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STRICTLY CONFIDENTIAL Offering Memorandum

PACIFIC ANDES RESOURCES DEVELOPMENT LIMITED


(incorporated in Bermuda)
S$200,000,000 8.50% Bonds due 2017
Issue Price: 100.00%
The Bonds will bear interest from July 30, 2014 at the rate of 8.50% per year. We will pay interest on the Bonds, semi-annually in arrear, on
the interest payment date (as defined in the Terms and Conditions of the Bonds) falling on, or nearest to, January 30 and July 30 of each year,
beginning on January 30, 2015.
Payments on the Bonds will be made without deduction for or on account of taxes of Bermuda or any subdivision or any authority thereof or
therein having power to tax, unless such deduction is required by law as described under Terms and Conditions of the Bonds Taxation.
Unless previously redeemed, or purchased and cancelled, the Bonds will be redeemed at their principal amount on the interest payment date
falling on, or nearest to, July 30, 2017. We may, at our option, redeem the Bonds in whole, but not in part, at any time, on giving not less than
30 nor more than 60 days notice to the Bondholders (which notice shall be irrevocable), at their principal amount, together with accrued and
unpaid interest to, but excluding the date fixed for, redemption, if we have or will become obliged to pay additional amounts as a result of any
change in, or amendment of, the tax laws or regulations of Bermuda or any political subdivision thereof or any authority thereof or therein
having power to tax or any change in the application or official interpretation of such laws or regulations and such obligation cannot be
avoided by our taking reasonable measures available to us. See Terms and Conditions of the Bonds Redemption and Purchase
Redemption for taxation reasons. The Bonds may be redeemed at the option of the holders at a redemption price equal to 101% of their
principal amount, together with accrued interest up to but excluding the date fixed for redemption, upon the occurrence of a Change of
Control. See Terms and Conditions of the Bonds Redemption and Purchase Redemption for Change of Control. The Bonds may be
redeemed at the option of the holders at a redemption price equal to 100% of their principal amount, together with accrued interest up to but
excluding the date fixed for redemption, upon the cessation or suspension of trading of the shares of the Issuer on the SGX-ST (as defined
below) or an Alternative Stock Exchange (as defined in the Terms and Conditions of the Bonds). See Terms and Conditions of the Bonds
Redemption and Purchase Redemption upon Cessation or Suspension of Trading of Shares.
For so long as any Bond remains outstanding, the Issuer shall not directly or indirectly permit: (i) its Consolidated Tangible Net Worth (as
defined in the Terms and Conditions of the Bonds) as at the end of any Relevant Period (as defined in the Terms and Conditions of the Bonds)
to be less than HK$10.0 billion; (ii) the Maximum Leverage Ratio (as defined in the Terms and Conditions of the Bonds) as at the end of any
Relevant Period to exceed 1.5:1.0; and (iii) the Dividend (as defined in the Terms and Conditions of the Bonds) with respect to any fiscal year
to be more than 40% of Net Profit After Tax per Annum (as defined in the Terms and Conditions of the Bonds) with respect to the same fiscal
year. See Terms and Conditions of the Bonds Covenants and Undertakings Financial Covenants.
Investing in the Bonds involves certain risks. See Risk Factors beginning on page 20.
Approval in-principle has been received for the listing and quotation of the Bonds on the Official List of the Singapore Exchange Securities
Trading Limited (the SGX-ST). The SGX-ST assumes no responsibility for the correctness of any of the statements made or opinions or
reports contained in this offering memorandum. Approval in-principle for the listing and quotation of the Bonds on the Official List of the
SGX-ST is not to be taken as an indication of the merits of the Company, its subsidiaries or the Bonds.
The Bonds have not been and will not be registered under the United States Securities Act of 1933, as amended (the Securities Act). Subject
to certain exceptions, the Bonds may not be offered, sold or delivered within the United States unless pursuant to an exemption from or in a
transaction not subject to the registration requirements of the Securities Act. The Bonds are being offered and sold outside the United States
in reliance on Regulation S of the Securities Act. For a description of these and certain further restrictions on offers and sales of the Bonds and
the distribution of this offering memorandum, see Subscription and Sale.
The Bonds have not been rated. The Bonds will be issued in registered form and will be represented by a Global Certificate, which will be
deposited with a common depositary on behalf of Euroclear Bank S.A./N.V. (Euroclear) and Clearstream Banking socit anonyme,
Luxembourg (Clearstream) and registered in the name of a nominee for the common depositary, on or about July 30, 2014. The Global
Certificate will be exchangeable for definitive certificates in registered form in the denomination of S$250,000 and integral multiples of
S$1,000 in excess thereof in the limited circumstances set out therein. See The Global Certificate.
Sole Lead Manager and Bookrunner
DBS Bank Ltd.
Offering Memorandum dated July 22, 2014
TABLE OF CONTENTS
Page
IMPORTANT NOTICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii
CERTAIN TERMS AND CONVENTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iv
FORWARD-LOOKING STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
THE OFFERING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SUMMARY HISTORICAL FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
RECENT DEVELOPMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
GLOSSARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
TERMS AND CONDITIONS OF THE BONDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
THE GLOBAL CERTIFICATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
CAPITALIZATION AND INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
INDUSTRY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
SUBSTANTIAL SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
SUBSCRIPTION AND SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
INDEX TO FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
i
IMPORTANT NOTICE
We confirm that: (i) this offering memorandum contains all information with respect to the Company and
its subsidiaries (collectively, the Group) and to the Bonds which is material in the context of the issue and
offering of the Bonds; (ii) all statements of fact relating to the Company, the Group and to the Bonds contained
in this offering memorandum are in all material respect true and accurate and not misleading in any material
respect, and there are no other facts in relation to the Company, the Group and to the Bonds the omission of
which would in the context of the issue of the Bonds make any statement in this offering memorandum
misleading in any material respect; (iii) the statements of intention, opinion, belief or expectation with regard to
the Company and the Group contained in this offering memorandum are honestly made or held and have been
reached after considering all relevant circumstances and have been based on reasonable assumptions; and (iv) all
reasonable enquiries have been made by the Company to ascertain such facts and to verify the accuracy of all
such information and statements. The Company accepts full responsibility for the information contained in this
offering memorandum.
No person has been authorized by the Company to give any information or to make any representation not
contained in or not consistent with this offering memorandum or any information supplied by the Company or
such other information as is in the public domain and, if given or made, such information or representation
should not be relied upon as having been authorized by the Company, the Sole Lead Manager, The Hongkong and
Shanghai Banking Corporation Limited as trustee (the Trustee), the Principal Paying Agent (as defined in the
Terms and Conditions of the Bonds) or the other Agents (as defined in the Terms and Conditions of the Bonds).
None of the Sole Lead Manager, the Trustee, the Principal Paying Agent or the other Agents has
independently verified the information contained herein. No representation or warranty is made or implied by the
Sole Lead Manager, the Trustee, the Principal Paying Agent or the other Agents or any of their respective
affiliates, and none of the Sole Lead Manager, the Trustee, the Principal Paying Agent and the other Agents nor
any of their respective affiliates makes any representation or warranty or accepts any responsibility, as to the
accuracy or completeness of the information contained in this offering memorandum. To the fullest extent
permitted by law, none of the Sole Lead Manager, the Trustee, the Principal Paying Agent or the other Agents
accepts any responsibility for the contents of this offering memorandum. Each of the Sole Lead Manager, the
Trustee, the Principal Paying Agent or the other Agents accordingly disclaims all and any liability whether
arising in tort or contract or otherwise (save as referred to above) which it might otherwise have in respect of this
offering memorandum or any such statement. Neither the delivery of this offering memorandum nor the offering,
sale or delivery of any Bonds shall, in any circumstances, create any implication that the information contained
in this offering memorandum is true subsequent to the date hereof or that there has been no adverse change in the
affairs of the Company since the date hereof or create any implication that the information contained herein is
correct as of any date subsequent to the date hereof.
The distribution of this offering memorandum and the offering, sale and delivery of the Bonds in certain
jurisdictions may be restricted by law. Persons into whose possession this offering memorandum comes are
required by the Company, the Sole Lead Manager, the Trustee, the Principal Paying Agent and the other Agents
to inform themselves about and to observe any such restrictions. For a description of certain restrictions on
offers, sales and deliveries of the Bonds and on the distribution of this offering memorandum, see Subscription
and Sale in this offering memorandum.
This offering memorandum may not be used for the purpose of an offer or solicitation by anyone in any
jurisdiction in which such offer or solicitation is not authorized or to any person to whom it is unlawful to make
such an offer or solicitation. This offering memorandum does not constitute an offer or an invitation to subscribe
for or purchase any Bonds, is not intended to provide the basis of any credit or other evaluation, and should not
be considered as a recommendation by the Company, the Sole Lead Manager, the Trustee, the Principal Paying
Agent or the other Agents or any of them that any recipient of this offering memorandum should subscribe for or
purchase any Bonds. Each recipient of this offering memorandum shall be taken to have made its own
investigation and appraisal of the Companys condition (financial or otherwise) with its own tax, legal and
business advisors as it deems necessary.
ii
In making an investment decision, investors must rely on their own examination of the Company and the
terms of the offering of the Bonds, including the merits and risks involved. See Risk Factors for a discussion of
certain factors to be considered in connection with an investment in the Bonds. Each person receiving this
offering memorandum acknowledges that such person has not relied on the Sole Lead Manager or any person
affiliated with the Sole Lead Manager, the Trustee, the Principal Paying Agent or any other Agent in connection
with its investigation of such information or its investment decision.
Except as otherwise indicated in this offering memorandum, all non-company specific statistics and data
relating to our industry or the economies of pertinent jurisdictions, such as the PRC, Peru and Russia, have been
extracted or derived from publicly available information and industry publications. The information has not been
independently verified by the Company or the Sole Lead Manager, the Trustee, the Principal Paying Agent or any
other Agent or by their respective affiliates, directors and advisors, and neither the Company, the Sole Lead
Manager, the Trustee, the Principal Paying Agent or any other Agent nor their respective affiliates, directors and
advisors make any representation as to the correctness, accuracy or completeness of that information. In
addition, third-party information providers may have obtained information from market participants and such
information may not have been independently verified. None of the Sole Lead Manager, the Trustee, the
Principal Paying Agent or any other Agent undertakes to review the Companys financial condition or affairs
during the life of the arrangements contemplated by this offering memorandum nor to advise any investor or
potential investor in the Bonds of any information coming to the attention of any of the Sole Lead Manager, the
Trustee, the Principal Paying Agent or any other Agent.
IN CONNECTIONWITHTHE ISSUE OF THE BONDS, DBS BANK LTD. (THE STABILIZING
MANAGER) (OR ANY PERSON ACTING ON BEHALF OF ANY STABILIZING MANAGER) MAY
OVER-ALLOT BONDS OR EFFECT TRANSACTIONS WITH A VIEW TO SUPPORTING THE
MARKET PRICE OF THE BONDS AT A LEVEL HIGHER THAN THAT WHICH MIGHT
OTHERWISE PREVAIL. HOWEVER, THERE IS NO ASSURANCE THAT THE STABILIZING
MANAGER (OR ANY PERSON ACTING ON BEHALF OF ANY STABILIZING MANAGER) WILL
UNDERTAKE STABILIZATIONACTION. ANY STABILIZATIONACTION OR OVER-ALLOTMENT
MUST BE CONDUCTED BY THE STABILIZING MANAGER (OR ANY PERSON ACTING ON
BEHALF OF ANY STABILIZING MANAGER) IN ACCORDANCE WITH ALL APPLICABLE LAWS
AND RULES.
iii
CERTAIN TERMS AND CONVENTIONS
We have prepared this offering memorandum using a number of conventions, which investors should
consider when reading the information contained herein. In this offering memorandum, references to the
Company or the Issuer are to Pacific Andes Resources Development Limited, and the terms Group, we,
our and us are to the Company and its subsidiaries or, where the context otherwise requires, in respect of the
period prior to the Company becoming the holding company of its present subsidiaries, the present subsidiaries
of the Company, some or any of them and the businesses carried on by such subsidiaries or (as the case may be)
their predecessors. References to you are to the prospective investors in the Bonds.
Unless otherwise specified or the context otherwise requires, all references to S$ or Singapore dollars
are to the official currency of Singapore, to HK$ or Hong Kong dollars are to the lawful currency of Hong
Kong, to CNY, Renminbi are to the lawful currency of the PRC, to US$ or U.S. dollars are to the lawful
currency of the United States of America, to A$ or Australian dollars are to the lawful currency of the
Commonwealth of Australia, to nuevos soles are to the lawful currency of Peru, to Euros are to the lawful
currency of the European Union, and to BD$ or Bermuda dollars are to the lawful currency of Bermuda. Any
discrepancies in the tables included herein between the listed amounts and the totals thereof are due to rounding.
References to PRC and China, for purposes of this offering memorandum, refer to the Peoples
Republic of China and do not include the Hong Kong Special Administrative Region, or Hong Kong, the Macau
Special Administrative Region, or Taiwan. References to Russia refer to the Russian Federation, references to
Peru refer to the Republica del Peru, references to Mauritania refer to the Islamic State of Mauritania,
references to Namibia refer to the Republic of Namibia, references to Australia refer to the Commonwealth
of Australia, references to Hong Kong refer to the Hong Kong Special Administrative Region, references to
Singapore refer to the Republic of Singapore and references to the U.S., U.S.A. or United States refer to
the United States of America. PRC government means the central government of the PRC, including all
political subdivisions (including provincial, municipal and other regional or local governmental entities) and
instrumentalities thereof. Russian government means the central government of Russia, including all political
subdivisions (including provincial, municipal and other regional or local governmental entities) and
instrumentalities thereof. Peruvian government means the central government of Peru, including all political
subdivisions (including provincial, municipal and other regional or local governmental entities) and
instrumentalities thereof.
Any references to the United Nations, the FAO, GLOBEFISH or FAOSTAT or the use of any of the
statistics, materials or databases of the United Nations, the FAO, GLOBEFISH and FAOSTAT in this offering
memorandum do not imply in any way an endorsement by the United Nations and/or FAO in respect of this
offering nor is the use by the Company of such statistics, materials or databases in this offering memorandum to
be taken as an indication of the merits of the Bonds. GLOBEFISH is part of the Fishery Industries Division of the
FAO. It cites statistics, materials and databases from the FAO and other public sources.
Unless otherwise stated, all financial data contained herein which is stated as relating to the Company are
referring to the consolidated data of the Group.
Totals presented in this offering memorandum may not total correctly due to rounding of numbers.
Unless otherwise defined, capitalized terms used in this offering memorandum shall have the meanings
set forth under Definitions or Glossary herein.
iv
FORWARD-LOOKING STATEMENTS
This offering memorandum includes forward-looking statements. All statements other than statements of
historical fact contained in this offering memorandum, including, without limitation, those regarding our future
financial position and results of operations, our strategy, plans, objectives, goals and targets, future developments
in the markets where we participate or are seeking to participate, and any statements preceded by, followed by or
that include the words believe, expect, aim, intend, will, may, anticipate, seek, should or
similar expressions or the negative thereof, are forward-looking statements. These forward-looking statements
involve known and unknown risks, uncertainties and other factors, some of which are beyond our control, which
may cause our actual results, performance or achievements, or industry results, to be materially different from
any future results, performance or achievements expressed or implied by the forward-looking statements. These
forward-looking statements are based on numerous assumptions regarding our present and future business
strategies and the environment in which we will operate in the future. Important factors that could cause our
actual results, performance or achievements to differ materially from those in the forward-looking statements
include, among others, the following:
our operations, competitive position, strategy and prospects;
the availability to us of suitable fishing vessels for acquisition or chartering on favorable terms;
our ability to implement vessel improvements to expand our production capacity of fish and other
marine species;
the availability of fish and other marine species in our fishing grounds;
the availability of qualified crew for the vessels in our fleet;
our ability to make improvements to or maintain our fishmeal processing facilities;
changes in laws, regulations and restrictions, including environmental regulations, relating to
fishing in our fishing grounds or fish processing;
other governmental policies affecting our business, including marine fishing, aquaculture and
trade policies;
our ability to obtain sufficient financing for our operations and our future expansion plans;
our ability to integrate and benefit from acquisitions, joint ventures and strategic alliances;
industry conditions, including the cyclicality of the fish processing industry, unpredictability of
weather conditions and the impact of disease on our business;
estimated demand for the fish and other marine products that we sell, globally and in our primary
markets, and the volatility in the prices of our fish products;
our ability to compete in the geographical areas in which we operate;
the effects of economic, political or social conditions and changes in foreign exchange policy or
rates, including changes relating to conditions in the PRC, which is our largest market;
changes in the cost of, or interruptions in the supply of, bunker fuel; and
possible disruptions to commercial activities due to natural and human-induced disasters,
including terrorist activities and armed conflicts.
v
Additional factors that could cause actual results, performance or achievements to differ materially
include, but are not limited to, those discussed under Risk Factors and elsewhere in this offering memorandum.
We caution you not to place undue reliance on these forward-looking statements which reflect our managements
view only as of the date of this offering memorandum. We undertake no obligation to update or revise any
forward-looking statements, whether as a result of new information, future events or otherwise. In light of these
risks, uncertainties and assumptions, the forward-looking events discussed in this offering memorandum might
not occur.
vi
SUMMARY
The summary below is only intended to provide a limited overview of information described in more detail
elsewhere in this offering memorandum. As it is a summary, it does not contain all of the information that may be
important to investors and terms defined elsewhere in this offering memorandum shall have the same meanings
when used in this Summary. Prospective investors should therefore read this offering memorandum in its entirety.
Business Overview
We are principally engaged in global sourcing, transportation, logistics and supply of frozen seafood
products to the international markets, in particular to the PRC. Through our listed subsidiary, CFGL, we own,
operate and/or manage fishing vessels, source fish from suppliers and own and operate fishmeal processing
plants. In addition, we are one of the leading suppliers of frozen seafood to the PRC, and carry out shipping
services by deploying our vessels to provide other fishing vessels with marine fuel, food and basic provisions. We
are also one of the largest producers of fishmeal in the world. Furthermore, we make strategic investments in
businesses that complement or streamline our existing operations. We are committed to meeting the growing
needs of health and value-conscious consumers around the world.
Fishery and Fish Supply Operations
CFGL is one of the worlds leading upstream industrial fishing operators with access to controlled ocean
resources through quota shares and licenses to fish, with a focus on Peruvian anchovy in Peruvian waters for
processing into fishmeal and fish oil and horse mackerel in the North Atlantic Ocean for human consumption.
CFGL also purchases fish supplies on a spot-basis, which comprise ocean catch fish and other marine species
intended for human consumption. We sell our fish products principally to markets in China, and also to Japan,
Europe and West Africa.
Fishmeal Production Operations
In our fishmeal production operations, we principally produce fishmeal and fish oil using anchovy that we
harvest within Perus exclusive economic zone pursuant to quota shares or purchase from third-party fishing
operators. After the Copeinca Acquisition, we currently operate ten processing plants, which are strategically
located along the coast of Peru, some of which are located at secondary shipping ports to aid in the delivery of
fish from fishing vessels, as well as the export of processed fishmeal and fish oil to customers. The primary
export markets for our fishmeal and fish oil products are China, Germany, Taiwan and Japan.
Frozen Fish Supply Chain Management Operations
Due to an increasing demand for fishery products and our large distribution network in the PRC, we
source a large volume of whitefish such as Alaska pollock and codfish from international suppliers, particularly
fishing companies operating in the North and South Pacific oceans. We own and operate seven reefer vessels with
an aggregate capacity of 59,500 metric tons per voyage. All of these vessels are fully equipped
with refrigerating facilities to ensure fish will be kept frozen during transportation. Where direct high sea
transshipment of frozen fish can be carried out, we send our vessels to the fishing grounds to collect the catch
directly from our suppliers trawlers. We collect frozen seafood products from the trawlers of our suppliers and
then transport them in our reefer vessels to markets in China, South Korea, Africa, Europe and North America
where we sell them directly to import/export companies or store them in bonded warehouses for further
distribution to our customers.
1
The following diagram illustrates the current breakdown of our operations as of the date of this offering
memorandum.
Fishery and fish supply
operations
Fishmeal production
operations
Fish and fish supply
Frozen fish supply
chain management operations
Other strategic
investments
The Company
For the year ended September 28, 2013, we had consolidated revenue of HK$8,764.1 million and
consolidated profit attributable to owners of the Company of HK$777.3 million. As of September 28, 2013, our
consolidated share capital and reserves were HK$14,112.9 million. For the six months ended March 28, 2014,
we had consolidated revenue of HK$4,660.0 million and consolidated profit attributable to the owners of the
Company of HK$277.9 million. As of March 28, 2014, our consolidated share capital and reserves were
HK$14,309.3 million.
History
We commenced our business under the name Pacific Andes Enterprises (Hong Kong) Limited in 1986 and
engaged in the sourcing and supply of frozen seafood products from suppliers in Taiwan, Pakistan, India and
Uruguay for export to clients in Taiwan and Australia. In 1994, PAIH was incorporated and became the new
holding company of the Group. The shares of PAIH were listed on SEHK on October 3, 1994. We were listed on
the mainboard of the SGX-ST on October 4, 1996. In the 1990s, we began the direct sourcing of seafood by
purchasing directly from trawlers owned by Russian fishing companies in the North Pacific Ocean. As volumes
of fish sourced from Russian fishing companies increased, we began chartering our own vessels for the delivery
of supplies directly from Russian ports to secure and reduce the costs of our fish supplies. We subsequently
provided more agency services to Russian fishing companies by acting as their agent to represent Russian fishing
companies. We began to enable the vessels of Russian fishing companies to operate at sea continuously and to
increase our supply of whitefish by chartering transport vessels and tankers for delivery and supply of marine
fuel and other supplies. Since our inception, we have continued to grow our operations by developing our
whitefish supplies and streamlining our supply chain management operations. We have also sought out strategic
investments that complement our existing operations.
2
Competitive Strengths
We believe the following competitive strengths have contributed to our success and will contribute to our
ability to further grow our operations.
One of the worlds largest integrated fishing companies.
Substantial presence in the PRC and diversified customer base abroad.
Strong presence in the fishmeal processing sector in Peru and access to controlled fishing grounds
with abundant fish resources.
Proven track record in industry consolidation and acquisitions.
High standards of food safety and quality.
Dedicated and experienced senior management team.
Business Strategy
Our business strategy consists of the following principal elements.
Continue to increase access to sustainable fishing resources globally and strengthen existing
supply chain.
Continue to expand and diversify our operations.
Continue to upgrade vessel fleet and improve operational capabilities.
Pursue strategic investments.
Uphold sustainable strategies and practices.
3
THE OFFERING
The following contains some summary information about the Bonds. Some of the terms described below
are subject to important limitations and exceptions. Words and expressions defined in Terms and Conditions of
the Bonds and The Global Certificate shall have the same meanings in this summary. For a more complete
description of the terms of the Bonds, see Terms and Conditions of the Bonds in this offering memorandum.
Issuer . . . . . . . . . . . . . . . . . . . . Pacific Andes Resources Development Limited.
Principal amount of the Bonds . . . . S$200,000,000 aggregate principal amount of 8.50% Bonds due 2017.
Issue Price . . . . . . . . . . . . . . . . . 100.00% of the principal amount.
Form and Denomination . . . . . . . . The Bonds will be issued in registered form in the denomination of
S$250,000 and integral multiples of S$1,000 in excess thereof.
Interest . . . . . . . . . . . . . . . . . . . The Bonds will bear interest at a rate of 8.50% per annum.
Interest Payment Dates . . . . . . . . . The Bonds bear interest from and including July 30, 2014, payable
semi-annually in arrear on the interest payment date falling on, or
nearest to, January 30 and July 30 in each year commencing on January
30, 2015.
Issue Date . . . . . . . . . . . . . . . . . July 30, 2014.
Maturity Date . . . . . . . . . . . . . . . The Interest Payment Date falling on, or nearest to, July 30, 2017.
Status . . . . . . . . . . . . . . . . . . . . The Bonds constitute direct, unconditional, unsubordinated and (subject
to Condition 4(a)) unsecured obligations of the Issuer and will at all
times rank pari passu and without any preference among themselves.
The payment obligations of the Issuer under the Bonds will rank at least
equally with all its other present and future unsecured and
unsubordinated obligations, save for such exceptions as may be provided
by applicable provisions of law and legislation and subject to Condition
4(a).
Negative Pledge. . . . . . . . . . . . . . So long as any Bond remains outstanding, the Issuer will not create or
permit to subsist, and the Issuer will procure that no Subsidiary (as
defined in the Terms and Conditions of the Bonds) of the Issuer (other
than CFGL and its Subsidiaries) will create or permit to subsist any
Security (as defined in the Terms and Conditions of the Bonds) upon the
whole or any part of its undertaking, assets or revenues, present or
future, to secure any Investment Securities (as defined in the Terms and
Conditions of the Bonds) or to secure any guarantee of, or indemnity in
respect of, any Investment Securities unless, at the same time or prior
thereto, the Issuers obligations under the Bonds and the Trust Deed (a)
are secured equally and rateably therewith, or (b) have the benefit of
such other security, guarantee, indemnity or other arrangement as the
Trustee in its absolute discretion may deem to be not materially less
beneficial to the Bondholders or as shall be approved by an
Extraordinary Resolution (as defined in the Trust Deed) of the
Bondholders. See Terms and Conditions of the Bonds Covenants and
Undertakings Negative Pledge.
4
Financial Covenants . . . . . . . . . . . For so long as any Bond remains outstanding, the Issuer shall not
directly or indirectly permit: (i) its Consolidated Tangible Net Worth (as
defined in the Terms and Conditions of the Bonds) as at the end of any
Relevant Period (as defined in the Terms and Conditions of the Bonds) to
be less than HK$10.0 billion; (ii) the Maximum Leverage Ratio (as
defined in the Terms and Conditions of the Bonds) as at the end of any
Relevant Period to exceed 1.5:1.0; and (iii) the Dividend (as defined in
the Terms and Conditions of the Bonds) with respect to any fiscal year to
be more than 40% of Net Profit After Tax per Annum (as defined in the
Terms and Conditions of the Bonds) with respect to the same fiscal year.
See Terms and Conditions of the Bonds Covenants and Undertakings
Financial Covenants.
Control of CFGL . . . . . . . . . . . . . For so long as any Bond remains outstanding, the Issuer shall ensure
that: (i) the Issuer and/or its Subsidiaries, directly or indirectly, together
beneficially own more than 50% of the Voting Rights of the issued share
capital of CFGL; (ii) the Issuer and/or its Subsidiaries, directly or
indirectly, together remain the single largest shareholder of CFGL; and
(iii) the Issuer exercises the power to appoint and/or remove, or to direct
the appointment and/or removal of, all or the majority of the members of
the board of directors or other governing body of CFGL, whether
obtained directly or indirectly, and whether obtained by ownership of
share capital, the possession of voting rights, contract or otherwise. See
Terms and Conditions of the Bonds Covenants and Undertakings
Control of CFGL.
Events of Default . . . . . . . . . . . . . For a description of certain events of default that will permit the Bonds
to become immediately due and payable at their principal amount,
together with accrued interest, see Terms and Conditions of the Bonds
Events of Default.
Taxation . . . . . . . . . . . . . . . . . . . All payments in respect of the Bonds will be made free and clear of, and
without withholding or deduction for or on account of any present or
future taxes, duties, assessments or governmental charges of whatsoever
nature imposed, levied, collected, withheld or assessed by or on behalf
of Bermuda or any political subdivision thereof or any authority therein
or thereof having power to levy tax, unless such withholding or
deduction is required by law. In that event, the Issuer shall (except in
certain circumstances as set out in the Terms and Conditions of the
Bonds) pay such additional amounts as will result in the receipt by the
Bondholders of such amounts as would have been received by them if no
such withholding or deduction had been required. See Terms and
Conditions of the Bonds Taxation.
5
Tax Redemption . . . . . . . . . . . . . The Bonds may be redeemed at the option of the Issuer in whole, but not
in part, at their principal amount together with interest accrued to, but
excluding, the date fixed for redemption in the event that as a result of
any change in, or amendment of, the tax laws or regulations of Bermuda
or any political subdivision thereof or any authority thereof or therein
having power to tax or any change in the application or official
interpretation of such laws or regulations effective after July 30, 2014,
the Issuer has or will become obliged to pay additional amounts and such
obligation cannot be avoided by the Issuer taking reasonable measures
available to it. See Terms and Conditions of the Bonds Redemption
and Purchase Redemption for Taxation Reasons.
Redemption for Change of Control . At any time following the occurrence of a Change of Control (as defined
in the Terms and Conditions of the Bonds), the holder of any Bond will
have the right, at such holders option, to require the Issuer to redeem all
but not some only of that holders Bonds on the Put Settlement Date (as
defined in the Terms and Conditions of the Bonds) at 101% of their
principal amount, together with accrued interest up to but excluding,
such Put Settlement Date. See Terms and Conditions of the Bonds
Redemption and Purchase Redemption for Change of Control.
Redemption at the Option of
Bondholders upon Cessation or
Suspension of Trading of the
Issuers Shares . . . . . . . . . . . .
In the event that (i) the shares of the Issuer cease to be traded on the
SGX-ST or an Alternative Stock Exchange (as defined in the Terms and
Conditions of the Bonds) or (ii) trading in the shares of the Issuer on the
SGX-ST or an Alternative Stock Exchange is suspended for a continuous
period of more than 20 trading days, the Issuer shall, at the option of the
Bondholder, redeem such Bond at 100% of its principal amount together
with interest accrued up to but excluding the date fixed for redemption
on the date falling 30 days after (in the case of (i)) the date of cessation
of trading or (in the case of (ii)) the business day immediately following
the expiry of such continuous period of 20 trading days. In this
paragraph, trading day means a day on which the SGX-ST or an
Alternative Stock Exchange (as applicable) is open for securities
trading. See Terms and Conditions of the Bonds Redemption and
Purchase Redemption upon Cessation or Suspension of Trading of
Shares.
Further Issues . . . . . . . . . . . . . . . The Issuer may from time to time, without the consent of the
Bondholders, create and issue further bonds which are expressed to be
consolidated and form a series with the Bonds and identical to the Bonds
in all respects, except for the issue date, issue price and the dates of first
payment of interest on them. See Terms and Conditions of the Bonds
Further Issues.
Clearing Systems . . . . . . . . . . . . . The Bonds will be issued in registered form and will be initially
represented by the Global Certificate registered in the name of a
nominee of, and deposited with, a common depositary on behalf of
Euroclear and Clearstream, and will be exchangeable for Definitive
Certificates in registered form only in the limited circumstances set out
therein.
Clearance and Settlement . . . . . . . The Bonds will be cleared through Euroclear and Clearstream. The
Common Code of the Bonds is 109021997 and the ISIN for the Bonds is
XS1090219970.
6
Notices and Payment . . . . . . . . . . For as long as the Bonds are represented by the Global Certificate and
the Global Certificate is held by a nominee for the common depositary
for Euroclear and Clearstream, payments of principal, premium and
interest in respect of the Bonds represented by the Global Certificate will
be made without presentation or, if no further payment falls to be made
in respect of the Bonds, against presentation and surrender of the Global
Certificate to or to the order of the Principal Paying Agent or such other
Paying Agent (as defined in the Terms and Conditions of the Bonds) for
such purpose. The Bonds which are represented by the Global
Certificate will be transferable only in accordance with the rules and
procedures for the time being of Euroclear or Clearstream.
Governing Law . . . . . . . . . . . . . . The Trust Deed and the Bonds, and any non-contractual obligations
arising out of, or in connection with them, are governed by and shall be
construed in accordance with English law.
Trustee. . . . . . . . . . . . . . . . . . . . The Hongkong and Shanghai Banking Corporation Limited.
Principal Paying Agent
for the Bonds . . . . . . . . . . . . . . The Hongkong and Shanghai Banking Corporation Limited.
Registrar and Transfer Agent
for the Bonds . . . . . . . . . . . . . . The Hongkong and Shanghai Banking Corporation Limited.
Listing . . . . . . . . . . . . . . . . . . . . Approval in-principle has been received for the listing and quotation of
the Bonds on the Official List of the SGX-ST. The SGX-ST assumes no
responsibility for the correctness of any of the statements made or
opinions or reports contained in this offering memorandum. Approval
in-principle for the listing and quotation of the Bonds on the Official List
of the SGX-ST is not to be taken as an indication of the merits of the
Company, its subsidiaries or the Bonds.
Rating . . . . . . . . . . . . . . . . . . . . The Bonds will not be rated.
Use of Proceeds. . . . . . . . . . . . . . See section entitled Use of Proceeds.
7
SUMMARY HISTORICAL FINANCIAL DATA
The following table presents our summary historical financial data as of and for the years ended
September 28, 2011, 2012 and 2013, all of which are derived from the consolidated audited financial statements
of the respective periods, and for the six months ended March 28, 2013 and 2014, which are derived from the
consolidated reviewed financial statements of the respective periods. The summary historical financial data
should be read in conjunction with the audited consolidated financial statements of the respective periods and the
reviewed consolidated financial statements of the respective periods, including the related notes, included
elsewhere in this offering memorandum. Our audited financial statements are prepared and presented in
accordance with Singapore Financial Reporting Standards. Our financial statements and financial information
would not be materially different had they been prepared under International Financial Reporting Standards.
Income Statement Data:
Year ended September 28, Six months ended March 28,
2011 2012 2013 2013 2014
(Audited) (Audited) (Audited) (Unaudited) (Unaudited)
(HK$ in thousands, except earnings per share)
Revenue . . . . . . . . . . . . . . . . . . . . 9,715,939 9,580,798 8,764,092 4,869,081 4,659,977
Cost of sales . . . . . . . . . . . . . . . . . (7,631,552) (7,689,406) (7,359,796) (4,057,954) (3,761,804)
Gross profit . . . . . . . . . . . . . . . . . . 2,084,387 1,891,392 1,404,296 811,127 898,173
Other operating income . . . . . . . . . 164,586 397,573 1,193,904 311,226 224,178
Selling and distribution expenses. . . . (422,457) (442,493) (247,841) (161,532) (104,699)
Administrative expenses . . . . . . . . . (214,689) (257,582) (230,278) (98,892) (151,003)
Other operating expenses . . . . . . . . (57,314) (285,848) (616,635) (14,239) (52,305)
Finance costs . . . . . . . . . . . . . . . . (559,434) (430,178) (586,186) (286,335) (426,136)
995,079 872,864 917,260 561,355 388,208
Share of result of associates . . . . . . . (242) 38,459 57,540 29,037 35,206
Profit before income tax . . . . . . . . . 994,837 911,323 974,800 590,392 423,414
Income tax (expense) benefit . . . . . . (30,513) (24,205) 70,567 106,805 (31,540)
Profit for the year/period . . . . . . . . . 964,324 887,118 1,045,367 697,197 391,874
Profit attributable to:
Owners of the Company . . . . . . . . 622,818 627,659 777,256 521,139 277,885
Non-controlling interests . . . . . . . 341,506 259,459 268,111 176,058 113,989
964,324 887,118 1,045,367 697,197 391,874
Earnings per share:
Basic (HK cents) . . . . . . . . . . . . . 20 16 16 11 6
Diluted (HK cents) . . . . . . . . . . . 19 16 16 11 6
8
Statement of Financial Position Data:
As of September 28, As of March 28,
2011 2012 2013 2013 2014
(Audited) (Audited) (Audited) (Unaudited) (Unaudited)
(HK$ in thousands)
Non-Current Assets:
Property, plant and equipment . . . . 4,727,058 4,572,851 5,300,991 4,303,241 5,081,749
Investment properties . . . . . . . . . . 49,244 51,449 52,135 51,219 53,026
Goodwill . . . . . . . . . . . . . . . . . . 2,903,375 2,952,461 2,952,461 2,952,461 2,952,461
Prepayment to suppliers . . . . . . . . 1,059,680 887,040 1,786,916 1,883,896 557,896
Advances to suppliers . . . . . . . . . . 315,900 315,900 315,900
Available-for-sale investments . . . . 313,172 32,858 25,393 568,661 18,355
Interests in associates . . . . . . . . . . 2,195 505,547 542,615 524,371 565,685
Other intangible assets . . . . . . . . . 1,460,632 1,826,633 9,539,557 1,826,633 9,539,557
10,831,256 11,144,739 20,200,068 12,426,382 18,768,729
Current Assets:
Inventories . . . . . . . . . . . . . . . . . 1,104,979 1,379,897 923,785 1,034,224 1,784,012
Trade and bills receivables . . . . . . 2,013,017 2,247,314 1,832,860 1,605,309 2,169,364
Other receivables and prepayments . 5,568,758 7,899,487 7,320,136 5,914,864 6,465,049
Current portion of prepayment to
suppliers . . . . . . . . . . . . . . . . . 172,640 172,640 205,123 226,964 1,326,000
Advances to suppliers . . . . . . . . . 315,900 315,900
Prepaid income tax . . . . . . . . . . . 23,759 15,238 99,513 7,483 51,206
Pledged deposits . . . . . . . . . . . . . 488,013 207 111 306 95
Bank balances and cash . . . . . . . . 218,067 445,854 615,771 2,026,248 425,883
9,589,233 12,160,637 11,313,199 10,815,398 12,537,509
Current Liabilities:
Trade and other payables . . . . . . . 433,395 356,824 308,082 244,231 355,297
Income tax payable . . . . . . . . . . . 52,585 44,201 22,057 21,382 44,181
Amounts due to Pacific Andes
International Holdings Limited
and its subsidiaries . . . . . . . . . . 4,339 4,937 5,371 5,888 4,134
Derivative financial instruments . . . 6,013 202,214 54,712 14,010 62,567
Convertible bonds . . . . . . . . . . . . 619,829
Bonds . . . . . . . . . . . . . . . . . . . . 721,476 714,648
Bank advances drawn on bills
and discounted trade receivables
with insurance coverage . . . . . . . 3,650 7,060
Current portion of finance leases . . 31,745 29,555 30,151 30,786 18,110
Current portion of interest-bearing
bank borrowings . . . . . . . . . . . . 4,867,287 5,119,836 7,897,734 4,766,835 6,032,289
6,018,843 5,757,567 9,046,643 5,083,132 7,231,226
Net Current Assets . . . . . . . . . . . . 3,570,390 6,403,070 2,266,556 5,732,266 5,306,283
9
As of September 28, As of March 28,
2011 2012 2013 2013 2014
(Audited) (Audited) (Audited) (Unaudited) (Unaudited)
(HK$ in thousands)
Non-Current Liabilities:
Finance leases . . . . . . . . . . . . . . . 63,372 33,817 3,666 18,110
Interest-bearing bank borrowings . . 2,773,185 1,801,956 1,557,980 1,898,236 3,080,537
Bonds . . . . . . . . . . . . . . . . . . . . 713,051 690,082 703,813
Long term payables . . . . . . . . . . . 237,011 190,118
Senior notes . . . . . . . . . . . . . . . . 2,120,094 4,080,896 2,126,504 4,086,576
Deferred tax liabilities. . . . . . . . . . 489,740 473,389 2,474,198 395,165 2,408,517
4,039,348 5,119,338 8,353,751 5,141,828 9,765,748
Net Assets . . . . . . . . . . . . . . . . . . 10,362,298 12,428,471 14,112,873 13,016,820 14,309,264
Capital and Reserves:
Share capital . . . . . . . . . . . . . . . . 832,691 1,325,005 1,325,005 1,325,005 1,325,005
Reserves . . . . . . . . . . . . . . . . . . 6,967,057 8,362,489 9,078,936 8,804,848 9,262,766
Attributable to owners of the
Company . . . . . . . . . . . . . . . . . . 7,799,748 9,687,494 10,403,941 10,129,853 10,587,771
Non-controlling interests . . . . . . . . . 2,562,550 2,740,977 3,708,932 2,886,967 3,721,493
Total Equity . . . . . . . . . . . . . . . . . 10,362,298 12,428,471 14,112,873 13,016,820 14,309,264
10
Cash Flow Data:
Year ended September 28, Six months ended March 28,
2011 2012 2013 2013 2014
(Audited) (Audited) (Audited) (Unaudited) (Unaudited)
(HK$ in thousands)
Net cash (used in)/from operating
activities . . . . . . . . . . . . . . . . . . (877,132) (1,047,977) 4,050,085 3,749,404 522,529
Net cash used in investing activities . (1,919,877) (971,131) (6,917,102) (1,771,946) (175,825)
Net cash from/(used in) financing
activities . . . . . . . . . . . . . . . . . . 2,761,738 2,244,594 3,037,499 (394,956) (548,070)
Net (decrease)/increase in cash and
cash equivalents . . . . . . . . . . . . . (35,271) 225,486 170,482 1,582,502 (201,366)
Cash and cash equivalents at end of
the year/period . . . . . . . . . . . . . . 212,025 437,512 607,994 2,020,014 418,075
Other Financial Data:
As of
September 28, March 28,
2011 2012 2013 2014
(HK$ in thousands, except ratios and percentages)
Consolidated Tangible Net Worth
(1)
. . 7,456,195 9,473,282 11,157,684 11,351,861
Leverage Ratio
(2)
. . . . . . . . . . . . . . . 1.12 0.99 1.23 1.19
Dividend as a percentage of Net Profit
After Tax per Annum
(3)
. . . . . . . . . 22% 10% 8%
Notes:
(1) Consolidated Tangible Net Worth ending on the indicated dates, as such term is defined in Condition 4 of the Terms and
Conditions of the Bonds.
(2) The leverage ratio calculated as the ratio of Consolidated Net Borrowings to Consolidated Tangible Net Worth ending on the
indicated dates, each term as defined in Condition 4 of the Terms and Conditions of the Bonds.
(3) Dividend paid or made as a percentage of Net Profit After Tax per Annum for the periods indicated, each term as defined in
Condition 4 of the Terms and Conditions of the Bonds.
11
RECENT DEVELOPMENTS
Consent Solicitation of Copeinca Notes
Our subsidiary, CFGL, wholly acquired the Copeinca Group on March 17, 2014. One of the entities
within the Copeinca Group, Copeinca AS, was subsequently de-listed from the Oslo Stock Exchange (Oslo Brs)
and Lima Stock Exchange (Bolsa de Valores de Lima) in April 2014. The Copeinca Group consequently became
wholly-owned subsidiaries of CFGL, with the ultimate goal of integrated business operations with CFGL and its
subsidiaries (the CFGL Group).
Previously, Copeinca had issued US$250,000,000 9.0% notes due 2017 on February 10, 2010 and January
17, 2013, which was guaranteed by Copeinca AS (the Copeinca Notes). However, due to the Copeinca
Acquisition and the CFGL Groups anticipated business and financing needs, CFGL has decided to undertake a
consent solicitation with respect to the Copeinca Notes. On July 17, 2014, CFGL entered into a consent
solicitation agreement with the participating solicitation agents, and has circulated a consent solicitation
statement to holders of the Copeinca Notes on record as of July 16, 2014, seeking their consent for proposals that
would:
enable the Copeinca Group to pursue financing activities to support the expansion and growth of
our business that may not otherwise be available to it;
enable certain members of the CFGL Group, namely CFG Investment S.A.C. (Peru) (CFG
Peru), China Fisheries International Limited (CFIL) and Sustainable Fishing Resources
S.A.C. (Peru) (SFR), to support the repayment obligations of the Copeinca Notes;
enable the Copeinca Group to support the payment obligations of certain indebtedness of CFGL
Group; and
better reflect CFGLs current business and operational status, as it would benefit from the
consolidated financing platform and enhanced liquidity that would be available to us if the
proposals are adopted.
If, upon receipt of the requisite consent of the holders of Copeinca Notes, CFGL, CFG Peru, CFIL and
SFR agree to provide guarantees for the repayment obligations of the Copeinca Notes, such entities will not
become subject to the other substantive provisions of the indenture governing the Copeinca Notes or be treated as
a parent guarantor or restricted subsidiary thereunder by virtue of giving such guarantees.
If this consent solicitation were to receive the requisite consents from holders of the Copeinca Notes, then
Copeinca and CFGL are expected to undertake the above activities in accordance with the consent solicitation
statement. However, there can be no assurance that the consent solicitation will receive the requisite consents to
permit the above to proceed.
12
DEFINITIONS
In this offering memorandum, unless the context otherwise specifies, the following expressions shall have
the meanings indicated.
Board of Directors or Board The Board of Directors of the Company.
CAGR Compound annual growth rate.
CFGL China Fishery Group Limited, an exempted company
incorporated in the Cayman Islands, the shares of
which are listed and quoted on the SGX-ST.
CFIL China Fishery International Limited, a company
incorporated under the laws of Samoa.
China or PRC Peoples Republic of China
CNY Bonds The CNY600,000,000 6.5% bonds due 2014 issued by
the Company, which was redeemed in full on June 3,
2014.
Copeinca Corporacion Pesquera Inca S.A.C., a corporation
(sociedad anonima cerrada) organized under the laws
of Peru and a subsidiary of Copeinca AS.
Copeinca Acquisition The acquisition of 100% of Copeinca AS and certain
of its subsidiaries by CFGL, which was completed on
March 17, 2014.
Copeinca AS Copeinca AS, previous known as Copeinca ASA, a
private limited company (Aksjeselskap) incorporated
in Norway with organization number 990565791,
which was previously listed on the Oslo Stock
Exchange (Oslo Brs) with a secondary listing on the
Lima Stock Exchange before the Copeinca
Acquisition.
Copeinca Group Copeinca AS and its subsidiaries, before the Copeinca
Acquisition.
Company or Issuer Pacific Andes Resources Development Limited.
DBS DBS Bank Ltd.
Director(s) The director(s) of the Company.
Global Certificate The form in which the Bonds will be initially issued.
The Global Certificate will be registered in the name
of a nominee of, and deposited with a common
depositary for Euroclear and Clearstream.
13
Group, we, our and us The Company and its subsidiaries or, where the
context otherwise requires, in respect of the period
prior to the Company becoming the holding company
of its present subsidiaries, the present subsidiaries of
the Company, some or any of them and the businesses
carried on by such subsidiaries or (as the case may be)
their predecessors.
kg Kilograms.
Listing The listing of the Bonds on the SGX-ST.
Memorandum of Association or Bye-laws The Memorandum of Association or Bye-Laws of the
Company as adopted on August 27, 1996, as amended
from time to time.
Offering The offering of the Bonds on the terms and conditions
set out in this offering memorandum.
PAIH Pacific Andes International Holdings Limited.
PARD Pacific Andes Resources Development Limited.
Regulation S Regulation S under the Securities Act.
Securities Act The United States Securities Act of 1933, as amended.
SEHK The Stock Exchange of Hong Kong Limited.
Senior Notes US$300,000,000 9.75% senior notes due 2019 issued
by CFG Investment S.A.C. pursuant to an indenture
dated July 12, 2012.
SFA The Securities and Futures Act, Chapter 289 of
Singapore.
SGX-ST The Singapore Exchange Securities Trading Limited.
Shares Ordinary shares of par value S$0.05 each.
Sole Lead Manager and Bookrunner DBS Bank Ltd.
sq.m. Square meters.
Tassal Tassal Group Limited, a company incorporated in
Australia, the shares of which are listed and quoted on
the Australian Securities Exchange.
Trust Deed The trust deed entered into by the Issuer and the
Trustee.
14
GLOSSARY
This glossary contains certain technical terms used in this offering memorandum in connection with the
Company. Such terms and their meanings may not correspond to standard industry definitions or usage.
Alatir Alatir Limited, a corporation incorporated under the
laws of the British Virgin Islands that previously acted
as a Supplier under the Supply Agreements.
Aquaculture The cultivation of marine or freshwater fish or
shellfish (particularly shrimp) under controlled
conditions.
Biomass The estimated aggregate weight of fish of spawning
age of a species at a given time.
Bunker fuel Heavy fuel oil used to power the engines of a vessel.
By-catch The total catch of fish from species other than the
species the vessel intended to catch.
Capture production Fish caught in the wild, including marine water and
fresh water areas.
Catcher trawler For the purposes of this offering memorandum,
catcher trawler means a trawler used exclusively as a
fishing vessel that works together with larger vessels
with processing and freezing facilities.
CIF Cost, insurance and freight, an international trade term
providing for cargo insurance and delivery of goods to
the named port of destination at the sellers expense.
Class survey The inspection of a vessel by a classification society
surveyor that takes place every four to five years.
Demersal The demersal zone refers to that part of the sea that is
near to the coast or the sea floor. Fish that spend most
of their life in deep water or the bottom of the sea are
known as demersal fish, and include cod, haddock,
Alaska pollock, hake and whiting.
Dry-docking The removal of a vessel from the water for inspection
and/or repair of those parts of a vessel which are below
the water line.
Exclusive economic zone Under the United Nations Convention on the Law of
the Sea, which went into effect in 1994, an area not
extending beyond 200 nautical miles from the
baselines from which the breadth of the territorial sea
is measured.
FAO Food and Agriculture Organization of the United
Nations.
15
FAOSTAT The fisheries statistics database of the FAO.
First Supply Agreement The agreement originally named as a vessel operating
agreement dated January 6, 2004 between CFIL and
Perun, as amended by four addenda dated January 20,
2004, April 1, 2005, July 20, 2010, and December 15,
2010, respectively, and further replaced with and
renamed as a supply agreement on July 16, 2012,
which expired in December 2013.
Fishmeal A nutrition-rich mealy substance produced by
cooking, pressing, drying and grinding fish or fish
parts and used as animal feed and fertilizer.
Fish oil Oil pressed from cooked fish which is produced during
the processing of fishmeal.
FOB Free on board, an international trade term requiring
the seller to deliver goods on board a vessel designated
by the buyer.
Fourth Supply Agreement The vessel operating agreement dated January 24,
2007 between CFIL and Perun, as amended by an
addendum dated July 20, 2010, and further replaced
with and renamed as a supply agreement on July 16,
2012.
Fully exploited Fishery operating at or close to optimal yield, with no
expected room for further expansion.
GLOBEFISH A unit in the FAO Fisheries Department responsible
for information on international fish trade.
Gross tonnage A measure of the overall size of a ship, which is
governed by the International Convention on Tonnage
Measurements of Ships, 1969 (London Rules).
Headed and gutted Removal of the head and guts of fish.
Hull Shell or body of a ship.
IFFO International Fishmeal and Fish Oil Organization, an
international non-profit organization which represents
fishmeal and fish oil producers and related trades
throughout the world.
IMO International Maritime Organization, a United Nations
agency that issues international standards for
shipping.
Industrial fishing Large-scale fishing of a variety of fish species for
processing for human consumption and for other
purposes.
16
ITQ system Individual transferable quota system, which is a
fishery management system established to prevent
overfishing. An ITQ is a legally defensible right to
catch, land and market a quantity of fish over a certain
period of time, granted to vessels operated by an
individual or a firm, and tradable on the market. Under
Perus ITQ system, individual quotas were granted to
licensed fishing vessels that entitle their owners to a
share of Perus total allowable catch.
Liability insurance Insurance obtained through a mutual association
formed by ship owners or commercial underwriters
regarding liabilities in respect of the operations of, or
carriage by, vessels.
Metric ton 1,000 kilograms.
Ministry of Production Ministry of Production of Peru.
Moderately exploited Fishery that is being exploited with a low level of
fishing effort and is believed to have some limited
potential for expansion in total production.
New Fourth Supply Agreement New supply agreement between CFIL and Perun dated
November 14, 2012 to replace the Fourth Supply
Agreement dated July 16, 2012, which was terminated
in March 2014.
North Pacific Ocean For the purposes of this offering memorandum, the
North Pacific Ocean refers to our fishing grounds in
Russias territorial waters and exclusive economic
zone in the sea of Okhotsk and the Russian Bering Sea
in the North Pacific Ocean.
Overexploited Fishery being exploited above the optimal yield which
is believed to be sustainable in the long term, with no
potential room for further expansion and a higher risk
of stock depletion.
Pelagic The pelagic zone refers to the upper layers of the open
ocean where food is plentiful, other than that near the
coast or the sea floor. Pelagic fish include anchovy,
sardine and mackerel.
Perun Perun Limited, a corporation incorporated under the
laws of the British Virgin Islands that previously acted
as a Supplier under the Supply Agreements.
17
Purse seiner A type of decked vessel with a length of over 15
meters. Such vessel is typically used to catch fish
species that aggregate near the water surface. The
vessel surrounds the shoal with a deep curtain of
netting and then the bottom of the net is pursed
(closed) by hauling a wire which runs from the vessel
through rings on the bottom of the net and back to the
vessel.
Quota Share A share of the total allowable catch allocated to an
operating unit such as a country, a vessel, a company
or an individual fisherman depending on the system of
allocation. Quotas may or may not be transferable,
inheritable, and/or tradable. While generally used to
allocate total allowable catch, quotas could be used
also to allocate fishing effort or biomass.
Recovering Fishery where catches are increasing after having been
depleted or experienced a production decline from a
previous high.
Recovery rate The percentage of finished product produced from a
whole fish.
RFMO Regional or sub-regional fisheries management
organizations.
Scrap Old vessels, which are disposed of by being sold as
scrap metal.
Second Supply Agreement The agreement originally named a vessel operating
agreement dated February 20, 2006 between CFIL and
Alatir, as amended by an addendum dated July 20,
2010, and further updated with and renamed as a
supply agreement on July 16, 2012, which was
terminated in March 2014.
Seine A type of large fishing net that hangs vertically in the
water by attaching weights along the bottom edge and
floats along the top. In a purse seine, along the bottom
of the net are a number of rings. A rope passes through
all the rings, and when pulled, draws the rings close to
one another, preventing the fish from swimming down
to escape the net. Under the purse seine fishing
technique, the seine is set by two boats, one called a
seiner and equipped with a wire rope on the bottom
to draw the net together, and the other called a skiff,
which participates in maneuvering the net around a
school of fish. The purse seine fishing technique is
most commonly used to catch pelagic fish.
18
South Pacific Regional Fishery Management
Organization, or SPRFMO
A non-governmental regional fisheries management
organization to manage fish stocks in the international
waters of the South Pacific Ocean.
Stock A part of a fish population usually with a particular
migration pattern, specific spawning grounds, and
subject to a distinct fishery.
Straddling Stocks Agreement The Straddling Stocks Agreement as adopted by the
United Nations.
Super trawler For the purposes of this offering memorandum, a large
stern trawler equipped with a plant for gutting,
filleting, freezing and storing fish, and for processing
fishmeal and fish oil.
Supplier Alatir and Perun (each a Supplier and collectively, the
Suppliers).
Supply Agreements The First Supply Agreement, Second Supply
Agreement, Third Supply Agreement and New Fourth
Supply Agreement (replacing the Fourth Supply
Agreement) pursuant to which a long-term supply of
fish harvested by the contract supply vessels is
secured. All Supply Agreements were terminated on
March 21, 2014 by an addendum to the Supply
Agreements between CFIL and the Suppliers.
Territorial waters The breadth of a states territorial sea, up to a
maximum of 12 nautical miles, established by such
state under the United Nations Convention on the Law
of the Sea, which went into effect in 1994.
Third Supply Agreement The vessel operating agreement dated January 4, 2007
among CFIL, Perun and Alatir as amended by an
addendum dated July 20, 2010, and further updated
with and renamed as a supply agreement on July 16,
2012, which was terminated in March 2014.
Total allowable catch The total weight of a given species of fish that is
legally permitted to be removed from the population
during a given period.
Trawler A vessel designed for the purpose of operating a trawl,
a net that is dragged along the bottom of the sea or
above the bottom of the sea at a specified depth.
Underexploited Undeveloped or new fishery that is believed to have a
significant potential for expansion in total production.
19
RISK FACTORS
Before making an investment decision, investors should carefully consider all of the information set out in
this offering memorandum, including the risk factors set forth below. Any of the risks described below could
materially and adversely affect the Companys ability to satisfy its obligations, including the Bonds, and have a
material adverse effect on the Companys business, operations and prospects. In that event, the price of the
Bonds could decline, and investors may lose all or part of their investments in the Bonds. The risks and
uncertainties described below are not the only risks and uncertainties the Company faces. Additional risks and
uncertainties not presently known to the Company or that the Company currently deems immaterial may also
impair the Companys business operations. The risks discussed below also include forward-looking statements
and the Companys actual results may differ substantially from those discussed in these forward-looking
statements. Subheadings are for convenience only and risk factors that appear under a particular subheading
may also apply to one or more other subheadings.
Risks Relating to Our Businesses
We are dependent on the performance of our non-wholly-owned subsidiary, CFGL.
A majority of our revenue is generated by the commercial fishing business of our non-wholly-owned
subsidiary, CFGL. Revenues from CFGL amounted to 49% and 54% of our total revenues for the year ended
September 28, 2013 and the six months ended March 28, 2014, respectively. As such, any factor or event that
adversely affects the business and results of operations of CFGL would result in a material adverse effect on our
results of operations and financial condition.
The amount of fish that our commercial fishing operations can catch in Peru is dependent upon our fishing
quota shares and the total allowable catch set by Peruvian governmental authorities.
The total allowable catch in Peru varies from season to season, and is determined at the beginning of each
anchovy season by the Ministry of Production on the advice of Peruvian authorities and with a view to
maintaining sustainable fishing. Out of that total allowable catch amount, fishermen are permitted to catch a
percentage determined by the quota shares which the local Peruvian fishing authorities allocate under a quota
allocation system. Therefore, the amount of fish that our commercial fishing operations in Peru can catch in any
given year is dependent upon the total allowable catch set by the Peruvian government, and the number of fishing
quota shares that we own. This constitutes a limitation on our ability to grow our fish catches, unless the total
allowable catch grows or we are able to gain access to additional quota shares.
If the Peruvian government reduces or withdraws the quota shares to which we have access, our catch
volumes of anchovy and mackerel would fall, unless we are able to replace these catch volumes by placing the
fishing vessels in locations, or changing our fishing to species of fish, that are not restricted by any specific quota
share system. Additionally, in southern Peru, the amount that we and other fishing operators in this region are
able to harvest is highly unpredictable from season to season due to the migratory patterns of anchovy.
Furthermore, the quota shares for each year must be used in that calendar year, and may not be carried forward to
the next year. We cannot assure you that the relevant owners of vessels will be able to maintain the quota shares
currently allocated to them by the local fishing authorities or that it will be possible for such vessel owners to
acquire additional quotas. In addition, if the Peruvian fishery laws and regulations are repealed or modified in a
manner that decreases the percentage of anchovy quotas allocated to the fishing vessels we own in Peru, or
eliminates the quota share allocation system, our anchovy harvesting rights and profitability in Perus exclusive
economic zone would be adversely affected. In this regard, to protect our quota shares in Peru against changes in
law, we entered into fish quota stability agreements with the Ministry of Production of Peru with respect to the
quota shares for our vessels, which represent 16.9% of the quota for the northern and central region and 14.7%
for the southern region. Under such agreements, the Ministry of Production guarantees the Peruvian
governments recognition of the individual fishing quotas granted to the covered vessels as of the respective dates
of the agreements for at least ten years regardless of changes in Peruvian fishery laws. However, we cannot
assure you that there will not be modifications to this agreement, or that this agreement will be renewed after the
20
ten-year period, both of which could affect our fishing quota. Although the individual fishing quotas in Perus
exclusive economic zone are meant to be permanent, it is possible that they may be increased or reduced as a
consequence of a change in the recalculation of the maximum percentage catch per vessel. The Peruvian
Ministry of Production recalculates the maximum percentage catch per vessel assigned to all vessels in Peru if:
(i) the vessel does not exploit at least 80% of its maximum percentage catch for the northern and central zone in
four consecutive seasons (no minimum requirement is applicable to the southern zone); (ii) the Ministry of
Production grants a new fishing permit or otherwise terminates a fishing permit; or (iii) as a result of a sanction,
the maximum percentage catch of a vessel is reduced. Peruvian fishery laws provide that a vessels maximum
percentage catch can be reduced when the harvesting of anchovy is performed by a vessel that has already
transferred its maximum percentage to another vessel or when the harvesting of anchovy is performed by a vessel
that is not a nominated vessel.
The amount of fish that we can catch under our fishing quota shares is a percentage of the total allowable
catch for a given year set by the Peruvian government. The total allowable catch of Peruvian anchovy in the
northern and central region of Peru, which is allocated between the first fishing season (usually April to July) and
the second fishing season (usually November to January), was 6.2 million, 3.5 million and 4.4 million metric tons
in calendar years 2011, 2012 and 2013, respectively. With respect to calendar year 2014, the Ministry of
Production set a total allowable catch of anchovy in the northern and central region of Peru at approximately 2.53
million metric tons for the first season of what is usually two seasons during the year. The first season started in
April and will last until July 31. The total allowable catch of the second season, generally from November to
January, has not yet been set for 2014.
For the southern region, the Ministry of Production set a total allowable catch of anchovy for the calendar
years 2011, 2012 and 2013 at 800,000, 700,000 and 830,000 metric tons, respectively. With respect to the
calendar year 2014, the total allowable catch approved by the Ministry of Production for the first season from
April to July was 230,000 metric tons. From time to time, the Peruvian government may impose fishing bans on
selected regions in Perus exclusive economic zone, or the entire coastline. We cannot assure you that the
Peruvian government will not decrease the total allowable catch of anchovy in Peru, impose bans on the
harvesting of anchovy to manage anchovy biomass, or prohibit the processing of anchovy into fishmeal.
Any reduction in our fishing quota shares, or any unexpected reductions or fluctuations in the total
allowable catch per season in Peru, could individually or together have a material adverse effect on our business,
results of operations and financial condition.
We are owed refunds on our terminated Supply Agreements.
CFGL, through its wholly-owned subsidiary, CFIL, terminated all of its Supply Agreements with Perun
and Alatir on March 21, 2014. Pursuant to the terms of the termination of these Supply Agreements, Perun and
Alatir must deliver a fixed price refund amount (in cash payments or fish supplies) to CFIL as refund of the
prepayments and other advances that it previously paid, which amounted to US$241.5 million under the Supply
Agreements. As of June 30, 2014, Perun and Alatir have repaid US$80.0 million in cash of the fixed price refund
amount to CFIL. In addition, they are required to pay the balance of US$161.5 million in headed and gutted
Alaska pollock at market price, or if mutually agreed with CFIL, in cash, by March 28, 2016 under the terms of
the termination. CFIL hold charges over shares of the Suppliers and debentures against them as security for such
refund. However, the debentures do not grant any security with respect to any fishing vessels and may not be
effective in securing CFILs right to payment of the refunds. Accordingly, we cannot assure you that CFIL will be
able to recover or enforce all or any part of the refund due to it from Perun and Alatir.
In addition, as Perun and Alatir are required to pay the refund of the outstanding balance in headed and
gutted Alaska pollock at market price, if Perun or Alatir fail to procure sufficient fish, they may need to pay in
cash. However, we cannot assure you that they will be able to procure sufficient funds to pay the outstanding
balance, as fishing is their only operation. If any Supplier experiences material issues in its operations, Peruns or
Alatirs ability to refund could be impaired. If Perun or Alatir is unable to return all or part of the refund for
21
whatever reason, the results of operations and financial condition of CFGL and CFIL will be materially and
adversely affected, which consequently would have a material adverse effect on our results of operations and
financial condition.
Our operations may be disrupted by drastic weather conditions and major climatic trends.
Drastic weather conditions affecting the fishing grounds where the fishing vessels operate, such as storms,
cyclones and typhoons, may decrease the volume of our fish catches or otherwise negatively affect our fishing
operations. Our operations may also be adversely affected by changes in sea temperatures and currents. These
changes cause fish to disperse from their customary depths and locations, which decreases the efficiency of
fishing vessels as a result of having to expend more time and fuel in harvesting fish. Our fishing operations may
also be adversely affected by major climatic trends, which have in the past caused significant decreases in
catches worldwide.
In addition, large catch fluctuations in Perus territorial waters and exclusive economic zone and in the
parts of the South Pacific Ocean in which we conduct fishing operations are common because of periodic
climatic events associated with the El Nio phenomenon. Such events affect fishing success and productivity in
these areas. El Nio is a climatic pattern that occurs in the Pacific Ocean every three to seven years, and is
characterized by the warming of the waters and related increase in air surface pressure in parts of the Pacific
Ocean. For example, catches of anchovy dropped severely following El Nio conditions during each of the El
Nio years, as reported by the U.S. National Oceanic and Atmospheric Administration (the NOAA), and U.S.
National Environmental Satellite, Data and Information Service, of 1972-1973, 1976-1977, 1982-1983,
1986-1987, 1991-1992, 1994-1995 and 1997-1998. Recently, El Nio occurred in 2002-2003, 2006-2007 and
2009-2010. The 2009-2010 El Nio conditions resulted in a reduction of the total catch in Peru from 5.8 million
metric tons in 2009 to 3.3 million metric tons in 2010, before recovering to 5.3 million metric tons in 2011.
Because El Nio is a recurring phenomenon, our fishing success and productivity in Peru and in the South Pacific
Ocean will be affected in future years. Additionally, in November to December of 2010, the effects of La Nia, a
recurring cooling climatic pattern which results in periods of below-average sea temperatures, also reduced our
and industry catch volumes significantly. During the fishing season, the entire industry utilized less than half of
all the fishing quota available in the northern and central zone of Peru. A reduction in our catch of anchovy or
other fish species in future El Nio or La Nia years could have an adverse effect on our business, results of
operations, financial performance and prospects.
Margins on sales of our products may be adversely affected by the prices of these products, and revenues may
not be sufficient to cover fixed costs.
Prices for fishmeal, fish oil and fish products are strongly dependent upon economic conditions. If
revenues are not sufficient to cover fixed and variable costs, including those we may not be able to control, such
as freight and transportation costs, fuel, crew costs, repair and maintenance, finance costs and others, margins for
these products may be adversely affected. Of these, the cost of fuel, which accounted for approximately 5.2%
and 4.9% of our cost of sales in the year ended September 28, 2013 and the six months ended March 28, 2014,
respectively, has experienced significant price volatility due to factors outside of our control. We do not currently
engage in any arrangements to hedge against changes in fuel costs, nor do we have any policy of maintaining
stores of extra fuel. As a result, fluctuations in global oil prices may have a significant and direct impact on our
profit margins and profitability, particularly in our South Pacific operations, which have higher transportation
costs than our other operations. We cannot assure you that oil prices will not continue to rise, or that we will be
able to offset any increase by increases in the prices of our products.
We are also affected by operating and finance costs in our fishmeal operations segment, in which a
reduction in catch volumes of anchovy and a reduction in utilization rates can also increase unit costs. These
factors are affected by the seasonality of the fishing season and the total allowable catch in Peru. In the event we
are not able to control our costs, or offset increases through corresponding increases in the prices of our products,
we will not be able to maintain our margins, and our results of operations and financial condition may be
materially and adversely affected.
22
Our supply of whitefish, and our sales of whitefish, are affected by factors outside of our control.
A significant amount of our revenue, approximately 49.7% and 26.3% in the year ended September 28,
2013 and the six months ended March 28, 2014, respectively, has been from the sale of whitefish such as Alaska
pollock. Our business is therefore, to a large extent, dependent on the continuous supply of whitefish which, in
turn, could be affected by a number of factors such as the availability of fish stocks, which is affected by
overfishing and environmental and other issues, weather conditions near the fishing areas during the fishing
season, the policies and regulations of the relevant governments in the countries where our suppliers operate, and
their ability to continue their operations. Any of these factors may adversely affect our supply of whitefish which,
in turn, may adversely affect our business, results of operations and financial condition.
In addition, our sales of whitefish may be adversely affected by a variety of factors outside of our control,
including changes in consumer preferences and the prices of our fish products. Further, trade policies adopted
and restrictions imposed by governmental authorities in the jurisdictions where our primary customers are
located may also adversely affect our ability to sell our products, such as, for example, if the relevant
governments were to institute restrictions on the import of fish products from fisheries located outside their
jurisdictions where we source our fish. These factors may also adversely affect our business, results of operations
and financial condition.
We have limited experience fishing in the South Pacific Ocean and along the coast of West Africa.
We began trial fishing operations for jack mackerel in the international waters of the South Pacific Ocean
in June 2009 and incurred losses from our operations in the South Pacific Ocean in the years ended September
28, 2012 and 2013 and the six months ended March 28, 2014. In November 2010, we began redeploying some of
our super trawlers from the South Pacific Ocean to conduct fishing operations in the Mauritanian waters along
the coast of West Africa, but discontinued these operations in July 2011 due to poor catch volumes. In the year
ended September 28, 2013, we redeployed certain of our fishing vessels to commence fishing operations off the
coast of Namibia in West Africa.
We have limited experience operating in these regions. Although we assume, from historical catch
volumes, that sufficient fish resources exist in these areas, we cannot assure you that our assumptions will prove
to be correct. Certain fishing regions, including the South Pacific fishery, are particularly susceptible to weather
conditions such as the El Nio phenomenon. We believe our catch volumes from our South Pacific operations in
2010 were adversely affected and will continue to be affected by the El Nio phenomenon. See Our operations
may be disrupted by drastic weather conditions and major climatic trends. Because the South Pacific Ocean and
Namibia both represent newer opportunities for us, geographically and otherwise, we cannot assure you as to the
success of our operations in either region. In addition, these deployments, involving the use of a factory vessel
and catcher trawlers in a hub-and-spoke arrangement, comprise a new operational arrangement for us. The
coordination of harvesting and processing activities among the factory vessel and catcher travels will require,
among other things, complex logistics management and careful planning to function efficiently. If we are unable
to operate the fleet efficiently, we may under-utilize the fleets catch and/or processing capacity and incur higher
than anticipated operating costs. Lastly, our fishing operations in the South Pacific Ocean and in Namibian
waters are subject to international treaties and/or conventions and certain domestic laws, rules and regulations,
all of which may be revised or amended due to factors beyond our control.
We may not be successful in securing additional quota shares for our fishmeal and/or trawling operations, or
in expanding our fishmeal operations to strategic locations.
Both our fishmeal and trawling operations are dependent upon the quota shares to which we have access
in the various controlled fishing grounds in which we operate. Since 2006, we have increased the number of our
fishmeal processing plants and have aggressively sought to increase our access to fishing quota shares and
increased the number of fishing vessels in our fleet. As part of our growth strategy, from time to time, we may
seek to acquire additional fishing companies in strategic locations and new fishing vessels or fish supply
agreements with fishing companies or vessel owners in countries that have attractive fishery resources. There is
23
a significant amount of competition from other companies for fishing quota shares and licenses. We may not be
able to secure additional fishmeal processing plants, quota shares and licenses either directly, by acquiring
fishing companies or additional vessels, or indirectly, by entering into agreements which give us access to quota
shares of fishery resources, on terms that are satisfactory to us, or at all. Our strategy of acquiring fishing
companies or additional vessels and/or securing new agreements subjects us to a number of risks, including but
not limited to the following:
we may be unable to identify suitable opportunities;
we may be unable to successfully conclude any agreements to acquire a vessel or processing plant,
or any new agreements giving us access to quota shares of fishery resources, on terms that are
satisfactory to us;
we may not have sufficient cash resources to complete an acquisition or may be unable to obtain
sufficient financing on acceptable terms, or at all;
we may be unable to effectively operate or ensure the proper management of vessels that we
acquire or otherwise add to our fleet; and
we may be unable to successfully integrate the operations under these new agreements or
acquisitions with our existing trawling or fishmeal operations.
If we are unsuccessful in acquiring additional fishing companies, vessels or access to quota shares of
fishery resources, our business, results of operations, financial condition and prospects may be adversely
affected.
Our products are subject to pricing volatility, and we are vulnerable to decreases in prices of fishmeal, fish oil
and fish products.
Our financial performance is significantly affected by the market prices of our fishmeal, fish oil and fish
products, which are subject to fluctuations due to a number of factors. These may include short-term oversupply
of fish in our markets, changes in consumer preferences, changes in the prices of substitute products, general
economic conditions, changes in standards of living, or other factors. In addition, we may have limited flexibility
to adjust our product mix in order to adapt to changing circumstances. Because we are limited in our ability to
increase significantly our sales volumes of fish by the quota shares and the total allowable catch for applicable
fish species, in the absence of expanding our operations to acquire additional quota shares, our ability to increase
our revenues depends to a significant extent on increases in the market prices of fishmeal, fish oil and fish
products. Further, our profitability and net margins in each of our trawling and fishmeal operations segments also
are significantly affected by the prices of fishmeal, fish oil and fish products, particularly in our fishmeal
operations segment, due to the large amount of finance costs in this segment. We cannot predict whether market
prices for fishmeal, fish oil and fish products will rise or fall in the future. A decline in prices of fish products
would have a material adverse effect on our business, results of operations and financial condition. In particular,
49.7% and 26.3% of our revenues was generated from the sale of Alaska pollock products in the year ended
September 28, 2013 and the six months ended March 28, 2014, respectively. The prices for Alaska pollock
products have experienced significant volatility in recent years and may continue to do so in the future. These
prices are influenced in part by factors outside our control, such as anticipated Russian and U.S. production, as
well as global demand and supply forces, and also vary according to the size, species and quality of the fish
harvested. For example, the prices of Alaska pollock fell in 2011 and continued to decrease through the year
ended March 28, 2012, primarily due to the European sovereign debt crisis. In particular, due to weakening
economic conditions in our principal European markets, as well as weakness in the foreign exchange rate of the
Euro against the U.S. dollar, prices of Alaska pollock fillets, for which Europe is the largest market, have been
adversely affected. Because Alaska pollock roe is consumed almost exclusively in Japan, prices for this product
are also influenced by inventory carry-over in Japan and South Korea (where trading companies acquire Alaska
24
pollock roe for export to Japan) as well as the purchasing power of the Japanese yen. A decline in the quality of
the Alaska pollock roe that we harvest or fluctuations in supply could cause a significant decline in the market
price of Alaska pollock and Alaska pollock roe, which would reduce our margins and revenues.
Fishmeal prices are also subject to cyclical fluctuations, and we are vulnerable to decreases in such prices.
In recent years, fishmeal prices have increased due to constraints in fishmeal supply and increased demand for
fishmeal. This was primarily a result of decreased raw material supply of Peruvian anchovy and other fish used
for production of fishmeal, as demand for such fish for human consumption has increased. Fishmeal prices are
determined by worldwide demand and supply conditions and are affected by factors including:
changes in the supply of raw material feedstock;
changes in production levels of, and/or consumer preferences for, aquaculture fish and shrimp,
pigs and poultry, which are the primary consumers of fishmeal;
general economic conditions, particularly in China, which is the worlds largest consumer of
fishmeal; and
changes in standards of living.
In addition, fishmeal faces competition from grain-based substitutes such as soybean meal, ground nut
meal or corn gluten. We cannot assure you that these grain-based products, or any other products that may
emerge, will not gain greater acceptance among customers or market share, or that the price of fishmeal will
remain competitive with substitute products. If more effective substitutes for fishmeal in aquaculture and
agriculture emerge, the demand for fishmeal could decline, which would adversely affect our business, results of
operations and financial condition.
Changing consumer preferences and eating habits may reduce the demand for fishmeal, fish oil and fish
products, and adversely affect our business, results of operations and financial condition.
Changing consumer preferences and eating habits may decrease demand for fish products and increase
demand for meat or other foods. In addition, although rising living standards worldwide, and particularly in the
PRC, our largest market, and global health trends promoting the consumption of fish products as a healthier
alternative for protein than meat products, have continued to drive global demand for our fishmeal, fish oil and
fish products, we cannot assure you that this trend will continue. Demand for fish products may also be affected
by campaigns organized by environmental groups to reduce consumption of ocean catch seafood out of a concern
that industrial fishing is not sustainable or will result in permanent loss of fish populations. Should changing
consumer preferences and eating habits decrease demand for fish products, whether as a result of health, safety or
environmental concerns, our business, results of operations and financial condition would be materially and
adversely affected.
We produce and distribute food products that are susceptible to contamination and, as a result, we face the
risk of damage to our reputation with respect to perceived health concerns and food safety issues.
As part of fish processing, it is possible from time to time that foreign objects may enter into some of our
fish products. Additionally, our fish products are vulnerable to contamination by disease-producing organisms or
pathogens, although we seek to mitigate this risk by processing our fish products on board our fishing vessels and
our factory vessel and freezing the fish promptly after harvesting and processing. Although we have
implemented measures to comply with relevant health and food safety requirements in relation to the packaging
and distribution of our frozen fish products and a health certificate is provided by relevant government authorities
to buyers at the time of sale, shipments of products that contain foreign objects or are contaminated, or perceived
to be contaminated, could lead to adverse public and customer relations and increased scrutiny by regulatory
authorities. Any perceived health concerns and food safety issues that may arise with respect to our fish products
may result in negative publicity to us, which could harm our reputation with our customers.
25
The fishmeal processing plants or fishing or transportation vessels we own and operate may suffer loss or
damage, which may not be covered by our insurance policies.
We have 12 fishmeal processing plants in Peru, of which 10 are currently in operation, as well as other
vessels that support these processing operations. We also currently own 111 fishing vessels and one factory
vessel and lease one additional vessel, 49 of which are currently in operation. For our supply chain management
business, we also own seven reefer vessels. Although we conduct maintenance and/or repair of the vessels and
processing plants regularly, we may experience property and casualty loss, or our operation of fishing vessels or
processing plants may be temporarily interrupted, due to a number of causes, including but not limited to adverse
weather, collision, stranding, fire, mechanical failure, breakdown or substandard performance of plant and
equipment, natural disasters, labor disturbances, industrial accidents, war or acts of piracy, pollution of fishing
waters and other environmental hazards, and human error. Any such event could result in direct losses and
liabilities, loss of income or increased costs. We seek to carry insurance that typically covers loss of cargo,
damage to the hull and machinery on vessels, loss or damage to property, illness, death or injury to crew
members, and pollution and collision liability, each as applicable to the geographic regions in which we conduct
fishing operations. However, in the event we suffer loss, damage or liability, our insurance coverage may not be
sufficient to cover such loss, damage or liability. In addition, we may experience substantial and unpredictable
costs if any of the fishing vessels we operate or whose management we oversee require repairs at a dry-docking
facility. Furthermore, some of the fishing vessels in our fleet operate far from shore, and those in the South
Pacific Ocean operate in international waters. Piracy has been, and continues to be, a problem in many parts of
the world, including off the coast of Somalia in the Indian Ocean. In this regard, recently we have expanded our
fishing grounds off the coast of Namibia along the coast of West Africa. Although none of these fishing vessels
have been subject to acts of piracy, and there have not been any reports of piracy off the coast of Namibia to date,
we cannot assure you that our fishing activities will be free from acts of piracy in Namibia or any of our other
fishing grounds. Should acts of piracy occur, we might suffer loss or damage of the fishing vessels, and our crew
may experience injury or loss of life. Further, our insurance may not, or may not be sufficient to, cover these
resulting losses. Any one or more of these factors could have an adverse effect on our business, results of
operations and financial condition.
The operation of an ocean-going vessel also carries inherent risks, including the possibility of
environmental accidents such as oil spills. Although we maintain insurance policies that cover claims arising out
of oil spills up to approximately US$10.0 million per claim for ocean-going trawlers and up to approximately
US$100.0 million per claim for our factory vessel, any event involving our fishing vessels that results in material
environmental damage or pollution could disrupt our operations as well as harm our reputation for safety and
environmental compliance, and adversely affect our business, results of operations and financial condition.
Our fishing operations in the international waters of the South Pacific Ocean and West Africa are subject to
various rules and regulations imposed by regional and sub-regional fisheries management organizations.
To preserve the fishing resources in their waters, most sovereign states have adopted licensing/quota
systems and imposed catch certification requirements for fishing within their respective waters. In addition,
many such states have established regional fisheries management organizations, or RFMOs, under multilateral
agreements, which typically have the objective of implementing management measures designed to secure
long-term sustainable fishery resources in international waters. For example, fishing operations in the South
Pacific Ocean have, since 2006, been the focus of such objectives. We expect that a quota system will be
introduced for the fishing of jack mackerel and other species in the international waters of the South Pacific
Ocean when the South Pacific Convention, which will restrict the total allowable catch of fish in these waters,
enters into force. A 2014 Interim Measures for Pelagic Fisheries (the 2014 Interim Measures), which covers
jack mackerel, went into effect as of May 4, 2014, and will continue to be effective until the South Pacific
Convention is fully effective to establish the conservation and management measures for the Trachurus species.
Under the 2014 Interim Measures, in respect of fisheries for Trachurus species, participating countries such as
Peru are to limit the gross tonnage of vessels flying their flags to certain levels specified in those measures.
26
Fishing operations in the waters along the coast of West Africa are subject to quota and licensing systems
in the relevant countries, including Namibia. These include a quota allocation system to holders of fishing rights
and fishing licenses, such as in Namibia. In Namibia, the Ministry of Fishing and Marine Resources issues
fishing rights to local companies, five of which can establish a joint venture to be a fishing quota holder. The
quota holder is entitled to such quota for a period of time. For example, the Ministry of Fishing and Marine
Resources allocates an annual quota of 10,000 million metric tons to 10 quota holders for a period of seven years,
which may be increased or reduced by the Ministry of Fishing and Marine Resources based on the companys
contribution to the society.
The international treaties and conventions applicable in the South Pacific Ocean and the laws, rules and
regulations applicable in West Africa may be revised or amended due to factors beyond our control, and these
changes may have a material adverse effect on our business and results of operations.
We cannot assure you that we will be able to continue to access required licenses and allocated quota
shares in the South Pacific Ocean or in West Africa sufficient to ensure a viable and profitable operation, or at all,
nor that we will find alternative deployments for our vessels in these waters.
We are subject to financial and business risks on completed or future acquisitions and investments.
In recent years, we have completed a number of strategic acquisitions and investments to complement our
businesses. We are subject to a number of special financial and business risks in connection with our acquisition
efforts, including among others, diversion of our managements time, attention, and resources, decreased
utilization during the integration process, loss of key acquired personnel, difficulties in integrating diverse
corporate cultures, increased costs to improve or coordinate managerial, operational, financial, and
administrative systems including dilutive issuances with respect to or losses on equity securities that we have
acquired, assumption of legal liabilities, potential write-offs related to the impairment of goodwill and additional
conflicts of interest. Furthermore, a deterioration of conditions in the global banking system and financial
markets could result in a severe tightening in the credit and equity markets, which may adversely affect the
availability, terms and cost of borrowings for us and our customers, including financings necessary to complete
future acquisitions of quota shares and fishing vessels. In addition, we may be unable to manage an acquired
entity profitably or successfully integrate its operations with our own. Further, the nature of certain strategic
investments may not provide us with the ability to influence major policy, corporate, strategic and investment
decisions of the entity that we invested in. As a minority investor, we would rely on dividend payments and may
not have alternative access to the cash flows of such entity, and we also may not be able to utilize the assets of
such entity to strategically enhance our existing operations. Any of these factors may adversely affect the growth
of our business, financial condition and results of operations.
In addition, although we conduct due diligence in connection with our acquisitions and investments, we
may not be aware of all the risks associated with the acquired businesses. Any discovery of adverse information
concerning the acquired businesses after the completion of the acquisitions, including hidden liabilities or
instances of non-compliance with applicable laws and regulations or the terms of agreements to which the
acquired business is a party, could materially and adversely affect our business, financial condition and results of
operations. For example, the Copeinca Acquisition by our wholly-owned subsidiary CFGL may subject us to
certain risks arising out of ongoing administrative proceedings or other issues. Such liabilities or instances of
non-compliance may subject us to legal proceedings, and although such proceedings may not be material, we
cannot assure you that any such proceedings will not be decided against us. Furthermore, the acquired companies
may not perform to our expectations for various reasons, including legislative or regulatory changes that affect
the products in which the acquired companies specialize, and the loss of key customers and personnel. If we are
unable to realize the benefits envisioned for such acquisitions and investments, our overall profitability and
growth plans may be adversely affected.
27
Our future success depends upon our ability to achieve and manage our growth.
A principal component of our strategy is to continue to grow our business by increasing the number of
fishing vessels and processing facilities we own and/or operate. Since 2006, we have increased the number of
fishing vessels that we own and operate from seven to 111. As of September 28, 2013, we held 16.9% and 14.7%
of Perus quota share in the northern and central zone and the southern zone, respectively. As part of our growth
strategy, we may acquire or contract to manage additional vessels and quota or employ vessels with access to
quota in the near future. We may have difficulty in integrating these additional assets, businesses and employees
into our existing operations. Our future growth will depend upon a number of factors, both within and outside of
our control. We may not be successful in expanding our operations, and we cannot assure you that any such
expansion will be profitable.
As our operations continue to expand, we may need to increase the number of our employees and the
scope of our operational and financial systems to handle the complexity and expanded geographic area of our
operations. We cannot assure you that we will be able to retain and attract qualified management and employees
or that our current operational and financial systems and controls will be adequate as we grow, which could have
a material adverse effect on our business, results of operations and financial condition.
Demand for our products and our ability to obtain funding may be negatively affected by the recent financial
market and economic crisis.
In 2008 and 2009, the economies of the United States, Europe and certain countries in Asia experienced a
severe and prolonged recession. Although the PRC economy continued to grow, the rate of growth in 2009 was
slower than in previous years. The financial crisis had a negative impact on demand for and sales prices of our
primary fishmeal, fish oil and fish products. While some economies have resumed growth, continued concerns
about the systemic impact of potential long-term and wide-spread recession, energy costs, geopolitical issues,
and the availability and cost of credit have contributed to increased market volatility and diminished expectations
for economic growth around the world. We cannot predict whether these adverse conditions will continue and the
extent to which we may be affected. The financial crisis has had a negative impact on demand for and sales prices
of our primary fishmeal, fish oil or fish products. Any deterioration in economic conditions could have a material
adverse effect on our business by decreasing the demand for and sales prices of fishmeal, fish oil and fish
products. Furthermore, a deterioration of conditions in the banking system and financial markets could result in
a severe tightening in credit and equity markets, which may adversely affect the availability, terms and cost of
borrowings for us and our customers and suppliers, including financings necessary to complete future
acquisitions of quota shares and fishing vessels. If our customers and suppliers experience liquidity or financial
problems, they may not be able to fulfill contracts to purchase our products or sell supplies to us. Any of these
factors may adversely affect our business, prospects, cash flows, financial condition and results of operations.
We have a significant amount of debt and face risks associated with the use of debt to fund our operations and
acquisitions, working capital and capital expenditures, including refinancing risk and foreclosure risk.
We rely on debt financing primarily in the form of short-term bank borrowings to fund our operations,
acquisitions, working capital and capital expenditures. We have a significant amount of debt. As of March 28,
2014, our total indebtedness was HK$13,932.2 million and our bank borrowings and debt securities due within
one year was HK$6,765.0 million. Since all of our borrowings have a limited tenure, we need sufficient liquidity
to meet our loan repayment obligations. Adverse market conditions which hamper or delay the recovery of credit
may affect our loan repayment schedules and, in turn, may result in lenders withdrawing or requiring early
repayment of the facilities granted to us. This will pose a solvency risk for us even though we may be profitable.
As we may also obtain loans of longer tenures, we are also subject to other risks normally associated with debt
financing. If principal payments due at maturity cannot be refinanced, extended or paid with proceeds of other
financing transactions, such as new equity or debt capital, our cash flows may not be sufficient to repay all
maturing debt. If prevailing interest rates or other factors at the time of any refinancing result in higher interest
rates, increased interest expense would adversely affect our ability to service our debt and our financial condition
and results of operations.
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Our substantial indebtedness could have other important consequences to you. For example, it could:
make it more difficult for us to satisfy our existing debt obligations;
require us to dedicate a substantial portion of our cash flow from operations to servicing and
repaying our indebtedness, thereby reducing the availability of our cash flow to fund working
capital, capital expenditures, acquisitions and other general corporate purposes;
limit our flexibility in planning for or reacting to changes in our business and the industry in which
we operate;
limit, along with the financial and other restrictive covenants of our indebtedness, our ability to
borrow additional funds, declare dividends, make guarantees, sell assets, create liens, issue or sell
securities, make acquisitions or capital expenditures, withstand downturns in our business or take
advantage of business opportunities;
place us at a competitive disadvantage compared to our competitors that have less debt; and
increase the cost of additional financing.
We may require additional financing in the future to fulfill our growth strategies or finance working capital,
additional acquisitions or capital expenditures, which may not be available on satisfactory terms or at all.
We may need to obtain additional debt or equity financing in the future to fund additional acquisitions,
working capital or capital expenditures. Our ability to obtain debt or equity financing on acceptable terms
depends on a variety of factors that are beyond our control, including market conditions, investors and lenders
perceptions of, and demand for, securities offered by us, credit availability and interest rates. As a result, we
cannot assure you that we will be able to obtain sufficient funding from external sources as required on terms
satisfactory to us, or at all, to finance our expansion strategy, working capital or future capital expenditures.
Additional debt financing may increase our financing costs and reduce our profitability, and our loan agreements
or terms of other debt may contain terms and conditions that may restrict our freedom to operate and manage our
business, such as requirements regarding debt service coverage ratios and leverage ratios, restrictions on the use
of our assets, including our cash balances, as collateral for loans, and/or restrictions on our ability to pay
dividends or distribute funds to our shareholders. We cannot assure you that we will be able to obtain any
additional financing, or retain or renew current financing upon expiry, on terms that are acceptable to us, or at all.
Fishmeal processing plants in Peru currently have excess capacity, which results in intense competition
among fishmeal producers for anchovy feedstock.
Because of restrictions in the catch of anchovy in Peru and a government-imposed ban on processing fish
species other than anchovy into fishmeal, our fishmeal processing plants, like other fishmeal processing plants in
Peru, currently have excess capacity and there is intense competition among fishmeal producers in Peru for
anchovy feedstock. Historically, we have closed some of our fishmeal processing plants due to decreased
supplies of anchovy feedstock in order to increase the utilization of our plants. We cannot assure you that we will
be able to obtain a sufficient quantity of anchovy feedstock for our fishmeal processing plants, either from our
own vessels or from third-party fishing companies, or that third-party fishing companies will offer to sell us
anchovy feedstock at prices that are acceptable to us. In addition, if we are required to purchase additional
amounts of anchovy feedstock from third-party fishing companies, we will likely incur higher costs of sales,
which will adversely affect our gross margins. Furthermore, the limited supply of anchovy feedstock due to
restrictions in the total allowable catch of anchovy, and the limited period during the fishing season when such
feedstock is available, may limit our ability to maintain or increase plant utilization rates. In the event we are not
able to obtain sufficient quantities of anchovy feedstock for our fishmeal processing plants, our business, results
of operations, financial condition and prospects will be materially and adversely affected.
29
Our controlling shareholder and certain officers may take actions that are not in, or may conflict with, our or
our shareholders best interests.
Our controlling shareholder and parent company, Pacific Andes International Holdings Limited, or PAIH,
which has direct beneficial control of a majority of our shares, will continue to have the ability to exercise a
controlling influence over our business, and may cause us to take actions that are not in, or may conflict with, our
best interests or those of our creditors, including the holders of our shares. These actions may include matters
relating to our management and policies and the election of our directors and senior management. Additionally,
Mr. Ng Joo Siang, our chairman, also serves as vice chairman and managing director of PAIH, Mr. Ng Joo Puay,
Frank, our managing director, also serves as executive director of PAIH, Madam Teh Hong Eng, our executive
director, also serves as chairperson of PAIH and Mr. Ng Joo Kwee, our executive director, also serves as
executive director of PAIH. They, along with other persons, hold a controlling interest in PAIH. As a result, PAIH
and these directors will be able to influence a variety of our major policy, corporate, strategic and investment
decisions, by controlling the election of our directors and, in turn, indirectly controlling the selection of our
senior management, determining the timing and amount of any dividend payments, approving our annual
budgets, deciding on increases or decreases in our share capital, determining the issuance of new securities,
approving mergers, acquisitions and disposals of our assets or business, and amending our articles of association.
We rely significantly on key management and inability to attract and retain other qualified personnel could
impair its ability to operate and grow successfully.
Our directors and the senior management possess substantial experience in business management and
operation and have made a significant contribution to the development of the Company. Our daily operations
depend significantly on the performance of our key management personnel. We do not have insurance for loss of
services of key employees. In the event that we lose the services of any of our key management personnel and fail
to find suitable and competent replacements, our operation and profitability may be adversely affected. Our
future growth will also depend on our ability to hire, train and retain qualified administrative, manufacturing and
sales personnel to manage our existing operations and future growth. Qualified individuals are in high demand
and we may not be able to successfully attract, assimilate or retain the personnel that we require. Failure to attract
and retain qualified personnel could have an adverse effect on our ability to maintain our competitive position
and to grow our business.
Furthermore, our fish harvesting and fish processing activities require an adequate supply of qualified and
experienced crew members and production workers willing to work in rough weather and potentially dangerous
operating conditions at sea. Our fishmeal and fish oil processing activities in Peru also require an adequate
supply of production workers. Some of our operations have from time to time experienced a high rate of
employee turnover and could continue to experience high turnover in the future. In particular, qualified and
experienced fishing vessel captains and engineers are extremely important to the success of our operations, and
such personnel are in short supply and in high demand. We may not be able to continue to hire and retain the
sufficiently skilled labor force necessary to operate efficiently and to support our operating strategies, or we may
not continue to experience favorable labor relations. In addition, our labor expenses could increase if the industry
experiences a shortage in the supply of personnel, as a result of negative perceptions of potential personnel of the
operating conditions or length of time crew members are required to spend at sea, or other reasons. Changes in
applicable laws and regulations in the geographic regions where we operate could also increase labor costs,
which could have a material adverse effect on our business, results of operations and financial condition.
Our financial results may be affected by fluctuations in interest rates and foreign exchange rates.
As we conduct business in several different countries, certain of our costs are often denominated in
currencies different than our revenue. As a result, we are exposed to fluctuations in exchange rates when costs are
denominated in a different currency than the related revenue. Our financial statements are prepared in Hong
Kong dollars, which is pegged to the U.S. dollar at a fixed exchange rate. Most of our revenues and costs are
denominated in U.S. dollars. However, some of our revenue is denominated in other currencies, particularly the
sale of fish roe which is denominated in Japanese yen and Alaska pollock fillet which is denominated in Euros. In
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addition, certain of our revenues and costs related to our Peruvian operations are denominated in nuevos soles. A
smaller portion of our revenue and costs are denominated in other currencies. In addition, any restrictions
regarding the conversion or timing of conversion of foreign currencies may also expose us to adverse fluctuations
in exchange rates. We are also exposed to interest rate risk resulting from fluctuations in interest rates. Increases
in interest rates would increase expenses relating to our outstanding debt and increase the cost of new debt.
Fluctuations in interest rates can also lead to significant fluctuations in the fair value of our debt obligations.
Although we entered into forward foreign exchange contracts in the year ended September 28, 2013 to
manage our exposure to Japanese yen and Euros, we have not established a formal hedging policy with respect to
our foreign exchange exposure, as we only implement hedging arrangements for certain transactions or under
certain circumstances. A weakening of the Japanese yen, Euro or the nuevos soles, relative to the U.S. dollar may
have a negative effect on our financial condition and results of operations.
Risks Relating to Our Industry
The frozen fish, fishmeal and fish oil products industry is highly competitive.
We compete with other major fishing operators operating in the waters in which we operate. In addition,
because we and other industry participants process fish on the vessels and fishmeal and fish oil at our processing
plants, we also face competition from onshore processors. Some of our competitors are larger than we are, have
greater financial resources, have fishing vessels with larger or more advanced processing facilities than we have,
or have stronger marketing and distribution channels than we do. Furthermore, production and distribution of
substitute products for our fish and fishmeal products, such as grain-based products, could reduce the demand for
these products and have a significant adverse impact on our the sales and profitability of our industry. Increases
in fishmeal prices or recessionary economic conditions could cause aquaculture farms to substitute these
products as a substitute for fishmeal. Increased competition as to any of our products, in particular, Alaska
pollock products and fishmeal, which represented 49.7% and 24.4%, respectively, of our revenues for the year
ended September 28, 2013, could result in price reductions, reduced margins and loss of market share, which
could adversely affect our profitability.
Competition in the areas in which we conduct fishing operations could intensify if current quota share
systems are modified or repealed, or if the relevant regulatory authorities grant additional licenses to other
fishing vessels or fishing operators. With regard to competition posed by fishing operators operating illegally in
the areas in which we operate, we depend in particular upon the effectiveness of the efforts of the relevant
governments to enforce fishery laws and regulations and prevent illegal fishing in their territorial waters and
exclusive economic zones. Increased competition from other fishing vessels could lead to a decline in the fish
stocks in the areas in which we operate and adversely affect our catch, which may in turn materially and
adversely affect our business, results of operations and financial condition.
Our industry and business operations are subject to many complex laws and regulations, over which
regulatory authorities exercise considerable discretion, and failure to comply may result in significant fines,
sanctions or other penalties.
Our industry is subject to highly complex statutes, rules and regulations, such as regulations and
international agreements governing environmental protection of the oceans and fish and other marine species, as
well as those governing maritime operations and human health and safety, all of which are subject to change at
any time. As a result, our results of operations have been, and will continue to be, affected by laws and
regulations applicable in our primary fishing grounds, particularly those of Peru and Namibia that are applicable
to our fishmeal and trawling operations, respectively. The laws and regulations that are important to our
operations include those applicable to fishing licenses, permits and quotas, the total allowable catch of our
principal fish species, customs declaration, fishmeal production, by-catch regulations and other matters. Of
primary importance are the laws and regulations applicable to fishing permits, licenses and quotas. The fishing
vessels we own or manage are subject to statutory and contractual limitations on the type and amount of fish they
may harvest, as well as restrictions as to where they may fish within our fisheries. If the fishing vessels or
31
members of our crew violate maritime law, the vessels we own or manage could be subject to forfeiture and
various penalties, and their fishing rights could be reduced or revoked. In addition, because the vessels
harvesting and processing activities take place at sea outside the day-to-day supervision of our senior
management, crew members of the vessels may commit infractions or violations that could subject them and us
to significant penalties, which could have a material and adverse effect on our business, results of operations and
financial condition.
Regulatory authorities exercise considerable discretion in matters of enforcement and interpretation of
applicable laws, regulations and standards, the issuance and renewal of licenses and permits and in monitoring
licensees compliance with the terms thereof. Commercial practices and legal and regulatory frameworks may
differ significantly between jurisdictions and are subject to change from time to time and at any time. As a result,
it may be difficult to ensure compliance with existing or new regulatory requirements in the jurisdictions in
which we operate, and any failure to comply could subject us to fines, sanctions or other penalties.
Peruvian Operations
We have been and continue to be involved in a variety of administrative proceedings in Peru for past and
alleged violations of Perus fishery, maritime and environmental laws and regulations committed by our fishing
vessels and processing plants. The administrative proceedings relate generally to inadvertent violations of the
fishery laws and regulations that occur naturally in fishing operations, despite the institution of measures to
prevent the occurrence of the violations. The violations of our fishing vessels include: anchovy catch exceeding
the 10% allowable thresholds for juvenile anchovy (those under 12 centimeters in length); using sardine, jack
mackerel and chub mackerel in fishmeal production; failure to transmit GPS positioning signals without a
justified cause; sailing at fishing speeds and with an unsteady course for two or more hours in reserved or
