, financial condition and operating results.

Risks Relating to this Offering

Our share price is likely to be volatile and the market price of our Ordinary Shares after this Offering may drop below the price you pay.

You should consider an investment in our Ordinary Shares as risky and invest only if you can withstand a significant loss and wide fluctuations in the market value of your investment. You may be unable to sell your Ordinary Shares at or above the offering price due to fluctuations in the market price of our Ordinary Shares arising from changes in, among others, our operating performance, prospects or market perception. In addition, the stock market has recently experienced significant volatility, particularly with respect to agro-industrial, biotechnology and other life sciences company stocks. The volatility of agro-industrial, biotechnology and other life sciences company stocks often does not relate to the operating performance of the companies represented by the stock. Some of the factors that may cause the market price of our Ordinary Shares to fluctuate or decrease below the price paid in this Offering include:

 

   

issues in developing our product candidates or future approved products;

 

   

regulatory developments or enforcement in Peru, the United States and foreign countries with respect to our products or our competitors’ products;

 

   

existing competition or new competition that may emerge;

 

   

introduction of technological innovations or new commercial products by us or our competitors;

 

   

changes in estimates or recommendations by securities analysts, if any cover our Ordinary Shares;

 

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fluctuations in the valuation of companies perceived by investors to be comparable to us;

 

   

public concern over our products;

 

   

litigation;

 

   

future sales of our Ordinary Shares;

 

   

share price and volume fluctuations attributable to inconsistent trading volume levels of our Ordinary Shares;

 

   

economic and other external factors or other disasters or crises;

 

   

general market conditions and market conditions for stocks in our industry;

 

   

overall fluctuations in U.S. equity markets; and

 

   

other factors that may be unanticipated or out of our control.

In addition, in the past, when the market price of a stock has been volatile, holders of that stock have instituted securities litigation against the company that issued the stock. If any of our shareholders brought a lawsuit against us, we could incur substantial costs defending the lawsuit and divert the time and attention of our management, which could seriously harm our business.

An active trading market for our Ordinary Shares may not be sustained.

There is currently no public market for our Ordinary Shares. Although we intend to apply to list our Ordinary Shares on the NYSE and the LSE, an active trading market for our Ordinary Shares may not develop or be sustained. If an active market for our Ordinary Shares does not develop or, once developed, is not sustained, it may be difficult for our shareholders to sell their Ordinary Shares without depressing the market price for the shares or sell their Ordinary Shares at or above the prices at which they acquired their Ordinary Shares or sell their Ordinary Shares at the time they would like to sell. The offering price of our Ordinary Shares will be determined through negotiations between us, the Selling Shareholders and the underwriters. The offering price may not be indicative of the market price of our Ordinary Shares after the offering. Any inactive trading market for our Ordinary Shares may also impair our ability to raise capital to continue to fund our operations by selling Ordinary Shares and may impair our ability to expand our business by using our Ordinary Shares as consideration.

Substantial future sales of our Ordinary Shares, or the perception that these sales could occur, may cause the price of our Ordinary Shares to drop significantly, even if our business is performing well.

A large volume of sales of our Ordinary Shares could decrease the prevailing market price of our Ordinary Shares and could impair our ability to raise additional capital through the sale of equity securities in the future. Even if a substantial number of sales of our Ordinary Shares does not occur, the mere perception of the possibility of these sales could depress the market price of our Ordinary Shares and have a negative effect on our ability to raise capital in the future.

We are an “Emerging Growth Company” and we cannot be certain whether the reduced requirements applicable to emerging growth companies will make our Ordinary Shares less attractive to investors.

We are an “Emerging Growth Company,” as defined in the Jumpstart Our Business Startups Act of 2012 effective on April 5, 2012, or the JOBS Act, and we may take advantage of certain exemptions from various requirements that are applicable to other public companies that are not “emerging growth companies.” Most of these requirements relate to disclosures that we would only be required to make if we cease to be a foreign private issuer in the future. Nevertheless, as a foreign private issuer that is an Emerging Growth Company, we will not be required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley

 

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Act for potentially up to five fiscal years after the date of this Offering. We will remain an Emerging Growth Company until the earliest of (a) the last day of our fiscal year during which we have total annual gross revenues of at least U.S.$1.07 billion; (b) the last day of our fiscal year following the fifth anniversary of the completion of this Offering; (c) the date on which we have, during the previous three-year period, issued more than U.S.$1.07 billion in non-convertible debt; or (d) the date on which we are deemed to be a “Large Accelerated Filer” under the Exchange Act. When we are no longer deemed to be an Emerging Growth Company, we will not be entitled to the exemptions provided in the JOBS Act discussed above. We cannot predict if investors will find our Ordinary Shares less attractive as a result of our reliance on exemptions under the JOBS Act. If some investors find our Ordinary Shares less attractive as a result, there may be a less active trading market for our Ordinary Shares and our Ordinary Shares price may be more volatile.

If we are unable to implement and maintain effective internal control over financial reporting in the future, or if we fail to promptly remediate our possible material weaknesses, our results of operations and the price of our shares could be adversely affected.

As an EGC and pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, beginning with our Annual Report on Form 20-F for the year ending December 31, 2022, our management will be required to report on the effectiveness of our internal control over financial reporting. The rules governing the standards that must be met for management to assess our internal control over financial reporting are complex and require significant documentation, testing and possible remediation. We have not yet made a formal assessment of the effectiveness of our internal control over financial reporting for that purpose. Also, once we no longer qualify as an EGC the independent registered public accounting firm that audits our financial statements will also be required to audit our internal control over financial reporting. Any delays or difficulty in satisfying these requirements could adversely affect our future results of operations and the price of our shares. Moreover, it may cost us more than we expect to comply with these control- and procedure-related requirements. Failure to comply with Section 404 or to implement required new or improved controls, or difficulties encountered in their implementation, could harm our operating results or cause us to fail to meet our reporting obligations could potentially result in a loss in investor confidence in our reported financial information and subject us to sanctions or investigations by regulatory authorities.

We are in the process of implementing measures designed to improve our internal control over financial reporting and to remediate potential control deficiencies, including performing a Sarbanes-Oxley compliance risk assessment process on a regular basis to identify, design, implement, and reevaluate our control activities related to internal control over financial reporting. We cannot assure you that the measures we have taken to date, and actions we may take in the future, will be sufficient to prevent control deficiencies that could lead to material weaknesses in our internal control over financial reporting. In addition, neither our management nor an independent registered public accounting firm has performed an evaluation of our internal control over financial reporting in accordance with the provisions of the Sarbanes-Oxley Act because no such evaluation has been required. Had we or our independent registered public accounting firm performed an evaluation of our internal control over financial reporting in accordance with the provisions of the Sarbanes-Oxley Act, material weaknesses may have been identified. If we are unable to successfully remediate any future material weaknesses in our internal control over financial reporting, the accuracy and timing of our financial reporting may be adversely affected, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting, and our share price may decline as a result.

We will incur significant increased costs as a result of operating as a public company, and our management will be required to devote substantial time to corporate governance standards.

As a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company. In addition, our administrative staff will be required to perform additional tasks. For example, in anticipation of becoming a public company, we will need to adopt additional internal controls and disclosure

 

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controls and procedures and retain a transfer agent. As a public company, we will bear all of the internal and external costs of preparing and distributing periodic public reports in compliance with our obligations under the securities laws.

In addition, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act and the related rules and regulations implemented by the SEC and the NYSE will increase our legal and financial compliance costs and will make some compliance activities more time consuming. We are currently evaluating these rules and cannot predict or estimate the amount of additional costs we may incur or the timing of such costs. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment will result in increased general and administrative expenses and may divert management’s time and attention from our other business activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to practice, regulatory authorities may initiate legal proceedings against us and our business may be harmed. In the future, it may be more expensive or more difficult for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified members of our Board of Directors, particularly to serve on our Audit, Internal Control and Risks Committee and Governance, Compensation and Social Responsibility Committee, and qualified executive officers.

Under the corporate governance standards of the SEC, each member of our Audit Committee must be an independent director no later than the first anniversary of the completion of this Offering. We may encounter difficulty in attracting qualified persons to serve on our Board of Directors and the Audit, Internal Control and Risks Committee, and our Board of Directors and management may be required to divert significant time and attention and resources away from our business to identify qualified directors. If we fail to attract and retain the required number of independent directors, we may be subject to the delisting of our Ordinary Shares from the NYSE and subsequently from the LSE.

We will be a “foreign private issuer” and our disclosure obligations will be different from those of U.S. domestic reporting companies. As a foreign private issuer, we will be subject to different U.S. securities laws and rules than a domestic U.S. issuer, which could limit the information publicly available to our shareholders.

As a “foreign private issuer”, we will be subject to reporting obligations that, in certain respects, are less detailed and less frequent than those of U.S. domestic reporting companies. For example, we will not be required to issue quarterly reports, proxy statements that comply with the requirements applicable to U.S. domestic reporting companies or individual executive compensation information that is as detailed as that required of U.S. domestic reporting companies. We will also have four months after the end of each fiscal year to file our annual report (on Form 20-F) with the SEC and will not be required to file current reports like U.S. domestic reporting companies. Furthermore, our officers, directors and principal shareholders will be exempt from the insider reporting and short-swing profit recovery requirements in Section 16 of the Exchange Act. Accordingly, our shareholders may not know when our officers, directors and principal shareholders purchase or sell their Ordinary Shares. As a foreign private issuer, we will also exempt from the requirements of Regulation FD (Fair Disclosure), which, generally, are meant to ensure that select groups of investors are not privy to specific information about an issuer before other investors. As a result of such varied reporting obligations, shareholders should not expect to receive the same information at the same time as information provided by U.S. domestic companies.

In addition, as a foreign private issuer, we will have the option to follow certain corporate governance practices of the country in which we are incorporated, rather than those of the United States, except to the extent that such laws would be contrary to U.S. securities laws, provided that we disclose the requirements we are not following and describe the practices we follow instead. We are currently incorporated in Cyprus. As a result, our shareholders may not have the same protections afforded to shareholders of companies that are subject to all domestic U.S. corporate governance requirements.

 

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If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our share price and trading volume could decline.

The trading market for our Ordinary Shares will depend on the research and reports that securities or industry analysts publish about us or our business. We do not have any control over these analysts. We cannot assure you that analysts will cover us or provide favorable coverage. If one or more of the analysts who cover us downgrade our stock or change their opinion of our Ordinary Shares, our share price would likely decline. If one or more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline.

Insiders have substantial control over us which could delay or prevent a change in corporate control or result in the entrenchment of management or the Board of Directors.

After this Offering, certain of our directors, executive officers and principal shareholders, together with their affiliates and related persons, will beneficially own, in the aggregate, approximately % of our outstanding Ordinary Shares. As a result, these shareholders, if acting together, may have the ability to determine the outcome of matters submitted to our shareholders for approval, including the election and removal of directors and any merger, or sale of all or substantially all of our assets. In addition, these persons, acting together, may have the ability to control the management and affairs of our company. Accordingly, this concentration of ownership may harm the market price of our Ordinary Shares by:

 

   

delaying, deferring, or preventing a change in control;

 

   

entrenching our management or the Board of Directors;

 

   

impeding a merger, takeover, or other business combination involving us; or

 

   

discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of us.

Our controlling shareholders will continue to have significant influence over us after this Offering, and their interests could conflict with yours.

Upon the consummation of the Offering, Samuel, Piero and Sheyla Dyer Coriat, our controlling shareholders, will jointly own approximately % of our outstanding Ordinary Shares (assuming no exercise of the overallotment option). As such, our controlling shareholders have the ability to determine the outcome of substantially all matters submitted for a vote to our shareholders and thus exercise control over our business policies and affairs, including, among others, the following:

 

   

the composition of our Board of Directors and, consequently, determinations of our board with respect to our business direction and policy, including the appointment and removal of our executive officers;

 

   

determination with respect to mergers, other business combinations and other transactions, including those that may result in a change of control;

 

   

whether dividends are paid or other distributions are made and the amount of such dividends or distributions;

 

   

whether we decide that our subsidiaries pay dividends or make other distributions to us and the amount of such dividends or distributions;

 

   

sales and dispositions of assets; and

 

   

the amount of debt financing that we may incur.

Our controlling shareholder may direct us to take actions that could be contrary to your interests and may be able to prevent other shareholders, including you, from blocking these actions or from causing different actions

 

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to be taken. We currently pay approximately U.S.$1.5 million to a related party of our controlling shareholder for strategic advisory services. We cannot assure you that our controlling shareholder will act in a manner consistent with your best interests.

Changes to U.S. federal income tax rules and regulations could have material U.S. federal income tax consequences for the Company and the shareholders.

Future legislation, regulations, rulings or other authority with respect to U.S. federal income taxes could affect the U.S. federal income tax treatment of the Company and the shareholders. Prospective investors should consult their tax advisors regarding the potential effect of such changes on the U.S. federal income tax treatment of the Company and their investment in the Company.

We may not be able to obtain timely authorizations for this initial public offering in Uruguay, a jurisdiction in which one of our subsidiaries operates.

Under applicable local regulations, non-Uruguayan owned entities that own agricultural land in Uruguay are required to submit an authorization application to the Uruguayan government requesting approval of any changes in its ownership structure. Our Uruguayan subsidiary, Camposol Uruguay S.R.L., has been unable to submit this application to the Uruguayan authorities due to the closure of the pertinent office within the Ministry of Cattle, Agriculture and Fisheries of Uruguay. The pertinent office has closed as part of a nationwide shutdown aimed at mitigating an increase in deaths, hospitalizations and infections caused by the COVID-19 virus. Camposol Uruguay S.R.L.’s failure to submit and obtain the approval for our initial public offering prior to the settlement of the transaction would constitute a breach of applicable regulations in Uruguay. Camposol Uruguay S.R.L. may be subject to sanctions by the Uruguayan authorities, including being precluded from acquiring or developing new rural lands in Uruguay, and may face delays or additional scrutiny in administrative and regulatory processes with such authorities.

