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FRUTOS SECOS ESPAÑOLES, S.A. (FRUSESA)
                                                                        INVESTMENT ...
FRUSESA                                                    INTENSIVE CULTIVATION OF WALNUT TREES
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FRUSESA                                                                                      EUROPEAN CONSUMPTION OF WALNU...
FRUSESA                                                             EUROPEAN CONSUMPTION OF WALNUTS EVOLUTION
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FRUSESA                                                                                EUROPEAN IMPORTS OF WALNUTS
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FRUSESA                                                               EUROPEAN IMPORTS OF WALNUTS
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FRUSESA                                                                                                 PRICE OF WALNUTS
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FRUSESA                                                                              WALNUT PRICE EVOLUTION
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FRUSESA                                                                                                           PROJECT ...
FRUSESA                                                                                              FOUNDER’S DESCRIPTION...
FRUSESA                                                                                                        SPANISH EXP...
FRUSESA                                                                                                    SHAREHOLDERS ST...
FRUSESA             PLANTATIONS LOCATION




IDM ESPAÑOLA, S.A.
                                 AZ/10/05/AAA/070/ 12
FRUSESA                                                                         PLANTATIONS CURRENTLY UNDER MANAGEMENT
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FRUSESA                                                                                                      INTENSIVE CUL...
FRUSESA                                                                                                               CLIM...
FRUSESA                                                                                                                   ...
FRUSESA                                                   PROFITABILITY OF THE INTENSIVE CULTIVATION OF WALNUT-TREES
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FRUSESA                                                           INTENSIVE CULTIVATION OF WALNUT-TREES
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FRUSESA                                                            INTENSIVE CULTIVATION OF WALNUTS
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FRUSESA                                                               INTENSIVE CULTIVATION OF WALNUTS
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FRUSESA                                                                   INTENSIVE CULTIVATION OF WALNUTS
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FRUSESA                                                                                  INTENSIVE CULTIVATION OF WALNUT-T...
FRUSESA                                                                                            INTENSIVE CULTIVATION O...
FRUSESA                                                                                 INTENSIVE CULTIVATION OF WALNUT-TR...
FRUSESA                                                                                                          INVESTMEN...
FRUSESA                                                                                    INVESTMENT PROPOSAL 1
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FRUSESA                                                                                                        INVESTMENT ...
FRUSESA                                                                                                        INVESTMENT ...
FRUSESA                                                                                                        INVESTMENT ...
FRUSESA                                                                                                   INVESTOR EXPENDI...
FRUSESA                                                                                                INVESTMENT PROPOSAL...
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10 A A A070