prohibited areas; failure to have legal documents of the vessel during inspection by the Ministry of Production;
fishing in closed seasons; registration numbers and holding capacities that did not coincide with information
maintained by the Ministry of Production; failure to have complete safety equipment or board the fishing vessel;
and submerged load line mark. Possible sanctions under administrative proceedings include payment of fines and
the temporary suspension during the fishing season of the vessel or the processing plant that is the subject of the
administrative sanction. In the event of a temporary suspension of operations of a fishing vessel, we would have
to operate one of our spare fishing vessels, or the processing plant would have to purchase additional amount of
anchovy feedstock from third parties, the cost of which, if necessary, will be comparatively higher than the cost
of anchovy feedstock harvested by our own vessels.
The violations of our processing plants include: discharge of the press liquor from its centrifuges into the
drainage channels and then into the sea and discharge of untreated water in collecting tank directly into the sea in
violation of environmental regulations; processing of unauthorized fish species in excess of allowable limits;
processing of juvenile anchovy in excess of the 10% maximum thresholds; processing of sardine, jack mackerel
and chub mackerel into fishmeal; inaccurate scale weight reporting; obstructing the monitoring, control,
inspection, supervision and sampling activities that had to be performed by personnel of the Ministry of
Production; having a chart house in the coastal strip in violation of environmental regulations; failure to keep or
submit proper records; and providing incorrect or incomplete information to regulatory authorities by mistake.
As of March 28, 2014, we were involved in claims relating to our Peruvian operations with an aggregate
value of approximately US$28.2 million, which were primarily related to fishing compliance, former employees
and miscellaneous claims. Our legal advisor in Peru has advised us that approximately US$12.0 million of these
claims is likely to have an unfavorable outcome to us, and we have made a provision of approximately US$12.0
million for such claims. In addition, our legal advisor in Peru has advised us that the outcome for claims of
approximately US$16.2 million cannot be reasonably ascertained, and certain other claims may also have a
remote chance of resulting in an unfavorable outcome for us.
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Namibian Operations
In February 2012, we commenced operations in the Namibian waters along the coast of West Africa.
Fishing activities in Namibia are primarily regulated by various fishing regulations. In addition, Namibia has
certain licensing, monitoring, fishing rights and quota allocation regulatory systems for fishing activities in their
exclusive economic zones that are similar to those in other regions where we operate.
Our industry and business operations are subject to various environmental laws and regulations, and failure
to comply with them may result in significant fines, penalties or other sanctions.
The environmental laws and regulations to which the vessels we own or whose management we oversee
are subject include those governing discharges into the water; the management, treatment, storage and disposal
of hazardous substances; and the remediation of contamination. If we do not procure full compliance with
environmental regulations, or if a release of hazardous substances occurs at or from one of our facilities or the
fishing vessels we operate or manage, we may be required to cease, suspend or otherwise limit our activities. We
may also be subject to penalties and could be held liable for the cost of remediation. If we are subject to these
penalties or costs, we may not be sufficiently covered or covered at all by insurance. In this regard, we have in the
past been the subject of administrative fines and penalties for violations, and are currently involved in a variety of
pending administrative proceedings in Peru for alleged violations, of Perus environmental laws and regulations
committed by our fishing vessels and processing plants. Moreover, regulatory authorities may modify or
implement additional environmental and other regulations regarding such matters as fishing methods or fish
processing, and we may not be able to comply, or we may incur substantial additional costs in order to comply,
with such revised or additional laws and regulations.
Our industry may be affected by a reduction in fish biomass.
Fish biomass, which affects the total achievable catch for all of the species that we and other industry
participants harvest in various locations globally, is subject to natural fluctuations which are beyond the relevant
authorities or our control. In addition, natural biomass fluctuations may be exacerbated by such factors as
pollution, overfishing, disease, reproductive problems or other biological issues. The overall health of fish
biomass is difficult to measure, and fisheries management remains a relatively inexact science. Since we and
other industry participants are unable to predict the timing and extent of fluctuations in fish biomass, we are
unable to take any measures that might alleviate the potential adverse effects of these fluctuations.
A reduction, whether short-or long-term, in the biomass of the species of fishes we utilize in our
operations may reduce the total allowable catch set by the relevant regulatory authorities, thereby adversely
impacting the allocation of quota shares granted by the authorities and, as a result, adversely affecting our
business results of operations, business, financial condition and prospects. Moreover, harvest trends are not
necessarily indicative of remaining fish stocks. As a result, conclusions about future harvest prospects cannot be
drawn upon current harvest data.
The seasonality of our industry may cause fluctuations in our results of operations and financial condition.
Our industry and thus, our business, is seasonal in nature and our revenues and results of operations vary
from period to period. For example, the fishing season in Peru that generally runs fromApril to July commenced
later in 2012 than in the prior year. Further, in 2011, sales of Alaska pollock roe, which generally would occur
prior to April, were delayed to April in that year as a result of the Great East Japan Earthquake in March 2011.
Consequently, results of operations for any particular period may not be indicative of results of operations for
future periods, which makes it difficult to forecast our results of operations for an entire fiscal year. This
variability may cause volatility in the market prices of our securities. Although our geographically dispersed
operations in Peru, the South Pacific Ocean and Namibia have different fishing seasons, which tend to reduce the
effect of this seasonality on our overall operations, our operations in specific geographic regions are also
seasonal.
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In addition, the seasonality of our industry means that our business and cash flows from operations are
higher than at certain times of the year. Our fishing seasons also straddle fiscal years and fiscal periods from time
to time, due to delays in the fishing season by regulatory authorities or other reasons. As a result, the timing of the
recognition of revenue from one period to another can be a function of unpredictable factors, such as the timing
of fishing seasons, weather, the timing of shipments of fish products and fishmeal to customers, and fishing
vessel utilization and efficiency, all of which are likely to vary from year to year. Given that we are required to
make regular interest payments to our lenders and note holders and our intention is to make regular dividend
payments as well, there is a risk that we will experience cash shortages, which could hinder our ability to make
these payments.
Risks Relating to Conducting Business in the PRC, Peru and West Africa
We are subject to risks relating to doing business in the PRC.
The PRC is the largest market for our products. For the year ended September 28, 2013 and the six months
ended March 28, 2014, our revenue derived from the PRC as a percentage of total consolidated revenue was
83.4% and 77.6%, respectively. As such, our business and operations are subject to a variety of risks relating to
the PRC, including
economic, political and social uncertainties in China;
changes in, and the arbitrary enforcement of, commercial laws, currency controls, import tariffs
and duties, customs regulations, and taxation laws in China;
local infrastructure problems, such as electrical power interruptions, in an area that has only
recently undergone a rapid industrial development;
transportation difficulties that may be encountered in receiving parts or shipping fish products by
land or by air;
unforeseen events such as outbreak of wars, terrorist attacks or other political, economic or social
events in the PRC that may lead to a protracted economic slowdown;
an inability to attract and retain sufficient and qualified engineering and management talent and
resources;
measures which may be introduced to control inflation or deflation;
changes in the rate or method of taxation;
continuing changes in the value of the Renminbi;
modifications to fiscal, banking or monetary policies to curb the growth in China; and
imposition of additional restrictions on currency conversion and remittances abroad.
Any of these risks may affect the demand for our products and/or our business operations and, as a result,
materially and adversely affect our business, results of operations and financial condition.
While Chinas economy has experienced significant growth in the past 20 years, growth has been uneven,
both geographically and among various sectors of the economy. The PRC government has implemented various
measures to encourage economic growth and guide the allocation of resources. Some of these measures benefit
the overall economy in China, but may also have a negative effect on us. For example, our operating results and
financial condition may be adversely affected by governmental control over capital investments or changes in tax
regulations applicable to us.
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The PRC has experienced and continues to experience significant economic and legislative development.
However, despite the recent transition from a planned economy to a more market-oriented economy, a substantial
portion of productive assets in China is still owned by the PRC government. In addition, the PRC government
continues to play a substantial role in regulating industry development by imposing industrial policies, and
exercises significant control over Chinas economic growth through allocation of resources, control over
payments of foreign currency denominated obligations, setting monetary and banking policy and providing
preferential treatment to particular industries or companies. Furthermore, a number of written statutes, upon
which the PRC legal system is based, remain largely untested and prior court decisions interpreting them may be
noted for reference but have limited value as precedents, thus representing an area of uncertainty for us and
others operating in the Chinese market. In addition, as the PRC legal system continues to develop, changes in
laws and regulations, their interpretation, or their enforcement may lead to restrictions on our ability to conduct
business in the PRC.
Our operations in Peru subject us to the risk of doing business in Peru.
Since 2006, we have acquired significant operations in Peru through several acquisitions of entities and
assets in the country. As a result, our business, results of operations and financial condition are affected by
changes in economic or other policies of the Peruvian government or other political, regulatory or economic
developments in Peru.
Perus economy has historically experienced considerable fluctuations in growth, proving to be
vulnerable to external factors, including volatility in interest rates in global financial markets, changes in
international prices of commodities, low growth affecting the United States and other trading partners, and
changes in the credit ratings of Peruvian sovereign bonds. Perus economy is also affected by internal factors,
including general current economic, business or political events in the country, the depreciation or revaluation of
the national currency, the ability of the Peruvian government to enact key economic reforms, the levels of
domestic debt and domestic inflation, the level of foreign direct and portfolio investment, and natural
occurrences such as El Nio, earthquakes and floods. In general, changes in Perus economic indicators such as
per capita income, levels of private consumption, exchange rates, employment rates and inflation could also
indirectly affect our results of operations.
During the past several decades, Peru has had a history of political instability that has included military
coups and a succession of regimes with differing policies and programs. Past governments have frequently
intervened in the nations economy and social structure. Among other actions, past governments have imposed
controls on prices, exchange rates and local and foreign investment as well as limitations on imports, have
restricted the ability of companies to dismiss employees, have expropriated private sector assets and have
prohibited the remittance of profits to foreign investors. Because we have significant operations in Peru, we
cannot assure you that political developments and economic conditions in Peru and/or terrorist activity will not
have a material adverse effect on market conditions, prices of our securities, our ability to obtain financing, and
our results of operations and financial condition.
In 2009, the Peruvian government adopted the individual transferable quota system for the anchovy
fishery industry, under which each ship owner is allocated quota shares representing its maximum percentage
catch. In addition, the Peruvian government also has introduced a variety of regulations applicable to fishmeal
production activities. A license is required to operate a fishmeal production plant, and the Peruvian government
has introduced a variety of regulations designed to minimize the environmental impact from operation of
fishmeal processing plants. As part of government policy to introduce clean technologies, the Peruvian
government set maximum permissible limits on effluents in 2008 and on emissions in 2009. The Peruvian
government has recently adopted new regulations that require the use of steam dryers in fishmeal production.
35
Our operations in West Africa subject us to the risk of doing business in West Africa.
We conduct fishing operations in Namibian waters along the coast of West Africa pursuant to an
agreement with certain quota holders. In addition, we sell a portion of our fish products to certain countries in
West Africa, including Nigeria and Namibia. Deterioration in the political, economic and social conditions or
changes in government policies of West African countries, such as:
significant changes in government policies with respect to local economies;
changes in laws or regulations; implementation of import-export quotas, wage and price controls,
or imposition of trade barriers;
forced repudiation, nullification, renegotiation or modification of our existing contracts; and/or
terrorist acts, armed hostilities, political unrest, war and civil disturbances.
Any of the above occurrences could have a material adverse impact on the local economy, the fish demand
in West Africa and our fishing operations along the coast of West Africa, which would in turn materially and
adversely affect our business, financial condition and results of operations.
Risks Relating to the Bonds
Our subsidiaries are subject to restrictions on the payment of dividends and the repayment of intercompany
loans or advances to us and our subsidiaries.
We depend on the receipt of dividends and the interest and principal payments on intercompany loans or
advances from our subsidiaries to satisfy our obligations, including our obligations under the Bonds. The ability
of our subsidiaries to pay dividends and make payments on intercompany loans or advances to their shareholders
is subject to, among other things, distributable earnings, cash flow conditions, restrictions contained in the
articles of association of our subsidiaries, applicable laws and restrictions contained in the debt instruments or
agreements of such subsidiaries. For instance, CFGL, our non-wholly-owned subsidiary from which we generate
a majority of our revenue, is bound by certain restrictive covenants from its previous offering of Senior Notes and
the Copeinca Acquisition, as well as the incurrence of current or any future bank borrowings, debt financing and
other indebtedness, all of which may limit its ability to pay dividends and make payments on intercompany loans
or advances to their shareholders, including us. In addition, if any of our subsidiaries raises capital by issuing
equity securities to third parties, dividends declared and paid with respect to such equity securities would not be
available to us to make payments on the Bonds. These restrictions could reduce the amounts that we receive from
our subsidiaries, which would restrict our ability to meet our payment obligations under the Bonds. As a result of
the foregoing, we cannot assure you that we will have sufficient cash flows from dividends from our subsidiaries
to satisfy our obligations under the Bonds.
Foreign currency exchange fluctuations affecting the valuation of the Bonds could impact our financial
condition.
Our financial statements are recorded in Hong Kong dollars, the exchange rate of which is effectively
pegged to the U.S. dollar. However, the interest on, and principal of, the Bonds will be payable in Singapore
dollars. The Bonds will be valued after every quarter in accordance with the prevailing Singapore dollar
exchange rate at that time. As such, any significant fluctuations in the Singapore dollar against the U.S. dollar,
and any subsequent effect on the Hong Kong dollar, may affect the valuation of the Bonds, which could result in
an increase in the amounts of interest and principal we must pay in respect of the Bonds, in U.S. dollar or Hong
Kong dollar terms, when Singapore dollars are converted into U.S. dollars and Hong Kong dollars. These foreign
currency fluctuations may result in a material adverse effect on our financial condition and results of operations.
36
If we are unable to comply with the restrictions and covenants in our debt agreements, or the Trust Deed
governing the Bonds, there could be a default under the terms of these agreements, or the Trust Deed
governing the Bonds, which could cause repayment of our debt to be accelerated.
If we are unable to comply with the restrictions and covenants in the Trust Deed governing the Bonds, or
our current or future debt obligations and other agreements, there could be a default under the terms of these
agreements. In the event of a default under these agreements, the holders of the debt could terminate their
commitments to lend to us, accelerate repayment of the debt, declare all amounts borrowed due and payable or
terminate the agreements, as the case may be. Furthermore, some of our debt agreements, including the Trust
Deed governing the Bonds, contain cross-acceleration or cross-default provisions. As a result, our default under
one debt agreement may cause the acceleration of repayment of other debt, including the Bonds, or result in a
default under our other debt agreements, including the Trust Deed governing the Bonds. If any of these events
occur, we cannot assure you that our assets and cash flows would be sufficient to repay in full all of our
indebtedness, or that we would be able to find alternative financing. Even if we could obtain alternative
financing, we cannot assure you that it would be on terms that are favorable or acceptable to us.
The Bonds will be structurally subordinated to subsidiary debt.
Some of our operations are conducted through our subsidiaries. Accordingly, we have and will be
dependent on our subsidiaries operations to service our indebtedness, including interest and principal on the
Bonds. The Bonds will be structurally subordinated to the claims of all holders of debt securities and other
creditors, including trade creditors, of our subsidiaries, and to all secured creditors of the Company and its
subsidiaries. In the event of an insolvency, bankruptcy, liquidation, reorganization, dissolution or winding up of
the business of any subsidiary of the Company, creditors of such subsidiary generally will have the right to be
paid in full before any distribution is made to us.
We may not be able to repurchase the Bonds upon the due date for redemption thereof.
We may, and at maturity will, be required to redeem all or, in the case of a Change of Control some, of the
Bonds. If such an event were to occur, we may not have sufficient cash in hand and may not be able to arrange
financing to redeem the Bonds in time, or on acceptable terms, or at all. The ability to redeem the Bonds in such
event may also be limited by the terms of other debt instruments. Our failure to repay, repurchase or redeem
tendered Bonds would constitute an event of default under the Bonds, which may also constitute a default under
the terms of other indebtedness of the Company.
The Trustee may request the Bondholders to provide an indemnity and/or security and/or prefunding to its
satisfaction.
In certain circumstances (including, without limitation, the giving of notice to the Company pursuant to
Condition 9 of the Terms and Conditions of the Bonds and the taking of enforcement steps pursuant to Condition
15 of the Terms and Conditions of the Bonds), the Trustee may (at its sole discretion) request Bondholders to
provide an indemnity and/or security and/or prefunding to its satisfaction before it takes actions on behalf of
Bondholders. The Trustee will not be obliged to take any such actions if not indemnified and/or secured and/or
prefunded to its satisfaction. Negotiating and agreeing to an indemnity and/or security and/or prefunding can be
a lengthy process and may impact on when such actions can be taken. The Trustee may not be able to take
actions, notwithstanding the provision of an indemnity or security or prefunding to it, in breach of the terms of
the Trust Deed or in circumstances where there is uncertainty or dispute as to the applicable laws or regulations
and, to the extent permitted by the agreements and the applicable law, it will be for the Bondholders to take such
actions directly.
Bondholders are bound by decisions of defined majorities in respect of any modification, waivers and
substitution.
The terms and conditions of the Bonds contain provisions for calling meetings of Bondholders to consider
matters affecting their interests generally. These provisions permit defined majorities to bind all Bondholders,
including Bondholders who did not attend and vote at the relevant meeting and Bondholders who voted in a
manner contrary to the majority.
37
Payments on certain Bonds may be subject to US withholding under FATCA.
In all but the most remote circumstances, it is not expected that Sections 1471 through 1474 of the U.S.
Internal Revenue Code of 1986, as amended (FATCA) will affect the amount of any payment received by the
Euroclear and Clearstream (together, the ICSDs) while the Bonds are in global form and held within ICSDs.
However, FATCA may affect payments made to custodians or intermediaries in the subsequent payment chain
leading to the ultimate investor if any such custodian or intermediary generally is unable to receive payments free
of FATCA withholding. It also may affect payment to any ultimate investor that is a financial institution that is
not entitled to receive payments free of withholding under FATCA, or an ultimate investor that fails to provide its
broker (or other custodian or intermediary from which it receives payment) with any information, forms, other
documentation or consents that may be necessary for the payments to be made free of FATCA withholding.
Investors should choose the custodians or intermediaries with care to ensure each is compliant with FATCA or
other laws or agreements related to FATCA, and provide each custodian or intermediary with any information,
forms, other documentation or consents that may be necessary for such custodian or intermediary to make a
payment free of FATCA withholding. Investors should consult their own tax advisors to obtain a more detailed
explanation of FATCA and how FATCA may affect them. The obligations of the Issuer under the Bonds are
discharged once it has paid the common depositary or common safekeeper for the ICSDs (as registered holder of
the Bonds). As such, the Issuer has no responsibility or obligation for any amount thereafter transmitted through
hands of the ICSDs and custodians or intermediaries.
38
TERMS AND CONDITIONS OF THE BONDS
The following are the terms and conditions substantially in the form in which they (other than the text in italics)
will be endorsed on the definitive certificate and referred to in the global certificate.
The S$200,000,000 8.50% bonds due 2017 (the Bonds, which expression includes any further bonds issued
pursuant to Condition 16 and forming a single series therewith) of Pacific Andes Resources Development
Limited (the Issuer) are subject to, and have the benefit of, a trust deed dated July 30, 2014 (as amended or
supplemented from time to time, the Trust Deed) between the Issuer and The Hongkong and Shanghai
Banking Corporation Limited as trustee (the Trustee, which expression includes all persons for the time being
trustee or trustees appointed under the Trust Deed) and are the subject of an agency agreement dated on or about
July 30, 2014 (as amended or supplemented from time to time, the Agency Agreement) between the Issuer,
The Hongkong and Shanghai Banking Corporation Limited as principal paying agent (the Principal Paying
Agent, which expression includes any successor principal paying agent appointed from time to time in
connection with the Bonds), The Hongkong and Shanghai Banking Corporation Limited as registrar (the
Registrar, which expression includes any successor registrar appointed from time to time in connection with
the Bonds), the paying agents named therein (together with the Principal Paying Agent, the Paying Agents,
which expression includes any successor or additional paying agents appointed from time to time in connection
with the Bonds), The Hongkong and Shanghai Banking Corporation Limited as transfer agent (the Transfer
Agent, which expression includes any successor or additional transfer agent appointed from time to time in
connection with the Bonds) and the Trustee. References herein to the Agents are to the Principal Paying Agent,
the Registrar, the other Paying Agents and the Transfer Agents and any reference to an Agent is to any one of
them and which shall, where applicable, include the Singapore Agent (as defined in Condition 13). Certain
provisions of these Conditions are summaries of the Trust Deed and the Agency Agreement and subject to their
detailed provisions. The holders of the Bonds (the Bondholders) are entitled to the benefit of, are bound by,
and are deemed to have notice of, all the provisions of the Trust Deed and are deemed to have notice of those
provisions applicable to them of the Agency Agreement. Copies of the Trust Deed and the Agency Agreement are
available for inspection by Bondholders during normal business hours at the registered office for the time being
of the Trustee, being at the date hereof at Level 30, HSBC Main Building, 1 Queens Road Central, Hong Kong
and at the Specified Office (as defined in the Agency Agreement) of the Principal Paying Agent, whose initial
Specified Office is as set out below. The issue of the Bonds was authorised by a resolution of the Board of
Directors of the Issuer passed on or about July 21, 2014.
All capitalised terms that are not defined in these Conditions will have the meanings given to them in the Trust
Deed.
1 Form, Denomination and Title
(a) Form and denomination: The Bonds shall be issued in registered form, without coupons attached,
in the denomination of S$250,000 each and in integral multiples of S$1,000 in excess thereof. A
certificate (each, a Definitive Certificate) will be issued to each holder of Bonds in respect of its
registered holding of Bonds. Each Definitive Certificate shall be numbered serially and shall have
an identifying number which shall be recorded on the relevant Definitive Certificate and in the
register of holders of the Bonds (the Register), which the Issuer shall procure to be kept by the
Registrar.
Upon issue, the Bonds will be represented by a global certificate (the Global Certificate)
substantially in the form scheduled to the Trust Deed. The Global Certificate will be registered in
the name of a nominee of, and deposited with, a common depositary for Euroclear Bank S.A./N.V.
and Clearstream Banking, socit anonyme. These terms and conditions (these Conditions, and
each, a Condition) are modified by certain provisions contained in the Global Certificate. See
The Global Certificate.
(b) Title: Title to the Bonds shall pass only by transfer and registration of title in the Register. The
holder of any Bond shall, except as otherwise required by law, be treated as its absolute owner for
39
all purposes (whether or not it is overdue and regardless of any notice of ownership, trust or any
interest in it or any writing on (other than the endorsed form of transfer), or the theft or loss of, the
Definitive Certificate issued in respect of it), and no person shall be liable for so treating the holder.
In these Conditions, holder of the Bonds, holder and Bondholder in relation to a Bond
shall mean the person in whose name a Bond is registered in the Register (or in the case of a joint
holding, the first name thereof).
2 Status
The Bonds constitute direct, unconditional, unsubordinated and (subject to Condition 4(a)) unsecured
obligations of the Issuer and shall at all times rank pari passu and without any preference among themselves. The
payment obligations of the Issuer under the Bonds shall, save for such exceptions as may be provided by
applicable provisions of law and legislation and subject to Condition 4(a), at all times rank at least equally with
all its other present and future unsecured and unsubordinated obligations.
3 Transfers of Bonds and Issue of Definitive Certificates
(a) Register: The Issuer will cause the Register to be kept at the Specified Office of the Registrar
(which shall be outside the United Kingdom in all circumstances) and in accordance with the terms
of the Agency Agreement, on which shall be entered the names and addresses of the holders of the
Bonds and the particulars of the Bonds held by them and of all transfers of the Bonds. Each
Bondholder shall be entitled to receive only one Definitive Certificate in respect of its entire
holding of Bonds.
(b) Transfers: Subject to the Agency Agreement and Conditions 3(e) and 3(f) herein, a Bond may be
transferred by delivery of the Definitive Certificate issued in respect of that Bond, with the form of
transfer endorsed on such Definitive Certificate duly completed and signed by the holder or its
attorney duly authorised in writing, to the Specified Office of the Registrar or the Transfer Agent.
No transfer of title to a Bond will be valid unless and until entered on the Register.
Transfers of interests in the Bonds evidenced by the Global Certificate will be effected in
accordance with the rules and procedures of the relevant clearing systems.
(c) Delivery of new Definitive Certificates: Each new Definitive Certificate to be issued upon a
transfer of Bonds will, within seven business days (as defined below) of receipt by the Registrar or,
as the case may be, any Transfer Agent of the Definitive Certificate and the form of transfer duly
completed and signed, be made available for collection at the Specified Office of the Registrar or
such Transfer Agent or, if so requested in the form of transfer, be mailed by uninsured mail at the
risk of the holder entitled to the Bonds but free of charge to the holder and at the Issuers expense
to the address specified in the form of transfer. The form of transfer is available at the Specified
Offices of the Transfer Agent.
Except in limited circumstances described herein (see The Global Certificate), owners of
interests in the Bonds will not be entitled to receive physical delivery of the Definitive Certificates.
Where only part of a principal amount of the Bonds (being that of one or more Bonds) in respect of
which a Definitive Certificate is issued is to be transferred or exchanged, a new Definitive
Certificate in respect of the Bonds not so transferred or exchanged will, within seven business days
of delivery of the original Definitive Certificate to the Registrar or the Transfer Agent, be made
available for collection at the Specified Office of the Registrar or such Transfer Agent or, if so
requested in the form of transfer, be mailed by uninsured mail at the risk of the holder of the Bonds
not so transferred or exchanged (but free of charge to the holder and at the Issuer s expense) to the
address of such holder appearing on the Register.
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In this Condition 3, business day shall mean a day other than a Saturday or Sunday on which
banks are open for business in the city in which the Specified Office of the Registrar or (as the case
may be) the Transfer Agent with whom a Definitive Certificate is deposited in connection with a
transfer or exchange, is located.
(d) Formalities free of charge: Registration of a transfer of Bonds and issuance of new Definitive
Certificates will be effected without charge by or on behalf of the Issuer or any of the Agents, but
upon (i) payment (or the giving of such indemnity or security as the Issuer or any of the Agents
may require) in respect of any tax or other governmental charges which may be imposed in relation
to such transfer; (ii) the Registrar being satisfied in its absolute discretion with the documents of
title or identity of the person making the application; and (iii) the relevant Agent being satisfied
that the regulations concerning transfer of Bonds have been complied with.
(e) Closed periods: No Bondholder may require the transfer of a Bond to be registered during the
period of (i) seven Payment Business Days (as defined in Condition 7(f)) ending on (and including)
the due date for any payment of principal in respect of that Bond, (ii) during the period of ten days
ending on (and including) any Interest Record Date (as defined in Condition 7(a)) and (iii) during
the period of seven days ending on (and including) any date of redemption pursuant to Condition
6(b).
(f) Regulations: All transfers of Bonds and entries on the Register will be made subject to the detailed
regulations concerning transfer of Bonds scheduled to the Agency Agreement. The regulations
may be changed by the Issuer, with the prior written approval of the Trustee and the Registrar, and
by the Registrar, with the prior written approval of the Trustee. A copy of the current regulations
will be mailed (free of charge to the Bondholder and at the Issuers expense) by the Registrar to any
Bondholder upon request and is available at the Specified Offices of the Registrar and the Transfer
Agent.
4 Covenants and Undertakings
(a) Negative pledge
So long as any Bond remains outstanding (as defined in the Trust Deed), the Issuer will not create
or permit to subsist, and the Issuer will procure that no Subsidiary (as defined below) of the Issuer
(excluding China Fishery Group Limited (CFGL) and its Subsidiaries) will create or permit to subsist,
any mortgage, charge, pledge, lien or other form of encumbrance or security interest (Security) upon
the whole or any part of its undertaking, assets or revenues, present or future, to secure any Investment
Securities (as defined below in Condition 4(c)) or to secure any guarantee of, or indemnity in respect of,
any Investment Securities unless, at the same time or prior thereto, the Issuers obligations under the
Bonds and the Trust Deed (a) are secured equally and rateably therewith, or (b) have the benefit of such
other security, guarantee, indemnity or other arrangement as the Trustee in its absolute discretion may
deem to be not materially less beneficial to the Bondholders or as shall be approved by an Extraordinary
Resolution (as defined in the Trust Deed) of the Bondholders.
(b) Financial covenants
For so long as any Bond remains outstanding, the Issuer shall not directly or indirectly permit:
(i) its Consolidated Tangible Net Worth as at the end of any Relevant Period to be less than
HK$10.0 billion;
(ii) the Maximum Leverage Ratio as at the end of any Relevant Period to exceed 1.5:1.0; and
(iii) the Dividend with respect to any fiscal year to be more than 40% of Net Profit After Tax per
Annum with respect to the same fiscal year.
41
The financial covenants set out in this Condition 4(b) shall be calculated in accordance with
GAAP and tested by reference to the audited (or, as the case may be, unaudited) consolidated
balance sheet and income statements of the Issuer as at the end of the Relevant Period.
The Trust Deed does not oblige the Trustee to monitor compliance by the Issuer with the
Conditions but it does oblige the Issuer to furnish the Trustee with a Certificate of Compliance (as
defined in the Trust Deed), on which the Trustee may rely as to such compliance.
(c) Control of CFGL
For so long as any Bond remains outstanding, the Issuer shall ensure that: (i) the Issuer and/or its
Subsidiaries, directly or indirectly, together beneficially own more than 50% of the Voting Rights of the
issued share capital of CFGL; (ii) the Issuer and/or its Subsidiaries, directly or indirectly, together remain
the single largest shareholder of CFGL; and (iii) the Issuer exercises the power to appoint and/or remove,
or to direct the appointment and/or removal of, all or the majority of the members of the board of directors
or other governing body of CFGL, whether obtained directly or indirectly, and whether obtained by
ownership of share capital, the possession of voting rights, contract or otherwise.
In these Conditions:
(i) Cash means any credit balance on any deposit, savings, current or other account, and any
cash in hand, of any member of the Group or to which any member of the Group is
beneficially entitled and which is:
(A) freely withdrawable on demand or subject to time deposit arrangements that can be
terminated at any time; and
(B) not subject to any Security or Quasi Security;
save that the deposit with a commercial bank of the Singapore dollar net proceeds of the
Bonds for the purposes of drawing funds in an alternative currency against such deposit
shall be included in the definition of Cash.
(ii) cash Dividend means (A) any Dividend which is to be paid in cash and (B) any Dividend
determined to be a cash Dividend pursuant to the definition of Dividend;
(iii) Cash Equivalent Investments means:
(A) securities with a maturity of less than 12 months from the date of acquisition issued
or fully guaranteed or fully insured by the Government of the United States or any
member state of the European Union which is rated at least A-1 by Standard &
Poors Ratings Group or P-1 by Moodys Investors Service, Inc.;
(B) commercial paper or other debt securities issued by an issuer rated at least A-1 by
Standard & Poors Ratings Group or P-1 by Moodys Investors Service, Inc. and
with a maturity of less than 12 months; and
(C) certificates of deposit or time deposits of any commercial bank (which has
outstanding debt securities rated as referred to in paragraph (B) above of this
definition) and with a maturity of less than three months,
in each case not subject to any Security or Quasi Security, denominated and payable in
freely transferrable and freely convertible currency and the proceeds of which are capable
of being remitted to a member of the Group.
42
(iv) Capital Stock means any and all shares, interests, participations or other equivalents
(however designated) of capital stock of a corporation, any and all classes of partnership
interests in a partnership, any and all membership interests in a limited liability company,
any and all other equivalent ownership interests in a Person and any and all warrants, rights
or options to purchase any of the foregoing;
(v) Consolidated Tangible Net Worth means, at any time, the aggregate of the amounts paid
up or credited as paid up on the issued ordinary share capital of the Issuer and the amount
standing to the credit of the reserves of the Group, including any amount credited to the
share premium account and minority interests and the value of fishing and plant permits, but
deducting:
(A) any debit balance on the consolidated profit and loss account of the Group;
(B) (to the extent included) any amount shown in respect of goodwill (including
goodwill arising only on consolidation) or other intangible assets (excluding fishing
and plant permits, which shall not be deducted) of the Group;
(C) (to the extent included) any provision for deferred taxation;
(D) (to the extent included) any amounts arising from an upward revaluation of assets
made at any time after September 28, 2013; and
(E) any amount in respect of any dividend or distribution declared, recommended or
made by any member of the Group to the extent payable to a person who is not a
member of the Group and to the extent such distribution is not provided for in the
most recent financial statements, and so that no amount shall be included or
excluded more than once;
(vi) Consolidated Net Borrowings means the aggregate principal amount of all Financial
Indebtedness of the Group at such date (other than Financial Indebtedness (A) to the extent
that such payment obligations are classified as borrowings under GAAP and (B) in respect
of any Financial Indebtedness between members of the Group) less the Cash and Cash
Equivalent Investments held by any member of the Group at that time;
(vii) Control means (A) the acquisition or control of more than 50% of the Voting Rights of
the issued share capital of the Issuer or (B) the right to appoint and/or remove all or the
majority of the members of the Board of Directors or other governing body, whether
obtained directly or indirectly, and whether obtained by ownership of share capital, the
possession of voting rights, contract or otherwise;
(viii) Dividend means any dividend or distribution of cash or other property or assets or
evidences of the Issuers indebtedness, whenever paid or made and however described
provided that where a cash Dividend is announced which is to be, or may at the election of
a shareholder or shareholders be, satisfied by the issue or delivery of Shares or other
property or assets, or where a capitalisation of profits or reserves is announced which is to
be, or may at the election of a shareholder or shareholders be, satisfied by the payment of a
Dividend, then for the purposes of this definition the Dividend in question shall be treated
as a Dividend of (A) such cash Dividend or (B) the Fair Market Value (on the date of
announcement of such Dividend or date of capitalisation (as the case may be) or, if later, the
date on which the number of Shares (or amount of property or assets, as the case may be)
43
which may be issued or delivered is determined) of such Shares or other property or assets
if such Fair Market Value is greater than the Fair Market Value of such cash Dividend;
(ix) Fair Market Value means, with respect to any asset, security, option, other right or
property on any date, the fair market value of that asset, security, option, other right or
property as determined in good faith by an Independent Financial Institution provided, that
(A) the Fair Market Value of a cash Dividend paid or to be paid shall be the amount of such
cash Dividend; (B) the Fair Market Value of any other cash amount shall be equal to such
cash amount; and (C) where shares, options, warrants or other rights are publicly traded in
a market of adequate liquidity (as determined by the Independent Financial Institution) the
fair market value of such shares, options, warrants or other rights shall equal the arithmetic
mean of the daily closing prices of such options, warrants or other rights during the period
of five Trading Days on the relevant market commencing on the first such Trading Days
such shares, options, warrants or other rights are publicly traded; and in the case of proviso
(A) of this definition translated into S$ (if declared or paid in a currency other than S$) at
the rate of exchange used to determine the amount payable to shareholders who were paid
or are to be paid or are entitled to be paid the cash Dividend in S$; and in any other case,
converted into S$ (if expressed in a currency other than S$) at such rate of exchange as may
be determined in good faith by an Independent Financial Institution to be the spot rate
ruling at the close of business on that date (or if no such rate is available on that date the
equivalent rate on the immediately preceding date on which such a rate is available);
(x) Financial Indebtedness means, in relation to any Person at any date, without
duplication:
(A) all indebtedness of such Person for borrowed money;
(B) all obligations of such Person for the purchase price of property or services to the
extent the payment of such obligations is deferred for a period in excess of 120 days
(other than trade payables) and refundable deposits held as borrowings;
(C) all obligations of such Person evidenced by notes, bonds, debentures or other similar
instruments;
(D) all indebtedness created or arising under any conditional sale or other title retention
agreement with respect to property acquired by such Person (unless the rights and
remedies of the seller or lender under such agreement in the event of default are
limited to repossession or sale of such property);
(E) all Finance Lease Obligations (to the extent treated as finance lease obligations in
accordance with GAAP) or Synthetic Lease Obligations of such Person;
(F) any indebtedness of such Person for or in respect of receivables sold or discounted
(other than any receivables to the extent they are sold on a non-recourse basis or on a
basis where recourse is limited solely to warranty claims relating to title or objective
characteristics of the relevant receivables);
(G) any indebtedness of such Person for any amount raised under any other transaction
(including any forward sale or purchase agreement) having the commercial effect of
a borrowing;
(H) all indebtedness of such Person, contingent or otherwise, as an account party under
acceptance, letter of credit, completion guaranties, performance bonds or similar
facilities; and
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(I) all obligations of such Person, contingent or otherwise, to purchase, redeem, retire or
otherwise acquire for value any Capital Stock of such Person prior to the respective
maturity dates,
provided that indebtedness owing by one member of the Group (other than the Issuer) to
another member of the Group (other than the Issuer) shall not be taken into account;
(xi) Finance Lease Obligations means, as to any Person, the obligations of such Person to
pay rent or other amounts under any lease of (or other arrangement conveying the right to
use) real or personal property which are required to be classified and accounted for as
finance leases under GAAP, and, for the purposes of these Conditions, the amount of such
obligations at any time shall be the capitalised amount thereof at such time determined in
accordance with GAAP;
(xii) GAAP means the Singapore Financial Reporting Standards or the International Financial
Reporting Standards issued and/or adopted by the Singapore Institute of Certified Public
Accountants and International Accounting Standards Board, respectively (or any successor
thereof) as in effect from time to time;
(xiii) Independent Financial Institution means an independent investment or commercial
bank of international repute selected by the Issuer (at the expense of the Issuer) and
approved in writing by the Trustee;
(xiv) Investment Securities means any present or future indebtedness in the form of, or
represented by, bonds, debentures, notes or other investment securities which are for the
time being, or are intended to be or capable of being, quoted, listed, ordinarily dealt in or
traded on any stock exchange or over the counter or other securities market;
(xv) Maximum Leverage Ratio means, as of each date of determination, the ratio of
Consolidated Net Borrowings on such date to Consolidated Tangible Net Worth on such
date;
(xvi) Net Profit After Tax per Annum means the profit of the Group after deduction of all
expenses, finance costs and taxes for a Relevant Period;
(xvii) Person means any natural person, company, trust, corporation, partnership, firm,
association, governmental authority or any other entity whether acting in an individual,
fiduciary or other capacity;
(xviii) Quasi Security means a transaction under which any member of the Group will:
(A) sell, transfer or otherwise dispose of any of its assets on terms whereby they are or
may be leased to or re-acquired by any other member of the Group;
(B) sell, transfer or otherwise dispose of any of its receivables on recourse terms;
(C) enter into any specific arrangement under which money or the benefit of a bank or
other account may be applied, set-off or made subject to a combination of accounts;
(D) enter into any other preferential arrangement having a similar effect; or
(E) enter into any retention of title arrangement;
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(xix) Relevant Period means each period of twelve months ending on the last day of the
Issuers financial year and each period of twelve months ending on the last day of first half
of the Issuers financial year;
(xx) SGX-ST means the Singapore Exchange Securities Trading Limited;
(xxi) Shareholder means the holder of Shares;
(xxii) Shares means the equity shares in the Issuer;
(xxiii) Singapore dollars or S$ denotes the lawful currency of the Republic of Singapore
(Singapore);
(xxiv) a Subsidiary of any person means (a) any company or other business entity of which that
person owns or controls (either directly or through one or more other Subsidiaries) more
than 50% of the issued share capital or other ownership interest having ordinary voting
power to elect directors, managers or trustees of such company or other business entity, or
(b) any company or other business entity which at any time has its accounts consolidated
with those of that person or which, under the law, regulations or generally accepted
accounting principles of the jurisdiction of incorporation of such person from time to time,
should have its accounts consolidated with those of that person;
(xxv) Synthetic Lease Obligations means all monetary obligations of a Person under (A) a
so-called synthetic, off-balance sheet or tax retention lease, or (B) an agreement for the use
or possession of property creating obligations which do not appear on the balance sheet of
such Person but which, upon the insolvency or bankruptcy of such Person, would be
characterised as the Financial Indebtedness of such Person (without regard to accounting
treatment);
(xxvi) Trading Day means a day when the SGX-ST is open for business, but does not include a
day when (A) no such last transaction price or closing bid and offered prices is/are reported
and (B) (if the securities are not listed or admitted to trading on such exchange) no such
closing bid and offered prices are furnished as aforesaid; and
(xxvii)Voting Rights means the right generally to vote at a general meeting of Shareholders of
the Issuer (irrespective of whether or not, at the time, stock of any other class or classes shall
have, or might have, voting power by reason of the happening of any contingency).
5 Interest
(a) Interest rate and Interest Payment Dates: The Bonds bear interest from and including July 30,
2014 at the rate of 8.50% per annum, payable semi-annually in arrear on January 30 and July 30 in
each year (each an Interest Payment Date), commencing January 30, 2015. If any Interest
Payment Date would otherwise fall on a day which is not a business day (as defined below in
Condition 5(d)), it shall be postponed to the next day which is a business day unless it would
thereby fall into the next calendar month in which event it shall be brought forward to the
immediately preceding business day. In these Conditions, the period beginning on and including
July 30, 2014 and ending on but excluding the first Interest Payment Date and each successive
period beginning on and including an Interest Payment Date and ending on but excluding the next
succeeding Interest Payment Date is called an Interest Period.
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(b) Interest payments: Each Bond will cease to bear interest from the due date for redemption unless,
upon due presentation, payment of principal is improperly withheld or refused. In such event, it
shall continue to bear interest in accordance with this Condition 5 (both before and after judgment)
until whichever is the earlier of (i) the day on which all sums due in respect of such Bond up to that
day are received by or on behalf of the relevant Bondholder, and (ii) the day seven days after the
Trustee or the Principal Paying Agent has notified Bondholders of receipt of all sums due in respect
of all the Bonds up to that seventh day (except to the extent that there is failure in the subsequent
payment to the relevant holders under these Conditions).
(c) Calculation of interest: Interest in respect of any Bond shall be calculated per S$1,000 in
principal amount of the Bonds (the Calculation Amount). The amount of interest payable per
Calculation Amount for any period shall be calculated by applying the rate of interest specified in
Condition 5(a) to the Calculation Amount and multiplying such product by the actual number of
days in the Interest Period concerned divided by 365 and rounding the resulting figure to the
nearest cent (half a cent being rounded upwards).
(d) In this Condition 5, the expression business day means a day other than a Saturday, Sunday or
public holiday on which commercial banks are open for business in Singapore, Hong Kong and the
city in which the Specified Office of the Principal Paying Agent is located.
6 Redemption and Purchase
(a) Final redemption: Unless previously redeemed, or purchased and cancelled, the Bonds will be
redeemed at their principal amount on the Interest Payment Date falling on, or nearest to, July 30,
2017. The Bonds may not be redeemed at the option of the Issuer other than in accordance with this
Condition 6.
(b) Redemption for taxation reasons: The Bonds may be redeemed at the option of the Issuer in
whole, but not in part, at any time, on giving not less than 30 nor more than 60 days notice to the
Bondholders (which notice shall be irrevocable), at their principal amount, together with interest
accrued to, but excluding the date fixed for redemption, if, immediately before giving such notice,
the Issuer satisfies the Trustee that:
(i) the Issuer has or will become obliged to pay additional amounts as provided or referred to in
Condition 8 as a result of any change in, or amendment to, the laws or regulations of
Bermuda or any political subdivision or any authority thereof or therein having power to
tax, or any change in the application or official interpretation of such laws or regulations,
which change or amendment becomes effective on or after July 30, 2014, and
(ii) such obligation cannot be avoided by the Issuer taking reasonable measures available to it,
provided that no such notice of redemption shall be given earlier than 90 days prior to the earliest
date on which the Issuer would be obliged to pay such additional amounts if a payment in respect
of the Bonds were then due.
Prior to the publication of any notice of redemption pursuant to this Condition 6(b), the
Issuer shall deliver to the Trustee and the Principal Paying Agent a certificate signed by a director
of the Issuer stating that the obligation referred to in (i) above of this Condition 6(b) cannot be
avoided by the Issuer taking reasonable measures available to it and the Trustee shall be entitled to
accept such certificate as sufficient evidence of the satisfaction of the condition precedent set out in
(ii) above of this Condition 6(b), in which event it shall be conclusive and binding on the
Bondholders.
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The Trustee shall be entitled to accept such certificate as sufficient evidence of the
satisfaction of the circumstances set out in (i) and (ii) above of this Condition 6(b), in which event
shall be conclusive and binding on the Bondholders. Such certificate shall be made available for
inspection by the Bondholders.
(c) Redemption for Change of Control: At any time following the occurrence of a Change of
Control, the holder of any Bond will have the right, at such holders option, to require the Issuer to
redeem all but not some only of that holders Bonds on the Put Settlement Date (as defined herein)
at 101% of their principal amount, together with accrued interest up to but excluding such Put
Settlement Date. To exercise such right, the holder of the relevant Bond must deposit at the
Specified Office of any Paying Agent a duly completed and signed notice of redemption, in the
form for the time being current, obtainable from the Specified Office of any Paying Agent (a Put
Exercise Notice), together with the definitive Bonds evidencing the Bonds to be redeemed by not
later than 30 days following a Change of Control, or, if later, 30 days following the date upon
which notice thereof is given to Bondholders by the Issuer in accordance with Condition 17. The
Put Settlement Date shall be the 20th day after the expiry of such period of 30 days as referred
to above.
A Put Exercise Notice, once delivered, shall be irrevocable and the Issuer shall redeem the
Bonds the subject of the Put Exercise Notices delivered as aforesaid on the Put Settlement Date.
The Issuer shall give notice to Bondholders and the Trustee in accordance with Condition
17 by not later than 10 days following the first day on which it becomes aware of the occurrence of
a Change of Control, which notice shall specify the procedure for exercise by holders of their rights
to require redemption of the Bonds pursuant to this Condition 6(c).
In this Condition 6:
a Change of Control occurs when:
(i) any Person or Persons (other than one or more Controlling Shareholders) directly or
indirectly, acting together, acquires Control directly or indirectly, of the Issuer; or
(ii) the Issuer consolidates with or merges into or sells or transfers all or substantially all
of the Issuers assets to any other person or persons, acting together, unless the
consolidation, merger, sale or transfer will not result in the other Person or Persons
acquiring Control over the Issuer or the successor entity; or
(iii) one or more Persons (other than the Controlling Shareholders) acquires the legal or
beneficial ownership of all of the issued share capital of the Issuer;
Controlling Shareholder means Teh Hong Eng, Ng Joo Siang, Ng Joo Kwee, Ng Joo
Thieng, Ng Joo Puay, Ng Joo Chuan and Ng PuayYee; and/or any trusts established for the benefit
of such shareholders and/or their immediate family members (related trusts) and/or any of their
associates (as defined in the listing rules of the SGX-ST) and/or any of their executors,
administrators, personal representatives or similar representatives and/or beneficiaries of their
estate and/or companies controlled by them, their immediate family members or related trusts in
such companies direct or indirect subsidiaries.
The Trustee shall not be required to take any steps to ascertain whether a Change of Control
has occurred and shall not be responsible or liable to Bondholders or any other person for any loss
arising from any failure to do so.
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(d) Redemption upon Cessation or Suspension of Trading of Shares
In the event that (i) the shares of the Issuer cease to be traded on the SGX-ST or an Alternative
Stock Exchange or (ii) trading in the shares of the Issuer on the SGX-ST or an Alternative Stock
Exchange is suspended for a continuous period of more than 20 trading days, the Issuer shall, at the
option of the holder of any Bond, redeem such Bond at 100% of its principal amount together with
interest accrued up to but excluding the date fixed for redemption on the date falling 30 days after
the Effective Date. In this Condition 6(d), Effective Date means (in the case of (i)) the date of
cessation of trading or (in the case of (ii)) the business day immediately following the expiry of
such continuous period of 20 trading days and trading day means a day on which the SGX-ST
or an Alternative Stock Exchange (as applicable) is open for securities trading.
The Issuer shall, within seven days after the Effective Date, give notice to the Trustee, any Paying
Agent and the Bondholders of the occurrence of the event specified in this Condition 6(d)
(provided that any failure by the Issuer to give such notice shall not prejudice any Bondholder of
such option). To exercise such option, the holder must deposit such Bond with any Paying Agent at
its Specified Office, together with a Put Exercise Notice not later than 21 days after the Effective
Date. Any Bond so deposited may not be withdrawn (except as provided in the Agency Agreement)
without the prior consent of the Issuer.
Alternative Stock Exchange means at any time, in the case of the shares of the Issuer, if they are
not at that time listed and traded on the SGX-ST, an internationally recognized, regularly operating
and regulated stock exchange which is the principal stock exchange or securities market of which
the shares are then listed or quoted or dealt in.
(e) Notice of redemption: All Bonds in respect of which any notice of redemption is given under this
Condition 6 shall be redeemed on the date specified in such notice in accordance with this
Condition 6. Upon the expiry of any such notice as is referred to in this Condition 6, the Issuer shall
be bound to redeem the Bonds in accordance with this Condition 6.
(f) Purchase: The Issuer and its Subsidiaries may at any time purchase Bonds in the open market or
otherwise at any price. Any Bonds purchased pursuant to this Condition 6(f) may be held, reissued,
resold or surrendered to the Principal Paying Agent for cancellation. The Bonds so purchased,
while held by or on behalf of the Issuer or any of its subsidiaries, shall not entitle the holder to vote
at any meetings of the Bondholders and shall not be deemed to be outstanding for the purposes of
calculating quorums at meetings of the Bondholders or for the purposes of Condition 14(a).
7 Payments
(a) Method of payment: Payment of principal, premium and interest due on the Bonds other than on
an Interest Payment Date will be made by transfer to the registered account of the Bondholder.
Payment of principal will only be made after surrender of the relevant Definitive Certificate at the
Specified Office of any Agent. Interest on Bonds due on an Interest Payment Date will be paid on
the due date for the payment of interest to the holder shown on the Register at the close of business
on the fifth Payment Business Day before the payment of interest (the Interest Record Date).
Payments of interest on each Bond will be made by transfer to the registered account of the
Bondholder in Singapore. Payment of all other amounts will be made as provided in these
Conditions.
Regarding the Interest Record Date while the Bonds are in global form, see The Global
Certificate.
If an amount which is due on the Bonds is not paid in full, the Registrar will annotate the Register
with a record of the amount (if any) in fact paid.
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(b) Registered accounts: For the purposes of this Condition 7, a Bondholders registered account
means the Singapore dollar account maintained by or on behalf of it with a bank in Singapore,
details of which appear on the Register at the close of business on the fifth Payment Business Day
prior to the due date for payment.
(c) Payment initiation: Where payment is to be made by transfer to a registered account, payment
instructions (for value on the due date or, if that is not a Payment Business Day, for value on the
first following day which is a Payment Business Day) will be initiated on the due date for payment
(or, if it is not a Payment Business Day, the immediately following business day) or, in the case of
a payment of principal, if later, on the Payment Business Day on which the relevant Definitive
Certificate is surrendered at the Specified Office of an Agent.
(d) Payments subject to fiscal laws: All payments are subject in all cases to any applicable fiscal or
other laws and regulations in the place of payment, but without prejudice to the provisions of
Condition 8. No commissions or expenses shall be charged to the Bondholders in respect of such
payments.
(e) Delay in payment: Bondholders will not be entitled to any interest or other payment for any delay
after the due date in receiving the amount due if the due date is not a Payment Business Day or if
the Bondholder is late in surrendering its Definitive Certificate (if required to do so).
(f) Payment Business Day: In these Conditions, Payment Business Day means a day other than a
Saturday, Sunday or public holiday on which commercial banks are generally open for business in
Singapore, Hong Kong and the city in which the Specified Office of the Principal Paying Agent is
located and, in the case of the surrender of a Definitive Certificate, in the place where the
Definitive Certificate is surrendered.
8 Taxation
All payments of principal and interest by or on behalf of the Issuer in respect of the Bonds shall be made
free and clear of, and without withholding or deduction for or on account of, any present or future taxes, duties,
assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or
on behalf of Bermuda or any political sub-division thereof or any authority therein or thereof having power to
tax, unless such withholding or deduction of such taxes, duties, assessments or governmental charges is required
by law. In that event, the Issuer shall pay such additional amounts as will result in receipt by the Bondholders of
such amounts as would have been received by them had no such withholding or deduction been required, except
that no such additional amounts shall be payable in respect of any Bond:
(a) Other connection: to a holder (or to a third party on behalf of a holder) who is liable to such taxes,
duties, assessments or governmental charges in respect of such Bond by reason of his having some
connection with Bermuda other than the mere holding of the Bond; or
(b) Surrender more than 30 days after the Relevant Date: in respect of which the Certificate
representing it is surrendered for payment more than 30 days after the Relevant Date except to the
extent that the holder of it would have been entitled to such additional amounts on presenting such
Bond for payment on the last day of such period of 30 days.
In these Conditions, Relevant Date means whichever is the later of the date on which such payment
first becomes due or the date on which payment in full of the amount outstanding is made or (if earlier) the date
seven days after that on which notice is duly given to the Bondholders that upon further surrender of the
Certificate representing such Bond being made in accordance with the Conditions, such payment will be made,
provided that payment is in fact made on surrender. Any reference in these Conditions to principal and/or interest
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shall be deemed to include any additional amounts which may be payable under this Condition 8 or any
undertaking given in addition to or substitution for it under the Trust Deed.
9 Events of Default
If any of the following events occurs and is continuing, then the Trustee at its discretion may and, if so
requested in writing by holders of at least 25% of the aggregate principal amount of the outstanding Bonds or if
so directed by an Extraordinary Resolution (provided in any such case that the Trustee shall have been
indemnified and/or secured and/or prefunded to its satisfaction), shall give written notice to the Issuer declaring
the Bonds to be immediately due and payable, whereupon they shall become immediately due and payable at
their principal amount together with accrued interest without further action or formality:
(a) Non-payment of principal: the Issuer fails to pay the principal on any of the Bonds when due; or
(b) Non-payment of interest: the Issuer fails to pay any amount of interest in respect of the Bonds
within five business days of the due date for the payment thereof; or
(c) Breach of other obligations: the Issuer does not perform or comply with any one or more of its
other obligations in the Bonds or the Trust Deed (including the covenants in Condition 4) which
default is incapable of remedy or if capable of remedy in the opinion of the Trustee, is not remedied
within thirty days after written notice of such default was given to the Issuer by the Trustee; or
(d) Cross-default: (i) any other present or future indebtedness of the Issuer or any of its Subsidiaries
for or in respect of moneys borrowed or raised becomes (or becomes capable of being declared)
due and payable prior to its stated maturity by reason of any actual or potential default, event of
default or the like (howsoever described), or (ii) any such indebtedness is not paid when due or, as
the case may be, within any originally applicable grace period, or (iii) the Issuer or any of its
Subsidiaries fails to pay when due any amount payable by it under any present or future guarantee
for, or indemnity in respect of, any moneys borrowed or raised, provided that the aggregate amount
of the relevant indebtedness, guarantees and indemnities in respect of which one or more of the
events mentioned above in this Condition 9(d) have occurred equals or exceeds US$10.0 million or
its equivalent (on the basis of the middle spot rate for the relevant currency against the U.S. dollar
as quoted by any leading bank on the day on which this Condition 9(d) operates); or
(e) Enforcement proceedings: a distress, attachment, execution or other legal process is levied,
enforced or sued out on or against any material part of the property, assets or revenues of the Issuer
or any of its Material Subsidiaries and is not discharged or stayed within thirty days; or
(f) Security enforced: any mortgage, charge, pledge, lien or other encumbrance, present or future,
created or assumed by the Issuer or any of its Material Subsidiaries becomes enforceable over a
material part of their assets or revenues and any step is taken to enforce it (including the taking of
possession or the appointment of a receiver manager or other similar person) and is not discharged
within thirty days; or
(g) Insolvency: the Issuer or any of its Material Subsidiaries is (or is, or could be, deemed by law or a
court to be) insolvent or bankrupt or unable to pay its debts, stops, suspends or threatens to stop or
suspend payment of all or a material part of (or of a particular type of) its debts, proposes or makes
a general assignment or an arrangement or composition with or for the benefit of the relevant
creditors in respect of any of such debts or a moratorium is agreed or declared in respect of or
affecting all or any material part of (or of a particular type of) the debts of the Issuer or any of its
Material Subsidiaries; or
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(h) Winding-up: an administrator is appointed, an order is made or an effective resolution passed for
the winding-up or dissolution of the Issuer or any of its Subsidiaries, or the Issuer or any of its
Material Subsidiaries ceases or threatens to cease to carry on all or a material part of its business or
operations, except for the purpose of and followed by a reconstruction, amalgamation,
reorganisation, merger or consolidation (i) on terms approved by an Extraordinary Resolution of
the Bondholders, or (ii) in the case of a Material Subsidiary, whereby the undertaking and assets of
such Material Subsidiary are transferred to or otherwise vested in the Issuer or another of its
Subsidiaries; or
(i) Authorisation and consents: any action, condition or thing (including the obtaining or effecting
of any necessary consent, approval, authorisation, exemption, filing, licence, order, recording or
registration) at any time required to be taken, fulfilled or done in order (i) to enable the Issuer
lawfully to enter into, exercise its rights and perform and comply with its obligations under the
Bonds, (ii) to ensure that those obligations are legally binding and enforceable and (iii) to make the
Bonds admissible in evidence in the courts of England is not taken, fulfilled or done; or
(j) Nationalisation: any step is taken by any person acting under the authority of any national,
regional or local government with a view to the seizure, compulsory acquisition, expropriation or
nationalisation of all or a material part of the assets of the Issuer or any of its Material Subsidiaries;
or
(k) Illegality: it is or will become unlawful for the Issuer to perform or comply with any one or more
of its obligations under any of the Bonds or the Trust Deed; or
(l) Analogous events: any event occurs which under the laws of any jurisdiction that is relevant to the
Issuer or any of its Material Subsidiaries has an analogous effect to any of the events referred to in
any of Conditions 9(a) to 9(k) (both inclusive).
In these Conditions, Material Subsidiary means, at any time, each Subsidiary of the Issuer:
(a) whose profit before taxation and exceptional items (pre-tax profit) or (in the case of a
Subsidiary of the Issuer which itself has Subsidiaries and which customarily prepares consolidated
accounts) consolidated pre-tax profit, attributable to the Issuer, as shown by its latest audit profit
and loss account, are at least 5% of the consolidated pre-tax profit as shown by the latest published
audited consolidated profit and loss account of the Issuer and its Subsidiaries including, for the
avoidance of doubt, the Issuer and its consolidated Subsidiaries share of profits of Subsidiaries not
consolidated and of associated companies and after adjustments for minority interests; or
(b) whose gross assets or (in the case of a Subsidiary of the Issuer which has Subsidiaries and which
customarily prepares consolidated accounts) gross consolidated assets attributable to the Issuer as
shown by its latest balance sheet are at least 5% of the gross consolidated assets of the Issuer and
its Subsidiaries as shown by the latest published audited consolidated balance sheet of the Issuer
and its Subsidiaries and without double counting and after adjustment for minority interests,
provided that, in relation to (a) and (b) above of this definition:
(i) in the case of a corporation or other business entity becoming a Subsidiary of the Issuer
after the end of the financial period to which the latest consolidated audited accounts of the
Issuer relate, the reference to the then latest consolidated audited accounts of the Issuer for
the purposes of the calculation above shall, until consolidated audited accounts of the Issuer
for the financial period in which the relevant corporation or other business entity becomes a
Subsidiary of the Issuer are published, be deemed to be a reference to the then latest
52
consolidated audited accounts of the Issuer adjusted to consolidate the latest accounts
(consolidated in the case of a Subsidiary of the Issuer which itself has Subsidiaries and
which customarily prepares consolidated accounts) of such Subsidiary in such accounts;
(ii) if the accounts of any Subsidiary of the Issuer (not being a Subsidiary of the Issuer referred
to in proviso (i) above of this definition) are not consolidated with those of the Issuer, then
the determination of whether or not such subsidiary is a Material Subsidiary shall be based
on a pro forma consolidation of its accounts (consolidated, if available) with the
consolidated accounts (determined on the basis of the foregoing) of the Issuer; and
(iii) in relation to any Subsidiary of the Issuer, each reference in (a), (b), (i) or (ii) above of this
definition to all or any of the accounts (consolidated or otherwise) of such Subsidiary shall
be deemed to be a reference to the relevant audited accounts of such Subsidiary if it
customarily prepares accounts which are audited and, if not, to the relevant unaudited
accounts of such Subsidiary which shall be certified by any two directors of such Subsidiary
as having been properly prepared in accordance with generally accepted accounting
principles applicable to such Subsidiary; or
(c) to which is transferred the whole or substantially the whole of the assets of a company which
immediately prior to such transfer is a Material Subsidiary shall thereupon become a Material
Subsidiary, provided that the Material Subsidiary which so transfers its assets shall forthwith upon
such transfer cease to be a Material Subsidiary and the Subsidiary to which the assets are so
transferred shall become a Material Subsidiary at the date on which the first published audited
accounts (consolidated, if appropriate) of the Issuer prepared as of a date later than such transfer
are issued unless such Subsidiary would continue to be a Material Subsidiary on the basis of such
accounts by virtue of the provisions of paragraphs (a) or (b) above of this definition,
and for this purpose a certificate addressed to the Trustee and signed by two directors of the Issuer as to whether
or not a Subsidiary is a Material Subsidiary may be relied upon by the Trustee without further enquiry or
evidence and, if so relied upon by the Trustee, shall be conclusive and binding on the Bondholders and all parties.
10 Prescription
Claims against the Issuer for payment in respect of the Bonds shall be prescribed and become void unless
made within a period of 10 years in the case of principal and five years in the case of interest from the appropriate
Relevant Date in respect of them.
11 Replacement of Certificates
If any Certificate is mutilated, defaced, destroyed, stolen or lost, it may be replaced at the Specified Office
of the Registrar or any Transfer Agent, subject to all applicable laws and stock exchange requirements, upon
payment by the claimant of such costs as may be incurred in connection therewith and on such terms as to
evidence, security, indemnity, and otherwise, as the Issuer and the Registrar or such Transfer Agent may require.
Mutilated or defaced Certificates must be surrendered before replacements will be issued.
12 Trustee
Under the Trust Deed, the Trustee is entitled to be indemnified, secured and/or prefunded to its
satisfaction and is relieved from responsibility in certain circumstances and is entitled to be paid its fees, costs,
expenses and other amounts in priority to the claims of the Bondholders.
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13 Agents
The initial Principal Paying Agent, the initial Transfer Agent and the initial Registrar and their initial
Specified Offices are listed below. The Issuer reserves the right, subject to the prior written approval of the
Trustee, at any time to vary or terminate the appointment of any Agent and to appoint additional or other Agents.
The Issuer will at all times maintain (i) a Principal Paying Agent, (ii) a Registrar outside the United Kingdom,
(iii) an Agent having a Specified Office in Singapore where the Bonds may be presented or surrendered for
payment or redemption, so long as the Bonds are listed on the SGX-ST and the rules of that exchange so require
(and such agent in Singapore shall be a Paying Agent and Transfer Agent and shall be referred to in these terms
and conditions as the Singapore Agent) and (iv) as necessary a Paying Agent with a Specified Office in a
European Union member state that will not be obliged to withhold or deduct tax pursuant to any law
implementing the Savings Directive (2003/48/EC) or any other Directive implementing the conclusions of the
ECOFIN Council meeting of 26-27 November 2000. Notice of any such termination or appointment, of any
changes in the Specified Offices of any Agent and of any change in the identity of the Registrar or the Principal
Paying Agent will be given promptly by the Issuer to the Bondholders in accordance with Condition 17 and in
any event not less than 45 days notice will be given.
So long as the Bonds are listed on the SGX-ST and the rules of that exchange so require, in the event that
the Global Certificate is exchanged for definitive Certificates, the Issuer shall appoint and maintain a paying
agent in Singapore, where the Bonds may be presented or surrendered for payment or redemption. In addition, in
the event that the Global Certificate is exchanged for definitive Certificates, announcement of such exchange
shall be made through the SGX-ST and such announcement will include all material information with respect to
the delivery of the definitive Certificates, including details of the Singapore agent.
14 Meetings of Bondholders, modification, waiver and substitution
(a) Meetings of Bondholders: The Trust Deed contains provisions for convening meetings of
Bondholders to consider matters affecting their interests, including the sanctioning by
Extraordinary Resolution of a modification of any of these Conditions or any provisions of the
Trust Deed. Such a meeting may be convened by the Issuer or the Trustee and shall be convened by
the Trustee if required in writing by Bondholders holding not less than 10% in principal amount of
the Bonds for the time being outstanding. The quorum for any meeting convened to consider an
Extraordinary Resolution will be two or more persons holding or representing more than 50%, in
principal amount of the Bonds for the time being outstanding, or at any adjourned meeting two or
more persons being or representing Bondholders whatever the principal amount of the Bonds held
or represented, unless the business of such meeting includes consideration of proposals, inter alia,
(i) to modify the maturity of the Bonds or the dates on which interest is payable in respect of the
Bonds, (ii) to reduce or cancel the principal amount of, or interest on, the Bonds, (iii) to change the
currency of payment of the Bonds, or (iv) to modify the provisions concerning the quorum required
at any meeting of Bondholders or the majority required to pass an Extraordinary Resolution, in
which case the necessary quorum will be two or more persons holding or representing not less than
66
2
3%, or at any adjourned meeting not less than 33
1
3%, in principal amount of the Bonds for the
time being outstanding (each, a Reserved Matter). Any Extraordinary Resolution duly passed
shall be binding on Bondholders (whether or not they were present at the meeting at which such
resolution was passed).
The Trust Deed provides that a resolution in writing signed by or on behalf of the holders of not
less than 90% in principal amount of the Bonds for the time being outstanding shall for all
purposes be as valid and effective as an Extraordinary Resolution passed at a meeting of
Bondholders duly convened and held. Such a resolution in writing may be contained in one
document or several documents in the same form, each signed by or on behalf of one or more
Bondholders.
54
(b) Modification and waiver: The Trustee may (but shall not be obliged), without the consent of the
Bondholders, agree to any modification of these Conditions or the Trust Deed (other than in
respect of a Reserved Matter) which, in the opinion of the Trustee, is not materially prejudicial to
the interests of Bondholders and to any modification of the Bonds or the Trust Deed which in its
opinion is of a formal, minor or technical nature or is to correct a manifest error, or to comply with
mandatory provisions of law.
In addition, the Trustee may (but shall not be obliged), without the consent of the Bondholders,
authorise or waive any proposed breach of breach of the Bonds or the Trust Deed (other than a
proposed breach or breach relating to the subject of a Reserved Matter) if, in the opinion of the
Trustee, the interests of the Bondholders will not be materially prejudiced thereby.
Unless the Trustee agrees otherwise, any such authorisation, waiver or modification shall be
notified to the Bondholders by the Issuer in accordance with Condition 17 as soon as practicable
thereafter and shall be binding on all Bondholders.
(c) Substitution: The Trust Deed contains provisions permitting (but not obliging) the Trustee to
agree, subject to such amendment of the Trust Deed and such other conditions as the Trustee may
require, but without the consent of the Bondholders, to the substitution of any other company in
place of the Issuer, or of any previous substituted company, as principal debtor under the Trust
Deed and the Bonds. In the case of such a substitution, the Trustee may (but shall not be obliged to)
agree, but it shall not be obliged to so agree, without the consent of the Bondholders, to a change of
the law governing the Bonds and/or the Trust Deed provided that such change would not in the
opinion of the Trustee be materially prejudicial to the interests of the Bondholders. In such event,
the Issuer shall give notice to Bondholders in accordance with Condition 17.
(d) Interests of Bondholders: In connection with the exercise of its functions, powers and discretions
(including but not limited to those in relation to any proposed modification, authorisation, waiver
or substitution) the Trustee shall have regard to the interests of the Bondholders as a class and shall
not have regard to the consequences of such exercise for individual Bondholders and the Trustee
shall not be entitled to require, nor shall any Bondholder be entitled to claim, from the Issuer or the
Trustee, any indemnification or payment in respect of any tax consequences of any such exercise
upon individual Bondholders except to the extent provided for in Condition 8 and/or any
undertakings given in addition thereto or in substitution therefor pursuant to the Trust Deed.
(e) Certificates/reports: Any certificate, confirmation or report of or information, opinion or advice
from any expert or other person called for by or provided to the Trustee (whether or not addressed
to the Trustee) in accordance with or as permitted by or for the purposes of these Conditions, the
Trust Deed and/or the Agency Agreement may be relied upon by the Trustee as sufficient evidence
of the facts therein (and shall be conclusive and binding on Bondholders and all other parties)
notwithstanding that such certificate, confirmation, report, information, opinion or advice and/or
any engagement letter or other document entered into by the Trustee and/or the Issuer or any other
person in connection therewith contains a monetary or other limit on the liability of the relevant
expert or person in respect thereof. The Trustee shall not be responsible for any loss occasioned by
acting on or refraining from acting in reliance on such certificate, confirmation, report,
information, opinion or advice.
55
15 Enforcement
At any time after the Bonds have become due and repayable, the Trustee may, at its sole discretion and
without further notice, take such proceedings against the Issuer as it may think fit to enforce repayment of the
Bonds and to enforce the provisions of the Trust Deed, but it will not be bound to take any such proceedings
unless (i) it shall have been so requested in writing by the holders of not less than 25% in principal amount of the
Bonds then outstanding or shall have been so directed by an Extraordinary Resolution of the Bondholders and (ii)
it shall have been indemnified and/or secured and/or prefunded to its satisfaction. No Bondholder will be entitled
to proceed directly against the Issuer unless the Trustee, having become bound to do so, fails to do so within a
reasonable period and such failure shall be continuing and no direction inconsistent with such written request or
Extraordinary Resolution has been given to the Trustee.
16 Further Issues
The Issuer may from time to time without the consent of the Bondholders create and issue further
securities either having the same terms and conditions as the Bonds in all respects and so that such further issue
shall be consolidated and form a single series with the outstanding securities of any series (including the Bonds)
or upon such terms as the Issuer may determine at the time of their issue. References in these Conditions to the
Bonds include (unless the context requires otherwise) any other securities issued pursuant to this Condition and
forming a single series with the Bonds. Any further securities forming a single series with the outstanding
securities of any series (including the Bonds) constituted by the Trust Deed or any deed supplemental to it shall,
and any other securities may (with the consent of the Trustee), be constituted by a deed supplemental to the Trust
Deed. The Trust Deed contains provisions for convening a single meeting of the Bondholders and the holders of
securities of other series where the Trustee so decides.
17 Notices
Notices to Bondholders will be valid if made in writing in English and mailed to them by uninsured mail
at the Issuers expense at its addresses in the Register maintained by the Registrar and shall be deemed to have
been given on the fourth weekday (being a day other than a Saturday or a Sunday) after the date of mailing.
So long as the Bonds are represented by a Global Certificate and such Global Certificate is held on behalf
of a clearing system, and where the rules of the SGX-ST so permit, notices to Bondholders shall be given by
delivery of the relevant notice to such clearing system for communication by them to their respective
accountholders instead of in accordance with Condition 17.
18 Indemnification
The Trust Deed contains provisions for the indemnification of the Trustee and for its relief from
responsibility, including provisions relieving it from taking proceedings to enforce repayment unless
indemnified and/or secured and/or prefunded to its satisfaction. The Trustee is entitled to enter into business
transactions with the Issuer and any entity related to the Issuer without accounting for any profit.
19 Contracts (Rights of Third Parties) Act 1999
No person shall have any right to enforce any term or condition of this Bond under the Contracts (Rights
of Third Parties) Act 1999.
56
20 Governing Law
(a) Governing law: The Trust Deed, the Bonds and any non-contractual obligations arising out of or
in connection with them are governed by and shall be construed in accordance with English law.
(b) Jurisdiction: The courts of England are to have jurisdiction to settle any disputes that may arise
out of or in connection with the Bonds and accordingly any legal action or proceedings arising out
of or in connection with the Bonds (Proceedings) may be brought in such courts.
(c) Service of process: Pursuant to the Trust Deed, the Issuer has irrevocably appointed Peaksville
Limited of Hill House, 1 Little New Street, London EC4A 3TR, United Kingdom as its agent in
England to receive service of process in any Proceedings in England based on any of the Bonds or
the Trust Deed. If for any reason the Issuer ceases to have such an agent in England, it will
forthwith appoint a substitute process agent and immediately notify the Trustee in writing of such
appointment. Nothing herein shall affect the right to serve process in any other manner permitted
by law.
57
THE GLOBAL CERTIFICATE
The global certificate contains provisions which apply to the Bonds while they are in global form, some of
which modify the effect of the Terms and Conditions of the Bonds set out in this offering memorandum. The
following is a summary of certain of those provisions.
Initial Issue of Certificates
The Global Certificate will be registered in the name of HSBC Nominees (Hong Kong) Limited (the
Registered Holder) as nominee for a common depositary for Euroclear and Clearstream (the Common
Depositary) and may be delivered on or prior to the original issue date of the Bonds.
Upon the registration of the Global Certificate in the name of any nominee for the Common Depositary
for Euroclear and Clearstream and delivery of the Global Certificate to the Common Depositary, Euroclear or
Clearstream will credit each subscriber with a nominal amount of Bonds equal to the nominal amount thereof for
which it has subscribed and paid.
Relationship of Accountholders with Clearing Systems
Each of the persons shown in the records of Euroclear, Clearstream or any other clearing system
(Alternative Clearing System) as the holder of a Bond represented by a Global Certificate must look solely to
Euroclear, Clearstream or any such Alternative Clearing System (as the case may be) for his share of each
payment made by the Issuer to the holder of the Global Certificate and in relation to all other rights arising under
the Global Certificate, subject to and in accordance with the respective rules and procedures of Euroclear,
Clearstream or such Alternative Clearing System (as the case may be). Such persons shall have no claim directly
against the Issuer in respect of payments due on the Bonds for so long as the Bonds are represented by the Global
Certificate and such obligations of the Issuer will be discharged by payment to the holder of the Global
Certificate in respect of each amount so paid.
Exchange
The following will apply in respect of transfers of Bonds held in Euroclear or Clearstream or an
Alternative Clearing System. These provisions will not prevent the trading of interests in the Bonds within a
clearing system whilst they are held on behalf of such clearing system, but will limit the circumstances in which
the Bonds may be withdrawn from the relevant clearing system.
Transfers of the holding of Bonds represented by the Global Certificate pursuant to Condition 3(b) may
only be made in part if the relevant clearing system is closed for business for a continuous period of 14 days
(other than by reason of holidays, statutory or otherwise) or announces an intention permanently to cease
business or does in fact do so, provided that, in the case of the first transfer of part of a holding pursuant to the
above, the Registered Holder has given the Registrar not less than 30 days notice at its Specified Office of the
Registered Holders intention to effect such transfer.
58
Payments
All payments in respect of Bonds represented by a Global Certificate will be made to, or to the order of,
the person whose name is entered on the Register at the close of business on the record date which shall be on the
Clearing System Business Day immediately prior to the date for payment, where Clearing System Business
Day means Monday to Friday inclusive except 25 December and 1 January.
Meetings
For the purposes of any meeting of Bondholders, the holder of the Bonds represented by the Global
Certificate shall (unless the Global Certificate represents only one Bond) be treated as two persons for the
purposes of any quorum requirements of a meeting of Bondholders and as being entitled to one vote in respect of
each integral currency unit of the currency of the Bonds.
Trustees Powers
In considering the interests of Bondholders while the Global Certificate is held on behalf of, or registered
in the name of any nominee for, a clearing system, the Trustee may have regard to any information provided to it
by such clearing system or its operator as to the identity (either individually or by category) of its accountholders
with entitlements to the Global Certificate and may consider such interests as if such accountholders were the
holders of the Bonds represented by the Global Certificate.
Notices
So long as all of the Bonds are represented by the Global Certificate and such Global Certificate is held on
behalf of Euroclear or Clearstream or any Alternative Clearing System, notices to holders of such Bonds shall be
given by delivery of the relevant notice to Euroclear or Clearstream or such Alternative Clearing System, for
communication by it to accountholders entitled to an interest in such Bonds in substitution for notification as
required by the Terms and Conditions of the Bonds.
Transfer of Bonds Represented by the Global Certificate
Transfers of interests in the Bonds will be effected through the records of Euroclear and Clearstream (or
any Alternative Clearing System) and their respective participants in accordance with the rules and procedures of
Euroclear and Clearstream (or any Alternative Clearing System) and their respective direct and indirect
participants. Where the holding of Bonds represented by a Global Certificate is only transferable in its entirety,
the certificate issued to the transferee upon transfer of such holding shall be a Global Certificate. Where transfers
are permitted in part, certificates issued to transferees shall not be Global Certificates unless the transferee so
requests and certifies to the Registrar that it is, or is acting as or as nominee for a common depositary for
Clearstream, Euroclear and/or an Alternative Clearing System.
Cancellation
Cancellation of any Bond represented by the Global Certificate which is required by the Terms and
Conditions of the Bonds to be cancelled will be effected by reduction in the principal amount of such Bonds in
the register of such Bonds and the Global Certificate on its presentation to or to the order of the Principal Paying
Agent for annotation (for information only) in the Global Certificate.
Bondholders Redemption
The Bondholders redemption option in Conditions 6(c) and 6(d) may be exercised by the holder of the
Global Certificate giving notice to the Principal Paying Agent or any other Paying Agent of the principal amount
of Bonds in respect of which the option is exercised within the time limits specified in the Conditions.
Issuers Redemption
The option of the Issuer provided for in Condition 6(b) shall be exercised by the Issuer giving notice to the
Bondholders within the time limits set out in and containing the information required by that Condition.
59
CAPITALIZATION AND INDEBTEDNESS
As of March 28, 2014, the Company had an authorized share capital of S$400,000,000 consisting of
8,000,000,000 ordinary shares of S$0.05 each and an issued and fully paid-up share capital of S$239,549,616.90,
consisting of 4,790,992,338 ordinary shares of S$0.05 each.
The following table sets forth the consolidated capitalization and indebtedness of the Company as of
March 28, 2014 and after pro forma adjustments to give effect to the issue of the Bonds while taking into account
the estimated expenses incurred in connection with the offering of the Bonds, but before the application of the
proceeds therefrom. The following table should be read in conjunction with Summary Historical Financial
Data and Recent Developments and the consolidated financial statements and related notes thereto included
elsewhere in this offering memorandum.
As of March 28, 2014
Actual
After pro forma
adjustments
(HK$ in thousands)
(Unaudited)
Short-term indebtedness
CNY Bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 714,648 714,648
Current portion of interest-bearing bank borrowings . . . . . . . . . . . . . 6,032,289 6,032,289
Current portion of finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . 18,110 18,110
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,765,047 6,765,047
Long-term indebtedness
Interest-bearing bank borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . 3,080,537 3,080,537
Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,086,576 4,086,576
New Bonds to be issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,256,000
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,167,113 8,423,113
Shareholders equity
Share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,325,005 1,325,005
Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,262,766 9,262,766
Attributable to owners of the Company . . . . . . . . . . . . . . . . . . . . . . 10,587,771 10,587,771
Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,721,493 3,721,493
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,309,264 14,309,264
Total capitalization
(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21,476,377 22,732,377
(1)
Total capitalization consists of long-term indebtedness and shareholders equity.
60
The following table sets forth our estimated debt maturity profile as of March 28, 2014 for the periods indicated.
Period ended March 28,
2015 2016 2017 2018 2019 2020
(HK$ in millions)
Bank borrowings. . . . . . . . . . . . 6,032 1,343 993 745
CNY Bonds
(1)
. . . . . . . . . . . . . 715
Senior Notes . . . . . . . . . . . . . . 1,949
(2)
2,137
(3)
Finance leases . . . . . . . . . . . . . 18
Total. . . . . . . . . . . . . . . . . . . . 6,765 1,343 2,942 745 2,137
Notes:
1. Redeemed in full on June 3, 2014.
2. Copeinca Notes.
3. US$300 million guaranteed senior notes due 2019 issued by CFG Investment S.A.C., a subsidiary of the Company.
Other than as described above, there has been no material change in our capitalization or indebtedness
since March 28, 2014.
61
USE OF PROCEEDS
The net proceeds from the offering of the Bonds will be approximately S$195.0 million after deducting
underwriting fees and commissions payable by us.
We intend to use the net proceeds from this offering for general corporate purposes, to fund our capital
expenditures, working capital, strategic acquisitions and investments, and to refinance a portion of our existing
indebtedness.
62
INDUSTRY
Certain information and statistics in this section and elsewhere in this offering memorandum relating to
the fishery industry are derived from various official and independent third party sources and have been
prepared partly on the basis of information made public by governmental entities and inter-governmental
organizations such as the FAO. We believe that the sources of such information are appropriate sources for such
information and have taken reasonable care in compiling, extracting and reproducing such information. We have
no reason to believe that such information is false or misleading or that any material fact has been omitted that
would render such information false or misleading. The information contained herein has not been
independently verified by us, the Sole Lead Manager or any other person.
Overview
Fishery as an activity involves the capture of wild fish and raising fish through fish farming or
aquaculture. Capture activity can be performed in both marine and freshwater fishing areas. According to the
FAO, world production trends in capture and fisheries have been stable since 2000. The capture fisheries sector
was regularly producing between 90 and 95 million metric tons each year, while aquaculture production was
growing rapidly, playing an increasing role in meeting rising demand for human consumption of fish and fishery
products. Meanwhile, world per capita fish consumption has increased steadily in recent years, with China
accounting for most of the growth.
However, given the uncertainties brought by climate change, the conditions for capture fisheries and
aquaculture are changing. In addition, to preserve fishing resources, sovereign states and regional fisheries
management organizations have adopted, among other measures, licensing and/or quota share systems to control
fishing within their respective waters and international waters. For example, many countries require fishing
licenses to catch fish, limit the length of the fishing seasons, and restrict the number, type and storage capacity of
fishing vessels that can be deployed within their waters. There is often a limit, or total allowable catch, imposed
on the amount of fish that can be caught, based on levels determined to ensure long-term sustainability. The
combined effects of these factors affect large-scale fisheries and aquaculture operations in a variety of natural,
social and economic contexts.
Peruvian Fishmeal and Fish Oil Industry
Government control of fisheries in Peru is managed by the Ministry of Production and the Vice-Ministry
of Fisheries through regulations and decrees on fishing periods, fishing areas and total allowable catch. These
regulatory bodies also administer permits to operate fishing vessels and licenses to operate plants for processing
fishmeal and fish oil.
Currently, Peruvian law prohibits expansion of the industrial fishing fleets operating in its waters beyond
current levels. New fishing vessels may only be acquired as replacements for existing vessels. Further, the
Peruvian government introduced similar controls in 1998 with respect to wooden fishing vessels. As a result, all
fishing vessels in Peru must now be licensed by the General Direction of Fish Extraction and Processing of the
Vice Ministry of Fishing. All steel and wooden fishing vessels engaged in industrial fishing activities must
contain satellite-based vessel tracking systems.
The industry is becoming increasingly concentrated and there is a trend towards further consolidation.
The six largest companies represented 58% of the Peruvian anchovy quota in Peru in 2013. The ten largest
companies represented 65% of total Peruvian fishmeal exports in 2005 and 90% in 2013. The remaining portion
is scattered among more than 50 smaller companies. Top market participants have exhibited steady growth in
terms of catch volume and revenue in recent years.
63
Fishmeal and fish oil is mainly produced from harvested pelagic fish, which have high fat content,
resulting in high quality fishmeal and fish oil. Fishmeal is produced through cooking, pressing, separating and
drying the fish. Fish oil is produced as a by-product of the production of fishmeal. Approximately 22-25% of the
weight of the fish is recovered in fishmeal producing process. Approximately 1-6% of the weight of the fish is
recovered in producing fish oil, depending on the maturity of the fish and when in the fishing season the fish is
harvested.
The main source for fishmeal and fish oil production is the Peruvian anchovy, which is the worlds most
harvested ocean catch fish according to the FAO, with a total catch volume in 2012 of 4.7 million metric tons.
Because of the abundant availability of Peruvian anchovy off the Peruvian coast, Peru is the largest fishmeal and
fish oil producer in the world. According to the IFFO, Peruvian production of fishmeal has consistently
represented approximately 30% of total world production volumes of fishmeal.
Fish Capture
The Peruvian anchovy has historically been the most harvested ocean catch fish in the world. According
to the FAO, the two primary global fisheries for Peruvian anchovy are found off the coasts of Peru and Chile.
Peruvian anchovy is found in large schools, generally within 80 kilometers off the coast. In Peru, the Peruvian
anchovy breeds throughout the year, with spawning occurring from July to September and from February to
March. The Peruvian anchovy matures quickly, generally at one year of age, and its life span is approximately
three years.
Historically, more than 80% of the total Peruvian anchovy catch has been concentrated between the
central and northern regions of Peru with the regions Ancash, Lima and Ica representing the greatest fishing
resources. The remainder is caught in the southern region of Peru.
Harvesting of Peruvian anchovy in the northern and central region of Peru is heavily regulated by the
Peruvian government. The Peruvian government has taken measures to ensure that anchovy in the northern and
central region of Peru is harvested at sustainable levels. The Peruvian government permits fishing in the northern
and central region of Peru only during limited periods, normally divided into two seasons in a calendar year, the
first season typically lasting fromApril to July, and the second season from November to January. The Peruvian
government also conducts anchovy biomass assessments and establishes the total allowable catch of anchovy in
the northern and central region of Peru each year based on its assessment of sustainable levels. The Peruvian
government has issued a series of laws to regulate anchovy fishing activity in the southern area, including setting
a maximum volume of anchovy that may be captured semi-annually. In the southern region, the total allowable
catch in one year is typically divided into two seasons, the first season lasting from January to August, and the
second season from October to March of the following year. Based on the total allowable catch, the Ministry of
Production determines the individual transferrable quota corresponding to each vessel, which is applicable to
both the northern and central region and the southern region of Peru.
64
The following table sets forth the Peruvian anchovy total allowable catch applicable in the southern and
the northern and central region of Peru, and the total catch in all of Peru during the periods indicated.
Anchovy Total Allowable Catch and National Total Catch
2009 2010 2011 2012 2013 2014
(metric tons in millions)
Total Allowable Catch
(2)
Southern region . . . . . . . . . . . . . . . . . . . . 0.5 0.9 0.8 0.7 0.7 0.2
(1)
Northern and central region . . . . . . . . . . . . 5.4 3.2 6.1 3.5 4.4 2.5
(1)
Total catch . . . . . . . . . . . . . . . . . . . . . . . . 5.4 3.3 6.9 4.2 5.1 NA
Notes:
(1) Total allowable catch for the first season of 2014 only.
(2) Until 2009, the fishing of anchovy in the southern region of Peru was not subject to limitations whereas the northern and central
region was assigned a maximum allowable catch of anchovy per season. Commencing the second season in 2009, the Ministry of
Production assigned separate limits to the total allowable catch for the southern region and the northern and central region.
Source: The source of Peruvian anchovy total allowable catch information is the Instituto del Mar del Peru. The source of Peruvian
anchovy total catch information is the FAO.
The total allowable catch of Peruvian anchovy in the northern and central region of Peru was 6.2 million,
3.5 million and 4.4 million metric tons in calendar years 2011, 2012 and 2013, respectively. Total allowable catch
for the first season in 2014 has been set at 2.5 million metric tons.
In the southern region, the Ministry of Production set the total allowable catch of anchovy in 2013 at 0.83
million metric tons. The first season had a total allowable catch of 0.40 million metric tons and the second season
had a total allowable catch of 0.43 million metric tons. In 2014, the quota amount has recently been set at 0.23
million for the first season.
The harvesting of anchovy off the coast of Peru is regularly impacted by El Nio and La Nia, which are
naturally occurring weather patterns. Because Peru accounts for such a large percentage of fishmeal and fish oil
worldwide, the occurrence of weather conditions off the coast of Peru affects supply and demand dynamics not
only in Peru but also the world at large. In the past, catch volumes were adversely affected due to overfishing
within the Peruvian exclusive economic zone, alongside natural phenomena like El Nio and La Nia. The
Peruvian government has responded with strict measures through implementation of quota sanctions on
industrial vessels.
Fishmeal and Fish Oil Production and Exports
Peru is the largest producer of fishmeal and fish oil in the world. In 2005, Peru produced approximately
two million metric tons of fishmeal. However, because of restrictions in the catch of anchovy in Peru imposed by
the Peruvian government, Peruvian fishmeal production has remained at approximately 1.4 million metric tons
per year since 2006. Perus production of fish oil has remained stable since 2005 with approximately 0.3 million
metric tons each year. According to FAO Food Outlook 2014, fishmeal production in IFFO member countries
during 2013 declined 18.0% and the supply of fish oil decreased as well by 8.0% largely due to Perus low
summer anchovy quota in 2012 and adverse weather.
65
Historically, more than 80% of the total anchovy catch has been concentrated between the northern and
central coast of Peru. Accordingly, most of the processing plants are also concentrated in this area, and
approximately 70% of Perus processing plants are located in the regions with the greatest fishing resources,
constituting Ancash, Lima and Ica. In 2013, Peru had approximately 90 active fishmeal processing plants, with a
total processing capacity of approximately 7,500 metric tons of raw material per hour. Due to low aquaculture
production in Peru, most fishmeal produced in Peru is exported. According to the IFFO, Peru accounted for
approximately 43.3% of the worlds fishmeal exports in 2012.
Besides Peru, the major exporters of fishmeal are Chile, Denmark, U.S.A. and Iceland, as shown in the
following chart.
Fishmeal Exporters 2012 (metric tons in thousands)
0
200
400
600
800
1,000
1,200
1,400
Peru Others Chile Denmark U.S.A. Iceland
1,328
977
306
183
144
126
Source: IFFO Statistical Yearbook 2013.
66
The following table sets forth the fishmeal production in the major fishmeal producing countries for the
periods indicated.
Fishmeal World Production (metric tons in thousands)
2008 2009 2010 2011 2012
%
Change
2012-2011
Average
2012-2008
Peru . . . . . . . . . . . . . . . . . . . . . 1,430.3 1,346.9 789.4 1,679.9 841.8 (49.9) 1,217.7
China . . . . . . . . . . . . . . . . . . . . 330.4 352.8 465.6 530.0 535.0 0.9 442.8
Thailand . . . . . . . . . . . . . . . . . . 468.0 408.0 500.0 495.0 490.0 (1.0) 472.2
Chile . . . . . . . . . . . . . . . . . . . . . 692.9 639.3 509.7 549.5 483.0 (12.1) 574.9
U.S.A . . . . . . . . . . . . . . . . . . . . 216.2 214.0 217.2 274.5 258.7 (5.7) 236.1
Japan. . . . . . . . . . . . . . . . . . . . . 204.2 205.6 202.1 183.4 194.0 5.8 197.9
Mexico . . . . . . . . . . . . . . . . . . . 98.6 104.9 78.9 133.3 139.0 4.3 110.9
Iceland . . . . . . . . . . . . . . . . . . . 140.9 103.2 84.7 91.2 133.7 46.7 110.7
Ecuador . . . . . . . . . . . . . . . . . . . 100.0 98.5 109.0 108.0 116.5 7.9 106.4
Norway . . . . . . . . . . . . . . . . . . . 142.1 137.1 153.7 107.4 98.4 (8.4) 127.7
South Africa . . . . . . . . . . . . . . . . 83.8 59.5 90.4 57.0 94.9 66.6 77.1
Denmark . . . . . . . . . . . . . . . . . . 163.2 180.9 191.3 163.0 89.9 (44.8) 157.6
Vietnam. . . . . . . . . . . . . . . . . . . 46.5 56.3 70.2 81.2 85.3 5.0 67.9
Russia . . . . . . . . . . . . . . . . . . . . 75.3 75.9 80.1 77.7 84.7 9.0 78.7
Morocco . . . . . . . . . . . . . . . . . . 77.0 100.0 113.0 86.0 69.8 (18.8) 89.2
Pakistan. . . . . . . . . . . . . . . . . . . 48.6 48.9 49.3 50.1 55.0 9.7 50.4
Panama . . . . . . . . . . . . . . . . . . . 23.6 24.3 42.2 49.0 54.3 10.8 38.7
Malaysia . . . . . . . . . . . . . . . . . . 44.2 45.2 46.2 49.4 52.0 5.3 47.4
India . . . . . . . . . . . . . . . . . . . . . 63.0 52.4 53.8 50.5 50.1 (0.8) 54.0
Brazil . . . . . . . . . . . . . . . . . . . . 42.5 44.3 44.9 47.0 46.2 (1.7) 45.0
Indonesia . . . . . . . . . . . . . . . . . . 33.7 43.1 45.0 45.3 45.0 (0.7) 42.4
Argentina. . . . . . . . . . . . . . . . . . 42.2 37.5 44.8 50.6 44.5 (12.1) 43.9
Iran. . . . . . . . . . . . . . . . . . . . . . 25.9 13.7 26.5 42.8 40.0 (6.5) 29.8
Spain. . . . . . . . . . . . . . . . . . . . . 55.0 48.0 40.0 36.0 35.0 (2.8) 42.8
Myanmar . . . . . . . . . . . . . . . . . . 23.2 20.6 31.6 31.6 34.7 9.8 28.3
Subtotal . . . . . . . . . . . . . . . . . . 4,671.1 4,460.8 4,079.5 5,069.3 4,171.5 (17.7) 4,490.4
Other. . . . . . . . . . . . . . . . . . . . . 419.5 377.5 480.7 517.6 363.1 (29.8) 431.7
Total
(1)
. . . . . . . . . . . . . . . . . . . 5,090.6 4,838.3 4,560.2 5,586.9 4,543.7 (18.8) 4,922.1
Note:
(1) Meals, solubles and similar animal feeding stuffs of aquatic animal origin. Includes fishmeal from white fish, oily fish and fish
solubles but excludes whale meal and solubles, squid meal, pota, crustacean, seal meal and fish silage.
Source: IFFO and ISTA Mielke GmbH, OIL WORLD, Hamburg.
67
The major fish oil exporters are Peru, Denmark, Vietnam, Chile and Norway, as shown in the following
chart.
Fish Oil Exporters 2012 (metric tons in thousands)
0
50
100
150
200
250
300
350
Others Peru Denmark Vietnam Chile Norway
323
303
149
82
71
65
Source: IFFO Statistical Yearbook 2013.
68
Besides Peru, the major producers of fish oil are Chile, the United States, Denmark and Japan. The
following table sets forth fish oil production in the major fish oil producers for the periods indicated:
Fish Oil World Production (metric tons in thousands)
2008 2009 2010 2011 2012
%
Change
2012-2011
Average
2012-2008
Peru . . . . . . . . . . . . . . . . . . . . . . . . . . . . 320.7 282.4 173.5 354.2 195.9 (44.7) 265.3
Chile . . . . . . . . . . . . . . . . . . . . . . . . . . . 171.2 152.1 105.2 139.1 140.6 1.1 141.6
Vietnam . . . . . . . . . . . . . . . . . . . . . . . . . 26.9 20.9 49.4 48.5 74.3 (4.4) 44.0
U.S.A. . . . . . . . . . . . . . . . . . . . . . . . . . . 86.2 76.3 61.5 66.5 63.2 6.6 70.8
Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . 62.7 64.6 60.5 54.4 58.0 (4.9) 60.0
Iceland . . . . . . . . . . . . . . . . . . . . . . . . . . 72.5 62.5 43.9 49.5 56.3 (9.0) 56.9
China . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.3 38.0 44.4 47.6 45.5 47.8 41.6
Norway. . . . . . . . . . . . . . . . . . . . . . . . . . 39.7 42.3 40.2 45.7 41.6 31.7 41.9
Denmark . . . . . . . . . . . . . . . . . . . . . . . . . 56.5 72.6 67.1 54.5 33.7 13.8 56.9
Morocco . . . . . . . . . . . . . . . . . . . . . . . . . 25.2 40.2 43.3 22.7 29.9 53.2 32.3
Ecuador . . . . . . . . . . . . . . . . . . . . . . . . . 13.0 10.8 13.8 13.6 20.1 (38.3) 14.3
Mexico . . . . . . . . . . . . . . . . . . . . . . . . . . 12.9 13.7 9.7 12.9 18.0 (36.4) 13.4
India. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 5.9 12.1 14.4 16.1 11.8 10.5
Sweden. . . . . . . . . . . . . . . . . . . . . . . . . . 9.8 9.9 11.0 11.6 11.1 (4.3) 10.7
Thailand . . . . . . . . . . . . . . . . . . . . . . . . . 6.8 6.5 8.2 10.0 10.6 8.2 8.4
Panama . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3 9.9 8.7 8.5 9.2 (3.1) 8.5
U.K. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.4 16.8 14.9 14.1 9.0 60.8 14.2
Germany . . . . . . . . . . . . . . . . . . . . . . . . . 5.8 6.1 6.2 6.4 6.8 6.0 6.3
South Africa . . . . . . . . . . . . . . . . . . . . . . 6.0 6.2 7.5 3.9 6.2 3.4 5.9
Indonesia . . . . . . . . . . . . . . . . . . . . . . . . 6.6 6.2 6.0 6.4 6.2 (6.7) 6.3
Canada . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1 2.5 5.6 5.8 6.0 21.7 5.4
France . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3 5.3 5.4 6.0 5.6 (2.8) 5.5
Ireland . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3 4.2 4.3 4.6 5.6 2.3 4.6
Spain . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.0 9.9 6.0 5.0 4.9 6.3 7.2
Angola . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9 3.9 4.2 4.4 4.5 39.2 4.2
Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . 1,013.1 968.7 812.5 1,010.3 878.9 (13.0) 936.7
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.5 24.0 28.1 25.9 22.8 (12.1) 24.9
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,036.7 992.8 840.6 1,036.3 901.7 (13.0) 961.6
Source: IFFO and ISTA Mielke GmbH, OIL WORLD, Hamburg.
According to the FAO, China is the largest export market for fishmeal produced in Peru, accounting for
approximately 535,500 metric tons, or 63.2% of Perus total fishmeal exports, in 2013. The next largest export
market for Peru is Germany which accounts for approximately 10.7% of exports, followed by Japan with
approximately 5.6% of exports and Vietnam with 2.3% of exports. For Peru, Germany is a major transshipment
platform for re-export to other countries in Europe.
69
The following table sets forth the four largest export markets, and total fishmeal exports, for fishmeal
produced in Peru for the periods indicated:
2008 2009 2010 2011 2012 2013
(metric tons in thousands)
China . . . . . . . . . . . . . . . . . . . 831.9 753.9 554.5 758.0 681.9 535.4
Germany . . . . . . . . . . . . . . . . . 191.9 269.1 136.3 119.2 193.5 90.7
Japan . . . . . . . . . . . . . . . . . . . 148.1 117.1 112.2 95.8 113.1 47.4
Vietnam . . . . . . . . . . . . . . . . . 63.1 62.5 37.5 46.3 52.1 19.2
Total . . . . . . . . . . . . . . . . . . . 1,564.0 1,537.2 1,084.5 1,292.5 1,319.8 846.7
Source: GLOBEFISH Highlights April 2014.
70
Demand for Fishmeal and Fish Oil and Prices
Fishmeal is mainly used for feed in aquaculture and poultry and swine production. According to IFFO
data, the aquaculture industrys share of fishmeal consumption is at 68% in 2012 while the pig farming industry
accounts for 23% of the fishmeal consumption worldwide. The aquaculture feed industry is also the primary
consumer of fish oil, representing approximately 74% of the total demand according to IFFO data for 2012, with
human consumption and industrial uses representing the balance. According to the IFFO, due to growth in
aquaculture, particularly in China, the largest producer of aquaculture fish and shrimp, world demand for
fishmeal and fish oil is expected to continue to increase.
According to the FAO, from 2005 to 2012, the most recent year for which information is available, the
amount of fish and shellfish produced in aquaculture worldwide grew at a CAGR of approximately 6%, from
approximately 44.3 million metric tons to approximately 66.6 million metric tons. The largest aquaculture
producer is China, with approximately 61.7% of total world aquaculture production in 2012, according to the
FAO.
The following chart sets forth the increase in aquaculture production in China for the periods indicated.
China Aquaculture Production (1950-2012)
0
10
20
30
40
50
60
1950 1960 1970 1980 1990 2000 2010
M
i
l
l
i
o
n