Our capital expenditure program for 2021 includes a U.S.$10.3 million investment in our Uruguayan fields aimed mainly at implementing and improving irrigation equipment and cropping our plants. Any delay or failure in obtaining the appropriate approvals under Uruguayan law may negatively impact the growth strategy of our Uruguayan operations, which may adversely affect our production of tangerines in Uruguay. Our ability to expand and implement our capital expenditure program in Uruguay may also be adversely affected.

Risks Related to Cyprus Law

The rights of our shareholders are governed by Cyprus law and our articles of association, and differ in some important respects from the typical rights of shareholders under U.S. state laws.

Our corporate affairs are governed by our articles of association and by the laws governing companies incorporated in Cyprus. The rights of our shareholders and the responsibilities of members of our Board of Directors under Cyprus law and our articles of association are different than under the laws of some U.S. state laws. For example, by law existing holders of shares in Cypriot public companies are entitled to pre-emptive rights on the issue of new shares in that company (provided such shares are paid in cash and the pre-emption rights have not been disapplied). The pre-emptive rights, however, may be disapplied by our shareholders at a general meeting for a period of five years.

You will not be able to benefit from certain anti-takeover protections.

As we are incorporated in Cyprus, we are subject to Cypriot law. As of the date of this prospectus, Cypriot law does not contain any requirement for a mandatory offer to be made by a person acquiring shares of a Cypriot company even if such an acquisition confers on such person control over us if neither such company’s shares are listed on a regulated market in the European Economic Area unless the acquirer acquires 90% or more of all the shares of a target company or of any class of shares in the target company, or acquires sufficient shares to aggregate, together with those which it already holds (in its own name or that of a nominee or held by its

 

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subsidiary) 90% or more of the target’s shares. Our Ordinary Shares are not listed on a European regulated market. Consequently, a prospective bidder acquiring Ordinary Shares may gain control over us in circumstances in which there is no requirement to conduct a mandatory offer under an applicable takeover protection regime. As a result, holders of Ordinary Shares may not be given the opportunity to receive treatment equal to what may be received, in the event of an offer made by a potential bidder with a view to gaining control over us or by certain other holders of Ordinary Shares. As a result, a bid for, or creeping acquisition of control over, us is currently not regulated by Cyprus law except in the limited circumstances outlined above.

You may not be able to exercise your pre-emptive rights in relation to future issuances of Ordinary Shares.

To raise funding in the future, we may issue additional Ordinary Shares, including in the form of Ordinary Shares. Generally, existing holders of shares in Cypriot public companies are entitled by law to pre-emptive rights on the issue of new shares in that company (provided that such shares are paid in cash and the pre-emption rights have not been disapplied). You may not be able to exercise pre-emptive rights for Ordinary Shares where there is an issue of a shares for a non-cash consideration or where pre-emption rights are disapplied. In the United States, we may be required to file a registration statement under the Securities Act to implement pre-emptive rights. We can give no assurance that an exemption from the registration requirements of the Securities Act would be available to enable U.S. holders of Ordinary Shares to exercise such pre-emptive rights and, if such exemption is available, we may not take the steps necessary to enable U.S. holders of Ordinary Shares to rely on it. Accordingly, you may not be able to exercise your pre-emptive rights on future issuances of Ordinary Shares, and, as a result, your percentage ownership interest in us would be reduced. Furthermore, rights offerings are difficult to implement effectively under the current U.S. securities laws and our ability to raise capital in the future may be compromised if we need to do so via a rights offering in the United States.

We may be deemed to be a tax resident outside of Cyprus.

According to the provisions of the Cyprus Income Tax Law, a company is considered to be a resident of Cyprus for tax purposes if its management and control are exercised in Cyprus. The concept of “management and control” is not defined in the Cypriot tax legislation. However, certain criteria generally considered as having to be taken into account in order to determine whether a company will be considered as being a tax resident of Cyprus: (i) whether the company is incorporated in Cyprus and is a tax resident only in Cyprus; (ii) whether the Board of Directors has a decision making power that is exercised in Cyprus in respect of key management, strategic and commercial decisions necessary for the company’s operations and general policies and, specifically, whether the majority of the Board of Directors meetings take place in Cyprus and, also, whether the majority of the Board of Directors are tax residents of Cyprus; (iii) whether the shareholders’ meetings take place in Cyprus; (iv) whether the company has issued general powers of attorney delegating the board’s power to exercise control and make decisions; (v) whether the corporate filings and reporting functions are performed by representatives located in Cyprus; (vi) whether the agreements relating to the company’s business or assets are executed or signed in Cyprus. Where, as with our Company, the majority of the Board of Directors is comprised of tax residents of Peru, there may be increased risk that the Company is not managed and controlled in Cyprus and, therefore, not a tax resident in Cyprus. If we are deemed not to be a tax resident in Cyprus, we may not be subject to the Cypriot tax regime other than in respect of Cyprus sourced income and we may be subject to the tax regime of the country in which we are deemed to be a tax resident. Further, we would not be eligible for benefits under the tax treaties entered into between Cyprus and other countries. Where the majority of our Board of Directors comprises tax residents or citizens of Peru, this may pose a risk that we, even if we are managed and controlled in Cyprus and therefore a tax resident in Cyprus, may be deemed to have a permanent establishment in Peru or elsewhere. Such a permanent establishment could be subject to taxation of the jurisdiction of the permanent establishment on the profits allocable to the permanent establishment. If we are tax resident in a jurisdiction outside of Cyprus or are deemed to have a permanent establishment in Peru or elsewhere, our tax burden may increase significantly, which, in turn, may materially adversely affect our business, financial condition and results of operations.

 

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We may be subject to defense tax in Cyprus.

Cypriot companies must pay a Special Contribution for the Defense Fund of the Republic of Cyprus, or the defense tax, at a rate of 17% on deemed dividend distributions to the extent that their ultimate beneficial owners are Cypriot tax residents. A Cypriot company that does not distribute at least 70% of its after-tax profits within two years from the end of the year in which the profits arose, is deemed to have distributed this amount as a dividend two years after that year end. The amount of this deemed dividend distribution, subject to the defense tax, is reduced by any actual dividend paid out of the profits of the relevant year at any time up to the date of the deemed distribution and the resulting balance of profits will be subject to the defense tax to the extent of the appropriation of shares held in the company at that time by Cyprus tax residents. The profits to be taken into account in determining the deemed dividend do not include fair value adjustments to any movable or immovable property.

The defense tax payable as a result of a deemed dividend distribution is paid in the first instance by the Company which may recover such payment from its Cypriot shareholders by deducting the amount from an actual dividend paid to such shareholders from the relevant profits. To the extent that we are unable to recover this amount due to a change in shareholders or no actual dividend is ever paid out of the relevant profits, we will suffer the cost of this defense tax. Imposition of this tax could have a material adverse effect on our business, financial condition and operating results if we are unable to recover the tax from shareholders as described above. In September 2011, the Commissioner of the Inland Revenue Department of Cyprus issued Circular 2011/10, which exempted from the defense tax any profits of a company that is tax resident in Cyprus imputed indirectly to shareholders that are themselves tax residents in Cyprus to the extent that these profits are indirectly apportioned to shareholders who are ultimately not Cyprus tax residents. This, however, might change and negatively affect our operations.

Our interest expenses may not be deductible.

In May 2012, the House of Representatives of Cyprus enacted laws, effective as of January 1, 2012, which provide that if a Cyprus parent company incurs an interest expense on the acquisition of shares of a company that is a wholly-owned subsidiary (whether directly or indirectly and irrespective of whether the subsidiary is a Cyprus or foreign company), the interest expense will now be deductible for tax purposes by the parent company. This deduction will only be available provided the subsidiary owns assets that are used in its business and the amount of interest deducted is limited and proportionate to the amount and value of assets used in the business. If we are unable to deduct our interest expenses for tax purposes, our results of operations and financial conditions may be materially adversely affected.

 

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EXCHANGE RATES

Peruvian Sol/U.S. Dollar

There have been no exchange controls in Peru since 1991, and since that time foreign exchange transactions have been based on free market exchange rates. However, during the previous two decades the Peruvian currency had experienced a significant number of large appreciations and depreciations. Therefore, the Peruvian Central Bank is used to intervene to stabilize the currency, generating a managed float. Investors are allowed to purchase foreign currency at free market exchange rates through any authorized institution of the Peruvian banking system.

The following table shows, for the periods indicated, certain information regarding the exchange rates for U.S. dollars expressed in nominal soles per U.S. dollar. The Federal Reserve Bank of New York does not report a noon buying rate for soles.

 

     Low(1)      High(1)      Period
Average(2)
     Period
End
 

Year:

           

2017

     3.231        3.392        3.261        3.241  

2018

     3.208        3.386        3.288        3.379  

2019

     3.285        3.405        3.339        3.317  

2020

     3.305        3.662        3.498        3.624  

2021 (through April 15)

     3.599        3.763        3.667        3.623  

 

(1)

Exchange rates are actual high/low, on a day-by-day basis, for each period.

(2)

Calculated as the average of daily exchange rates over the relevant period.

Source: Peruvian Superintendencia de Banca, Seguros y AFP.

Euro/U.S. dollar

A material portion of our sales are made to customers in Europe, with such sales being made in Euros. Because our functional currency is the U.S. dollar, our financial results are affected by the exchange rate between the Euro and the U.S. dollar. The table below shows, for the periods indicated, certain information regarding the exchange rates for U.S. dollars expressed in U.S. dollars per Euro.

 

     Low(1)      High(1)      Period
Average(2)
     Period
End
 

Year:

           

2017

     1.042        1.204        1.130        1.202  

2018

     1.148        1.287        1.215        1.228  

2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

     1.101        1.21        1.149        1.169  

2020

     1.083        1.354        1.176        1.354  

2021 (through April 15)

     1.180        1.306        1.240        1.253  

 

(1) 

Exchange rates are actual high/low, on a day-by-day basis, for each period.

(2) 

Calculated as the average of daily exchange rates over the relevant period.

 

Source:

Peruvian Superintendencia de Banca, Seguros y AFP.

 

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USE OF PROCEEDS

We estimate that the net proceeds from this Offering will be approximately U.S.$    million, based upon an assumed initial public offering price of U.S.$                 per ordinary share, the midpoint of the estimated price range set forth on the cover page of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us. If the underwriters exercise their over-allotment option from us in full, we estimate that the net proceeds will be approximately U.S.$                 million after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

We will use between U.S.$50 million and U.S.$100 million from the proceeds of the primary portion of the offering to fund our capital expenditures for the year 2021 and the prepayment of the existing short-term debt as described below.

 

Financial Institution

   Interest     Outstanding Amount
at March 31, 2021
     Maturity Date  

Banco Internacional del Perú - Interbank

     0.93   U.S.$ 10,000,000        August 14, 2021  

Banco Internacional del Perú - Interbank

     0.93   U.S.$ 10,000,000        August 14, 2021  

Banco BBVA Peru

     1.25   U.S.$ 10,000,000        July 15, 2021  

Banco BBVA Peru

     1.25   U.S.$ 10,000,000        July 15, 2021  

Scotiabank Perú

     1.30   U.S.$ 10,000,000        August 6, 2021  

Scotiabank Perú

     0.88   U.S.$ 5,000,000        July 7, 2021  

Scotiabank Perú

     0.88   U.S.$ 5,000,000        July 8, 2021  
    

 

 

    

Total:

     U.S.$ 60,000,000     

Scotiabank Perú S.A.A., an affiliate of Scotia Capital (USA) Inc., will receive proceeds from this offering through the repayment U.S.$20 million of such short tem debt. Therefore, Scotia Capital (USA) Inc. is deemed to have a conflict of interest within the meaning of Rule 5121 of the Financial Industry Regulatory Authority, Inc. (“Rule 5121”). See “Underwriting (Conflict of Interest)—Conflicts of Interest.” We will not receive any proceeds from the sale of the Ordinary Shares by the Selling Shareholders.

A U.S.$1.00 increase or decrease in the assumed initial public offering price of U.S.$    per ordinary share, the midpoint of the estimated price range set forth on the cover page of this prospectus, would increase or decrease the net proceeds to us from this Offering by approximately U.S.$    million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. An     % increase or decrease in the number of Ordinary Shares offered by us would increase or decrease the net proceeds to us from this Offering by approximately U.S.$    million, assuming the assumed initial public offering price remains the same and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us.

 

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DIVIDEND POLICY

We may only pay out dividends of the profits as shown in our adopted annual IFRS accounts. Under Cyprus law, we are not allowed to make distributions if the distribution would reduce our net assets below the total sum of the issued share capital and the reserves which we must maintain under Cyprus law and our Amended and Restated Articles of Association.

For fiscal year 2019, on December 2019, the Company made a distribution to its shareholders for an aggregated amount of U.S.$10.0 million. On March 9, 2021, the Company held a board meeting to formalize the distribution of dividends for U.S.$10.0 million that were paid in 2019. Also, an additional U.S.$0.5 million were distributed as dividends on the same date.

We did not declare or pay dividend distributions to our shareholders for fiscal year 2020.

Our Board of Directors has adopted a policy of paying up to 50% of our net profit as dividends distribution on a yearly basis. Any future determination regarding the declaration and payment of dividends, if any, will be at the discretion of our shareholders at a general meeting and will depend on a range of factors, including the availability of distributable profits, our liquidity and financial position, restrictions imposed by our financing arrangements, tax considerations, planned acquisitions and other relevant factors.