m
e
t
r
i
c

t
o
n
s
Source: FAO.
The growth in aquaculture has created an increase in demand, particularly in the primary aquaculture
markets in Asia, for fishmeal, which is used as one of the sources of protein in feed for aquaculture fish and
shrimp. According to FAO Food Outlook 2012, a total of 73% of Perus exports is currently taken by the Asian
buyers. According to the FAO, Peru confirmed its role as the major exporter with more than 60% of its production
now going to China, increased by 14% from five years ago. As a country with high demand for pork, China also
consumes a significant amount of fishmeal for swine production.
Due to its higher cost per metric ton of fish produced, aquaculture is used primarily to produce higher
value fish species such as catfish and salmon. Aquaculture is not a cost effective alternative for lower value fish
species such as Alaska pollock or jack mackerel.
71
Fishmeal and fish oil prices are influenced primarily by expected production in fishmeal producing
countries of anchovy and other fish catch used as raw material, and changes in the demand of fishmeal and fish
oil in the aquaculture and agriculture industries. Due in part to reduced production of fishmeal due to the low
quota for fishing and corresponding strong demand from aquaculture and terrestrial farming sectors, world
fishmeal prices have risen since 2006 to historically high levels. In January 2013, the price of standard fishmeal
went up to US$1,919 per metric ton, up from approximately US$900 per metric ton in June 2009. Throughout
2013, with weaker demand from the shrimp industry, increased anchovy landings in Peru post winter seas, and
decreasing demand from China towards the end of the year, fishmeal prices gradually came down to US$1,553
per metric ton in December 2013. According to FAO Food Outlook 2014, feed producers are increasingly
substituting plant-based material to reduce their dependence on fishmeal, and this is expected to continue. It is
anticipated that the strong El Nio effects in 2014 will impact fishmeal production in South America, but a
healthy menhaden fishery stock and the EUs introduction of a ban on discards in 2014 will likely compensate for
the supply shortfall to some extent. Prices for fishmeal are expected to remain high in the long term. The
OECD-FAO Outlook projects that the fishmeal prices will increase by 6% in 2022 from the 2010-2012 base.
However, since prices of fishmeal are starting from very high levels, a small decline is expected in selected years
of the outlook period.
The following chart shows the prices of fishmeal FOB Peru in U.S. dollars per metric ton for the periods
indicated.
Weekly FOB Peruvian Super Prime Fishmeal Prices (US$/metric ton)
Source: IFFO Statistical Yearbook 2013.
Global Fishing Dynamics
According to the FAO, worldwide production of fish and shellfish, including both wild catch and
aquaculture production, has increased steadily at a CAGR of 2.4% from approximately 140.7 million metric tons
in 2007 to approximately 158.0 million metric tons in 2012. The increase is primarily attributable to a growing
aquaculture industry, with total aquaculture production increasing in the period at a CAGR of 6.0% from 49.9
million metric tons in 2007 to 66.6 million metric tons in 2012. Wild catch production has remained relatively
stable, from 90.8 million metric tons in 2007 to 91.3 million metric tons in 2012, and further growth is
constrained by various regulations and environmental considerations. According to the OECD-FAOAgricultural
Outlook 2013-2022 (OECD-FAO Outlook), world fisheries production is projected to reach 181 million
metric tons in 2022, with the majority of the increase attributable to aquaculture production. China alone is
72
expected to represent 63% of the worlds aquaculture production. Due to an increasing world population and
continued economic growth, demand for seafood and thus also fish production is projected by the FAO to
continue to increase.
The following table sets forth a breakdown of total worldwide fish production between fish capture and
aquaculture for the periods indicated.
2007 2008 2009 2010 2011 2012
(metric tons in millions)
Total capture (fish, crustaceans,
molluscs, etc.) . . . . . . . . . . . . 90.8 90.1 90.1 89.1 93.7 91.3
Total aquaculture (fish,
crustaceans, molluscs, etc.) . . . 49.9 52.9 55.7 59.0 62.0 66.6
Total world fisheries . . . . . . . . . 140.7 143.1 145.8 148.1 155.7 158.0
Source: FAO.
Wild Catch Fish Production
According to the FAO, China was the top producer of wild catch fish (including shellfish) in 2012,
harvesting about 16.2 million metric tons, followed by Indonesia, which harvested approximately 5.8 million
metric tons. The next largest producing countries in 2012 were the United States, India, Peru, Russia, Japan,
Myanmar, Chile and the Philippines. According to the FAO Food Outlook 2014, overall production from capture
fisheries is expected to grow by 0.3% from 90.5 million metric tons in 2013 to 90.8 million metric tons in 2014.
The following table sets forth the annual fish capture production of the worlds largest fish catching countries for
the periods indicated.
Worldwide Fish Capture Production
2007 2008 2009 2010 2011 2012
(metric tons in thousands, except percentages)
China . . . . . . . . . . 14,659 16.2% 14,791 16.5% 14,920 16.7% 15,419 17.4% 15,769 16.8% 16,166 17.7%
Indonesia . . . . . . . 5,050 5.6% 4,997 5.6% 5,104 5.7% 5,308 6.0% 5,701 6.1% 5,814 6.4%
U.S.A. . . . . . . . . . 4,768 5.3% 4,350 4.9% 4,222 4.7% 4,370 4.9% 5,131 5.5% 5,108 5.6%
India . . . . . . . . . . 3,859 4.3% 4,099 4.6% 4,067 4.5% 4,695 5.3% 4,311 4.6% 4,863 5.3%
Peru. . . . . . . . . . . 7,211 8.0% 7,395 8.2% 6,914 7.7% 4,261 4.8% 8,212 8.8% 4,808 5.3%
Russia . . . . . . . . . 3,476 3.9% 3,384 3.8% 3,826 4.3% 4,070 4.6% 4,255 4.5% 4,331 4.7%
Japan . . . . . . . . . . 4,278 4.7% 4,302 4.8% 4,116 4.6% 4,044 4.6% 3,741 4.0% 3,611 4.0%
Myanmar . . . . . . . 2,236 2.5% 2,494 2.8% 2,767 3.1% 3,063 3.5% 3,333 3.6% 3,579 3.9%
Chile . . . . . . . . . . 3,819 4.2% 3,555 4.0% 3,454 3.9% 2,680 3.0% 3,063 3.3% 2,573 2.8%
Philippines . . . . . . 2,500 2.8% 2,561 2.9% 2,603 2.9% 2,612 3.0% 2,171 2.3% 2,127 2.3%
Others . . . . . . . . . 38,449 42.6% 37,771 42.1% 37,637 42.0% 38,082 43.0% 38,046 40.6% 38,356 40.0%
Total . . . . . . . . . . 90,305 100.0% 89,699 100.0% 89,630 100.0% 88,604 100.0% 93,734 100.0% 91,336 100.0%
Source: FAO.
China is the largest fish producing country in the world. From 2007 to 2012, the fish capture production in
China steadily increased from 14.7 million metric tons to 16.2 million metric tons at a CAGR of 1.96%.
73
In Peru, the average annual total fish capture production from 2007 to 2012 was 6.5 million metric tons. A
marked decrease in capture production by Peru in 2010 was largely a result of management measures (e.g.
fishing closures) applied to protect the high number of juveniles present as a consequence of the La Nia event
(cold water). This action paid dividends in 2011 when capture production exceeded the 2009 level. In 2012, the
total fish capture production was at 4.8 million metric tons, due to the reduction in total allowable catch
mandated by the Peruvian government. Production in most other countries of the world has remained relatively
stable or has slightly decreased due to the widespread imposition of restrictions on fishing worldwide.
Most of the world ocean catch occurs in the North Pacific Ocean, which is the worlds most productive
fishing region. According to the FAO, production in the North Pacific Ocean was 24.4 million metric tons in
2012. The fishing region in the North Pacific Ocean principally encompasses the territorial waters and exclusive
economic zones of Russia, the United States, Canada and Japan. The primary species caught in the North Pacific
Ocean are Alaska pollock, chub mackerel, Japanese anchovy and ribbon fish, or largehead hairtail. The Central
Pacific Ocean is the second most productive fishing region, with 14.0 million metric tons caught in 2012, and
skipjack tuna, yellowfin tuna and scads nei being the top three species caught. The Southeast Pacific Ocean is the
fourth most productive fishing regions, with 8.3 million metric tons caught in 2012 with Peruvian anchovy,
jumbo flying squid and jack mackerel being the top three species caught.
The principal species of fish caught in commercial fishing is Peruvian anchovy, which is principally used
as raw material for fishmeal, followed by Alaska pollock, which is used primarily for seafood, in the form of
whole fish and fish fillets. The roe of Alaska pollock is consumed almost exclusively in Japan. Other principal
species of fish in commercial fishing are Atlantic herring, skipjack tuna, chub mackerel, largehead hairtail, jack
mackerel, Japanese anchovy and yellowfin tuna. The following table sets forth a breakdown of worldwide fishery
capture production by the principal fish species for the periods indicated.
Worldwide Marine Fish Capture Production by Specifies
2007 2008 2009 2010 2011 2012
(metric tons in thousands)
Peruvian anchovy . . . . . . . . . . . 7,612 7,428 6,910 4,206 8,320 4,693
Alaska pollock . . . . . . . . . . . . . 2,909 2,650 2,499 2,830 3,207 3,271
Atlantic herring . . . . . . . . . . . . 2,369 2,476 2,509 2,201 1,780 1,850
Skipjack tuna . . . . . . . . . . . . . . 2,459 2,422 2,600 2,523 2,645 2,795
Chub mackerel . . . . . . . . . . . . . 1,692 1,876 1,624 1,602 1,716 1,581
Largehead hairtail . . . . . . . . . . . 1,321 1,369 1,346 1,344 1,258 1,235
Jack mackerel. . . . . . . . . . . . . . 1,992 1,468 1,287 728 634 447
Japanese anchovy . . . . . . . . . . . 1,391 1,266 1,071 1,202 1,326 1,296
Yellowfin tuna . . . . . . . . . . . . . 1,028 1,140 1,093 1,165 1,239 1,352
Other species . . . . . . . . . . . . . . 65,847 66,320 68,050 70,251 60,485 61,186
World total. . . . . . . . . . . . . . . . 90,305 89,699 89,630 88,604 82,610 79,706
Source: FAO.
74
Growing Demand Worldwide and in China
According to the FAO, the international trade in fishery products has risen rapidly in recent years.
According to FAO Food Outlook 2014, total trade value has increased by 5.2% to approximately US$136.0
billion in 2013 from approximately US$129.2 billion in 2012, and total trade value in 2014 is forecasted to be
US$141.8 billion. In 2010, the world population on average consumed 16.7% of its total dietary animal protein
from fish and fish products. The increased demand for fish has been driven by higher standards of living
worldwide, especially in the PRC; increased health consciousness among consumers, which has led consumers
to eat more fish as part of a healthy and nutritious diet; and increased demand for fishmeal for use in aquaculture
and poultry and pig farming as a higher quality source of protein.
Behind the strong demand for fish lies an increase in average per capita fish consumption. According to
The State of World Fisheries and Aquaculture 2014 published by the FAO, world per capita seafood consumption
has been steadily increasing, from an average of 9.9 kg in the 1960s, 11.5 kg in the 1970s, 12.6 kg in the 1980s,
14.4 kg in the 1990s and 17.0 kg in the 2000s, reaching 18.9 kg in 2010, and preliminary estimates for 2012 point
to a further increase to 19.2 kg. According to FAO Food Outlook 2014, world per capita seafood consumption
grew by 2.6% in 2013 and is expected to rise another 1.4% in 2014, reaching 20.0 kg per year. Most of this
increase is coming from rising aquaculture production. According to OECD-FAO Outlook, in 2022, the world
per capita seafood consumption is projected to be approximately 20.6 kg per capita. In the last three decades, the
per capita seafood supply has also risen dramatically in the Northern Africa region. According to Status and
Potential of Fisheries and Aquaculture in Asia and the Pacific published by FAO Regional Office for Asia and the
Pacific, fish contributes more than, or close to, 50% of total animal proteins in certain small developing island
states and in Bangladesh, Cambodia, Indonesia, Japan and Sri Lanka.
The global overall consumption of seafood per capita has shown steady growth as illustrated below.
Seafood Consumption Per Capita
(kg per capita)
0
2
4
6
8
10
12
14
16
18
20
22
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014F
Source: 1980-2011 figures are from FAOSTAT, 2012-2013 figures and 2014 forecast are from FAO Food Outlook 2014.
75
According to the DTFAS Report and the FAO, approximately 75% to 86% of global total fish production
has been used for human consumption since 2001, with the remaining amount directed to non-human
consumption, primarily fishmeal and fish oil production. According to the FAO, consumption of fish and seafood
per capita in China grew at an estimated CAGR of 5.3% from 11.2 kg in 1990 to 32.8 kg in 2011. Consumption
of fish and seafood per capita in the United States and Japan was recorded at 21.7 kg and 53.7 kg, respectively, in
2011.
According to the FAO, China accounted for approximately 37.2% of total world fish production in 2012,
compared to 34.7% in 2005. Historically, most of Chinas production growth has come from its aquaculture
industry, with aquaculture production increasing from approximately 37.6 million metric tons in 2005 to
approximately 41.5 million metric tons in 2012. However, according to Global Aquaculture Outlook in the Next
Decades: An Analysis of National Aquaculture Production Forecasts to 2030, an article published by FAO,
continued future growth in aquaculture in China is constrained due to a lack of suitable farming areas, greater
focus on environmental considerations, reclamation of ponds for real estate development and restrictions on
aquaculture in reservoirs and lakes. In addition, Chinas zero growth policy for fishing in its waters prevents an
increase in its own fish production. As a result, further growth in aquaculture production in China is expected to
be supported increasingly by imports of fish caught through industrial deep sea fishery operations.
The following tables set forth the worlds major fish importing and exporting countries. China has been,
by far, the largest exporter, but its imports are also growing. Since 2001, it has become the worlds third largest
importing country, after the United States and Japan.
76
Major Exporters and Importers
2002 2012 APR
(1)
(US$ millions) (%)
Exporters
China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,485 18,228 15.1
Norway . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,569 8,912 9.6
Thailand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,698 8,079 8.1
Vietnam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,037 6,278 11.9
U.S.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,260 5,753, 5.8
Chile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,867 4,386 8.9
Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,044 4,213 3.3
Denmark. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,872 4,139 3.7
Spain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,889 3,927 7.6
Netherlands. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,803 3,874 7.9
Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,525 67,788 9.0
Rest of the World . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,776 61,319 7.5
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58,301 129,107 8.3
Importers
Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,646 17,991 2.8
U.S.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,634 17,561 5.1
China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,198 7,441 13.0
Spain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,853 6,428 5.3
France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,207 6,064 6.6
Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,906 5,562 6.7
Germany. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,420 5,305 8.2
United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,328 4,244 6.2
South Korea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,874 3,739 7.2
Hong Kong . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,766 3,664 7.6
Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,830 77,998 5.7
Rest of the World . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,323 51,390 11.5
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,153 129,388 7.6
Note:
(1)
APR refers to the average annual percentage growth rate for 2002-2012.
Source: FAO.
77
There are a variety of demand drivers affecting the fish prices, including growing world population,
increasing standards of living and purchasing power, improving nutritional requirements, increasing per capita
consumption, stagnant capture fisheries production, increasing feed costs, a weaker U.S. dollar and higher crude
oil prices, better freezing technology and transportation infrastructure, and demand exceeding supply. According
to OECD-FAO Outlook, fish prices will increase over the medium term. The following chart sets forth
information on fish prices from capture fisheries, aquaculture and the FAO total fish price index for the periods
indicated.
The FAO Fish Price Index
Source: FAO SOFIA 2014.
78
Principal Species of Fish Traded
The following are the principal species of fish traded by us:
Demersal Marine Fish Description
Alaska pollock Alaska pollock is one of the most harvested species of
whitefish, with an olive green to brown back, and
silver sides. It is also one of the most harvested
groundfish, which are fish that live on, in or near the
bottom of the body of water they inhabit. Alaska
pollock are approximately 30 to 38 centimeters in
length upon first reaching maturity at three to four
years of age and can grow to a length of approximately
80 centimeters. They live to 14 to 15 years of age.
Alaska pollock roe is a high value product in the
Japanese market.
Alaska pollock are headed and gutted and their roe or
milt is extracted before being frozen on board fishing
vessels into uniform blocks and packed into composite
paper-plastic sacks. Alaska pollock fish fillets are also
processed on board certain fishing vessels.
Pelagic Marine Fish Description
Peruvian anchovy The Peruvian anchovy is a slender fish ranging in
length from 10 to 20 centimeters once mature. It is
harvested in Peru primarily as feedstock in the
production of fishmeal and fish oil. The Perus
anchovy fishery sector has produced 20% to 35% of
the worlds fishmeal and fish oil in recent years.
Horse mackerel Horse mackerel is silver in color, with bits of olive
green and a white belly. It can grow up to 70
centimeters in length and is elongated in shape. The
horse mackerel is an extremely popular staple food in
West Africa.
Jack mackerel Jack mackerel has an elongated and fairly compressed
body and a large head, and its size at first maturity has
been reported to vary between 21.6 and 30 centimeters
in different areas.
After being caught, they are sorted into different sizes
and then frozen into uniform blocks before they are
packed into carton boxes.
79
The Impact of Weather on the Fishery Industry
Climatic change presents an increasingly significant threat to the sustainability of capture fisheries and
aquaculture development. Varying climatic conditions between regions, as a result of global warming, will affect
the intensity, frequency and seasonality of climate patterns, such as E1 Nio, and extreme weather events, such as
floods, droughts and storms. These events affect the marine habitat, its food chain and the marine biomass. In
particular, among all the weather events, the El Nio phenomenon is usually associated with physical and
biological changes in the oceans which in turn affect fish distribution, and directly affect species composition
and fish stocks.
According to the NOAA, the El Nio phenomenon is an unusual warming of the tropical Pacific Ocean
that occurs irregularly at approximately three- to six-year intervals in response to a large scale weakening of the
trade winds that normally blow westward from South America toward Asia. As the trade winds weaken, so does
the containment of the warm water in the Western Pacific Ocean and the maintenance of cooler water in the
Eastern Pacific Ocean. As a result, during El Nio conditions, relatively warm water spreads all across the Pacific
Ocean, including to South America. The two principal factors affecting anchovy and other marine life during an
El Nio phenomenon are warmer water temperatures and reduced supply of subsurface nutrients that normally
upwell to shallow depths. Adding to these factors, El Nio causes significant rainfall in the Andean mountains,
introducing large amounts of fresh water into the sea. In an El Nio environment, anchovy and other fish migrate
to deeper water and further south where the water temperature is cooler, water salinity is higher and there are
more nutrients. The total fish catch in an El Nio environment is therefore significantly lower.
La Nia is known as the cold phenomenon and occurs when strong winds blow from the South,
introducing lower sea temperatures. A mild La Nia can have a very positive impact on anchovy fishing because
there is generally less rain in the Andean mountains as a result, and therefore there is less fresh water flowing into
the sea, which maintains salinity levels appropriate for anchovy and other fish.
However, when the La Nia effect is strong, fish tend to spread out searching for warmer waters at
different depths, which results in greater difficulty in capturing large amounts of fish. As a result, La Nia can
also create a negative fishing environment due to the increased difficulties in capturing fish.
The El Nio effect can significantly affect anchovy and other fish populations. For example, catches of
anchovy dropped severely following El Nio conditions during each of the El Nio years, as reported by the
NOAA and U.S. National Environmental Satellite, Data and Information Service, of 1972-1973, 1976-1977,
1982-1983, 1986-1987, 1991-1992, 1994-1995 and 1997-1998. Recently, El Nio occurred in 2002-2003,
2006-2007 and 2009-2010. Peruvian scientists are predicting a strong El Nio this year, which is expected to
have a major effect on fisheries off the west coast of South America in 2014. The following chart shows the
catches of anchovy in Peru since 1950.
80
Peruvian Anchovy Catches 1990-2012 (million metric tons)
Source: The Ministry of Production of Peru.
South Pacific and North Pacific Fisheries
South Pacific Fishery Industry
Jack mackerel is the worlds 22nd largest harvested fish species, with a total annual harvest of 0.4 million
metric tons in 2012 according to the FAO. The fish has historically mainly been used for production of fishmeal
and fish oil, but is increasingly being used for human consumption. Jack mackerel is a straddling stock in Chilean
and Peruvian waters.
The South Pacific Regional Fishery Management Organization (SPRFMO) has recently been
established under the South Pacific Convention for the international conservation and management of non-highly
migratory fisheries and protection of biodiversity in the marine environment in the international waters of the
South Pacific Ocean. The responsibilities of the Commission of SPRFMO include determining the nature and
extent of fishing for any fishery resource, including establishing a total allowable catch or total allowable fishing
effort and size limits for fish that may be harvested.
The SPRFMO has adopted conservation and management measures to arrest the depletion of the jack
mackerel species, and has agreed on a quota for the total catch of jack mackerels in the convention area of
390,000 tonnes for the year 2014. Members and cooperating non-contracting parties in the convention area are to
share in this total catch in tonnage.
Jack Mackerel Catch Volumes and Pricing
An increased share of human consumption of jack mackerel in recent years, as well as the low cost profile
of the fish driving demand growth, especially in West Africa (particularly in countries such as Nigeria and Ivory
Coast), has supported a positive price trend for jack mackerel.
81
The global catch volume for jack mackerel saw a steep dip between the years 1995 to 1999 due to El Nio.
The total catch volume has since been moderately flat with a slight fall in 2008. For over 20 years, Chile has
dominated the jack mackerel fishery in the South Pacific Ocean. Catch volumes for 2009 indicate that Chile
accounts for over 64% of the total catch, international waters accounts for close to 29%, and Peru accounts for
the remaining 6%.The total allowable catch is determined by scientific methods of assessing the stocks of fully
exploited fish species, and historical individual quotas allocated to industrial vessels and individual artisans.
Annually allocated by the fishing regulatory authorities, namely Subsecretaria De Pesca in Chile and similar
institutions in Peru, the total allowable catch represents the maximum threshold for each vessel and fishing
company.
According to the DTFAS Report, from 2002 to 2007, there was a positive trend for the fishing of jack
mackerel in international waters, which lie beyond the 200-nautical mile exclusive economic zone of the Chilean
and Peruvian coastlines. However, since 2007, there has been a decrease in catch volumes of jack mackerel in
international waters.
The following table sets forth the total catch volumes of Chilean mackerel from 2003 to 2009.
Total Catch Volumes in International Waters
2003 2004 2005 2006 2007 2008 2009
(metric tons in thousands)
Chilean jack mackerel . . . . 155.0 255.0 250.0 342.0 424.5 401.0 370.9
Source: Kontali, DTFAS Report.
According to Deloittes research findings, regulatory bodies continue to monitor catch volumes of jack
mackerel in South Pacific international waters as well as Chile and Peru with the goal of ensuring sustainability
of the fishery resources and sustaining the stability of the fish biomass in these fisheries.
82
Catch Volumes for Jack Mackerel
(metric tons in thousands)
0
500
1,000
1,500
2,000
2,500
2007 2008 2009 2010 2011 2012
1,992.4
1,470.9
1,287.2
686.4
634.1
447.1
Total catch volumes
Source: FAO.
With a wider human consumption of jack mackerel the FOB price, or the price free on board, has risen
from approximately US$0.34 per kg in January 2002 to approximately US$1.40 per kg in May 2012, a CAGR of
15.2%. The positive trend in the price of the jack mackerel reflects the growing demand of the fish for human
consumption.
83
Free on Board (FOB) Export Pricing of Jack Mackerel from Chile
(US$/kg)
Source: Kontali Estimates.
North Pacific Fisheries
According to the FAO, most of the catch in the North Pacific Ocean consisted of Alaska pollock (11.9%),
large head hairtail (5.3%) and Japanese anchovy (5.1%). Historically, Alaska pollock is the dominant catch
species in the North Pacific Ocean.
Alaska pollock accounted for 37.3% of groundfish production worldwide in 2011, with 3.2 million metric
tons caught, which was more than any other groundfish species. Alaska pollock matures relatively quickly, with
fish aged three to seven years contributing most significantly to the commercial fisheries. Rapid growth allows a
relatively high proportion of the Alaska pollock biomass to be harvested each year without reducing the overall
population.
The two primary global resources for Alaska pollock are the Russian pollock fisheries off West
Kamchatka in the Sea of Okhotsk and off Naverin Cape in the Russian Bering Sea and the U.S. Bering Sea
pollock fishery. Alaska pollock fisheries are also located off the coasts of Japan and Canada. The Alaska pollock
biomass in the Russian and U.S. pollock fisheries are independent of one another, with virtually no co-mingling
between these stocks. Alaska pollock stocks in Russia have increased in recent years, although they remain
below historical levels, while Alaska pollock stocks in the United States have decreased in recent years.
According to FAO, approximately 50.2% of the Alaska pollock produced worldwide in 2011 came from the
Russian pollock fisheries, and approximately 40.6% came from the United States/Canada pollock fisheries. The
balance of the worldwide Alaska pollock production was derived from Japan and South Korea.
84
Pricing and Exports
Each of the products produced from Alaska pollock has different pricing characteristics. The price of
Alaska pollock roe is heavily influenced by the size and condition of roe skeins, color and freshness of the roe
and the maturity of the fish caught. Industrial fishing companies are more likely to produce higher quality roe
because they process the fish within hours of being caught, rather than several days later as is the case with
onshore processors. Roe prices are also influenced by anticipated Russian and U.S. production. In addition,
Alaska pollock roe is consumed almost exclusively in Japan. As a result, inventory carry-over by Japanese and
South Korean purchasers, the primary purchasers of Alaska pollock roe, also affects the price of roe.
Generally, the primary influences on the prices of Alaska pollock products are the expected harvest catch
volumes in the Russian and U.S. pollock fisheries, carry-over inventories and changes in demand. To a large
extent, catch volumes of Alaska pollock in the Russian and United States Alaska pollock fisheries depend upon
changes in the Russian Alaska pollock total allowable catch and harvest limits recommended by the U.S.
National Marine Fisheries Service. The Russian government has carefully controlled the total allowable catch in
recent years in an effort to ensure the sustainability of the biomass. Historically, prices of Alaska pollock
products have tended to move in the opposite direction of movements in the Russian Alaska pollock total
allowable catch, increasing when the total allowable catch decreases and decreasing when the Alaska pollock
total allowable catch increases.
Due to favorable worldwide demand and supply conditions, the prices of Alaska pollock per metric ton
has risen steadily in recent years except for a slight decrease in 2010. However, producers of Alaska pollock fillet
blocks have been facing a decline in prices recently. The following chart shows the average industry prices of
Alaska pollock per metric ton for the periods indicated.
85
Prices of Alaska Pollock
(1)
0
1
2
3
4
5
2003 2004 2005
U
S
$

p
e
r

k
g
2006 2007 2008 2009 2010 2011 2012
2.10
2.35
2.85 2.83
3.25
4.40
3.90
3.40
3.10 3.10
Note:
(1) Alaska pollock frozen fillet block prices, skinless and boneless, DAP, in Germany, origin Russian Federation/USA
Source: GLOBEFISH April 2013.
The following chart shows Chinas import volume and price of Alaska pollock for the periods indicated.
Source: GLOBEFISH April 2013.
86
BUSINESS
Overview
We are principally engaged in global sourcing, transportation, logistics and supply of frozen seafood
products to the international markets, in particular to the PRC. Through our listed subsidiary, CFGL, we own,
operate and/or manage fishing vessels, source fish from suppliers and own and operate fishmeal processing
plants. In addition, we are one of the leading suppliers of frozen seafood to the PRC, and carry out shipping
services by deploying our vessels to provide other fishing vessels with marine fuel, food and basic provisions. We
are also one of the largest producers of fishmeal in the world. Furthermore, we make strategic investments in
businesses that complement or streamline our existing operations. We are committed to meeting the growing
needs of health and value-conscious consumers around the world.
Fishery and Fish Supply Operations
CFGL is one of the worlds leading upstream industrial fishing operators with access to controlled ocean
resources through quota shares and licenses to fish, with a focus on Peruvian anchovy in Peruvian waters for
processing into fishmeal and fish oil and horse mackerel in the North Atlantic Ocean for human consumption.
CFGL also purchases fish supplies on a spot-basis, which comprise ocean catch fish and other marine species
intended for human consumption. We sell our fish products principally to markets in China, and also to Japan,
Europe and West Africa.
Fishmeal Production Operations
In our fishmeal production operations, we principally produce fishmeal and fish oil using anchovy that we
harvest within Perus exclusive economic zone pursuant to quota shares or purchase from third-party fishing
operators. After the Copeinca Acquisition, we currently operate ten processing plants, which are strategically
located along the coast of Peru, some of which are located at secondary shipping ports to aid in the delivery of
fish from fishing vessels, as well as the export of processed fishmeal and fish oil to customers. The primary
export markets for our fishmeal and fish oil products are China, Germany, Taiwan and Japan.
Frozen Fish Supply Chain Management Operations
Due to an increasing demand for fishery products and our large distribution network in the PRC, we
source a large volume of whitefish such as Alaska pollock and codfish from international suppliers, particularly
fishing companies operating in the North and South Pacific oceans. We own and operate seven reefer vessels with
an aggregate capacity of 59,500 metric tons per voyage. All of these vessels are fully equipped with refrigerating
facilities to ensure fish will be kept frozen during transportation. Where direct high sea transshipment of frozen
fish can be carried out, we send our vessels to the fishing grounds to collect the catch directly from our suppliers
trawlers. We collect frozen seafood products from the trawlers of our suppliers and then transport them in our
reefer vessels to markets in China, South Korea, Africa, Europe and North America where we sell them directly
to import/export companies or store them in bonded warehouses for further distribution to our customers.
The following diagram illustrates the current breakdown of our operations as of the date of this offering
memorandum.
Fishery and fish supply
operations
Fishmeal production
operations
Fish and fish supply
Frozen fish supply
chain management operations
Other strategic
investments
The Company
87
For the year ended September 28, 2013, we had consolidated revenue of HK$8,764.1 million and
consolidated profit attributable to owners of the Company of HK$777.3 million. As of September 28, 2013, our
consolidated share capital and reserves were HK$14,112.9 million. For the six months ended March 28, 2014,
we had consolidated revenue of HK$4,660.0 million and consolidated profit attributable to the owners of the
Company of HK$277.9 million. As of March 28, 2014, our consolidated share capital and reserves were
HK$14,309.3 million.
History
We commenced our business under the name Pacific Andes Enterprises (Hong Kong) Limited in 1986 and
engaged in the sourcing and supply of frozen seafood products from suppliers in Taiwan, Pakistan, India and
Uruguay for export to clients in Taiwan and Australia. In 1994, PAIH was incorporated and became the new
holding company of the Group. The shares of PAIH were listed on SEHK on October 3, 1994. We were listed on
the mainboard of the SGX-ST on October 4, 1996. In the 1990s, we began the direct sourcing of seafood by
purchasing directly from trawlers owned by Russian fishing companies in the North Pacific Ocean. As volumes
of fish sourced from Russian fishing companies increased, we began chartering our own vessels for the delivery
of supplies directly from Russian ports to secure and reduce the costs of our fish supplies. We subsequently
provided more agency services to Russian fishing companies by acting as their agent to represent Russian fishing
companies. We began to enable the vessels of Russian fishing companies to operate at sea continuously and to
increase our supply of whitefish by chartering transport vessels and tankers for delivery and supply of marine
fuel and other supplies. Since our inception, we have continued to grow our operations by developing our
whitefish supplies and streamlining our supply chain management operations. We have also sought out strategic
investments that complement our existing operations.
Our Investment in China Fishery Group Limited
CFGL was incorporated in 2000 and entered the industrial fishery industry in 2001 with the launch of our
contract supply business in the North Pacific Ocean. PARD acquired a controlling stake in CFGL in 2004. Since
its listing on the Main Board of the SGX-ST on January 25, 2006, CFGL has rapidly expanded its sourcing
operations by securing long-term supplies of fish under fishing quota shares and licenses, making strategic
acquisitions and constantly positioning itself to develop markets for underutilized fish. As a result of this
significant growth, we have gradually increased our shareholding in CFGL through a series of investments,
including an acquisition in 2006 of the shares of Super Investment, an investment holding company which held
78% of the share capital of CFGL (representing 28.8% of the equity interest in CFGL held by the Company) at
that time. We further increased our equity interest in CFGL to 63.9% by issuing US$93.0 million 4.0%
convertible bonds due 2012, and completed a US$228 million rights issue. As of the date of this offering
memorandum, we held 57.9% of the equity interest in CFGL. In March 2014, CFGL completed the acquisition of
Copeinca, a leading producer of fishmeal and fish oil in Peru, which further expanded its Peruvian fishmeal
operations and made it the largest fishing quota holding company in Peru.
Investment in CFGL by the Carlyle Group
On June 29, 2010, CFGL entered into a subscription agreement with CAP III-A Limited (CAP), a
member of the Carlyle Group, a global alternative asset manager, for the subscription of CFGLs new shares for
a total subscription price of up to US$190.0 million. Pursuant to the subscription agreement, CFGL issued
113,513,514 shares (representing approximately 11.32% of CFGLs then enlarged share capital) and 26,666,666
warrants, each warrant entitling the holder to subscribe for one share at an exercise price of S$2.10 per share,
subject to adjustment under certain circumstances as specified in the warrant terms and conditions. On December
5, 2013, CFGL entered into a warrant issuance agreement with CAP, pursuant to which, CFGL issued 96,153,846
warrants, representing 4.49% of CFGLs then enlarged share capital, subject to certain conditions. Each warrant
carries the right for CAP to subscribe for one share at the price of S$0.52 (subject to adjustments in accordance
with certain conditions of the warrants) within three years from the issuance date. Upon the exercise of all the
warrants issued pursuant to this warrant issuance agreement, CAP will hold approximately 15.08% of CFGLs
then enlarged share capital. Through certain agreements, CAP also nominated a non-executive director to the
board of directors of CFGL and a member to each of the audit and risk management, investment and corporate
social responsibility committees.
88
Competitive Strengths
We believe the following competitive strengths have contributed to our success and will contribute to our
ability to further grow our operations.
One of the worlds largest integrated fishing companies.
We are one of the worlds largest listed fishing companies in terms of ocean catch volume and a leading
fishing company in terms of revenue. For the year ended September 28, 2013, we caught 566,235 metric tons of
fish and other marine species. From these catches, we derived revenue of HK$4,273.1 million. In our trawling
operations, we have a large and advanced fishing fleet which allows us to effectively leverage economies of scale
to maximize profitability. We deployed a state-of-the-art factory vessel to the South Pacific Ocean in December
2009. This factory vessel works together with catcher trawlers that supply it with ocean catches for centralized
processing. In our fishmeal production operations, our large fleet of fishing operations are supported by our
processing plants in Peru, which are strategically located along the coast, some of which are situated near
secondary shipping ports. Our processing plants are able to aid in the delivery of fish from fishing vessels as well
as efficiently and timely process fishmeal and fish oil.
With respect to our supply chain management operations, we operate and charter a transportation fleet
that loads whitefish directly from, and provides marine fuel and supplies to, our suppliers. These value-added
services allow our suppliers to further extend their time at sea, while providing us a stable supply of whitefish at
attractive prices. We then provide processing, storage and transshipment services for such fish products. For the
year ended September 28, 2013, we transported approximately 290,600 tons of fish to China, South Korea,
Africa and Europe . With such large quantities of transshipment, we are able to charter our vessels based on time
charter, rather than voyage charter, which reduces the costs of chartering. As a result of our economics of scale
and our sourcing strategies, we are then able to offer competitive prices for our products.
Substantial presence in the PRC and diversified customer base abroad.
We have been supplying fish products to the PRC, the principal market for our products, for over 20 years.
We believe we are one of the largest importers of frozen seafood into the PRC based on import volume. Based on
statistics reported by the PRC customs bureau for the year ended December 31, 2013, approximately 2,090,000
metric tons of frozen fish was imported into the PRC. During the same period, we imported approximately
269,728 metric tons of frozen fish for our customers in the PRC, representing approximately 12.9% of all frozen
fish imported into the PRC during this period. As a result, we have access to market information derived from our
operations, which provides us with greater insight on market developments in the PRC, where our strategy is to
focus on the mass market where there is a strong demand for inexpensive, nutritious seafood products. Our
competitive pricing enables us to position frozen fish as an inexpensive and nutritious alternative to other staple
food products such as poultry and pork. We believe our market insight and long-term relationships with traders
and importers in the PRC have positioned us favorably to capitalize on the expected continued growth in
consumer demand for fish products in the PRC. In addition to a substantial presence in the PRC, our supply chain
management operations also enjoy a diversified customer base in Europe, North America and a developing
customer base in Africa.
Strong presence in the fishmeal processing sector in Peru and access to controlled fishing grounds with
abundant fish resources.
After the Copeinca Acquisition in March 2014, our subsidiary CFGL became one of the largest fishmeal
and fish oil producers and the largest fishing quota holding company in Peru, with 111 licensed purse seiners and
12 fishmeal processing plants. As of March 28, 2014, CFGL owned a 16.9% quota share for harvesting Peruvian
anchovy in northern and central Peru and a 14.7% quota share in southern Peru under Perus ITQ system. We
believe that CFGL will be able to further improve the utilization of our processing plants in a cost effective
manner. We believe the integration of Copeinca strengthens our vertically-integrated business operations, and
will enable us to remain competitive to grow our business and revenues.
89
With respect to our fish and fish supply operations, we have diversified our sources of fish to fishing
grounds in the Atlantic Ocean, which has allowed us to widen our product range, while improving the utilization
of our vessels. With respect to our supplies, we believe we have a competitive advantage in securing reliable
supplies of whitefish such as Alaska pollock and codfish at attractive prices because of the value-added services
we are able to provide our suppliers. Our ability to source products in all seasons from diverse locations and
different suppliers enables us to maximize our vessel capacity and utilization flexibility.
Proven track record in industry consolidation and acquisitions.
We have a proven track record of capitalizing on strategic growth opportunities. Through strategic
acquisitions, commercial arrangements and organic growth, we have rapidly increased our access to fishery
resources in recent years, including the acquisition of additional fishing quotas, fleet expansion, and utilization
of fishmeal processing plants in Peru. For instance, our subsidiary CFGL recently completed the strategic
acquisition of Copeinca, a leading fishmeal and fish oil producer in Peru in March 2014. The acquisition and
subsequent merger of Copeincas operations and assets enabled CFGL to become one of the largest fishmeal and
fish oil producers and the largest fishing quota holding company in Peru.
Our experienced management team has the proven ability to identify, execute and integrate acquisitions.
By maintaining a strong capital structure, we are able to use leverage as necessary to complete acquisitions that
complement our existing operations and provide attractive returns. We believe our experience will position us to
further develop our existing businesses and allow us to benefit from economies of scale, while enabling us to
continue building our leadership position in the global fishery industry.
High standards of food safety and quality.
We are committed to maintaining high standards of food safety and quality. As consumer awareness and
expectations for transparency in the food supply chain have increased, we have implemented a whole chain
traceability system in our trawling operations to track our fish products intended for human consumption from
catch to plate. The overarching goal of our traceability system is to reinforce consumer faith in our business
integrity and the quality of our products. With respect to our frozen fish supply chain management operations, we
have established stringent quality control measures regarding technical and hygienic standards on all of our
seafood products. We believe that our application of stringent quality controls on our seafood products further
bolsters our reputation in the seafood trading industry.
Dedicated and experienced senior management team.
Our senior management has an average of 20 years of related industry experience, and has been
instrumental to our success to date. Our management team possesses extensive operating experience and an
in-depth understanding of the fishery industry and supply chain management which, we believe, will allow us to
further develop our businesses.
Business Strategy
Our business strategy consists of the following principal elements.
Continue to increase access to sustainable fishing resources globally and strengthen existing supply chain.
We plan to take advantage of growing fish consumption and rising demand for fishmeal and fish oil
worldwide, especially in the PRC, by increasing our access to fishing resources through quota allocations and
fishing licenses. To that end, we will continue to position ourselves in newly controlled fishing grounds to reap
future benefits when more comprehensive control systems are introduced and re-allocate our fleet to be
responsive to opportunities in different fishing regions to grow our fish supplies and maximize the utilization rate
of our vessels. For instance, we commenced fishing operations in Namibia in February 2012 and successfully
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obtained access to fishing quotas there through our joint venture in Namibia. We target newly controlled fishing
grounds with abundant marine resources that have not reached their full market potential. We believe that these
marine resources possess upward price mobility because they can be promoted to higher-margin uses such as
direct human consumption or fishmeal production. We adopted a similar strategy in developing our South Pacific
Ocean and West Africa operations and will continue to identify other suitable fishing grounds and fish species.
With respect to our frozen fish supply chain management operations, to ensure a stable and secure supply
of fish, we plan to strengthen our long-term access to fishery resources on the upstream level. We plan to
maintain the strong relationships that we enjoy with other fishing companies by continuing to offer them
comprehensive value-added services.
Continue to expand and diversify our operations.
We will continue to expand our fishing operations with a view towards diversifying our operations to
increase revenue and profitability. Our plan is to diversify our fish product offerings, fishing grounds and target
markets. We have been able to apply our harvesting and distribution experience to quickly establish a market
presence for a growing range of fish products. We began selling horse mackerel, sardines and herring to West
Africa in 2012, and are growing our Namibian fishing operations. In recent years, we have significantly
increased the geographic scope of our fishing operations to become a truly global fishing company.
Continue to upgrade vessel fleet and improve operational capabilities.
We plan to increase and upgrade our vessel fleet to capitalize on our growing access to fishery resources.
In this regard, we are evaluating suitable opportunities to acquire additional vessels or enter into operating
agreements with owners of fishing vessels that have existing fishing quotas. We will also continue to explore
opportunities to upgrade and increase the capacity of the fishing vessels in our fleet to strengthen our ability to
capitalize on our fishing resources. In addition to increasing our efficiency, vessel upgrades should also help
reduce future vessel operating costs. As a part of our strategy to increase our operational capabilities, we plan to
continue improving the logistics management of our fleet. Since 2011, we have invested approximately
US$127.3 million in the acquisition of fishing vessels, including a state-of-the-art factory vessel as part of our
fleet deployed in the South Pacific Ocean. We use catcher trawlers in our South Pacific Ocean operations to
supply a continuous stream of ocean catches to our factory vessel for centralized processing.
With respect to our frozen fish supply chain management operations, we regularly review our distribution
strategy with the goal of strengthening our distribution network, which currently extends across more than 30
countries. We may further expand our transportation vessel fleet to serve our customers better, as well as
acquiring additional berthing spaces, warehouses and ship repairing facilities located at or near strategic
seaports.
Pursue strategic investments.
We plan to continue pursuing strategic investments, which include investments or acquisitions of
complementary businesses as well as organic development of our existing business lines. We plan to leverage our
previous experience in identifying, executing and integrating our acquisitions and investments to expand and
diversify our fish and fish supply operations and frozen fish supply chain management operations, and to support
our other business growth strategies.
Uphold sustainable strategies and practices.
As an environmentally responsible company with a long-term commitment to sustainable development,
we plan to continue to maintain sustainable fishing practices and are committed to working with only reputable
fishing companies. We perform voluntary quarterly reviews of our procurement processes, undertaken by an
international audit firm, to ensure that illegally harvested fish does not enter our supply chain. We continue to
improve our operational efficiencies and yield rates and promote under-utilized fish species for human
consumption.
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Fishery and Fish Supply Operations
CFGL, the subsidiary through which we conduct our fishery and fish supply operations, is one of the
worlds largest listed fishing companies in terms of catch volume. CFGL is the largest fishing quota holding
company and one of the largest fishmeal and fish oil producers in Peru, with strategically processing plants
located along the coast of Peru. CFGL also conducts fishing operations and purchases fish products on a
spot-basis from various suppliers. CFGL has also secured access rights to controlled fishing grounds in Peru in
the South Pacific Ocean and Namibia.
Since the listing of CFGL on the SGX-ST in 2006, we have rapidly expanded our fishery and fish supply
operations through strategic acquisitions and operating arrangements with other fishing companies. For the year
ended September 28, 2013 and the six months ended March 28, 2014, revenue from our fishery and fish supply
operations was HK$4,329.1 million and HK$2,535.7 million, respectively, accounting for approximately 49.4%
and 54.4% of our total revenue, respectively.
Fishmeal Production Operations
In our fishmeal production operations, we principally produce fishmeal and fish oil using anchovy that we
harvest within Perus exclusive economic zone pursuant to quota shares or purchase from third-party fishing
operators. In March 2014, CFGL completed the acquisition of Copeinca, a leading producer of fishmeal and fish
oil in Peru, which further expanded our Peruvian fishmeal operations and made us one of the largest fishmeal
producers in Peru.
Our Peruvian anchovy fishery operations are carried out under the ITQ system, which was introduced in
Peru in April 2009. Under this system, following the Copeinca Acquisition we held 16.9% of the quota for
harvesting Peruvian anchovy in the northern and central zone in Peru, as well as 14.7% for the southern zone as
of March 28, 2014. We focus most of our fishing efforts in the northern and central zone because the migratory
patterns of Peruvian anchovy make this region more productive for harvesting anchovy. The current ITQ system
permits each fishing company to distribute its quota share among certain of its vessels, which are known as
nominated vessels. Doing so removes the incentive for the fishing company to harvest and process the targeted
fish species as fast as possible and gives it a greater opportunity to optimize operational efficiencies.
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The following table sets forth our total production quantity of fishmeal and fish oil for the periods
indicated.
Year ended September 28,
Six months ended
March 28,
2012 2013 2014
Fishmeal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106,783 57,621 126,473
Fish oil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,919 10,277 18,055
Processing Plants
We own 12 fishmeal and fish oil processing plants, ten of which are in operation as of March 28, 2014.
The following table sets forth a summary of our operational processing plants as of March 28, 2014.
Plant Location
Production
capacity Processing Age of plant
(metric
tons/hour) (years)
Northern Peru:
Bayovar Plant . . . . . . . . . . Piura
(1,250 km north of Lima)
170 Steam-dried 20
Chancay Plant . . . . . . . . . . Lima
(80 km north of Lima)
168 Steam-dried 49
Chancay Plant 2 . . . . . . . . . Lima
(80 km north of Lima)
80 Steam-dried 23
Chicama Plant . . . . . . . . . . Malabrigo Port
(610 km north of Lima)
80 Steam-dried 14
Chicama Plant 2. . . . . . . . . Malabrigo Port
(610 km north of Lima)
159 Steam-dried 12
Chimbote Plant . . . . . . . . . Chimbote Port
(450 km north of Lima)
103 Steam-dried 47
Chimbote Plant 2 . . . . . . . . Chimbote Port
(450 km north of Lima)
250 Steam-dried 44
Pisco Plant . . . . . . . . . . . . Pisco Port
(250 km south of Lima)
110 Steam-dried 19
Tambo de Mora Plant . . . . . Tambo de Mora
District-Chincha
(200 km south of Lima)
40 Steam-dried 42
Southern Peru:
Ilo Plant . . . . . . . . . . . . . . Ilo Port
(1,330 km south of Lima)
90 Steam-dried 7
Ilo Plant 2 . . . . . . . . . . . . . Ilo Port
(1,335 km south of Lima)
50 Steam-dried 17
La Planchada Plant . . . . . . . Planchada Port
(760 km south of Lima)
145 Steam-dried 52
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These processing plants are strategically located along the coast of Peru, some of which are situated near
secondary shipping ports to aid in the delivery of fish from fishing vessels as well as the export of processed
fishmeal and fish oil to customers. Eight of the processing plants in operation are located along the northern and
central coastline of Peru, where fishing is currently permitted six months of the year, and two processing plants
in operation are located along the southern coastline of Peru, where currently fishing is permitted year-round.
The geographic distribution of our operational processing plants minimizes distance and travel time from fishing
locations to processing plants, which reduces fuel expenses and preserves catch quality. We also purchase a
portion of our anchovy feedstock from third parties for processing at our processing plants to increase utilization
of our plants. We also have a number of decommissioned plants, which we plan to use as repair and maintenance
sites for our fishing vessels.
The raw fish material is delivered by the fishing vessel using a fish pump installed in a barge and sent
through a submarine pipe to the processing plant, except for our Bayovar Plant and Chimbote Plants, which have
access to piers. The raw materials are then weighed, sampled, and transported to pits where they are heated,
strained, pressed, undergo a decanting and centrifuge process, evaporated, dried, cooled and ground. After
undergoing this process, the finished fishmeal is then packaged and transported to customers. Approximately
22% to 25% by weight of the fish is recovered in producing fishmeal.
In accordance with the requirements of the Ministry of Production, all of our active processing plants
currently use steam dryers, which enable us to save energy and improve the quality of the final product. To that
end, we have implemented a steam-dried processing system of indirect steam with mechanisms for hot gas
recirculation and recovery of particles that comply with the maximum allowable emission rates for the fishmeal
and fish oil industry.
With respect to steam-dried fishmeal, the plants produce a range of different grades, including Super
Prime, Prime, Taiwan Grade, Thailand Grade and Standard. The finished fishmeal has high protein content,
making it ideal for aquaculture and agribusiness feed products. Fishmeal is typically composed of approximately
60% to 72% protein, 10% to 12% fat, 10% to 12% moisture, 5% to 7% salt and sand and 10% to 20% ash.
Crude fish oil is produced during the production of fishmeal. The fish oil is primarily used as an ingredient
in aquaculture feed but is also used as the raw material in making capsules containing omega-3 fatty acids as a
human health supplement. Approximately 1% to 6% by weight of the fish is recovered in producing fish oil,
depending on the maturity of the fish and the date in the fishing season when the fish is harvested.
Fishing Vessels
As a result of the ITQ system, we, along with many fishing operators in the region, reduced the number of
plants in operation and the number of vessels deployed in harvesting anchovy. We own the purse seiners in our
fishmeal operations, along with the quota shares allocated to these vessels, and do not pay any charter or other
fees in connection with these vessels. All of our purse seiners are authorized by the Ministry of Production in
Peru to conduct fishery operations. We own 111 fishing vessels and lease an additional fishing vessel, 40 of
which are currently in operation. In addition, 21 out of these 40 operating fishing vessels are equipped with
freezer storage rooms or RSW, allowing our fish to reach our plants fresh and in turn improving the quality of the
fishmeal products we produce. Following the implementation of our efficiency measures, we have reduced the
number of vessels actively deployed in the Peruvian anchovy fishery to 40. The remaining vessels are inactive
and serve as replacement vessels for our active fleet.
Our fishing vessels typically conduct fishing operations within a radius of up to 250 miles from their
respective processing bases and generally remain at sea for periods of one to two days per trip. The vessels use
the purse seine fishing technique, which is enhanced by a fish finding system. In addition, all vessels are
equipped with a satellite-based vessel tracking system. Our fishing vessels in Peru caught approximately
205,032 and 351,135 metric tons of anchovy, and our fishmeal processing plants produced approximately 67,898
and 144,528 metric tons of fishmeal and fish oil, in the year ended September 28, 2013 and six months ended
March 28, 2014, respectively.
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Sales and Marketing
Historically, a substantial majority of the total sales in our fishmeal operations have been exported. The
primary export markets for our fishmeal and fish oil products are the PRC, Germany, Taiwan and Japan. With the
exception of customers in Germany, customers in the export markets use (or resell to end-customers who use) the
fishmeal and fish oil in their local markets. The fishmeal exported to Germany is generally distributed to other
destinations in Europe. We conduct direct sales of our fishmeal and fish oil through our own sales team and do
not use distributors to sell our goods.
Our fishmeal customers are mostly agribusiness companies and aquaculture companies, which use
fishmeal and fish oil as raw material for animal feed products. These customers either buy our products directly
or through trading companies.
Once conditions of sale are agreed with the customer, a sale and purchase contract is signed. Payment is
generally made by the customer through letters of credit and in some other cases (as with Japanese customers) a
bill of collection is also an acceptable form of payment. As fishmeal and fish oil are commodities, our sales prices
generally reflect spot market prices.
The global fishery industry is a concentrated commodities industry. We believe our marketing strength
comes from the quality and price of our fish products, and we do not engage in material marketing efforts to
promote our products or increase our visibility within the industry.
Trawling Operations
In our trawling operations, we principally engage in the harvesting, processing and sale of ocean catch
fish and other marine species intended for human consumption. For the year ended September 28, 2013 and six
months ended March 28, 2014, we sold approximately 255,052 and 86,679 metric tons of frozen fish and other
fish products derived from our trawling operations, respectively. As part of our strategy to diversify our business
and increase our catch volume, we expanded our trawling operations to the South Pacific Ocean in June 2009 and
to West Africa in November 2010. We commenced operations in Namibia in 2012.
The following table summarizes our trawling operations as of the date of this offering memorandum.
South Pacific Ocean
Fishing grounds: International waters of the South Pacific Ocean
Vessels: One factory vessel and five catcher trawlers
Fish and marine species: Jack mackerel
Fishing season: March-September
West Africa
Fishing grounds: Exclusive economic zone of Namibia
Vessels: Two super trawlers
Fish and marine species: Horse mackerel, sardines and other marine species
Fishing season: November-August
Our trawling operations consist of two super trawlers with a total gross tonnage of approximately 12,376
metric tons. We own and operate a factory vessel and five catcher trawlers, which are deployed in the South
Pacific Ocean during the fishing season there. During periods outside the fishing season in the South Pacific
Ocean, our factory vessel and catcher trawlers will harvest fish in Namibia to increase the number of vessel
utilization days. We harvest jack mackerel in the international waters of the South Pacific Ocean with a fleet of
six vessels which we own, comprising the factory vessel and five catcher trawlers referred to above. Our catcher
trawlers supply ocean catches of jack mackerel to our factory processing vessel for centralized processing. We
believe that this form of deployment increases the efficiency of our fishing operations by reducing consumption
of bunker fuel and increasing the number of catch days.
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All of the fishing vessels in our trawling operations are equipped with advanced technology, including
satellite-based vessel tracking and a bar code traceability system. We use sonar fish finding systems to locate
schools of fish, which allow us to set our trawl nets with a higher degree of accuracy to increase the catch volume
of each trawl shot and reduce by-catch. Our factory vessel has facilities for onboard processing, freezing and
packaging. Our onboard processing ability preserves the quality of our ocean catch and permits customers to
accept delivery of our catch directly from the vessels stationed at fishing grounds. To increase the total catch
value of our trawling operations, we retain all fish waste from our primary processing activities for further
processing into fishmeal.
Controlled Fishery Resources
The fish that we catch are from controlled fishing grounds, most of which are currently, or are expected to
become, subject to quota allocation systems. Under the United Nations Convention of the Law of the Sea, coastal
states have economic jurisdiction within their territorial waters and exclusive economic zone, which extend 12
and 200 nautical miles, respectively, from the baseline of coastal states. Many governments have adopted
measures to control and monitor fishing activities within their exclusive economic zone.
Peruvian anchovy within the exclusive economic zone of Peru is covered by the Perus ITQ system, which
was established in April 2009. The quota allocation systems used by Peru ensure that each fishing company or
vessel, as the case may be, will have the opportunity to harvest a fixed percentage of the total harvest and
removes the incentive to harvest and process the targeted fish species as fast as possible, thereby giving each
fishing company a greater opportunity to optimize operational efficiencies.
The South Pacific Regional Fisheries Management Organization has set forth voluntary interim measures
that restrict fishing activities for designated species fish, including jack mackerel, pending the ratification of a
quota allocation system by member countries. Mauritania has a monthly license system based on registered
vessel tonnage to control fishing activities within its exclusive economic zone.
Sustainability of Fishery Resources
The sustainability of fishery resources is important to the international community. To preserve the
fishing resources in their waters, sovereign states have adopted licensing and/or quota systems and imposed
catch certification requirements for fishing within their respective waters.
Peru. Fishing in Peru is currently conducted under a quota share allocation system. Many of the
regulations and decrees on fishing in Peru apply specifically to Peruvian anchovy and control, for example,
fishing periods, fishing areas and total allowable catches. The Sea Institute of Peru, an organization dedicated to
scientific research which advises the Peruvian government on rules and policies regarding the exploitation of
fishery resources, monitors the biomass of anchovy in Peru through its receipt of reports of catch and the satellite
tracking of vessels. The measures taken by the Peruvian government to protect the sustainability of anchovy are
to prohibit capture in spawning seasons (capture is only allowed in fishing seasons, generally running fromApril
to July and November to January for the northern and central region, and January to July and August to
December for the southern region), prohibit fishing within five miles of the coast, ban fishing in areas with high
incidences of juveniles and impose fines for companies that catch juvenile fish and violate the fishing rules and
regulations.
Namibia. Fishing in Namibia also is currently conducted under a quota share allocation system. The total
allowable catches are set for all the major species based on the recommendations from the fisheries scientists
employed by the ministry responsible for marine resources. The total allowable catch is distributed among the
entities that have been granted fishing rights under the Marine Resources Act 2000, and such fishing rights are
not freely transferable. The main purpose of the fishing rights is to limit entry to the fisheries sector in order to
protect the Namibian fisheries resources and maintain sustainable operations.
96
International waters. With regard to fishing in international waters, since 1945, some 30 regional or
sub-regional fisheries management organizations, or RFMOs, have been established under multilateral
agreements. RFMOs typically have the objective of implementing management measures designed to secure
long-term sustainable fishery resources in international waters. Controlling measures such as fishing quota
systems and catch certification requirements have been gradually introduced by these RFMOs. In addition, catch
certification needs to be obtained and renewed by fishers before they are allowed to market and sell their products
in the respective member states.
These measures have enabled us to maintain the sustainability of the harvesting of our primary fish
species by controlling the total allowable catch of these fish species, the minimum size and weight of the fish
harvested, the number of fishing participants, the allocated share of fish for each of the allowed fishing
participants and the permitted seasons for fishing activities.
Fish Products and Processing
We primarily harvest jack mackerel in the South Pacific and horse mackerel and sardines in Namibia,
which are primarily sold as whole frozen fish to West Africa. We sell fish products in the form of frozen whole
round fish, headed and gutted fish and fillet blocks, with the product mix being monitored and adjusted each
season to match market demand. Processing frozen fish involves releasing the fish from holding tanks onto a
conveyer, sorting the fish by species and size and diverting into hoppers at the head of the processing line. There
the fish are headed and gutted, graded by weight and then frozen and packed into carton boxes or composite
paper-plastic sacks and stored inside freezers. In the production of frozen fish fillet blocks, fish are first de-scaled
and filleted by machine before being frozen.
Waste fish caught in the trawl nets and fish by products, primarily frames, guts and heads produced as a by
product of the fish filleting and cleaning process, are retained for further processing into fishmeal. These raw
materials are weighed, crushed, steamed, dried, re-weighed and packaged. We sell fishmeal primarily to China,
where it is used as the main ingredient in aquaculture feed.
Fishing Vessels
Our trawling operations consist of eight fishing vessels. We generally do not charter any of the fishing
vessels in our fleet to other parties. We are responsible for the cost and supervision of the maintenance and repair
of the fishing vessels that are used in our operations. Routine maintenance and repair is performed while the
vessel is at sea by engineers who stay on board the fishing vessels during the fishing season. In addition, for
major repairs, we arrange special repair and maintenance teams to the fishing vessels. The super trawlers are
generally docked for a period of approximately four to seven weeks each year for annual maintenance and
repairs.
Sales and Marketing
Our trawling operations focus on fish products and, to a lesser extent, fishmeal products. We sell fish
products in the form of frozen whole round fish, headed and gutted fish and fillet blocks, with the product mix
being monitored and adjusted each season to match market demand. We also sell roe, which is sold to consumers
as frozen whole skeins. The main end-markets by customer location for our various fish products are summarized
in the table below.
Product Customer location
Whole round products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PRC/ South Korea/ West Africa
Headed and gutted products . . . . . . . . . . . . . . . . . . . . . . . . . . PRC
Fillet products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Europe
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We generally sell our whole round fish, headed and gutted fish and fillet blocks through direct sales and
fish roe through a combination of direct sales and silent auctions. We sell our fish catches on FOB or CIF basis.
For such sales, we arrange transportation vessels to deliver products to customers. Credit terms are determined
on a case-by-case basis depending on the customers creditworthiness, length of relationship with us and market
conditions. We have not written off any trade receivables in the last three years.
Our fish products are mainly commodity products with a large number of potential buyers. Accordingly,
the focus of our sales and marketing personnel is on negotiating with our customers sales contract terms and sales
prices, which generally reflect spot market prices. We also analyze market information from a variety of
governmental and other sources on a regular basis to better understand and anticipate price trends and demand
for our products.
Frozen Fish Supply Chain Management Operations
Due to an increasing demand for fish products in the PRC and our distribution network in the PRC, we
source a large volume of whitefish, such as Alaska pollock and codfish sourced from international suppliers, in
particular those operating in the North and South Pacific oceans.
For the year ended September 28, 2013 and the six months ended March 28, 2014, revenue from our
supply chain management operations was HK$4,435.0 million and HK$2,124.3 million, respectively,
accounting for approximately 50.6% and 45.6% of our total revenue, respectively.
Our major sourcing areas are the Sea of Okhotsk, the Russian Bering Sea, the North Atlantic Ocean, the
South Pacific Ocean and the Indian Ocean. The length of the fishing seasons vary from year to year due to factors
such as weather conditions and water temperature and also due to fulfillment of fishing quotas on allowable
catches. Since the fishing seasons are not the same in different parts of the world, diversified sourcing has
enabled us to reduce the seasonality of the business as well as to maximize the utilization of our owned and
chartered vessels.
We source different types of whitefish, which includes Alaska pollock, one of the most harvested species
of whitefish, as well as cod. We source whitefish primarily from Russian fishing companies, which load their
catches directly onto our owned or chartered refrigerating transportation vessels at sea. This approach allows our
suppliers to further extend their time at sea, while providing us with a stable supply of whitefish at attractive
prices.
Alaska pollock caught by fishing trawlers often have their heads removed and are gutted before they are
frozen at sea. We purchase Alaska pollock mainly in headed and gutted form and sometimes, in whole round
form, for sale in the suppliers original packages to wholesale import and export companies and/or processing
companies in the PRC or trading companies in Europe and Asia.
We generally enter into single-season supply contracts with our suppliers prior to the commencement of
the fishing season. Under the terms of our supply contracts, we generally are required to make prepayments of
between 30% to 50% to our suppliers. This prepayment is later offset against the final purchase price of the fish
upon delivery.
We own and operate seven reefer vessels for the collection, freezing and delivery of frozen fish from the
various fishing grounds where our suppliers operate. The reefer vessels are equipped with refrigerating facilities
to ensure fish will be kept frozen during transportation. The reefer vessels owned or chartered by us generally
have capacities of between 4,500 and 11,000 metric tons per voyage. During the fishing season, we send these
vessels to collect frozen fish products from the trawlers of our suppliers for direct high sea transshipment. The
frozen seafood products are then transported to markets in China, South Korea, Africa, Europe and North
America where they are directly sold to import/export companies or stored in bonded warehouses for further
distribution to our customers. In the PRC, the use of bonded warehouses allows us to store cargos of fish without
paying customs duty, which is instead paid by our customers when they take delivery of the cargo.
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Sales and Marketing
All of our frozen fish sales are conducted on an arms length basis based on prevailing market conditions.
For the year ended September 28, 2013 and the six months ended March 28, 2014, approximately 20% of our
frozen fish sales were settled on letter of credit terms and approximately 80% were settled in cash.
Our supply chain management operations serve a diversified customer base located in the PRC, Europe
and Africa. For the year ended September 28, 2013 and the six months ended March 28, 2014, our customer base
included approximately 102 customers in eight countries and approximately 52 customers in eight countries,
respectively. The following table sets forth the revenues for our supply chain management operations by
geographic region for the periods indicated.
Year ended September 28,
Six months ended
March 28,
2012 2013 2014
(HK$ in
thousands) %
(HK$ in
thousands) %
(HK$ in
thousands) %
Region
PRC . . . . . . . . . . . . . . . . . . . . 3,487,529 71.6 3,735,991 84.2 1,939,035 91.3
East Asia (excluding PRC)
(1)
. . . 4,797 0.2
Africa . . . . . . . . . . . . . . . . . . . 995,389 20.4 324,021 7.3 5,242 0.2
Europe
(2)
. . . . . . . . . . . . . . . . . 386,674 8.0 374,973 8.5 167,132 7.9
Others
(3)
. . . . . . . . . . . . . . . . . 8,056 0.4
Total. . . . . . . . . . . . . . . . . . . . 4,869,592 100.0 4,434,985 100.0 2,124,262 100.0
Notes:
(1) Includes South Korea.
(2) Includes Russia.
(3) Includes United States.
Strategic Investments
In March 2014, CFGL completed the acquisition of Copeinca, a leading producer of fishmeal and fish oil
in Peru, which further expanded its Peruvian fishmeal operations and made it the largest fishing quota holding
company in Peru.
In June 2014, we sold 26,500,000 ordinary shares in Tassal, a Tasmania-based company principally
engaged in the hatching, farming, processing, sales and marketing of Atlantic salmon in Australia, which
represented approximately 18.09% of the equity interest in Tassal, for a consideration of A$96,725,000. The
transfer of shares realised a cash inflow of approximately A$96,725,000, amounting to an approximately 100%
gain on our investment.
Customers
In our fishmeal production operations, our customers primarily consist of independent trading companies
and importers located the PRC, Germany, Taiwan and Japan. A large portion of our products that arrive in
Germany are distributed to customers elsewhere in Europe. From time to time, we sell part of our anchovy catch
from the southern zone of Peru to other fishmeal processing companies. Third-party sales of anchovy have not
represented a material portion of our revenue.
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In our trawling operations, we have established long-term relationships with a number of key customers
worldwide, which are mainly independent trading companies in Hong Kong, the PRC, South Korea, Japan and
Germany.
In our supply chain management operations, our customers primarily consist of import and export
companies, processors and distributors.
During the year ended September 28, 2013 and the six months ended March 28, 2014, sales to our top five
customers in our fishery and fish supply operations collectively accounted for 33.8% and 22.1%, respectively, of
our total revenues. During the same periods, sales to our top five customers in our supply chain management
operations accounted for 25.9% and 20.9%, respectively, of our total revenues. During the year ended September
28, 2013 and the six months ended March 28, 2014, sales to our largest customer in our fishery and fish supply
operations accounted for 19.9% and 8.4%, respectively, of our total revenues. During the same periods, sales to
our largest customer in our supply chain management operations accounted for 5.9% and 7.2%, respectively, of
our total revenues.
Suppliers
In our fishmeal processing and trawler operations, bunker fuel represents the largest component of our
raw material purchases. We also purchase significant amounts of packing materials, lubricant oil as well as
anchovy stock for our fishmeal operations. Our average credit period on trade purchases is 30 days. The majority
of fish material processed in our fishmeal processing plants is caught by our own vessels, while the remaining
portion was purchased from local fishing companies.
In our supply chain management operations, frozen fish products represent the largest component of our
raw material purchases.
During the year ended September 28, 2013 and the six months ended March 28, 2014, the top five
suppliers of our fishery and fish supply operations, which consisted of our bunker fuel suppliers and a logistics
service provider, accounted for 27.7% and 34.2%, respectively, of our total raw material purchases. During the
same periods, the top five suppliers of our supply chain management operations, which mainly consisted of
frozen fish products, accounted for 43.7% and 46.6%, respectively, of our total raw material purchases. During
the year ended September 28, 2013 and the six months ended March 28, 2014, purchases from the largest
supplier of our fishery and fish supply operations accounted for 14.2% and 8.8%, respectively, of our total raw
material purchases. During the same periods, purchases from the largest supplier of our supply chain
management operations accounted for 17.8% and 21.8%, respectively, of our total raw material purchases.
Insurance Policies
In our fishmeal production operations, we maintain insurance policies with respect to the fishing vessels
and fishmeal processing plants we have acquired in Peru. The insurance policies are provided by reputable
insurance companies in Peru. We believe the insurance policies are in accordance with industry standards in
Peru. In our trawling operations, we maintain insurance policies for loss of cargo, hull and machinery on vessels,
as well as protection and indemnity for loss or damage to property and illness, death or injury to crew members.
In our supply chain management operations, all seafood products in our possession have customary cargo
insurance. Each of the reefer vessels owned and operated by us has customary liability and indemnity cover, hull
and machinery and war risks insurance. We believe that we carry adequate insurance coverage for our business
activities consistent with customary standards in our industry.
Intellectual Property
We generally do not market our products and services under any particular trademark or logo because the
nature of our business generally does not require any brand differentiation. While we have certain corporate
names and logos registered in the PRC, Hong Kong, Singapore, Taiwan and Peru, we do not depend upon any
significant trademarks or logos.
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Competition
The fishmeal and fish oil industry in Peru is highly competitive as Peru is the largest producer of fishmeal
in the world. Despite restrictions on the grant of new licenses to operate fishmeal processing plants in Peru, our
fishmeal and fish oil processing operations experience significant competition due to overcapacity, which has
increased competition for purchasing raw material. We, along with the Peruvian fishmeal and fish oil industry in
general, also compete with the other fishmeal producing countries, mainly Chile, Denmark, Iceland and Mexico.
We also face competition from grain-based fishmeal substitutes.
We face competition in our trawling operations from a number of fishing operators in the fishing grounds
where we operate. We compete with these fishing companies in the sale of ocean catch fish products, as well as
in procuring access to quota shares. In addition, we also compete against other fishing vessels operating legally
and illegally in international waters as well as local fishing companies in Chile and Peru that catch jack mackerel
in their respective jurisdictional waters. We also compete with other fishing vessels operating in the exclusive
economic zone of Namibia in the harvest and sale of horse mackerel and sardines. Competition from illegal
fishing operations is higher in our South Pacific Ocean and West Africa operations as a result of less-developed
enforcement of fishing restrictions. In addition, as a supplier of ocean catch fish, we also face competition with
respect to the supply of other fish species, including fish from aquaculture production. However, due to
difference in the quality and price between ocean catch fish and aquaculture products, we believe that the
competition we face from aquaculture products is less than that from other suppliers of ocean catch fish. The
fishing supply industry is fragmented with no dominant supplier in the market. In the supply of whitefish and
other seafood products to customers in the PRC and Europe, we primarily compete with Russian fishing
companies (including our suppliers) and other fishery logistics and supply chain management service providers.
Quality Control
We are committed to maintaining high standards of food safety and quality in all of our operations.
Production of fishmeal and fish oil from our Peruvian operations consists of processing raw fish material
at our processing plants. We have a quality control team led by a quality control manager who has over 15 years
of experience in fisheries, a degree in industrial engineering from the Inca Garcialazo de la Vega University of
Peru, and training on Hazard Analysis and Critical Control Points (HACCP) procedures. In addition, we
employ ten trained quality control technicians at each processing plant, under the management of a chemical or
fisheries engineer. We closely monitor and perform inspections and laboratory analyses at every stage of the
fishmeal and fish oil production process. Our quality management systems are supported by ERP SAP, based on
HACCP or GMP*B2.
We also perform a physical examination and laboratory analyses of the finished fishmeal and fish oil for
smell, texture, color and also for chemical and nutritional content. Our fleet and plants meet the health, safety and
international regulations and standards required for exports to our main markets, such as BASC, GMP+, ISO
14001, OHSAS 18001, IFFO and Friend of the Sea. A quality control certificate, which certifies the results of the
laboratory analyses described above, is generally required by operational satisfaction procedures certified by
GMP*B2 quality control system to be delivered to customers, and is issued by an independent surveyor, such as
SGS International. We have not experienced any incidents of contamination and no major returns of fishmeal or
fish oil products delivered to customers. All factories in Peru exporting fish oil for human consumption to Europe
are required to be inspected and to meet EU food hygiene regulations. These include the requirements that raw
material is fresh, is uncontaminated by foreign matter and has minimal contact with air.
With respect to our trawling operations, fish is highly perishable and therefore requires quick processing
and, if necessary, freezing. Our ocean catch from our trawling operations is converted into primary processed
products within hours of harvesting and then frozen, packed and stored on board, thereby reducing the risk of
spoilage. The harvested fish from our fishmeal operations is delivered to the processing plant using a fish pump
which sends the fish directly from the vessel to the plant, then weighed and sampled, processed into fishmeal or
fish oil and packaged.
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In addition, contamination may occur in a number of ways, such as by dirt, scales, bones or blood. To help
guard against contamination, we use highly automated on-board processing facilities in our trawling operations,
limiting human involvement to a minimum. Substantially all of our operative fishmeal processing plants are
certified under operational satisfaction procedures certified by GMP*B2 quality control system, as established
by SGS International, an internationally recognized organization that provides inspection, verification, testing
and certification services, which are based on ISO 9001 and HACCP standards. Our processing plants are subject
to regular audits by Perus Fishing Technological Institute, a government agency responsible for enforcing the
implementation of HACCP quality control systems and standards in the processing of seafood products.
Production of our fish products from our trawling operations consists of processing, freezing and
packaging ocean catch fish on board our super trawlers or factory vessel for subsequent sale to our customers. All
the fish we purchase from our suppliers comply with relevant health and food safety requirements in relation to
the packaging and distribution of frozen fish products and a health certificate is provided by relevant government
authorities to buyers at the time of sale. We also have implemented a barcoding system that allows for whole
chain traceability in our trawling operations to track our fish products intended for human consumption from
catch to plate.
With respect to our frozen fish supply chain management operations, we have established stringent
quality control measures regarding technical and hygienic standards on all of our seafood products. For the
sourcing of whitefish, we undertake two inspections. The first inspection is carried out at the suppliers fishing
vessels if the whitefish is purchased from suppliers on the high seas. With the arrangement of transport vessels
carrying out loading operations in the high seas close to the fishing grounds, we are able to monitor and control
the quality of the fish that we source. A second inspection is carried out at the ports of discharge in the PRC to
ensure that the whitefish meets our quality standards. We believe that our application of stringent quality controls
on our seafood products further bolsters our reputation in the seafood trading industry.
Environmental Considerations
We are subject to environmental rules and regulations relating to protection of certain marine species and
to regulations restricting fishing outside of designated fishing seasons or in excess of allocated fishing quotas or
quota shares.
We put a strong emphasis on promoting environmentally responsible fishing practices and minimizing the
impact of our operations on the marine environment. For example, we perform voluntary quarterly reviews of our
procurement processes, undertaken by an international audit firm, to ensure that illegally harvested fish does not
enter our supply chain. We also promote production efficiency and maximum utilization of by-products.
All of the fishing vessels in our operations are regularly maintained to prevent accidents due to equipment
failure. We generally carry insurance for all of our vessels pursuant to the International Convention on Civil
Liability for Bunker Oil Pollution Damage, and we have also obtained international sewage pollution, air
pollution and oil pollution prevention certificates for all the vessels in our fleet for our operations in the South
Pacific Ocean and Mauritania. As to our purse seiners operating in Peru, they are in compliance with all
applicable local environmental regulations and requirements in all material respects.
All our fishmeal processing plants in Peru have received the required approvals under the General Fishing
Law of Peru in relation to environmental laws and regulations. We have already completed the conversion project
of the processing plants from the FAQ drying technology to the steam dried technology in 2013. As of the date of
this offering memorandum, all of our operational plants have steam dried technology and comply with applicable
environmental regulations.
All of our plants have successfully implemented new technologies for environmental protection which
include ecological pumps for fish discharge and rotating filters to recover fish solids that are suspended in the
pumping water. We direct all fish processing wastewater through these water treatment plants before disposal in
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municipal waste systems. All of our plants have implemented physical-chemical waste water treatment systems
and have placed underwater piping systems for the discharge of the treated water. Furthermore, all of our
processing plants have a solid waste management plan and have instituted contingency plants to guard against oil
spills. With respect to our Peruvian fishmeal operations, all investments we made for environmental compliance
are covered by an investment program submitted to the Ministry of Production in 2009.
We believe our operations comply in all material respects with applicable environmental laws and
regulations. To date, we have never been subject to any material fine, orders or other penalties to cease or cure
environmental damage. In the future, it is possible that relevant governmental authorities, environmental
agencies, and/or national or international organizations could impose additional regulations or measures, which
may require us to spend additional funds on environmental matters.
Properties
We currently maintain an administrative office in Hong Kong with a total saleable area of approximately
775 sq.m. We lease a representative office in Qingdao, Shandong Province, PRC, with a gross floor area of
approximately 50 sq.m. from a related third party. We have eight investment properties in Beijing and Shanghai
with a total gross floor area of approximately 882 sq.m.
As of March 28, 2014, we conducted our fishmeal production operations through plants, warehouses and
offices built and located upon properties owned by us in Peru, and one property which was held for investment.
These properties consist of (i) a total registered site area of approximately 695,690 sq.m.; (ii) 12 processing
plants (of which we operate ten to process fishmeal) located in seven provinces (departamentos) of Peru with a
total gross floor area of approximately 100,903 sq.m.; (iii) other buildings for administrative uses with a gross
floor area of approximately 4,260 sq.m.; and (iv) a pier consisting of a bridge and a reef with a total construction
area of approximately 850 sq.m. and ancillary structures.
Employees
As of March 28, 2014, we employed approximately 2,958 full-time employees, including seasonal crew
members on our vessels and the production workers at our processing plants. We generally hire vessel crew on a
contract basis of six to nine months, depending on their nationality, rank and fishing season of their destination
fishing ground. The majority of the production workers at our processing plants are also hired on a contract basis
generally for a period of six months.
The following table sets forth a breakdown of the employees under our employment or management by
activity as of the dates indicated.
As of September 28, As of March 28,
2012 2013 2014
Activity
Administration and finance . . . . . . . . . . . . . . . . . . . . 162 253 249
Technical . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 164 149
Vessel crew . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,221 1,954 1,853
Production workers. . . . . . . . . . . . . . . . . . . . . . . . . . 618 747 707
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,094 3,118 2,958
Legal Proceedings
Save as disclosed in this offering memorandum, neither we nor any of our subsidiaries are involved in any
litigation or arbitration proceedings that we believe are material in the context of the Bonds, nor are we aware
that any such proceedings are pending or threatened. However, from time to time, we have been involved in legal
proceedings or other disputes arising in the ordinary course of our business which are primarily disputes with our
customers, suppliers and employees.
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SUBSTANTIAL SHAREHOLDERS
The following table sets forth certain information regarding ownership of our outstanding share capital as
of March 28, 2014 by those persons (not being a Director or chief executive of the Company) who had an interest
in the outstanding shares and underlying shares of the Company as recorded in the Register of Substantial
Shareholders as of March 28, 2014.
Name Direct Interest Percentage
(1)
Deemed
Interest Percentage
(1)
Clamford Holding Limited
(Clamford). . . . . . . . . . . . . . . . . 3,131,957,257 65.37% 51,824,955
(2)
1.08%
Pacific Andes International Holdings
Limited
(3)
. . . . . . . . . . . . . . . . . . 3,183,782,212 66.45%
N.S. Hong Investment (BVI) Limited
(4)
(N.S. Hong) . . . . . . . . . . . . . . . . 3,183,782,212 66.45%
Notes:
(1) Percentage of total outstanding shares as of March 28, 2014.
(2) 34,012,455 shares and 17,812,500 shares were held directly by UOB Kay Hian Pte Ltd and Nomura Singapore Limited,
respectively.
(3) PAIH is the holding company of Clamford and therefore PAIH is deemed to be interested in the shares held by Clamford.
(4) N.S. Hong is the holding company of PAIH, which in turn is the holding company of Clamford and therefore N.S. Hong is deemed
to be interested in the shares held by Clamford.
Save as disclosed above, as of the date of this offering memorandum, the Company has not been notified
by any persons who had interests in the shares or underlying shares of the Company which are required to be
recorded in the Register of Substantial Shareholders.
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MANAGEMENT
Directors
The Board of Directors is responsible and has general powers for the management and conduct of our
business. The table below shows certain information in respect of members of the Board:
Name Age Position
Ng Joo Siang . . . . . . . . . . . . . . . . . . 55 Chairman/Executive Director
Ng Joo Puay, Frank . . . . . . . . . . . . . . 51 Managing Director/Executive Director
Teh Hong Eng. . . . . . . . . . . . . . . . . . 78 Executive Director
Ng Joo Kwee . . . . . . . . . . . . . . . . . . 53 Executive Director
Bertie Cheng Shao Shiong . . . . . . . . . 77 Independent Non-Executive Director
Lt. Gen. (Ret) Ng Jui Ping . . . . . . . . . 65 Independent Non-Executive Director
Chew Hai Chee . . . . . . . . . . . . . . . . . 59 Independent Non-Executive Director
Ng Puay Yee . . . . . . . . . . . . . . . . . . . 42 Alternate Director
(1)
Chan Tak Hei . . . . . . . . . . . . . . . . . . 44 Alternate Director
(2)
Notes:
(1) Alternate Director to Teh Hong Eng.
(2) Alternate Director to Ng Joo Kwee.
Executive Directors
Mr. Ng Joo Siang, 55, is a founding member, an Executive Director and the Chairman of the Company.
He is the managing director and vice-chairman of the Hong Kong listed parent company, Pacific Andes
International Holdings Limited. Mr. Ng is also an executive director of the Companys indirect
non-wholly-owned Singapore listed subsidiary, China Fishery Group Limited. He is responsible for the
formulation of corporate policies and strategies, and oversees the development, management and investments of
the Group. Mr. Ng was appointed as the Chairman on March 30, 2007. He graduated from Louisiana State
University, Baton Rouge, Louisiana, U.S.A., majoring in international trade and finance. Mr. Ng has over 30
years of experience in the seafood and shipping industries. He is son of Madam Teh Hong Eng and brother of Mr.
Ng Joo Kwee, Mr. Ng Joo Puay, Frank and Ms. Ng Puay Yee.
Mr. Ng Joo Puay, Frank, 51, is an Executive Director and the Managing Director of the Company. He is
responsible for corporate planning and policy administration of the Group. Mr. Ng is also the executive director
of the Hong Kong listed parent company, Pacific Andes International Holdings Limited. He studied at Loyola
University in New Orleans, Louisiana, U.S.A., majoring in business administration. Mr. Ng has over 20 years of
experience in the seafood trading business. Prior to joining the Group in 1987, he was a trading manager with a
fish trading company in Taiwan for three years. Mr. Ng is son of MadamTeh Hong Eng and brother of Mr. Ng Joo
Siang, Mr. Ng Joo Kwee and Ms. Ng Puay Yee.
Madam Teh Hong Eng, 78, is an Executive Director of the Company. She is responsible for general
administration and strategic planning. Madam Teh joined the Group in 1986 and has over 30 years of experience
in administration and financial investments. She is also the chairperson of the Hong Kong listed parent company,
Pacific Andes International Holdings Limited. Madam Teh was last re-elected as a Director on January 28, 2013.
She is mother of Mr. Ng Joo Siang, Mr. Ng Joo Kwee, Mr. Ng Joo Puay, Frank and Ms. Ng Puay Yee.
Mr. Ng Joo Kwee, 53, is an Executive Director of the Company. He is the executive chairman of the
Companys indirect non-wholly-owned Singapore listed subsidiary, China Fishery Group Limited. Mr. Ng is also
an executive director of the Hong Kong listed parent company, Pacific Andes International Holdings Limited. He
oversees the sourcing, processing, sales and marketing activities of the Group. Mr. Ng received education in the
USA at Southeastern Louisiana University in Hammond, Louisiana. Between 1983 and 1989, he was president of
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a seafood trading and fishing company in Taiwan. In 1989, Mr. Ng joined the Group as General Manager of its
China operations. In 1994, he resigned from the Company, but rejoined in March 1996. Mr. Ng was last
re-elected a Director on January 28, 2011. He is son of Madam Teh Hong Eng and brother of Mr. Ng Joo Siang,
Mr. Ng Joo Puay, Frank and Ms. Ng Puay Yee.
Independent Directors
Mr. Bertie Cheng Shao Shiong, 77, was appointed as an Independent Director of the Company on
December 29, 1997 and Chairman of the Audit Committee since January 27, 2006. He was last re-elected as a
Director on January 28, 2012. Mr. Cheng retired as Chief Executive Officer of POSBank in July 1997. He was
appointed as Advisor to POSBank on June 1, 2010. Mr. Cheng holds and has held directorships, in both listed and
unlisted companies. Currently, he is the Chairman of Telechoice International Limited and Non-executive
Chairman of TEE International Limited. Mr. Cheng is also a Director of Hong Leong Finance Limited and
Baiduri Bank Berhad. Other appointments include being the Chairman of the Medifund Committee, Singapore
General Hospital, Vice-Chairman of the Board of Trustees, Consumers Association of Singapore (CASE)
Endowment Fund and the Chairman of the Investment Panel of SPRING SEEDS Capital Pte Ltd. He holds a
Bachelor of Arts Degree in Economics (Honours) from the University of Malaya in Singapore. Mr. Cheng
received the Public Administration Medal (Silver) in 1984 and the Public Service Medal in 2001. He also
received the Friend of Labour Award from the National Trade Union Congress (NTUC) in 2008.
Lieutenant General (Retired) Ng Jui Ping, 65, was appointed as a Lead Independent Director of the
Company and the Chairman of the Nominating and Remuneration Committees of the Company on January 27,
2006. He was last re-elected as a Director on January 27, 2014. General Ng had a distinguished 30-year military
career culminating in the position of Chief of Defence Force, Singapore, from which he retired in 1995. He was
also Chief of Army and Chief of Staff of the General Staff. General Ng has been conferred the prestigious
Meritorious Service Medal (Military) and the Public Administration Medal (Gold), among other national
honours, for distinguished service to Singapore. He has also been conferred prestigious awards by regional
countries for his contributions. Following his retirement from the Singapore Armed Forces, General Ng took up
the entrepreneurial route. He listed the company he co-founded on the SGX-ST in January 2000 and exited via a
share sale in late 2004. General Ng now wholly owns and is Chairman of August Asia Consulting, a business
advisory firm amongst other privately-owned companies. He is also an Independent Director on the SGX-ST
listed Boards of Yanlord Land Group Limited and Singapore Shipping Corporation Limited. His past
directorships in other listed companies and other major appointments include Deputy Chairman, Central
Provident Fund Board, Singapore; Director, PSA International Pte Ltd and Chairman of its China and North East
Asia Group; Director, NTUC Income, Singapores largest Insurance group; Chairman, Singapore Technologies
Automotive Ltd; Chairman, Horizon.com Limited, Chairman, Chartered Industries of Singapore Pte Ltd;
Chairman, Nanyang Institute of Management Pte Ltd; Chairman, Knowledge Alive Pte Ltd; Corporate Advisor
to Singapore Technologies Pte Ltd and Singapore Technologies Engineering Ltd; Advisor, Aldar, Abu Dhabis
largest property development group; Advisor, Chesterton International Property Consultants, Singapore; and
Advisor, MEC Coal Pte Ltd. General Ng received a Master of Arts (History) from Duke University, USA and also
completed the Advanced Management Programme in Harvard Business School, USA.
Mr. Chew Hai Chwee, 59, was appointed as an Independent Director and a member of the Audit and
Remuneration Committees of the Company on November 22, 2010. He was last re-elected as a Director on
January 28, 2011. Mr. Chew had spent the last 27 years working for Asian and US multinationals with listing on
the SGX, NYSE and NASDAQ in USA where he was primarily responsible for various business functions and
responsibilities including compliance, audit, mergers and acquisitions, corporate governance and international
finance. Currently, he has his own consultancy and investment firm. He has invested in and co-founded Silveray
Pte. Ltd, a company that is committed to providing a safe, dependable and dignified wheelchair-transport service
for the wheelchair-bound and mobility-impaired customers in Singapore. Mr. Chew is also a director in various
listed and unlisted companies. He serves as an independent director on the board of Stratech Systems Limited, a
listed company on the SGX and WWF-World Wide Fund for Nature-Singapore (a non-profit organization) with
headquarters in Gland, Switzerland. Mr. Chew is also a Council Member and an audit committee member in Red
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Cross (Singapore) and currently chairs the Committee of Humanitarian Aid and International Relief of Red Cross
(Singapore). He also sits on the Board of Directors of UNLV (University of Nevada Las Vegas) Singapore and on
the Board of Advisors of Kemin Asia Pacific. Mr. Chew was appointed in 2012 as a member of audit committee
of Thye Hua Kwan. He holds a First Class Honours degree in accounting and MBA in Business from University
of South Alabama, U.S.A. In addition, Mr. Chew has attended the Executive Programme for CFO in INSEAD,
France.
Alternate Directors
Ms. Ng Puay Yee, 42, was appointed as an Alternate Director to Madam Teh Hong Eng on March 15,
2002. She is also an executive director of the Hong Kong listed parent company, Pacific Andes International
Holdings Limited. Ms. Ng is responsible for global sales and marketing of the Pacific Andes Groups frozen fish
and seafood products. In addition, she also oversees the Groups global raw material sourcing. Ms. Ng is a
member of Corporate Social Responsibility Committee of the Companys indirect non-wholly-owned Singapore
listed subsidiary, China Fishery Group Limited, and is an active board member of various fish trade organisations
around the world such as the Groundfish Forum Council, where she is on the executive committee, Whitefish
CEO Sustainability Committee, and the National Fishery Institute Executive Committee. She graduated from
Indiana University in Bloomington, Indiana, U.S.A., majoring in Mass Communication. She joined the Pacific
Andes Group in 1995. Ms. Ng is also a board member of the Young Presidents Organisation Hong Kong
Chapter, and is an active member of the young business leaders community in Hong Kong. She is daughter of
Madam Teh Hong Eng and sister of Mr. Ng Joo Siang, Mr. Ng Joo Kwee and Mr. Ng Joo Puay, Frank.
Mr. Chan Tak Hei, 44, was appointed as an Alternate Director to Mr. Ng Joo Kwee on March 15, 2002.
He is also the finance director of the Companys indirect non-wholly-owned Singapore listed subsidiary, China
Fishery Group Limited. Mr. Chan graduated from the Hong Kong Polytechnic University with a bachelor degree
in accountancy and is a fellow member of the Hong Kong Institute of Certified Public Accountants. Prior to
joining the Group in 1995, he worked in an international accounting firm for more than four years.
Interests of the Directors in the Securities of the Company and Associated Corporations
The interests of each Director in the shares, underlying shares and debentures of the Company and PAIH
as of March 28, 2014 were as follows:
Direct Interest Deemed Interest
As of March 28, 2014
Ordinary shares of S$0.05 each
The Company
Bertie Cheng Shao Shiong . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,128,474
(1)
Lt. Gen. (Ret) Ng Jui Ping . . . . . . . . . . . . . . . . . . . . . . . . . . . 252,900
Ordinary shares of HK$0.10 each
PAIH
Ng Joo Siang . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,828,171
(2)
Ng Puay Yee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,304,245
Lt. Gen. (Ret) Ng Jui Ping . . . . . . . . . . . . . . . . . . . . . . . . . . . 990,216
Notes:
(1) These shares were held under nominee, Hong Leong Finance Nominees Pte Ltd.
(2) These shares were held under the name of the spouse of Ng Joo Siang.
There were no movements in the interest of directors in shares from the end of the financial year to the
date of this offering memorandum.
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Share Options and Share Awards
Share Option Scheme of the Company
At a special general meeting held on January 28, 2012, the shareholders of the Company approved a share
option scheme known as the PARD Share Option Scheme 2012 (the 2012 Option Scheme). As of March 28,
2014, no options have been granted under the 2012 Option Scheme to any directors and employees of the
Company or its subsidiaries. As of March 28, 2014, no options have been granted under the 2012 Option Scheme
to the Companys controlling shareholders and its associates, directors and employees of the parent company and
its subsidiaries and executive directors and employees of the Companys associated companies. No options have
also been granted under the 2012 Option Scheme to the above group of participants since the commencement of
the 2012 Option Scheme. No options were granted under the 2012 Option Scheme to any employee and/or
director (whether executive or non-executive) of a company in the PAIH group. Accordingly, no participant has
received 5% or more of the total number of options available under the 2012 Option Scheme.
Exercise Price
Subject to any alteration of capital pursuant to Rule 10 of the Rules of the 2012 Option Scheme, the
exercise price for each share in respect of which an option is exercisable shall be payable upon the exercise of the
option and shall be determined by the Remuneration Committee in its absolute discretion, on the date of grant,
and fixed by the Remuneration Committee at:
the market price being the weighted average of the last-dealt price for a share, as determined by
reference to the daily official list published by the SGX-ST for the three consecutive trading days
immediately preceding the date of grant of an option; or
a price which is set at a discount to the market price, provided that the maximum discount shall not
exceed 20% of the market price. The Remuneration Committee shall have the sole and absolute
discretion to determine the exact amount of discount to each participant.
In no event will the exercise price be less than the nominal (par) value of a share.
Alteration of Capital
If a variation in the issued share capital of the Company (whether by way of a capitalization of profits or
reserves or rights issue, or a reduction, sub-division or consolidation of the existing shares) shall take place, then:
the exercise price for the shares; and/or
the par value, class and/or number of shares comprised in an option to the extent unexercised;
and/or
the par value, class and/or number of shares over which additional options may be granted to the
participants,
shall be adjusted in such manner as the Remuneration Committee may determine to be appropriate
and except in relation to a capitalisation issue, upon the written confirmation of the auditors (acting
only as experts and not as arbitrators), that in their opinion, such adjustment is fair and reasonable.
Notwithstanding the provisions of Rule 10(a) of the Rules of the 2012 Option Scheme, no such
adjustment shall be made:
if as a result, the exercise price shall fall below the par value of a share and if such adjustment
would but for this paragraph (b)(i) result in the exercise price being less than the par value of a
share, the exercise price payable shall be the par value;
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unless the Remuneration Committee after considering all relevant circumstances, considers it
equitable to do so; and
no options under the 2012 Option Scheme were granted during the financial year under review and
no options were granted with exercises set at a discount to the market price of the Companys
shares.
Share Awards Scheme of the Company
The Company also has in place a share award scheme known as the PARD Share Awards Scheme (the
Share Awards Scheme), which was approved by the shareholders of the Company at a special general meeting
held on July 31, 2007.
The Company may at its discretion and on a free-of charge basis, grants awards, which represent a
specified number of fully paid shares in the share capital of the Company. The awards will vest only after
satisfactory completion of time-based targets and/or time-and-performance-based targets and shall not be more
than 10 years from the date of the grant of the shares. Upon the vesting of an award, the participant may receive
any or a combination of the following:
new ordinary shares credited as fully paid up;
existing shares repurchased from open market; and/or
cash equivalent value of such shares.
No awards have been granted to participants under the Share Awards Scheme as of March 28, 2014. The
2012 Option Scheme and the Share Awards Scheme are administered by the Remuneration Committee
comprising Lt. Gen. (Ret) Ng Jui Ping, Bertie Cheng Shao Shiong and Chew Hai Chwee. The aggregate number
of ordinary shares over which options may be granted pursuant to the 2012 Option Scheme, the Share Awards
Scheme and any other share scheme which the Company may have in place shall not exceed 15% of the issued
share capital of the Company (excluding treasury shares) from time to time.
Share Awards Scheme of CFGL
The CFGL Share Awards Scheme (the CFGL SAS) in respect of ordinary shares in CFGL was
approved by the shareholders of China Fishery Group Limited on April 30, 2007. The CFGL SAS is administered
by the remuneration committee of CFGL, currently comprising Lim Soon Hock, Tse Man Bun and Tan Ngiap
Joo.
CFGL may at its discretion and on a free-of-charge basis, grant shares under the CFGL SAS to
participants of the scheme. The shares will vest only after satisfactory completion of time-based targets and/or
time-and-performance-based targets and shall not be more than 10 years from the date of the grant of the shares.
Upon vesting, the participant may receive any or a combination of the following:
new ordinary shares credited as fully paid up;
existing shares repurchased from open market; and
cash equivalent value of such shares.
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No shares awards or options are outstanding as of March 28, 2014.
Save as disclosed above, as of March 28, 2014, neither the Company nor any of its holding companies,
subsidiaries or fellow subsidiaries a party to any arrangements to enable the directors of the Company to acquire
benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.
110
TAXATION
The following summary of certain Hong Kong and Bermuda tax consequences of the purchase, ownership
and disposition of the Bonds is based upon applicable laws, regulations, rulings and decisions in effect as of the
date of this offering memorandum, all of which are subject to change (possibly with retroactive effect). This
discussion does not purport to be a comprehensive description of all the tax considerations that may be relevant
to a decision to purchase, own or dispose of the Bonds and does not purport to deal with consequences
applicable to all categories of investors, some of which may be subject to special rules. Neither these statements
nor any other statements in this offering memorandum are to be regarded as advice on the tax position of any
holder of the Bonds or any persons acquiring, selling or otherwise dealing in the Bonds or on any tax
implications arising from the acquisition, sale or other dealings in respect of the Bonds. Persons considering the
purchase of the Bonds should consult their own tax advisors concerning the possible tax consequences of buying,
holding or selling any Bonds under the laws of their country of citizenship, residence or domicile.
Hong Kong Taxation
Profits Tax
Hong Kong profits tax is charged on every person carrying on a trade, profession or business in Hong
Kong in respect of profits arising in or derived from the conduct of such trade, profession or business (excluding
profits arising from the sale on disposal of capital assets).
Under the Inland Revenue Ordinance (Chapter 112 of the Laws of Hong Kong), interest on the Bonds will
be subject to profits tax where such interest is received by or accrues to:
(a) a financial institution (as defined in the Inland Revenue Ordinance) through the carrying on of its
business in Hong Kong; or
(b) a corporation carrying on a trade or business in Hong Kong and where such interest is derived from
Hong Kong; or
(c) a person, other than a corporation, carrying on a trade or business in Hong Kong and where such
interest arises in or derives from Hong Kong and is in respect of the funds of that trade, profession
or business.
Sums by way of gains or profits arising from the sale, disposal or redemption of the Bonds will be subject
to profits tax where such gains or profits are received by or accrue to:
(a) a financial institution and arising through or from the carrying on of its business in Hong Kong;
(b) a corporation carrying on a trade or business in Hong Kong and where such gains or profits are
derived from Hong Kong; or
(c) a person, other than a corporation, carrying on a trade, profession or business in Hong Kong and
where such gains or profits arise in or derive from Hong Kong and are in respect of the funds of the
trade, profession or business.
111
Stamp Duty
No Hong Kong stamp duty is payable on the issue of the Bonds, nor should stamp duty be payable upon
any transfer of the Bonds, which under the present terms and conditions, are exempted loan capital as defined
in the Stamp Duty Ordinance (Cap. 117 of the Laws of Hong Kong).
Bermuda Taxation
In Bermuda there are no taxes on profits, income or dividends, nor is there any capital gains tax, estate
duty or death duty. Profits can be accumulated and it is not obligatory for a company to pay dividends. The
Company is required to pay an annual government fee (the Government Fee), which is determined on a
sliding scale by reference to a companys authorised share capital and share premium account, with the minimum
fee being BD$1,995 and the maximum fee being BD$31,120 (the Bermuda dollar is treated at par with the U.S.
dollar). The Government Fee is payable at the end of January in every year and is based on the authorised share
capital and share premium account as they stood at August 31 in the preceding year.
The Bermuda government has enacted legislation under which the Minister of Finance of Bermuda is
authorised to give an assurance to an exempted company or a partnership that, in the event of there being enacted
in Bermuda any legislation imposing tax computed on profits or income or computed on any capital asset, gain or
appreciation, then the imposition of any such tax shall not be applicable to such entities or any of their
operations. In addition, there may be included an assurance that any such tax or any tax in the nature of estate
duty or inheritance tax, shall not be applicable to the shares, debentures or other obligations of such entities. This
assurance has been obtained by the Company for a period ending March 28, 2016.
EU Directive on the Taxation of Savings Income
Under the Directive on the taxation of savings income, Member States are required to provide to the tax
authorities of another Member State details of payments of interest (or similar income) paid by an individual
resident within its jurisdiction to, or collected by such person for, an individual or certain limited types of entities
established in that other Member State. However, for a transitional period, Luxembourg and Austria are instead
required to operate a withholding system in relation to such payments (the ending of such transitional period
being dependent upon the conclusion of certain other agreements relating to information exchange with certain
other countries). A number of non-EU countries and certain dependent or associated territories within certain
Member States, including Switzerland, have adopted similar measures (a withholding system in the case of
Switzerland). It is expected that by 2015, Luxembourg and Austria will discontinue applying the withholding
system and thus begin automatically exchanging information.
The European Commission has proposed certain amendments to the Directive, which may, if
implemented, amend or broaden the scope of the requirements described above.
112
SUBSCRIPTION AND SALE
We have entered into a subscription agreement with DBS Bank Ltd. dated July 22, 2014, or the
Subscription Agreement, pursuant to which and subject to certain conditions contained therein, we have agreed
to sell to the Manager, and the Manager has agreed to subscribe and pay for the aggregate principal amount of the
Bonds at 100% of their principal amount. The Manager may give a termination notice to us at any time prior to
the payment of the net proceeds of the issue of the Bonds to us on the Closing Date.
We have agreed to pay a management and underwriting commission, an incentive fee and reimburse the
Manager for certain of its expenses in connection with the issue of the Bonds. We have also agreed to pay a
private bank concession with respect to sales of bonds to certain private banks. The Subscription Agreement
provides that we will indemnify the Manager against certain liabilities in connection with any loss arising out of
the offer and sale of the Bonds. The Subscription Agreement provides that the obligation of the Manager to
subscribe and pay for the Bonds is subject to certain conditions precedent, and entitles the Manager to terminate
the Subscription Agreement in certain circumstances.
The Manager or its subsidiaries or affiliates may purchase the Bonds for their own account and enter into
transactions, including credit derivatives, asset swaps, repackaging and credit default swaps relating to the Bonds
and/or our securities. Such transactions may be carried out as bilateral trades with selected counterparties and
separately from any existing sale or resale of the Bonds to which this offering memorandum relates
(notwithstanding that such selected counterparties may also be purchasers of the Bonds).
In addition, the Manager and certain of their subsidiaries or affiliates may have performed and may in the
future perform certain investment banking, commercial banking and advisory services for us and/or our
subsidiaries and affiliates from time to time for which it has received customary fees and expenses.
The Manager and its subsidiaries or affiliates are full service financial institutions engaged in various
activities, which may include securities trading, commercial and investment banking, financial advisory,
investment management, principal investment, hedging, financing and brokerage activities. In the ordinary
course of their various business activities, the Manager and its subsidiaries or affiliates may make or hold a broad
array of investments and actively trade debt and equity securities (or related derivative securities) and financial
instruments (including bank loans) for their own account and for the accounts of their customers and may at any
time hold long and short positions in such securities and financial instruments.
General
The distribution of this offering memorandum or any offering material and the offering, sale or delivery of
the Bonds is restricted by law in certain jurisdictions. Therefore, persons who may come into possession of this
offering memorandum or any offering material are advised to consult with their own legal advisors as to what
restrictions may be applicable to them and to observe such restrictions. This offering memorandum may not be
used for the purpose of an offer or invitation in any circumstances in which such offer or invitation is not
authorised.
No action has been or will be taken in any jurisdiction by us or the Manager that would permit a public
offering of the Bonds, or possession or distribution of this offering memorandum (in preliminary or final form),
or any other offering or publicity material relating to the Bonds (including roadshow materials and investor
presentations), in any country or jurisdiction where action for that purpose is required. The Manager has
undertaken to us that it will comply to the best of its knowledge and belief and in all material respects with all
applicable laws and regulations in each country or jurisdiction in which it acquires, offers, sells or delivers Bonds
or has in its possession or distributes such offering material, in all cases at its own expense.
United States
The Bonds have not been and will not be registered under the Securities Act and, subject to certain
exceptions, may not be offered or sold within the United States. The Bonds are being offered and sold outside of
the United States in reliance on Regulation S.
113
In addition, until 40 days after the commencement of the offering of the Bonds, an offer or sale of the
Bonds within the United States by any dealer (whether or not participating in the Offering) may violate the
registration requirements of the Securities Act.
United Kingdom
The Manager has represented and agreed that:
(a) it has only communicated or caused to be communicated and will only communicate or cause to be
communicated any invitation or inducement to engage in investment activity (within the meaning
of Section 21 of the Financial Services and Markets Act 2000, or FSMA) received by it in
connection with the issue or sale of any Bonds in circumstances in which Section 21(1) of the
FSMA does not apply to us; and
(b) it has complied and will comply with all applicable provisions of the FSMA with respect to
anything done by it in relation to the Bonds in, from or otherwise involving the United Kingdom.
Hong Kong
The Manager has represented and agreed that (i) it has not offered or sold and will not offer or sell in Hong
Kong, by means of any document, any Bonds other than (a) to professional investors as defined in the
Securities and Futures Ordinance (Cap. 571) of the Laws of Hong Kong and any rules made under that
Ordinance; or (b) in other circumstances which do not result in the document being a prospectus as defined in
the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong or which do not
constitute an offer to the public within the meaning of that Ordinance; and (ii) it has not issued or had in its
possession for the purposes of issue, and will not issue or have in its possession for the purposes of issue, whether
in Hong Kong or elsewhere, any advertisement, invitation or document relating to the Bonds, which is directed
at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to
do so under the securities laws of Hong Kong) other than with respect to Bonds which are or are intended to be
disposed of only to persons outside Hong Kong or only to professional investors as defined in the Securities
and Futures Ordinance and any rules made under that Ordinance.
PRC
The Manager has represented, warranted and agreed that the Bonds are not being offered or sold and may
not be offered or sold, directly or indirectly, in the PRC (for such purposes, not including Hong Kong and Macau
Special Administrative Regions or Taiwan), except as permitted by the securities laws of the PRC.
Singapore
The Manager has acknowledged that this offering memorandum has not been registered as a prospectus
with the Monetary Authority of Singapore. Accordingly, the Manager has represented and agreed that it has not
offered or sold any Bonds or caused such Bonds to be made the subject of an invitation for subscription or
purchase and will not offer or sell such Bonds or cause such Bonds to be made the subject of an invitation for
subscription or purchase, and has not circulated or distributed, nor will it circulate or distribute, this offering
memorandum or any other document or material in connection with the offer or sale, or invitation for
subscription or purchase, of such Bonds, whether directly or indirectly, to persons in Singapore other than (i) to
an institutional investor under the SFA, (ii) to a relevant person pursuant to Section 275(1), or any person
pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275 of the SFA or (iii)
otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.
Where the Bonds are subscribed or purchased under Section 275 of the SFA by a relevant person which is:
(a) a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole
business of which is to hold investments and the entire share capital of which is owned by one or
more individuals, each of whom is an accredited investor; or
114
(b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments
and each beneficiary of the trust is an individual who is an accredited investor,
securities (as defined in Section 239(1) of the SFA) of that corporation or the beneficiaries rights and interest
(howsoever described) in that trust shall not be transferred within six months after that corporation or that trust
has acquired the Bonds pursuant to an offer made under Section 275 of the SFA, except:
(1) to an institutional investor or to a relevant person defined in Section 275(2) of the SFA, or to any
person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA;
(2) where no consideration is or will be given for the transfer;
(3) where the transfer is by operation of law;
(4) as specified in Section 276(7) of the SFA; or
(5) as specified in Regulation 32 of the Securities and Futures (Offers of Investments) (Shares and
Debentures) Regulations 2005 of Singapore,
Japan
The Bonds have not been and will not be registered under the Financial Instruments and Exchange Act of
Japan (Act No. 25 of 1948, as amended, the Financial Instruments and Exchange Act). Accordingly, the
Manager has represented and agreed that it has not, directly or indirectly, offered or sold and will not, directly or
indirectly, offer or sell any Bonds in Japan or to, or for the benefit of, any resident of Japan (which term as used
herein means any person resident in Japan, including any corporation or other entity organized under the laws of
Japan) or to others for re-offering or re-sale, directly or indirectly, in Japan or to, or for the benefit of, any
resident of Japan except pursuant to an exemption from the registration requirements of, and otherwise in
compliance with, the Financial Instruments and Exchange Act and other relevant laws and regulations of Japan.
115
GENERAL INFORMATION
(1) Clearing System: The Bonds will be issued in registered form and will be initially represented by the
Global Certificate deposited with a common depositary on behalf of Euroclear and Clearstream and
registered in the name of a nominee for the common depositary, and will be exchangeable for Definitive
Certificates in registered form only in the limited circumstances set out therein.
The Common Code of the Bonds is 109021997 and the ISIN for the Bonds is XS1090219970.
(2) Authorizations: We have obtained all necessary consents, approvals and authorizations in connection
with the issue and performance of the Bonds. The issue of the Bonds was authorized by written
resolutions of the Board of Directors on July 21, 2014.
(3) No Material Adverse Change: There has been no material adverse change in the Companys or its
subsidiaries financial or trading positions or prospects since March 28, 2014.
(4) Litigation: From time to time, we may be involved in litigation or arbitration proceedings that arise
during the ordinary course of our business. However, save as disclosed in this offering memorandum,
neither the Company nor any of its subsidiaries is involved in any litigation or arbitration proceedings that
we believe are material in the context of the Bonds nor are we aware that any such proceedings are
pending or threatened.
(5) Reliance on Certificates: Pursuant to the Terms and Conditions of the Bonds and the Trust Deed, the
Trustee may rely without liability to Bondholders on any report, confirmation, certificate, information
from or any advice or opinion of any accountants, lawyers, financial advisors, financial institution or other
expert, whether or not addressed to it and whether or not their liability in relation thereto is limited (by its
terms or by any engagement letter entered into in relation thereto by the Trustee or any other person or in
any other manner) by reference to a monetary cap, methodology or otherwise. The Trustee may accept and
shall be entitled to rely on any such report, confirmation, information, certificate, advice or opinion and
such report, confirmation, information, certificate, advice or opinion shall be binding on the Company, the
Trustee and the Bondholders.
(6) Available Documents: Copies of our annual report for the year ended September 28, 2013, the Trust
Deed, the Agency Agreement and our Memorandum of Association will be available for inspection from
the Issue Date at the office of our share transfer agent, Boardroom Corporate & Advisory Services Pte.
Ltd. at 50 Raffles Place, #32-01 Singapore Land Tower, Singapore 048623, and at the principal place of
business in Hong Kong of the Trustee (being, at the date of this offering memorandum, Level 30, HSBC
Main Building, 1 Queens Road Central, Hong Kong) upon written request during normal business hours,
so long as any of the Bonds is outstanding.
We prepare and publish an annual report every year and an interim report semi-annually. Copies of our
annual report and interim report in respect of the latest year and period can be obtained from our corporate
website, the contents of which do not form part of this offering memorandum.
(7) Financial Information: The Groups audited consolidated financial statements as of and for the financial
years ended September 28, 2011, 2012 and 2013, which are included elsewhere in this offering
memorandum, have been audited by Deloitte & Touche LLP, Chartered Accountants, as stated in their
reports appearing herein. The Group has also prepared unaudited consolidated financial information for
the six months ended March 28, 2013 and 2014 which are included in this offering memorandum, but have
not been audited by Deloitte & Touche LLP, Chartered Accountants.
116
(8) Listing: Approval in-principle has been received for the listing and quotation of the Bonds on the Official
List of the SGX-ST. The SGX-ST assumes no responsibility for the correctness of any of the statements
made or opinions or reports contained in this offering memorandum. Approval in-principle for the listing
and quotation of the Bonds on the Official List of the SGX-ST is not to be taken as an indication of our
merits, the merits of our subsidiaries or the merits of the Bonds. The Bonds will be traded on the SGX-ST
in a minimum board lot size of S$250,000 with a minimum of four lots to be traded in a single transaction
for so long as the Bonds are listed on the SGX-ST.
For so long as the Bonds are listed on the SGX-ST and the rules of the SGX-ST so require, the Issuer will
appoint and maintain a paying agent in Singapore, where the Bonds may be presented or surrendered for
payment or redemption, in the event that a Global Certificate is exchanged for certificates in definitive
form. In addition, in the event that a Global Certificate is exchanged for certificates in definitive form, an
announcement of such exchange shall be made by or on behalf of us through the SGX-ST and such
announcement will include all material information with respect to the delivery of the certificates in
definitive form, including details of the paying agent in Singapore.
117
INDEX TO FINANCIAL STATEMENTS
Page
For the Six Months Ended March 28, 2014
Independent Auditors Review Report
(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-2
Condensed Consolidated Income Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-4
Condensed Consolidated Statement of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-5
Condensed Consolidated Statements of Financial Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-6
Condensed Consolidated Statements of Changes in Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-8
Condensed Consolidated Statement of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-9
Notes to the Condensed Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-10
For the Year Ended September 28, 2013
Independent Auditors Report
(2)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-27
Consolidated Income Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-28
Consolidated Statement of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-29
Statements of Financial Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-30
Statements of Changes in Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-32
Consolidated Statement of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-34
Notes to the Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-36
For the Year Ended September 28, 2012
Independent Auditors Report
(2)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-103
Consolidated Income Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-104
Consolidated Statement of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-105
Statements of Financial Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-106
Statements of Changes in Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-108
Consolidated Statement of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-110
Notes to the Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-112
Notes:
(1) The review report on the Groups consolidated financial statements set out herein is reproduced from the review report previously
issued. Pages references referred to in the above-referenced report refer to pages set out in the financial statements originally
attached to the review report.
(2) The independent auditors report on the Groups consolidated financial statements set out herein is reproduced from the Companys
annual report. Page references referred to in the above named reports refer to pages set out in such annual report.
F-1
REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION
FOR THE SIX-MONTH PERIOD ENDED MARCH 28, 2014
July 18, 2014
The Board of Directors
Pacific Andes Resources Development Limited
Hong Kong Plaza,
Rooms 3201 3210,
188 Connaught Road West,
Hong Kong
Introduction
We have reviewed the accompanying interim financial information of Pacific Andes Resources Development
Limited (the Company) and its subsidiaries (the Group) which comprise the condensed consolidated statement of
financial position as at March 28, 2014, condensed consolidated income statement, condensed consolidated
statement of comprehensive income, condensed consolidated statement of changes in equity and condensed
consolidated statement of cash flows of the Group for the period from September 29, 2013 to March 28, 2014,
and a summary of significant accounting policies and selected explanatory notes as set out on pages F-4 to F-27.
Management is responsible for the preparation and fair presentation of this interim financial information in
accordance with Singapore Financial Reporting Standard No. 34, Interim Financial Reporting (FRS 34). Our
responsibility is to express a conclusion on this interim financial information based on our review.
Scope of Review
We conducted our review in accordance with the Singapore Standard on Review Engagements 2410, Review of
Interim Financial Information Performed by the Independent Auditor of the Entity. A review of interim
financial information consists of making inquiries, primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit
conducted in accordance with Singapore Standards on Auditing and consequently does not enable us to obtain
assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
F-2
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim
financial information is not prepared, in all material respects, in accordance with FRS 34.
Limitation of Use
These condensed consolidated financial statements have been prepared solely for inclusion in the offering
memorandum in connection with the Groups proposed offering of senior unsecured bonds in 2014 which will
only be offered and sold outside the United States. This report is made solely to you, as a body and for no other
purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this
report.
Yours faithfully,
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Public Accountants and
Chartered Accountants
Singapore
F-3
CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE SIX-MONTH PERIOD ENDED MARCH 28, 2014
Six-month period ended
NOTES 28.3.2014 28.3.2013
HK$000 HK$000
(unaudited) (unaudited)
Revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 4,659,977 4,869,081
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,761,804) (4,057,954)
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 898,173 811,127
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 224,178 311,226
Selling and distribution expenses . . . . . . . . . . . . . . . . . . . . (104,699) (161,532)
Administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . (151,003) (98,892)
Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (52,305) (14,239)
Finance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (426,136) (286,335)
Share of results of associates . . . . . . . . . . . . . . . . . . . . . . . 35,206 29,037
Profit before taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 423,414 590,392
Taxation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 (31,540) 106,805
Profit for the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 391,874 697,197
Profit for the period attributable to:
Owners of the Company. . . . . . . . . . . . . . . . . . . . . . . . . 277,885 521,139
Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . 113,989 176,058
391,874 697,197
Earnings per share 10
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK5.8 cents HK10.9 cents
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK5.8 cents HK10.9 cents
F-4
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX-MONTH PERIOD ENDED MARCH 28, 2014
Six-month period ended
28.3.2014 28.3.2013
HK$000 HK$000
(unaudited) (unaudited)
Profit for the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 391,874 697,197
Other comprehensive (expense) income
Items that will not be reclassified to profit or loss:
Surplus on revaluation of properties . . . . . . . . . . . . . . . . . . . . . . 3,325 2,250
Items that will be subsequently reclassified to profit or loss:
Fair value changes of available-for-sale investments . . . . . . . . . . . (3,282) 15,226
Exchange differences arising on translation of foreign operations . . (7,694) 395
Other comprehensive (expense) income for the period . . . . . . . . . . . . (7,651) 17,871
Total comprehensive income for the period. . . . . . . . . . . . . . . . . . . . 384,223 715,068
Total comprehensive income attributable to:
Owners of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 272,216 532,442
Non-controlling interests. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112,007 182,626
384,223 715,068
F-5
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AT MARCH 28, 2014
NOTES 28.3.2014 28.9.2013
HK$000 HK$000
(unaudited) (audited)
Non-current assets
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . 13 5,081,749 5,300,991
Investment properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 53,026 52,135
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 2,952,461 2,952,461
Prepayment to suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . 15 557,896 1,786,916
Available-for-sale investments . . . . . . . . . . . . . . . . . . . . . . 18,355 25,393
Interests in associates. . . . . . . . . . . . . . . . . . . . . . . . . . . . 565,685 542,615
Other intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 9,539,557 9,539,557
Total non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . 18,768,729 20,200,068
Current assets
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,784,012 923,785
Trade, bills, other receivables and prepayments . . . . . . . . . . 17 8,634,413 9,152,996
Current portion of prepayments to suppliers. . . . . . . . . . . . . 15 1,326,000 205,123
Advance to a supplier. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 315,900 315,900
Prepaid income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51,206 99,513
Pledged deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95 111
Bank balances and cash . . . . . . . . . . . . . . . . . . . . . . . . . . 425,883 615,771
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,537,509 11,313,199
Current liabilities
Trade and other payables . . . . . . . . . . . . . . . . . . . . . . . . . 18 355,297 308,082
Income tax payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,181 22,057
Amounts due to Pacific Andes International
Holdings Limited and its subsidiaries . . . . . . . . . . . . . . . 4,134 5,371
Derivative financial instruments. . . . . . . . . . . . . . . . . . . . . 62,567 54,712
Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 714,648 721,476
Bank advances drawn on bills . . . . . . . . . . . . . . . . . . . . . . 7,060
Current portion of finance leases . . . . . . . . . . . . . . . . . . . . 18,110 30,151
Current portion of interest-bearing bank borrowings . . . . . . . 19 6,032,289 7,897,734
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,231,226 9,046,643
Net current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,306,283 2,266,556
F-6
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AT MARCH 28, 2014
NOTES 28.3.2014 28.9.2013
HK$000 HK$000
(unaudited) (unaudited)
Non-current liabilities
Finance leases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,666
Interest-bearing bank borrowings . . . . . . . . . . . . . . . . . . . . 19 3,080,537 1,557,980
Long term payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190,118 237,011
Senior notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 4,086,576 4,080,896
Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,408,517 2,474,198
Total non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . 9,765,748 8,353,751
Net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,309,264 14,112,873
Capital and reserves
Share capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 1,325,005 1,325,005
Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,262,766 9,078,936
Attributable to owners of the Company . . . . . . . . . . . . . . . . 10,587,771 10,403,941
Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . 3,721,493 3,708,932
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,309,264 14,112,873
F-7
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE SIX-MONTH PERIOD ENDED MARCH 28, 2014
Share
capital
Share
premium
Capital
reserve
Investment
Revaluation
reserve
Properties
Revaluation
reserve
Currency
Exchange
Translation
reserve
Retained
earnings
Attributable
to owners
of
Company
Non-
controlling
interests Total
HK$000 HK$000 HK$000 HK$000 HK$000 HK$000 HK$000 HK$000 HK$000 HK$000
Balance at September 29, 2012
(audited) . . . . . . . . . . 1,325,005 4,318,455 279,908 52,841 (4,529) 3,715,814 9,687,494 2,740,977 12,428,471
Total comprehensive income
for the period . . . . . . . . 8,819 2,089 395 521,139 532,442 182,626 715,068
Transactions with owners,
recognised directly in equity . .
Dividend paid to non-controlling
shareholders . . . . . . . . (36,636) (36,636)
Final dividend of 0.30 Singapore
cents
per ordinary share in respect of
financial year 2012 (Note 9) . . (90,083) (90,083) (90,083)
Balance at March 28, 2013
(unaudited) . . . . . . . . . 1,325,005 4,318,455 279,908 8,819 54,930 (4,134) 4,146,870 10,129,853 2,886,967 13,016,820
Balance at September 29, 2013
(audited) . . . . . . . . . . 1,325,005 4,318,455 279,908 3,282 60,573 13,731 4,402,987 10,403,941 3,708,932 14,112,873
Total comprehensive income
for the period . . . . . . . . (3,282) 2,214 (4,601) 277,885 272,216 112,007 384,223
Transactions with owners,
recognised directly in equity . .
Non-controlling interests arising
from acquisition of additional
interest
in subsidiaries. . . . . . . . (37,174) (37,174)
Dividend paid to non-controlling
shareholders . . . . . . . . (62,272) (62,272)
Final dividend of 0.30 Singapore
cent
per ordinary share in respect of
financial year 2013 (Note 9) . . (88,386) (88,386) (88,386)
Balance at March 28, 2014
(unaudited) . . . . . . . . . 1,325,005 4,318,455 279,908 62,787 9,130 4,592,486 10,587,771 3,721,493 14,309,264
See accompanying notes to financial statements.
F-8
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX-MONTH PERIOD ENDED MARCH 28, 2014
Six-month period ended
28.3.2014 28.3.2013
HK$000 HK$000
(unaudited) (unaudited)
Operating activities
Profit before income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 423,414 590,392
Adjustments for non-cash items . . . . . . . . . . . . . . . . . . . . . . . . . . . 896,400 551,981
Operating cash flows before movements in working capital. . . . . . . . . 1,319,814 1,142,373
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (860,227) 345,673
Trade, bills, other receivables and prepayments . . . . . . . . . . . . . . . . . 518,583 2,626,628
Trade and other payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,345) (114,160)
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (450,296) (251,110)
Net cash from operating activities . . . . . . . . . . . . . . . . . . . . . . . . 522,529 3,749,404
Investing activities
Purchase of property, plant and equipment . . . . . . . . . . . . . . . . . . . . (199,706) (88,947)
Purchase of available-for-sale investments . . . . . . . . . . . . . . . . . . . . (5,115) (531,098)
Addition of prepayment to suppliers . . . . . . . . . . . . . . . . . . . . . . . . (1,170,000)
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,996 18,099
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . (175,825) (1,771,946)
Financing activities
Net cash outflow arising on acquisition of additional interests
in subsidiaries (Note A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (55,603)
Dividend paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (88,386) (90,083)
Dividend paid to non-controlling shareholders . . . . . . . . . . . . . . . . . (37,174) (36,636)
Bank borrowings raised. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,331,311 663,000
Repayment of bank borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,770,799) (482,142)
Addition (repayment) of working capital loans, net . . . . . . . . . . . . . . 96,569 (435,471)
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (23,988) (13,624)
Net cash used in financing activities . . . . . . . . . . . . . . . . . . . . . . . (548,070) (394,956)
Net (decrease) increase in cash and cash equivalents . . . . . . . . . . . (201,366) 1,582,502
Cash and cash equivalents at beginning of the period. . . . . . . . . . . 607,994 437,512
Effect of foreign exchange rate changes . . . . . . . . . . . . . . . . . . . . . . 11,447
Cash and cash equivalents at end of the period . . . . . . . . . . . . . . . 418,075 2,020,014
Representing: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bank balances and cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 425,883 2,026,248
Bank overdrafts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7,808) (6,234)
418,075 2,020,014
Note to consolidated statement of cash flow
(A) On March 17, 2014, the Group carried out a compulsory acquisition of all remaining shares in Copeinca
ASA (Copeinca) for a consideration of HK$55,603,000 pursuant to Section 4-25 of the Norwegian
Public Limited Liability Companies Act. As a result, the Group has assumed ownership of all shares in
Copeinca.
F-9
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX-MONTH PERIOD ENDED MARCH 28, 2014
1. GENERAL
Pacific Andes Resources Development Limited (the Company) is an exempt company incorporated in
Bermuda with limited liability. Its principal place of business is in Hong Kong and registered office at
Canons Court, 22 Victoria Street, Hamilton HM12, Bermuda. The Company is listed on the Singapore
Exchange Securities Trading Limited.
The Company acts as an investment holding company and provides corporate management services to its
Group companies.
The interim financial information which comprise the condensed consolidated statement of financial
position, condensed consolidated income statement, condensed consolidated statement of comprehensive
income, condensed consolidated statement of changes in equity and condensed consolidated statement of
cash flows of the Group are presented in Hong Kong dollars consistent with the reporting currency of its
holding companies and all values are rounded to the nearest thousand (HK$000) except when otherwise
indicated.
The interim financial information of the Group, for the period from September 29, 2013 to March 28,
2014, were authorised for issue by the Board of Directors on July 18, 2014.
2. BASIS OF PREPARATION
The interim financial information for the period six-month period ended March 28, 2014 has been
prepared in accordance with Singapore Financial Reporting Standards 34, Interim Financial Reporting
(FRS34).
3. SIGNIFICANT ACCOUNTING POLICIES
The interim financial information has been prepared using accounting policies consistent with the
Singapore Financial Reporting Standards in accordance with the historical cost basis, except as disclosed
in the accounting policies in the audited financial statements for the year ended September 28, 2013.
The accounting policies adopted are consistent with those followed in the preparation of the Groups
audited financial statements for the financial year ended September 28, 2013.
In the current period, the Group has adopted all the new and revised FRSs and Interpretations of FRS
(INT FRS) that are relevant to its operations and effective for annual periods beginning on or after
September 29, 2013. The adoption of these new/revised FRSs and INT FRSs does not result in changes to
the Groups accounting policies and has no material effect on the amounts reported for the current and
prior periods.
F-10
3. SIGNIFICANT ACCOUNTING POLICIES (contd)
At the date of authorisation of these financial statements, the following FRSs, INT FRSs and amendments
to FRS that are relevant to the Group were issued but not effective:
FRS 19 Employee Benefits
FRS 27 (Revised) Separate Financial Statements
FRS 28 Investments in Associates and Joint Ventures
FRS 110 Consolidated Financial Statements
FRS 112 Disclosure of Interests in Other Entities
FRS 113 Fair Value Measurement
Amendments to FRS 107 Disclosures Offsetting Financial Assets and Financial Liabilities
Amendments to FRS 32 Financial Instruments: Presentation
Amendments to FRS 36 Impairment of Assets
Amendments to FRS 110 Consolidated Financial Statements Investment Entities
FRS 110, FRS 112 Transition Guidance
Consequential amendments were also made to various standards as a result of these new/revised
standards.
FRS 110 Consolidated Financial Statements and FRS 27 Separate Financial Statements
FRS 110 replaces the control assessment criteria and consolidation requirements currently in FRS 27 and
INT FRS 12 Consolidation Special Purpose Entities.
FRS 110 defines the principle of control and establishes control as the basis for determining which entities
are consolidated in the consolidated financial statements. It also provides more extensive application
guidance on assessing control based on voting rights or other contractual rights. Under FRS 110, control
assessment will be based on whether an investor has (i) power over the investee; (ii) exposure, or rights, to
variable returns from its involvement with the investee; and (iii) the ability to use its power over the
investee to affect the amount of the returns. FRS 27 remains as a standard applicable only to separate
financial statements.
FRS 110 will take effect from financial years beginning on or after January 1, 2014, with retrospective
application subject to transitional provisions.
When the Group adopts FRS 110, entities it currently consolidates may not qualify for consolidation, and
entities it currently does not consolidate may qualify for consolidation. The Group is currently estimating
the effects of FRS 110 on its investments in the period of initial adoption.
F-11
3. SIGNIFICANT ACCOUNTING POLICIES (contd)
FRS 112 Disclosure of Interests in Other Entities
FRS 112 requires an entity to provide more extensive disclosures regarding the nature of and risks
associated with its interest in subsidiaries, associates, joint arrangements and unconsolidated structured
entities.
FRS 112 will take effect from financial years beginning on or after January 1, 2014, and the Group is
currently estimating the extent of additional disclosures needed.
FRS 113 Fair Value Measurement
FRS 113 is a single new Standard that applies to both financial and non-financial items. It replaces the
guidance on fair value measurement and related disclosures in other Standards, with the exception of
measurement dealt with under FRS 102 Share-based Payment, FRS 17 Leases, net realisable value in
FRS 2 Inventories and value-in-use in FRS 36 Impairment of Assets.
FRS 113 provides a common fair value definition and hierarchy applicable to the fair value measurement
of assets, liabilities, and an entitys own equity instruments within its scope, but does not change the
requirements in other Standards regarding which items should be measured or disclosed at fair value.
The disclosure requirements in FRS 113 are more extensive than those required in the current standards.
For example, quantitative and qualitative disclosures based on the three-level fair value hierarchy
currently required for financial instruments only under FRS 107
Financial Instruments: Disclosures will be extended by FRS 113 to cover all assets and liabilities within
its scope.
FRS 113 will be effective prospectively from annual periods beginning on or after January 1, 2014.
Comparative information is not required for periods before initial application.
The Group is currently estimating the effects of FRS 113 in the period of initial adoption.
Amendments to FRS 32 Financial Instruments: Presentation
The amendments to FRS 32 clarify existing application issues relating to the offsetting requirements.
Specifically, the amendments clarify the meaning of currently has a legal enforceable right of set-off and
simultaneous realisation and settlement. The amendments to FRS 32 are effective for annual periods
beginning on or after January 1, 2014, with retrospective application required.
The management is still evaluating the impact of the amendments to FRS 32 on the financial assets and
liabilities that have been set-off on the statement of financial position.
Amendments to FRS 34 Interim Financial Reporting
The Group has applied the amendments to FRS 34 Interim Financial Reporting as part of the Annual
Improvements to FRSs 2009 2011 Cycle for the first time in the current interim period. The amendments
to FRS 34 clarify that the total assets and total liabilities for a particular reportable segment would be
separately disclosed in the condensed consolidated financial statements only when the amounts are
regularly provided to the chief operating decision maker and there has been a material change from the
amounts disclosed in the last annual financial statements for that reportable segment. Disclosures of
segment information are set out in Note 5.
F-12
3. SIGNIFICANT ACCOUNTING POLICIES (contd)
Amendments to FRS 36 Impairment of Assets
The amendments to FRS 36 restrict the requirement to disclose the recoverable amount of an asset or cash
generating unit (CGU) to periods in which an impairment loss has been recognised or reversed. The
amendments also expand and clarify the disclosure requirements applicable when such asset or CGUs
recoverable amount has been determined on the basis of fair value less costs of disposal, such as the level
of fair value hierarchy within which the fair value measurement of the asset or CGU has been
determined, and where the fair value measurements are at Level 2 or 3 of the fair value hierarchy, a
description of the valuation techniques used and any changes in that valuation technique, key assumptions
used including discount rate(s) used.
Upon adoption of the amendments to FRS 36, the Group expects additional disclosures arising from any
asset impairment loss or reversals, and where their respective recoverable amounts are determined based
on fair value less costs of disposal.
Management anticipates that the adoption of the above FRSs and amendments to FRSs issued but not
effective at the date of authorisation of these financial statements in future periods will not have material
impact on the financial statement of the Group in the period of their initial adoption except as discussed
above.
Except as described above, the application of the other new or revised FRSs in the current interim period
has had no material effect on the amounts reported and/or disclosures set out in these condensed
consolidated financial statements.
4. FINANCIAL RISK AND CAPITAL RISK MANAGEMENT POLICIES
There have been no changes in the financial risk management of the Group and the Groups overall capital
risk management remains unchanged and has been disclosed in the audited financial statements for the
year ended September 28, 2013 except for the following:
Financial instruments subject to offsetting, enforceable master netting arrangements and similar
agreements.
The Group does not have any financial instruments which are subjected to offsetting, enforceable master
netting arrangements or similar netting agreements.
F-13
5. REVENUE AND SEGMENT INFORMATION
FRS 108 requires reportable segments to be identified on the basis of internal reports about components of
the Group that are regularly reviewed by the chief operating decision maker (i.e. the board of directors) in
order to allocate resources to segments and to assess their performance.
The Groups operating and reportable segments under FRS 108 are based on different business divisions
which are summarised as follows:
Frozen fish supply chain management
(SCM)
sales of frozen fish and other seafood products and
shipping services
Fishery and fish supply sales of fish and other marine catches from fishery
and fish supply activities and the production and
sale of fishmeal and fish oil
These divisions are on the basis on which the Group reports its segment information to the Groups chief
operating decision maker for the purposes of resource allocation and assessment of performance.
Segment sales and expenses: Segment sales and expense are the sales and operating expenses reported in
the profit or loss that are directly attributable to a segment and the relevant portion of such sales and
expenses that can be allocated on a reasonable basis to a segment.
The accounting policies of the reportable segments are the same as the Groups accounting policies in the
preparation of the Groups financial statements. Segment result represents the profit earned by each
segment without the allocation of certain other income, fair value changes in certain investment
properties, fair value change in derivative financial instruments, administrative expenses, other expenses,
finance costs and taxation.
Segment assets and liabilities: Segment assets include all operating assets used by a segment and consist
principally of operating cash and cash equivalents, receivables, prepayments, advances, inventories,
prepayment to suppliers, certain investment properties, certain property, plant and equipment and
intangible assets. Segment liabilities consist principally of trade payable, accrued expenses, and long term
payables.
There are no inter-segment sales and expenses during the current and prior period.
Income from associates is allocated as they are specifically attributable to operating segments, and
correspondingly the investments in associates are included in segment assets of the Group.
F-14
5. REVENUE AND SEGMENT INFORMATION (contd)
Information regarding the above segments is reported below.
For the six-month period ended March 28, 2014
Segment revenue and results
Frozen
fish SCM
Fishery
and
fish supply Consolidated
HK$000 HK$000 HK$000
REVENUE
External sales to external customers. . . . . . . . . . 2,124,262 2,535,715 4,659,977
RESULT
Segment result . . . . . . . . . . . . . . . . . . . . . . . . 248,990 786,994 1,035,984
Unallocated corporate income. . . . . . . . . . . . . . 16,874
Unallocated corporate expenses. . . . . . . . . . . . . (203,308)
Finance costs . . . . . . . . . . . . . . . . . . . . . . . . . (426,136)
Profit before taxation. . . . . . . . . . . . . . . . . . . . 423,414
Frozen
fish SCM
Fishery
and
fish supply Consolidated
HK$000 HK$000 HK$000
Impairment loss on property,
plant and equipment. . . . . . . . . . . . . . . . . . . 31,192 31,192
As at March 28, 2014
Segment assets and liabilities
Frozen
fish SCM
Fishery
and
fish supply Consolidated
HK$000 HK$000 HK$000
ASSETS
Segment assets . . . . . . . . . . . . . . . . . . . . . . . . 7,130,779 24,071,227 31,202,006
Unallocated corporate assets. . . . . . . . . . . . . . . 104,232
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . 31,306,238
LIABILITIES
Segment liabilities . . . . . . . . . . . . . . . . . . . . . 834,845 6,987,012 7,821,857
Unallocated corporate liabilities . . . . . . . . . . . . 9,175,117
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . 16,996,974
F-15
5. REVENUE AND SEGMENT INFORMATION (contd)
For the six-month period ended March 28, 2013
Segment revenue and results
Frozen
fish SCM
Fishery
and
fish supply Consolidated
HK$000 HK$000 HK$000
REVENUE
External sales to external customers. . . . . . . . . . 2,756,974 2,112,107 4,869,081
RESULT
Segment result . . . . . . . . . . . . . . . . . . . . . . . . 216,815 584,375 801,190
Unallocated corporate income. . . . . . . . . . . . . . 189,293
Unallocated corporate expenses. . . . . . . . . . . . . (113,756)
Finance costs . . . . . . . . . . . . . . . . . . . . . . . . . (286,335)
Profit before taxation. . . . . . . . . . . . . . . . . . . . 590,392
As at September 28, 2013
Segment assets and liabilities
Frozen
fish SCM
Fishery
and
fish supply Consolidated
HK$000 HK$000 HK$000
ASSETS
Segment assets . . . . . . . . . . . . . . . . . . . . . . . . 7,668,981 23,692,638 31,361,619
Unallocated corporate assets. . . . . . . . . . . . . . . 151,648
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . 31,513,267
LIABILITIES
Segment liabilities . . . . . . . . . . . . . . . . . . . . . 818,447 7,063,299 7,881,746
Unallocated corporate liabilities . . . . . . . . . . . . 9,518,648
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . 17,400,394
F-16
6. OTHER INCOME
Six-month period ended
28.3.2014 28.3.2013
HK$000 HK$000
(unaudited) (unaudited)
Interest income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 146
Rental income from properties . . . . . . . . . . . . . . . . . . . . . . . 1,073 1,089
Compensation received from suppliers of fish . . . . . . . . . . . . . 82,124 52,516
Gain on revaluation of investment properties . . . . . . . . . . . . . . 1,277
Exchange gain, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99,430 246,490
Sundry income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,264 10,985
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 224,178 311,226
7. PROFIT BEFORE TAXATION
Six-month period ended
28.3.2014 28.3.2013
HK$000 HK$000
(unaudited) (unaudited)
Profit before taxation has been arrived at after charging:
Amortisation of prepayment to suppliers . . . . . . . . . . . . . . . . 108,143 118,820
Depreciation of property, plant and equipment. . . . . . . . . . . . . 360,089 360,807
Impairment loss on property, plant and equipment . . . . . . . . . . 31,192
Loss on disposal of property, plant and equipment . . . . . . . . . . 1,365
Loss on revaluation of investment properties . . . . . . . . . . . . . . 625
8. TAXATION
Six-month period ended
28.3.2014 28.3.2013
HK$000 HK$000
(unaudited) (unaudited)
The (charge) credit comprises:
Profit tax (expense) benefit for the period
Other jurisdictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . (84,460)
Overprovision in respect of prior period
Other jurisdictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,581
Deferred tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52,920 78,224
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (31,540) 106,805
9. DIVIDEND
The directors do not recommend the payment of an interim dividend for the six-month period ended
March 28, 2013 and March 28, 2014.
F-17
On January 27, 2014, the Company declared a final dividend of 0.30 Singapore cent per share for the year
ended September 28, 2013. Subsequently, cash dividend of HK$88,386,000 were paid.
On January 28, 2013, the Company declared a final dividend of 0.30 Singapore cent per share for the year
ended September 28, 2012. Subsequently, cash dividend of HK$90,083,000 were paid.
10. EARNINGS PER SHARE
The calculation of the basic and diluted earnings per share attributable to the owners of the Company is
based on the following data:
Six-month period ended
28.3.2014 28.3.2013
HK$000 HK$000
(unaudited) (unaudited)
Earnings attributable to the owners of the Company
for the purposes of calculation of basic and
diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . 277,885 521,139
Weighted average number of ordinary shares
for the purpose of calculation of basic and
diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . 4,790,992,338 4,790,992,338
For the period ended March 28, 2014, the outstanding warrants issued by the Companys listed subsidiary,
China Fishery Group Limited (China Fishery) are not included in the calculation of diluted earnings
per share as the exercise price was higher than the average market price of the shares of China Fishery
during the outstanding period and therefore were auti-dilutive
F-18
11. HOLDING COMPANY AND RELATED COMPANY TRANSACTIONS
The Company is a subsidiary of Pacific Andes International Holdings Limited, a company incorporated in
Bermuda with its shares listed on The Stock Exchange of Hong Kong Limited. Its ultimate holding
company is N.S. Hong Investment (BVI) Limited, a company incorporated in the British Virgin Islands.
Some of the Companys transactions are between members of the Group and the effect of these on the
basis determined between the parties is reflected in these financial statements. The intercompany balances
are unsecured, interest-free and repayable on demand unless otherwise stated.
12. OTHER RELATED PARTY TRANSACTIONS
Some of the Groups transactions and arrangements are with related parties and the effect of these on the
basis determined between the parties is reflected in these financial statements.
13. MOVEMENTS IN PROPERTY, PLANTAND EQUIPMENTAND INVESTMENT PROPERTIES
During the period, the Group incurred the following capital expenditures on property, plant and
equipment:
Six-month period ended
28.3.2014 28.3.2013
HK$000 HK$000
(unaudited) (unaudited)
Freehold land and buildings . . . . . . . . . . . . . . . . . . . . . . . . . 3,480
Furniture, fixtures and office equipment . . . . . . . . . . . . . . . . . 501
Motor vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 286
Plant and machinery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,194 51,772
Vessels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,034
Fishing nets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . 67,127 37,175
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199,706 88,947
The Groups leasehold land and buildings classified as property, plant and equipment were revalued by
BMI Appraisals Limited, independent property valuers, at March 28, 2014 and September 28, 2013. BMI
Appraisals Limited have appropriate qualifications and recent experiences in the valuation of similar
properties in the relevant locations. The valuation was based on direct comparison method by reference to
market transaction prices of similar properties or on income approach by taking into account the current
rents passing and the reversionary income potential of tenancies. The valuation gave rise to a net
revaluation increase of HK$3,325,000 (2013: HK$2,250,000) which was credited to the property
revaluation reserve.
The Groups investment properties were revalued by BMI Appraisals Limited, independent property
valuers, at March 28, 2014 and September 28, 2013. The valuation was based on income approach by
taking into account the current rents passing and the reversionary income potential of tenancies. The
revaluation gave rise to a fair value gain of HK$1,277,000 (2013: fair value loss of HK$625,000) which
has been recognised in other income (2013: other expense) in the condensed consolidated income
statement.
F-19
14. GOODWILL
28.3.2014 28.9.2013
HK$000 HK$000
(unaudited) (audited)
At beginning and end of period . . . . . . . . . . . . . . . . . . . . . . . 2,952,461 2,952,461
For the purposes of impairment testing, goodwill is allocated to two groups of cash generating units
(CGUs). The carrying amounts of goodwill as at March 28, 2014 allocated to the CGUs are as follows:
28.3.2014 28.9.2013
HK$000 HK$000
Contract supply business
China Fisheries International Limited (CFIL) . . . . . . . . . 1,784,700 1,784,700
Peruvian fishmeal division
CFG Investment S.A.C. (CFGI) . . . . . . . . . . . . . . . . . . 1,167,761 1,167,761
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,952,461 2,952,461
During the six-month period ended March 28, 2014, management of the Group determined that there is no
indication of impairment of any of its CGUs containing goodwill or intangible assets with indefinite
useful lives.
15. PREPAYMENT TO SUPPLIERS/ADVANCE TO A SUPPLIER
Prepayment to suppliers
Prepayment to suppliers is made to secure the fish supply under the long term supply agreements
(LSAs) for the purpose of simplifying the fish supply arrangements between CFIL and the
counterparties and further clarifying the rights and obligations of the counterparties. Summary of these
LSA are set out in the Companys announcement on July 16, 2012. The Group has entered into a new
LSAs (New LSA) with a supplier, Perun, in November 2012 to replace the fourth LSA. The New LSA
took retrospective effect from October 1, 2012 and shall terminate on September 30, 2030. A fixed fees
payable under the new LSA for the entire duration of the LSA, amounting to US$150,000,000
(approximately HK$1,170 million) in aggregate, was prepaid by the Group to Perun. This is different
from the previous fourth LSA which provided for a fixed price of US$12,000 (approximately HK$93,600)
per vessel per calendar day. Other than this, all other terms and conditions in the New LSA are similar to
the fourth LSA.
Under the LSAs, the Group also pays variable price for the supply of fish based on contracted percentages
of the revenue derived from the sales of fish before deduction of amortisation of fixed prepayment to
suppliers.
F-20
15. PREPAYMENT TO SUPPLIERS/ADVANCE TO A SUPPLIER (contd)
On March 24, 2014, the Company announced termination of the LSAs and the New LSA with effect from
April 1, 2014. Under the termination agreements, the Group will be entitled to be refunded in cash or in
the form of fish supply of HK$1,326,000,000 in the next 12 months, and the remaining balance of
HK$557,896,000 by March 28, 2016.
Advance to a supplier
Advance to a supplier is unsecured, interest free and represents advances for working capital. The advance
amount will be refunded in cash or in the form of fish supply. Management expects the advances to
suppliers to be settled in the next 12 months.
16. OTHER INTANGIBLE ASSETS
Other intangible assets comprise fishing and plant permits of HK$9,536,829,000 (28.9.2013:
HK$9,536,829,000) granted by the authority in Peru with indefinite useful lives and club debentures of
HK$2,728,000 (28.9.2013: HK$2,728,000).
Fishing permits are granted by the authority in Peru. The fishing permits are attached to fishing vessels
and are transferable to other vessels. Management has obtained legal advice that the fishing permits do not
have a finite term and remain in full force and good standing as long as the applicable legal requirements
are complied with. Accordingly, the cost of fishing permits is not amortised.
17. TRADE, BILLS, OTHER RECEIVABLES AND PREPAYMENTS
28.3.2014 28.9.2013
HK$000 HK$000
(unaudited) (audited)
Trade and bills receivables . . . . . . . . . . . . . . . . . . . . . . . . . . 2,169,364 1,832,860
Suppliers (Note) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,252,946 801,486
Deferred expenditure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 266,030 256,901
Prepayments for fish . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,223,168 5,815,115
Other receivables and prepayments . . . . . . . . . . . . . . . . . . . . 722,905 446,634
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,634,413 9,152,996
Note:
The balances with suppliers are unsecured, interest free and represent advances to the suppliers to finance the working capital for the
supply of fish to the Group under the LSA.
The balances with suppliers are stated net of amounts payable to vessel owners in respect of payments made by the vessel owners on
behalf of the Group. This offset has been effected on the basis of arrangements amongst members of the Group, the vessel owners
and the suppliers.
F-21
18. TRADE AND OTHER PAYABLES
28.3.2014 28.9.2013
HK$000 HK$000
(unaudited) (audited)
Outside parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 355,297 308,082
The average credit period on purchase of goods is 30 days (28.9.2013 : 30 days). No interest is charged on
overdue balances. The Group has financial risk management policies in place to ensure that all payables
are within the credit timeframe.
Trade payables principally comprise amounts outstanding for vessel operating costs and trade purchases.
19. INTEREST BEARING BANK BORROWINGS
28.3.2014 28.9.2013
HK$000 HK$000
(unaudited) (audited)
Interest-bearing bank borrowings comprise:
Trust receipt loans and short-term bank loans . . . . . . . . . . . . . 4,242,684 4,145,918
Club loans and term loans . . . . . . . . . . . . . . . . . . . . . . . . . . 4,894,500 5,334,238
Bank overdrafts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,808 7,777
9,144,992 9,487,933
Less: issuing costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (32,166) (32,219)
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,112,826 9,455,714
Repayable as follows:
On demand or within one year . . . . . . . . . . . . . . . . . . . . . . . 6,032,289 7,897,734
In the second year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,343,264 1,557,980
In the third year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 992,727
In the fourth year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 744,546
9,112,826 9,455,714
Less: Amount due within one year included under current
liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,032,289) (7,897,734)
Amount due after one year . . . . . . . . . . . . . . . . . . . . . . . . . 3,080,537 1,557,980
20. BONDS
The Chinese Renminbi denominated unsecured bonds were issued on June 2, 2011 and will be redeemed
on June 2, 2014. Interest of 6.5% per annum will be paid semi-annually until the settlement date.
Subsequent to period end, the bonds have been fully redeemed.
The interest expense charged is calculated by applying an effective interest rate of 7.5% per annum to the
bonds outstanding.
At March 28, 2014, the outstanding principal of the bonds amounted to RMB570,000,000 (approximately
HK$716,148,000) (28.9.2013: RMB570,000,000 (approximately HK$726,539,000)).
F-22
21. SENIOR NOTES
On July 24, 2012, the Group, through its subsidiary, CFGI issued guaranteed senior fixed rate notes with
aggregate nominal value of US$300,000,000 (approximately HK$2,340,000,000) (the Notes) which
carry fixed interest of 9.75% per annum (interest payable semi-annually in arrear) and will be fully
repayable by July 30, 2019.
The net carrying amount of the Notes was stated net of issue expenses totalling US$17,045,000
(approximately HK$132,951,000). Such expenses were amortised over the life of the Notes by charging
the expenses to the profit or loss using effective interest rate of 10.92% per annum and increasing the net
carrying amount of the Notes with the corresponding amount. As of March 28, 2014, accumulated
amortisation amounted to US$2,384,000 (approximately HK$18,595,000 (28.9.2013: US$1,668,000
(approximately HK$13,012,000)).
At March 28, 2014, the outstanding principal of the Notes amounted to US$288,000,000 (approximately
HK$2,246,400,000 (28.9.2013: US$288,000,000 (approximately HK$2,246,400,000)).
CPI, a subsidiary of Copeinca AS (Copeinca) which was acquired by the Group during the year ended
September 28, 2013 issued guaranteed senior fixed rate notes with nominal value of US$250,000,000
(approximately HK$1,950,000,000) (CPI Notes), which carry fixed interest rate of 9% per annum
(interest payable semi-annually in arrear) and will be due in 2017. The CPI Notes are unsecured but
guaranteed by Copeinca. In addition, certain covenants set out in the CPI Notes need to be compiled with.
The net carrying amount of the CPI Notes was stated net of issue expenses totaling US$948,000
(approximately HK$7,394,000). Such expenses were amortised over the life of the CPI Notes by charging
the expenses to the profit or loss using effective interest rate of 9.59% per annum and increasing the net
carrying amount of the CPI Notes with the corresponding amount. As at March 28, 2014, accumulated
amortisation amounted to US$125,000 (approximately HK$975,000) (28.9.2013: US$112,000
(approximately HK$874,000)).
22. SHARE CAPITAL
Number of shares Amount
HK$000
Ordinary shares of S$0.05 each
At September 29, 2012, March 28, 2013,
September 28, 2013 and March 28, 2014. . . . . . . . . . . . . . . 4,790,992,338 1,325,005
F-23
23. COMMITMENTS
28.3.2014 28.9.2013
HK$000 HK$000
(unaudited) (audited)
Capital expenditure in respect of the acquisition of property,
plant and equipment contracted for but not provided
in the condensed consolidated financial statements . . . . . . . . 36,821 65,890
With effect from July 16, 2012, the Group had ongoing commitments to pay variable price for the supply
of fish under the first, second and third LSA entered into with the suppliers for a period of 10 to 18 years
up to December 31, 2025. Variable price was calculated at 20% of the revenue derived from the sales of
fish before deduction of amortisation of fixed prepayment to suppliers.
In addition, the Group had ongoing commitment to pay fixed price for the supply of fish of US$12,000
(approximately HK$93,600) per day per vessel per calendar day for 6 fishing vessels under the fourth
LSA entered into with Perun up to December 31, 2012. The fourth LSA has been replaced by the New
LSA in November 2013.
The LSAs and the New LSA has been terminated with effect from April 1, 2014. Details are set out in
Note 15.
24. FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS
Some of the Groups financial assets and financial liabilities are measured at fair value at the end of each
reporting period. The following table gives information about how the fair values of these financial assets
and financial liabilities are determined (in particular, the valuation technique(s) and inputs used), as well
as the level of the fair value hierarchy into which the fair value measurements are categorised (levels 1 to
3) based on the degree to which the inputs to the fair value measurements is observable.
Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active market
for identical assets or liabilities;
Level 2 fair value measurements are those derived from inputs other than quoted prices included
within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices); and
Level 3 fair value measurements are those derived from valuation techniques that include inputs
for the asset or liability that are not based on observable market data (unobservable inputs).
F-24
24. FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS (contd)
Financial instruments
Fair value as at
28.3.2014
Fair value
hierarchy
Valuation techniques
and key inputs
HK$000
Listed equity securities classified
as available-for-sale investments
in the condensed consolidated
statement of financial position
8,060 Level 1 Quoted bid prices in an active
market
Structured foreign currency
forward contracts treated as
derivative financial instruments
classified as other financial
liabilities in the condensed
consolidated statement of
financial position
62,567 Level 2 Discounted cash flows.
Future cash flows are
estimated based on forward
exchange rates (from
observable yield curves at the
end of the reporting period)
and contracted exchange rates,
discounted at a rate that
reflects the credit risk of the
Group or the counterparties, as
appropriate.
There were no transfers between Level 1 and 2 in the current and prior years.
25. CONTINGENT LIABILITIES
At March 28, 2014, certain subsidiaries of the Group are parties to legal processes in Peru with potential
claims amounting to HK$220,092,000 (28.9.2013: HK$233,415,000)). These relate to environmental
matters, employment disputes and miscellaneous claims. The Groups legal advisor has advised that
HK$93,787,000 (28.9.2013: HK$82,984,000) of these claims is likely to have unfavourable outcome for
the Group and the outcome for claims of HK$126,305,000 (28.9.2013: HK$150,431,000) cannot be
reasonably ascertained.
Additionally, there are claims which the legal advisor has opined to have remote chances of resulting in
unfavourable outcomes for the Group. At the end of the reporting period, the Group had made a provision
of HK$93,787,000 (28.9.2013: HK$82,984,000) for these claims where the outcome is likely to be
unfavourable to the Group.
Save as disclosed above, no member of the Group is engaged in any litigation or claims of material
importance known to the directors to be pending and threatened against any members of the Group.
F-25
26. PLEDGE OF ASSETS
(a) At March 28, 2014, deposits amounting to HK$95,000 (28.9.2013: HK$111,000) are pledged to a
bank to secure an export invoice discounting facility granted to the Group.
(b) At March 28, 2014, inventories of fishmeal of HK$94,055,000 (28.9.2013: HK$63,882,000) and
were also pledged as security for the revolving inventory financing facilities obtained from banks.
(c) At March 28, 2014, the obligations under finance leases were secured by the lessors title to the
leased property, plant and equipment of a subsidiary in Peru with carrying values of
HK$25,033,000 (28.9.2013: HK$26,463,000).
27. SUBSEQUENT EVENTS
On May 29, 2014, an indirect wholly-owned subsidiary of the Company, Quality Food (Singapore) Pte.
Limited entered into an agreement with UBS AG, Australia Branch to sell 26,500,000 ordinary shares,
approximately 18.09% equity interest, in the capital of Tassal Group Limited at a consideration of
A$96.725 million (approximately HK$695.5 million) for an estimated gain of approximately HK$241.9
million. Upon completion, the Company continued to indirectly hold approximately 4.64% equity interest
in Tassal Group Limited.
F-26
Pacific Andes Resources Development Limited Annual Report 2013 36
INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF PACIFIC ANDES RESOURCES DEVELOPMENT LIMITED
(incorporated in Bermuda with limited liability)
Report on the Financial Statements
We have audited the accompanying financial statements of Pacific Andes Resources Development Limited (the Company) and its
subsidiaries (the Group) which comprise the statements of financial position of the Group and the Company as at 28 September
2013, and the consolidated income statement, statement of comprehensive income, statement of changes in equity and statement
of cash flows of the Group and statement of changes in equity of the Company for the year then ended, and a summary of
significant accounting policies and other explanatory notes, as set out on pages 37 to 111.
Managements Responsibility for the Financial Statements
Management is responsible for the preparation of these financial statements that give a true and fair view in accordance with
Singapore Financial Reporting Standards and for devising and maintaining a system of internal accounting controls sufficient to
provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions
are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss accounts
and balance sheets and to maintain accountability of assets.
Auditors Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in
accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan
and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.
The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of
the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the entitys preparation of the financial statements that give a true and fair view in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys
internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe
that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements of the Group and the statement of financial position and statement of changes
in equity of the Company are properly drawn up in accordance with the Singapore Financial Reporting Standards so as to give a
true and fair view of the state of affairs of the Group and of the Company as at 28 September 2013 and of the results, changes
in equity and cash flows of the Group and changes in equity of the Company for the year then ended on that date.
Deloitte & Touche LLP
Public Accountants and
Chartered Accountants
Singapore
Jeremy Toh Yew Kuan
Partner
(Appointed on 29 July 2013)
Date: 27 December 2013
F-27
Pacific Andes Resources Development Limited Annual Report 2013 37
CONSOLIDATED INCOME STATEMENT
Financial year ended 28 September 2013
THE GROUP
NOTES 2013 2012
HK$000 HK$000