As a holding company, the level of our income and our ability to pay dividends depend primarily upon the receipt of dividends and other distributions from our subsidiaries. The payment of dividends by our subsidiaries is contingent upon the sufficiency of their earnings, cash flows, regulatory capital requirements and distributable profits.

Our ability to distribute dividends and the amount of such dividends is subject to certain restrictions and limitations under our current indebtedness. Pursuant to the terms of Camposol’s 6.000% Senior Notes Due 2027 (“Camposol’s Senior Notes”) we may not make any type of distribution on our capital stock if at the time of, and after giving effect to, such distribution:

 

  a)

a default has occurred and is continuing or would occur as a result of such dividends distribution,

 

  b)

Camposol Holding PLC could not incur at least in U.S.$1.00 of indebtedness (which is permitted if Camposol Holding PLC’s Consolidated Net Indebtedness/Consolidated EBITDA Ratio is less than 3.50 to 1.0 after giving effect on a pro forma basis to such indebtedness and the receipt and application of proceeds), or

 

  c)

such dividends distribution, together with the aggregate amount of all payments that qualify as restricted payments declared or made by us and our restricted subsidiaries after the issue date, (excluding payments permitted by literals (b) and (c) below) will exceed the sum of:

 

  a.

50% of the aggregate amount of Camposol Holding PLC’s Consolidated Net Income (or, if the Consolidated Net Income is a loss, minus 100% of the amount of such loss) accrued on a cumulative basis during the period (taken as one accounting period) beginning on the first day of the fiscal quarter immediately preceding the issue date and ending on the last day of our most recently ended fiscal quarter for which our consolidated financial statements are available and have been provided to the Indenture trustee at the time of such dividend distribution, plus

 

  b.

100% of the aggregate net cash proceeds received by us, Camposol or any restricted subsidiary after the issue date as a capital contribution to its common equity by, or from the issuance and sale of its capital stock (other than disqualified stock) to, a person who is not our subsidiary, Camposol, or any restricted subsidiary, including any such net cash proceeds received upon (x) the conversion of any of our indebtedness (other than subordinated

 

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  indebtedness) into our capital stock (other than disqualified stock), Camposol’s capital stock or the capital stock of any restricted subsidiary, or (y) the exercise by a person who is not our subsidiary of any options, warrants or other rights to acquire our capital stock (other than disqualified stock), in each case after deducting the amount of any such net cash proceeds used to redeem, repurchase, defease or otherwise acquire or retire for value any of our subordinated indebtedness or capital stock, Camposol’s or the ones of any restricted subsidiary, plus

 

  c.

an amount equal to the net reduction in investments (other than reductions in permitted investments) that were made after the issue date in any person resulting from (a) repurchases or redemptions of such investments by such person, proceeds realized upon the sale or other disposition and such investments, releases of guarantees, payments of interest on indebtedness, dividends or repayments of loans or advances by such person, in each case to us or any restricted subsidiary (except, in each case, to the extent any such payment or proceeds are included in the calculation of consolidated net income), or (b) from redesignations of unrestricted subsidiaries as restricted subsidiaries, not to exceed, in each case, the amount of investments made by us or a restricted subsidiary after the issue date in any such person; plus

 

  d

the amount by which indebtedness is reduced on our consolidated balance sheet upon the conversion or exchange subsequent to the issue date of any of our indebtedness, Camposol’s or the ones of any restricted subsidiary for capital stock (other than disqualified stock); plus

 

  e.

U.S.$30.0 million.

Additionally, under the U.S.$20 million Mid-Term Loan entered into by Camposol and Banco BBVA Perú (“BBVA”) dated November 12, 2019 (the “BBVA Loan”), Camposol may not distribute dividends to us without the express written consent of BBVA, not to be unreasonably withheld or delayed, during the period ending on November 12, 2021 or otherwise when an event of default under such facility has occurred and is continuing. This restriction is not applicable to the mandatory distribution of dividends under Peruvian law in an amount equal to 50% of distributable profits per year, after deducting the legal reserve, if at least 20% of the voting share request it, provided that such distribution is only in favor of shareholders that are not part of the economic group of Camposol.

The restriction in Camposol’s ability to distribute dividends to us may restrict our ability to distribute dividends.

Based on our operating results and financial condition for fiscal year 2020, we would have been eligible to declare dividends to our shareholders under Camposol’s Senior Notes and the BBVA Loan in 2020.

To the extent that we declare and pay dividends, holders of Ordinary Shares on the relevant record date will be entitled to receive dividends payable in respect of Ordinary Shares.

 

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CAPITALIZATION

The following table indicates our capitalization at December 31, 2020:

 

   

on an actual basis; and

 

   

on an adjusted basis to give effect to our issuance and sale of Ordinary Shares in this Offering at an assumed initial public offering price of U.S.$            per share, the midpoint of the estimated price range set forth on the cover page of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us and excluding the Ordinary Shares that may be purchased by the over-allotment option.

The adjusted information below is illustrative only, and our consolidated capitalization following the completion of this Offering will be adjusted based on the actual initial public offering price and other terms of our initial public offering determined at pricing. You should read this table together with “Selected Consolidated Financial and Other Data”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our audited consolidated financial statements and related notes included elsewhere in this prospectus.

 

     Actual,
as of
December 31,
2020
     Adjusted,
as of
December 31,
2020
 
     (In thousands of U.S. dollars)  

Long-term debt(1)

     354,615     

Current portion of long term debt

     7,368     

Bank loans(2)

     57,922     
  

 

 

    

Total debt(3)

     419,905     

Shareholders’ equity:

     

Ordinary Shares(4)

     10,000     

Revaluation surplus

     172,614     

Retained earnings

     224,191     

Non-controlling interest

     175     
  

 

 

    

Total shareholder’s equity

     406,980     
  

 

 

    

Total capitalization

     826,885     
  

 

 

    

 

(1) 

Includes U.S.$350,000,000 of Camposol’s 6.000% Senior Notes due 2027. See Note No. 20 to our audited consolidated financial statements included elsewhere in this prospectus.

(2)

Bank loans are promissory notes with maturities of up to 90 days, which were obtained for working capital purposes. See Note 25 to our audited consolidated financial statements included elsewhere in the prospectus.

(3)

U.S.$11 million of our total debt is secured and U.S.$409 million is unsecured.

(4)

Consists of (i) [•] Ordinary Shares with a nominal value of [•] per share, and (ii) Ordinary Shares, as adjusted for this Offering, with a nominal value of [•] per share.

 

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DILUTION

If you invest in the Ordinary Shares, your interest will be diluted to the extent of the difference between the initial public offering price per Ordinary Share and our net tangible book value per Ordinary Share after this Offering. Dilution results from the fact that the initial public offering price per ordinary share underlying our Ordinary Shares is substantially in excess of the net tangible book value per ordinary share. Our net tangible book value as of December 31, 2020 was approximately U.S.$        million, or U.S.$             per ordinary share         . Net tangible book value per ordinary share represents the amount of total assets, excluding intangible assets and goodwill, minus the amount of total liabilities, divided by the total number of Ordinary Shares outstanding at the end of the period.

Without taking into account any other changes in such net tangible book value after December 31, 2020, other than to give effect to our issuance and sale of Ordinary Shares in this Offering, based upon an assumed initial public offering price of U.S.$             per Ordinary Share, which is the midpoint of the range set forth on the cover page of this prospectus, and after deduction of underwriting discounts and commissions and estimated offering expenses payable by us, as adjusted net tangible book value as of December 31, 2020 would have been U.S.$              per outstanding ordinary share, or U.S.$             per ordinary share. This represents an immediate increase (decrease) in net tangible book value of U.S.$            or % per ordinary share to our existing shareholders and an immediate dilution in net tangible book value of U.S.$            or % per ordinary share to new investors of Ordinary Shares in this Offering. Dilution is determined by subtracting net tangible book value per ordinary share immediately upon the completion of this Offering from the assumed initial public offering price per ordinary share.

We and the Selling Shareholders have granted an option to the underwriters, exercisable for 30 days after the date of this prospectus, to purchase up to additional Ordinary Shares at the public offering price, less the underwriting discount. If the underwriters exercise this option, each will be obligated, subject to conditions contained in the underwriting agreement, to purchase a number of additional Ordinary Shares proportionate to that underwriter’s initial amount reflected in the above table.

The following table illustrates such dilution, assuming either no exercise or full exercise of the underwriters’ over-allotment option:

 

     No Exercise      Full Exercise  
            U.S.$             U.S.$  

Assumed initial public offering price per ordinary share

                                                               

Net tangible book value per ordinary share as of December 31, 2020

           

Amount of dilution in net tangible book value per ordinary share to new investors in the offering

           

Amount of dilution in net tangible book value per Ordinary Shares to new investors in the Offering

           

A U.S.$1.00 change in the assumed initial public offering price of U.S.$            per ordinary share would, in the case of an increase, and, in the case of a decrease, our the dilution per ordinary share and per shares to new investors in this Offering by U.S.$             per ordinary share and U.S.$             per Ordinary Shares, assuming no change to the number of Ordinary Shares offered by the Selling Shareholders as set forth on the cover page of this prospectus, and after deducting underwriting discounts and commissions and estimated offering expenses. Our net tangible book value following the completion of this Offering is subject to adjustment based on the actual initial public offering price of our Ordinary Shares.

 

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

You should read the following operating and financial review together with our audited consolidated financial statements and related notes included elsewhere in this prospectus. Certain statements in this section are “forward-looking statements” and are subject to risks and uncertainties, which may cause actual results to differ materially from those expressed or implied by such forward-looking statements. Please see “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” for more information.

The following discussion and analysis should be read together with our audited consolidated financial information.

Overview

We are among the largest suppliers of fresh and healthy food products in Latin America in terms of revenue. Our operations are vertically integrated, thus we have control over our entire value chain: fields, packing facilities, sales and distribution channels. Our 20-year track record of success introducing and scaling new products in the demanding European, United States and Chinese markets, mainly through world-class retailers (such as Costco, Walmart, OGL, ALDI, Edeka, Sam’s Club, Publix, Kaufland, Alibaba, JD.com, Tesco and Lidl, among others), is sustained by our recognized value proposition: high consistency, superior quality and full traceability. Moreover, our sustainable production practices foster socially-responsible and environmentally- friendly practices. Our main products are fresh blueberries, avocados and other crops, which include tangerines, mangoes and grapes. Our value proposition is mainly supported by our ability to provide consistency, quality and full traceability to our clients, mainly through our international commercial arm.

Our Business

Our three reported segments are composed of two segments, blueberries and avocados, which are our most relevant products, and a third segment grouped as “Other” which mainly includes tangerines, mangoes and grapes. These business units are supported by our international commercial platform, with commercial and distribution offices in the United States, the Netherlands, China and Switzerland, and a Costa Rican branch of our Swiss commercial office.

The following table shows revenue by segment excluding unallocated revenue not reviewed separately by the chief operating decision maker:

 

     For the year ended
December 31, 2020
    For the year ended
December 31, 2019
 
     Revenue
(in thousands
of U.S.$)
     % of Total     Revenue
(in thousands
of U.S.$)
     % of Total  

Blueberries

     174,355        51.0     200,484        61.7

Avocados

     75,027        22.0     73,154        22.5

Other(1)

     92,359        27.0     51,383        15.8
  

 

 

    

 

 

   

 

 

    

 

 

 

Total

     341,741        100.0     325,021        100.0

 

(1)

Includes tangerines, mangoes, grapes and other products.

 

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The following table is a reconciliation of the revenue from operations of our reportable segments with the consolidated total revenue from our operations:

 

     2020      2019  
    

(in thousands

of U.S. dollars)

 

Total revenue of reportable segments

     341,741        325,021  

Unallocated(1) revenue

     1,504        1,617  
  

 

 

    

 

 

 

Consolidated revenue from operations

     343,245        326,638  

 

(1)

Unallocated items correspond to minor activities not reported to the chief operating decision maker, such as packaging and other minor services provided by the Company.

Fresh Produce

We produce fresh fruits under the Camposol brand, mainly blueberries and avocados, along with other products such as tangerines, mangoes and grapes. Most of our sales come from our own fields thus making us the largest independent producer of blueberries in Peru as measured by the 25,590 MT sold in 2020 and 29,778 MT sold in 2019. According to the Peruvian Exporters Association (Asociación de Exportadores or “ADEX”), we are in the top 5 of the largest Peruvian exporters of Hass avocados, having sold 31,890 MT in 2020 and 24,528 MT in 2019. In specific instances, we have sourced avocados and mangoes from third parties to diversify our offering.

We believe the strategic locations of our fields translates into more favorable prices, because we are able to produce year-round and therefore supply fruits when supplies are low and prices are high in North America, Europe and China. We also believe the location of our fields makes us less susceptible to extreme weather, due to a greenhouse effect from Humboldt Current and our proximity to the Andean mountains. Consequently, our fields experience a moderate dry climate and stable temperatures throughout the year. Additionally, the proximity of our fields to the Equator results in longer daylight hours, which also positively affects productivity. All these climate benefits and the fact that the majority of our fields are in a high yield stage provide us with more clarity on our future production volumes. Since 2017, we have purchased lands in Colombia and Uruguay to increase our windows of production and the presence in our sales markets throughout the year.

We have fully integrated our value chain, all the way from farming to commercialization and logistics, which allows us to consistently provide high-quality products that are fully traceable to top retailers and wholesalers in our markets. As of December 31, 2020, we had over 10,040 gross planted hectares of land (9,918 hectares for current products and 122 hectares undergoing R&D), which at least 7,016 HAs are located in Peru, 2,125 HAs are located in Colombia, 749 HAs are located in Uruguay and 150 HAs are located in Chile.