Revenue 5 8,764,092 9,580,798
Cost of sales (7,359,796) (7,689,406)

Gross profit 1,404,296 1,891,392
Other operating income 7 1,193,904 397,573
Selling and distribution expenses (247,841) (442,493)
Administrative expenses (230,278) (257,582)
Other operating expenses (616,635) (285,848)
Finance costs 8 (586,186) (430,178)

917,260 872,864
Share of results of associates 20 57,540 38,459

Profit before income tax 974,800 911,323
Income tax benefit (expense) 11 70,567 (24,205)

Profit for the year 9 1,045,367 887,118

Profit attributable to:
Owners of the Company 777,256 627,659
Non-controlling interests 268,111 259,459

1,045,367 887,118

Earnings per share
Basic 12 HK$0.16 HK$0.16

Diluted 12 HK$0.16 HK$0.16

See accompanying notes to the financial statements.
F-28
Pacific Andes Resources Development Limited Annual Report 2013 38
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Financial year ended 28 September 2013
THE GROUP
2013 2012
HK$000 HK$000

Profit for the year 1,045,367 887,118
Other comprehensive income:
Items that will not be reclassified subsequently to profit or loss
Gain on revaluation of property, plant and equipment 9,201 9,414
Items that may be reclassified subsequently to profit or loss
Exchange difference on translation of the Groups overseas operations 30,849 2,430
Fair value change of available-for-sale investments 104,317 109,240
Reclassification adjustment transfer to profit and loss upon derecognition of
available-for-sale investments (101,035)

Other comprehensive income for the year, net of tax 43,332 121,084

Total comprehensive income for the year 1,088,699 1,008,202

Total comprehensive income attributable to:
Owners of the Company 806,530 746,261
Non-controlling interests 282,169 261,941

1,088,699 1,008,202

See accompanying notes to the financial statements.
F-29
Pacific Andes Resources Development Limited Annual Report 2013 39
STATEMENTS OF FINANCIAL POSITION
At 28 September 2013
THE GROUP THE COMPANY
NOTES 2013 2012 2013 2012
HK$000 HK$000 HK$000 HK$000

NON-CURRENT ASSETS
Property, plant and equipment 14 5,300,991 4,572,851
Investment properties 15 52,135 51,449
Goodwill 16 2,952,461 2,952,461
Prepayment to suppliers 17 1,786,916 887,040
Advances to suppliers 17 315,900
Available-for-sale investments 18 25,393 32,858
Interests in subsidiaries 19 5,874,373 6,636,675
Interests in associates 20 542,615 505,547
Other intangible assets 21 9,539,557 1,826,633

20,200,068 11,144,739 5,874,373 6,636,675

CURRENT ASSETS
Inventories 22 923,785 1,379,897
Trade and bills receivables 23 1,832,860 2,247,314
Other receivables and prepayments 24 7,320,136 7,899,487 183
Current portion of prepayment to suppliers 17 205,123 172,640
Advances to suppliers 17 315,900
Interests in subsidiaries 19 731,044
Prepaid income tax 99,513 15,238
Pledged deposits 43 111 207
Bank balances and cash 25 615,771 445,854 841 1,203

11,313,199 12,160,637 731,885 1,386

CURRENT LIABILITIES
Trade and other payables 26 308,082 356,824 15,832 14,540
Income tax payable 22,057 44,201
Amounts due to Pacific Andes International
Holdings Limited and its subsidiaries 27 5,371 4,937
Derivative financial instruments 28 54,712 202,214 2,760 24,206
Bonds 32 721,476 721,476
Bank advances drawn on bills 29 7,060
Current portion of finance leases 30 30,151 29,555
Current portion of interest-bearing bank
borrowings 31 7,897,734 5,119,836

9,046,643 5,757,567 740,068 38,746

NET CURRENT ASSETS (LIABILITIES) 2,266,556 6,403,070 (8,183) (37,360)

F-30
Pacific Andes Resources Development Limited Annual Report 2013 40
At 28 September 2013
STATEMENTS OF FINANCIAL POSITION
THE GROUP THE COMPANY
NOTES 2013 2012 2013 2012
HK$000 HK$000 HK$000 HK$000

NON-CURRENT LIABILITIES
Finance leases 30 3,666 33,817
Interest-bearing bank borrowings 31 1,557,980 1,801,956
Bonds 32 690,082 690,082
Long term payables 33 237,011
Senior notes 34 4,080,896 2,120,094
Deferred tax liabilities 35 2,474,198 473,389

8,353,751 5,119,338 690,082

NET ASSETS 14,112,873 12,428,471 5,866,190 5,909,233

CAPITAL AND RESERVES
Share capital 36 1,325,005 1,325,005 1,325,005 1,325,005
Reserves 37 9,078,936 8,362,489 4,541,185 4,584,228

Attributable to owners of the Company 10,403,941 9,687,494 5,866,190 5,909,233
Non-controlling interests 3,708,932 2,740,977

TOTAL EQUITY 14,112,873 12,428,471 5,866,190 5,909,233

See accompanying notes to the financial statements.
F-31
Pacific Andes Resources Development Limited Annual Report 2013 41
STATEMENTS OF CHANGES IN EQUITY
Financial year ended 28 September 2013
Share
capital
Share
premium
Capital
reserve
Other
reserve
Investment
revaluation
reserve
Properties
revaluation
reserve
Currency
exchange
translation
reserve
Retained
earnings
Attributable
to owners
of the
Company
Non-
controlling
interests Total
HK$000 HK$000 HK$000 HK$000 HK$000 HK$000 HK$000 HK$000 HK$000 HK$000 HK000

THE GROUP
Balance at 29 September 2011 832,691 3,453,523 283,128 35,482 (109,240) 45,909 (6,959) 3,265,214 7,799,748 2,562,550 10,362,298
Total comprehensive income
for the year 109,240 6,932 2,430 627,659 746,261 261,941 1,008,202
Issue of shares on exercise
of rights issue 492,314 886,545 1,378,859 1,378,859
Share issue expenses (21,613) (21,613) (21,613)
Redemption of convertible bonds (35,482) 35,482
Deemed dilution of interest
in a subsidiary (3,220) (3,220) 3,220
Dividend paid to non-controlling
shareholders (86,734) (86,734)
Final dividend of 1.08 Singapore cents
per ordinary share in respect of
year ended 28 September 2011
(Note 13) (212,541) (212,541) (212,541)

Balance at 28 September 2012 1,325,005 4,318,455 279,908 52,841 (4,529) 3,715,814 9,687,494 2,740,977 12,428,471
Total comprehensive income
for the year 3,282 7,732 18,260 777,256 806,530 282,169 1,088,699
Contribution from non-controlling
shareholders 661,742 661,742
Dividend paid to non-controlling
shareholders (36,636) (36,636)
Non-controlling interests arising from
acquisition of subsidiary 60,680 60,680
Final dividend of 0.30 Singapore cent
per ordinary share in respect of
year ended 28 September 2012
(Note 13) (90,083) (90,083) (90,083)

Balance at 28 September 2013 1,325,005 4,318,455 279,908 3,282 60,573 13,731 4,402,987 10,403,941 3,708,932 14,112,873

See accompanying notes to the financial statements.
F-32
Pacific Andes Resources Development Limited Annual Report 2013 42
Financial year ended 28 September 2013
STATEMENTS OF CHANGES IN EQUITY
Share
capital
Share
premium
Other
reserve
Retained
earnings Total
HK$000 HK$000 HK$000 HK$000 HK$000

THE COMPANY
Balance at 29 September 2011 832,691 3,453,523 35,482 243,420 4,565,116
Total comprehensive income for the year 199,412 199,412
Issue of shares on exercise of rights issue 492,314 886,545 1,378,859
Share issue expenses (21,613) (21,613)
Redemption of convertible bonds (35,482) 35,482
Final dividend of 1.08 Singapore cents per ordinary
share in respect of year ended 28 September 2011
(Note 13) (212,541) (212,541)

Balance at 28 September 2012 1,325,005 4,318,455 265,773 5,909,233
Total comprehensive income for the year 47,040 47,040
Final dividend of 0.30 Singapore cent per ordinary
share in respect of year ended 28 September 2012
(Note 13) (90,083) (90,083)

Balance at 28 September 2013 1,325,005 4,318,455 222,730 5,866,190

See accompanying notes to the financial statements.
F-33
Pacific Andes Resources Development Limited Annual Report 2013 43
CONSOLIDATED STATEMENT OF CASH FLOWS
Financial year ended 28 September 2013
THE GROUP
2013 2012
HK$000 HK$000

Operating activities
Profit before income tax 974,800 911,323
Adjustments for:
Share of results of associates (57,540) (38,459)
Interest expense 586,186 430,178
Interest income (880) (3,894)
Statutory employee profit sharing 2,203 38,796
Provision for claims 10,756 9,143
Amortisation of prepayment to suppliers 237,641 172,640
Depreciation expense 790,983 747,426
Loss (gain) on revaluation of investment properties 247 (1,972)
Impairment loss of property, plant and equipment 350,356 44,067
Gain on disposal of property, plant and equipment (3,221) (183)
Gain on repurchase of bonds (4,000)
Gain on purchase of senior notes (7,378)
Gain on bargain purchase on acquisition of an associate (10,515)
Gain on bargain purchase on acquisition of subsidiaries (499,584) (19,872)
Fair value changes of available-for-sale investments 1,644
Gain on disposal of available-for-sale investments (101,035)
Fair value changes of derivative financial instruments 34,562 202,214

Operating cash flows before movements in working capital 2,325,474 2,471,158
Inventories 1,029,326 (273,119)
Trade and bills receivables, other receivables and prepayments 1,447,647 (2,542,973)
Derivative financial instruments (182,064) (6,013)
Trade and other payables 41,542 (235,075)

Cash from (used in) operations 4,661,925 (586,022)
Interest paid (543,202) (373,068)
Income tax paid (68,638) (88,887)

Net cash from (used) in operating activities 4,050,085 (1,047,977)

F-34
Pacific Andes Resources Development Limited Annual Report 2013 44
Financial year ended 28 September 2013
CONSOLIDATED STATEMENT OF CASH FLOWS
THE GROUP
NOTES 2013 2012
HK$000 HK$000

Investing activities
Interest received 880 3,894
Dividend received from an associate 20,472 18,515
Proceeds from disposal of property, plant
and equipment 3,221 2,490
Proceeds on disposal of available-for-sale investments 96,483
Additions to prepayment to suppliers (1,170,000)
Acquisition of assets (19,500)
Purchase of property, plant and equipment (118,766) (679,763)
Acquisition of investment in an associate (56,085)
Acquisition of available-for sale investment (110,234) (26,702)
Net cash outflow arising on acquisition
of subsidiaries 38 (5,619,658) (233,480)

Net cash used in investing activities (6,917,102) (971,131)

Financing activities
Dividend paid 13 (90,083) (212,541)
Dividend paid to non-controlling shareholders (36,636) (86,734)
Proceeds from shares issue by a subsidiary 661,742
Net cash advanced from Pacific Andes
International Holdings Limited and its subsidiaries 434 598
Proceeds from issuing of shares on exercise of rights issue 1,378,859
Net proceeds from issue of senior notes 2,207,053
Share issue expenses (21,613)
Redemption of convertible bonds (638,104)
Repurchase of bonds (33,352)
Purchase of senior notes (81,003)
Bank advances repaid on bills and discounted
trade receivables with insurance coverage 7,060 (3,650)
Finance leases repaid (29,555) (31,745)
Bank borrowings raised 3,496,186 780,000
Repayment of bank borrowings (469,396) (1,160,226)
Repayment of working capital loans, net (502,349) (340,754)
Decrease in pledged deposits 96 487,806

Net cash from financing activities 3,037,499 2,244,594

Net increase in cash and cash equivalents 170,482 225,486
Cash and cash equivalents at beginning of the year 437,512 212,025
Exchange difference arising on consolidation 1

Cash and cash equivalents at end of the year 607,994 437,512

Being:
Bank balances and cash 25 615,771 445,854
Bank overdrafts 31 (7,777) (8,342)

607,994 437,512

F-35
Pacific Andes Resources Development Limited Annual Report 2013 45
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2013
1 General
The Company is an exempted company incorporated in Bermuda with limited liability. Its registered office is at Canons Court,
22 Victoria Street, Hamilton HM12, Bermuda and principal place of business is at Hong Kong Plaza, Rooms 3201-3210, 188
Connaught Road West, Hong Kong. The Companys shares are listed on the Singapore Exchange (SGX). Its immediate
holding company is Clamford Holding Limited, a company incorporated in the British Virgin Islands. Its intermediate holding
company is Pacific Andes International Holdings Limited (PAIH), a company incorporated in Bermuda with its shares listed
on The Stock Exchange of Hong Kong Limited. Its ultimate holding company is N. S. Hong Investment (BVI) Limited, a
company incorporated in the British Virgin Islands.
The Company acts as an investment holding company and provides corporate management services to Group companies.
The principal activities of the subsidiaries and associates are described in Notes 45 and 20 respectively.
These financial statements are presented in Hong Kong dollars consistent with the presentation currency of its holding
companies and all values are rounded to the nearest thousand (HK$000) except when otherwise indicated.
The consolidated financial statements of the Group and statement of financial position and statement of changes in equity of
the Company for the year ended 28 September 2013 were authorised for issue by the Board of Directors on 27 December
2013.
2 Summary of Significant Accounting Policies
BASIS OF ACCOUNTING The financial statements are prepared in accordance with the historical cost basis, except
as disclosed in the accounting policies below, and are drawn up in accordance with the Singapore Financial Reporting
Standards (FRS).
The financial statements are also prepared in accordance with International Financial Reporting Standards. There are
no material differences between the preparation of financial statements in Singapore Financial Reporting Standards and
International Financial Reporting Standards that are applicable to the Group and Company.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date, regardless of whether that price is directly observable or estimated
using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes into account the
characteristics of the asset or liability which market participants would take into account when pricing the asset or liability
at the measurement date. Fair value for measurement and/or disclosure purposes in these consolidated financial statements
is determined on such a basis, except for share-based payment transactions that are within the scope of FRS 102, leasing
transactions that are within the scope of FRS 17, and measurements that have some similarities to fair value but are not
fair value, such as net realisable value in FRS 2 or value in use in FRS 36.
F-36
Pacific Andes Resources Development Limited Annual Report 2013 46
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
2 Summary of Significant Accounting Policies continued
ADOPTION OF NEW AND REVISED STANDARDS On September 29, 2012, the Group adopted all the new and revised
FRSs and Interpretations of FRS (INT FRS) that are effective from that date and are relevant to its operations. The adoption
of these new/revised FRSs and INT FRSs does not result in changes to the Groups and Companys accounting policies
and has no material effect on the amounts reported for the current or prior years except as disclosed below:
The Group has applied the amendments to FRS 1 Presentation of Items of Other Comprehensive Income retrospectively for
the first time in the current year, the Group grouped items of other comprehensive income into two categories in the other
comprehensive income section: (a) items that will not be reclassified subsequently to profit or loss and (b) items that may
be reclassified subsequently to profit or loss when specific conditions are met. Other than the above mentioned presentation
changes, the application of the amendments to FRS 1 does not result in any impact on profit or loss, other comprehensive
income and total comprehensive income.
At the date of authorisation of these financial statements, the following FRSs, INT FRSs and amendments to FRS that are
relevant to the Group and the Company were issued but not effective:
FRS 27 (Revised) Separate Financial Statements
FRS 110 Consolidated Financial Statements
FRS 112 Disclosure of Interests in Other Entities
FRS 113 Fair Value Measurement
Amendments to FRS 32 Financial Instruments: Presentation
Amendments to FRS 107 Financial Instruments: Disclosure Offsetting Financial Assets and Financial Liabilities
Amendments to FRS 36 Impairment of Assets
Amendments to FRS 110 Consolidated Financial Statements Investment Entities
FRS 110, FRS 111, FRS 112 Transition Guidance
Consequential amendments were also made to various standards as a result of these new/revised standards.
FRS 110 Consolidated Financial Statements and FRS 27 Separate Financial Statements
FRS 110 replaces the control assessment criteria and consolidation requirements currently in FRS 27 and INT FRS 12
Consolidation Special Purpose Entities.
FRS 110 defines the principle of control and establishes control as the basis for determining which entities are consolidated
in the consolidated financial statements. It also provides more extensive application guidance on assessing control based
on voting rights or other contractual rights. Under FRS 110, control assessment will be based on whether an investor has
(i) power over the investee; (ii) exposure, or rights, to variable returns from its involvement with the investee; and (iii) the
ability to use its power over the investee to affect the amount of the returns. FRS 27 remains as a standard applicable only
to separate financial statements.
FRS 110 will take effect from financial years beginning on or after January 1, 2014, with retrospective application subject
to transitional provisions.
When the Group adopts FRS 110, entities it currently consolidates may not qualify for consolidation, and entities it currently
does not consolidate may qualify for consolidation. The Group is currently estimating the effects of FRS 110 on its
investments in the period of initial adoption.
F-37
Pacific Andes Resources Development Limited Annual Report 2013 47
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
2 Summary of Significant Accounting Policies continued
FRS 112 Disclosure of Interests in Other Entities
FRS 112 requires an entity to provide more extensive disclosures regarding the nature of and risks associated with its
interest in subsidiaries, associates, joint arrangements and unconsolidated structured entities.
FRS 112 will take effect from financial years beginning on or after January 1, 2014, and the Group is currently estimating
the extent of additional disclosures needed.
FRS 113 Fair Value Measurement
FRS 113 is a single new Standard that applies to both financial and non-financial items. It replaces the guidance on fair
value measurement and related disclosures in other Standards, with the exception of measurement dealt with under FRS 102
Share-based Payment , FRS 17 Leases, net realisable value in FRS 2 Inventories and value-in-use in FRS 36 Impairment
of Assets.
FRS 113 provides a common fair value definition and hierarchy applicable to the fair value measurement of assets, liabilities,
and an entitys own equity instruments within its scope, but does not change the requirements in other Standards regarding
which items should be measured or disclosed at fair value.
The disclosure requirements in FRS 113 are more extensive than those required in the current standards.
For example, quantitative and qualitative disclosures based on the three-level fair value hierarchy currently required for
financial instruments only under FRS 107.
Financial Instruments: Disclosures will be extended by FRS 113 to cover all assets and liabilities within its scope.
FRS 113 will be effective prospectively from annual periods beginning on or after January 1, 2014. Comparative information
is not required for periods before initial application.
The Group is currently estimating the effects of FRS 113 in the period of initial adoption.
Amendments to FRS 32 Financial Instruments: Presentation
The amendments to FRS 32 clarify existing application issues relating to the offsetting requirements. Specifically, the
amendments clarify the meaning of currently has a legal enforceable right of set-off and simultaneous realisation and
settlement. The amendments to FRS 32 are effective for annual periods beginning on or after January 1, 2014, with
retrospective application required.
The management is still evaluating the impact of the amendments to FRS 32 on the financial assets and liabilities that have
been set-off on the statement of financial position.
F-38
Pacific Andes Resources Development Limited Annual Report 2013 48
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
2 Summary of Significant Accounting Policies continued
Amendments to FRS 107 Financial Instruments: Disclosure Offsetting Financial Assets and Financial
Liabilities
The amendments to FRS 107 require entities to disclose information about rights of set-off and related arrangements
(such as collateral posting requirements) for financial instruments under an enforceable master netting agreement or similar
arrangement.
The amendments to FRS 107 are required for annual periods beginning on or after January 1, 2013 and interim periods
within those annual periods. The disclosures should be provided retrospectively for all comparative periods.
Amendments to FRS 36 Impairment of Assets
The amendments to FRS 36 restrict the requirement to disclose the recoverable amount of an asset or cash generating unit
(CGU) to periods in which an impairment loss has been recognised or reversed. The amendments also expand and clarify
the disclosure requirements applicable when such asset or CGUs recoverable amount has been determined on the basis of
fair value less costs of disposal, such as the level of fair value hierarchy within which the fair value measurement of the
asset or CGU has been determined, and where the fair value measurements are at Level 2 or 3 of the fair value hierarchy,
a description of the valuation techniques used and any changes in that valuation technique, key assumptions used including
discount rate(s) used.
Upon adoption of the amendments to FRS 36, the Group expects additional disclosures arising from any asset impairment
loss or reversals, and where their respective recoverable amounts are determined based on fair value less costs of disposal.
Management anticipates that the adoption of the above FRSs and amendments to FRSs issued but not effective at the date
of authorisation of these financial statements in future periods will not have a material impact on the financial statements
of the Group and of the Company in the period of their initial adoption except as discussed above.
BASIS OF CONSOLIDATION The consolidated financial statements incorporate the financial statements of the Company
and entities (including special purpose entities) controlled by the Company (its subsidiaries). Control is achieved when the
Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the year are included in the consolidated statement of profit or
loss and other comprehensive income from the effective date of acquisition and up to the effective date of disposal, as
appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting
policies into line with those used by other members of the Group.
All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.
In the Companys financial statements, investments in subsidiaries are carried at cost less any impairment in net recoverable
value that has been recognised in profit or loss.
F-39
Pacific Andes Resources Development Limited Annual Report 2013 49
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
2 Summary of Significant Accounting Policies continued
COMMON CONTROL BUSINESS COMBINATION OUTSIDE THE SCOPE OF FRS 103 A business combination involving
entities under common control is a business combination in which all the combining entities or businesses are ultimately
controlled by the same party or parties both before and after the business combination, and that control is not transitory.
The restructuring exercise in 2005 resulted in a business combination involving common control entities, and accordingly
the accounting treatment is outside the scope of FRS 103 Business Combinations. For such common control business
combinations, merger accounting principles are used to include the assets, liabilities, results, equity changes and cash flows
of the combining entities in the consolidated financial statements.
In applying merger accounting, financial statement items of the combining entities or businesses for the reporting period in
which the common control combination occurs, and for any comparative periods disclosed, are included in the consolidated
financial statements of the combined entity as if the combination had occurred from the date when the combining entities
or businesses first came under the control of the controlling party or parties.
A single uniform set of accounting policies is adopted by the combined entity. Therefore, the combined entity recognised the
assets, liabilities and equity of the combining entities or businesses at the carrying amounts in the financial statements of the
constituent entities prior to the common control combination. The carrying amounts are included as if consolidated financial
statements had been prepared by the controlling party, including adjustments required for conforming the combined entitys
accounting policies and applying those policies to all periods presented. There is no recognition of any goodwill or excess of
the acquirers interest in the net fair value of the acquirees identifiable assets, liabilities and contingent liabilities over cost
at the time of the common control combination. The effects of all transactions between the combining entities or businesses,
whether occurring before or after the combination, are eliminated in preparing the consolidated financial statements of the
combined entity.
Merger reserve represents the difference between the nominal amount of the share capital of the combining entities at the
date on which it was acquired by the Group and the nominal amount of the share capital issued as consideration for the
acquisition.
F-40
Pacific Andes Resources Development Limited Annual Report 2013 50
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
2 Summary of Significant Accounting Policies continued
BUSINESS COMBINATIONS WITHIN THE SCOPE OF FRS 103 Where there is no common control prior to acquisition,
the acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration for each
acquisition is measured at the aggregate of the acquisition date fair values of assets given, liabilities incurred by the Group
to the former owners of the acquiree, and equity interests issued by the Group in exchange for control of the acquiree.
Acquisition-related costs are recognised in profit or loss as incurred.
Where applicable, the consideration for the acquisition includes any asset or liability resulting from a contingent consideration
arrangement, measured at its acquisition-date fair value. Subsequent changes in such fair values are adjusted against the
cost of acquisition where they qualify as measurement period adjustments (see below). The subsequent accounting for
changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends
on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured
at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that
is classified as an asset or a liability is remeasured at subsequent reporting dates in accordance with FRS 39 Financial
Instruments:
Recognition and Measurement, or FRS 37 Provisions, Contingent Liabilities and Contingent Assets, as appropriate, with the
corresponding gain or loss being recognised in profit or loss.
Where a business combination is achieved in stages, the Groups previously held interests in the acquired entity are
remeasured to fair value at the acquisition date (i.e. the date the Group attains control) and the resulting gain or loss, if
any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have
previously been recognised in other comprehensive income are reclassified to profit or loss, where such treatment would be
appropriate if that interest were disposed of.
The acquirees identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under the FRS
are recognised at their fair value at the acquisition date, except that:
deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognised and
measured in accordance with FRS 12 Income Taxes and FRS 19 Employee Benefits respectively;
liabilities or equity instruments related to share-based payment transactions of the acquiree or the replacement of an
acquirees share-based payment awards transactions with share-based payment awards transactions of the acquirer in
accordance with the method in FRS 102 Share-based Payment at the acquisition date; and
assets (or disposal groups) that are classified as held for sale in accordance with FRS 105 Non current Assets Held
for Sale and Discontinued Operations are measured in accordance with that Standard.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination
occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional
amounts are adjusted during the measurement period (see below), or additional assets or liabilities are recognised, to reflect
new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have
affected the amounts recognised as of that date.
The measurement period is the period from the date of acquisition to the date the Group obtains complete information about
facts and circumstances that existed as of the acquisition date and is subject to a maximum of one year from acquisition
date.
The accounting policy for initial measurement of non-controlling interests is described above.
F-41
Pacific Andes Resources Development Limited Annual Report 2013 51
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
2 Summary of Significant Accounting Policies continued
FINANCIAL INSTRUMENTS Financial assets and financial liabilities are recognised on the Groups statement of financial
position when the Group becomes a party to the contractual provisions of the instrument.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial instrument and of allocating interest
income or expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future
cash receipts or payments (including all fees on points paid or received that form an integral part of the effective interest
rate, transactions costs and other premiums or discounts) through the expected life of the financial instrument, or where
appropriate, a shorter period. Income and expense is recognised on an effective interest basis for debt instruments.
Financial assets
Cash and cash equivalents in the statement of cash flows
Cash and cash equivalents in the statement of cash flows comprise cash on hand and balances with banks that are readily
convertible to a known amount of cash and are subject to an insignificant risk of change in value.
Loans and receivables
Trade and other receivables that have fixed or determinable payments that are not quoted in an active market are classified
as loans and receivables. Loans and receivables are initially measured at amortised cost using the effective interest method
less impairment. Interest is recognised by applying the effective interest method, except for short-term receivables when the
recognition of interest would be immaterial.
Held-to-maturity investments
Securities with fixed or determinable payments and fixed maturity dates where the Group has a positive intent and ability to
hold to maturity are classified as held-to-maturity investments. Held-to-maturity investments are recorded at amortised cost
using the effective interest method less impairment, with revenue recognised on an effective yield basis.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at the end of each reporting period. Financial assets are impaired
where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the
financial asset, the estimated future cash flows of the financial assets have been impacted.
Objective evidence of impairment could include:
significant financial difficulty of the issuer or counterparty; or
default or delinquency in interest or principal payments; or
it becoming probable that the borrower will enter bankruptcy or financial re-organisation.
For certain categories of financial asset, such as trade receivables, assets that are assessed not to be impaired individually
are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables
could include the Groups past experience of collecting payments, an increase in the number of delayed payments in the
portfolio past the average credit period of 60 days, as well as observable changes in national or local economic conditions
that correlate with default on receivables.
F-42
Pacific Andes Resources Development Limited Annual Report 2013 52
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
2 Summary of Significant Accounting Policies continued
Financial assets continued
Impairment of financial assets continued
For financial assets carried at amortised cost, the amount of the impairment is the difference between the assets carrying
amount and the present value of estimated future cash flows, discounted at the original effective interest rate.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the
exception of trade receivables where the carrying amount is reduced through the use of an allowance account. When a trade
receivable is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written
off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in
profit or loss.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an
event occurring after the impairment loss was recognised, the previously recognised impairment loss is reversed through
profit or loss to the extent the carrying amount of the financial asset at the date the impairment is reversed does not exceed
what the amortised cost would have been had the impairment not been recognised.
Derecognition of financial assets
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or
it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If
the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the
transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have
to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group
continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
Financial liabilities and equity instruments
Classification as debt or equity
Financial liabilities and equity instruments issued by the Group are classified according to the substance of the contractual
arrangements entered into and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its
liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs.
Financial liabilities
Trade and other payables are initially measured at fair value, net of transaction costs, and are subsequently measured at
amortised cost, using the effective interest method, with interest expense recognised on an effective yield basis except for
short-term payables when the recognition of interest would be immaterial.
Interest-bearing bank loans and senior notes are initially measured at fair value, and are subsequently measured at amortised
cost, using the effective interest method. Any difference between the proceeds (net of transaction costs) and the settlement
or redemption of borrowings is recognised over the term of the borrowings in accordance with the Groups accounting policy
for borrowing costs (see below).
Financial guarantee contract liabilities are measured initially at their fair values and subsequently at the higher of the amount
of obligation under the contract recognised as a provision and the amount initially recognised less, when appropriate,
cumulative amortisation. The amount amortised on a straight-line basis over the period of the guarantee is the deemed
guarantee income for the issuer.
F-43
Pacific Andes Resources Development Limited Annual Report 2013 53
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
2 Summary of Significant Accounting Policies continued
Financial liabilities and equity instruments continued
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Groups obligations are discharged, cancelled or they
expire.
Derivative financial instruments
The Group enters into foreign exchange forward contracts to manage its exposure to foreign exchange rate risk. Further
details of derivative financial instruments are disclosed in Note 28 to the financial statements.
Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently
remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognised in profit or loss
immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the
recognition in profit or loss depends on the nature of the hedge relationship.
A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more
than 12 months and it is not expected to be realised or settled within 12 months. Other derivatives are presented as current
assets or current liabilities.
LEASES Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and
rewards of ownership to the lessee. All other leases are classified as operating leases.
The Group as lessor
Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Initial direct
costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and
recognised on a straight-line basis over the lease term.
The Group as lessee
Assets held under finance leases are recognised as assets of the Group at their fair value at the inception of the lease
or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in
the statement of financial position as a finance lease obligation. Lease payments are apportioned between finance charges
and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability.
Finance charges are charged directly to profit or loss.
Rentals payable under operating leases are charged to profit or loss on a straight-line basis over the term of the relevant
lease.
In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability.
The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis.
F-44
Pacific Andes Resources Development Limited Annual Report 2013 54
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
2 Summary of Significant Accounting Policies continued
DEFERRED EXPENSES Expenses incurred in catching fish and other marine catches during voyages are deferred in the
statement of financial position and released to profit or loss as expenses when the fish and marine catches are sold and
revenue is recognised for the sale. Expenses on each voyage are deferred to the extent that there is reasonable probability
of recovery from sale of fish and other marine catches from that voyage. When it is probable that the costs incurred or to
be incurred on a voyage will exceed the estimated value of the catches, the expected loss is recognised as an expense in
profit or loss immediately.
Under the vessel operating agreements, the Group paid charter hire fees based on fixed rates and variable rates based on
contracted percentages of the annual operating profit attributable to the vessels procured by the Suppliers (Note 17). As
the fixed portions of charter hire cost were payable during the charter hire period regardless of whether the vessels were
deployed (save for certain exceptions during the earlier part of the charter hire), the Group expensed fixed charter hire cost
on a time-proportionate basis to profit or loss and did not include this cost in deferred expenses. Variable charter hire costs
were determined when the revenue from the sale of fish and marine products were determined. Variable charter hire cost
was accrued as an expense at the same time when revenue was recognised.
INVENTORIES Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and,
where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present
location and condition. Cost is calculated using the weighted average method. Net realisable value represents the estimated
selling price less all estimated costs of processing and costs to be incurred in marketing, selling and distribution.
PROPERTY, PLANT AND EQUIPMENT Leasehold buildings held for administrative purposes are stated in the statement of
financial position at their revalued amounts, being the fair value at the date of revaluation, less any subsequent accumulated
depreciation and subsequent accumulated impairment losses. Revaluations are performed with sufficient regularity such
that the carrying amounts do not differ materially from that which would be determined using fair values at the end of the
reporting period.
Any revaluation increase arising on the revaluation of such land and buildings is recognised in other comprehensive income
and accumulated in revaluation reserve, except to the extent that it reverses a revaluation decrease for the same asset
previously recognised in profit or loss, in which case the increase is credited to profit or loss to the extent of the decrease
previously charged. A decrease in carrying amount arising on the revaluation of such land and buildings is charged to profit
or loss to the extent that it exceeds the balance, if any, held in the property revaluation reserve relating to a previous
revaluation of that asset.
Property in the course of construction for production, supply or administrative purposes, or for purposes not yet determined,
are carried at cost, less any recognised impairment loss. Cost includes professional fees and, for qualifying assets, borrowing
costs capitalised in accordance with the Groups accounting policy. Depreciation of these assets, on the same basis as other
property assets, commences when the assets are ready for their intended use.
Depreciation on revalued buildings is charged to profit or loss. On subsequent sale or retirement of a revalued building, the
attributable revaluation surplus remaining in the revaluation reserve is transferred to retained earnings.
Property, plant and equipment with the exception of leasehold building are stated at cost less accumulated depreciation and
any accumulated impairment losses.
F-45
Pacific Andes Resources Development Limited Annual Report 2013 55
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
2 Summary of Significant Accounting Policies continued
Property, plant and equipment continued
Depreciation is charged so as to write off the cost or valuation of assets over their estimated useful lives, using the straight-
line method on the following bases:
Freehold buildings 33 years
Leasehold buildings 25 years upon every revaluation or the lease term, if shorter
Processing vessel 20 years
Fishing vessels 10 to 17 years
Fishing nets 4 years
Plant and machinery 2 to 10 years
Vehicles 20 years
Furniture, fittings and office equipment 4 to 10 years
Freehold land is not depreciated.
The estimated useful lives, residual values and depreciation method are reviewed at each year end, with the effect of any
changes in estimate accounted for on a prospective basis.
Fully depreciated assets still in use are retained in the financial statements.
Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, if
there is no certainty that the lessee will obtain ownership by the end of the lease term, the asset shall be fully depreciated
over the shorter of the lease term and its useful life.
The gain or loss arising on disposal or retirement of an item of property, plant and equipment is determined as the difference
between the sale proceeds and the carrying amount of the asset and is recognised in profit or loss. On the subsequent sale
or retirement of a revalued property, the attributable revaluation surplus remaining in the properties revaluation reserve is
transferred directly to retained earnings. No transfer is made from the revaluation reserve to retained earnings except when
an asset is derecognised.
INVESTMENT PROPERTY Investment property, which is property held to earn rentals and/or for capital appreciation,
including property under construction for such purposes, is measured initially at its cost, including transaction costs.
Subsequent to initial recognition, investment property is measured at fair value. Gains or losses arising from changes in the
fair value of investment property are included in profit or loss for the period in which they arise.
F-46
Pacific Andes Resources Development Limited Annual Report 2013 56
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
2 Summary of Significant Accounting Policies continued
GOODWILL Goodwill arising in a business combination is recognised as an asset at the date that control is acquired (the
acquisition date). Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-
controlling interest in the acquiree and the fair value of the acquirers previously held equity interest (if any) in the entity
over net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.
If, after reassessment, the Groups interest in the fair value of the acquirees identifiable net assets exceeds the sum of
the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of the acquirers
previously held equity interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain
purchase gain.
Goodwill is not amortised but is reviewed for impairment at least annually. For the purpose of impairment testing, goodwill
is allocated to each of the Groups cash-generating units expected to benefit from the synergies of the combination. Cash-
generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is
an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying
amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then
to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss
recognised for goodwill is not reversed in a subsequent period. On disposal of a subsidiary or the relevant cash generating
unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.
Intangible Assets
Intangible assets acquired separately
Intangible assets acquired separately are reported at cost less accumulated amortisation and any accumulated impairment
losses. Intangible assets with finite useful lives are amortised on a straight-line basis over their estimated useful lives. The
estimated useful life and amortisation method are reviewed at the end of each annual reporting period, with the effect
of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives are
not amortised. Each period, the useful lives of such assets are reviewed to determine whether events and circumstances
continue to support an indefinite useful life assessment for the asset. Such assets are tested for impairment in accordance
with the policy below.
Intangible assets acquired in a business combination
Intangible assets acquired in a business combination are identified and recognised separately from goodwill. The cost of
such intangible assets is their fair value at the acquisition date.
Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated
amortisation and accumulated impairment losses, on the same basis as intangible assets acquired separately.
Prepayment to suppliers
This represents future payment for supply of fishery products under the long term supply agreements which have been
prepaid or contractually agreed to be prepaid. They are amortised and charged to profit or loss as cost of sales or charter
hire expense proratably over the period for which the prepayment is made and the benefits are expected to accrue.
F-47
Pacific Andes Resources Development Limited Annual Report 2013 57
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
2 Summary of Significant Accounting Policies continued
IMPAIRMENT OF TANGIBLE AND INTANGIBLE ASSETS EXCLUDING GOODWILL At the end of each reporting period,
the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication
that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is
estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable
amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset
belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to
individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a
reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives are tested for impairment annually, and whenever there is an indication that the
asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments
of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the
carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised
immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss
is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to
the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in
prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried
at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
PROVISIONS Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a
past event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made of
the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at
the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Where a provision
is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those
cash flows.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party,
the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the
receivable can be measured reliably.
F-48
Pacific Andes Resources Development Limited Annual Report 2013 58
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
2 Summary of Significant Accounting Policies continued
REVENUE RECOGNITION Revenue is measured at the fair value of the consideration received or receivable. Revenue
is reduced for estimated customer returns, rebates and other similar allowances.
Sale of fish and marine related products
Revenue from the sale of fishes and related products are recognised when all the following conditions are satisfied:
the Group has transferred to the buyer the significant risks and rewards of ownership of the goods;
the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor
effective control over the goods sold;
the amount of revenue can be measured reliably;
it is probable that the economic benefits associated with the transaction will flow to the Group; and
the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Ocean freight income
Ocean freight income is recognised when the shipping and freight services are rendered.
Rental income and sub-contract of vessel operating agreement
Those are recognised on a straight-line basis over the term of the relevant lease.
Interest income
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate
applicable.
BORROWING COSTS Borrowing costs directly attributable to the acquisition, construction or production of qualifying
assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are
added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets
is deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
RETIREMENT BENEFIT COSTS Payments to defined contribution retirement benefit plans are charged as an expense
as they fall due. Payments made to state-managed retirement benefit schemes are dealt with as payments to defined
contribution plans where the Groups obligations under the plans are equivalent to those arising in a defined contribution
retirement benefit plan.
EMPLOYMENT LEAVE ENTITLEMENT Employee entitlements to annual leave are recognised when they accrue to
employees. A provision is made for the estimated liability for annual leave as a result of services rendered by employees
up to the end of the reporting period.
F-49
Pacific Andes Resources Development Limited Annual Report 2013 59
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
2 Summary of Significant Accounting Policies continued
INCOME TAX Income tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the statement
of profit or loss and other comprehensive income because it excludes items of income or expense that are taxable or
deductible in other years and it further excludes items that are not taxable or tax deductible. The Groups liability for current
tax is calculated using tax rates (and tax laws) that have been enacted or substantively enacted in countries where the
Company and subsidiaries operate by the end of the reporting period.
Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements
and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet
liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets
are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary
differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or
from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects
neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associate
except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary
difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences
associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient
taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the
foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that
it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset
realised based on the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting
period. The measurement of deferred tax liabilities and assets reflect the tax consequences that would follow from the
manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amounts of its
assets and liabilities.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to
settle its current tax assets and liabilities on a net basis. Current and deferred tax are recognised as an expense or income
in profit or loss, except when they relate to items credited or debited outside profit or loss (either in other comprehensive
income or directly in equity), in which case the tax is also recognised outside profit or loss (either in other comprehensive
income or directly in equity, respectively), or where they arise from the initial accounting for a business combination. In the
case of a business combination, the tax effect is taken into account in calculating goodwill or determining the excess of the
acquirers interest in the net fair value of the acquirees identifiable assets, liabilities and contingent liabilities over cost.
F-50
Pacific Andes Resources Development Limited Annual Report 2013 60
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
2 Summary of Significant Accounting Policies continued
FOREIGN CURRENCY TRANSACTIONS AND TRANSLATION The individual financial statements of each Group entity are
measured in equity in the currency of the primary economic environment in which the entity operates (its functional currency).
The consolidated financial statements of the Group and the statement of financial position of the Company are presented
in Hong Kong dollars, which is different from the functional currency of the Company, which is United States dollars.
In preparing the financial statements of the individual entities, transactions in currencies other than the entitys functional
currency are recorded at the rate of exchange prevailing on the date of the transaction. At the end of each reporting period,
monetary items denominated in foreign currencies are retranslated at the rates prevailing at the end of the reporting period.
Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing
on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a
foreign currency are not retranslated.
Exchange differences arising on the settlement of monetary items, and on retranslation of monetary items are included in
profit or loss for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are
included in profit or loss for the period except for differences arising on the retranslation of non-monetary items in respect
of which gains and losses are recognised in other comprehensive income. For such non-monetary items, any exchange
component of that gain or loss is also recognised in other comprehensive income.
Exchange differences on foreign currency borrowings relating to assets under construction for future productive use, are
included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency
borrowings.
For the purpose of presenting consolidated financial statements, the assets and liabilities of the Groups foreign operations
(including comparatives) are expressed in Hong Kong dollars using exchange rates prevailing at the end of the reporting
period. Income and expense items (including comparatives) are translated at the average exchange rates for the period,
unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the
transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated
in a separate component of equity under the header of currency exchange translation reserve.
On the disposal of a foreign operation (i.e. a disposal of the Groups entire interest in a foreign operation, or a disposal
involving loss of control over a subsidiary that includes a foreign operation, loss of joint control over a jointly controlled entity
that includes a foreign operation, or loss of significant influence over an associate that includes a foreign operation), all of
the accumulated exchange differences in respect of that operation attributable to the Group are reclassified to profit or loss.
Any exchange differences that have previously been attributed to non-controlling interests are derecognised, but they are not
reclassified to profit or loss.
In the case of a partial disposal (i.e. no loss of control) of a subsidiary that includes a foreign operation, the proportionate
share of accumulated exchange differences are re-attributed to non-controlling interests and are not recognised in profit or
loss. For all other partial disposals (i.e. of associates or jointly controlled entities not involving a change of accounting basis),
the proportionate share of the accumulated exchange differences is reclassified to profit or loss.
On consolidation, exchange differences arising from the translation of the net investment in foreign entities (including
monetary items that, in substance, form part of the net investment in foreign entities), and of borrowings and other currency
instruments designated as hedges of such investments, are recognised in other comprehensive income and accumulated in
a separate component of equity under the header of currency exchange translation reserve.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of
the foreign operation and translated at the closing rate.
F-51
Pacific Andes Resources Development Limited Annual Report 2013 61
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
3 Critical Accounting Judgements and Key Sources of Estimation Uncertainty
In the application of the Groups accounting policies, which are described in Note 2, management is required to make
judgements, estimates and assumption about the carrying amounts of assets and liabilities that are not readily apparent
from other sources. The estimates and associated assumptions are based on historical expense and other factors that are
considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis revisions to accounting estimates are
recognised in the period in which the estimates is revised if the revision affects only that period, or in the period of the
revision and futures periods if the revision affects both current and futures periods.
Critical Judgements in Applying the Groups Accounting Policies
FRS 39 requires the recognition of an impairment loss for available-for-sale investment if there is objective evidence of
impairment such as a significant or prolonged decline in the fair value of an investment in an equity instrument below its
cost. Nonetheless, the determination of what constitutes a significant or prolonged decline is a matter of fact that requires
the application of judgment.
In making its judgment, management considered if there was objective evidence of impairment and concluded based on its
analysis that the fair value was not representative of the intrinsic value of the equity investment and no impairment was
necessary.
Key Sources of Estimation Uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting
period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within
the next financial year, are discussed below.
Carrying Amount of Prepayment to Suppliers and Advances to Suppliers
As at 28 September 2013, the carrying amounts of prepayments to suppliers and advances to suppliers (Note 17) was
HK$1,992,039,000 (2012: HK$1,059,680,000) and HK$315,900,000 (2012: HK$315,900,000) respectively. The supply of fish
under the long term supply arrangements and operation of vessels under the vessel operating agreements with the Suppliers
(Note 17) have been profitable after deducting amortisation of the prepayment to suppliers over the periods for which
the supply of fish or charter hires have been prepaid. Management has carried out a review of the carrying amounts of
prepayment and advances to Suppliers based on the performance of the operations and noted no indications of impairment.
F-52
Pacific Andes Resources Development Limited Annual Report 2013 62
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
3 Critical Accounting Judgements and Key Sources of Estimation Uncertainty continued
Key Sources of Estimation Uncertainty continued
Carrying Amount of Processing Vessel, Fishing Vessels and Fishing and Plant Permits
As at the end of the financial year, the carrying amounts of processing vessel, fishing vessels and fishing and plant permits
totalled HK$256,562,000, HK$1,623,629,000 and HK$9,536,829,000 respectively (2012: HK$552,230,000, HK$1,105,773,000
and HK$1,823,905,000). Determining whether the carrying amounts of these assets can be realised requires an estimation of
the value in use of the cash-generating units and a suitable discount rate in order to calculate present value. Management
has evaluated these projections using assumptions on catch quantities, prices of catch and operating cost after considering
efficiencies that can be achieved when the operations become part of the Groups larger operations.
With effect from January 2009, the fishing system in Peru changed from the previous Olympic system to Individual
Transferable Quota (ITQ) system which entitles fishing companies holding valid licensed fishing vessels to a share of
fishing quotas determined by the authorities. Management has evaluated the impact of the quota allocation under the ITQ
system and included such consideration in the estimation of the value in use.
Management has carried out a review of the recoverable amounts of the property, plant and equipment based on their
value-in-use. The assessment has led to the recognition of impairment loss of HK$350,356,000 (2012: HK$44,067,000) in
the current year.
Carrying Amount of Goodwill
Based on managements assessment, management is of the view that the carrying amount of goodwill of HK$2,952,461,000
(2012: HK$2,952,461,000) is not impaired. Information relating to the carrying amount and managements assessment of
goodwill is provided in Note 16.
Interests in Subsidiaries
Management has carried out a review of the recoverability of the amounts due from subsidiaries, having regard to the
existing performance of the relevant subsidiaries and the carrying value of the net assets in these subsidiaries. No allowance
for impairment has been recognised for financial years ended 28 September 2013 and 28 September 2012.
The carrying amounts of the amounts due from subsidiaries are disclosed in Note 19 to the financial statements.
Useful Lives of Property, Plant and Equipment
The carrying amount of property, plant and equipment amounting to HK$5,300,991,000 (2012: HK$4,572,851,000) have been
determined after charging depreciation on a straight-line basis over the estimated useful life of these assets. Components
of these carrying amounts are detailed in Note 14.
Management reviews the estimated useful lives of these assets at the end of each reporting period and determined that the
useful lives as stated in Note 2 remain appropriate.
Impairment of Property, Plant and Equipment (Excluding Processing Vessel and Fishing Vessels)
The Group assesses annually whether property, plant and equipment have any indication of impairment in accordance with
the accounting policy. If there is indication of impairment, the recoverable amounts of these assets are then determined
based on value-in-use calculations. These calculations require the use of judgement and estimates. Management has carried
out a review of the recoverable amount of the property, plant and equipment based on their value-in-use and noted no
impairment for the year.
Acquisition of subsidiaries
As disclosed in Note 38, the net assets acquired and previously held interest in relation to the acquisition of subsidiary are
stated at fair value based on the valuation performed by an independent professional valuer. The independent professional
valuer determined the fair values based on a method of valuation which involves the use of certain estimates. Management
is of the view that the estimates used by the professional valuers and the fair values are the best estimate of the likely
values at the date of finalisation of these financial statements.
F-53
Pacific Andes Resources Development Limited Annual Report 2013 63
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
4 Financial Instruments, Financial Risks and Capital Risks Management
(a) Categories of Financial Instruments
The following tables set at the financial instruments as at the end of the reporting period:
THE GROUP THE COMPANY
2013 2012 2013 2012
HK$000 HK$000 HK$000 HK$000