In addition to our planted hectares, we own and operate a 35,416 square meter production facility in close proximity to our fields, which includes two fresh-packing facilities, two freezing facilities and a laboratory for molecular and microbial biotechnology research. We operate through commercial and distribution offices in the United States, the Netherlands, China and Switzerland, and a Costa Rican branch of our Swiss commercial office.

We rely on our strong R&D capabilities. Over time, R&D has identified, tested and developed each new product in our portfolio, including our blueberry, avocado, tangerine and cherry products. The R&D process starts with testing adaptability to our field conditions and ends with reaching high-scale production. We also focus on biological pest control to minimize the use of pesticides, which we believe makes our products healthier and more appealing for health-conscious customers than other pesticide-heavy alternatives.

 

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Marketing

Our commercial team maintains relationships with retailers and supermarkets worldwide and provides them with the consistency in supply and the quality that they require. We focus on major retailers in the United States and in Europe, including Costco, Walmart, OGL, ALDI, Edeka, Sam’s Club, Publix and Kaufland, Tesco and Lidl, among others. Our customers demand high standards, which we have been able to meet. For example, during 2020 and 2019 we successfully underwent 67 and 80 audits, respectively, from different retailers and certified companies. In 2019, we were recognized with the 2018 Risk Taker Award by Walmart for “going above and beyond to meet customer needs”, and in 2017 we were recognized with the 2016 Supplier of the Year Award in the Produce Category by Walmart.

Through the continued development of our commercial and distribution offices, we are focused on developing and pursuing direct commercial relationships with retailers and supermarkets because we obtain higher margins when we sell directly to retailers or supermarkets. In the case of blueberries, in 2020, our margin for sales to retailers was U.S.$3.79 per kilo, compared to a margin of U.S.$1.89 per kilo for sales in other channels. In the case of avocados, in 2020, our margin for sales to retailers was U.S.$ 1.23 per kilo, compared to a margin of U.S.$0.58 per kilo for sales in other channels. In terms of direct sales to retailers, we increased our direct sales to retailers of fresh blueberries from 50% in 2019 to 72% in 2020 and our direct sales to retailers of fresh avocados from 53% in 2019 to 54% in 2020. These measures allowed us also to maintain more stable volumes of sales and caused us to reduce our participation in the spot and wholesale markets which involves offering dynamic pricing where we obtain lower margins. Further, our direct sales to retailers make more efficient and generate lower risks to our collections process and increase the exposure of our brands with end-consumers generating an improvement in our brand awareness in the long term which, boost our commercial leverage.

In 2020, we opened a commercial office in Switzerland where our team in charge of designing and implementing our commercial strategy and providing business intelligence solutions is located.

Moreover, we are focusing on boosting our brand recognition among consumers; an initial effort to achieve this is our “The Berry that Cares” branding campaign launched in 2017, and the campaign “Camposol cares from farm to family” launched in 2018. With this campaign we aim to express our value proposition to our end consumer and highlight our focus on millennials and health and environmentally-conscious consumers. The campaign’s objective is to emphasize four key elements present during our production cycle: our consumers, our field laborers, our community and our environmental impact.

We export our diverse range of products to countries throughout the world. Each product is targeted to a specific export market based on customer demand. Overall, we exported to over 40 countries in 2020 and sold directly to five of the world’s top 10 food retailers as determined by the National Federation of Retailers based on the top 100 ranking of retailers by sales in 2019. The main countries that we export to are the United States, Germany, Canada, the United Kingdom and France, which collectively represented 85% of revenues in 2020. Further, sales to Asia commenced in 2009 and in 2020, Asia accounted for approximately 6% of revenues. We opened our commercial office in Shanghai in August 2017.

Expectations for the First Quarter of 2021 Results

Our financial statements for the first quarter of 2021 are not yet available. The preliminary information for the first quarter 2021 results included in this Registration Statement on Form F-1 has been prepared by, and is the responsibility of, the Company’s management. Gaveglio Aparicio y Asociados S. Civil de R. L., member firm of PricewaterhouseCoopers International Limited, has neither audited, reviewed, examined, compiled nor applied agreed-upon procedures with respect to the accompanying preliminary information for the first quarter of 2021 results contained herein and, accordingly, Gaveglio Aparicio y Asociados S. Civil de R. L. does not express an opinion or any other form of assurance on such information or its achievability. The Gaveglio Aparicio y

 

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Asociados S. Civil de R. L. report included in this Registration Statement on Form F-1 relates to the Company’s historical financial information. It does not extend to the preliminary information for the first quarter of 2021 results and should not be read to do so.

We expect that our total volume sold for the first quarter of 2021 will range from 26,547 MT to 28,067 MT, representing an increase of approximately 0.9% to 6.7% as compared to the first quarter of 2020. We expect that for the first quarter of 2021, our blueberry volumes will range from 6,002 MT to 6,402 MT, our avocado volumes will range from 768 MT to 888 MT, and our other volumes will range from 19,777 MT to 20,777 MT. Additionally, we expect our revenues from operations for the first quarter of 2021 will range from U.S.$80.8 million to U.S.$87.4 million, representing an increase of approximately 27.0% to 37.4% as compared to the first quarter of 2020. We expect that for the first quarter of 2021, our blueberry revenues will range from U.S.$37.2 million to U.S.$40.2 million, our avocado revenues will range from U.S.$2.4 million to U.S.$3.0 million, and our other revenues will range from U.S.$41.2 million to U.S.$44.2 million.

In the view of our management, the preliminary financial information above was prepared on a reasonable basis, reflects the best currently available estimates and judgments, and presents, to the best of management’s knowledge and belief, our preliminary performance for the first quarter of 2021 in terms of volumes sold and revenues. However, this information is not a fact and no assurances can be given that our actual volumes and revenues for the first quarter of 2021 will not differ from these preliminary amounts. Readers of this prospectus are cautioned not to place undue reliance on the preliminary information. These preliminary amounts are based on management’s internal estimates and are subject to further internal review by management and approval by our board of directors. Our actual volumes sold and revenues for the first quarter of 2021 may vary from these preliminary amounts.

Principal factors affecting our results of operations and financial condition

The primary factors affecting our results of operations include:

The maturity of our crops and resulting yields. The productive curve of a plant, determined as volume of harvested product per hectare (MT/Ha) in a year, depends on the plant’s age. This curve starts low and increases as plants reach peak years, during which period the curve remains flat before declining during old age. The productive curve varies by crop. The average lifespan is 10 years for blueberry plants and 20 years for avocado trees. As a result, our production increases as new investments approach their period of maximum yields and decreases when they pass that point. Because the cost of maintaining a plant remains fairly stable during its lifetime, costs per unit decrease sharply as yields increase.

In Peru, avocado plants typically take three years to grow and begin production, and another three years to mature and achieve peak stable yields. By December 31, 2020, 54% of our avocado plants entered their fully-productive stage. However, avocado trees have a tendency to adopt an alternate bearing cycle that results in a large crop of small avocados in one year followed by small crop of large avocados the next year, and such is the case with our avocado trees.

Internal studies, undertaken by our agricultural operations management and by our Fresh Produce business unit, indicate that blueberry plants take 1.5 years to grow and begin production and two years to mature and achieve normalized yields. By December 31, 2020, 94% of our blueberry plants entered their fully-productive stage. However, our practices include replanting with genetically improved trees and bushes as well as continuously testing new species to substitute maturing crops, as the case may be, to increase yields. The price of blueberries fell in 2019 for several reasons, including the fact that the blueberry market was saturated and the quality of our products was not the same level as that in previous years.

 

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The phases of maturity for the segment by year are as follows (in hectares):

 

     For the year ended December 31, 2020      For the year ended December 31, 2019  

Segment

   Unproductive      Medium
Yield
     High
Yield
     Total      Unproductive      Medium
Yield
     High
Yield
     Total  

Blueberries

     96        55        2,501        2,652        407        1        2,151        2,559  

Avocados

     1,938        295        2,583        4,816        1,554        210        2,646        4,410  

Other(1)

     774        1,050        626        2,450        833        593        530        1,956  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     2,808        1,400        5,710        9,918        2,794        804        5,327        8,925  

 

(1) 

Includes tangerines, mangoes, grapes and other products.

The effects of supply and demand on the prices of our products. Our results of operations depend substantially on the market prices of the products we sell. Our main export competitors are primarily based outside of Peru. For example, we compete with Californian and Mexican exporters in the fresh avocado market in the United States and South African exporters in the European market. Due to the global nature of our business, any event that has a positive or negative effect on production levels in a competitor’s home country may have the opposite effect on our sales and profitability. For example, adverse climatic conditions in South Africa would reduce the number of fresh avocados available for Europe and increase the price at which we sell our fruit in this market, or vice versa. Hence, in 2015 we decided to work directly with retailers to achieve more stable export prices as well as to better understand consumers and thus adapt our value proposition to new trends. Working with retailers leads to stable export prices by establishing commercial programs and reducing exposure to spot market prices. Today, more than half of our sales are directly to retailers.

The percentages of total sales from our channels are as follows:

 

     For the year ended
December 31,
 
     2020     2019  

Direct to Retail

     54     41

Others

     46     59

Free trade agreements, the lifting of import barriers and access to our principal export markets. We derive revenues from the export of our products to several countries around the world. Our results have benefited significantly in recent years from the execution by Peru of free trade agreements with the United States, the European Union and China. Furthermore, China granted phytosanitary clearance to Peruvian Hass avocados, which allowed Peruvian exports to enter the country beginning in 2016. Even though China is currently a small market for avocados—mainly imported from Mexico—it has shown significant growth from 2015 to 2019, according to Trademap.

The imports of avocado into China are as follows:

 

     2015      2016      2017      2018      2019  

Total

     15,989        25,128        32,137        43,859        32,564  

Peru

     144        3,568        6,667        16,850        12,922  

Chile

     2,263        11,565        16,707        11,892        10,511  

Mexico

     13,582        9,996        8,754        14,963        8,881  

New Zealand

     —          —          —          154        250  

Source: Trademap

Moreover, avocados are becoming a common product on restaurant menus and at juice bars in China. Thus, per-capita consumption of avocados in China may grow in future years, which would turn China into an

 

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important third market for Peruvian exports, along with the United States and Europe. To be in a position to take advantage of this potential opportunity, we opened a new commercial office in Shanghai in August 2017.

Continue to integrate and systematize our value chain

Over the last two years we have been working heavily across our value chain looking to generate improvements and efficiencies that will help us in various fronts, such as to (i) sustain margins at current levels by reducing our dependence on manual labor, (ii) better manage sourcing and distribution throughout our diverse geographical footprint, and (iii) transform our product traceability process into a key competitive advantage, which will be key when deploying our third party sourcing business.

In order to promote this, we have launched a digital transformation initiative focused on the systematization and integration of our core operational processes. The process begins with estimates on future crop volumes by using statistical models along with artificial intelligence, precision automatization of irrigation and nutrition for crops, top of the line quality starting at the fields to the final destination. Further, this will also include top of the line personnel transportation, labor and productivity management. We estimate that full first round implementation of this initiative will take two to three years.

Seasonality. Agriculture is inherently seasonal in nature. Each of our products is subject to its own pattern of growth, planting and harvesting cycles. For example, in Peru, avocados are typically harvested in April through July and blueberries are typically harvested in the specific commercial windows that take place during the months of June to March. In Colombia, avocados are typically harvested in September through May. We maintain a strategically-diversified mix of export products that are characterized by varying harvest seasons, largely to mitigate risks associated with seasonality. In this respect, in 2020, 18.5% of our revenues were generated during the first quarter, 9.7% during the second quarter, 31.0% during the third quarter and 40.8% during the fourth quarter. In future years, as our products reach peak yields, we expect that the seasonality of our revenues will decrease.

Revenue by segment from our operations by quarter for the years ended December 31, 2020 and 2019, are as follows (in thousands of U.S. dollars or in percentages where indicated) (excluding unallocated revenue):

 

    Q1     Q2     Q3     Q4     Total     Participation  
    2020     2019     2020     2019     2020     2019     2020     2019     2020     2019     2020     2019  

Blueberries

    28,963       38,131       1,820       3,989       38,279       50,189       105,293       108,175       174,355       200,484       51.0     61.7

Avocados

    824       1,485       16,087       21,674       51,248       47,409       6,868       2,586       75,027       73,154       22.0     22.5

Other(1)

    33,518       16,384       15,375       9,136       16,448       10,535       27,018       15,328       92,359       51,383       27.0     15.8
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    63,305       56,000       33,282       34,799       105,975       108,133       139,179       126,089       341,741       325,021       100     100

 

(1) 

Includes tangerines, mangoes, grapes and other products.

The following table is a reconciliation of the revenue from operations of our reportable segments with the consolidated total revenue from our operations:

 

     2020      2019  
     (in thousands
of U.S. dollars)
 

Total revenue of reportable segments

     341,741        325,021  

Unallocated(1) revenue

     1,504        1,617  
  

 

 

    

 

 

 

Consolidated revenue from operations

     343,245        326,638  

 

(1) 

Unallocated items correspond to minor activities not reported to the chief operating decision maker, such as packaging and other minor services provided by the Company.

 

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Economic situation globally, and in particular in our main export markets. Our business and results of operations are directly affected by developments in the global economy. Europe and the United States have been our primary export markets, while the Chinese market, with the recent opening of China to blueberries and avocados, will be an interesting alternative destination for our products. The portion of our total exports directed to the Americas (primarily the United States) and Europe has been balanced. Our total sales to Europe in 2020 and 2019 represented 32.8% and 35.4% of our total sales, respectively. Sales to North America represented 58.4% and 53.0% of our total sales during 2020 and 2019, respectively (particularly, the United States represented 51.8% and 47.6% of our total sales during 2020 and 2019, respectively). During 2020 and 2019, our sales to Asia represented 6.0% and 9.4% of our total sales, while our sales to other countries represented 2.9% and 2.2% during 2020 and 2019, respectively. Customer demand in these countries is directly tied to the prevailing economic situation. For us, it is important to have the flexibility to sell to and have the flexibility to switch between these markets, depending on the current market opportunity in each, to obtain better results.