Financial assets
Loans and receivables
(including cash and cash equivalents) 3,901,252 4,121,552 841 1,386
Available-for-sale investments 25,393 32,858

3,926,645 4,154,410 841 1,386

Financial liabilities
Amortised cost 14,612,416 10,134,258 737,308 704,622
Derivative financial instruments 54,712 202,214 2,760 24,206

14,667,128 10,336,472 740,068 728,828

(b) Financial Risk Management Policies and Objectives
The Groups overall risk management programme seeks to minimise potential adverse effects on the financial
performance of the Group.
The Groups activities expose it to a variety of financial risks, including the effects of changes in foreign currency
exchange rates, interest rates, credit quality of counterparties and liquidity.
There has been no change to the Groups exposure to these financial risks or the manner in which it manages and
measures these risks. Market risk exposures are measured using sensitivity analysis indicated below.
F-54
Pacific Andes Resources Development Limited Annual Report 2013 64
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
4 Financial Instruments, Financial Risks and Capital Risks Management continued
(b) Financial Risk Management Policies and Objectives continued
i) Foreign Exchange Risk Management
The Group entities transact largely in their functional currencies, which in most instances is the United States
dollars. Foreign exchange risk arises largely from transactions denominated in currencies such as Japanese Yen,
Singapore dollars, Peruvian Nuevo Soles, Chinese Renminbi, Hong Kong dollars, Namibian dollars and Euro.
At the reporting date, the carrying amounts of monetary assets and monetary liabilities denominated in currencies
other than the respective Group entities functional currencies are as follows:
THE GROUP
Liabilities Assets
2013 2012 2013 2012
HK$000 HK$000 HK$000 HK$000

Japanese Yen 896 1,625 139 212
Peruvian Nuevo Soles 97,365 108,480 223,775 66,040
Chinese Renminbi 737,242 706,430 4,203 11,489
Hong Kong dollars 53,331 42,128 2,180 2,638
Euro 3,309 5,079 2,877 12,455
Singapore dollars 926 424 1,692 1,938
Danish Krone 2,743 12
Norwegian Krone 1,636 1,056 7,802 226
Namibian dollars 9,888 22 45,783 4,371
Canadian dollars 5 2,819

THE COMPANY
Liabilities Assets
2013 2012 2013 2012
HK$000 HK$000 HK$000 HK$000
Chinese Renminbi 736,743 704,570 237 266
Hong Kong dollars 18 33
Singapore dollars 565 52 126 305

F-55
Pacific Andes Resources Development Limited Annual Report 2013 65
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
4 Financial Instruments, Financial Risks and Capital Risks Management continued
(b) Financial Risk Management Policies and Objectives continued
i) Foreign Exchange Risk Management continued
Foreign currency sensitivity
The following details the sensitivity to a 10% increase and decrease in the relevant foreign currencies against the
functional currency of each Group entity. 10% is the sensitivity rate that represents managements assessment
of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding
foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change in
foreign currency rates.
If the relevant major currency (Peruvian Nuevo Soles), weakens or strengthens by 10% against the functional
currency of each Groups entity, Groups profit for the year ended 28 September 2013 will decrease or increase
by HK$12,641,000 (2012: increase or decrease by HK$4,244,000). For other currencies, management considers
that the amounts involved are insignificant and accordingly no sensitivity analysis is presented.
For both the Group and Company level the Chinese Renminbi foreign exchange risk exposure relates to primarily
the Chinese Renminbi bonds (Note 32) which has been covered by a forward foreign exchange contract (Note 28).
Management has considered the remaining foreign exchange risk exposure resulting from Chinese Renminbi to
be insignificant and accordingly no sensitivity analysis has been presented.
In addition, the Group has entered into foreign currency forward contracts with banks to reduce its exposure
to currency fluctuation risk of anticipated sales and purchases transactions which are denominated in foreign
currencies. The derivative is not accounted for under hedge accounting. The Group is required to estimate the fair
value of the foreign currency forward contract at end of the reporting period, which therefore exposes the Group
to other price risk.
The fair value of foreign currency forward contracts amounted to HK$54,712,000 (2012: HK$202,214,000) and has
exposure to the forward exchange rate of the relevant foreign currencies against the functional currencies of each
Group entity. Management considered that the Groups exposure to the foreign currency risk on these contracts
is minimal. Accordingly, no sensitivity analysis is presented.
ii) Interest Rate Risk Management
Interest-earning financial assets comprise bank balances and fixed deposits (Notes 25 and 43). Summary
quantitative data of the Groups interest-bearing financial liabilities can be found in section (iv) of this note.
The Group mitigates its exposure to changes in interest rates by locking in fixed rate borrowings through the issue
of bonds (Note 32) and senior notes (Note 34) and use of finance leases for which rates are fixed at inception
of the finance leases (Note 30). The Groups policy is to obtain the most favourable interest rates available and
also by reviewing the terms of the interest-bearing liabilities to minimise the adverse effects of changes in interest
rates.
F-56
Pacific Andes Resources Development Limited Annual Report 2013 66
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
4 Financial Instruments, Financial Risks and Capital Risks Management continued
(b) Financial Risk Management Policies and Objectives continued
ii) Interest Rate Risk Management continued
Interest rate sensitivity
The sensitivity analyses below have been determined based on the exposure to variable interest rates for variable
rate borrowings at the end of the reporting period and the stipulated change taking place at the beginning of the
financial year and held constant throughout the reporting period in the case of instruments that have floating rates.
A 50 basis point increase or decrease represents managements assessment of the reasonably possible change
in interest rates.
If interest rates had been 50 basis points higher or lower and all other variables were held constant, the Groups
profit for the year ended 28 September 2013 would decrease or increase by approximately HK$47,341,000 (2012:
decrease or increase by HK$34,629,000).
If interest rates had been 50 basis points higher or lower and all other variables were held constant, the
Companys post-tax profit for the year ended 28 September 2013 would decrease or increase by approximately
HK$Nil (2012: decrease or increase by HK$Nil).
iii) Credit Risk Management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss
to the Group.
At both 28 September 2013 and 28 September 2012, the Groups maximum exposure to credit risk which will
cause a financial loss to the Group due to failure to discharge an obligation by the counterparties and financial
guarantees issued by the Group is arising from:
the carrying amount of the respective recognised financial assets as stated in the consolidated statement of
financial position.
Sales of fishes and related products are made to companies which the Group assessed to be of good credit
rating through their trading and payment history as well as such commercial information which the Group obtains
from time to time. Before accepting any new customers, the Group assesses the potential customers credit quality
and defines credit limits by customers. Limits and credit quality attributed to customers are reviewed periodically.
Trade debtors that are neither past due nor impaired are substantially companies with good collection track record
with the Group. Management considers that the credit risk associated with the Groups trade receivables has
been mitigated by the above risk management practices. The recoverable amount of individual trade receivable is
reviewed at the end of each reporting period and allowance is made for estimated irrecoverable amount.
There is concentration of credit risk as 53% (2012: 60%) of the Groups receivables at the end of the reporting
period relate to 5 entities (2012: 5 entities).
As at the end of the financial year, the Group has balance due from the Suppliers which accounted for
HK$801,486,000 or 11% (2012: HK$874,951,000 or 11%) of other receivables and prepayments balances. In
addition, the Group also advanced HK$315,900,000 (2012: HK$315,900,000) to the Suppliers (Note 17).
The credit risk on bank balances is limited because the counterparties are reputable financial institutions.
F-57
Pacific Andes Resources Development Limited Annual Report 2013 67
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
4 Financial Instruments, Financial Risks and Capital Risks Management continued
(b) Financial Risk Management Policies and Objectives continued
iv) Liquidity Risk Management
The Group maintains sufficient cash and cash equivalents and obtains a mix of short-term and long-term external
financing to fund its operations. The Company obtains funding from members of the Group as necessary to meet
its financial obligations.
Non-derivative financial liabilities
The following tables detail the contractual maturity for non-derivative financial liabilities. The tables have been
drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the
Group and Company can be required to pay. The table includes both interest and principal cash flows. The
adjustment column represents the possible future cash flows attributable to the instrument included in the maturity
analysis which is not included in the carrying amount of the financial liability on the statements of financial position.
Weighted
average
effective
interest rate
On
demand
or within
1 year
Within
2 to 5
years
After
5 years Adjustment Total
% HK$000 HK$000 HK$000 HK$000 HK$000

THE GROUP
2013
Non-interest bearing 154,048 154,034 308,082
Finance lease liabilities 8.49 37,541 4,376 (8,100) 33,817
Variable interest rate instruments 4.29 7,985,511 1,567,007 (84,373) 9,468,145
Fixed interest rate instruments 10.41 1,170,532 3,331,990 4,471,435 (4,171,585) 4,802,372

9,347,632 5,057,407 4,471,435 (4,264,058) 14,612,416

2012
Non-interest bearing 333,981 333,981
Finance lease liabilities 8.49 39,798 41,916 (18,342) 63,372
Variable interest rate instruments 4.55 5,218,442 1,857,821 (150,444) 6,925,819
Fixed interest rate instruments 10.08 287,131 1,683,772 2,572,721 (1,732,538) 2,811,086

5,879,352 3,583,509 2,572,721 (1,901,324) 10,134,258

THE COMPANY
2013
Non-interest bearing 15,832 15,832
Fixed interest rate instruments 7.52 758,368 (36,892) 721,476

774,200 (36,892) 737,308

2012
Non-interest bearing 14,540 14,540
Fixed interest rate instruments 7.52 52,059 725,675 (87,652) 690,082

66,599 725,675 (87,652) 704,622

F-58
Pacific Andes Resources Development Limited Annual Report 2013 68
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
4 Financial Instruments, Financial Risks and Capital Risks Management continued
(b) Financial Risk Management Policies and Objectives continued
iv) Liquidity Risk Management continued
Derivative financial liabilities
As at the end of the reporting period, the undiscounted contractual net cash outflows on foreign exchange
forward contracts that settle on a net basis within 1 year from the end of the reporting date were HK$54,712,000
(2012: within 1 year from the end of the reporting date were HK$202,214,000). The carrying amount of financial
derivatives in the consolidated statement of financial position has been determined by reference to the quoted
forward rates at the end of the reporting period.
v) Other Risk Management
As at 28 September, 2013, the Group prepaid HK$1,992 million (2012: HK$1,060 million) for supply of fish by
23 fishing vessels (2012: 17 fishing vessels), the benefits of which are to be realised over 10 to 18 years up to
2030 (2012: 10 to 18 years up to 2025). The Group mitigates the risk relating to obligations of the counterparties
in respect of long term supply agreements through the security documents described in Note 17.
vi) Fair Values of Financial Assets and Financial Liabilities
The carrying amounts of cash and bank balances, trade and other current receivables and payables and other
receivables and liabilities approximate their respective fair values due to the relatively short-term maturity of
these financial instruments. The fair values of other classes of financial assets and liabilities (excluding derivative
instruments) are determined in accordance with generally accepted pricing models based on discounted cash flow
analysis using prices from observable current market transactions.
The fair values of derivative instruments are calculated using quoted prices. Where such prices are not available,
discounted cash flow analysis is performed using the applicable yield curve for the duration of the instruments for
non-optional derivatives, and option pricing models for optional derivatives. Foreign currency forwards contracts
are measured using quoted forward exchange rates matching maturities of the contracts.
The following table provides an analysis of financial instruments that are measured subsequent to initial recognition
at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable.
Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for
identical assets or liabilities.
Level 2 fair value measurements are those derived from inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived
from prices).
Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset
or liability that are not based on observable market data (unobservable inputs).
F-59
Pacific Andes Resources Development Limited Annual Report 2013 69
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
4 Financial Instruments, Financial Risks and Capital Risks Management continued
(b) Financial Risk Management Policies and Objectives continued
vi) Fair Values of Financial Assets and Financial Liabilities continued
2013
Level 1 Level 2 Level 3 Total
HK$000 HK$000 HK$000 HK$000

Available-for-sale investments
Quoted equity securities 14,908 14,908
Unquoted debt securities 2,685 2,685
Unquoted equity securities 7,800 7,800

17,593 7,800 25,393

Financial liabilities at FVTPL
Derivative financial instruments 54,712 54,712

2012
Level 1 Level 2 Level 3 Total
HK$000 HK$000 HK$000 HK$000
Available-for-sale investments
Quoted equity securities 9,536 9,536
Unquoted debt securities 15,522 15,522
Unquoted equity securities 7,800 7,800

25,058 7,800 32,858

Financial liabilities at FVTPL
Derivative financial instruments 202,214 202,214

There were no transfers between Level 1, Level 2 and Level 3 in the year.
(c) Capital Risk Management Policies and Objectives
The Groups objectives in managing capital are to maintain an optimal capital structure so as to maximise the return
to its shareholders, to protect the interests of its stakeholders, safeguard the Groups ability to continue as a going
concern and to be able to service its debts when they are due. In order to maintain or achieve an optimal capital
structure, the Group may adjust the amount of dividend payment, obtain various forms of borrowings in the market and
issue new shares at an appropriate price when necessary.
F-60
Pacific Andes Resources Development Limited Annual Report 2013 70
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
4 Financial Instruments, Financial Risks and Capital Risks Management continued
(c) Capital Risk Management Policies and Objectives continued
The capital structure of the Group is as follow:
Group
2013 2012
HK$000 HK$000

Debts:
Finance leases 33,817 63,372
Bank loans 9,462,774 6,921,792
Bonds 721,476 690,082
Senior notes 4,080,896 2,120,094

14,298,963 9,795,340

Cash and cash equivalents 615,771 445,854

Shareholders equity 14,112,873 12,428,471

Management constantly reviews the capital structure to achieve the aforementioned objectives. As a part of this review,
management considers the cost of capital and the risks associated with each class of capital. The Group will balance
its overall capital structure through the payment of dividends, new share issues as well as the issue of new debt or
the redemption of existing debts.
Management also ensures that the Group maintains gearing ratio within a set range to comply with the loan covenants
imposed by banks.
The Groups overall strategy remains unchanged since the last reporting date. The Group is in compliance with
externally imposed capital requirements for the financial years 2013 and 2012.
F-61
Pacific Andes Resources Development Limited Annual Report 2013 71
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
5 Revenue
THE GROUP
2013 2012
HK$000 HK$000

Sales of frozen seafood 4,060,011 4,484,039
Sales of fishes from fishing activities 2,981,084 3,102,044
Sub-contract of vessel operating agreements 162,279
Sales of fishmeal and fish oil 1,292,054 1,396,939
Shipping and agency services 430,943 435,497

8,764,092 9,580,798

6 Segment Information
For management reporting purposes, the Group is organised into two operating divisions, frozen fish supply chain
management (Frozen Fish SCM) and Fishery and Fish Supply. These divisions are on the basis on which the Group
reports its segment information to the Groups chief operating decision maker for the purposes of resource allocation and
assessment of performance.
Frozen Fish SCM comprises sales of fish and other seafood products, charter hire services, sales of marine fuel oil and
provision of packaging materials to fish suppliers. Fishery and Fish Supply comprises income from fishing and fish supply
activities and the production and sale of fishmeal and fish oil.
Segment sales and expenses: Segment sales and expense are the sales and operating expense reported in the Groups
income statement that are directly attributable to a segment and the relevant portion of such sales and expense that can
be allocated on a reasonable basis to a segment.
Segment assets and liabilities: Segment assets include all operating assets used by a segment and consist principally of
operating cash and cash equivalents, receivables, prepayments, advances, inventories, prepayment to suppliers, property,
plant and equipment and intangible assets, net of allowances and provisions. Additions to non-current assets are the total
costs incurred during the year to acquire segment assets that are expected to be used for more than one year and comprises
purchase of property, plant and equipment, prepayment to suppliers and intangible assets directly attributable to the segment.
Segment liabilities include all liabilities and consist principally of accounts payable and accrued expenses.
Inter-segment transfers: Segment sales and expenses include transfers between operating segments. Inter-segment sales are
charged at cost plus a percentage profit mark-up. These transfers are eliminated on consolidation.
Investments in associates: Income from associates is allocated as they are specifically attributable to operating segments,
and correspondingly the investments in associates are included in segment assets of the Group.
F-62
Pacific Andes Resources Development Limited Annual Report 2013 72
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
6 Segment Information continued
Products and Services from which Reportable Segments Derive Their Revenues
Information on the Groups revenue and results by reportable segment are presented below:
Frozen fish
SCM
Fishery and
Fish Supply Consolidated
HK$000 HK$000 HK$000

2013
INCOME STATEMENT
External sales 4,434,985 4,329,107 8,764,092

Segment result 725,321 1,249,619 1,974,940

Unallocated items:
Administrative expense (230,278)
Fair value changes of derivative financial instruments (34,562)
Rental income from properties 2,129
Loss on revaluation of investment properties (247)
Other operating expenses (150,996)
Finance costs (586,186)
Income tax benefit 70,567
Profit for the year 1,045,367

STATEMENT OF FINANCIAL POSITION
Segment assets 7,668,981 23,692,638 31,361,619
Unallocated corporate assets 151,648
Consolidated total assets 31,513,267

Segment liabilities 818,447 7,063,299 7,881,746
Unallocated corporate liabilities 9,518,648
Consolidated total liabilities 17,400,394

OTHER SEGMENT INFORMATION
Additions to non-current assets 120,159 1,832,898 1,953,057
Depreciation 41,164 749,819 790,983
Impairment loss of property, plant and equipment 350,356 350,356
Amortisation of prepayment to suppliers 237,641 237,641
Amortisation of senior notes issuing expenses 11,590 11,590

F-63
Pacific Andes Resources Development Limited Annual Report 2013 73
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
6 Segment Information continued
Products and Services from which Reportable Segments Derive Their Revenues continued
Frozen fish
SCM
Fishery and
Fish Supply Consolidated
HK$000 HK$000 HK$000
(restated) (restated) (restated)

2012
INCOME STATEMENT
External sales 4,869,592 4,711,206 9,580,798

Segment result 648,171 1,232,675 1,880,846

Unallocated items:
Administrative expense (257,582)
Fair value changes of derivative financial instruments (202,214)
Rental income from properties 2,113
Gain on revaluation of investment properties 1,972
Other operating expenses (83,634)
Finance costs (430,178)
Income tax expense (24,205)
Profit for the year 887,118

STATEMENT OF FINANCIAL POSITION
Segment assets 9,363,843 13,874,846 23,238,689
Unallocated corporate assets 66,687
Consolidated total assets 23,305,376

Segment liabilities 926,258 2,921,282 3,847,540
Unallocated corporate liabilities 7,026,365
Consolidated total liabilities 10,876,905

OTHER SEGMENT INFORMATION
Additions to non-current assets 182,009 724,250 906,259
Depreciation 38,880 708,546 747,426
Impairment loss of property, plant and equipment 44,067 44,067
Amortisation of prepayment to suppliers 172,640 172,640
Amortisation of senior notes issuing expenses 1,422 1,422

F-64
Pacific Andes Resources Development Limited Annual Report 2013 74
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
6 Segment Information continued
Products and Services from which Reportable Segments Derive Their Revenues continued
The accounting policies of the reportable segments are the same as the Groups accounting policies described in
Note 2. Segment result represents the profit earned by each segment with the allocation of administrative expenses,
gains and losses on revaluation and repurchase of bonds and purchase of senior notes, finance costs, share of results of
associates and taxation. This is the measure reported to the chief operating decision maker for the purposes of resource
allocation and assessment of segment performance.
Geographical Information
Geographical locations of the customers of the Group are organised in accordance with their parent companys country of
origin which principally comprises Hong Kong and other regions in the Peoples Republic of China (PRC), East Asia, South
America, Europe, Africa and other parts of the world.
The Groups revenue from external customers and information about its segment assets (non-current assets excluding
investment in associates and other financial assets) by geographical location are detailed below:
Revenue from
external customers
Non-current
assets
Geographical segments 2013 2012 2013 2012
HK$000 HK$000 HK$000 HK$000

Hong Kong and other regions in the PRC 7,306,369 6,249,474 1,135,066 1,136,147
South America 49,179 9,326 13,361,715 4,459,459
Europe 502,070 1,078,921 5,094,172 4,974,586
East Asia 357,998 1,006,485 66,500 69,000
Africa 485,966 1,210,081
Others 62,510 26,511

8,764,092 9,580,798 19,657,453 10,639,192

Information About Major Customers
During the year ended 28 September 2013 and 2012, there is no customer from Frozen Fish SCM segment with revenue
more than 10% of the Groups total revenue.
A customer from Fishery and Fish Supply segment with revenue more than 10% of the Groups total revenue amounted to
approximately HK$1,747,200,000 (2012: HK$1,253,460,000).
F-65
Pacific Andes Resources Development Limited Annual Report 2013 75
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
7 Other Operating Income
THE GROUP
2013 2012
HK$000 HK$000

Other operating income comprises:
Administrative income charged to associates 996 982
Compensation received from suppliers of fish
(a)
157,221 184,086
Interest income 880 3,894
Rental income from properties 2,129 2,113
Realised gain on derivative financial instruments 325,670 106,930
Exchange gain, net 87,524 37,333
Gain on disposal of property, plant and equipment 3,221 183
Gain on revaluation of investment properties 1,972
Gain on bargain purchase on acquisition of an associate (Note 20) 10,515
Gain on bargain purchase on acquisition of subsidiaries (Note 38) 499,584 19,872
Gain on repurchase of bonds 4,000
Gain on purchase on senior notes 7,378
Gain on disposal of available-for-sale investments, net 101,035
Sundry income 15,644 18,315

1,193,904 397,573

(a)
This relates to compensation for non-delivery of fish from suppliers within the stipulated timeframe.
8 Finance Costs
THE GROUP
2013 2012
HK$000 HK$000

Amortisation of senior notes issuing expenses 11,590 1,422
Interest on bank overdraft and loans 283,240 301,120
Interest on finance leases 4,268 7,232
Interest on senior notes 233,791 36,768
Interest on convertible bonds and bonds 53,186 83,531
Interest on amounts due to PAIH and its subsidiaries (Note 27) 111 105

586,186 430,178

F-66
Pacific Andes Resources Development Limited Annual Report 2013 76
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
9 Profit For The Year
Profit for the year has been arrived at after charging (crediting):
THE GROUP
2013 2012
HK$000 HK$000

Directors emoluments:
of the Company 7,732 8,848
of the subsidiaries 11,122 8,421
Contributions to retirement benefit scheme, net of forfeitures 13,198 12,502
Staff costs, excluding directors emoluments and retirement benefits contributions 38,195 74,713
Crew wages 141,344 540,901
Audit fees paid to auditors of the Company 4,904 2,782
Audit fees paid to other auditors of the Group 7,691 6,892
Non-audit fees paid to auditors of the Company 2,574 1,266
Non-audit fees paid to other auditors of the Group 3,120 3,243
Amortisation of prepayment to suppliers (included in cost of sales) 237,641 172,640
Depreciation of property, plant and equipment 790,983 747,426
Loss on revaluation of investment properties 247
Fair value change on available-for-sale investments 1,644
Fair value changes of derivative financial instruments 34,562 202,214
Impairment loss on property, plant and equipment 350,356 44,067
Gain on disposal of property, plant and equipment (3,221) (183)
Gain on repurchase of bonds (4,000)
Gain on purchase of senior notes (7,378)
Net foreign exchange gains (87,524) (37,333)
Cost of inventories included in cost of sales 5,979,033 4,664,460

10 Directors and Key Management Personnels Emoluments
The emoluments of directors and other members of key management during the year were as follows:
THE GROUP
2013 2012
HK$000 HK$000

Short-term benefits 18,206 16,668
Post-employment benefits 648 601

Total 18,854 17,269

The emoluments of directors and key management are determined by the Remuneration Committee having regard to the
performance of individuals and market trends.
Included in the emoluments of directors and other members of key management for the year of HK$18,854,000 (2012:
HK$17,269,000) is an amount of HK$6,597,000 (2012: HK$5,886,000) charged by PAIH and its subsidiaries as administrative
expense, which was calculated in accordance with the management agreement signed on 3 September 1996 and updated
by a supplemental agreement dated 22 July 2003.
F-67
Pacific Andes Resources Development Limited Annual Report 2013 77
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
11 Income Tax Benefit (Expense)
THE GROUP
2013 2012
HK$000 HK$000

The charge comprises:
Profits tax benefit (expense) for the year
Other jurisdictions 3,810 (89,024)
Overprovision in respect of prior years
Other jurisdictions 13,600
Deferred tax (Note 35) 53,157 64,819

70,567 (24,205)

The income tax expense varied from the amount of income tax expense determined by applying the Hong Kong profits tax
rate of 16.5% (2012: 16.5%) to profit before income tax as a result of the following differences:
THE GROUP
2013 2012
HK$000 HK$000

Hong Kong profits tax at statutory rate (160,842) (150,368)
Non-taxable items 182,680 132,026
Overprovision in respect of prior years 13,600
Effect of different tax rates of subsidiaries operating in other jurisdictions 25,635 (10,889)
Tax effect of share of results of associates 9,494 5,026

Total Hong Kong profits tax at effective tax rate 70,567 (24,205)

Taxation in other jurisdictions is calculated at the rate prevailing in the respective jurisdictions.
F-68
Pacific Andes Resources Development Limited Annual Report 2013 78
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
12 Earnings Per Share
The calculation of the basic and diluted earnings per share attributable to the owners of the Company is based on the
following data:
THE GROUP
2013 2012
HK$000 HK$000

Earnings
Earnings for the purposes of basic and diluted earnings per share
(profit for the year attributable to owners of the Company) 777,256 627,659

2013 2012
Number of shares
Weighted average number of ordinary shares for the purposes of
basic earnings per share 4,790,992,338 4,040,256,929

Weighted average number of ordinary shares for purposes of
diluted earnings per share 4,790,992,338 4,040,256,929

The effect of dilutive potential ordinary shares from convertible bonds is excluded in the calculation of the diluted earnings
per share for the year ended 28 September 2012 as it is anti-dilutive.
The weighted average number of ordinary shares used in the calculation of basic and diluted earnings per share for the
year ended 28 September 2012 has been adjusted by incorporating the effects of rights issue during the year ended 28
September 2012.
13 Dividends
During the financial year, the Company paid dividends as follows:
THE COMPANY
2013 2012
HK$000 HK$000

Final dividend of 0.30 Singapore cent (2012: 1.08 Singapore cents) per ordinary share
in respect of the previous financial year 90,083 212,541

The final dividend paid in cash during the year ended 28 September 2013 of 0.30 Singapore cent (1.89 HK cents) per
ordinary shares was HK$90,083,000.
In respect of the current year, the Directors proposed that a dividend of 0.30 Singapore cent (1.86 HK cents) per ordinary
share and is subject to approval by shareholders at the forthcoming Annual General Meeting and has not been included as
a liability in these financial statements.
F-69
Pacific Andes Resources Development Limited Annual Report 2013 79
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
14 Property, Plant and Equipment
THE GROUP
Leasehold
land and
buildings
Freehold
land
Freehold
buildings
Processing
vessel Vessels
Fishing
vessels
Fishing
nets
Furniture
and
fixtures
Office
equipment
Motor
vehicles
Plant and
machinery
Construction-
in-progress Total
HK$000 HK$000 HK$000 HK$000 HK$000 HK$000 HK$000 HK$000 HK$000 HK$000 HK$000 HK$000 HK$000

COST OR VALUATION
At 29 September 2011 106,798 45,868 190,076 616,456 368,420 1,395,376 85,603 16,655 45,053 14,622 3,021,074 265,171 6,171,172
Acquisition of subsidiaries (Note 38) 972 6,822 46,373 632 36,201 3,623 94,623
Additions 19,118 67,860 13,601 9,879 1,418 13,001 11 332,166 222,709 679,763
Reclassification 25,127 46,077 (71,204)
Reclassification to fishing and
plant permits (Note 21) (144,207) (144,207)
Disposals (165) (26,728) (19,793) (492) (46,850) (94,028)
Adjustment on asset revaluation 5,180 5,180

At 28 September 2012 111,978 65,958 196,733 616,456 436,280 1,453,749 76,321 18,073 57,562 14,633 3,244,461 420,299 6,712,503
Acquisition of subsidiaries (Note 38) 145,491 112,305 615,125 47,076 3,136 15,436 69 718,099 47,626 1,704,363
Acquisition of assets 19,500 19,500
Additions 1,409 59 481 55,010 61,807 118,766
Reclassification 1,270 27,991 12,136 372 313 2,325 82,845 (127,252)
Disposals (20,905) (63) (47) (511) (195) (21,721)
Adjustment on asset revaluation 4,720 4,720
Exchange realignment 1,057 3,737 8,195 1,358 109 310 49 10,467 428 25,710

At 28 September 2013 116,698 213,776 340,766 616,456 436,280 2,089,209 125,127 21,627 76,067 14,240 4,110,687 402,908 8,563,841

Comprising:
28 September 2013
At cost 213,776 340,766 616,456 436,280 2,089,209 125,127 21,627 76,067 14,240 4,110,687 402,908 8,447,143
At valuation 116,698 116,698

116,698 213,776 340,766 616,456 436,280 2,089,209 125,127 21,627 76,067 14,240 4,110,687 402,908 8,563,841

28 September 2012
At cost 65,958 196,733 616,456 436,280 1,453,749 76,321 18,073 57,562 14,633 3,244,461 420,299 6,660,525
At valuation 111,978 111,978

111,978 65,958 196,733 616,456 436,280 1,453,749 76,321 18,073 57,562 14,633 3,244,461 420,299 6,712,503

ACCUMULATED DEPRECIATION
At 29 September 2011 35,040 41,558 128,896 251,288 69,323 13,605 22,464 13,140 852,862 1,428,176
Depreciation 4,234 5,105 22,668 20,518 79,349 17,710 1,000 3,430 786 592,626 747,426
Disposals (24) (26,728) (17,911) (208) (46,850) (91,721)
Adjustment on asset revaluation (4,234) (4,234)

At 28 September 2012 40,121 64,226 149,414 303,909 69,122 14,605 25,686 13,926 1,398,638 2,079,647
Depreciation 4,481 8,933 22,668 22,227 96,610 20,464 1,231 5,246 489 608,634 790,983
Disposals (20,905) (63) (47) (511) (195) (21,721)
Adjustment on asset revaluation (4,481) (4,481)
Exchange realignment 869 2,343 867 41 161 49 3,731 8,061

At 28 September 2013 49,923 86,894 171,641 381,957 90,453 15,814 31,046 13,953 2,010,808 2,852,489

IMPAIRMENT
At 28 September 2011 15,938 15,938
Impairment loss recognised 44,067 44,067

At 28 September 2012 44,067 15,938 60,005
Impairment loss recognised 273,000 39,556 411 560 1,605 87 35,137 350,356

At 28 September 2013 273,000 83,623 411 560 1,605 87 51,075 410,361

CARRYING AMOUNT
At 28 September 2013 116,698 213,776 290,843 256,562 264,639 1,623,629 34,263 5,253 43,416 200 2,048,804 402,908 5,300,991

At 28 September 2012 111,978 65,958 156,612 552,230 286,866 1,105,773 7,199 3,468 31,876 707 1,829,885 420,299 4,572,851

F-70
Pacific Andes Resources Development Limited Annual Report 2013 80
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
14 Property, Plant and Equipment continued
In 2013, the Group made an impairment loss of HK$273,000,000 (2012: HK$Nil) for the processing vessel and
HK$77,356,000 (2012: HK$44,067,000) for certain fishing vessels and plant and machineries that management has identified
as non-operative. This has been recognised in the consolidated income statement and included in the line item other
operating expenses.
The recoverable amount of the relevant assets has been determined on the basis of their value in use. The discount rate
used in measuring value in use was 13.65% (2012: 13.41%).
The carrying amount of leasehold land and buildings represents land and buildings in Hong Kong with more than 50 years
of lease remaining at the end of the reporting period.
The leasehold land and buildings situated in Hong Kong and Singapore were revalued by BMI Appraisals Limited, a firm
of independent professional valuers, on an open market value basis at 28 September 2013 and 28 September 2012.
The valuations for the financial years then ended were arrived using Direct Comparison Method and were performed in
accordance with International Valuation Standards.
The carrying amounts of the Groups property, plant and equipment includes an amount of HK$26,442,000 (2012:
HK$28,409,000) in respect of assets held under finance leases (Note 30).
During the previous financial year, management obtained legal advice that the plant permit does not have finite term and
remain in full force and good standing as long as the applicable legal requirements are complied with. Accordingly, the
carrying amount of the plant permit was reclassified to fishing and plant permits in 2012.
If leasehold land and buildings of the Group had not been revalued, they would have been included on a historical cost
basis at the following amounts:
2013 2012
HK$000 HK$000

Cost 62,576 62,576
Accumulated depreciation (16,851) (14,737)

Carrying amount 45,725 47,839

F-71
Pacific Andes Resources Development Limited Annual Report 2013 81
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
15 Investment Properties
THE GROUP
2013 2012
HK$000 HK$000

Valuation at beginning of year 51,449 49,244
Adjustment on asset revaluation (247) 1,972
Exchange realignment 933 233

Valuation at end of year 52,135 51,449

The investment properties were valued at HK$52,135,000 (2012: HK$51,449,000) by BMI Appraisals Limited, a firm of
independent professional valuers, on an open market value basis at 28 September 2013 and 28 September 2012. The
valuations for the financial years then ended were arrived at using Investment Method and were performed in accordance
with International Valuation Standards.
The carrying value of investment properties shown above comprises:
THE GROUP
2013 2012
HK$000 HK$000

Investment properties in the PRC under long leases 17,794 15,696
Investment properties in the PRC under medium leases 9,241 9,853
Investment properties in Singapore under long leases 25,100 25,900

52,135 51,449

Long leases refer to the leases with terms of more than 50 years remaining at the end of the reporting period and medium
leases refer to leases with terms of 50 years or less remaining at the end of the reporting period.
The property rental income earned by the Group from its investment properties, all of which are leased out under operating
leases, amounted to HK$2,129,000 (2012: HK$1,855,000). Direct operating expenses arising on the investment properties in
the year amounted to HK$722,000 (2012: HK$895,000).
16 Goodwill
THE GROUP
2013 2012
HK$000 HK$000

At beginning of year 2,952,461 2,903,375
Arising on acquisition of subsidiaries (Note 38) 49,086

At end of year 2,952,461 2,952,461

Goodwill acquired in a business combination is allocated, at acquisition, to the cash-generating units (CGU) that are
expected to benefit from that business combination. The carrying amount of goodwill had been allocated to each CGU as
follows:
THE GROUP
2013 2012
HK$000 HK$000

Contract Supply business 1,784,700 1,784,700
Peruvian fishmeal operations 1,167,761 1,167,761

2,952,461 2,952,461

F-72
Pacific Andes Resources Development Limited Annual Report 2013 82
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
16 Goodwill continued
The Group tests goodwill annually for impairment or more frequently if there are indications that goodwill might be impaired.
The recoverable amounts of the CGUs are determined from value in use calculations. The key assumptions for the value
in use calculations are those regarding the discount rates, growth rates and expected changes to selling prices and direct
costs during the period. Management estimates discount rates using pre-tax rates that reflect current market assessments of
the time value of money and the risks specific to CGUs. The growth rates are based on industry growth forecasts. Changes
in selling prices and direct costs are based on past practices and expectations of future changes in the market.
In 2013, the Group engaged an independent financial advisor located in Hong Kong, BMI Appraisal Limited, to determine
the value of Contract Supply business and Peruvian fishmeal operations as of 28 September 2013 (2012: 28 September
2012).
The assessment of recoverability of the carrying amount of goodwill includes:
(i) forecasted projected cash flows up to 2023 (2012: 2022) and projection of terminal value using the perpetuity method;
(ii) growth rate of 3% (2012: 2%); and
(iii) use of 8.93% (2012: 7.61%) for Contract Supply business and use of 18.01% (2012: 17.14%) for Peruvian fishmeal
operations to discount the projected cash flows to net present values.
Based on the above assessments, management expects the carrying amount of goodwill to be recoverable and there is no
impairment in value of the goodwill.
As at the end of the year, any reasonably possible change to the key assumptions applied is not likely to cause the
recoverable amounts to be below the carrying amounts of the CGUs.
17 Prepayment to Suppliers/Advances to Suppliers
THE GROUP
2013 2012
HK$000 HK$000

Total prepayment to suppliers 3,394,560 2,224,560
Less: Accumulated amortisation (1,402,521) (1,164,880)

1,992,039 1,059,680
Included as current assets (205,123) (172,640)

Included as non-current assets 1,786,916 887,040

Accumulated amortisation:
At beginning of year 1,164,880 992,240
Amortisation during the year 237,641 172,640

At end of year 1,402,521 1,164,880

Since 2004, China Fisheries International Limited (CFIL), a subsidiary had entered into vessel operating agreements with
two companies, Perun Limited (Perun) and Alatir Limited (Alatir) (collectively as Suppliers), to prepay fixed charter hire
for 23 (2012: 17) vessels for 10 to 18 years (2012: 10 to 18 years) up to 2030 (2012: 2025).
F-73
Pacific Andes Resources Development Limited Annual Report 2013 83
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
17 Prepayment to Suppliers/Advances to Suppliers continued
To secure the benefits from the prepayments and to ensure that the counterparties comply with their obligations under the
vessel operating agreements, the counterparties executed the following documents in favour of CFIL:
(i) charges of all the issued shares of Perun and Alatir;
(ii) debentures over all the present and future assets of Perun and Alatir; and
(iii) entrusted management agreements to vest upon the nominees of CFIL, the management and control of Perun and
Alatir in respect of and limited to the performance and obligations of the vessel operating agreements.
With effect from 16 July 2012, these vessel operating agreements were replaced by the long term supply agreements.
To secure the benefits from the prepayments and to ensure that the counterparties comply with their obligations under the
long term supply agreements, the counterparties executed the following documents in favour of CFIL:
(i) charges of all the issued shares of Perun and Alatir; and
(ii) debentures over all the present and future assets of Perun and Alatir.
Advances to suppliers
The advances to Suppliers as of 28 September 2012 are unsecured, interest-free and represent advances for working capital
under the long term supply agreements. The advance amount will be offset against future payments made to the Suppliers.
During the year, management has reclassified the advances to Suppliers to other receivables as the advance amount is
expected to be offset against future payments made to the Suppliers within the next 12 months.
The fair value of the Groups advances to Suppliers approximates their carrying amount.
18 Available-For-Sale Investments
THE GROUP
2013 2012
HK$000 HK$000

Unquoted equity securities 7,800 7,800
Unquoted debt securities 2,685 15,522
Quoted equity securities 14,908 9,536

25,393 32,858

Unquoted equity securities represents 1.9% (2012: 1.9%) interest of a company. The investment is carried at cost as the
fair value cannot be reasonably determined. In the opinion of management, no impairment is considered necessary.
19 Interests in Subsidiaries
THE COMPANY
2013 2012
HK$000 HK$000

Amounts due from subsidiaries 6,605,417 6,636,675

Particulars of the subsidiaries at 28 September 2013 are set out in Note 45. The amounts due from subsidiaries are
denominated in Hong Kong dollars, unsecured, bear interest at variable rates ranging from 3.36% to 3.45% (2012: 3.46%
to 3.55%) per annum and repayable on demand. Management does not expect any demand to be made for payment within
the next twelve months except for the amount shown as current. Interest rates are determined on monthly basis.
Management is of the opinion that the carrying amount of amounts due from subsidiaries approximate their fair value.
F-74
Pacific Andes Resources Development Limited Annual Report 2013 84
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
20 Interests in Associates
THE GROUP
2013 2012
HK$000 HK$000

Share of net assets 542,615 505,547

Comprising:
Cost of investment in associates 483,411 483,411
Share of post-acquisition profits, net of dividend income received 59,204 22,136

542,615 505,547

At the end of the reporting period, the Group had interests in the following associates:
Name of entity
Country of
incorporation
or registration/
operation
Percentage of
equity interest and
voting power held Principal activities
2013 2012

Pacos Trading Limited Republic of Cyprus/
Worldwide
20% 20% Acting as shipping agency
Paco (ET) Limited Republic of Cyprus/
Worldwide
20% 20% Inactive
Paco (GT) Limited Republic of Cyprus/
Worldwide
20% 20% Inactive
Paco (HT) Limited Republic of Cyprus/
Worldwide
20% 20% Inactive
Tassal Group Limited
(1)
Australia/Australia 22.76% 22.76% Engaged in the hatching, farming,
processing, sale and marketing
of Atlantic salmon in Australia
(1)
Listed on the Australian Securities Exchange.
All the associates are audited by member firms of Deloitte Touche Tohmatsu, of which Deloitte & Touche LLP, Singapore
is a member.
During the year ended 28 September 2012, the Group increased its equity interest in Tassal Group Limited (Tassal) from
19.76% to 22.76%. Consequently, this entity became an associate of the Group via step-acquisition and gain on bargain
purchase on acquisition of HK$10,515,000 was recorded (Note 7). At the end of the reporting period the fair market value
of the investment in Tassal is HK$802.5 million (2012: HK$366.5 million).
The financial year end date for Tassal is 30 June. For the purpose of applying the equity method of accounting, the
consolidated financial statements of Tassal for the year ended 30 June 2013 have been used as the Group considers that
it is impracticable for Tassal to prepare a separate set of financial statements as of 28 September 2013.
F-75
Pacific Andes Resources Development Limited Annual Report 2013 85
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
20 Interests in Associates continued
Summarised financial information in respect of the Groups associates is set out below:
2013 2012
HK$000 HK$000

Total assets 3,637,546 3,993,098
Total liabilities (1,377,755) (1,592,161)

Net assets 2,259,791 2,400,937

Groups share of associates net assets 542,615 505,547

Revenue 2,203,456 1,520,302

Profit for the year 252,651 168,977

Groups share of associates profit for the year 57,540 38,459

21 Other Intangible Assets
THE GROUP
Fishing and
plant permits
Club
memberships Total
HK$000 HK$000 HK$000

Cost:
At 29 September 2011 1,457,904 2,728 1,460,632
From acquisition of subsidiaries (Note 38) 221,794 221,794
Reclassification from property, plant and equipment (Note 14) 144,207 144,207

At 28 September 2012 1,823,905 2,728 1,826,633
From acquisition of subsidiaries (Note 38) 7,697,914 7,697,914
Exchange realignment 15,010 15,010

At 28 September 2013 9,536,829 2,728 9,539,557

Fishing and plant permits are granted by the authority in Peru. The fishing permits are attached to fishing vessels and are
transferable to other fishing vessels.
Management has obtained legal advice that the fishing and plant permits do not have a finite term and remain in full force
and good standing as long as the applicable legal requirements are complied with. Accordingly, the costs of fishing and
plant permits are not amortised.
As stated in Note 16, the Group has engaged an independent financial advisor located in Hong Kong to determine the value
of the Peruvian operations. Based on that report and managements assessment of business prospects, management expects
the carrying amount of fishing and plant permits to be recoverable and there is no impairment in value of the fishing and
plant permits.
Club memberships have infinite life and are not amortised.
F-76
Pacific Andes Resources Development Limited Annual Report 2013 86
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
22 Inventories
THE GROUP
2013 2012
HK$000 HK$000

(restated)
Inventories at cost consist of the following:
Fishmeal 477,806 117,726
Frozen seafood 301,550 1,187,170
Fuel 30,524 23,870
Supplies 113,905 51,131

923,785 1,379,897

Fishmeal with carrying amounts of HK$63,882,000 (2012: HK$41,255,000) have been pledged as security for the Groups
bank overdrafts and certain loans totalling HK$173,300,000 (2012: HK$118,978,000) (Note 31).
23 Trade and Bills Receivables
THE GROUP
2013 2012
HK$000 HK$000

Outside parties 1,832,860 2,247,314

An allowance for estimated irrecoverable amount from the sale of goods to third parties of HK$172,000 (2012: HK$334,000)
has been determined by reference to managements estimation of irrecoverable amounts. The Group has provided fully for
receivables over 180 days based on historical experience.
For the remaining trade receivables of HK$1,832,860,000 (2012: HK$2,247,314,000), the majority is neither past due nor
impaired.
The credit period granted on sale of goods is up to 180 days (2012: 180 days). No interest is charged on overdue balances.
The amounts due from associates are unsecured, interest-free and repayable on demand.
Movement in the allowance for doubtful debts:
THE GROUP
2013 2012
HK$000 HK$000

Balance at beginning of the year 334 4,858
Written off against trade receivables during the year (162) (4,524)

Balance at end of the year 172 334

F-77
Pacific Andes Resources Development Limited Annual Report 2013 87
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
23 Trade and Bills Receivables continued
The Groups trade receivables that are not denominated in the functional currencies of the respective entities are as follows:
THE GROUP
2013 2012
HK$000 HK$000

Chinese Renminbi 1,503 1,460
Namibian dollars 2,910 2,604
Peruvian Nuevo Soles 1,252 2,661

5,665 6,725

24 Other Receivables and Prepayments
THE GROUP THE COMPANY
2013 2012 2013 2012
HK$000 HK$000 HK$000 HK$000

Suppliers 801,486 874,951
Other receivables and prepayments 446,634 237,327 183
Deferred expenditure 256,901 175,039
Prepayments for fish 5,815,115 6,612,170

7,320,136 7,899,487 183

The balances with Suppliers as of 28 September 2013 and 2012 are unsecured, interest-free and represent advances to
the Suppliers for working capital advances for the supply of fish to the Group under the long term supply agreements
(Note 17).
The balances with the Suppliers are stated net of amounts payable to vessel owners in respect of payments made by the
vessel owners on behalf of the Group. This offset has been effected on the basis of arrangements amongst members of
the Group, the vessel owners and the Suppliers.
The other receivables balances are neither past due nor impaired.
The Group and Companys other receivables that are not denominated in the functional currencies of the respective entities
are as follows:
THE GROUP THE COMPANY
2013 2012 2013 2012
HK$000 HK$000 HK$000 HK$000

Chinese Renminbi 40 6,382
Euro 1,678 6,921
Namibian dollars 32,896 913
Peruvian Nuevo Soles 117,909 61,022

152,523 75,238

F-78
Pacific Andes Resources Development Limited Annual Report 2013 88
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
25 Bank Balances and Cash
THE GROUP THE COMPANY
2013 2012 2013 2012
HK$000 HK$000 HK$000 HK$000

Cash at banks 448,962 442,345 841 1,203
Cash on hand 4,499 3,509
Short term deposits 162,310

615,771 445,854 841 1,203

The interest rates on cash placed with financial institutions ranged from nil to 0.4% (2012: Nil to 0.4%) per annum.
As of 28 September 2013, short term deposits denominated in USD amounting to HK$162,310,000 which bears a short-term
market interest rate of 5.30%.
The Group and Companys cash and bank balances that are not denominated in the functional currencies of the respective
entities are as follows:
THE GROUP THE COMPANY
2013 2012 2013 2012
HK$000 HK$000 HK$000 HK$000

United States dollars 154,360 134
Chinese Renminbi 2,660 3,647 237 266
Euro 1,199 5,534
Hong Kong dollars 1,888 1,662 18 33
Peruvian Nuevo Soles 1,685 2,357
Singapore dollars 1,687 1,924 126 305
Namibian dollars 9,978 854
Norwegian Krone 7,576
Canadian dollars 5 2,819

181,038 18,931 381 604

F-79
Pacific Andes Resources Development Limited Annual Report 2013 89
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
26 Trade and Other Payables
THE GROUP THE COMPANY
2013 2012 2013 2012
HK$000 HK$000 HK$000 HK$000

Trade creditors and accruals 221,468 269,046 52
Interest payable 86,614 64,935 15,832 14,488
Provision for claims [Note 41(b)] 22,843

308,082 356,824 15,832 14,540

Trade payables principally comprise amounts outstanding for vessel operating costs and trade purchases.
The average credit period on purchase of goods is 30 days (2012: 30 days). No interest is charged on overdue balances.
The Group has financial risk management policies in place to ensure that all payables are within the credit timeframe.
The Group and Companys trade and other payables that are not denominated in the functional currencies of the respective
entities are as follows:
THE GROUP THE COMPANY
2013 2012 2013 2012
HK$000 HK$000 HK$000 HK$000

Chinese Renminbi 15,766 16,348 15,832 14,488
Euro 3,309 5,079
Hong Kong dollars 7,578 1,449
Peruvian Nuevo Soles 97,365 108,480
Singapore dollars 926 424 52
Danish Krone 2,743
Norwegian Krone 1,636 1,056
Japanese Yen 896 1,625
Namibian dollars 9,888 22

137,364 137,226 15,832 14,540

F-80
Pacific Andes Resources Development Limited Annual Report 2013 90
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
27 Amounts Due to Pacific Andes International Holdings Limited and its Subsidiaries (PAIH)
The amounts due are unsecured, repayable on demand and bear interest at the funding cost of PAIH (Note 44) and its
subsidiaries at rates ranging from 2.18% to 2.21% (2012: 2.21% to 2.30%) per annum.
28 Derivative Financial Instruments
During the year, the Group entered into foreign currency forward contracts with banks to reduce its exposure to currency
fluctuation risk of anticipated sales and purchase transactions which are denominated in foreign currencies. These derivatives
contracts are not accounted for under hedge accounting. At the end of the reporting period, the fair value of the foreign
currency forward contracts is HK$54,712,000 (2012: HK$202,214,000), which is settled on net basis. These amounts are
based on quoted market prices for equivalent instruments at the end of the reporting period.
These changes in fair value of HK$34,562,000 (2012: HK$202,214,000) have been charged to profit or loss during the year
and included in the line item other operating expenses.
The major terms of the foreign currency forward contracts are as follows:
2013
Aggregate principal amount Maturity dates Contracted exchange rates

Sell JPY 37,434,600,000 From September 2015 to July 2016 US$1 at JPY89.9 to JPY94.95
Sell Euro 44,000,000 July 2015 Euro1 at US$1.37
Sell US$ 415,238,000 From June 2014 to May 2016 US$1 at RMB6.30 to RMB6.40
2012
Aggregate principal amount Maturity dates Contracted exchange rates

Sell JPY 48,758,362,000 From October 2012 to August 2015 US$1 at JPY73.80 to JPY80.51
Sell Euro 102,000,000 July 2015 Euro1 at US$1.30 to US$1.36
Sell GBP 23,000,000 August 2014 GBP1 at US$1.627
Sell US$ 425,238,000 From January 2014 to June 2015 US$1 at RMB6.30 to RMB7.00
F-81
Pacific Andes Resources Development Limited Annual Report 2013 91
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
29 Bank Advances Drawn on Bills
As at 28 September 2013, bank advances drawn on bills amounting to HK$7,060,000 were with recourse and bear interest
rates at 2.54% per annum. These matured in December 2013.
30 Finance Leases
THE GROUP
Minimum lease payments
Present value
of minimum
lease payments
2013 2012 2013 2012
HK$000 HK$000 HK$000 HK$000

Amount payable under finance leases:
Within one year 37,541 39,798 30,151 29,555
In the second to fifth year inclusive 4,376 41,916 3,666 33,817
Less: Future finance charges (8,100) (18,342) NA NA

Present value of lease obligations 33,817 63,372 33,817 63,372

Less: Amount due for settlement within
12 months (shown under current
liabilities) (30,151) (29,555)

Amount due for settlement after 12 months 3,666 33,817

All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
All lease obligations are denominated in United States dollars.
The carrying amounts of the Groups lease obligations approximate their fair value.
The Groups obligations under finance leases are secured by the lessors title to the leased assets (Note 14).
F-82
Pacific Andes Resources Development Limited Annual Report 2013 92
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
31 Interest-Bearing Bank Borrowings
THE GROUP
2013 2012
HK$000 HK$000

Interest-bearing bank borrowings comprise:
Trust receipt loans and short-term bank loans 4,145,918 3,422,341
Club loans and term loans 5,334,238 3,565,318
Bank overdrafts 7,777 8,342

9,487,933 6,996,001
Less: Issuing costs (32,219) (74,209)

9,455,714 6,921,792

Analysed as:
Secured 173,300 118,978
Unsecured 9,282,414 6,802,814

9,455,714 6,921,792

Repayable as follows:
On demand or within one year 7,897,734 5,119,836
In the second year 1,557,980 857,981
In the third year 943,975

9,455,714 6,921,792
Less: Amount due for settlement within one year included under current liabilities (7,897,734) (5,119,836)

Amount due after one year 1,557,980 1,801,956

Short-term bank borrowings of the Group amounting to HK$173,300,000 (2012: HK$118,978,000) bear interest ranging from
2.75% to 2.94% (2012: 2.74% to 4.00%) per annum and are secured over the Groups fishmeal (Note 43).
Borrowings of HK$910,000 on 28 September 2012 were unsecured, bear fixed interest rates of 8.50% per annum.
F-83
Pacific Andes Resources Development Limited Annual Report 2013 93
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
31 Interest-Bearing Bank Borrowings continued
The remaining unsecured club loans, term loans, revolving loans and trust receipt loans bear interest at variable rates ranging
from 2.20% to 3.68% (2012: 2.21% to 3.73%) per annum.
Management estimates that the fair values of the bank borrowings approximate their carrying amounts as the Groups
borrowing rates approximate the market rates available at the end of the reporting period.
The Groups interest-bearing bank borrowings that are not denominated in the functional currencies of the respective entities
are as follows:
THE GROUP
2013 2012
HK$000 HK$000

Hong Kong dollars 45,753 40,679

32 Bonds
The Chinese Renminbi denominated unsecured bonds was issued on 2 June 2011. The Company has the option of
redeeming the bonds in whole, but not in part, at any time, on giving not less than 30 nor more than 60 days notice to
the bondholders.
The bonds will mature on 2 June 2014. Interest of 6.5% per annum will be paid semi-annually until settlement date.
The interest expenses charged to profit or loss is calculated by applying an effective interest rate of 7.5% per annum on
the outstanding bonds.
During the year ended 28 September 2012, a principal amount of RMB30,000,000 (approximately HK$37,127,000) bonds
was repurchased from market at a consideration of RMB26,175,000 (approximately HK$32,393,000) resulting in a gain on
repurchase of bonds of HK$4,000,000 after amortisation cost.
The fair values of the bonds approximate their carrying amounts as the bonds effective interest rates approximate the market
rates available at the end of the reporting period.
33 Long term payables
THE GROUP
2013 2012
HK$000 HK$000

Long term trade payables 101,088
Provision for claims
(a)
82,984
Other payables and accrued expenses 14,227
Other provisions
(b)
38,712

237,011

F-84
Pacific Andes Resources Development Limited Annual Report 2013 94
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
33 Long term payables continued
(a) Movements in the provision for claims are as follows:
2013 2012
HK$000 HK$000

At beginning of year (Note 26) 22,843
Charged to profit or loss 10,756
Arising on acquisition of subsidiary 49,385

82,984

(b) This represents the provision for fishing ban expenses, fishing expenses and laboral reposition of personnel. The long
term payables are unsecured, interest-free and not to be repaid within 12 months. The fair values of the Groups long
term payables approximate their carrying amount.
34 Senior Notes
2013 2012
HK$000 HK$000

At beginning of the year 2,120,094
Issued during the year
(a)
2,118,672
Amortization of issuance cost 11,590 1,422
Arising on acquisition of subsidiaries
(b)
1,949,212

At end of the year 4,080,896 2,120,094

(a) On 24 July 2012, the Group, through its subsidiary, CFG Investment S.A.C. (CFGI), issued guaranteed senior
fixed rate notes with aggregate nominal value of US$300,000,000 (approximately HK$2,340,000,000) (the Notes)
which carried fixed interest of 9.75% per annum (interest payable semi-annually in arrears) and was repayable by
30 July 2019.
The Notes are listed on the Singapore Exchange Securities Trading Limited. They are unsecured and guaranteed by
China Fishery Group Limited (China Fishery) and certain subsidiaries of China Fishery. The guarantees are effectively
subordinated to secure obligations of each guarantor, to the extent of the value of assets serving as security.
At any time prior to 30 July 2016, CFGI may redeem the Notes in whole or in part at the principal amount of the
Notes plus an applicable premium and accrued interest provided that any partial redemption shall not result in less
than US$100 million (approximately HK$780 million) of outstanding Notes. At any time prior to and up to 30 July 2016,
CFGI may redeem up to 35% of the Notes, with net cash proceeds from issue of ordinary shares of China Fishery or
sale of ordinary shares of CFGI, at the redemption price equal to 109.75% of the principal amount of the Notes plus
accrued and unpaid interests, if any, as of the redemption date.
F-85
Pacific Andes Resources Development Limited Annual Report 2013 95
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
34 Senior Notes continued
(a) continued
The Notes contained certain covenants that limited China Fisherys and certain subsidiaries abilities to, among other
things:
incur or guarantee additional indebtedness and issue disqualified or preferred shares;
declare dividends or purchase or redeem shares;
make investments or other specified restricted payments;
issue or sell shares of certain subsidiaries;
sell assets or create any lien; and
enter into sale and leaseback transactions.
Management estimated the fair value of the Notes at 28 September 2013 to be approximately HK$2,126,982,000. The
fair value has been calculated based on the bid price extracted from Bloomberg as at 28 September 2013. In 2012,
management estimated the fair value of the Notes at 28 September 2012 to be approximately HK$1,816,996,000. The
fair value has been calculated by assuming redemption on 30 July 2019, using effective interest rate of 14.19% per
annum with reference to the US Treasury Zero Coupon Bonds and holding the credit risk margin constant.
The net carrying amount of the Notes was stated net of issue expenses totalling HK$132,951,000. Such expenses
were amortised over the life of the Notes by charging the expenses to profit or loss and increasing the net carrying
amount of the Notes with the corresponding amount. As of 28 September 2013, accumulated amortisation amounted
to HK$13,012,000 (2012: HK$1,422,000).
During the year ended 28 September 2012, a total principal amount of US$12,000,000 (approximately HK$93,600,000)
of Notes was purchased from market at a consideration of US$10,385,000 (approximately HK$81,003,000) resulting in
a gain on purchase of notes of HK$7,378,000 after amortisation cost.
(b) On January 2013, Copeinca S.A.C., reopened its US$175 million (approximately HK$1,365 million) 9.00% senior notes
due in 2017 raising gross proceeds of US$75 million (approximately HK$585 million), which are guaranteed by Copeinca
ASA. The issue of these notes corresponds to a single issue of the US$175 million (approximately HK$1,365 million)
9.00% senior notes due 2017. The total aggregate principal amount of the 9.00% senior notes due in 2017 outstanding
following such reopening amounts to US$250 million (approximately HK$1,950 million).
On 2 February 2010, Copeinca S.A.C. agreed with Credit Suisse Securities (USA) LLC, as representative of several
purchasers, to issue and sell to the several purchasers, US$175 million (approximately HK$1,365 million) principal
amount of its 9.00% senior notes due in 2017 to be issued under an indenture dated 10 February 2010, between
Copeinca S.A.C., the Guarantor and Deutsche Bank Trust Company Americas, as trustee, guaranteed on an unsecured
senior basis by the Company. Coupons bear a 9% interest and are payable on a semi-annual basis.
F-86
Pacific Andes Resources Development Limited Annual Report 2013 96
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
34 Senior Notes continued
(b) continued
The Notes contained certain covenants that limited the Copeincas and certain subsidiaries abilities to, among other
things:
incur or guarantee additional indebtedness and issue disqualified or preferred shares;
declare dividends or purchase or redeem shares;
make investments or other specified restricted payments;
issue or sell shares of certain subsidiaries;
sell assets or create any lien; and
enter into sale and leaseback transactions.
Management estimated the fair value of the Notes at 28 September 2013 to be approximately US$251,250,000
(approximately HK$1,959,750,000). The fair value has been calculated based on the bid price extracted from Bloomberg
as at 28 September 2013.
The net carrying amount of the Notes was stated net of issue expenses totaling US$948,000 (approximately
HK$7,394,000). Such expenses were amortised over the life of the Notes by charging the expenses to the profit or
loss using effective interest rate of 9.59% per annum and increasing the net carrying amount of the Notes with the
corresponding amount. As of 28 September 2013, accumulated amortization amounted to US$112,000 (approximately
HK$874,000).
35 Deferred Tax Liabilities
The following are the major deferred tax liabilities and assets recognised and movements thereon during the current year:
Accelerated
tax depreciation
Fair value
adjustments
(1)
Provisions Total
HK$000 HK$000 HK$000 HK$000

THE GROUP
At 29 September 2011 (8,127) 513,701 (15,834) 489,740
Acquisition of subsidiaries (Note 38) 48,468 48,468
Charged (Credited) to consolidated income
statement (Note 11) 8,127 (75,300) 2,354 (64,819)

At 28 September 2012 486,869 (13,480) 473,389
Acquisition of subsidiaries (Note 38) 2,048,218 2,048,218
Credited to consolidated income statement (Note 11) (53,157) (53,157)
Exchange realignment 5,748 5,748

At 28 September 2013 2,487,678 (13,480) 2,474,198

(1)
Being deferred tax effect on fair value adjustments of property, plant and equipment and fishing and plant permits on
business combinations.
F-87
Pacific Andes Resources Development Limited Annual Report 2013 97
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
36 Share Capital
THE GROUP AND THE COMPANY
Number of shares
at S$0.05 Amounts
per share S$000

Authorised:
At 28 September 2012 and 2013 8,000,000,000 400,000

Issued and fully paid:
At 29 September 2011 3,193,994,892 159,699
Issue of shares as a result of rights issue 1,596,997,446 79,850

At 28 September 2012 and 28 September 2013 4,790,992,338 239,549

THE GROUP AND THE COMPANY
2013 2012
HK$000 HK$000

Issued and fully paid:
Balance at beginning of year 1,325,005 832,691
Issue of shares as a result of rights issue 492,314

Balance at end of year 1,325,005 1,325,005

During the year ended 28 September 2012, the Company issued 1,596,997,446 new ordinary shares of S$0.05 each at an
issue price of S$0.14 per share by way of rights on the basis of one new share for every two existing shares.
F-88
Pacific Andes Resources Development Limited Annual Report 2013 98
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
37 Reserves
Capital reserve
The capital reserve represents the Groups share of the fair value adjustment to the net assets of subsidiaries on acquisition
of additional equity interest from the minority shareholder.
Other reserve
The other reserve represents the equity component of convertible debt instruments.
Investment revaluation reserve
The investment revaluation reserve arises on the revaluation of available-for-sale financial assets. Where a revalued financial
asset is sold, the portion of the reserve that relates to that financial asset, and is effectively realised, is recognised in profit
and loss. Where a revalued financial asset is impaired, the portion of the reserve that relates to that financial asset is
recognised in profit and loss.
Properties revaluation reserve
The properties revaluation reserve arises on the revaluation of leasehold buildings. Where a revalued leasehold building is
sold, the portion of the revaluation reserve that relates to that asset, and is effectively realised, is transferred directly to
retained earnings. The revaluation reserve is not available for distribution to the Companys shareholders.
Currency exchange translation reserve
Exchange differences relating to the translation from the functional currencies of the Groups foreign subsidiaries into Hong
Kong dollars are brought to account by entries made directly to the currency exchange translation reserve.
38 Acquisition of Subsidiaries
During the year ended 28 September 2013 and 2012, the Group acquired the following subsidiaries and accounted for these
acquisitions using the purchase method of accounting.
28 September 2013
Subsidiary Place of incorporation Date of acquisition

Copeinca ASA Norway 30 August 2013
During the year, the Group acquired 99.1% equity interest in Copeinca, Perus second largest fishing company listed on the
Oslo Brs with a secondary listing on the Lima Stock Exchange. The acquisition was completed on 30 August 2013.
The Group acquired Copeinca primarily to expand the Peruvian operations.
F-89
Pacific Andes Resources Development Limited Annual Report 2013 99
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
38 Acquisition of Subsidiaries continued
The net assets acquired and the goodwill arising are as follows:
Acquirees
carrying
amount
before
combination
Fair value
adjustments Fair value
HK$000 HK$000 HK$000

Property, plant and equipment (Note 14) 1,931,654 (227,291) 1,704,363
Other intangible assets (Note 21) 1,670,113 6,027,801 7,697,914
Goodwill 1,084,941 (1,084,941)
Inventories 380,936 192,278 573,214
Trade receivables 270,309 270,309
Other receivables and prepayments 183,533 183,533
Prepaid income tax 56,297 56,297
Trade and other payables (86,021) (86,021)
Income tax payable (35,582) (35,582)
Bank borrowings (10,046) (10,046)
Long term payables (51,356) (51,356)
Senior notes (1,949,212) (1,949,212)
Deferred tax liabilities (Note 35) (575,858) (1,472,360) (2,048,218)
Non-controlling interests (33,946) (26,474) (60,420)

2,835,762 3,409,013 6,244,775
Gain on bargain purchase arising on acquisition (Note 7) (499,584)
Gain on disposal of available-for-sale investment (125,533)
Total cash consideration 5,619,658

Satisfied by:
Cash paid 6,143,981

Net cash outflow arising on acquisition:
Cash paid 6,143,981
Less: Gain on disposal of available-for-sale investment (125,533)
Less: Cash and cash equivalents acquired (398,790)
5,619,658

Gain on bargain purchase arising on acquisition represents the excess of the fair value of the net assets acquired over the
purchase consideration.
The initial accounting for the acquisition of Copeinca has only been provisionally determined as the acquisition occurred close
to the end of the reporting period. At the date of finalisation of these financial statements, the necessary market valuations
and other calculations for the items listed below had not been finalised and they have therefore only been provisionally
determined based on the managements best estimate of the likely values.
Impact of acquisition on the results of the Group
During the year, the acquisition of the subsidiary resulted in inclusion of post-acquisition revenue of HK$245,973,000 and
profit of HK$55,840,000 in the Groups financial statements.
Had the business combination during the year been effected at 29 September 2012, the revenue of the Group would have
been HK$10,123,538,000 and the profit for the year would have been HK$809,511,000.
F-90
Pacific Andes Resources Development Limited Annual Report 2013 100
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
38 Acquisition of Subsidiaries continued
Previously held interest
The previously held equity interest of 17.19% in Copeinca was previously recorded as available-for-sale investment. It was
re-measured at fair value at the date of acquisition. The difference between the fair value of HK$1,042,415,000 and the
carrying amount of 17.19% equity interest immediately prior to the date of acquisition of HK$916,882,000 amounting to
HK$125,533,000 was recognised in other operating income (Note 7).
Non-controlling interest
The interests of a non-controlling shareholder recognised at the acquisition date was measured at the non-controlling
interests proportionate share of the fair value of the acquirees identifiable net assets.
28 September 2012
Subsidiaries Place of incorporation Date of acquisition

Consorcio Vollmacht S.A.C. Peru 7 November 2011
Negocios Rafmar S.A.C. Peru 7 November 2011
Brandberg Namibia Investments Company
(Proprietary) Limited Namibia 5 March 2012
Inversiones Pesqueras West S.A.C. Peru 14 June 2012
Pesqueros del Pacifico S.A.C. Peru 14 June 2012
The Group acquired the above subsidiaries to achieve higher operating efficiencies of the Peruvian operations and venture
into new market in Namibia.
During the year ended 28 September 2012, the acquisition of the subsidiaries resulted in inclusion of post-acquisition revenue
of HK$874,000 and loss of HK$6,474,000 in the Groups financial statements.
It is not practicable to estimate the change in revenue and operating results for the Group had the above acquisitions being
effected at the beginning of the financial year as the financial statements prior to the acquisitions have not been prepared
based on International Financial Reporting Standards or Singapore Financial Reporting Standards.
F-91
Pacific Andes Resources Development Limited Annual Report 2013 101
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
38 Acquisition of Subsidiaries continued
Non-controlling interest continued
The net assets acquired and the goodwill arising are as follows:
Acquirees
carrying
amount
before
combination
Fair value
adjustments Fair value
HK$000 HK$000 HK$000

Property, plant and equipment (Note 14) 104,954 (10,331) 94,623
Other intangible assets (Note 21) 49,920 171,874 221,794
Inventories 1,799 1,799
Other receivable and prepayments 22,401 (348) 22,053
Bank balances and cash 2,000 2,000
Trade and other payables (87,535) (87,535)
Deferred tax liabilities (Note 35) (48,468) (48,468)