Exchange rates between the U.S. dollar and the Peruvian sol, and the U.S. dollar and the Euro. Notwithstanding that a significant amount of our assets are located in Peru, our functional currency is the U.S. dollar, primarily as a result of our export driven business and because our primary revenues and costs are denominated in U.S. dollars. We buy and sell our products and services and obtain funding for our working-capital and investments mainly in U.S. dollars. In 2020, 41% of our production costs were related to labor, which are incurred in soles. As a result, our financial results are affected by exchange rate fluctuations between the U.S. dollar and the sol; the appreciation of the U.S. dollar against the sol benefits our financial results, while the depreciation of the U.S. dollar against the sol has a negative impact on our financial results. Furthermore, a material portion of our sales are made to customers in Europe, in Euros, so our financial results are also affected by the U.S. dollar/Euro exchange rate. See “Exchange Rates.”

Climate-related risk. Even though our operations in Peru are located in a region characterized by stable climatic conditions, high fluctuations, if any, may affect both the yields and the quality of our products. During the first quarter of 2017, Northern Peru was affected by a weather phenomenon called “El Niño Costero,” caused by a sudden and abnormal warming of Pacific waters off the coast of Peru and resulting in widespread flooding. Our own operations in the region and our revenues were not materially affected, notwithstanding the damage to the region’s logistical infrastructure, such as roads and bridges, in part because the main impact was in the month of March, at which time our blueberry and mango production was almost finished. Mangoes are harvested from December to March and blueberries, which can be harvested year-round, are primarily harvested from September to December and secondarily from January to March. In Colombia, there is no record of El Niño having a substantial negative impact in the region where we operate. However, La Niña’s lower temperatures could affect production yields. In El Salto, Uruguay, given its latitude, La Niña could bring hail that may damage the crops. In both Northern Peru and El Salto, Uruguay, we have studied the lands and their environment, and are investigating ways to mitigate these risks (i.e., planting at different altitudes or close to bodies of water). In Mexico, our lands are located in Los Mochis, an area that in its higher ranges reaches temperatures above 45°C. For this reason, we are implementing mesh roofs over the crops to protect our plants. Also, the area has a strong rainy season between July and September. Historically, we have not suffered major weather incidents in Mexico, other than a few cyclones that have not resulted in damage to our lands and crops. In the Patagua Cerro of Chile, our crops may be subject to sub-freezing temperatures and volatile rainfall amounts. In order to mitigate the freezing temperatures, we have implemented a system to reduce the impact of such weather. In order to mitigate the volatile rainfall, we have constructed a reservoir able to hold up to 45 metric tons of water.

Segment Information

We have three segments: Blueberries, Avocados, and Other (tangerines, mangoes and grapes and other products).

 

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The table below provides a breakdown of our revenues by business lines for the years indicated excluding unallocated revenues not reviewed separately by the chief operating decision maker (in thousands of U.S. dollars).

 

     For the year ended December 31,  
     Blueberries      Avocados      Other(1)      Total  
     2020      2019      2020      2019      2020      2019      2020      2019  

Revenues

     174,355        200,484        75,027        73,154        92,359        51,383        341,741        325,021  

 

(1) 

Includes tangerines, mangoes, grapes and other products.

The following table is a reconciliation of the revenue from operations of our reportable segments with the consolidated total revenue from our operations:

 

     2020      2019  
    

(in thousands

of U.S. dollars)

 

Total revenue of reportable segments

     341,741        325,021  

Unallocated(1) revenue

     1,504        1,617  
  

 

 

    

 

 

 

Consolidated revenue from operations

     343,245        326,638  

 

(1) 

Unallocated items correspond to minor activities not reported to the chief operating decision maker, such as packaging and other minor services provided by the Company.

The table below provides a breakdown of our assets by business lines as of the dates indicated (in thousands of U.S. dollars), excluding unallocated assets.

 

At December 31, 2020

   Blueberries      Avocados      Other(1)      Total  

Biological assets

     102,979        44,284        16,201        163,464  

Finished products

     18,487        2,959        16,614        38,060  

Property, plant and equipment(2)

     281,022        255,620        165,281        701,923  

Right of use asset

     29,187        7,581        13,777        50,545  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total assets by segment

     431,675        310,444        211,873        953,992  
  

 

 

    

 

 

    

 

 

    

 

 

 

Area (Has)

     2,652        4,816        2,450        9,918  

At December 31, 2019

   Blueberries      Avocados      Other(1)      Total  

Biological assets

     101,811        27,792        9,057        138,660  

Finished products

     11,461        1,770        19,085        32,316  

Property, plant and equipment

     174,039        166,496        99,668        440,203  

Right of use asset

     9,080        9,542        6,661        25,283  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total assets by segment

     296,391        205,600        134,471        636,462  
  

 

 

    

 

 

    

 

 

    

 

 

 

Area (Has)

     2,559        4,410        1,956        8,925  

 

(1) 

Includes tangerines, mangoes, grapes and other products.

(2) 

Includes land that for 2020 has been stated on a revalued basis.

 

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Results of Operations

Year Ended December 31, 2020 Compared to Year Ended December 31, 2019

The table below shows our results of operations, and including information such as a percentage of revenues, for the periods indicated.

 

     Year ended December 31,  
     2020     % of
2020
Revenues
    2019     % of
2019
Revenues
 
     (in thousands of U.S. Dollars,
except for percentages)
 

Revenue

     343,245       100     326,638       100

Cost of sales:

        

Cost of sales

     (177,913     (51.8 %)      (156,908     (48.0 %) 

Depreciation of bearer plants

     (22,493     (6.6 %)      (19,164     (5.9 %) 

Gross profit before adjustment for biological assets

     142,839       41.6     150,566       46.1

Net gain arising from changes in fair value of biological assets

     23,981       7.0     10,163       3.1
  

 

 

     

 

 

   

Gross profit after adjustment for biological assets

     166,820       48.6     160,729       49.2

Selling expenses

     (44,916     (13.1 %)      (37,659     (11.5 %) 

Administrative expenses

     (22,090     (6.4 %)      (25,428     (7.8 %) 

Other income

     1,115       0.3     6,410       1.96

Other expenses

     (10,208     (3.0 %)      (5,009     (1.5 %) 

Net foreign exchange transactions (losses) gains

     (663     (0.2 %)      2,517       0.8

Operating profit

     90,058       26.2     101,560       31.1
  

 

 

     

 

 

   

Share of profit of investments accounted for using the equity method

     1,708       0.5     81       0.02

Financial income

     816       0.2     1,001       0.3

Financial cost

     (34,997     10.2     (21,851     (6.7 %) 
  

 

 

     

 

 

   

Profit before income tax

     57,585       16.9     80,791       24.7
  

 

 

     

 

 

   

Income tax (expense) benefit

     (27,754     8.1     2,843       0.9
  

 

 

     

 

 

   

Profit for the year

     29,831       8.7     83,634       25.6
  

 

 

     

 

 

   

Other comprehensive income:

        

Item that may be reclassified to profit or loss:

        

Currency translation adjustment

     (1,223     0.4     (2,131     (0.7 %) 

Item that will not be reclassified to profit or loss:

        

Revaluation surplus (land)

     243,639       71.0     —         —    

Deferred income tax of revaluation surplus

     (71,025     20.7     —         —    
  

 

 

     

 

 

   

Total comprehensive income for the year

     201,222       58.9     81,503       24.95

Profit (loss) attributable to:

        

Owners of the parent

     29,143       8.5     83,263       25.5

Non-controlling interests

     688       0.2     371       0.1

Total comprehensive income (loss) for the year attributable to:

        

Owners of the parent

     200,700       58.7     81,322       24.9

Non-controlling interest

     522       0.2     181       0.06

Earnings per share—Basic and Diluted

     0.29         0.83    

Revenues

In 2020 our revenues were U.S.$343.2 million, which represented an increase of U.S.$16.6 million, or 5.1%, compared to revenues of U.S.$326.6 million in 2019. This increase was primarily a result of an increase in our sales in the other segment offset by a decrease of sales in blueberries.

 

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The table below provides a breakdown of our revenues by segment for the years indicated excluding the unallocated revenues not reviewed separately by the chief operating decision maker (in thousands of U.S. dollars).

 

     For the year ended December 31,  
     Blueberries      Avocados      Other(1)      Total  
     2020      2019      2020      2019      2020      2019      2020      2019  

Revenues

     174,355        200,484        75,027        73,154        92,359        51,383        341,741        325,021  

 

(1)

Includes tangerines, mangoes and grapes and other products.

The following table shows a reconciliation of the revenue from operations of our reportable segments with the consolidated total revenue from our operations:

 

     2020      2019  
    

(in thousands

of U.S. dollars)

 

Total revenue of reportable segments

     341,741        325,021  

Unallocated(1) revenue

     1,504        1,617  
  

 

 

    

 

 

 

Consolidated revenue from operations

     343,245        326,638  

 

(1) 

Unallocated revenue corresponds to minor activities not reported to the chief operating decision maker, such as packaging and other minor services provided by the Company.

Blueberries

In 2020, revenues from blueberries were U.S.$174.4 million, which represented a decrease of U.S.$26.1 million, or 13.0%, from U.S.$200.5 million for 2019. In 2020, revenues from blueberries represented 51.0% of total revenues, compared to 61.7% of our total revenues in 2019.

The decrease in revenues from blueberries in 2020 was primarily a result of a decrease in the production and sales volumes of blueberries. Production and sales of blueberries decreased mainly due to (i) a colder spring in Peru than usual and (ii) management’s decision to early prune our blueberry bushes. The decision to prune the blueberry bushes was made as COVID-19 related shutdowns began to occur and the risk of leaving unpruned bushes increased. Unpruned bushes increase the risk of attracting pests that could have a negative effect on future production. The blueberries obtained from early pruned bushes are not mature enough and as such are unfit for sale.

Avocados

In 2020, revenues from avocados were U.S.$75.0 million, which represented an increase of U.S.$1.8 million, or 2.6%, from U.S.$73.2 million for 2019. In 2020, revenues from our avocados represented 22.0% of total revenues, compared to 22.5% of our total revenues in 2019.

The increase in revenues from our avocado segment in 2020 was primarily a result of an increase in the production and sales volumes of avocados offset by a reduction in prices. Volumes increased as a result of our avocado trees having come out of an off year in 2019. Prices decreased due to the lockdowns around the world which generated the shutdown of the food services industry in the northern hemisphere and Europe in particular.

Other

In 2020, revenues from our “Other” segment, which is made up of tangerines, mangoes and grapes and other products were U.S.$92.4 million, which represented an increase of U.S.$41.0 million, or 79.7%, from U.S.$51.4 million in 2019. In 2020, revenues from “Other” segment represented 26.9% of our total revenues, compared to 15.8% of our total revenues in 2019.

 

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The significant increase in revenues from our “Other” segment in 2020 was primarily a result of increase in demand and higher export volume of tangerines, mangoes and grapes. Production volume of tangerines increased due to favorable weather in Uruguay while prices increased due to increased global demand for citric acid and Vitamin C rich foods. Production volume of mangoes increased due to favorable weather in Peru while prices decreased as a result of lesser demand. Demand for grapes increased, offset by a reduction in production volume caused by unfavorable weather in the Peruvian regions where we grow grapes.

Cost of Sales

In 2020, our cost of sales was U.S.$200.4 million, which represented an increase of U.S.$24.3 million, or 13.8%, compared to cost of sales in 2019 of U.S.$176.1 million, mainly due to a reduction in the production volume of blueberries and an increase in labor and healthcare costs mainly due to changes in Peruvian labor regulations.

The tables below details cost of sales for the periods indicated (in thousands of U.S. dollars):

 

Cost of Sales

   2020      2019  

Cost of sales

     177,913        156,908  

Depreciation of bearer plants

     22,493        19,164  

Total

     200,406        176,072  

The tables below detail cost of sales of reportable segments for the years indicated:

 

     For the year ended
December 31,
 
     2020      2019  

Blueberries

     98,939        90,579  

Avocados

     45,928        49,481  

Other(1)

     54,543        34,586  

Total

     199,410        174,646  

Blueberries

In 2020, cost of sales from blueberries was U.S.$98.9 million, which represented an increase of U.S.$8.3 million, or 9.2%, from U.S.$90.6 million in 2019. This increase was primarily a result of a reduction in volume of blueberries mainly due to (i) management’s decision to early prune the blueberries bushes, and (ii) increased labor and healthcare costs related to a change in Peruvian labor regulations.

In 2020, cost of sales from blueberries represented 49.6% of total cost of sales, compared to 51.9% in 2019.

Avocados

In 2020, cost of sales from avocados was U.S.$45.9 million, which represented a decrease of U.S.$3.6 million, or 7.3%, from U.S.$49.5 million in 2019. This decrease was primarily a result of increased production volume which in turn promoted efficiencies and reduced labor costs due to less personnel hired.

In 2020, cost of sales from avocados represented 23.0% of total cost of sales, compared to 28.3% in 2019.

Other

In 2020, cost of sales from our “Other” segment, which includes tangerines, mangoes, grapes and other products, was U.S.$54.5 million, which represented an increase of U.S.$19.9 million, or 57.5%, from

 

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U.S.$34.6 million in 2019. This result is primarily a result of an increase in costs related to our expansion and development of our tangerines, mangoes and grapes production.