93,539 112,727 206,266

Gain on bargain purchase arising on acquisition (Note 7) (19,872)
Goodwill arising on acquisition (Note 16) 49,086
Total consideration 235,480

Satisfied by:
Cash paid 235,480

Net cash outflow arising on acquisition:
Cash paid 235,480
Cash and cash equivalents acquired (2,000)
233,480

39 Acquisition of Assets
During the financial year, the Group acquired the entire issued share capital of J. Wiludi & Asociados Consultores En
Pesca S.A.C. (Note 45) which own a fishing vessel for a consideration of HK$19,500,000. The transaction was determined
by management to be an acquisition of assets rather than a business combination as defined in FRS 103 Business
Combinations.
F-92
Pacific Andes Resources Development Limited Annual Report 2013 102
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
40 Operating Lease Arrangements
The Group as lessor
The Group rents out its investment properties in PRC and Singapore and a portion of its freehold building and equipment
in Peru under operating leases. Rental income earned during the year ended 28 September 2013 was HK$2,129,000 (2012:
HK$2,113,000).
At the end of the reporting period, the Group had contracted with tenants for the following future minimum lease payments:
2013 2012
HK$000 HK$000

Within one year 1,512 218
In second to fifth year inclusive 1,149

2,661 218

Leases for premises are negotiated for an average term of 2 years and rentals are fixed for an average of 2 years.
The Group as lessee
2013 2012
HK$000 HK$000

(a) Minimum lease expenditure
under operating leases recognised as an expense in the year 372,925

Comprising:
Rental of premises 878
Amortisation of prepayment to suppliers (Note 17) 172,640
Variable charter hire 35,420
Fixed charter hire 163,987

(b) At the end of the reporting period, the Group had no outstanding commitments under non-cancellable operating leases
in respect of rented premises.
F-93
Pacific Andes Resources Development Limited Annual Report 2013 103
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
41 Contingent Liabilities
(a) At the end of the reporting period, the Group and the Company had contingent liabilities as follows:
THE GROUP THE COMPANY
2013 2012 2013 2012
HK$000 HK$000 HK$000 HK$000

Unsecured guarantees given to bankers
in respect of banking facilities utilised
by subsidiaries:
Unsecured 4,197,689 4,648,188

The Company also issued unlimited guarantee to bankers in respect of general banking facilities granted to subsidiaries.
The secured facilities provided to the Groups subsidiary is secured by land and buildings held by the Group.
(b) Certain subsidiaries of the Group are parties to legal processes in Peru amounting to approximately HK$233,415,000
(2012: HK$29,629,000). These relate to environmental matters, former employees and miscellaneous claims. The
Groups legal advisor has advised that HK$82,984,000 (2012: HK$22,843,000) of these claims is likely to have
unfavourable outcome for the Group and the outcome for claims of HK$150,431,000 (2012: HK$6,786,000) cannot be
reasonably ascertained. Additionally, there are claims which the legal advisor has opined to have remote chances of
resulting in unfavourable outcomes for the Group.
The Group had made a provision of HK$82,984,000 (2012: HK$22,843,000) for these claims where the outcome is
likely to be unfavourable to the Group.
Saved as disclosed above, no member of the Group is engaged in any litigation or claims of material importance known
to Directors to be pending or threatened against any member of the Group.
42 Commitments
2013 2012
HK$000 HK$000

(a) Capital expenditure in respect of acquisition of property, plant and equipment
contracted for but not provided in the consolidated financial statements 65,890 2,051

(b) As at 28 September 2013, the Group has ongoing commitment to pay variable price for the supply of fish under the
first, second, third and fourth long term supply agreements entered into with Perun and Alatir for a period of 10 to
23 years up to 28 September 2030. Variable price is calculated at 20% of the revenue derived from the sales of fish
before deduction of amortisation of fixed prepayment to Suppliers.
43 Pledge of Assets
Deposits amounting to HK$111,000 (2012: HK$207,000) are pledged to a bank to secure an export invoice discounting facility
granted to the Group.
Inventories totalling HK$63,882,000 (2012: HK$41,255,000) of a Peruvian subsidiary are pledged as security for certain short
term bank borrowings for certain Peruvian subsidiaries.
F-94
Pacific Andes Resources Development Limited Annual Report 2013 104
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
44 Holding Company and Related Company Transactions
During the year, the Group carried out significant transactions with the subsidiaries of PAIH as follows:
2013 2012
HK$000 HK$000

Interest expenses paid to PAIH and its subsidiaries (note (i)) 111 105
Administrative expenses paid to PAIH and its subsidiaries (note (ii)) 34,787 33,419

Notes:
(i) The interest expenses were calculated monthly at interest rates ranging from 2.18% to 2.21% (2012: 2.21% to 2.30%) per annum on
the outstanding amounts due to PAIH and its subsidiaries.
(ii) The administrative expenses paid to PAIH and its subsidiaries, were calculated in accordance with the management agreement signed
on 3 September 1996 and updated by a supplemental agreement dated 22 July 2003.
45 Particulars of Subsidiaries
Details of the subsidiaries are as follows:
Name
Country
of incorporation
or registration/operation
Proportion
of ownership
interest
Proportion
of voting
power held Principal activities
2013 2012 2013 2012
% % % %

Admired Agents Limited
(5)
British Virgin Islands/
Worldwide
46.34 46.34 80 80 Agent for procurement of
provisions and supplies
for the Group
Alliance Capital
Enterprises Limited
(2)
Hong Kong/PRC 100 100 100 100 Property holding
Andes Agency Limited
(5)
Hong Kong/Worldwide 100 100 100 100 Inactive
Andeshali Namibia
Investment Holdings
(5)
Namibia 57.92 100 100 100 Investment holding
Atlantic Pacific Fishing
Company (Pty)
Limited
(6)
Namibia 28.38 49 Operation of vessel and
sale of fish
Brandberg (Mauritius)
Investments Holdings
Limited (formerly
Andeshali Resources
Holding Limited
(5)
)
Mauritius 57.92 100 100 100 Investment holding
Brandberg Namibia
Investments Company
(Proprietary) Limited
(5)
Namibia 57.92 57.92 100 100 Fishing operation
F-95
Pacific Andes Resources Development Limited Annual Report 2013 105
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
Name
Country
of incorporation
or registration/operation
Proportion
of ownership
interest
Proportion
of voting
power held Principal activities
2013 2012 2013 2012
% % % %

CFG Investment S.A.C.
. (3)
Peru 57.92 57.92 100 100 Investment holding,
operation of fishing
vessel, operation of
fishmeal plants and
sale of fish and marine
catches, fishmeal and
fish oil
China Fishery Group
Limited (Formerly known
as CFG Investments
(Hong Kong) Ltd)
(5)
Hong Kong 57.92 57.92 100 100 Investment holding
CFG Investments
(Shanghai) Ltd
(5)
PRC 57.92 57.92 100 100 Inactive
CFG Peru Investments Pte
Limited
(1)
Singapore 57.92 57.92 100 100 Investment holding
CFGL (Singapore) Private
Limited
(1)
Singapore 57.92 57.92 100 100 Property holding
Champion Maritime
Limited
(5)
British Virgin Islands/
Worldwide
57.92 57.92 100 100 Inactive
Champion Shipping
Limited
(5)
British Virgin Islands/
Worldwide
100 100 100 100 Vessel holding
Chanery Investment Inc.
(5)
British Virgin Islands/
Worldwide
57.92 57.92 100 100 Property holding
Chiksano Management
Limited
(5)
British Virgin Islands/
Worldwide
57.92 57.92 100 100 Agent for sales of fish
and other marine
catches of the Group
and procurement of
provisions and supplies
for the Group
China Cold Chain Group
Limited
(5)
British Virgin Islands 100 100 100 100 Inactive
China Fisheries
International Limited
(5)
Samoa/Worldwide 57.92 57.92 100 100 Management and
operation of fishing
vessels and sale of
fish and other marine
catches
45 Particulars of Subsidiaries continued
F-96
Pacific Andes Resources Development Limited Annual Report 2013 106
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
Name
Country
of incorporation
or registration/operation
Proportion
of ownership
interest
Proportion
of voting
power held Principal activities
2013 2012 2013 2012
% % % %

China Fishery Group
Limited
(1)(4)
Cayman Islands 57.92 57.92 70.51 70.51 Investment holding
CJSC Invest Group
(5)
Russia 57.92 57.92 100 100 Investment holding
Concept China Investment
Limited
(2)
Hong Kong/PRC 100 100 100 100 Property holding
Conred Limited
(2)
Hong Kong/PRC 100 100 100 100 Inactive
Consorcio Vollmacht
S.A.C.
(3)
Peru 57.92 57.92 100 100 Vessel and fishing quota
holding
Copeinca ASA
(7)
Norway 57.40 99.1 Investment holding
Copeinca Internacional
S.L.U
(7)
Spain 57.40 99.1 Investment holding
Corporacion Pesquera Inca
S.A.C.
(3)(7)
Peru 57.40 99.1 Investment holding,
operation of fishing
vessel, operation of
fishmeal plants and
sale of fish and marine
catches, fishmeal and
fish oil
Corporacion Pesquera
Frami S.A.C.
(3)
Peru 57.92 57.92 100 100 Vessel holding
Davis Limited
(2)
Hong Kong/PRC 100 100 100 100 Property holding
Emerald Nirwana Sdn
Bhd
(5)
Malaysia 100 100 100 100 Inactive
Excel Concept Limited
(5)
British Virgin Islands/
Worldwide
46.34 46.34 80 80 Agent for sales of fish
and other marine
catches of the Group
Fantastic Buildings
Limited
(2)
British Virgin Islands/
Hong Kong
100 100 100 100 Property holding
Fortress Agents
Limited
(5)
British Virgin Islands/
Worldwide
57.92 57.92 100 100 Agent for sales of fish
and other marine
catches of the Group
and procurement of
provisions and supplies
for the Group
45 Particulars of Subsidiaries continued
F-97
Pacific Andes Resources Development Limited Annual Report 2013 107
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
Name
Country
of incorporation
or registration/operation
Proportion
of ownership
interest
Proportion
of voting
power held Principal activities
2013 2012 2013 2012
% % % %

Gain Star Management
Limited
(5)
British Virgin Islands/
Worldwide
57.92 57.92 100 100 Agent for sales of fish
and other marine
catches of the Group
and procurement of
provisions and supplies
for the Group
Golden Target Pacific
Limited
(5)
British Virgin Islands/
Worldwide
100 100 100 100 Investment holding
Grandwell Investment
Group Ltd
(6)
Hong Kong 57.92 100 Investment holding
Grand Success Investment
(Singapore) Pte Ltd
(1)(6)
Singapore 57.92 100 Investment holding
Growing Management
Limited
(5)
British Virgin Islands/
Worldwide
57.92 57.92 100 100 Agent for sales of fish
and other marine
catches of the Group
and procurement of
provisions and supplies
for the Group
Hill Cosmos International
Limited
(5)
British Virgin Islands/
Worldwide
57.92 57.92 100 100 Inactive
Inmobiliaria Y Constructora
PAHK S.A.C.
. (3)
Peru 57.92 57.92 100 100 Investment holding
Inversiones Pesqueras
West S.A.C.
(3)
Peru 57.92 57.92 100 100 Fishmeal and investment
holding
J. Wiludi & Asociados
Consultores En Pesca
S.A.C.
(3)(7)
Peru 57.92 100 Vessel holding
Lions City Investment
Inc.
(5)
British Virgin Islands 100 100 100 100 Investment holding
LLC Investment Company
Kredo
(5)
Russia 57.92 57.92 100 100 Operation of fishing
vessel and sale of fish
45 Particulars of Subsidiaries continued
F-98
Pacific Andes Resources Development Limited Annual Report 2013 108
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
Name
Country
of incorporation
or registration/operation
Proportion
of ownership
interest
Proportion
of voting
power held Principal activities
2013 2012 2013 2012
% % % %

Loyal Mark Holdings
Limited
(5)
British Virgin Islands/
Worldwide
57.92 57.92 100 100 Agent for sales of fish
and other marine
catches of the Group
and procurement of
provisions and supplies
for the Group
Macro Capitales S.A.
(3)
Panama 57.92 57.92 100 100 Investment holding
Metro Island International
Limited
(5)
British Virgin Islands/
Worldwide
46.34 46.34 80 80 Agent for sales of fish
and other marine
catches of the Group
and procurement of
provisions and supplies
for the Group
Mission Excel International
Limited
(5)
British Virgin Islands/
Worldwide
57.92 57.92 100 100 Agent for sales of fish
and other marine
catches of the Group
and procurement of
provisions and supplies
for the Group
Natprop Investments
Limited
(5)
Cook Islands/Worldwide 100 100 100 100 Ship repairing agency
Negocios Rafmar
S.A.C.
(3)(8)
Peru 57.92 100 Fishmeal processing
Nidaro International
Limited
(5)
British Virgin Islands/
Worldwide
57.92 57.92 100 100 Inactive
Nippon Fishery Holdings
Limited
(5)
British Virgin Islands/
Worldwide
57.92 57.92 100 100 Inactive (since being
acquired)
New Millennium Group
Holdings Limited
(2)
British Virgin Islands/
Worldwide
100 100 100 100 Inactive
Ocean Expert International
Ltd
(5)
British Virgin Islands/
Worldwide
57.92 57.92 100 100 Agent for sales of fish
and other marine
catches of the Group
and procurement of
provisions and supplies
for the Group
45 Particulars of Subsidiaries continued
F-99
Pacific Andes Resources Development Limited Annual Report 2013 109
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
Name
Country
of incorporation
or registration/operation
Proportion
of ownership
interest
Proportion
of voting
power held Principal activities
2013 2012 2013 2012
% % % %

Pacific Andes Enterprises
(BVI) Limited
(2)
British Virgin Islands/
Worldwide
100 100 100 100 Trading of frozen seafood
products
Pacific Andes Food
(Hong Kong) Company
Limited
(2)
Hong Kong 100 100 100 100 Trading of frozen seafood
products
Pacific Andes Vegetables,
Inc.
(5)
British Virgin Islands/
PRC
100 100 100 100 Investment holding
Paco Alpha Limited
(5)
British Virgin Islands/
Worldwide
100 100 100 100 Vessel holding
Paco Beta Limited
(5)
British Virgin Islands/
Worldwide
100 100 100 100 Trading of marine fuel
Paco Gamma Limited
(5)
British Virgin Islands/
Worldwide
100 100 100 100 Inactive
Paco Sigma Limited
(5)
British Virgin Islands/
Worldwide
100 100 100 100 Trading agent
Pacos Trading Limited
(5)
Cayman Islands/
Worldwide
100 100 100 100 Inactive
Parkmond Group
Limited
(2)
British Virgin Islands/
Worldwide
100 100 100 100 Trading of frozen seafood
products
PARD Trade Limited
(2)
British Virgin Islands 100 100 100 100 Inactive
Pesqueros del Pacifico
S.A.C.
(3)(8)
Peru 57.92 57.92 100 100 Vessel Holding
PFB Fisheries B.V.
(7)
Netherlands 57.40 99.1 Investment holding
Premium Choice Group
Limited
(5)
British Virgin Islands/
Worldwide
57.92 57.92 100 100 Management of fishing
vessels
Pioneer Logistics
Limited
(5)
British Virgin Islands/
Worldwide
57.92 57.92 100 100 Inactive
Powertech Engineering
(Qingdao) Co. Ltd
(5)
PRC 57.92 57.92 100 100 Agent for vessel repairing
services for the Group
45 Particulars of Subsidiaries continued
F-100
Pacific Andes Resources Development Limited Annual Report 2013 110
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
Name
Country
of incorporation
or registration/operation
Proportion
of ownership
interest
Proportion
of voting
power held Principal activities
2013 2012 2013 2012
% % % %

Protein Trading Limited
(5)
Samoa 57.92 57.92 100 100 Procurement and
marketing agent for
fishmeal
Qingdao Pacific Andes
Farm Co. Limited
(5)
PRC 100 100 100 100 Inactive
Qingdao New Millennium
Food Co., Limited
(5)
PRC 100 100 100 100 Inactive
Quality Food
(Singapore) Pte.
Limited
(5)
Singapore 100 100 100 100 Investment holding
Ringston Holdings Ltd
(5)
Cyprus 57.92 57.92 100 100 Investment holding
Sea Capital
International Limited
(5)
British Virgin Islands/
Worldwide
57.92 57.92 100 100 Inactive
Servicios Pesqueros
Chimbote S.A.
(3)(8)
Peru 57.92 100 Provision of logistic and
warehousing services
for fishing industry
Shine Bright Management
Limited
(5)
British Virgin Islands/
Worldwide
57.92 57.92 100 100 Agent for sales of fish
and other marine
catches of the Group
and procurement of
provisions and supplies
for the Group
Smart Group Limited
(5)
Cayman Islands 57.92 57.92 100 100 Investment holding
South Pacific Shipping
Agency Ltd
(5)
British Virgin Islands/
Worldwide
57.92 57.92 100 100 Agent for procurement of
provisions and supplies
for the Group
Super Investment
Limited
(2)
Cayman Islands 81.93 81.93 96.9 96.9 Investment holding
Superb Choice
International Limited
(5)
British Virgin Islands/
Worldwide
57.92 57.92 100 100 Inactive
Sustainable Pelagic
Fishery S.A.C.
(3)
Peru 57.92 57.92 100 100 Operation of fishing
vessels
45 Particulars of Subsidiaries continued
F-101
Pacific Andes Resources Development Limited Annual Report 2013 111
For the financial year ended 28 September 2013
NOTES TO THE FINANCIAL STATEMENTS
Name
Country
of incorporation
or registration/operation
Proportion
of ownership
interest
Proportion
of voting
power held Principal activities
2013 2012 2013 2012
% % % %

Sustainable Fishing
Resources S.A.C.
(3)
Peru 57.92 57.92 100 100 Operation of fishing
vessels
Richtown Development
Limited
(5)
British Virgin Islands/
Hong Kong
100 100 100 100 Investment holding
Well Hope
International Limited
(5)
British Virgin Islands 100 100 100 100 Inactive
Toyama Holdings
Limited
(5)
British Virgin Islands/
Worldwide
57.92 57.92 100 100 Procurement of provisions
and supplies for the
Group
Target Shipping Limited
(5)
Hong Kong/Worldwide 57.92 57.92 100 100 Investment holding
Turbo (Asia) Limited
(2)
Hong Kong 100 100 100 100 Investment holding
Zhonggang Fisheries
Limited
(5)
British Virgin Islands 70 70 70 70 Investment holding
Notes:
(1) Audited by Deloitte & Touche LLP Singapore.
(2) Audited by Deloitte Touche Tohmatsu, Hong Kong.
(3) Audited by Giris, Hernnder y Associados S.C., a member firm of Deloitte Touche Tohmatsu.
(4) Listed on the Singapore Exchange Securities Trading Limited in January 2006.
(5) Audited by Deloitte & Touche Tohmatsu, Hong Kong for sole purpose of inclusion of their financial position and operating results in the
consolidated financial statements of the Group.
(6) Incorporated during the financial year.
(7) The subsidiary was acquired during the financial year.
(8) The subsidiary was merged with CFG Investment S.A.C. during the year.
46 Subsequent Events
On 8 November 2013, a non-wholly owned subsidiary, Grand Success Investment (Singapore) Pte Ltd, received acceptances
of the Second General Offer for a total of 476,500 Copeinca Shares in the final results of the Second General Offer.
Settlement of the Second General Offer was completed on 8 November 2013. Following the settlement of the Second
General Offer, the Group owns 70,044,592 Copeinca Shares, representing approximately 99.78% of the shares and votes
in Copeinca.
On 5 December 2013 entered into the Warrant Issuance Agreement with CAP III-A LIMITED pursuant to which China
Fishery has agreed to issue 96,153,846 warrants of China Fishery. The warrants of China Fishery will be issued to CAP
III-A LIMITED at the warrants subscription consideration of US$1.00, subject to the terms and conditions of the Warrant
Issuance Agreement.
45 Particulars of Subsidiaries continued
F-102
33
INDEPENDENT AUDITORS REPORT
Pacific Andes Resources Development Limited Annual Report 2012
TO THE MEMBERS OF PACIFIC ANDES RESOURCES DEVELOPMENT LIMITED
(incorporated in Bermuda with limited liability)
Report on the Financial Statements
We have audited the accompanying financial statements of Pacific Andes Resources Development Limited (the Company) and its
subsidiaries (the Group) which comprise the statements of financial position of the Group and the Company as at 28 September
2012, and the consolidated income statement, statement of comprehensive income, statement of changes in equity and statement
of cash flows of the Group and statement of changes in equity of the Company for the year then ended, and a summary of significant
accounting policies and other explanatory notes, as set out on pages 34 to 104.
Managements Responsibility for the Financial Statements
Management is responsible for the preparation of these financial statements that give a true and fair view in accordance with
Singapore Financial Reporting Standards, and for devising and maintaining a system of internal accounting controls sufficient to
provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are
properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss account and
balance sheets and to maintain accountability of assets.
Auditors Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance
with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.
The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the
financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant
to the entitys preparation of the financial statements that gives a true and fair view in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal
control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements of the Group and the statement of financial position and statement of changes
in equity of the Company are properly drawn up in accordance with the Singapore Financial Reporting Standards so as to give a true
and fair view of the state of affairs of the Group and of the Company as at 28 September 2012 and of the results, changes in equity
and cash flows of the Group and changes in equity of the Company for the year then ended on that date.
Deloitte & Touche LLP
Public Accountants and
Certified Public Accountants
Singapore
Tsia Chee Wah
Partner
(Appointed on 30 July 2008)
24 December 2012
F-103
34
CONSOLIDATED INCOME STATEMENT
Financial year ended 28 September 2012
Pacific Andes Resources Development Limited Annual Report 2012
THE GROUP
NOTES 2012 2011
HK$000 HK$000

Revenue 5 9,580,798 9,715,939
Cost of sales (7,689,406) (7,631,552)

Gross profit 1,891,392 2,084,387
Other operating income 7 397,573 164,586
Selling and distribution expenses (442,493) (422,457)
Administrative expenses (257,582) (214,689)
Other operating expenses (285,848) (57,314)
Finance costs
interest expense 8 (430,178) (443,103)
cost of early redemption of senior notes 34 (116,331)

872,864 995,079
Share of results of associates 20 38,459 (242)

Profit before income tax 911,323 994,837
Income tax expense 11 (24,205) (30,513)

Profit for the year 9 887,118 964,324

Profit attributable to:
Owners of the Company 627,659 622,818
Non-controlling interests 259,459 341,506

887,118 964,324

(restated)
Earnings per share
Basic 12 HK$0.16 HK$0.20

Diluted 12 HK$0.16 HK$0.19

See accompanying notes to the financial statements.
F-104
35
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Financial year ended 28 September 2012
Pacific Andes Resources Development Limited Annual Report 2012
THE GROUP
2012 2011
HK$000 HK$000

Profit for the year 887,118 964,324
Other comprehensive income:
Exchange difference on translation of the Groups overseas operations 2,430 (5,063)
Fair value change of available-for-sale investments 109,240 (109,240)
Gain on revaluation of property, plant and equipment 9,414 23,672
Deferred tax liability arising on revaluation of properties (1,933)

Other comprehensive income (loss) for the year, net of tax 121,084 (92,564)

Total comprehensive income for the year 1,008,202 871,760

Total comprehensive income attributable to:
Owners of the Company 746,261 525,339
Non-controlling interests 261,941 346,421

1,008,202 871,760

See accompanying notes to the financial statements.
F-105
36
STATEMENTS OF FINANCIAL POSITION
At 28 September 2012
Pacific Andes Resources Development Limited Annual Report 2012
THE GROUP THE COMPANY
NOTES 2012 2011 2012 2011
HK$000 HK$000 HK$000 HK$000

NON-CURRENT ASSETS
Property, plant and equipment 14 4,572,851 4,727,058
Investment properties 15 51,449 49,244
Goodwill 16 2,952,461 2,903,375
Prepayment to suppliers 17 887,040 1,059,680
Advances to suppliers 17 315,900 315,900
Available-for-sale investments 18 32,858 313,172
Interests in subsidiaries 19 6,636,675 5,896,566
Interests in associates 20 505,547 2,195
Other intangible assets 21 1,826,633 1,460,632

11,144,739 10,831,256 6,636,675 5,896,566

CURRENT ASSETS
Inventories 22 1,379,897 1,104,979
Trade and bills receivables 23 2,247,314 2,013,017
Other receivables and prepayments 24 7,899,487 5,568,758 183 511
Current portion of prepayment to suppliers 17 172,640 172,640
Prepaid income tax 15,238 23,759
Pledged deposits 43 207 488,013 487,758
Bank balances and cash 25 445,854 218,067 1,203 11,546

12,160,637 9,589,233 1,386 499,815

CURRENT LIABILITIES
Trade and other payables 26 356,824 433,395 14,540 25,736
Income tax payable 44,201 52,585
Amounts due to Pacific Andes International
Holdings Limited and its subsidiaries 27 4,937 4,339
Derivative financial instruments 28 202,214 6,013 24,206
Convertible bonds 33 619,829 619,829
Bank advances drawn on bills and discounted
trade receivables with insurance coverage 29 3,650
Current portion of finance leases 30 29,555 31,745
Current portion of interest-bearing
bank borrowings 31 5,119,836 4,867,287 472,649

5,757,567 6,018,843 38,746 1,118,214

NET CURRENT ASSETS (LIABILITIES) 6,403,070 3,570,390 (37,360) (618,399)

F-106
37 Pacific Andes Resources Development Limited Annual Report 2012
STATEMENTS OF FINANCIAL POSITION
At 28 September 2012
THE GROUP THE COMPANY
NOTES 2012 2011 2012 2011
HK$000 HK$000 HK$000 HK$000

NON-CURRENT LIABILITIES
Finance leases 30 33,817 63,372
Interest-bearing bank borrowings 31 1,801,956 2,773,185
Bonds 32 690,082 713,051 690,082 713,051
Senior notes 34 2,120,094
Deferred tax liabilities 35 473,389 489,740

5,119,338 4,039,348 690,082 713,051

NET ASSETS 12,428,471 10,362,298 5,909,233 4,565,116

CAPITAL AND RESERVES
Share capital 36 1,325,005 832,691 1,325,005 832,691
Reserves 37 8,362,489 6,967,057 4,584,228 3,732,425

Attributable to owners of the Company 9,687,494 7,799,748 5,909,233 4,565,116
Non-controlling interests 2,740,977 2,562,550

TOTAL EQUITY 12,428,471 10,362,298 5,909,233 4,565,116

See accompanying notes to the financial statements.
F-107
38
STATEMENTS OF CHANGES IN EQUITY
Financial year ended 28 September 2012
Pacific Andes Resources Development Limited Annual Report 2012
Share
capital
Share
premium
Capital
reserve
Other
reserve
Warrants
reserve
Investment
revaluation
reserve
Properties
revaluation
reserve
Currency
exchange
translation
reserve
Retained
earnings
Attributable
to
owners of
the Company
Non-
controlling
interests Total
HK$000 HK$000 HK$000 HK$000 HK$000 HK$000 HK$000 HK$000 HK$000 HK$000 HK000 HK$000

THE GROUP
Balance at 29 September 2010 721,106 2,836,437 305,140 35,482 164,350 29,085 (1,896) 2,885,664 6,975,368 2,264,718 9,240,086
Total comprehensive income
for the year (109,240) 16,824 (5,063) 622,818 525,339 346,421 871,760
Issue of shares on exercise
of warrants 86,651 476,291 (164,350) 398,592 398,592
Share issue expenses (3,820) (3,820) (3,820)
Acquisition of additional
interest of a subsidiary (22,012) (22,012) 22,012
Contribution from
non-controlling shareholders 22,467 22,467
Dividend paid to
non-controlling shareholders (93,068) (93,068)
Final dividend of S1.38 cents
per ordinary share in respect of
year ended 28 September
2010 (Note 13) 24,934 144,615 (243,268) (73,719) (73,719)

Balance at 28 September 2011 832,691 3,453,523 283,128 35,482 (109,240) 45,909 (6,959) 3,265,214 7,799,748 2,562,550 10,362,298
Total comprehensive income
for the year 109,240 6,932 2,430 627,659 746,261 261,941 1,008,202
Issue of shares on exercise
of rights issue 492,314 886,545 1,378,859 1,378,859
Share issue expenses (21,613) (21,613) (21,613)
Redemption of convertible bonds (35,482) 35,482
Deemed dilution of interest
in a subsidiary (3,220) (3,220) 3,220
Dividend paid to
non-controlling shareholders (86,734) (86,734)
Final dividend of S1.08 cents per
ordinary share in respect of
year ended 28 September
2011 (Note 13) (212,541) (212,541) (212,541)

Balance at 28 September 2012 1,325,005 4,318,455 279,908 52,841 (4,529) 3,715,814 9,687,494 2,740,977 12,428,471

F-108
39 Pacific Andes Resources Development Limited Annual Report 2012
STATEMENTS OF CHANGES IN EQUITY
Financial year ended 28 September 2012
Attributable to owners of the Company

Share
capital
Share
premium
Other
reserve
Warrants
reserve
Retained
earnings Total
HK$000 HK$000 HK$000 HK$000 HK$000 HK$000

THE COMPANY
Balance at 29 September 2010 721,106 2,836,437 35,482 164,350 265,005 4,022,380
Total comprehensive income for the year 221,683 221,683
Issue of shares on exercise of warrants 86,651 476,291 (164,350) 398,592
Share issue expenses (3,820) (3,820)
Final dividend of S1.38 cents per ordinary
share in respect of year ended 28
September 2010 (Note 13) 24,934 144,615 (243,268) (73,719)

Balance at 28 September 2011 832,691 3,453,523 35,482 243,420 4,565,116
Total comprehensive income for the year 199,412 199,412
Issue of shares on exercise of rights issue 492,314 886,545 1,378,859
Share issue expenses (21,613) (21,613)
Redemption of convertible bonds (35,482) 35,482
Final dividend of S1.08 cents per ordinary
share in respect of year ended 28
September 2011 (Note 13) (212,541) (212,541)

Balance at 28 September 2012 1,325,005 4,318,455 265,773 5,909,233

See accompanying notes to the financial statements.
F-109
40
CONSOLIDATED STATEMENT OF CASH FLOWS
Financial year ended 28 September 2012
Pacific Andes Resources Development Limited Annual Report 2012
THE GROUP
2012 2011
HK$000 HK$000

Operating activities
Profit before income tax 911,323 994,837
Adjustments for:
Share of results of associates (38,459) 242
Interest expense 430,178 443,103
Interest income (3,894) (1,905)
Statutory employee profit sharing 38,796 6,094
Provision for claims 9,143 3,356
Amortisation of prepayment to suppliers 172,640 172,640
Depreciation expense 747,426 515,623
Cost of early redemption of senior notes 116,331
Gain on revaluation of investment properties (1,972) (4,598)
Impairment loss of property, plant and equipment 44,067
Gain on disposal of property, plant and equipment (183) (620)
Gain on repurchase of bonds (4,000)
Gain on purchase of senior notes (7,378)
Discount on acquisition of an associate (10,515)
Discount on acquisition of a subsidiary (19,872)
Fair value changes of available-for-sale investments 1,644
Fair value changes of derivative financial instruments 202,214 6,013

Operating cash flows before movements in working capital 2,471,158 2,251,116
Inventories (273,119) (822,603)
Trade and bills receivables, other receivables and prepayments (2,542,973) (1,870,018)
Derivative financial instruments (6,013) (19,638)
Trade and other payables (235,075) 40,844

Cash used in operations (586,022) (420,299)
Interest paid (373,068) (425,590)
Income tax paid (88,887) (31,243)

Net cash used in operating activities (1,047,977) (877,132)

F-110
41 Pacific Andes Resources Development Limited Annual Report 2012
CONSOLIDATED STATEMENT OF CASH FLOWS
Financial year ended 28 September 2012
THE GROUP
NOTES 2012 2011
HK$000 HK$000

Investing activities
Interest received 3,894 1,905
Dividend received from an associate 18,515
Proceeds from disposal of property, plant and equipment 2,490 1,868
Purchase of property, plant and equipment (679,763) (1,167,818)
Acquisition of investment in an associate (56,085)
Acquisition of available-for-sale investment (26,702) (420,784)
Purchase of other intangible assets (18,720)
Advances to suppliers (315,900)
Net cash outflow arising on acquisition of subsidiaries 38 (233,480) (428)

Net cash used in investing activities (971,131) (1,919,877)

Financing activities
Dividend paid 13 (212,541) (73,719)
Dividend paid to non-controlling shareholders (86,734) (70,601)
Net cash advanced from (repayment to)
Pacific Andes International Holdings Limited and its subsidiaries 598 (830)
Proceeds from issuing of shares on exercise of rights issue 1,378,859
Proceeds from issuing of shares on exercise of warrants 398,592
Net proceeds from issue of bonds 695,951
Net proceeds from issue of senior notes 2,207,053
Share issue expenses (21,613) (3,820)
Redemption of senior notes (1,751,705)
Redemption of convertible bonds (638,104)
Repurchase of bonds (33,352)
Purchase of senior notes (81,003)
Bank advances repaid on bills and discounted
trade receivables with insurance coverage (3,650) (615)
Finance leases repaid (31,745) (31,117)
Bank borrowings raised 780,000 3,315,000
Repayment of bank borrowings (1,160,226) (692,292)
(Repayment) additions of working capital loans (340,754) 1,420,068
Decrease (increase) in pledged deposits 487,806 (443,174)

Net cash from financing activities 2,244,594 2,761,738

Net increase (decrease) in cash and cash equivalents 225,486 (35,271)
Cash and cash equivalents at beginning of the year 212,025 247,277
Exchange difference arising on consolidation 1 19

Cash and cash equivalents at end of the year 437,512 212,025

Being:
Bank balances and cash 25 445,854 218,067
Bank overdrafts 31 (8,342) (6,042)

437,512 212,025

See accompanying notes to the financial statements.
F-111
42
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
Pacific Andes Resources Development Limited Annual Report 2012
1 General
The Company is an exempted company incorporated in Bermuda with limited liability. Its registered office is at Canons
Court, 22 Victoria Street, Hamilton HM12, Bermuda and principal place of business is at Hong Kong Plaza, Room 3201-3210,
188 Connaught Road West, Hong Kong. The Companys shares are listed on the Singapore Exchange (SGX). Its immediate
holding company is Clamford Holding Limited, a company incorporated in the British Virgin Islands. Its intermediate holding
company is Pacific Andes International Holdings Limited (PAIH), a company incorporated in Bermuda with its shares listed on
The Stock Exchange of Hong Kong Limited. Its ultimate holding company is N. S. Hong Investment (BVI) Limited, a company
incorporated in the British Virgin Islands.
The Company acts as an investment holding company and provides corporate management services to Group companies. The
principal activities of the subsidiaries and associates are described in Notes 44 and 20 respectively.
These financial statements are presented in Hong Kong dollars consistent with the presentation currency of its holding
companies and all values are rounded to the nearest thousand (HK$000) except when otherwise indicated.
The consolidated financial statements of the Group and statement of financial position and statement of changes in equity of
the Company for the year ended 28 September 2012 were authorised for issue by the Board of Directors on 24 December 2012.
2 Summary of Significant Accounting Policies
BASIS OF ACCOUNTING The financial statements are prepared in accordance with the historical cost basis, except as
disclosed in the accounting policies below, and are drawn up in accordance with the Singapore Financial Reporting Standards
(FRS).
ADOPTION OF NEW AND REVISED STANDARDS In the current financial year, the Group has adopted all the new and revised
FRSs and Interpretations of FRSs (INT FRS) that are relevant to its operations and effective for annual periods beginning on
or after 29 September 2011. The adoption of these new/revised FRSs and INT FRSs does not result in changes to the Groups
or Companys accounting policies and has no material effect on the amounts reported for the current or prior years.
At the date of authorisation of these financial statements, the following FRSs and amendments to FRSs relevant to the Group
and Company were issued but not effective:
Amendments to FRS 1 Presentation of Financial Statements Amendments relating to Presentation of Items of Other
Comprehensive Income
FRS 27 (Revised) Separate Financial Statements
FRS 110 Consolidated Financial Statements
FRS 112 Disclosure of Interests in Other Entities
FRS 113 Fair Value Measurement
Amendments to FRS 32 Financial Instruments: Presentation and FRS 107 Financial Instruments: Disclosure Offsetting
Financial Assets and Financial Liabilities
Annual Improvements to FRS 2012
Consequential amendments were also made to various standards as a result of these new/revised standards.
F-112
43 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
2 Summary of Significant Accounting Policies continued
Amendments to FRS 1 Presentation of Financial Statements Amendments relating to Presentation of Items of
Other Comprehensive Income (OCI)
The amendment on Other Comprehensive Income (OCI) presentation will require the Group to present in separate
groupings, OCI items that might be recycled i.e., reclassified to profit or loss (e.g., those arising from cash flow hedging,
foreign currency translation) and those items that would not be recycled (e.g. revaluation gains on property, plant and
equipment under the revaluation model). The tax effects recognised for the OCI items would also be captured in the respective
grouping, although there is a choice to present OCI items before tax or net of tax.
Changes arising from these amendments to FRS 1 will take effect from financial years beginning on or after 1 July 2012, with
full retrospective application.
When the Group adopts the amendments, it will have to present revaluation gains on property, plant and equipment and the
corresponding tax effects separately from other OCI items that might be recycled to profit or loss.
FRS 110 Consolidated Financial Statements and FRS 27 Separate Financial Statements
FRS 110 replaces the control assessment criteria and consolidation requirements currently in FRS 27 and INT FRS 12
Consolidation Special Purpose Entities.
FRS 110 defines the principle of control and establishes control as the basis for determining which entities are consolidated
in the consolidated financial statements. It also provides more extensive application guidance on assessing control based on
voting rights or other contractual rights. Under FRS 110, control assessment will be based on whether an investor has (i) power
over the investee; (ii) exposure, or rights, to variable returns from its involvement with the investee; and (iii) the ability to use its
power over the investee to affect the amount of the returns. FRS 27 remains as a standard applicable only to separate financial
statements.
FRS 110 will take effect from financial years beginning on or after 1 January 2014, with full retrospective application subject to
transitional provisions.
When the Group adopts FRS 110, entities it currently consolidates may not qualify for consolidation, and entities it currently
does not consolidate may qualify for consolidation. The Group is currently estimating the effects of FRS 110 on its investments
in the period of initial adoption.
FRS 112 Disclosure of Interests in Other Entities
FRS 112 requires an entity to provide more extensive disclosures regarding the nature of and risks associated with its interest in
subsidiaries, associates, joint arrangements and unconsolidated structured entities. FRS 112 will take effect from financial years
beginning on or after 1 January 2014, and the Group is currently estimating the extent of additional disclosures needed.
FRS 113 Fair Value Measurement
FRS 113 is a single new Standard that applies to both financial and non-financial items. It replaces the guidance on fair value
measurement and related disclosures in other Standards, with the exception of measurement dealt with under FRS 102 Share-
based Payment, FRS 17 Leases, net realisable value in FRS 2 Inventories and value-in-use in FRS 36 Impairment of Assets.
FRS 113 provides a common fair value definition and hierarchy applicable to the fair value measurement of assets, liabilities,
and an entitys own equity instruments within its scope, but does not change the requirements in other Standards regarding
which items should be measured or disclosed at fair value.
The disclosure requirements in FRS 113 are more extensive than those required in the current standards. For example,
quantitative and qualitative disclosures based on the three-level fair value hierarchy currently required for financial instruments
only under FRS 107.
Financial Instruments: Disclosures will be extended by FRS 113 to cover all assets and liabilities within its scope.
F-113
44 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
2 Summary of Significant Accounting Policies continued
FRS 113 will be effective prospectively from annual periods beginning on or after 1 January 2014. Comparative information
is not required for periods before initial application. The Group is currently estimating the effects of FRS 113 in the period of
initial adoption.
The Group is currently estimating the effects of FRS 113 in the period of initial adoption.
Amendments to FRS 32 Financial Instruments: Presentation and FRS 107 Financial Instruments: Disclosure
Offsetting Financial Assets and Financial Liabilities
The amendments to FRS 32 clarify existing application issues relating to the offsetting requirements. Specifically, the
amendments clarify the meaning of currently has a legal enforceable right of set-off and simultaneous realisation and
settlement.
The amendments to FRS 107 require entities to disclose information about rights of set-off and related arrangements (such
as collateral posting requirements) for financial instruments under an enforceable master netting agreement or similar
arrangement.
The amendments to FRS 107 are required for annual periods beginning on or after 1 January 2013 and interim periods
within those annual periods. The disclosures should be provided retrospectively for all comparative periods. However, the
amendments to FRS 32 are effective for annual periods beginning on or after 1 January 2014, with retrospective application
required.
Annual Improvements to FRS 2012
The Annual Improvements include a number of amendments to various FRSs. The amendments are effective for annual periods
beginning on or after 1 January 2013. The amendments include:
Amendments to FRS 16 Property, Plant and Equipment; and
Amendment to FRS 32 Financial Instruments: Presentation.
Amendments to FRS 16 clarify that spare parts, stand-by equipment and servicing equipment should be classified as property,
plant and equipment when they meet the definition of property, plant and equipment in FRS 16 and as inventory if otherwise.
Management does not anticipate that the amendments to FRS 16 will have a significant effect on the financial statements.
Amendments to FRS 32 clarify that income tax relating to distributions to holders of an equity instrument and to transaction
costs of an equity transaction should be accounted for in accordance with FRS 12 Income Taxes. Management anticipates that
the amendments will have no effect on the financial statements as the Group has already adopted this treatment.
Management anticipates that the adoption of the above FRSs and amendments to FRSs in future periods is not expected to
have a material impact on the financial statements of the Group and the Company in the period of their initial adoption except
as discussed above.
BASIS OF CONSOLIDATION The consolidated financial statements incorporate the financial statements of the Company
and entities controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the
financial and operating policies of an entity so as to obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the
effective date of acquisition or up to the effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line
with those used by other members of the Group.
All intra-group transactions, balances, income and expenses are eliminated on consolidation.
F-114
45 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
2 Summary of Significant Accounting Policies continued
BASIS OF CONSOLIDATION continued
Non-controlling interests in subsidiaries are identified separately from the Groups equity therein. The interest of non-
controlling shareholders may be initially measured (at date of original business combination) either at fair value or at the non-
controlling interests proportionate share of the fair value of the acquirees identifiable net assets. The choice of measurement
basis is made on an acquisition-by-acquisition basis. Subsequent to acquisition, the carrying amount of non-controlling interests
is the amount of those interests at initial recognition plus the non-controlling interests share of subsequent changes in equity.
Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having
a deficit balance.
Changes in the Groups interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.
The carrying amounts of the Groups interests and the non-controlling interests are adjusted to reflect the changes in their
relative interests in the subsidiary. Any difference between the amount by which the non-controlling interests are adjusted and
the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company.
When the Group loses control of a subsidiary, the profit or loss on disposal is calculated as the difference between (i) the
aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying
amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. Amounts previously
recognised in other comprehensive income in relation to the subsidiary are accounted for (i.e. reclassified to profit or loss
or transferred directly to retained earnings) in the same manner as would be required if the relevant assets or liabilities were
disposed of. The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the
fair value on initial recognition for subsequent accounting under FRS 39 Financial Instruments:Recognition and Measurement
or, when applicable, the cost on initial recognition of an investment in an associate or jointly controlled entity.
In the Companys financial statements, investments in subsidiaries are carried at cost less any impairment in net recoverable
value that has been recognised in profit or loss.
BUSINESS COMBINATIONS Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The
consideration for each acquisition is measured at the aggregate of the acquisition date fair values of assets given, liabilities
incurred by the Group to the former owners of the acquiree, and equity interests issued by the Group in exchange for control
of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred.
Where applicable, the consideration for the acquisition includes any asset or liability resulting from a contingent consideration
arrangement, measured at its acquisition-date fair value. Subsequent changes in such fair values are adjusted against the cost
of acquisition where they qualify as measurement period adjustments (see below). The subsequent accounting for changes
in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the
contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent
reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an
asset or a liability is remeasured at subsequent reporting dates in accordance with FRS 39 Financial Instruments: Recognition
and Measurement, or FRS 37 Provisions, Contingent Liabilities and Contingent Assets, as appropriate, with the corresponding
gain or loss being recognised in profit or loss.
Where a business combination is achieved in stages, the Groups previously held interests in the acquired entity are remeasured
to fair value at the acquisition date (i.e. the date the Group attains control) and the resulting gain or loss, if any, is recognised in
profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised
in other comprehensive income are reclassified to profit or loss, where such treatment would be appropriate if that interest
were disposed of.
F-115
46 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
2 Summary of Significant Accounting Policies continued
BUSINESS COMBINATIONS continued
The acquirees identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under the FRS are
recognised at their fair value at the acquisition date, except that:
deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognised and
measured in accordance with FRS 12 Income Taxes and FRS 19 Employee Benefits respectively;
liabilities or equity instruments related to the replacement by the Group of an acquirees share-based payment awards are
measured in accordance with FRS 102 Share-based Payment; and
assets (or disposal groups) that are classified as held for sale in accordance with FRS 105 Non-current Assets Held for Sale
and Discontinued Operations are measured in accordance with that Standard.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination
occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts
are adjusted during the measurement period (see below), or additional assets or liabilities are recognised, to reflect new
information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected
the amounts recognised as of that date.
The measurement period is the period from the date of acquisition to the date the Group obtains complete information about
facts and circumstances that existed as of the acquisition date and is subject to a maximum of one year from acquisition date.
The accounting policy for initial measurement of non-controlling interests is described above.
REVENUE RECOGNITION Revenue is measured at the fair value of the consideration received or receivable. Revenue is
reduced for estimated customer returns, rebates and other similar allowances.
Revenue from the sale of fishes and related products are recognised when all the following conditions are satisfied:
the Group has transferred to the buyer the significant risks and rewards of ownership of the goods;
the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor
effective control over the goods sold;
the amount of revenue can be measured reliably;
it is probable that the economic benefits associated with the transaction will flow to the Group; and
the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Shipping and agency service income is recognised when the shipping and agency services are rendered.
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate
applicable.
Rental income is recognised on a straight-line basis over the terms of the relevant lease.
RETIREMENT BENEFITS COSTS Payments to defined contribution retirement benefit plans are charged as an expense as they
fall due. Payments made to state-managed retirement benefit schemes are dealt with as payments to defined contribution plans
where the Groups obligations under the plans are equivalent to those arising in a defined contribution retirement benefit plan.
F-116
47 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
2 Summary of Significant Accounting Policies continued
EMPLOYEE LEAVE ENTITLEMENT Employee entitlements to annual leave are recognised when they accrue to employees. A
provision is made for the estimated liability for annual leave as a result of services rendered by employees up to the end of the
reporting period.
SHARE BASED PAYMENTS The Group issues equity-settled share-based payments to certain employees. Equity-settled
share-based payments are measured at fair value (excluding the effect of non market-based vesting conditions) at the date of
grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line
basis over the vesting period, based on the Groups estimate of shares that will eventually vest.
At the end of each reporting period, the Group revises its estimate of the number of equity instruments expected to vest. The
impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects
the revised estimate, with a corresponding adjustment to the equity-settled employee benefits reserve.
Fair value is measured using the Black-Scholes pricing model. The expected life used in the model has been adjusted, based
on managements best estimate, for the effects of non-transferability, exercise restrictions and behavioral considerations.
BORROWING COSTS Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets,
which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the
cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
INCOME TAX Income tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the
consolidated income statement because it excludes items of income or expense that are taxable or deductible in other years
and it further excludes items that are not taxable or tax deductible. The Groups liability for current tax is calculated using
tax rates (and tax laws) that have been enacted or substantively enacted in countries where the Company and its subsidiaries
operate by the end of the reporting period.
Deferred tax is recognised on the differences between the carrying amounts of assets and liabilities in the financial statements
and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability
method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences
can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial
recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable
profit nor the accounting profit.
Deferred tax liabilities are recognised on taxable temporary differences arising on investments in subsidiaries and associates,
except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary
difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences
associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient
taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the
foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is
no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset
realised based on the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting
period.
F-117
48 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
2 Summary of Significant Accounting Policies continued
INCOME TAX continued
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current
tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its
current tax assets and liabilities on a net basis.
Current and deferred tax are recognised as an expense or income in profit or loss, except when they relate to items credited
or debited outside profit or loss (either in other comprehensive income or directly in equity), in which case the tax is also
recognised outside profit or loss (either in other comprehensive income or directly in equity respectively), or where they arise
from the initial accounting for a business combination. In the case of a business combination, the tax effect is taken into account
in calculating goodwill or determining the excess of the acquirers interest in the net fair value of the acquirees identifiable
assets, liabilities and contingent liabilities over cost.
PROPERTY, PLANT AND EQUIPMENT Leasehold land and buildings held for use in the production or supply of goods or
services or for administrative purposes, are stated in the statement of financial position at their revalued amounts, being the
fair value at the date of revaluation, less any subsequent accumulated depreciation and subsequent accumulated impairment
losses. Revaluations are performed with sufficient regularity such that the carrying amounts do not differ materially from that
which would be determined using fair values at the end of the reporting period.
Any revaluation increase arising on revaluation of such land and buildings is recognised in other comprehensive income and
accumulated in revaluation reserve, except to the extent that it reverses a revaluation decrease for the same asset previously
recognised in profit or loss, in which case the increase is credited to profit or loss to the extent of decrease previously charged
to profit or loss. A decrease in carrying amount arising on the revaluation of such land and buildings is charged to profit or loss
to the extent that it exceeds the balance, if any, held in the revaluation reserve relating to a previous revaluation of that asset.
Depreciation on revalued land and land and buildings is charged to profit or loss. On subsequent sale or retirement of a
revalued building, the attributable revaluation surplus remaining in the revaluation reserve is transferred to retained earnings.
Properties in the course of construction for production, supply or administrative purposes or for the purpose not yet
determined, are carried at cost, less any recognised impairment loss. Cost includes professional fees and, for qualifying assets,
borrowing costs capitalised in accordance with the Groups accounting policy. Depreciation of these assets, on the same basis
as other property assets, commences when the assets are ready for their intended use.
Property, plant and equipment, other than revalued assets, freehold land and construction in progress are stated at cost less
accumulated depreciation and any accumulated impairment losses.
Depreciation is charged to write off the cost or valuation of assets less estimated residual value of assets over their estimated
useful lives using the straight-line method on the following basis:
Leasehold land and buildings 25 years upon every revaluation or lease terms, if shorter
Freehold buildings 33 years
Processing vessel 20 years
Vessels 10 to 17 years
Fishing vessels 10 to 17 years
Fishing nets 4 years
Furniture and fixtures 3
1
/
3
to 10 years
Office equipment 2
1
/
2
to 10 years
Motor vehicles 20 years
Plant and machinery 2 to 10 years
F-118
49 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
2 Summary of Significant Accounting Policies continued
PROPERTY, PLANT AND EQUIPMENT continued
Freehold land is not depreciated.
The estimated useful lives, residual values and depreciation method are reviewed at each year end, with the effect of any
changes in estimate accounted for on a prospective basis.
Fully depreciated assets still in used are retained in the financial statements.
The gain or loss arising on disposal or retirement of an item of property, plant and equipment is determined as the difference
between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss. On the subsequent sale
or retirement of a revalued property, the attributable revaluation surplus remaining in the revaluation reserve is transferred
directly to retained earnings. No transfer is made from the revaluation reserve to retained earnings except when an asset is
derecognised.
Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets, or, if there
is no certainty that the lessee will obtain ownership by the end of the lease term, the asset shall be fully depreciated over the
shorter of the lease term and its useful life.
INVESTMENT PROPERTIES Investment properties are held on a long-term basis for investment potential and income.
Investment properties are stated at periodic valuation on an open market value for existing use basis. Professional valuations
are obtained annually. All investment properties are measured at fair value with changes in fair value recognised directly in
profit or loss for the period in which they arise.
GOODWILL Goodwill arising on the acquisition of a subsidiary represents the excess of the cost of acquisition over the
Groups interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the subsidiary recognised
at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any
accumulated impairment losses.
For the purpose of impairment testing, goodwill is allocated to each of the Groups cash-generating units expected to benefit
from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment
annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-
generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount
of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each
asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period.
On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss on
disposal.
The Groups policy for goodwill arising on acquisition of an associate is described under Associates below.
F-119
50 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
2 Summary of Significant Accounting Policies continued
Other Intangible Assets
Intangible assets acquired separately
Intangible assets acquired separately are reported at cost less accumulated amortisation and any accumulated impairment
losses. Intangible assets with finite useful lives are amortised on a straight-line basis over their estimated useful lives. The
estimated useful life and amortisation method are reviewed at the end of each annual reporting period, with the effect of any
changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives are not amortised.
Each period, the useful lives of such assets are reviewed to determine whether events and circumstances continue to support
an indefinite useful life assessment for the asset. Such assets are tested for impairment in accordance with the policy below.
Intangible assets acquired in a business combination
Intangible assets acquired in a business combination are identified and recognised separately from goodwill where they satisfy
the definition of an intangible asset and their fair values can be measured reliably. The cost of such intangible assets is their fair
value at the acquisition date.
Subsequent to initial recognition, intangible assets acquired in a business combination are reported on the same basis as
intangible assets acquired separately.
PREPAYMENT TO SUPPLIERS Prepayment to suppliers represents future payment for supply of fishery products under the
long term supply agreements or future charter hire expense for fishing vessels under the vessel operating agreements which
have been prepaid or contractually agreed to be prepaid. They are amortised and charged to profit or loss as cost of sales
pro-ratably over the period for which the prepayment is made and the benefits are expected to accrue.
ASSOCIATES An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an
interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the
invested but is not control or joint control over those policies.
The results and assets and liabilities of associates are incorporated in these financial statements using the equity method of
accounting. Under the equity method, investments in associates are carried in the consolidated statement of financial position
at cost as adjusted for post-acquisition changes in the Groups share of the net assets of the associate, less any impairment in
the value of individual investments. Losses of an associate in excess of the Groups interest in that associate (which includes any
long-term interests that, in substance, form part of the Groups net investment in the associate) are not recognised, unless the
Group has incurred legal or constructive obligations or made payments on behalf of the associate.
Any excess of the cost of acquisition over the Groups share of the net fair value of the identifiable assets, liabilities and
contingent liabilities of the associate recognised at the date of acquisition is recognised as goodwill. The goodwill is included
within the carrying amount of the investment and is assessed for impairment as part of the investment. Any excess of the
Groups share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after
reassessment, is recognised immediately in the consolidated income statement.
Where a Group entity transacts with an associate of the Group, profits and losses are eliminated to the extent of the Groups
interest in the relevant associate.
INVENTORIES Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and, where
applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location
and condition. Cost is calculated using the weighted average method. Net realisable value represents the estimated selling
price less all estimated costs of processing and costs to be incurred in marketing, selling and distribution.
F-120
51 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
2 Summary of Significant Accounting Policies continued
DEFERRED EXPENDITURE Expenses incurred in catching fish and other marine catches during voyages are deferred in the
statement of financial position and released to profit or loss as expenses when the fish and marine catches are sold and revenue
is recognised for the sale. Expenses on each voyage are deferred to the extent that there is reasonable probability of recovery
from sale of fish and other marine catches from that voyage. When it is probable that the costs incurred or to be incurred on
a voyage will exceed the estimated value of the catches, the expected loss is recognised as an expense in the profit or loss
immediately.
Under the vessel operating agreements, the Group paid charter hire fees based on fixed rates and variable rates based on
contracted percentages of the annual operating profit attributable to the vessels procured by the Suppliers (Note 17). As the
fixed portions of charter hire cost were payable during the charter hire period regardless of whether the vessels were deployed
(save for certain exceptions during the earlier part of the charter hire), the Group expenses fixed charter hire cost on a time-
proportionate basis in the consolidated income statement and did not include this cost in deferred expenses. Variable charter
hire costs were determined when the revenue from the sale of fish and marine products were determined. Variable charter hire
cost was accrued as an expense at the same time when revenue was recognised.
IMPAIRMENT OF ASSETS EXCLUDING GOODWILL At the end of each reporting period, the Group reviews the carrying
amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent
of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group
estimates the recoverable amount of the cash-generating unit to which the asset belongs. Where a reasonable and consistent
basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they
are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be
identified.
Intangible assets with indefinite useful lives are tested for impairment annually, and whenever there is an indication that the
asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying
amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately
in the consolidated income statement, unless the relevant asset is carried at a revalued amount, in which case the impairment
loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the
revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount
that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years.
A reversal of an impairment loss is recognised immediately in the consolidated income statement, unless the relevant asset is
carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
FINANCIAL INSTRUMENTS Financial assets and financial liabilities are recognised on the Groups statement of financial
position when the Group becomes a party to the contractual provisions of the instrument.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial instrument and of allocating interest
income or expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash
receipts or payments (including all fees on points paid or received that form an integral part of the effective interest rate,
transaction costs and other premiums or discounts) through the expected life of the financial instrument, or where appropriate,
a shorter period. Income and expense is recognised on an effective interest rate basis for debt instruments.
F-121
52 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
2 Summary of Significant Accounting Policies continued
Financial assets
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, balances with banks and bank overdrafts that are readily convertible to a
known amount of cash and are subject to an insignificant risk of change in value.
Available-for-sale investment
Available-for-sale investment is non-derivative financial asset that is either designated or not classified as financial asset at fair
value through profit or loss or loans and receivables. Available-for-sale equity investment that does not have a quoted market
price in an active market and whose fair value cannot be reliably measured is measured at cost less any identified impairment
losses at the end of each reporting period subsequent to initial recognition.
Loans and receivables
Trade and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as
loans and receivables. Loans and receivables are initially recognised at fair value and subsequently measured at amortised
cost using the effective interest method less impairment. Interest is recognised by applying the effective interest method,
except for short-term receivables when the recognition of interest would be immaterial.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at the end of each reporting period. Financial assets are impaired
where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the
financial asset, the estimated future cash flows of the financial asset have been impacted. For an available-for-sale equity
investment, a significant or prolonged decline in the fair value of that investment below its cost is considered to be objective
evidence of impairment.
For all other financial assets, they are assessed to be impaired individually and the objective evidence of impairment could
include:
significant financial difficulty of the issuer or counterparty; or
default or delinquency in interest or principal payments; or
it becoming probable that the borrower will enter bankruptcy or financial organisation.
For financial assets carried at amortised cost, the amount of the impairment is the difference between the assets carrying
amount and the present value of estimated future cash flows, discounted at the original effective interest rate.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception
of receivables where the carrying amount is reduced through the use of an allowance account. When receivable is uncollectible,
it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the
allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.
With the exception of available-for-sale investment, if, in a subsequent period, the amount of the impairment loss decreases
and the decrease can be related objectively to an event occurring after the impairment loss was recognised, the previously
recognised impairment loss is reversed through profit or loss to the extent the carrying amount of the financial asset at the
date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been
recognised.
In respect of available-for-sale equity investment, impairment losses previously recognised in profit or loss are not reversed
through profit or loss. Any increase in fair value subsequent to an impairment loss is recognised in other comprehensive
income.
F-122
53 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
2 Summary of Significant Accounting Policies continued
Financial assets continued
Derecognition of financial assets
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or it transfers
the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither
transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the
Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group
retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the
financial asset and also recognises a collateralised borrowing for the proceeds received.
Financial liabilities and equity instruments
Classification as debt or equity
Financial liabilities and equity instruments issued by the Group are classified according to the substance of the contractual
arrangements entered into and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its
liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs.
Financial liabilities
Trade and other payables and amounts due to Pacific Andes International Holdings Limited and its subsidiaries are initially
measured at fair value, net of transaction costs, and are subsequently measured at amortised cost, using the effective interest
method, with interest expense recognised on an effective yield basis, except for short term payables when the recognition of
interest would be immaterial.
Interest-bearing bonds, bank loans and senior notes are initially measured at fair value, and are subsequently measured
at amortised cost, using the effective interest method. Any difference between the proceeds (net of transaction costs) and
the settlement or redemption of borrowings is recognised over the term of the borrowings in accordance with the Groups
accounting policy for borrowing costs (see above).
Derivative financial liabilities
The Group enters into derivative financial instruments to manage its exposure to foreign exchange rate risk i.e. foreign
exchange forward contracts. Further details of derivative financial instruments are disclosed in Note 28.
Derivatives are initially recognised at fair value at the date of the derivative contract is entered into and are subsequently
remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognised in profit or loss
immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the
recognition in profit or loss depends on the nature of the hedging relationship.
A derivative with a positive fair value is recognised as a financial asset, a derivative with a negative fair value is recognised as
a financial liability. A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the
instrument is more than 12 months and it is not expected to be realised or settled within 12 months. Other derivatives are
presented as current assets or current liabilities.
Convertible bonds
Convertible bonds are regarded as compound instruments, consisting of a liability component and an equity component. The
component parts of compound instruments are classified separately as financial liabilities and equity in accordance with the
substance of the contractual arrangement. At the date of issue, the fair value of the liability component is estimated using the
prevailing market interest rate for a similar non-convertible instrument. This amount is recorded as a liability on an amortised
cost basis until extinguished upon conversion or at the instruments maturity date. The equity component is determined by
deducting the amount of the liability component from the fair value of the compound instrument as a whole. This is recognised
and included in equity, net of income tax effects, and is not subsequently remeasured.
F-123
54 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
2 Summary of Significant Accounting Policies continued
Financial liabilities and equity instruments continued
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Groups obligations are discharged, cancelled or they
expire.
LEASES Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards
of ownership to the lessee. All other leases are classified as operating leases.
The Group as lessor
Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Initial direct costs
incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised
on a straight-line basis over the lease term.
The Group as lessee
Assets held under finance leases are recognised as assets of the Group at their fair value at the inception of the lease or,
if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the
statement of financial position as a finance lease obligation. Lease payments are apportioned between finance charges and
reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance
charges are charged directly to profit or loss.
Rentals payable under operating leases are charged to profit or loss on a straight-line basis over the term of the relevant lease.
In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The
aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis.
PROVISIONS Provisions are recognised when the Group has a present obligation (legal or constructive) as result of a past
event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount
of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the
end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Where a provision is
measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of these cash
flows.
FOREIGN CURRENCY TRANSACTIONS AND TRANSLATION The individual financial statements of each Group entity are
measured in equity in the currency of the primary economic environment in which the entity operates (its functional currency).
The consolidated financial statements of the Group and the statement of financial position of the Company are presented in
Hong Kong dollars, which is different from the functional currency of the Company, which is United States dollars.
In preparing the financial statements of the individual entities, transactions in currencies other than the entitys functional
currency are recorded at the rate of exchange prevailing on the date of the transaction. At the end of each reporting period,
monetary items denominated in foreign currencies are retranslated at the rates prevailing at the end of the reporting period.
Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on
the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign
currency are not retranslated.
Exchange differences arising on the settlement of monetary items, and on retranslation of monetary items are included in profit
or loss for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included
in profit or loss for the period except for differences arising on the retranslation of non-monetary items in respect of which gains
and losses are recognised in other comprehensive income. For such non-monetary items, any exchange component of that gain
or loss is also recognised in other comprehensive income.
F-124
55 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
2 Summary of Significant Accounting Policies continued
FOREIGN CURRENCY TRANSACTIONS AND TRANSLATION continued
Exchange differences on foreign currency borrowings relating to assets under construction for future productive use, are
included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency
borrowings.
For the purpose of presenting consolidated financial statements, the assets and liabilities of the Groups foreign operations
(including comparatives) are expressed in Hong Kong dollars using exchange rates prevailing at the end of the reporting
period. Income and expense items (including comparatives) are translated at the average exchange rates for the period, unless
exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions
are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in a separate
component of equity under the header of currency exchange translation reserve.
On the disposal of a foreign operation (i.e. a disposal of the Groups entire interest in a foreign operation, or a disposal
involving loss of control over a subsidiary that includes a foreign operation, loss of joint control over a jointly controlled entity
that includes a foreign operation, or loss of significant influence over an associate that includes a foreign operation), all of
the accumulated exchange differences in respect of that operation attributable to the Group are reclassified to profit or loss.
Any exchange differences that have previously been attributed to non-controlling interests are derecognised, but they are not
reclassified to profit or loss.
In the case of a partial disposal (i.e. no loss of control) of a subsidiary that includes a foreign operation, the proportionate share
of accumulated exchange differences are re-attributed to non-controlling interests and are not recognised in profit or loss.
For all other partial disposals (i.e. of associates or jointly controlled entities not involving a change of accounting basis), the
proportionate share of the accumulated exchange differences is reclassified to profit or loss.
On consolidation, exchange differences arising from the translation of the net investment in foreign entities (including monetary
items that, in substance, form part of the net investment in foreign entities), and of borrowings and other currency instruments
designated as hedges of such investments, are recognised in other comprehensive income and accumulated in a separate
component of equity under the header of currency exchange translation reserve.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the
foreign operation and translated at the closing rate.
3 Critical Accounting Judgements and Key Sources of Estimation Uncertainty
In the application of the Groups accounting policies, which are described in Note 2, management is required to make
judgements, estimates and assumption about the carrying amounts of assets and liabilities that are not readily apparent from
other sources. The estimates and associated assumptions are based on historical expense and other factors that are considered
to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis revisions to accounting estimates are recognised
in the period in which the estimates is revised if the revision affects only that period, or in the period of the revision and futures
periods if the revision affects both current and futures periods.
F-125
56 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
3 Critical Accounting Judgements and Key Sources of Estimation Uncertainty continued
Critical judgements in applying the Groups accounting policies
Impairment of quoted available-for-sale equity investment
In 2011, the Group had a quoted available-for-sale equity investment which was purchased at cost for approximately HK$421
million and the fair value of the investment as at 28 September 2011 is approximately HK$305 million.
FRS 39 requires the recognition of an impairment loss for available-for-sale investment if there is objective evidence of
impairment such as a significant or prolonged decline in the fair value of an investment in an equity instrument below its cost.
Nonetheless, the determination of what constitutes a significant or prolonged decline is a matter of fact that requires the
application of judgment.
In making its judgment, management considered if there was objective evidence of impairment and concluded based on
its analysis that the fair value was not representative of the intrinsic value of the equity investment and no impairment was
necessary.
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period,
that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next
financial year, are discussed below.
Carrying amount of prepayment to suppliers and advances to suppliers
As at 28 September 2012, the carrying amounts of prepayments to suppliers and advances to suppliers (Note 17) was
HK$1,059,680,000 (2011: HK$1,232,320,000) and HK$315,900,000 (2011: HK$315,900,000) respectively. The supply of fish
under the long term supply agreements and the operation of vessels under the vessel operating agreements with the Suppliers
(Note 17) have been profitable after deducting amortisation of the prepayment to suppliers over the periods for which the
supply of fish or charter hires have been prepaid. Management has carried out a review of the carrying amounts of prepayment
and advances to Suppliers based on the performance of the operations and noted no indications of impairment.
Carrying amount of processing vessel, fishing vessels and fishing and plant permits
As at the end of the financial year, the carrying amounts of processing vessel, fishing vessels and fishing and plant permits
totalled HK$552,230,000, HK$1,105,773,000 and HK$1,823,905,000 respectively (2011: HK$574,898,000, HK$1,144,088,000
and HK$1,457,904,000). Determining whether the carrying amounts of these assets can be realised requires an estimation of
the value in use of the cash-generating units and a suitable discount rate in order to calculate present value. Management
has evaluated these projections using assumptions on catch quantities, prices of catch and operating cost after considering
efficiencies that can be achieved when the operations become part of the Groups larger operations.
With effect from January 2009, the fishing system in Peru changed from the previous Olympic system to Individual
Transferable Quota (ITQ) system which entitles fishing companies holding valid licensed fishing vessels to a share of fishing
quotas determined by the authorities. Management has evaluated the impact of the quota allocation under the ITQ system and
included such consideration in the estimation of the value in use.
Management has carried out a review of the recoverable amounts of the property, plant and equipment based on their value-
in-use. The assessment has led to the recognition of impairment loss of HK$44,067,000 (2011: HK$nil) in the current year.
Carrying amount of goodwill
Based on managements assessment, management is of the view that the carrying amount of goodwill of HK$2,952,461,000
(2011: HK$2,903,375,000) is not impaired. Information relating to the carrying amount and managements assessment of
goodwill is provided in Note 16.
F-126
57 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
3 Critical Accounting Judgements and Key Sources of Estimation Uncertainty continued
Key sources of estimation uncertainty continued
Accounting for the step acquisition review of carrying amount of associate
During the year, management concluded its accounting of the step acquisition of an associate, Tassal Group Limited (Tassal)
which in prior year was accounted for as an available-for-sale investment (Note 18). For the purposes of the step-acquisition,
management determined the fair value of 22.76% interest in Tassal and were assisted by independent valuation specialists.
Accordingly, management determined the discount arising from the acquisition was HK$10,515,000.
As at the end of the financial year, management has carried out a review of the carrying amount of its major associate and
assessed the operations of Tassal and there was no significant indicators of impairment.
Interests in subsidiaries
Management has carried out a review of the recoverability of the amounts due from subsidiaries, having regard to the existing
performance of the relevant subsidiaries and the carrying value of the net assets in these subsidiaries. No allowance for
impairment has been recognised for financial years ended 28 September 2012 and 28 September 2011.
The carrying amounts of the amounts due from subsidiaries are disclosed in Note 19 to the financial statements.
Useful lives of property, plant and equipment
The carrying amount of property, plant and equipment amounting to HK$4,572,851,000 (2011: HK$4,727,058,000) have been
determined after charging depreciation on a straight-line basis over the estimated useful life of these assets. Components of
these carrying amounts are detailed in Note 14.
Management reviews the estimated useful lives of these assets at the end of each reporting period and determined that the
useful lives as stated in Note 2 remain appropriate.
Impairment of property, plant and equipment (excluding processing vessel and fishing vessels)
The Group assesses annually whether property, plant and equipment have any indication of impairment in accordance with the
accounting policy. If there is indication of impairment, the recoverable amounts of these assets are then determined based on
value-in-use calculations. These calculations require the use of judgment and estimates.
Management has carried out a review of the recoverable amount of the property, plant and equipment based on their value-in-
use and noted no impairment for the year.
4 Financial Instruments, Financial Risks and Capital Risks Management
(a) Categories of financial instruments
The following tables set at the financial instruments as at the end of the reporting period:
THE GROUP THE COMPANY
2012 2011 2012 2011
HK$000 HK$000 HK$000 HK$000

Financial assets
Loans and receivables
(including cash and cash equivalents) 4,121,552 4,092,129 1,386 499,815
Available-for-sale investments 32,858 313,172

4,154,410 4,405,301 1,386 499,815

Financial liabilities
Amortised cost 10,134,258 9,494,694 704,622 1,831,265
Derivative financial instruments 202,214 6,013 24,206

10,336,472 9,500,707 728,828 1,831,265

F-127
58 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
4 Financial Instruments, Financial Risks and Capital Risks Management continued
(b) Financial risk management policies and objectives
The Groups overall risk management programme seeks to minimise potential adverse effects on the financial performance
of the Group.
The Groups activities expose it to a variety of financial risks, including the effects of changes in foreign currency exchange
rates, interest rates, credit quality of counterparties and liquidity.
There has been no change to the Groups exposure to these financial risks or the manner in which it manages and
measures these risks. Market risk exposures are measured using sensitivity analysis indicated below.
i) Foreign exchange risk management
The Group entities transact largely in their functional currencies, which in most instances is the United States dollars.
Foreign exchange risk arises largely from transactions denominated in currencies such as Japanese Yen, Singapore
dollars, Peruvian Nuevo Soles, Chinese Renminbi, Hong Kong dollars and Euro.
At the reporting date, the carrying amounts of monetary assets and monetary liabilities denominated in currencies
other than the respective Group entities functional currencies are as follows:
THE GROUP
Liabilities Assets
2012 2011 2012 2011
HK$000 HK$000 HK$000 HK$000

Japanese Yen 1,625 11,127 212 47
Peruvian Nuevo Soles 108,480 63,300 66,040 100,529
Chinese Renminbi 706,430 732,752 11,489 510,031
Hong Kong dollars 42,128 6,449 2,638 2,150
Euro 5,079 19,152 12,455 3,554
Singapore dollars 424 130 1,938 3,207
Danish Krone 2,743 966 12
Norweign Krone 1,056 2,376 226
Namibian dollars 22 4,371
Canadian dollars 2,819

THE COMPANY
Liabilities Assets
2012 2011 2012 2011
HK$000 HK$000 HK$000 HK$000

Chinese Renminbi 704,570 728,474 266 497,710
Hong Kong dollars 33 51
Singapore dollars 52 11 305 1,091

Foreign currency sensitivity
The following details the sensitivity to a 10% increase and decrease in the relevant foreign currencies against the
functional currency of each Group entity. 10% is the sensitivity rate that represents managements assessment of
the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign
currency denominated monetary items and adjusts their translation at the period end for a 10% change in foreign
currency rates.
F-128
59 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
4 Financial Instruments, Financial Risks and Capital Risks Management continued
(b) Financial risk management policies and objectives continued
i) Foreign exchange risk management continued
If the relevant major currency (Peruvian Nuevo Soles), weakens or strengthens by 10% against the functional
currency of each Groups entity, Groups profit for the year ended 28 September 2012 will increase or decrease by
HK$4,244,000 (2011: decrease or increase by HK$3,723,000). For other currencies, management considers that the
amounts involved are insignificant and accordingly no sensitivity analysis is presented.
For both the Group and Company level the Chinese Renminbi foreign exchange risk exposure relates to primarily
the Chinese Renminbi bonds (Note 32) which has been covered by a forward foreign exchange contract (Note 28).
Management has considered the remaining foreign exchange risk exposure resulting from Chinese Renminbi to be
insignificant and accordingly no sensitivity analysis has been presented.
In addition, the Group has entered into foreign currency forward contracts with banks to reduce its exposure to
currency fluctuation risk of anticipated sales and purchases transactions which are denominated in foreign currencies.
The derivative is not accounted for under hedge accounting. The Group is required to estimate the fair value of the
foreign currency forward contract at end of the reporting period, which therefore exposes the Group to other price
risk.
The fair value of foreign currency forward contracts amounted to HK$202,214,000 (2011: HK$6,013,000) and has
exposure to the forward exchange rate of the relevant foreign currencies against the functional currencies of each
Group entity. Management considered that the Groups exposure to the foreign currency risk on these contracts is
minimal. Accordingly, no sensitivity analysis is presented.
ii) Interest rate risk management
Interest-earning financial assets comprise bank balances and fixed deposits (Notes 25 and 42). Summary quantitative
data of the Groups interest-bearing financial liabilities can be found in section (iv) of this note.
The Group mitigates its exposure to changes in interest rates by locking in fixed rate borrowings through the issue of
bonds (Note 32), convertible bonds (Note 33) and senior notes (Note 34) and use of finance leases for which rates are
fixed at inception of the finance leases (Note 30). The Groups policy is to obtain the most favourable interest rates
available and also by reviewing the terms of the interest-bearing liabilities to minimise the adverse effects of changes
in interest rates.
Interest rate sensitivity
The sensitivity analyses below have been determined based on the exposure to variable interest rates for variable
rate borrowings at the end of the reporting period and the stipulated change taking place at the beginning of the
financial year and held constant throughout the reporting period in the case of instruments that have floating rates.
A 50 basis point increase or decrease represents managements assessment of the reasonably possible change in
interest rates.
If interest rates had been 50 basis points higher or lower and all other variables were held constant, the Groups
post-tax profit for the year ended 28 September 2012 would decrease or increase by approximately HK$34,629,000
(2011: decrease or increase by HK$37,828,000).
If interest rates had been 50 basis points higher or lower and all other variables were held constant, the Companys
post-tax profit for the year ended 28 September 2012 would decrease or increase by approximately HK$nil (2011:
decrease or increase by HK$2,363,000).
F-129
60 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
4 Financial Instruments, Financial Risks and Capital Risks Management continued
(b) Financial risk management policies and objectives continued
iii) Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to
the Group.
At both 28 September 2012 and 28 September 2011, the Groups maximum exposure to credit risk which will cause
a financial loss to the Group due to failure to discharge an obligation by the counterparties and financial guarantees
issued by the Group is arising from:
the carrying amount of the respective recognised financial assets as stated in the consolidated statement of
financial position.
Sales of fishes and related products are made to companies which the Group assessed to be of good credit rating
through their trading and payment history as well as such commercial information which the Group obtains from time
to time. Before accepting any new customers, the Group assesses the potential customers credit quality and defines
credit limits by customers. Limits and credit quality attributed to customers are reviewed periodically. Trade debtors
that are neither past due nor impaired are substantially companies with good collection track record with the Group.
Management considers that the credit risk associated with the Groups trade receivables has been mitigated by the
above risk management practices. The recoverable amount of individual trade receivable is reviewed at the end of
each reporting period and allowance is made for estimated irrecoverable amount.
There is concentration of credit risk as 60% (2011: 58%) of the Groups receivables at the end of the reporting period
relate to 5 entities (2011: 5 entities).
As at the end of the fi nanci al year, the Group has bal ance due from the Suppl i ers whi ch accounted for
HK$874,951,000 or 11% (2011: HK$842,205,000 or 15%) of other receivables and prepayments balances. In
addition, the Group also advanced HK$315,900,000 (2011: HK$315,900,000) to the Suppliers (Note 17).
The credit risk on bank balances is limited because the counterparties are reputable financial institutions.
iv) Liquidity risk management
The Group maintains sufficient cash and cash equivalents and obtains a mix of short-term and long-term external
financing to fund its operations. The Company obtains funding from members of the Group as necessary to meet its
financial obligations.
Non-derivative financial liabilities
The following tables detail the contractual maturity for non-derivative financial liabilities. The tables have been drawn
up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group and
Company can be required to pay. The table includes both interest and principal cash flows. The adjustment column
represents the possible future cash flows attributable to the instrument included in the maturity analysis which is not
included in the carrying amount of the financial liability on the statements of financial position.
F-130
61 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
4 Financial Instruments, Financial Risks and Capital Risks Management continued
(b) Financial risk management policies and objectives continued
iv) Liquidity risk management continued
Non-derivative financial liabilities continued
Weighted
average
effective
interest rate
%
On demand
or within
1 year
Within
2 to 5 years After 5 years Adjustment Total
HK$000 HK$000 HK$000 HK$000 HK$000

THE GROUP
2012
Non-interest bearing 333,981 333,981
Finance lease liabilities 8.49 39,798 41,916 (18,342) 63,372
Variable interest rate
instruments 4.55 5,218,442 1,857,821 (150,444) 6,925,819
Fixed interest rate
instruments 10.08 287,131 1,683,772 2,572,721 (1,732,538) 2,811,086

5,879,352 3,583,509 2,572,721 (1,901,324) 10,134,258

2011
Non-interest bearing 418,236 418,236
Finance lease liabilities 8.88 45,250 81,714 (31,847) 95,117
Variable interest rate
instruments 2.72 4,898,548 2,878,351 (211,241) 7,565,658
Fixed interest rate
instruments 6.24 762,138 841,719 (188,174) 1,415,683

6,124,172 3,801,784 (431,262) 9,494,694

THE COMPANY
2012
Non-interest bearing 14,540 14,540
Fixed interest rate
instruments 7.52 52,059 725,675 (87,652) 690,082

66,599 725,675 (87,652) 704,622

2011
Non-interest bearing 25,736 25,736
Variable interest rate
instruments 1.50 472,842 (193) 472,649
Fixed interest rate
instruments 6.24 679,699 840,716 (187,535) 1,332,880

1,178,277 840,716 (187,728) 1,831,265

F-131
62 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
4 Financial Instruments, Financial Risks and Capital Risks Management continued
(b) Financial risk management policies and objectives continued
iv) Liquidity risk management continued
Derivative financial liabilities
As at the end of the reporting period, the undiscounted contractual net cash outflows on foreign exchange forward
contracts that settle on a net basis within 1 year from the end of the reporting date were HK$202,214,000 (2011:
within 1 year from the end of the reporting date were HK$6,013,000). The carrying amount of financial derivatives in
the consolidated statement of financial position has been determined by reference to the quoted forward rates at the
end of the reporting period.
v) Other risk management
As at 28 September 2012, the Group prepaid HK$1,060 million (2011: HK$1,232 million) for supply of fish by 17
fishing vessels (2011: of charter hire fee for 17 fishing vessels), the benefits of which are to be realised over 10 to
18 years up to 2025 (2011: 10 to 18 years up to 2025). The Group mitigates the risk relating to obligations of the
counterparties in respect of long term supply agreements (2011: vessel operating agreements) through the security
documents described in Note 17.
vi) Fair values of financial assets and financial liabilities
The carrying amounts of cash and bank balances, trade and other current receivables and payables and other
receivables and liabilities approximate their respective fair values due to the relatively short-term maturity of
these financial instruments. The fair values of other classes of financial assets and liabilities (excluding derivative
instruments) are determined in accordance with generally accepted pricing models based on discounted cash flow
analysis using prices from observable current market transactions.
The fair values of derivative instruments are calculated using quoted prices. Where such prices are not available,
discounted cash flow analysis is performed using the applicable yield curve for the duration of the instruments for
non-optional derivatives, and option pricing models for optional derivatives. Foreign currency forwards contracts are
measured using quoted forward exchange rates matching maturities of the contracts.
The following table provides an analysis of financial instruments that are measured subsequent to initial recognition
at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable.
Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for
identical assets or liabilities.
Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1
that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or
liability that are not based on observable market data (unobservable inputs).
F-132
63 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
4 Financial Instruments, Financial Risks and Capital Risks Management continued
(b) Financial risk management policies and objectives continued
vi) Fair values of financial assets and financial liabilities continued
2012
Level 1 Level 2 Level 3 Total
HK$000 HK$000 HK$000 HK$000

Available-for-sale investments
Quoted equity securities 9,536 9,536
Unquoted debt securities 15,522 15,522
Unquoted equity securities 7,800 7,800

25,058 7,800 32,858

Financial liabilities at FVTPL
Derivative financial instruments 202,214 202,214

2011
Level 1 Level 2 Level 3 Total
HK$000 HK$000 HK$000 HK$000

Available-for-sale investments
Quoted equity securities 305,372 305,372
Unquoted equity securities 7,800 7,800

305,372 7,800 313,172

Financial liabilities at FVTPL
Derivative financial instruments 6,013 6,013

There were no transfers between Level 1, Level 2 and Level 3 in the year.
(c) Capital risk management policies and objectives
The Groups objectives in managing capital are to maintain an optimal capital structure so as to maximise the return to its
shareholders, to protect the interests of its stakeholders, safeguard the Groups ability to continue as a going concern and
to be able to service its debts when they are due. In order to maintain or achieve an optimal capital structure, the Group
may adjust the amount of dividend payment, obtain various forms of borrowings in the market and issue new shares at an
appropriate price when necessary.
The capital structure of the Group is as follow:
Group
2012 2011
HK$000 HK$000

Debts:
Finance leases 63,372 95,117
Bank loans 6,921,792 7,640,472
Convertible bonds 619,829
Bonds 690,082 713,051
Senior notes 2,120,094

9,795,340 9,068,469

Cash and cash equivalents 445,854 218,067

Shareholders equity 12,428,471 10,362,298

F-133
64 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
4 Financial Instruments, Financial Risks and Capital Risks Management continued
(c) Capital risk management policies and objectives continued
Management constantly reviews the capital structure to achieve the aforementioned objectives. As a part of this review,
management considers the cost of capital and the risks associated with each class of capital. The Group will balance
its overall capital structure through the payment of dividends, new share issues as well as the issue of new debt or the
redemption of existing debts.
Management also ensures that the Group maintains gearing ratio within a set range to comply with the loan covenants
imposed by banks.
The Groups overall strategy remains unchanged since the last reporting date. The Group is in compliance with externally
imposed capital requirements for the financial years 2012 and 2011.
5 Revenue
THE GROUP
2012 2011
HK$000 HK$000

Sales of frozen seafood 4,484,039 4,066,035
Sales of fishes from fishing activities 3,102,044 3,692,113
Sub-contract of vessel operating agreements 162,279 180,898
Sales of fishmeal and fish oil 1,396,939 1,473,501
Shipping and agency services 435,497 303,392

9,580,798 9,715,939

6 Segment Information
For management reporting purposes, the Group is organised into two operating divisions, frozen fish supply chain management
(Frozen Fish SCM) and Fishery and Fish Supply (2011: fishing). These divisions are on the basis on which the Group reports
its segment information to the Groups chief operating decision maker for the purposes of resource allocation and assessment
of performance.
Frozen Fish SCM comprises sales of fish and other seafood products, charter hire services, sales of marine fuel oil and provision
of packaging materials to fish suppliers. Fishery and Fish Supply comprises income from fishing and fish supply activities and
the production and sale of fishmeal and fish oil.
Segment sales and expenses: Segment sales and expense are the sales and operating expense reported in the Groups income
statement that are directly attributable to a segment and the relevant portion of such sales and expense that can be allocated
on a reasonable basis to a segment.
Segment assets and liabilities: Segment assets include all operating assets used by a segment and consist principally of
operating cash and cash equivalents, receivables, prepayments, advances, inventories, prepayment to suppliers, property,
plant and equipment and intangible assets, net of allowances and provisions. Additions to non-current assets are the total
costs incurred during the year to acquire segment assets that are expected to be used for more than one year and comprises
purchase of property, plant and equipment, prepayment to suppliers and intangible assets directly attributable to the segment.
Segment liabilities include all liabilities and consist principally of accounts payable and accrued expenses.
Inter-segment transfers: Segment sales and expenses include transfers between operating segments. Inter-segment sales are
charged at cost plus a percentage profit mark-up. These transfers are eliminated on consolidation.
Investments in associates: Income from associates is allocated as they are specifically attributable to operating segments, and
correspondingly the investments in associates are included in segment assets of the Group.
F-134
65 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
6 Segment Information continued
Products and services from which reportable segments derive their revenues
Information on the Groups revenue and results by reportable segment are presented below:
Frozen Fishery and
Fish SCM Fish Supply Consolidated
HK$000 HK$000 HK$000

2012
INCOME STATEMENT
External sales 4,869,592 4,711,206 9,580,798

Segment result 648,171 1,232,675 1,880,846

Unallocated items:
Administrative expense (257,582)
Change in fair value of derivative financial
instruments (202,214)
Rental income from properties 2,113
Gain on revaluation of investment properties 1,972
Other operating expenses (83,634)
Finance costs interest expense (430,178)
Income tax expense (24,205)

Profit for the year 887,118

STATEMENT OF FINANCIAL POSITION
Segment assets 9,363,843 13,874,846 23,238,689
Unallocated corporate assets 66,687

Consolidated total assets 23,305,376

Segment liabilities 236,176 327,799 563,975
Unallocated corporate liabilities 10,312,930

Consolidated total liabilities 10,876,905

OTHER SEGMENT INFORMATION
Additions to non-current assets 182,009 724,250 906,259
Depreciation 38,880 708,546 747,426
Impairment loss of property, plant and equipment 44,067 44,067
Amortisation of prepayment to suppliers 172,640 172,640
Amortisation of senior notes issuing expenses 1,422 1,422

F-135
66 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
6 Segment Information continued
Product and services from which reportable segments derive their revenues continued
Frozen Fishery and
Fish SCM Fish Supply Consolidated
HK$000 HK$000 HK$000

2011
INCOME STATEMENT
External sales 4,369,427 5,346,512 9,715,939

Segment result 393,224 1,426,789 1,820,013

Unallocated items:
Administrative expenses (208,676)
Change in fair value of derivative financial
instruments (6,013)
Rental income from properties 1,663
Gain on revaluation of investment properties 4,598
Other operating expenses (57,314)
Finance costs interest expense (443,103)
Finance costs cost of early redemption of senior notes (116,331)
Income tax expense (30,513)

Profit for the year 964,324

STATEMENT OF FINANCIAL POSITION
Segment assets 7,539,645 12,807,841 20,347,486
Unallocated corporate assets 73,003

Consolidated total assets 20,420,489

Segment liabilities 227,104 216,643 443,747
Unallocated corporate liabilities 9,614,444

Consolidated total liabilities 10,058,191

OTHER SEGMENT INFORMATION
Additions to non-current assets 471,574 1,151,127 1,622,701
Depreciation 53,068 462,555 515,623
Amortisation of prepayment to suppliers 172,640 172,640
Amortisation of senior notes issuing expenses 9,461 9,461

The accounting policies of the reportable segments are the same as the Groups accounting policies described in Note 2.
Segment result represents the profit earned by each segment with the allocation of administrative expenses, gains and losses
on revaluation and repurchase of bonds and purchase of senior notes, finance costs, share of results of associates and taxation.
This is the measure reported to the chief operating decision maker for the purposes of resource allocation and assessment of
segment performance.
F-136
67 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
6 Segment Information continued
Geographical information
Geographical locations of the customers of the Group are organised in accordance with their parent companys country of
origin which principally comprises Hong Kong and other regions in the Peoples Republic of China (PRC), East Asia, South
America, Europe, Africa and other parts of the world.
The Groups revenue from external customers and information about its segment assets (non-current assets excluding
investment in associates and other financial assets) by geographical location are detailed below:
Revenue from
external customers
Non-current
assets
Geographical segments 2012 2011 2012 2011
HK$000 HK$000 HK$000 HK$000

Hong Kong and other regions in the PRC 6,249,474 6,280,025 1,136,147 1,239,800
South America 9,326 15,011 4,459,459 6,000,457
Europe 1,078,921 823,557 4,974,586 3,216,625
East Asia 1,006,485 711,156 69,000 66,807
Africa 1,210,081 1,750,982
Others 26,511 135,208 305,372

9,580,798 9,715,939 10,639,192 10,829,061

Information about major customers
During the year ended 28 September 2012 and 2011, there is no customer from Frozen Fish SCM segment with revenue more
than 10% of the Groups total revenue.
A customer from Fishery and Fish Supply segment with revenue more than 10% of the Groups total revenue amounted to
approximately HK$1,253,460,000 (2011: HK$1,511,445,000).
F-137
68 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
7 Other Operating Income
THE GROUP
2012 2011
HK$000 HK$000

Other operating income comprises:
Administrative income charged to associates 982 1,026
Compensation received from suppliers of fish
(a)
184,086 119,848
Interest income 3,894 1,905
Rental income from properties 2,113 1,663
Rental income from vessels 20,355
Realised gain on derivative financial instruments 106,930
Exchange gain, net 37,333
Gain on disposal of property, plant and equipment 183 620
Gain on revaluation of investment properties 1,972 4,598
Discount on acquisition of an associate (Note 20) 10,515
Discount on acquisition of a subsidiary (Note 38) 19,872
Gain on repurchase of bonds 4,000
Gain on purchase on senior notes 7,378
Dividend income 3,070
Sundry income 18,315 11,501

397,573 164,586

(a)
This relates to compensation for non-delivery of fish from suppliers within the stipulated timeframe.
8 Finance Costs
THE GROUP
2012 2011
HK$000 HK$000

Amortisation of senior notes issuing expenses 1,422 9,461
Interest on bank overdraft and loans 301,120 197,040
Interest on finance leases 7,232 9,536
Interest on senior notes 36,768 156,926
Interest on convertible bonds and bonds 83,531 70,035
Interest on amounts due to PAIH and its subsidiaries (Note 27) 105 105

430,178 443,103

F-138
69 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
9 Profit for the Year
Profit for the year has been arrived at after charging (crediting):
THE GROUP
2012 2011
HK$000 HK$000

Directors emoluments:
of the Company 8,848 8,773
of the subsidiaries 8,421 6,224
Contributions to retirement benefit scheme, net of forfeitures 12,502 12,793
Staff costs, excluding directors emoluments
and retirement benefits contributions 74,713 75,301
Crew wages 540,901 605,592
Audit fees paid to auditors of the Company 2,782 4,562
Audit fees paid to other auditors of the Group 6,892 2,790
Non-audit fees paid to auditors of the Company 1,266 6,080
Non-audit fees paid to other auditors of the Group 3,243 4,934
Amortisation of prepayment to suppliers (included in cost of sales) 172,640 172,640
Depreciation of property, plant and equipment 747,426 515,623
Fair value change on available-for-sale investments 1,644
Fair value changes of derivative financial instruments 202,214 6,013
Impairment loss on property, plant and equipment 44,067
Gain on disposal of property, plant and equipment (183) (620)
Gain on repurchase of bonds (4,000)
Gain on purchase of senior notes (7,378)
Net foreign exchange (gains) losses (37,333) 13,617
Cost of inventories included in cost of sales 4,664,460 4,306,627

10 Directors and Key Management Personnels Emoluments
The emoluments of directors and other members of key management during the year were as follows:
THE GROUP
2012 2011
HK$000 HK$000

Short-term benefits 16,668 14,422
Post-employment benefits 601 575

Total 17,269 14,997

The emoluments of directors and key management are determined by the Remuneration Committee having regard to the
performance of individuals and market trends.
Included in the emoluments of directors and other members of key management for the year of HK$17,269,000 (2011:
HK$14,997,000) is an amount of HK$5,886,000 (2011: HK$6,256,000) charged by PAIH and its subsidiaries as administrative
expense, which was calculated in accordance with the management agreement signed on 3 September 1996 and updated by
a supplemental agreement dated 22 July 2003.
F-139
70 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
11 Income Tax Expense
THE GROUP
2012 2011
HK$000 HK$000

The charge comprises:
Profits tax for the year
Hong Kong (700)
Other jurisdictions (89,024) (69,915)

(89,024) (70,615)
Over provision in respect of previous years
Hong Kong 171
Deferred tax (Note 35) 64,819 39,931

(24,205) (30,513)

The income tax expense varied from the amount of income tax expense determined by applying the Hong Kong profits tax rate
of 16.5% (2011: 16.5%) to profit before income tax as a result of the following differences:
THE GROUP
2012 2011
HK$000 HK$000

Hong Kong profits tax at statutory rate (150,368) (164,148)
Non-taxable items 132,026 146,633
Over provision in respect of prior years 171
Effect of different tax rates of subsidiaries operating in other jurisdictions (10,889) (14,362)
Tax effect of share of results of associates 5,026 (40)
Others 1,233

Total Hong Kong profits tax at effective tax rate (24,205) (30,513)

Taxation in other jurisdictions is calculated at the rate prevailing in the respective jurisdictions.
F-140
71 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
12 Earnings Per Share
The calculation of the basic and diluted earnings per share attributable to the owners of the Company is based on the following
data:
THE GROUP
2012 2011
HK$000 HK$000

Earnings
Earnings for the purposes of basic and diluted earnings per share (profit for the year
attributable to owners of the Company) 627,659 622,818

2012 2011
(restated)
Number of shares
Weighted average number of ordinary shares for the
purposes of basic earnings per share 4,040,256,929 3,183,747,886
Effect of dilutive potential ordinary shares:
Warrants 80,850,571

Weighted average number of ordinary shares for
purposes of diluted earnings per share 4,040,256,929 3,264,598,457

The effect of dilutive potential ordinary shares from convertible bonds is excluded in the calculation of the diluted earnings per
share for the year ended 28 September 2012 and 2011 as it is anti-dilutive.
The weighted average number of ordinary shares used in the calculation of basic and diluted earnings per share for the year
ended 28 September 2011 and 28 September 2012 respectively has been adjusted by incorporating the effects of rights issue
during the year ended 28 September 2012.
13 Dividends
During the financial year, the Company paid dividends as follows:
THE COMPANY
2012 2011
HK$000 HK$000

Final dividend of S1.08 cents (2011: S1.38 cents)
per ordinary share in respect of the previous financial year 212,541 243,268

The final dividend paid in cash during the year ended 28 September 2012 of S1.08 (HK6.53 cents) per ordinary share was
HK$212,541,000.
Pursuant to the Companys Scrip Dividend Scheme, the Company issued 80,999,850 ordinary shares of S$0.05 (HK$0.30) per
ordinary share at an issue price of S$0.34 (HK$2.05) per ordinary share to eligible shareholders in respect of the final dividend
of S1.38 cents (HK8.34 cents) for the year ended 28 September 2011. Accordingly, dividend paid in cash for the year ended 28
September 2011 was HK$73,719,000.
In respect of the current year, the Directors proposed that a dividend of S0.30 cent (HK1.89 cents) per ordinary share and is
subject to approval by shareholders at the forthcoming Annual General Meeting and has not been included as a liability in these
financial statements.
F-141
72 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
14 Property, Plant and Equipment
THE GROUP
Leasehold
land and
buildings
Freehold
land
Freehold
buildings
Processing
vessel Vessels
Fishing
vessels
Fishing
nets
Furniture
and fixtures
Office
equipment
Motor
vehicles
Plant and
machinery
Construction-
in-progress Total
HK$000 HK$000 HK$000 HK$000 HK$000 HK$000 HK$000 HK$000 HK$000 HK$000 HK$000 HK$000 HK$000

COST OR VALUATION
At 29 September 2010 86,757 46,287 174,169 616,456 309,660 1,141,960 77,449 16,444 39,219 15,678 2,276,240 174,457 4,974,776
Acquisition of subsidiaries 12,046 12,046
Additions 647 3,276 241,332 99 6,111 169 727,644 188,540 1,167,818
Reclassification 585 58,760 12,084 8,154 150 109 340 17,644 (97,826)
Disposals (1,066) (38) (386) (1,565) (454) (3,509)
Adjustment on asset revaluation 20,041 20,041

At 28 September 2011 106,798 45,868 190,076 616,456 368,420 1,395,376 85,603 16,655 45,053 14,622 3,021,074 265,171 6,171,172
Acquisition of subsidiaries 972 6,822 46,373 632 36,201 3,623 94,623
Additions 19,118 67,860 13,601 9,879 1,418 13,001 11 332,166 222,709 679,763
Reclassification 25,127 46,077 (71,204)
Reclassification to fishing and
plant permits (Note 21) (144,207) (144,207)
Disposals (165) (26,728) (19,793) (492) (46,850) (94,028)
Adjustment on asset revaluation 5,180 5,180

At 28 September 2012 111,978 65,958 196,733 616,456 436,280 1,453,749 76,321 18,073 57,562 14,633 3,244,461 420,299 6,712,503

Comprising:
28 September 2012
At cost 65,958 196,733 616,456 436,280 1,453,749 76,321 18,073 57,562 14,633 3,244,461 420,299 6,600,525
At valuation 111,978 111,978

111,978 65,958 196,733 616,456 436,280 1,453,749 76,321 18,073 57,562 14,633 3,244,461 420,299 6,712,503

28 September 2011
At cost 45,868 190,076 616,456 368,420 1,395,376 85,603 16,655 45,053 14,622 3,021,074 265,171 6,064,374
At valuation 106,798 106,798

106,798 45,868 190,076 616,456 368,420 1,395,376 85,603 16,655 45,053 14,622 3,021,074 265,171 6,171,172

ACCUMULATED DEPRECIATION
At 29 September 2010 30,362 17,980 89,384 178,118 54,874 12,411 20,758 13,602 500,956 918,445
Depreciation 3,631 4,678 23,578 39,512 73,170 14,449 1,228 2,051 1,054 352,272 515,623
Disposals (34) (345) (1,516) (366) (2,261)
Adjustment on asset revaluation (3,631) (3,631)

At 28 September 2011 35,040 41,558 128,896 251,288 69,323 13,605 22,464 13,140 852,862 1,428,176
Depreciation 4,234 5,105 22,668 20,518 79,349 17,710 1,000 3,430 786 592,626 747,426
Disposals (24) (26,728) (17,911) (208) (46,850) (91,721)
Adjustment on asset revaluation (4,234) (4,234)

At 28 September 2012 40,121 64,226 149,414 303,909 69,122 14,605 25,686 13,926 1,398,638 2,079,647

IMPAIRMENT
At 29 September 2010 and
28 September 2011 15,938 15,938
Impairment loss recognised 44,067 44,067

At 28 September 2012 44,067 15,938 60,005

CARRYING AMOUNT
At 28 September 2012 111,978 65,958 156,612 552,230 286,866 1,105,773 7,199 3,468 31,876 707 1,829,885 420,299 4,572,851

At 28 September 2011 106,798 45,868 155,036 574,898 239,524 1,144,088 16,280 3,050 22,589 1,482 2,152,274 265,171 4,727,058

F-142
73 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
14 Property, Plant and Equipment continued
In 2012, the Group made an impairment loss of HK$44,067,000 for 13 idle fishing vessels that management has identified
for scrapping. This has been recognised in the consolidated income statement and included in the line item other operating
expenses.
During the year ended 28 September 2010, the Group closed two of its fishmeal plants. The closure led to the recognition of
impairment loss of HK$9,776,000 that had been recognised in the consolidated income statement in 2010. The recoverable
amount of the relevant assets has been determined on the basis of their value in use.
In 2006, the Group carried out a review of the recoverable amount of its vegetables processing plant and equipment used in the
Groups vegetables business segment upon the Groups cessation of cultivation and processing of vegetables to concentrate
on the sourcing and distribution of vegetable products. The review led to the recognition of impairment loss of HK$6,162,000
that had been recognised in the consolidated income statement in 2006. The recoverable amount of the relevant assets has
been determined on the basis of their value in use. Management determined that there has been no change in circumstances
since then.
The carrying amount of leasehold land and buildings represents land and buildings in Hong Kong with more than 50 years of
lease remaining at the end of the reporting period.
The leasehold land and buildings situated in Hong Kong and Singapore were revalued by BMI Appraisals Limited, a firm
of independent professional valuers, on an open market value basis at 28 September 2012 and 28 September 2011. The
valuations for the financial years then ended were arrived using Direct Comparison Method and were performed in accordance
with International Valuation Standards.
The carryi ng amounts of the Groups property, pl ant and equi pment i ncl udes an amount of HK$28,409,000 (2011:
HK$77,563,000) in respect of assets held under finance leases (Note30).
During the year, management obtained legal advice that the plant permit does not have finite term and remain in full force and
good standing as long as the applicable legal requirements are complied with. Accordingly, the carrying amount of the plant
permit is reclassified to fishing and plant permits.
As at 28 September 2011, certain land and buildings have been pledged to secure mortgage loans of the Group (Note 42).
If leasehold land and buildings of the Group had not been revalued, they would have been included on a historical cost basis
at the following amounts:
2012 2011
HK$000 HK$000

Cost 62,576 62,576
Accumulated depreciation (14,737) (12,623)

Carrying amount 47,839 49,953

F-143
74 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
15 Investment Properties
THE GROUP
2012 2011
HK$000 HK$000

Valuation at beginning of year 49,244 43,556
Adjustment on asset revaluation 1,972 4,598
Exchange realignment 233 1,090

Valuation at end of year 51,449 49,244

The investment properties were valued at HK$51,449,000 (2011: HK$49,244,000) by BMI Appraisals Limited, a firm of
independent professional valuers, on an open market value basis at 28 September 2012 and 28 September 2011. The
valuations for the financial years then ended were arrived at using Investment Method and were performed in accordance with
International Valuation Standards.
The carrying value of investment properties shown above comprises:
THE GROUP
2012 2011
HK$000 HK$000

Investment properties in the PRC under long leases 15,696 14,575
Investment properties in the PRC under medium leases 9,853 9,969
Investment properties in Singapore under long leases 25,900 24,700

51,449 49,244

Long leases refer to the leases with terms of more than 50 years remaining at the end of the reporting period and medium
leases refer to leases with terms of 50 years or less remaining at the end of the reporting period.
The property rental income earned by the Group from its investment properties, all of which are leased out under operating
leases, amounted to HK$1,855,000 (2011: HK$1,503,000). Direct operating expenses arising on the investment properties in
the year amounted to HK$895,000 (2011: HK$821,000).
F-144
75 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
16 Goodwill
THE GROUP
2012 2011
HK$000 HK$000

At beginning of year 2,903,375 2,883,417
Arising on acquisition of subsidiaries (Note 38) 49,086 3,333
Adjustment to goodwill provisionally determined (a) 16,625

At end of year 2,952,461 2,903,375

(a) In 2011, the Group completed the valuation of Pesquera Alejandria S.A.C. acquired in 2010. The provisional fair value
assigned to the net assets acquired decreased by HK$16,625,000, resulting in an increase in goodwill of HK$16,625,000.
Goodwill acquired in a business combination is allocated, at acquisition, to the cash-generating units (CGU) that are
expected to benefit from that business combination. The carrying amount of goodwill had been allocated to each CGU as
follows:
THE GROUP
2012 2011
HK$000 HK$000

Contract Supply business 1,784,700 1,784,700
Peruvian fishmeal operations 1,167,761 1,118,675

2,952,461 2,903,375

The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired.
The recoverable amounts of the CGUs are determined from value in use calculations. The key assumptions for the value in use
calculations are those regarding the discount rates, growth rates and expected changes to selling prices and direct costs during
the period. Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value
of money and the risks specific to CGUs. The growth rates are based on industry growth forecasts. Changes in selling prices and
direct costs are based on past practices and expectations of future changes in the market.
F-145
76 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
16 Goodwill continued
In 2012, the Group engaged an independent financial advisor located in Hong Kong, BMI Appraisal Limited, to determine the
value of Contract Supply business and Peruvian fishmeal operations as of 28 September 2012 (2011: 28 September 2011).
The assessment of recoverability of the carrying amount of goodwill includes:
(i) forecast projected cash flows up to 2022 (2011: 2021) and projection of terminal value using the perpetuity method;
(ii) growth rate of 2% (2011: 3.3%); and
(iii) use of 7.61% (2011: 7.72%) for Contract Supply business and use of 17.14% (2011: 17.26%) for Peruvian fishmeal
operations to discount the projected cash flows to net present values.
Based on the above assessments, management expects the carrying amount of goodwill to be recoverable and there is no
impairment in value of the goodwill.
As at the end of the year, any reasonably possible change to the key assumptions applied is not likely to cause the recoverable
amounts to be below the carrying amounts of the CGUs.
17 Prepayment to Suppliers/Advances to Suppliers
THE GROUP
2012 2011
HK$000 HK$000

Total prepayment to suppliers 2,224,560 2,224,560
Less: Accumulated amortisation (1,164,880) (992,240)

1,059,680 1,232,320
Included as current assets (172,640) (172,640)

Included as non-current assets 887,040 1,059,680

Accumulated amortisation:
At beginning of year 992,240 819,600
Amortisation during the year 172,640 172,640

At end of year 1,164,880 992,240

Since 2004, China Fisheries International Limited (CFIL), a subsidiary had entered into vessel operating agreements with two
companies, Perun Limited (Perun) and Alatir Limited (Alatir) (collectively as Suppliers), to prepay fixed charter hire for 17
(2011: 17) vessels for 10 to 18 years (2011: 10 to 18 years) up to 2025 (2011: 2025).
To secure the benefits from the prepayments and to ensure that the counterparties comply with their obligations under the
vessel operating agreements, the counterparties executed the following documents in favour of CFIL:
(i) charges of all the issued shares of Perun and Alatir;
(ii) debentures over all the present and future assets of Perun and Alatir; and
(iii) entrusted management agreements to vest upon the nominees of CFIL, the management and control of Perun and Alatir
in respect of and limited to the performance and obligations of the vessel operating agreements.
F-146
77 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
17 Prepayment to Suppliers/Advances to Suppliers continued
With effect from 16 July 2012, these vessel operating agreements were replaced by the long term supply agreements.
To secure the benefits from the prepayments and to ensure that the counterparties comply with their obligations under the long
term supply agreements, the counterparties executed the following documents in favour of CFIL:
(i) charges of all the issued shares of Perun and Alatir; and
(ii) debentures over all the present and future assets of Perun and Alatir.
Advances to Suppliers
The advances to Suppliers as of 28 September 2012 are unsecured, interest-free and represent advances for working capital
under the long term supply agreements. The advance amount will be offset against future payments made to the Suppliers.
Management does not expect the advances to Suppliers to be repaid in the next 12 months.
The advances to Suppliers as of 28 September 2011 are unsecured, interest-free and represent advances for the acquisition
and upgrade of two fishing vessels under the vessel operating agreements. The advance amount will be offset against future
payments made to the Suppliers. Management does not expect the advances to Suppliers to be repaid in the next 12 months.
The fair value of the Groups advances to Suppliers approximates their carrying amount.
18 Available-for-Sale Investments
THE GROUP
2012 2011
HK$000 HK$000

Unquoted equity securities 7,800 7,800
Unquoted debt securities 15,522
Quoted equity securities 9,536 305,372

32,858 313,172

Unquoted equity securities represents 1.9% (2011: 1.9%) interest of a company. The investment is carried at cost as no fair value
can be determined. In the opinion of management, no impairment is considered necessary.
In the prior year, quoted equity securities represented 19.76% interests in Tassal, a company listed on the Australian Securities
Exchange. In December 2010, the Group entered into a sale and purchase agreement with an independent third party to
acquire a total of 28,910,367 shares, representing 19.76% of the total number of issued shares of Tassal for a consideration
of A$51,749,556 (approximately HK$421 million). Tassal is principally engaged in the hatching, farming, processing, sale and
marketing of Atlantic salmon in Australia. The fair value of the equity securities was based on the quoted closing market price
of Tassals shares on the last market day of the financial year in 2011.
On 21 November 2011, the Group acquired an additional 3% interest in Tassal making it an associate of the Group (Note 20).
F-147
78 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
19 Interests in Subsidiaries
THE COMPANY
2012 2011
HK$000 HK$000

Amounts due from subsidiaries 6,636,675 5,896,566

Particulars of the subsidiaries at 28 September 2012 are set out in Note 44. The amounts due from subsidiaries are
denominated in Hong Kong dollars, unsecured, bear interest at variable rates ranging from 3.46% to 3.55% (2011: 3.19% to
3.26%) per annum and repayable on demand. Management does not expect any demand to be made for payment within the
next twelve months. Interest rates are determined on monthly basis.
Management is of the opinion that the carrying amount of amounts due from subsidiaries approximate their fair value.
20 Interests in Associates
THE GROUP
2012 2011
HK$000 HK$000

Share of net assets 505,547 2,195

Comprising:
Cost of investment in associates 483,411 3
Share of post-acquisition profits, net of dividend income received 22,136 2,192

505,547 2,195

At the end of the reporting period, the Group had interests in the following associates:
Name of entity
Country of
incorporation
or registration/
operation
Percentage of
equity interest
and voting
power held Principal activities
2012 2011

Pacos Trading Limited Republic of Cyprus/Worldwide 20% 20% Acting as shipping agency
Paco (ET) Limited Republic of Cyprus/Worldwide 20% 20% Inactive (Formerly trading of
frozen fish products)
Paco (GT) Limited Republic of Cyprus/Worldwide 20% 20% Inactive
Paco (HT) Limited Republic of Cyprus/Worldwide 20% 20% Inactive
Tassal Group Limited
(1)
Australia/Australia 22.76% 19.76%
(2)
Engaged in the hatching, farming,
processing, sale and marketing
of Atlantic salmon in Australia
(1) Listed on the Australian Securities Exchange.
(2) Classified as available-for-sale investments as at 28 September 2011.
All the associates are audited by member firms of Deloitte Touche Tohmatsu, of which Deloitte & Touche LLP, Singapore is a
member.
During the financial year, the Group increased its equity interest in Tassal Group Limited (Tassal) from 19.76% to 22.76%.
Consequently, this entity became an associate of the Group via step-acquisition and discount on acquisition of HK$10,515,000
was recorded (Note 7). At the end of the reporting period the fair market value of the investment in Tassal is HK$366.5 million.
The financial year end date for Tassal is 30 June. For the purpose of applying the equity method of accounting, the
consolidated financial statements of Tassal for the period from 21 November 2011 (date of initial recognition of an associate of
the Group) to 30 June 2012 have been used as the Group considers that it is impracticable for Tassal to prepare a separate set
of financial statements as of 28 September 2012.
F-148
79 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
20 Interests in Associates continued
Summarised financial information in respect of the Groups associates is set out below:
2012 2011
HK$000 HK$000

Total assets 3,993,098 22,597
Total liabilities (1,592,161) (11,622)

Net assets 2,400,937 10,975

Groups share of associates net assets 505,547 2,195

Revenue 1,520,302 241,609

Profit (Loss) for the year 168,977 (1,210)

Groups share of associates profit (loss) for the year 38,459 (242)

21 Other Intangible Assets
THE GROUP
Fishing and
plant permits
Club
memberships Total
HK$000 HK$000 HK$000

Cost:
At 28 September 2010 1,439,184 2,728 1,441,912
From acquisition of fishing vessels 18,720 18,720

At 28 September 2011 1,457,904 2,728 1,460,632
From acquisition of subsidiaries (Note 38) 221,794 221,794
Reclassification from property, plant and equipment (Note 14) 144,207 144,207

At 28 September 2012 1,823,905 2,728 1,826,633

Fishing and plant permits are granted by the authority in Peru. The fishing permits are attached to fishing vessels and are
transferable to other fishing vessels.
Management has obtained legal advice that the fishing and plant permits do not have a finite term and remain in full force
and good standing as long as the applicable legal requirements are complied with. Accordingly, the costs of fishing and plant
permits are not amortised.
As stated in Note 16, the Group has engaged an independent financial advisor located in Hong Kong to determine the value
of the Peruvian operations. Based on that report and managements assessment of business prospects, management expects
the carrying amount of fishing and plant permits to be recoverable and there is no impairment in value of the fishing and plant
permits.
Club memberships have infinite life and are not amortised.
F-149
80 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
22 Inventories
THE GROUP
2012 2011
HK$000 HK$000

Inventories at cost consist of the following:
Fishmeal 75,825 84,816
Frozen seafood 1,187,170 901,064
Fuel 23,870 34,952
Supplies 51,131 81,860
Others 41,901 2,287

1,379,897 1,104,979

Fishmeal with carrying amounts of HK$41,255,000 (2011: HK$61,169,000) have been pledged as security for the Groups bank
overdrafts and certain loans totalling HK$118,978,000 (2011: HK$170,356,000) (Note 31).
23 Trade and Bills Receivables
THE GROUP
2012 2011
HK$000 HK$000

Outside parties 2,247,314 2,013,017

An allowance for estimated irrecoverable amount from the sale of goods to third parties of HK$334,000 (2011: HK$4,858,000)
has been determined by reference to managements estimation of irrecoverable amounts. The Group has provided fully for
receivables over 180 days based on historical experience.
For the remaining trade and bills receivables of HK$2,247,314,000 (2011: HK$2,013,017,000), the majority is neither past due
nor impaired.
The credit period granted on sale of goods is up to 180 days (2011: 180 days). No interest is charged on overdue balances.
The amounts due from associates are unsecured, interest-free and repayable on demand.
Movement in the allowance for doubtful debts:
THE GROUP
2012 2011
HK$000 HK$000

Balance at beginning of the year 4,858 5,914
Written off against trade receivables during the year (4,524) (1,056)

Balance at end of the year 334 4,858

F-150
81 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
23 Trade and Bills Receivables continued
The Groups trade and bills receivables that are not denominated in the functional currencies of the respective entities are as
follows:
THE GROUP
2012 2011
HK$000 HK$000

Euro 2,002
Chinese Renminbi 1,460 1,438
Namibian dollars 2,604
Peruvian Nuevo Soles 2,661 2,910

6,725 6,350

24 Other Receivables and Prepayments
THE GROUP THE COMPANY
2012 2011 2012 2011
HK$000 HK$000 HK$000 HK$000

Suppliers 874,951 842,205
Other receivables and prepayments 237,327 214,927 183 511
Deferred expenditure 175,039 373,575
Prepayments for fish 6,612,170 4,138,051

7,899,487 5,568,758 183 511

The balances with Suppliers as of 28 September 2012 are unsecured, interest-free and represent advances to the Suppliers for
working capital advances for the supply of fish to the Group under the long term supply agreements (Note 17).
The balances with Suppliers as of 28 September 2011 are unsecured, interest-free and represent advances to the Suppliers
for fishing tickets so as to be able to fish in the Pacific Ocean, which are obtained after payment of a resources utilisation fee
based on the planned catch volume. Balances also consist of working capital advances for the operation of the vessels under
the vessel operating agreements (Note 17).
The balances with the Suppliers are stated net of amounts payable to vessel owners in respect of payments made by the vessel
owners on behalf of the Group. This offset has been effected on the basis of arrangements amongst members of the Group, the
vessel owners and the Suppliers.
The other receivables balances are neither past due nor impaired.
The Group and Companys other receivables that are not denominated in the functional currencies of the respective entities are
as follows:
THE GROUP THE COMPANY
2012 2011 2012 2011
HK$000 HK$000 HK$000 HK$000

Chinese Renminbi 6,382 8,819
Euro 6,921 1,550
Peruvian Nuevo Soles 61,022 95,163

74,325 105,532

F-151
82 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
25 Bank Balances and Cash
THE GROUP THE COMPANY
2012 2011 2012 2011
HK$000 HK$000 HK$000 HK$000

Cash at banks 442,345 215,220 1,203 11,546
Cash on hand 3,509 2,847

445,854 218,067 1,203 11,546

The interest rates on cash placed with financial institutions ranged from Nil to 0.4% (2011: Nil to 0.1%) per annum.
The Group and Companys cash and bank balances that are not denominated in the functional currencies of the respective
entities are as follows:
THE GROUP THE COMPANY
2012 2011 2012 2011
HK$000 HK$000 HK$000 HK$000

United States dollars 134 165
Chinese Renminbi 3,647 12,016 266 9,441
Euro 5,534 2
Japanese Yen 212 47
Hong Kong dollars 1,662 2,120 33 51
Peruvian Nuevo Soles 2,357 2,456
Singapore dollars 1,924 3,207 305 1,091
Namibian dollars 854
Canadian dollars 2,819

19,143 20,013 604 10,583

26 Trade and Other Payables
THE GROUP THE COMPANY
2012 2011 2012 2011
HK$000 HK$000 HK$000 HK$000

Trade creditors and accruals 269,046 376,331 52 11
Interest payable 64,935 41,905 14,488 25,725
Provision for claims [Note 40(b)] 22,843 15,159

356,824 433,395 14,540 25,736

F-152
83 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
26 Trade and Other Payables continued
Movements in provision for claims:
THE GROUP THE COMPANY
2012 2011 2012 2011
HK$000 HK$000 HK$000 HK$000

Balance at beginning of year 15,159 13,779
Payments during the year (1,459) (1,976)
Additional provision in the year 9,143 3,356

Balance at end of year 22,843 15,159

Trade payables principally comprise amounts outstanding for vessel operating costs and trade purchases.
The average credit period on purchase of goods is 30 days (2011: 30 days). No interest is charged on overdue balances. The
Group has financial risk management policies in place to ensure that all payables are within the credit timeframe.
The Group and Companys trade and other payables that are not denominated in the functional currencies of the respective
entities are as follows:
THE GROUP THE COMPANY
2012 2011 2012 2011
HK$000 HK$000 HK$000 HK$000

Chinese Renminbi 16,348 19,701 14,488 15,423
Euro 5,079 7,438
Hong Kong dollars 1,449 1,552
Peruvian Nuevo Soles 108,480 63,300
Singapore dollars 424 130 52 11
Danish Krone 2,743 966
Norwegian Krone 1,056 2,376
Japanese Yen 1,625 111
Namibian dollars 22

137,226 95,574 14,540 15,434

27 Amounts Due to Pacific Andes International Holdings Limited and its Subsidiaries (PAIH)
The amounts due are unsecured, repayable on demand and bear interest at the funding cost of PAIH (Note 43) and its
subsidiaries at rates ranging from 2.21% to 2.30% (2011: 2.19% to 2.26%) per annum.
F-153
84 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
28 Derivative Financial Instruments
During the year, the Group entered into foreign currency forward contracts with banks to reduce its exposure to currency
fluctuation risk of anticipated sales and purchase transactions which are denominated in foreign currencies. These derivatives
contracts are not accounted for under hedge accounting. At the end of the reporting period, the fair value of the foreign
currency forward contracts is HK$202,214,000 (2011: HK$6,013,000), which is settled on net basis. These amounts are based on
quoted market prices for equivalent instruments at the end of the reporting period.
These changes in fair value of HK$202,214,000 (2011: HK$6,013,000) have been charged to profit or loss during the year and
included in the line item other operating expenses.
The major terms of the foreign currency forward contracts are as follows:
2012
Aggregate principal amount Maturity dates Contracted exchange rates

Sell JPY48,758,362,000 From October 2012 to August 2015 US$1 at JPY73.80 to 80.51
Sell Euro102,000,000 July 2015 Euro1 at US$1.30 to US$1.36
Sell GBP23,000,000 August 2014 GBP1 at US$1.627
Sell US$425,238,000 From January 2014 to June 2015 US$1 at RMB6.30 to RMB7.00
2011
Aggregate principal amount Maturity dates Contracted exchange rates

Sell JPY2,953,500,000 From March 2012 to August 2012 US$1 at JPY75.50 to JPY79.50
Sell US$20,000,000 From July 2012 to August 2012 US$1 at RMB6.3090 to RMB6.4050
Buy US$20,000,000 From July 2012 to August 2012 US$1 at RMB6.2740 to RMB6.3700
29 Bank Advances Drawn on Bills and Discounted Trade Receivables with Insurance Coverage
As at 28 September 2011, bank advances drawn on bills amounting to HK$3,650,000 were with recourse and bear interest rates
at 2.43% per annum. These matured in November 2011.
F-154
85 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
30 Finance Leases
THE GROUP
Minimum
lease payments
Present value
of minimum
lease payments
2012 2011 2012 2011
HK$000 HK$000 HK$000 HK$000

Amount payable under finance leases:
Within one year 39,798 45,250 29,555 31,745
In the second to fifth year inclusive 41,916 81,714 33,817 63,372
Less: Future finance charges (18,342) (31,847) NA NA

Present value of lease obligations 63,372 95,117 63,372 95,117

Less: Amount due for settlement
within 12 months (shown
under current liabilities) (29,555) (31,745)

Amount due for settlement after 12 months 33,817 63,372

All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
All lease obligations are denominated in United States dollars.
The carrying amounts of the Groups lease obligations approximate their fair value.
The Groups obligations under finance leases are secured by the lessors title to the leased assets (Note 14).
F-155
86 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
31 Interest-Bearing Bank Borrowings
THE GROUP
2012 2011
HK$000 HK$000

Interest-bearing bank borrowings comprise:
Trust receipt loans and short-term bank loans 3,422,341 4,409,759
Club loans and term loans 3,565,318 3,315,000
Mortgage loans 419
Bank overdrafts 8,342 6,042

6,996,001 7,731,220
Less: Issuing costs (74,209) (90,748)

6,921,792 7,640,472

Analysed as:
Secured 118,978 653,687
Unsecured 6,802,814 6,986,785

6,921,792 7,640,472

Repayable as follows:
On demand or within one year 5,119,836 4,867,287
In the second year 857,981 938,657
In the third year 943,975 941,967
In the fourth year 892,561

6,921,792 7,640,472
Less: Amount due for settlement within one year
included under current liabilities (5,119,836) (4,867,287)

Amount due after one year 1,801,956 2,773,185

Information on securities for the mortgage loans is provided in Note 42. In 2011, the mortgage loans bore interest at 2.25%
below the Hong Kong Dollar Prime lending rate in Hong Kong and were repriced on a monthly basis.
Short-term bank borrowings of the Group amounting to HK$118,978,000 (2011: HK$170,356,000)bear interest ranging from
2.74% to 4.00% (2011: 2.72% to 3.71%) per annum and are secured over the Groups fishmeal (Note 42).
Borrowings of HK$910,000 (2011: HK$72,540,000) are unsecured, bear fixed interest rates of 8.50% (2011: 3.20% to 3.90%) per
annum.
In 2011, borrowings of HK$10,263,000 were secured, bore fixed interest rates ranging from 7.00% to 8.50% per annum.
In 2011, short-term bank borrowings of the Group and the Company amounting to HK$472,649,000 bore interest rates ranging
from 1.22% to 1.78% and were secured over the Groups and Companys pledged deposits.
F-156
87 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
31 Interest-Bearing Bank Borrowings continued
The remaining unsecured club loans, term loans, revolving loans and trust receipt loans bear interest at variable rates ranging
from 2.21% to 3.73% (2011: 2.10% to 3.81%) per annum.
Management estimates that the fair values of the bank borrowings approximate their carrying amounts as the Groups
borrowing rates approximate the market rates available at the end of the reporting period.
The Groups interest-bearing bank borrowings that are not denominated in the functional currencies of the respective entities
are as follows:
THE GROUP
2012 2011
HK$000 HK$000

Euro 11,714
Hong Kong dollars 40,679 4,897
Japanese Yen 11,016

40,679 27,627

32 Bonds
The Chinese Renminbi denominated unsecured bonds was issued on 2 June 2011. The Company has the option of redeeming
the bonds in whole, but not in part, at any time, on giving not less than 30 nor more than 60 days notice to the bondholders.
The bonds will mature on 2 June 2014. Interest of 6.5% per annum will be paid semi-annually until settlement date.
The interest expenses charged to profit or loss is calculated by applying an effective interest rate of 7.5% per annum on the
outstanding bonds.
During the year ended 28 September 2012, a principal amount of RMB30,000,000 (approximately HK$37,127,000) bonds
was repurchased from market at a consideration of RMB26,175,000 (approximately HK$32,393,000) resulting in a gain on
repurchase of bonds of HK$4,000,000 after amortisation cost.
The fair values of the bonds approximate their carrying amounts as the bonds effective interest rates approximate the market
rates available at the end of the reporting period.
F-157
88 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
33 Convertible Bonds
The United States dollar denominated unsecured convertible bonds was issued on 18 April 2007. The bonds were convertible
into a fixed number of ordinary shares of the Company at a fixed exchange rate at any time between the date of issue of the
bonds and their settlement date at the option of the holders. On issue, the bonds were convertible at S$1.0813 per ordinary
share and revised to S$0.6785 per ordinary share effective from 24 July 2010.
If the bonds were not converted, they were to be redeemed on 18 April 2012 at 116.04%. Interest of 4% per annum was paid
semi-annually until settlement date.
The net proceeds received from the issue of the convertible bonds have been split between the liability element and an equity
component, representing the fair value of the embedded option to convert the liability into equity of the Company, as follows:
Liability
component
Equity
conversion
component
HK$000 HK$000

Balance as at 28 September 2010 588,895 35,482
Interest expenses 52,934
Interest paid during the year (22,000)

Balance as at 28 September 2011 619,829 35,482
Interest expenses 30,448
Interest paid during the year (12,173)
Redeemed during the year (638,104) (35,482)

Balance as at 28 September 2012

The interest expenses charged was calculated by applying an effective interest rate of 8.85% per annum to the liability
component for the period since the bonds were issued.
Management estimates the fair value of the liability component of the convertible bonds at 28 September 2011 to be
approximately HK$612,562,000. This fair value has been calculated by assuming the early redemption option of the Company
attached in the convertible bonds using effective interest rate of 14.64% per annum with reference to the US Treasury Zero
Coupon Bond and holding the credit risk margin constant.
The convertible bonds were fully redeemed during the financial year.
34 Senior Notes
On 24 July 2012, the Group, through its subsidiary, CFG Investment S.A.C. (CFGI), issued guaranteed senior fixed rate notes
with aggregate nominal value of US$300,000,000 (approximately HK$2,340,000,000) (the Notes) which carried fixed interest
of 9.75% per annum (interest payable semi-annually in arrears) and was repayable by 30 July 2019.
The Notes are listed on the Singapore Exchange Securities Trading Limited. They are unsecured and guaranteed by China
Fishery Group Limited (China Fishery) and certain subsidiaries of China Fishery. The guarantees are effectively subordinated
to secure obligations of each guarantor, to the extent of the value of assets serving as security.
At any time prior to 30 July 2016, CFGI may redeem the Notes in whole or in part at the principal amount of the Notes plus
an applicable premium and accrued interest provided that any partial redemption shall not result in less than US$100 million
(approximately HK$780 million) of outstanding Notes. At any time prior to and up to 30 July 2016, CFGI may redeem up to
35% of the Notes, with net cash proceeds from issue of ordinary shares of China Fishery or sale of ordinary shares of CFGI, at
the redemption price equal to 109.75% of the principal amount of the Notes plus accrued and unpaid interests, if any, as of the
redemption date.
F-158
89 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
34 Senior Notes continued
The Notes contained certain covenants that limited China Fisherys and certain subsidiaries abilities to, among other things:
incur or guarantee additional indebtedness and issue disqualified or preferred shares;
declare dividends or purchase or redeem shares;
make investments or other specified restricted payments;
issue or sell shares of certain subsidiaries;
sell assets or create any lien; and
enter into sale and leaseback transactions.
Management estimated the fair value of the Notes at 28 September 2012 to be approximately HK$1,816,996,000. The fair value
has been calculated by assuming redemption on 30 July 2019, using effective interest rate of 14.19% per annum with reference
to the US Treasury Zero Coupon Bonds and holding the credit risk margin constant.
The net carrying amount of the Notes is stated net of issue expenses totalling HK$132,951,000. Such expenses are amortised
over the life of the Notes by charging the expenses to profit or loss and increasing the net carrying amount of the Notes with
the corresponding amount. As of 28 September 2012, accumulated amortisation amounted to HK$1,422,000.
During the year, a total principal amount of US$12,000,000 (approximately HK$93,600,000) of Notes was purchased from
market at a consideration of US$10,385,000 (approximately HK$81,003,000) resulting in a gain on purchase of notes of
HK$7,378,000 after amortisation cost.
In the prior year, the notes that were issued on 19 December 2006 were early redeemed by CFGI on 19 September 2011 which
resulted in the cost of early redemption of HK$116,331,000 which was charged to income statement.
35 Deferred Tax Liabilities
The following are the major deferred tax liabilities and assets recognised and movements thereon during the current year:
Accelerated
tax
depreciation
Fair value
adjustments
(1)
Provisions Total
HK$000 HK$000 HK$000 HK$000

THE GROUP
At 29 September 2010 32,027 510,828 (18,672) 524,183
Acquisition of subsidiaries (Note 38) 3,555 3,555
Charged to asset revaluation reserve 1,933 1,933
(Credited) Charged to consolidated income
statement (Note 11) (40,154) (2,615) 2,838 (39,931)

At 28 September 2011 (8,127) 513,701 (15,834) 489,740
Acquisition of subsidiaries (Note 38) 48,468 48,468
(Credited) Charged to consolidated income
statement (Note 11) 8,127 (75,300) 2,354 (64,819)

At 28 September 2012 486,869 (13,480) 473,389

(1) Being deferred tax effect on fair value adjustments of property, plant and equipment and fishing and plant permits on business
combinations.
F-159
90 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
36 Share Capital
THE GROUP AND THE COMPANY
Number of shares
at S$0.05 Amounts
per share S$000

Authorised:
At 29 September 2010, 28 September 2011 and 2012 8,000,000,000 400,000

Issued and fully paid:
At 29 September 2010 2,840,191,014 142,009
Issue of shares as a result of scrip dividend 80,999,850 4,050
Exercise of warrants 272,804,028 13,640

At 28 September 2011 3,193,994,892 159,699
Issue of shares as a result of rights issue 1,596,997,446 79,850

At 28 September 2012 4,790,992,338 239,549

THE GROUP AND THE COMPANY
2012 2011
HK$000 HK$000

Issued and fully paid:
Balance at beginning of year 832,691 721,106
Exercise of warrants 86,651
Issue of shares as a result of scrip dividend 24,934
Issue of shares as a result of rights issue 492,314

Balance at end of year 1,325,005 832,691

During the year ended 28 September 2012, the Company issued 1,596,997,446 new ordinary shares of S$0.05 each at an issue
price of S$0.14 per share by way of rights on the basis of one new share for every two existing shares.
F-160
91 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
37 Reserves
Capital reserve
The capital reserve represents the Groups share of the fair value adjustment to the net assets of subsidiaries on acquisition of
additional equity interest from the minority shareholder.
Other reserve
The other reserve represents the equity component of convertible debt instruments.
Warrants reserve
Warrants reserve represents the net proceeds received from the issue of warrants of the Company. The reserve will be
transferred to share capital and share premium accounts upon the exercise of the warrants.
Warrants with subscription price of S$0.23 each
Number S$000 HK$000

Balance at 29 September 2010 277,533,596 63,833 348,685
Exercised during the year (272,804,028) (62,745) (342,759)
Lapsed during the year (4,729,568) (1,088) (5,926)

Balance at 28 September 2011

On 24 July 2009, 278,237,699 free detachable warrants were issued together with the rights issue of the Company. Each
warrant entitled the holder to subscribe for one ordinary share of S$0.05 each at the exercise price of S$0.23 per share at any
time from the date of issue up to and including 22 July 2011.
Revaluation reserve
The properties revaluation reserve arises on the revaluation of leasehold buildings. Where a revalued leasehold building is sold,
the portion of the revaluation reserve that relates to that asset, and is effectively realised, is transferred directly to retained
earnings. The revaluation reserve is not available for distribution to the Companys shareholders.
The investment revaluation reserve arises on the revaluation of available-for-sale financial assets. Where a revalued financial
asset is sold, the portion of the reserve that relates to that financial asset, and is effectively realised, is recognised in profit and
loss. Where a revalued financial asset is impaired, the portion of the reserve that relates to that financial asset is recognised in
profit and loss.
Currency exchange translation reserve
Exchange differences relating to the translation from the functional currencies of the Groups foreign subsidiaries into Hong
Kong dollars are brought to account by entries made directly to the currency exchange translation reserve.
F-161
92 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
38 Acquisition of Subsidiaries
During the year ended 28 September 2012 and 2011, the Group acquired the following subsidiaries and accounted for these
acquisitions using the purchase method of accounting.
(i) 28 September 2012
Subsidiary Place of incorporation Date of acquisition

Consorcio Vollmacht S.A.C. Peru 7 November 2011
Negocios Rafmar S.A.C. Peru 7 November 2011
Brandberg Namibia Investments
Company (Proprietary) Limited Namibia 5 March 2012
Inversiones Pesqueras West S.A.C. Peru 14 June 2012
Pesqueros del Pacifico S.A.C. Peru 14 June 2012
The Group acquired the above subsidiaries to achieve higher operating efficiencies of the Peruvian operations and
venture into new market in Namibia.
During the year, the acquisition of the subsidiaries resulted in inclusion of post-acquisition revenue of HK$874,000 and
loss of HK$6,474,000 in the Groups financial statements.
It is not practicable to estimate the change in revenue and operating results for the Group had the above acquisitions
being effected at the beginning of the financial year as the financial statements prior to the acquisitions have not been
prepared based on International Financial Reporting Standards or Singapore Financial reporting Standards.
F-162
93 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
38 Acquisition of Subsidiaries continued
(i) 28 September 2012 continued
The net assets acquired and the goodwill arising are as follows:
Acquirees
carrying
amount before
combination
Fair value
adjustments Fair value
HK$000 HK$000 HK$000

Property, plant and equipment (Note 14) 104,954 (10,331) 94,623
Other intangible assets (Note 21) 49,920 171,874 221,794
Inventories 1,799 1,799
Other receivables and prepayments 22,401 (348) 22,053
Bank balances and cash 2,000 2,000
Trade and other payables (87,535) (87,535)
Deferred tax liabilities (Note 35) (48,468) (48,468)

93,539 112,727 206,266

Discount arising on acquisitions (Note 7) (19,872)
Goodwill arising on acquisitions (Note 16) 49,086

Total consideration 235,480

Satisfied by:
Cash paid 235,480

Net cash outflow arising on acquisitions:
Cash paid 235,480
Cash and cash equivalents acquired (2,000)

233,480

F-163
94 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
38 Acquisition of Subsidiaries continued
(ii) 28 September 2011
Subsidiary Place of incorporation Date of acquisition

Servicios Pesqueros Chimbote S.A. Peru 23 December 2010
The Group acquired the subsidiary primarily to lower vessel operating costs of Peruvian operations.
During the year, the acquisition of the subsidiaries resulted in inclusion of post-acquisition revenue of HK$Nil and loss of
HK$78,000 in the Groups financial statements.
It is not practicable to estimate the change in revenue and operating results for the Group had the above acquisitions
being effected at the beginning of the financial year as the financial statements prior to the acquisitions have not been
prepared based on International Financial Reporting Standards or Singapore Financial Reporting Standards.
The net assets acquired and the goodwill arising are as follows:
Acquirees
carrying
amount
before Fair value
combination adjustments Fair value
HK$000 HK$000 HK$000

Property, plant and equipment (Note 14) 623 11,423 12,046
Other receivables and prepayments 688 688
Other payables and accrued expenses (384) (384)
Deferred tax liabilities (Note 35) (109) (3,446) (3,555)

818 7,977 8,795

Goodwill arising on acquisitions (Note 16) 3,333

Total consideration 12,128

Satisfied by:
Cash paid 428
Cash paid previously for interest in associate 11,700

12,128

Net cash outflow arising on acquisitions:
Cash paid 428

F-164
95 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
39 Operating Lease Arrangements
The Group as lessor
The Group rents out its investment properties in PRC and Singapore and a portion of its freehold building and equipment
in Peru under operating leases. Rental income earned during the year ended 28 September 2012 was HK$2,113,000 (2011:
HK$1,663,000).
At the end of the reporting period, the Group had contracted with tenants for the following future minimum lease payments:
2012 2011
HK$000 HK$000

Within one year 218 660
In second to fifth year inclusive 56

218 716

Leases for premises are negotiated for an average term of 2 years and rentals are fixed for an average of 2 years.
The Group as lessee
2012 2011
HK$000 HK$000

(a) Minimum lease expenditure
under operating leases recognised as
an expense in the year 372,925 581,828

Comprising:
Rental of premises 878 875
Amortisation of prepayment to suppliers (Note 17) 172,640 172,640
Variable charter hire 35,420 203,329
Fixed charter hire 163,987 204,984

(b) At the end of the reporting period, the Group had no outstanding commitments under non-cancellable operating leases
in respect of rented premises.
(c) At 28 September 2011, the Group has ongoing commitments to pay variable charter hire for 17 fishing vessels under the
first, second and third vessel operating agreements entered into with Perun and Alatir for a period of 10 to 18 years up to
31 December 2025. Variable charter hire is calculated at 20% of the net profit derived from vessel operating agreements
before deduction of amortisation of fixed prepayment to Suppliers.
(d) As at 28 September 2011, the Group has ongoing commitment to pay fixed charter hire of US$12,000 (approximately
HK$93,600) per day per vessel, and variable charter hire for 6 fishing vessels under the fourth vessel operating agreement
entered into with Perun up to 31 December 2012. Variable charter hire is calculated at 20% of the net profit derived from
operating the fishing vessels after deduction of fixed charter hire payable annually.
F-165
96 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
39 Operating Lease Arrangements continued
Fixed charter hire payables under the fourth long term supply agreement is as follows:
2012 2011
HK$000 HK$000

Within one year 52,790

With effect from 16 July 2012, the above vessel operating agreement were replaced by the long term supply agreements (Note
17).
40 Contingent Liabilities
(a) At the end of the reporting period, the Group and the Company had contingent liabilities as follows:
THE GROUP THE COMPANY
2012 2011 2012 2011
HK$000 HK$000 HK$000 HK$000

Unsecured guarantees given to bankers
in respect of banking facilities utilised
by subsidiaries:
Secured 419
Unsecured 4,648,188 3,386,925

4,648,188 3,387,344

The Company also issued unlimited guarantee to bankers in respect of general banking facilities granted to subsidiaries.
The secured facilities provided to the Groups subsidiary is secured by land and buildings held by the Group.
(b) Certain subsidiaries of the Group are parties to legal processes in Peru amounting to approximately HK$29,629,000 (2011:
HK$22,311,000). These relate to environmental matters, former employees and miscellaneous claims. The Groups legal
advisor has advised that HK$22,843,000 (2011: HK$15,159,000) of these claims is likely to have unfavourable outcome
for the Group and the outcome for claims of HK$6,786,000 (2011: HK$7,152,000) cannot be reasonably ascertained.
Additionally, there are claims which the legal advisor has opined to have remote chances of resulting in unfavourable
outcomes for the Group.
The Group had made a provision of HK$22,843,000 (2011: HK$15,159,000) for these claims where the outcome is likely to
be unfavourable to the Group.
Saved as disclosed above, no member of the Group is engaged in any litigation or claims of material importance known
to the Directors to be pending or threatened against any member of the Group.
F-166
97 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
41 Commitments
2012 2011
HK$000 HK$000

(a) Capital expenditure in respect of acquisition of
property, plant and equipment contracted for but
not provided in the consolidated financial statements 2,051 104,191

(b) With effect from 16 July 2012, the Group has ongoing commitments to pay variable price for the supply of fish under
the new first, second and third long term supply agreements entered into with Perun and Alatir for a period of 10 to 18
years up to 31 December2025. Variable price is calculated at 20% of the revenue derived from the sales of fish before
deduction of amortisation of fixed prepayment to Suppliers.
In addition, the Group has ongoing commitment to pay fixed price for the supply of fish of US$12,000 (approximately
HK$93,600) per day per vessel for 6 fishing vessels under the new fourth long term supply agreement entered into with
Perun up to 31 December 2012.
42 Pledge of Assets
At 28 September 2011, the Group pledged land and buildings with aggregate net carrying values of approximately HK40.8
million to secure the mortgage loans of the Group granted by certain banks.
Deposits amounting to HK$207,000 (2011: HK$255,000) are pledged to a bank to secure an export invoice discounting facility
granted to the Group.
At 28 September 2011, Chinese Renminbi denominated deposits amounting to HK$487,758,000 were pledged to certain banks
to secure facilities granted to the Group.
Inventories totalling HK$41,255,000 (2011: HK$61,169,000) of a Peruvian subsidiary are pledged as security for certain short
term bank borrowings for that Peruvian subsidiary.
F-167
98 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
43 Holding Company and Related Company Transactions
During the year, the Group carried out significant transactions with the subsidiaries of PAIH as follows:
2012 2011
HK$000 HK$000

Interest expenses paid to PAIH and its subsidiaries [note (i)] 105 105
Administrative expenses paid to PAIH and its subsidiaries [note (ii)] 33,419 27,936

Notes:
(i) The interest expenses were calculated monthly at interest rates ranging from 2.21% to 2.30% (2011: 2.19% to 2.26%) per annum on the
outstanding amounts due to PAIH and its subsidiaries.
(ii) The administrative expenses paid to PAIH and its subsidiaries, were calculated in accordance with the management agreement signed on
3 September 1996 and updated by a supplemental agreement dated 22 July 2003.
44 Particulars of Subsidiaries
Details of the subsidiaries are as follows:
Name
Country
of incorporation
or registration/
operation
Proportion
of ownership
interest
Proportion
of voting
power held Principal activities
2012 2011 2012 2011
% % % %

Admired Agents Limited
(5)
British Virgin Islands/
Worldwide
46.34 46.38 80 80 Agent for procurement of
provisions and supplies
for the Group
Alliance Capital Enterprises Limited
(2)
Hong Kong/PRC 100 100 100 100 Property holding
Andes Agency Limited
(5)
Hong Kong/
Worldwide
100 100 100 100 Inactive
Andeshali Resources Holding Limited
(5)(6)
Nigeria 100 100 Investment holding
Andeshali Namibia Investment
Holdings Limited
(5)(6)
Namibia 100 100 Investment holding
Brandberg Namibia Investments
Company (Proprietary) Limited
(5)(7)
Namibia 57.92 100 Fishing operation
CFG Investment S.A.C.
(3)
Peru 57.92 57.97 100 100 Investment holding,
operation of fishing
vessel, operation of
fishmeal plants and
sale of fish and marine
catches, fishmeal and
fish oil
F-168
99 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
Name
Country
of incorporation
or registration/
operation
Proportion
of ownership
interest
Proportion
of voting
power held Principal activities
2012 2011 2012 2011
% % % %

China Fishery Group Limited
(Formerly known as CFG Investments
(Hong Kong) Ltd)
(5)
Hong Kong 57.92 57.97 100 100 Investment holding
CFG Investments (Shanghai) Ltd
(5)
PRC 57.92 57.97 100 100 Inactive
CFG Peru Investments Pte Limited
(1)
Singapore 57.92 57.97 100 100 Investment holding
CFGL (Singapore) Private Limited
(1)
Singapore 57.92 57.97 100 100 Property holding
Champion Maritime Limited
(5)
British Virgin Islands/
Worldwide
57.92 57.97 100 100 Inactive
Champion Shipping Limited
(5)
British Virgin Islands/
Worldwide
100 100 100 100 Vessel holding
Chanery Investment Inc.
(5)
British Virgin Islands/
Worldwide
57.92 57.97 100 100 Property holding
Chiksano Management Limited
(5)
British Virgin Islands/
Worldwide
57.92 57.97 100 100 Agent for sales of fish
and other marine
catches of the Group
and procurement of
provisions and supplies
for the Group
China Cold Chain Group Limited
(5)
British Virgin Islands 100 100 100 100 Inactive
China Fisheries International Limited
(5)
Samoa/Worldwide 57.92 57.97 100 100 Management and
operation of fishing
vessels and sale of
fish and other marine
catches
China Fishery Group Limited
(1) (4)
Cayman Islands 57.92 57.97 70.51 70.58 Investment holding
CJSC Invest Group
(5)
Russia 57.92 57.97 100 100 Investment holding
Concept China Investment Limited
(2)
Hong Kong/PRC 100 100 100 100 Property holding
Conred Limited
(2)
Hong Kong/PRC 100 100 100 100 Inactive
Consorcio Vollmacht S.A.C.
(3)(7)
Peru 57.92 100 Vessel and fishing quota
holding
Corporacion Pesquera Frami S.A.C.
(3)
Peru 57.92 57.97 100 100 Vessel holding
44 Particulars of Subsidiaries continued
F-169
100 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
Name
Country
of incorporation
or registration/
operation
Proportion
of ownership
interest
Proportion
of voting
power held Principal activities
2012 2011 2012 2011
% % % %

Davis Limited
(2)
Hong Kong/PRC 100 100 100 100 Property holding
Emerald Nirwana Sdn Bhd
(5)
Malaysia 100 100 100 100 Inactive
Excel Concept Limited
(5)
British Virgin Islands/
Worldwide
46.34 46.38 80 80 Agent for sales of fish and
other marine catches of
the Group
Fantastic Buildings Limited
(2)
British Virgin Islands/
Hong Kong
100 100 100 100 Property holding
Fortress Agents Limited
(5)
British Virgin Islands/
Worldwide
57.92 57.97 100 100 Agent for sales of fish
and other marine
catches of the Group
and procurement of
provisions and supplies
for the Group
Gain Star Management Limited
(5)
British Virgin Islands/
Worldwide
57.92 57.97 100 100 Agent for sales of fish
and other marine
catches of the Group
and procurement of
provisions and supplies
for the Group
Golden Target Pacific Limited
(5)
British Virgin Islands/
Worldwide
100 100 100 100 Investment holding
Growing Management Limited
(5)
British Virgin Islands/
Worldwide
57.92 57.97 100 100 Agent for sales of fish
and other marine
catches of the Group
and procurement of
provisions and supplies
for the Group
Hill Cosmos International Limited
(5)
British Virgin Islands/
Worldwide
57.92 57.97 100 100 Inactive
Inmobiliaria Y Constructora
PAHK S.A.C.
(3)
Peru 57.92 57.97 100 100 Investment holding
Inversiones Pesqueras West S.A.C.
(3)(7)
Peru 57.92 100 Fishmeal and investment
holding
Lions City Investment Inc.
(5)
British Virgin Islands 100 100 100 100 Investment holding
44 Particulars of Subsidiaries continued
F-170
101 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
Name
Country
of incorporation
or registration/
operation
Proportion
of ownership
interest
Proportion
of voting
power held Principal activities
2012 2011 2012 2011
% % % %

LLC Investment Company Kredo
(5)
Russia 57.92 57.97 100 100 Operation of fishing vessel
and sale of fish
Loyal Mark Holdings Limited
(5)
British Virgin Islands/
Worldwide
57.92 57.97 100 100 Agent for sales of fish
and other marine
catches of the Group
and procurement of
provisions and supplies
for the Group
Macro Capitales S.A.
(3)
Panama 57.92 57.97 100 100 Investment holding
Metro Island International Limited
(5)
British Virgin Islands/
Worldwide
46.34 46.38 80 80 Agent for sales of fish
and other marine
catches of the Group
and procurement of
provisions and supplies
for the Group
Mission Excel International Limited
(5)
British Virgin Islands/
Worldwide
57.92 57.97 100 100 Agent for sales of fish
and other marine
catches of the Group
and procurement of
provisions and supplies
for the Group
Natprop Investments Limited
(5)
Cook Islands/
Worldwide
100 100 100 100 Ship repairing agency
Negocios Rafmar S.A.C.
(3)(7)
Peru 57.92 100 Fishmeal processing
Nidaro International Limited
(5)
British Virgin Islands/
Worldwide
57.92 57.97 100 100 Inactive
Nippon Fishery Holdings Limited
(5)
British Virgin Islands/
Worldwide
57.92 57.97 100 100 Inactive (since being
acquired)
New Millennium Group Holdings
Limited
(2)
British Virgin Islands/
Worldwide
100 100 100 100 Inactive
Ocean Expert International Ltd
(5)
British Virgin Islands/
Worldwide
57.92 57.97 100 100 Agent for sales of fish
and other marine
catches of the Group
and procurement of
provisions and supplies
for the Group
44 Particulars of Subsidiaries continued
F-171
102 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
Name
Country
of incorporation
or registration/
operation
Proportion
of ownership
interest
Proportion
of voting
power held Principal activities
2012 2011 2012 2011
% % % %

Pacific Andes Enterprises (BVI) Limited
(2)
British Virgin Islands/
Worldwide
100 100 100 100 Trading of frozen seafood
products
Pacific Andes Food (Hong Kong)
Company Limited
(2)
Hong Kong 100 100 100 100 Trading of frozen seafood
products
Pacific Andes Vegetables, Inc.
(5)
British Virgin Islands/
PRC
100 100 100 100 Investment holding
Paco Alpha Limited
(5)
British Virgin Islands/
Worldwide
100 100 100 100 Vessel holding
Paco Beta Limited
(5)
British Virgin Islands/
Worldwide
100 100 100 100 Trading of marine fuel
Paco Gamma Limited
(5)
British Virgin Islands/
Worldwide
100 100 100 100 Inactive
Paco Sigma Limited
(5)
British Virgin Islands/
Worldwide
100 100 100 100 Trading agent
Pacos Trading Limited
(5)
Cayman Islands/
Worldwide
100 100 100 100 Inactive (Formerly trading
of frozen seafood
products)
Parkmond Group Limited
(2)
British Virgin Islands/
Worldwide
100 100 100 100 Trading of frozen seafood
products
PARD Trade Limited
(2)
British Virgin Islands 100 100 100 100 Inactive
Pesquera Bari S.A.C.
(3)(8)
Peru 57.97 100 Vessel holding
Pesqueros del Pacifico S.A.C.
(3)(7)
Peru 57.92 100 Vessel holding
Premium Choice Group Limited
(5)
British Virgin Islands/
Worldwide
57.92 57.97 100 100 Management of fishing
vessels
Pioneer Logistics Limited
(5)
British Virgin Islands/
Worldwide
57.92 57.97 100 100 Inactive
Powertech Engineering (Qingdao)
Co. Ltd
(5)
PRC 57.92 57.97 100 100 Agent for vessel repair
services (for the Group)
Protein Trading Limited
(5)
Samoa 57.92 57.97 100 100 Procurement and
marketing agent for
fishmeal
44 Particulars of Subsidiaries continued
F-172
103 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
Name
Country
of incorporation
or registration/
operation
Proportion
of ownership
interest
Proportion
of voting
power held Principal activities
2012 2011 2012 2011
% % % %

Qingdao Pacific Andes Farm
Co. Limited
(5)
PRC 100 100 100 100 Inactive
Qingdao New Millennium
Food Co., Limited
(5)
PRC 100 100 100 100 Inactive
Quality Food (Singapore)
Pte. Limited
(5)
Singapore 100 100 100 100 Investment holding
Ringston Holdings Ltd
(5)
Cyprus 57.92 57.97 100 100 Investment holding
Sea Capital International Limited
(5)
British Virgin Islands/
Worldwide
57.92 57.97 100 100 Inactive
Servicios Pesqueros Chimbote
S.A.
(3)
Peru 57.92 57.97 100 100 Provision of logistic and
services for fishing
industry
Shine Bright Management Limited
(5)
British Virgin Islands/
Worldwide
57.92 57.97 100 100 Agent for sales of fish
and other marine
catches of the Group
and procurement of
provisions and supplies
for the Group
Smart Group Limited
(5)
Cayman Islands 57.92 57.97 100 100 Investment holding
South Pacific Shipping Agency Ltd
(5)
British Virgin Islands/
Worldwide
57.92 57.97 100 100 Agent for procurement of
provisions and supplies
for the Group
Super Investment Limited
(2)
Cayman Islands 81.93 81.93 96.9 96.9 Investment holding
Superb Choice International Limited
(5)
British Virgin Islands/
Worldwide
57.92 57.97 100 100 Inactive
Sustainable Pelagic Fishery S.A.C.
(3)
Peru 57.92 57.97 100 100 Operation of fishing
vessels
Sustainable Fishing Resources S.A.C.
(3)
Peru 57.92 57.97 100 100 Operation of fishing
vessels
Richtown Development Limited
(5)
British Virgin Islands/
Hong Kong
100 100 100 100 Investment holding
Well Hope International Limited
(5)
British Virgin Islands 100 100 100 100 Inactive
44 Particulars of Subsidiaries continued
F-173
104 Pacific Andes Resources Development Limited Annual Report 2012
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 28 September 2012
44 Particulars of Subsidiaries continued
Name
Country
of incorporation
or registration/
operation
Proportion
of ownership
interest
Proportion
of voting
power held Principal activities
2012 2011 2012 2011
% % % %

Toyama Holdings Limited
(5)
British Virgin Islands/
Worldwide
57.92 57.97 100 100 Procurement of provisions
and supplies for the
Group
Target Shipping Limited
(5)
Hong Kong/
Worldwide
57.92 57.97 100 100 Investment holding
Turbo (Asia) Limited
(2)
Hong Kong 100 100 100 100 Investment holding
Zhonggang Fisheries Limited
(5)
British Virgin Islands 70 70 70 70 Investment holding
Notes:
(1) Audited by Deloitte & Touche LLP Singapore.
(2) Audited by Deloitte Touche Tohmatsu, Hong Kong.
(3) Audited by Giris, Hernnder y Associados S.C., a member firm of Deloitte Touche Tohmatsu.
(4) Listed on the Singapore Exchange Securities Trading Limited in January 2006.
(5) Audited by Deloitte Touche Tohmatsu, Hong Kong for sole purpose of inclusion of their financial position and operating results in the
consolidated financial statements of the Group.
(6) Incorporated during the financial year.
(7) The subsidiary was acquired during the financial year.
(8) The subsidiary was merged with CFG Investment S.A.C. during the year.
45 Subsequent Events
On 14 November 2012 the Group entered into a new Long Term Supply Agreement with Perun (Note 17) (New LSA) to
replace the Fourth LSA dated 16 July 2012 (Fourth LSA). The New LSA shall take retrospective effect from 1 October 2012
and shall terminate on 30 September 2030. The New LSA provides that a prepaid fixed fee of US$150,000,000 (approximately
HK$1,170 million) is payable by the Group to Perun for all the fish harvested by all the contract vessels during the term of the
New LSA (Fixed Price). This is different from the Fourth LSA which provided for a fixed price of US$12,000 (approximately
HK$93,600) per vessel per calendar day.
F-174
REGISTERED OFFICE OF THE COMPANY PRINCIPAL OFFICE OF THE COMPANY
Pacific Andes Resources Development Limited
Canons Court
22 Victoria Street
Hamilton HM12
Bermuda
Pacific Andes Resources Development Limited
Rooms 3201-3210
Hong Kong Plaza
188 Connaught Road West
Hong Kong
INDEPENDENT AUDITORS
Deloitte & Touche LLP
6 Shenton Way #32-00
OUE Downtown 2
Singapore 068809
TRUSTEE
The Hongkong and Shanghai Banking
Corporation Limited
Level 30, HSBC Main Building
1 Queens Road Central
Hong Kong
PRINCIPAL PAYING AGENT, REGISTRAR AND TRANSFER AGENT
The Hongkong and Shanghai Banking
Corporation Limited
Level 30, HSBC Main Building
1 Queens Road Central
Hong Kong
LEGAL ADVISORS TO THE COMPANY
As to English law
Baker & McKenzie
23rd Floor, One Pacific Place
88 Queensway
Hong Kong
As to Bermuda law
Appleby
2206-19 Jardine House
1 Connaught Road
Central
Hong Kong
As to Singapore law
David Lim & Partners LLP
50 Raffles Place #17-01
Singapore Land Tower
Singapore 048623
LEGAL ADVISORS TO THE SOLE LEAD MANAGER AND THE TRUSTEE
As to English law
Linklaters
10th Floor, Alexandra House
Chater Road
Central
Hong Kong
LISTING AGENT
David Lim & Partners LLP
50 Raffles Place #17-01
Singapore Land Tower
Singapore 0486239

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