In 2020, cost of sales from Other represented 27.4% of total cost of sales, compared to 19.8% in 2019.

Gross Profit Before Adjustment For Biological Assets

In 2020, our gross profit before adjustment for biological assets was U.S.$142.3 million, which represented a decrease of U.S.$8.1 million, or 5.4% compared to our gross profit before adjustment for biological assets of U.S.$150.4 million in 2019. This resulted in a total gross margin of 41.6% for 2020, compared to a gross margin of 46.3% in 2019, primarily a result of a colder than average spring in Peru and a decrease in gross margin of blueberries due to a reduction in sales and volume of blueberries, which in turn was mainly due to a result of early pruning of our blueberry bushes.

The table below sets forth gross profit before adjustment for biological assets for segment in 2020 and 2019, excluding our unallocated revenue:

 

     2020     2019  
     Gross Profit
Before
Adjustment
For
Biological
Assets
     % of total     Gross
Margin %(2)
    Gross Profit
Before
Adjustment
For
Biological
Assets
     % of total     Gross
Margin %(2)
 
     (in thousands of U.S. dollars, except percentages)  

Blueberries

     75,416        53.0     43.3     109,905        73.1     54.8

Avocados

     29,099        20.4     38.8     23,673        15.7     32.4

Other(1)

     37,816        26.6     40.9     16,797        11.2     32.7
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

Total

     142,331        100.0     41.6 %(3)      150,375        100.0     46.3 %(3) 
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

 

(1) 

Includes tangerines, mangoes, grapes and other products.

(2) 

Gross margin of each segment is calculated by dividing the gross profit before adjustment for biological assets by the revenue corresponding to such segment in the same year.

(3) 

Total gross margin is calculated by dividing total gross profit before adjustment for biological assets of reportable segments by total revenue.

The table below shows a reconciliation of the profit after adjustment for biological assets by segments with the profit after adjustment for biological assets:

 

     2020      2019  
    

(in thousands

of U.S. dollars)

 

Gross profit after adjustment for biological assets by segments

     166,312        160,538  

Unallocated revenue

     1,504        1,617  

Unallocated cost of sales

     (996      (1,426
  

 

 

    

 

 

 

Profit after adjustment for biological assets

     166,820        160,729  

Blueberries

In 2020, the gross profit before adjustment for biological assets for blueberries was U.S.$75.4 million, which represented a decrease of U.S.$34.5 million, or 31.4%, over the gross profit before adjustment for biological assets of U.S.$109.9 million from 2019. This resulted in a gross margin of 43.2% for blueberries in 2020, compared to a gross margin of 54.8% in 2019. The decrease is mainly explained by a reduction in production volumes which in turn was mainly due to a colder spring than average and an early pruning of the blueberry bushes.

 

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Avocados

In 2020, the gross profit before adjustment for biological assets for avocados was U.S.$29.1 million, which represented an increase of U.S.$5.4 million, or 22.8%, over the gross profit before adjustment for biological assets of U.S.$23.7 million from avocados in 2019. This resulted in a gross margin of 38.8% for avocados in 2020, compared to a gross margin of 32.4% in 2019, primarily as a result of an increase in the production volume of avocados. Volumes increased as a result of our avocado trees having come out of an off year in 2019.

Other

In 2020, the gross profit before adjustment for biological assets for “Other” segment was U.S.$37.8 million, which represented an increase of U.S.$21.0 million, or 125.0%, over the gross profit before adjustment for biological assets of U.S.$16.8 million in 2019. This resulted in a gross margin of 40.9% for 2020, compared to a gross margin of 32.7% in 2019. This result is primarily a result of an increase in the production volume of mangoes and an increase in demand for tangerines. Production volume of tangerines increased due to favorable weather in Uruguay while prices increased due to increased global demand for citric acid and Vitamin C rich foods. Production volume of mangoes increased due to favorable weather in Peru while prices decreased as a result of lesser demand.

Net gain (loss) arising from changes in fair value of biological assets

We recognize in our results the effects of adjustments originated by income for biological assets, which correspond to changes in fair value of our products made as of the reporting date. Biological assets of blueberries, avocados and other fruits and vegetables, such as tangerines, mangoes and grapes are stated at their fair value less cost of sales. See “—Critical Accounting Policies—Biological Assets.”

In 2020, our net adjustment from changes in fair value of biological assets was U.S.$24.0 million, which represented an increase of U.S.$13.8 million, or 135.3%, over our net adjustment from changes in fair value of biological assets of U.S.$10.2 million in 2019. This increase is due primarily to an increase in prices and volumes for 2020.

The following table shows gain (loss) arising from changes in fair value of biological assets by segment (in thousands of U.S. dollar):

 

     Blueberries      Avocados      Others     Total  
     U.S.$      U.S.$      U.S.$     U.S.$  

For the year ended December 31, 2020 -

          

Gain arising from changes in fair value of biological assets

     486        18,057        5,438       23,981  
  

 

 

    

 

 

    

 

 

   

 

 

 

For the year ended December 31, 2019 -

          

Gain (loss) arising from changes in fair value of biological assets

     3,480        11,190        (4,507     10,163  
  

 

 

    

 

 

    

 

 

   

 

 

 

 

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Selling Expenses

The table below sets forth our selling expenses for the periods indicated.

 

     For the Year ended December 31,  
     2020      % of 2020
Revenues
    2019      % of 2019
Revenues
 
     (in thousands of U.S. dollars, except
percentages)
 

Freight

     23,559        6.86     19,010        5.82

Exportation custom duties

     10,131        2.95     7,717        2.36

Personnel expenses

     5,297        1.54     4,371        1.34

Insurance

     1,106        0.32     1,534        0.47

Consulting services

     1,069        0.31     1,425        0.44

Travel and business expenses

     275        0.08     803        0.25

Subscriptions to associations

     189        0.06     733        0.22

Selling commissions

     1,849        0.54     672        0.21

Depreciation of right of use asset

     —          —         93        0.03

Depreciation

     160        0.05     29        0.01

Amortization of computer software

     19        0.01     4        0.00

Other expenses

     1,262        0.37     1,268        0.39
  

 

 

    

 

 

   

 

 

    

 

 

 

Total selling expenses

     44,916        13.09     37,659        11.53

In 2020, our selling expenses were U.S.$44.9 million, which represented an increase of U.S.$7.2 million, or 19.1%, from our selling expenses of U.S.$37.7 million in 2019. This increase was primarily a result of an increase in freight fees and customs duties as a result of an increase in export volumes.

Administrative Expenses

The table below sets forth our administrative expenses for the periods indicated.

 

     For the Year ended December 31,  
     2020      % of 2020
Revenues
    2019      % of 2019
Revenues
 
     (in thousands of U.S. dollars, except percentages)  

Personnel expenses

     11,303        3.3     11,874        3.6

Professional fees

     3,938        1.1     5,291        1.6

Renting of machinery and equipment

     902        0.3     1,197        0.4

Travel and business expenses

     338        0.1     1,234        0.4

Amortization of computer software

     731        0.2     525        0.2

Depreciation

     785        0.2     669        0.2

Materials and supplies

     354        0.1     649        0.2

Depreciation of right of use asset

     315        0.09     237        0.07

Audit services and others

     315        0.09     352        0.1

Directors’ remuneration

     148        0.04     280        0.09

Maintenance

     506        0.1     354        0.1

Subscriptions to associations

     372        0.1     372        0.1

Insurances

     256        0.07     27        0.03

Other taxes

     108        0.03     112        0.03

Transport and telecommunications

     96        0.03     128        0.008

Utilities

     76        0.02     108        0.04

Other expenses

     1,547        0.5     2,019        0.6
  

 

 

    

 

 

   

 

 

    

 

 

 
     22,090        6.4     25,428        7.8

 

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In 2020, our administrative expenses were U.S.$22.1 million, which represented a decrease of U.S.$3.3 million, or 13.0%, from our administrative expenses of U.S.$25.4 million in 2019. This decrease was primarily as a result of a reduction in our number of employees and a reduction of travel expenses due to mobility restrictions implemented by the governments of the countries where we operate and implemented due to the COVID-19 pandemic.

Other Income

In 2020, our other income was U.S.$1.1 million, which represented a decrease of U.S.$5.3 million, or 82.8%, compared to U.S.$6.4 million in 2019. This decrease was primarily as a result of a reduction in indemnities received from insurance companies and an impairment reversal in avocado and grapes cash-generating units in 2019.

Other Expenses

In 2020, our other expenses were U.S.$10.2 million, which represented an increase of U.S.$5.2 million, or 104.0%, over our other expenses of U.S.$5.0 million in 2019. This increase was primarily a result of increased non-recurrent costs related to the COVID-19 pandemic, such as the temporarily increase in transportation cost and higher levels of sickness leave of our workers, and costs related to our corporate restructuring efforts.

Net Foreign Exchange Transaction (Losses) Gains

In 2020, our net foreign exchange transaction losses were U.S.$0.7 million, compared to our net foreign exchange transaction gains of U.S.$2.5 million in 2019. These losses were primarily as a result of volatility in foreign exchange markets. Our exchange differences are mainly explained by the change in the value of our accounts receivable in Euros when converted to our functional currency, which is the U.S. dollar.

Operating Profit

In 2020, our operating profit was U.S.$90.1 million, which represented a decrease of U.S.$11.5 million compared to U.S.$101.6 million in 2019. This decrease was primarily as a result of reduced avocado prices due to lower demand from the food industry.

Share of Profit of Investments Accounted for Using the Equity Method

In 2020, our share of profit of investments accounted for using the equity method was U.S.$1.7 million, which represented an increase of U.S.$1.62 million, or 2,025.0%, over our share of profit of investments of U.S.$0.08 million in 2019. This corresponds to the increase of profits received from our affiliate Empacadora de Frutos Tropicales S.A. (“Empafrut”), the company in charge of packaging our grapes and mangoes in which we own a participation equivalent to the 35% of its shares.

Financial Income

In 2020, our financial income was U.S.$0.8 million, which represented a decrease of U.S.$0.2 million, or 20.0%, compared to U.S.$1.0 million in 2019. This decrease was primarily as a result of the reduction of income generated by short-term deposits in 2020.

Financial Cost

In 2020, our financial cost was U.S.$35.0 million, which represented an increase of U.S.$13.1 million, or 59.8%, compared to U.S.$21.9 million in 2019. This increase was primarily due to costs related to Camposol’s prepayment of its 10.50% Senior Secured Notes due 2021, Camposol S.A.’s issue of its 6.000% Senior Notes due 2027 and fees incurred in the prepayment of Camposol S.A.’s syndicated loan.

 

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Profit Before Income Tax

In 2020, our profit before income tax was U.S.$57.6 million, which represented a decrease of U.S.$23.2 million, or 28.7%, compared to U.S.$80.8 million in 2019. This decrease was primarily as a result of increases in financial costs and selling expenses.

Income Tax (Expense) Benefit

Our effective tax rates for operations were -48.2% in 2020 and 3.5% in 2019. For the years ended December 31, 2020 and 2019, we recognized profit before tax. For the year ended December 31, 2020, we recognized a tax expense of U.S.$27.8 million, mainly as a result of deferred tax adjustments caused by changes in Peruvian law and non-taxable currency adjustments between our books and tax accounting rules. In 2019, we recognized a tax credit of U.S.$2.8 million.

Profit for the year

As a result of the foregoing, for the year ended December 31, 2020 our profit for the year was U.S.$29.8 million, which represented a decrease of U.S.$53.8 million compared to U.S.$83.6 million in 2019. This was primarily as a result of an increase in income tax expenses and financial costs.

Revaluation surplus (land)

In 2020, we registered a revaluation surplus of U.S.$243.6 million. This was primarily as a result of a change in the Company’s accounting policy on how its lands (classified in property, plant and equipment) were accounted from a cost basis to a fair value basis. See Note No. 4 to our audited consolidated financial statements included elsewhere in this prospectus.

Deferred income tax of revaluation surplus

In 2020, we registered a deferred income tax of revaluation surplus of U.S.$71.0 million. This was as a result of the revaluation surplus of the lands of the Company due to a change in one of its accounting policies as described above.

Liquidity and Capital Resources

As of December 31, 2020, our cash position totaled U.S.$34.0 million, an increase of U.S.$6.2 million compared to U.S.$27.8 million as of December 31, 2019, mainly due to the implementation of measures to maximize our cash position, such as reductions in the average term to collect our accounts receivables and the increase in the average term to pay our accounts payables.

As of December 31, 2020, our debt amounted to U.S.$474.4 million, comprised of: (i) U.S.$351.0 million in long-term debt, including the Senior Secured Notes due 2027, (ii) U.S.$57.9 million in debt owed to bank loans, and (iii) U.S.$54.5 million in various leasing operations and accrued interest related with the previously mentioned debt, net of capitalized structuring costs.

 

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As of December 31, 2020, we had total credit lines with mainly local financial institutions amounting to U.S.$150.8 million of which we used a total of U.S.$68.9 million. As of that same date, we had available credit lines of U.S.$82.0 million, as shown in the table below.

 

                                        Covenants  

Financial Institution

  Working
Capital
    Medium/Long
Term
    Total lines     Lines used     Available
lines
    Currency     Yes     No  

Banco BBVA (Peru)

    25,000,000       11,000,000       38,000,000       36,000,000       2,000,000     U.S. $           X  

Scotiabank Peru

    23,850,000       —         43,860,000       23,850,000       20,010,000     U.S. $           X  

Banco ICBC (Peru)

    9,000,000       —         9,000,000       9,000,000           U.S. $           X  

Banco Interbank (Peru)

    —         —         20,000,000       —         20,000,000     U.S. $           X  

Banco Santander (Peru)

    —         —         39,954,000       —         39,954,000     U.S. $           X  

Total

    57,850,000       11,000,000       150,814,000       68,850,000       81,964,000        

The following table sets forth our outstanding financial indebtedness at December 31, 2020:

 

     Principal Amount
at December 31, 2020
     Maturity  

Bank loans(1)

   U.S.$ 57.9 million        120 days  

Long-term debt(2)

   U.S.$ 362.0 million        6.0 years  

Financial leases and accrued interest

   U.S.$ 54.5 million        2.1 years  

Total

   U.S.$ 474.4 million     

 

(1) 

Includes short term debt.

(2) 

Includes U.S.$350.0 million aggregate principal amount of our 6.000% Senior Notes due 2027 and a U.S.$12.0 million of mid-term loans including the interest derived from such loans.

We continually review our debt structure against potential market opportunities that may allow us to reduce borrowing costs and lengthen maturities.

Cash Flow Information

The following table presents selected cash flow information for the periods indicated.

 

     Year ended December 31,  
     2020      2019  
     (in thousands of U.S. dollars)  

Net cash generated from operating activities

     85,700        74,240  

Net cash used in investing activities

     (71,405      (105,658

Net cash generated from financing activities

     (8,092      26,701  
  

 

 

    

 

 

 

Net increase (decrease) in cash and cash equivalents

     6,203        (4,717

Cash and cash equivalents at beginning of year

     27,788        32,505  

Cash and cash equivalents at end of year

     33,991        27,788  

Net Cash Generated from Operating Activities

In 2020, we generated U.S.$85.7 million from operations, compared to U.S.$74.2 million in 2019. This increase in cash generated from operating activities as compared to 2019 is due mainly to the increase in our revenues derived from the sales of avocado and secondarily to the increase in our revenues resulting from our sales of tangerines, mangoes and grapes, offset by a decrease in the sale of blueberries.

 

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Net Cash Used in Investing Activities

In 2020, we used cash flow in net investing activities in an amount of U.S.$71.4 million, and mainly in the investment in lands in Colombia as well as in certain aspects of our operations in Peru which included equipment for our blueberries production and new lands in Peru. In 2019, we used cash flow from investing activities in an amount of U.S.$105.7 million, mainly in our investments in lands in Colombia for the production of avocados and in Peru for the production of blueberries and grapes.

Net Cash Generated from Financing Activities

Cash flow used in financing activities in 2020 was U.S.$8.1 million, compared to cash flow generated from financing activities of U.S.$26.7 million in 2019. During 2020, we used cash flow in financing activities as described below:

U.S.$31.3 million generated from the issuance of international bonds and the full prepayment of a syndicated loan and bank loans,

U.S.$9.4 million for payments mainly of leasing liabilities and some other liabilities,

U.S.$22.0 million from a payment to related parties to acquire the shares of Camposol Uruguay S.R.L., and

U.S.$8.0 million for payments to related party companies.

During 2019, we used cash flow in financing activities as described below:

U.S.$139.1 million generated from the full prepayment of international bonds and the obtention of a syndicated loan and bank loans,

U.S.$5.4 million for payments mainly of leasing liabilities and some other liabilities,

U.S.$65.0 million for a payment to financing provided to the former parent entity,

U.S.$42.0 million for payments to related parties,

U.S.$10.0 million for payments to distribute dividends to shareholders, and

U.S.$10.0 million to offset capital contributions to constitute the Company.

Camposol’s 6.000% Senior Notes due 2027

On February 3, 2020, Camposol issued its Senior Notes due 2027 (the “Senior Notes due 2027”) pursuant to an Indenture, dated the same date, between Camposol, the Company and The Bank of New York Mellon. Camposol Holding PLC is a guarantor under the Senior Notes due 2027.

The Senior Notes due 2027 pay interest at a rate of 6.000% per year, payable semi-annually in arrears on February 3 and August 3, with a single bullet principal payment on February 3, 2027.

The Senior Notes due 2027 are subject to certain customary covenants under the Indenture, such as limitations on the incurrence of indebtedness and disqualified stock, restricted payments, asset sales, dividend and other payments restrictions affecting certain restricted subsidiaries, issuance of guarantees by restricted subsidiaries, transactions with affiliates, use of proceeds and business activities.

The Senior Notes due 2027 are also subject to customary events of default, including among others, default on payment of principal and/or interest, breach of certain covenant provisions, a cross-default provision with any other indebtedness, failure to pay judgments or orders of payment for money, voluntarily or involuntarily commencing insolvency procedures, denying the obligations under the guarantee, disaffirming the validity of the security interests, failure of perfecting the first lien security interests and failure of maintaining the liens and collateral documents in full force and effect.

 

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Camposol may redeem the Senior Notes due 2027 under varying redemption prices and circumstances, including redeeming up to 40% of the principal amount of the Senior Notes due 2027 at any time prior to February 3, 2023 and upon sixty days from the sale of our Ordinary Shares or Camposol’s ordinary shares, at a redemption price of 106% of the principal amount of the Senior Notes due 2027 and accrued interest, if any.

Lease liability

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 (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease.

We lease certain property, plant and equipment. Leases of property, plant and equipment where we have substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalized at the lease’s commencement at the lower of the fair value of the leased property and the present value of the minimum lease payments.

Each lease payment is allocated between the liability and finance charges. The corresponding rental obligations, net of finance charges, are included in long-term debt. The interest payments are charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases are depreciated over the shorter of the useful life of the asset and the lease term.

Bank loans

As of December 31, 2020, our outstanding bank loans were as follows:

 

   

U.S.$11.0 million Mid-Term Loan with Banco BBVA Continental (the “Mid-Term Loan”), which will mature and be payable in full on November 2025 through nineteen quarterly installments. The use of proceeds of the Mid-Term Loan was for investing in our Colombian operations. As of December 31, 2020, the outstanding principal balance of this loan was U.S.$11.0 million which accrues interest at LIBOR plus 3.2%.

Financial Contractual Obligations and Commitments

The following tables present information relating to our financial contractual obligations, as of December 31, 2020:

 

Contractual Obligations

          Payment Due by Period  
            2021      2022-2024      2024-2026      >2026  
     Total      Less than 1 year      1 to 3 years      3 to 5 years      More than 5 years  
     (in thousands of U.S.$)  

Long-term debt

     361,983        7,368        2,001        3,962        348,652  

Lease obligations

     54,453        14,522        23,304        7,725        8,902  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     416,436        21,890        25,305        11,687        357,554  

Capital Expenditures

Since the acquisition of Camposol S.A. in 2007 by investors led by Dyer Coriat Holding (since renamed Generación del Pacífico), we have made substantial investments in diversifying crops, significantly growing planted areas of avocados and opening the U.S. market for Peruvian Hass avocados and grapes. In addition, we invest yearly in research and development, which includes costs associated with physical facilities, purchase of new equipment, new technologies and other expansion and improvement projects associated with our business.

In our capital expenditure program for 2021, we will invest approximately U.S.$52.1 million, of which U.S.$24.4 million is expected to be invested in Peru (including U.S.$4.6 million in processing plans and U.S.$4.1 million in R&D), U.S.$13.1 million in Colombia, U.S.$10.3 million in Uruguay and U.S.$4.3 million in other countries.

 

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During 2020, we invested a total of U.S.$71.4 million in capital expenditures, of which U.S.$52.7 million were invested in Peru (including U.S.$28.3 million in blueberries and U.S.$5.1 million in grapes), U.S.$9.1 million in Colombia, U.S.$5.6 million were invested in Uruguay and U.S.$2.3 million were invested in Chile.

During 2019, we invested a total of U.S.$105.7 million in capital expenditures, of which U.S.$54.8 million were invested in Peru, U.S.$45 million in Colombia and U.S.$5.2 million in Uruguay.

During 2018, we invested a total of U.S.$120.6 million in capital expenditures, of which U.S.$33.2 million were invested in blueberries in Peru, U.S.$15.3 million were invested in avocado in Colombia and Peru, U.S.$26.4 million were invested in tangerines in Peru and Uruguay, and U.S.$11.5 million were invested in grapes and other products in Peru.

We may modify our capital expenditure program at any time to address, among others, changes in market conditions for our products, changes in general economic conditions in Peru, Colombia, Uruguay, Mexico, Chile, the United States, Europe, China or any other relevant country or region, changes in the prices of raw materials, interest rate changes, inflation and competitive conditions. Accordingly, our projected capital expenditures may not be actually made, or if made, the actual amount of such capital expenditures could be significantly greater or less than projected.

Quantitative and Qualitative Disclosure about Market Risk

In the normal course of our business, we are exposed to foreign exchange, fruits and vegetables prices and interest rate risk. The following discusses our exposure to these risks. This discussion contains forward-looking statements that are subject to risks and uncertainties. Actual results could vary materially as a result of a number of factors including those set forth in the risk factors section of this prospectus. Uncertainties that are either non-financial or not quantifiable, such as political, economic, tax, other regulatory, or credit risks, are not included in the following assessment of our market risks. See Note 3 to the audited consolidated financial statements included elsewhere in the prospectus for additional information regarding our market risks.

Foreign Exchange Rate Risk

Our activities and borrowings in foreign currency expose us to the risk of fluctuations in U.S. dollar exchange rates. We seek to mitigate this risk partially by maintaining debt balances in foreign currency. Notwithstanding the fact that a significant amount of our assets are located in Peru, our functional currency is the U.S. dollar, primarily as a result of our export driven business and the fact that our primary revenues and costs are denominated in U.S. dollars. We buy and sell our products and services and obtain funding for our working capital and investments mainly in U.S. dollars. We generally do not enter into derivative financial instruments to hedge our exposure to exchange rate risk.

During 2020, 41% of our production costs were related to labor, which are incurred in soles. As a result, our financial results are affected by exchange rate fluctuations between the U.S. dollar and the sol. Furthermore, a material portion of our sales are made to customers in Europe, with such sales being made in Euros. As a result of our functional currency being the U.S. dollar, our financial results are affected by the exchange rate between the Euro and the U.S. dollar. Future variations in exchange rates could have a significant impact on the portion of our costs denominated in soles or the portion of our sales denominated in Euros, thus affecting our results of operations.

For the year ended December 31, 2020, 61.3% of our collections were denominated in U.S. dollars, our functional currency, and of the rest of the collections 26.7% were denominated in Euros, 7.2% were denominated in soles and 4.4% were denominated in Yuan. Given this exposure, we estimate that a 6.4% strengthening/weakening of the U.S dollar against the Euro would generate an increase/decrease in collections during 2021 of approximately U.S.$7.5 million, a 3.7% strengthening/weakening of the U.S dollar against the Peruvian Sol

 

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would generate an increase/decrease in collections during 2021 of approximately U.S.$0.8 million, and a 2.2% strengthening/weakening of the U.S dollar against the Yuan would generate an increase/decrease in collections during 2021 of approximately U.S.$0.7 million.

Price Risk

We are exposed to the risk of fluctuations in the prices for our products, as international prices of fruits and vegetables are subject to changes. Although we seek to mitigate our exposure to price risk by selling a portion of our production from each season on a forward basis, the amount and terms of any such forward sales is subject to market risk and other commercial uncertainties, and we do not hedge the price at which our products are sold and as a result are fully exposed to the effects of changes in prevailing market prices of fruits and vegetables. A decline in the market price of fruits and vegetables would adversely impact our revenues, net income and cash flows and could have a material adverse effect on our ability to repay our debt and meet our other financial obligations.

For the year ended December 31, 2020, we had U.S.$343.2 million in revenues, which were primarily composed of blueberries and avocado. Given these volumes and distribution of revenues, we estimate that a 10% increase/decrease in the average price, would generate a higher/lower pre-tax income for 2020 of approximately U.S.$34.3 million, given all other variables remaining constant.

Interest Rate Risk

Our exposure to interest rate risk arises primarily from loans and short-term borrowings. Borrowings issued at variable rates expose us to interest rate risk. As of December 31, 2020, our long-term debt contracts are set at a fixed interest rate. Our short-term debts are also set at a fixed interest rate during the life of the contracts but in the renovation of these contracts the interest rate could rise depending on the current market conditions. We do not enter into derivative financial instruments to hedge our exposure to interest rate risk.

As of December 31, 2020, we had U.S.$58.9 million of short-term debt which is subject to changes in the interest rates. All of our medium and long term-debt has fixed rates. Given this current exposure to interest rate fluctuations, we estimate a variation of 100 basis points in interest rates would increase or lower our annual pre-tax income by approximately U.S.$0.6 million.

Liquidity Risk

Liquidity risk is the risk that we will encounter difficulty in meeting the obligations associated with our financial liabilities that are settled in cash. Cash flow forecasting is performed in our operating entities and aggregated at a consolidated level. We continuously monitor our risk to a shortage of funds.

Credit Risk

Credit risk is the risk of financial loss to us if a debtor or counterparty to a financial instrument fails to meet its contractual obligations, and arises mainly from our receivables. We are exposed to credit risk from our operating activities, primarily receivables, and cash, cash equivalents and deposits held with banks and financial institutions.

Inflation Risk

We do not believe that inflation has had a material effect on our business, financial condition or results of operations in the reporting period.

Off-Balance Sheet Arrangements

We do maintain a U.S.$1.5 million off-balance sheet guarantee.

 

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Critical Accounting Policies

Our audited consolidated financial statements have been prepared in accordance with IFRS as issued by the IASB. The preparation of our financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. While our significant accounting policies are more fully described in the notes to our audited consolidated financial statements, we believe that the following accounting policies and estimates are critical to our business operations and understanding of our financial results. We refer to Note 4 to the audited consolidated financial statements included elsewhere in this prospectus for additional information.

Biological Assets. We assess fair value of biological assets in accordance to the criteria set out in IAS 41 and IFRS 13 by determining the present value of net cash flows expected to be obtained from the assets. In determining fair value, we exercise judgment to decide how biological assets are recovered and which assumptions to use, which can influence the fair value calculation. These include estimates for plantation volumes, prices, weather condition on expected yields, discount rate and cost per hectare.

We also consider a short-term risk-adjusted discount rate affected by specific industry and market risk considerations. We perform a sensitivity analysis of the biological asset to take into consideration volatility levels that would give rise to a material effect in profit before tax. In 2020, a 5% increase or decrease in the discount rate would have had an effect on profit before tax of a loss or gain, respectively, of U.S.$ 1.4 million compared to a loss or gain, respectively, of U.S.$0.3 million for 2019. We refer to Notes 4 and 10 to the audited consolidated financial statements included elsewhere in this prospectus for additional information about the fair value of our biological assets.

Long lived assets carrying amounts and impairment charges. We annually assess if a provision for impairment is required under our accounting policies to determine goodwill. We make judgments in analyzing the evidence of impairment and determining value in use. These include judgments in preparing the expected future cash flows, including forecasting our future operations, forecasting economic factors that may impact revenue and costs and determining the discount rates that are applied to those cash flows.

Our estimates in determining the recoverable amount of the avocado cash generating unit depend on consideration of prior-year events in the market and our prior operations, which have affected production and prices of avocado negatively, and have resulted in a change in our strategy. We consider these in estimating expected future cash flows and they are factored into cash flows for the coming years. We refer to Notes 6 and 8 to the audited consolidated financial statements included elsewhere in this prospectus for the change in estimates by us in determining the impairment that was recognized in goodwill for 2020 and for additional information on how we determine impairment of assets.

Income Tax. In determining our tax obligations and expenses we must interpret applicable tax laws and regulations. We receive advice from our professional legal tax counsel before making any decision on tax matters. Even though we consider our estimates to be prudent and appropriate, differences of interpretation may arise with relevant tax authorities that may require future tax adjustments. We recognize liabilities for situations observed in preliminary tax audits based on estimates as to whether the payment of additional taxes is required. When a final tax result of these situations is different from the amounts that were initially recorded, the differences are charged to the current and deferred income tax assets and liabilities in the period for which the differences are determined.

We perform a sensitivity analysis to determine the effect of inappropriate interpretations of tax law. For 2020, if an actual final tax outcome on the judgment areas differs by a 10% decrease or increase from our estimates, it would result in a U.S.$0.7 million loss or gain, respectively, compared to U.S.$0.07 loss or gain, respectively, for 2019. We refer to Notes 18 and 34 to the audited consolidated financial statements included elsewhere in this prospectus for additional information about our income taxes.

 

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Determination of functional currency. We have determined our functional currency to be the U.S. dollar. We sell our products in international markets to customers in a number of countries and sales are influenced by a number of currencies. Most operating costs are incurred in Peru but many are invoiced in U.S. dollars and the price of some raw materials and supplies are influenced by the U.S. dollar. Moreover, the borrowings and cash balances are held in U.S. dollars. We used our judgment in determining our functional currency by taking into account several factors and concluded that the currency that most faithfully represents our economic environment and conditions is the United States dollar. We refer to Note 4 to the audited consolidated financial statements included elsewhere in this prospectus for additional information about the determination of our functional currency.

Bearer plants. We apply judgment in establishing when bearer plants are available for use, which is the end of the permanent investment period (point of maturity). At this point, they are designated as bearer plants (mature) and depreciation commences. The permanent investment period starts one day after the transplant to the plot until the first harvest. We refer to Notes 2.6 and 6 to the audited consolidated financial statements included elsewhere in this prospectus for additional information on our bearer plants.

Lease liability. In determining the lease term, Management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated). The assessment is reviewed if a significant event or a significant change in circumstances occurs which affects this assessment and that is within the control of the lessee.

Estimation of fair value of lands

Since 2020, the Company has changed its accounting policy on how its lands (classified in property, plant and equipment) were accounted from a cost basis to a fair value basis.

Between February and August 2020, the Company performed valuations of its lands (classified in property, plant and equipment and bearer plants), with most of them revalued in June 2020. The Company’s new accounting policy determines a land property’s value within a range of reasonable fair value estimates. Land is recognized at fair value and is to be evaluated every year or when there are significant changes in its value as determined by external independent appraisers. At the end of each reporting period, management updates its assessment of the fair value of each property, taking into account the most recent independent valuations. Management determines a property’s value within a range of reasonable fair value estimates. Under this accounting policy, the best evidence of fair value is current prices in an active market for similar properties. A revaluation surplus is credited as revaluation surplus in shareholder’s equity. The Company carries out a sensitivity analysis of its lands considering the volatility levels that would give rise to a material effect in revaluation surplus. The key input under this approach is the price per hectare from current year sales of comparable lots of lands in the area (location and size).

The Company believes this change better reflects the current value of its property and therefore provides more relevant information to management, users of the financial statements and others. The accounting change has been applied prospectively in accordance with IAS 16 during 2020 and therefore the adoption of the new policy had no effect on previous years. The effect in the year ended December 31, 2020 was to create a revaluation surplus for the year in the amount of U.S.$258.4 million and a provision for deferred income tax for U.S.$75.3 million.

The Company estimates that, other factors being constant, a 5% reduction in the sales price for the year ended December 31, 2020, would have reduced the value of its lands by US$12.2 million which would negatively impact, net of its tax effect, on the “Revaluation surplus” item in the Consolidated Statement of Comprehensive Income.

 

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SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

The following table presents our selected consolidated financial information, as of and for the years indicated, in each case in accordance with IFRS. This information should be read in conjunction with, and is qualified in its entirety by reference to our audited consolidated financial statements and the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” appearing elsewhere in this prospectus.

We have derived the consolidated statement of financial position as of December 31, 2020 and 2019 and the consolidated statement of comprehensive income and consolidated statement of cash flows for the years ended December 31, 2020 and 2019 from our audited consolidated financial statements included elsewhere in this prospectus.

Consolidated Statement of Comprehensive Income:

 

     Year ended December 31,  
           2020                 2019        
     (in thousands of U.S.
Dollars, except for the per
share)
 

Revenue

     343,245       326,638  

Cost of sales:

    

Cost of sales

     (177,913     (156,908

Depreciation of bearer plants

     (22,493     (19,164

Gross profit before adjustment for biological assets

     142,839       150,566  

Net gain arising from changes in fair value of biological assets

     23,981       10,163  
  

 

 

   

 

 

 

Gross profit after adjustment for biological assets

     166,820       160,729  
  

 

 

   

 

 

 

Selling expenses

     (44,916     (37,659

Administrative expenses

     (22,090     (25,428

Other income

     1,115       6,410  

Other expenses

     (10,208     (5,009

Net foreign exchange transactions (losses) gains

     (663     2,517  
  

 

 

   

 

 

 

Operating profit

     90,058       101,560  
  

 

 

   

 

 

 

Share of profit of investments accounted for using the equity method

     1,708       81  

Financial income

     816       1,001  

Financial cost

     (34,997     (21,851
  

 

 

   

 

 

 

Profit before income tax

     57,585       80,791  
  

 

 

   

 

 

 

Income tax (expense) benefit

     (27,754     2,843  
  

 

 

   

 

 

 

Profit for the year

     29,831       83,634  
  

 

 

   

 

 

 

Other comprehensive income:

    

Item that may be reclassified to profit or loss:

    

Currency translation adjustment

     (1,223     (2,131

Item that will not be reclassified to profit or loss:

    

Revaluation surplus (land)

     243,639       —    

Deferred income tax of revaluation surplus

     (71,025     —    
  

 

 

   

 

 

 

Total comprehensive income for the year

     201,222       81,503  

Profit attributable to:

    

Owners of the parent

     29,143       83,263  

Non-controlling interests

     688       371  

Total comprehensive income for the year attributable to:

    

Owners of the parent

     200,700       81,322  

Non-controlling interest

     522       181  

Earnings per share—Basic and Diluted

     0.29       0.83  

 

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Consolidated Statement of Financial Position:

 

     At December 31,  
     2020      2019  
     (in thousands of U.S.
dollars, except for the
number of shares
outstanding)
 

Cash and cash equivalents

     33,991        27,788  

Working capital(1)

     146,812        116,672  

Total assets

     1,112,850        790,083  

Long-term debt(2)

     354,615        313,910  

Total equity and liabilities

     1,112,850        790,083  

Total equity

     406,980        227,758  

Share capital

     10,000        10,000  

Number of shares outstanding (thousands of shares)

     100,000        100,000  

 

(1)

Total current assets minus total current liabilities.

(2)

Only includes the non-current portion.

Consolidated Statement of Cash Flows:

 

     For the year ended
December 31,
 
     2020      2019  
     (in thousands of U.S.
dollars)
 

Cash paid to suppliers and employees

     (231,354      (244,793

Interest paid

     (21,845      (21,092

Net cash generated from operating activities

     85,700        74,240  

Net cash used in investing activities

     (71,405      (105,658

Net cash (used in) generated from financing activities

     (8,092      26,701  

Non-IFRS information and other information:

 

     For the year ended
December 31,
 
     2020     2019  
     (in thousands of U.S.
dollars, except margins
and dividends declared
per share)
 

Profit for the year margin(1)

     8.69     25.60

Aggregate amount of dividends paid

     —         10,000  

Adjusted EBITDA(2)

     116,825       120,241  

Adjusted EBITDA Margin(2)

     34.0     36.8

 

(1)

We calculate Profit margin as Profit for the year from our operations divided by Revenue. This indicator allows investors and management to evaluate the margin of our operations.

(2)

Adjusted EBITDA and Adjusted EBITDA Margin are non-IFRS measures. See “Presentation of Financial Measures and Other Information” for a discussion of how we define and calculate these measures and why we believe they are important. A reconciliation of Adjusted EBITDA to profit for the period, the most directly comparable measure calculated in accordance with IFRS, is set forth below and is included in “Selected Consolidated Financial and Other Data”.

 

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Reconciliation:

 

     For the year ended
December 31,
 
     2020     2019  
    

(in thousands of U.S.
dollars, except
Adjusted

EBITDA Margin)

 

Profit for the year

     29,831       83,634  

Interest net(3)

     34,181       20,850  

Income tax (expense) benefit

     27,754       (2,843

Depreciation and amortization

       13,598  

Depreciation of bearer plants

     22,493       19,164  

Share of profit of investments accounted for using the equity method

     (1,708     (81

Net foreign exchange transactions (losses) gains(4)

     663       (2,517

Other income

     (1,115     (6,410

Other expenses

     10,208       5,009  

Net gain arising from changes in fair value of biological assets

     (23,981     (10,163
  

 

 

   

 

 

 

Adjusted EBITDA

     116,825       120,241  
  

 

 

   

 

 

 

Adjusted EBITDA Margin(5)

     34.0     36.8

 

(3)

We calculate interest net by adding financial income and financial cost.

(4)

Gains/Losses due to the translation of currencies into our functional currency, the U.S. dollar.

(5)

We calculate Adjusted EBITDA Margin as Adjusted EBITDA divided by Revenue.

 

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BUSINESS

Overview

We are among the largest suppliers of fresh and healthy food products in Latin America in terms of revenue. Our operations are vertically integrated, thus we have control over our entire value chain: fields, packing facilities, sales and distribution channels. Our 20-year track record of success introducing and scaling new products in the demanding European, United States and Chinese markets, mainly through world-class retailers (such as Costco, Walmart, OGL, ALDI, Edeka, Sam’s Club, Publix, Kaufland, Alibaba, JD.com, Tesco and Lidl, among others), is sustained by our recognized value proposition: high consistency, superior quality and full traceability. Moreover, our sustainable production practices foster socially-responsible and environmentally- friendly practices. Our main products are fresh blueberries, avocados and other crops, which includes tangerines, mangoes and grapes. Our value proposition is mainly supported by our ability to provide consistency, quality and full traceability to our clients, mainly through our international commercial arm.

 

 

LOGO

Our main business unit, Fresh Produce, is focused on fresh fruit and vegetable production. Our three reported segments are composed of two segments, blueberries and avocados, which are our most relevant products and a third segment grouped as “Other” which mainly includes tangerines, mangoes and grapes. These business units are supported by our international commercial platform, with commercial and distribution offices in the United States, the Netherlands, China and Switzerland, and a Costa Rican branch of our Swiss commercial office.

 

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Productive fields information:

The following tables shows information regarding our total land including the distribution of our productive fields by crop and other detailed for the periods indicated:

 

     As of December 31,  
     2020     2019  
     Production      Total
Planted
    Production      Total
Planted
 
     (MTs)      (HAs)     (MTs)      (HAs)  

Results by business line:

          

Blueberries

     25,566        2,652       29,563        2,559  

Avocados

     32,034        4,816       23,121        4,410  

Other(1)

     52,489        2,450       29,327        1,956  
  

 

 

    

 

 

   

 

 

    

 

 

 

Total

     110,089        9,918       82,011        8,925  
  

 

 

    

 

 

   

 

 

    

 

 

 

Total land owned (HAs)

        20,567          20,556  

Total planted (HAs) from continued operations

        9,918          8,925  

Average yield (%):

          

Peak phase

     5,710        57.6     5,327        59.7

Medium phase

     1,399        14.1     804        9.0

Unproductive phase

     2,809        28.3     2,794        31.3
     9,918          8,925     

 

(1)

Includes tangerines, mangoes, grapes and other products.

Geographic distribution of exports based on revenues:

The following tables set forth, in thousands of U.S. dollars, the distribution of our exports by geography for the periods indicated:

 

     For the year ended
December 31,
 
     2020      2019  

United States