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INVESTMENT PROPOSAL FOR SPANISH INTENSIVE PLANTATIONS OF NUT-TREES

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  1. 1. FRUTOS SECOS ESPAÑOLES, S.A. (FRUSESA) INVESTMENT PROPOSAL: INTENSIVE PLANTATIONS OF NUT-TREES INTERNATIONAL DEVELOPMENT MANAGEMENT ESPAÑOLA, S.A. PADRE DAMIAN, 23 - 1ª PLANTA - 28036 MADRID - SPAIN - TEL. (34) 913-533-810 - FAX (34) 913-596-988 - E-MAIL: idm@infonegocio.com AZ/10/05/AAA/070 ““““LA INFORMACION CONTENIDA EN ESTE DOCUMENTO, PROPIEDAD DE IDM ESPAÑOLA ES ESTRICTAMENTE CONFIDENCIAL, QUEDANDO PROHIBIDA SU REPRODUCCION TOTAL O PARCIAL O LA UTILIZACION INDEBIDA SIN SU CONSENTIMIENTO POR ESCRITO, RESERVANDOSE LAS ACCIONES LEGALES A QUE HUBIERA LUGAR EN FUNCION DE LOS PERJUICIOS OCASIONADOS A IDM ESPAÑOLA, S.A. O A SUS CLIENTES ”””””THE INFORMATION CONTAINED IN THIS DOCUMENT IS PROPERTY OF IDM ESPAÑOLA, S.A. AND IT IS STRICTLY CONFIDENTIAL. NO PART OF IT MAY BE REPRODUCED OR UNDULY USED WITHOUT ITS WRITTEN PERMISSION. ACCORDINGLY ANY DAMAGES INFLICTED TO IDM ESPAÑOLA, S.A. OR ITS CLIENTS WILL BE ADEQUATELY PROSECUTED””””
  2. 2. FRUSESA INTENSIVE CULTIVATION OF WALNUT TREES AGENDA ∗BUSINESS OPPORTUNITY EVALUATION ∗FRUSESA DESCRIPTION −FOUNDERS AND SHAREHOLDERS −CURRENT ACTIVITIES −CLIMATE AND SOIL REQUIREMENTS ∗PROFITABILITY ANALYSIS OF THE INTENSIVE CULTIVATION OF WALNUT-TREES ∗ADVANTAGES OF MANAGEMENT BY FRUSESA ∗INVESTMENT PROPOSALS IDM ESPAÑOLA, S.A. AZ/10/05/AAA/070/ 1
  3. 3. FRUSESA EUROPEAN CONSUMPTION OF WALNUTS (1987) IMPORTS FROM 50 NON-ECC COUNTRIES 40 30 CONSUMPTION (000 TM) 20 10 0 ITALY GERMANY SPAIN GREECE FRANCE PORTUGAL U.K. BELGIUM HOLLAND DENMARK LUXEMBOURG ∗European consumption of walnuts accounts for 158,000 MT, of which 55,000 MT are from non-EEC countries. Germany and Spain ∗European consumption of walnuts accounts for 158,000 MT, of which 55,000 MT are from non-EEC countries. Germany and Spain being the main importers being the main importers ∗To achieve self-sufficiency, Europe would require 13,750 additional hectares of intensive plantations of walnuts at full production ∗To achieve self-sufficiency, Europe would require 13,750 additional hectares of intensive plantations of walnuts at full production ∗Considering the existing limitations in other Mediterranean countries, Spain isisthe most adequate location for the new plantations ∗Considering the existing limitations in other Mediterranean countries, Spain the most adequate location for the new plantations SOURCE: NIMEXE IDM ESPAÑOLA, S.A. AZ/10/05/AAA/070/ 2
  4. 4. FRUSESA EUROPEAN CONSUMPTION OF WALNUTS EVOLUTION (1978-87) CAGR* (%) 200 (1978-87) 180 160 0,0 140 120 EUROPEAN CONSUMPTION 100 The European consumption of walnuts was The European consumption of walnuts was OF WALNUTS (000 TM) stable from 1978 to 1987. But grew annually stable from 1978 to 1987. But grew annually 80 1,9% for the 1983-87 period 1,9% for the 1983-87 period 60 40 20 0 1978 79 80 81 82 83 84 85 86 87 * Compounded annual growth rate SOURCE: NIMEXE IDM ESPAÑOLA, S.A. AZ/10/05/AAA/070/ 3
  5. 5. FRUSESA EUROPEAN IMPORTS OF WALNUTS (1978-87) CAGR* (%) 60 (1978-87) 5,0 50 40 IMPORTS FROM NON-ECC 30 Growing European imports, CAGR (1978-87) Growing European imports, CAGR (1978-87) COUNTRIES (000 TM) of 5,0%, accelerating recently, CAGR (1983- of 5,0%, accelerating recently, CAGR (1983- 87) of 8,2% 87) of 8,2% 20 10 0 1978 79 80 81 82 83 84 85 86 87 * Compounded annual growth rate SOURCE: NIMEXE IDM ESPAÑOLA, S.A. AZ/10/05/AAA/070/ 4
  6. 6. FRUSESA EUROPEAN IMPORTS OF WALNUTS BREAKDOWN BY ORIGIN (1978-87) EEC'S CONSUMPTION 100% OTHERS BULGARIA HUNGARY CHIL TURKEY INDIA 90% CHINA 80% 70% ∗Import of walnuts from the USA represented ∗Import of walnuts from the USA represented 60% 75,4% of total European imports in 1987 75,4% of total European imports in 1987 ORIGIN 50% (PERCENTAGE) ∗Supply conditions from the USA will influence ∗Supply conditions from the USA will influence 40% USA European market patterns European market patterns 30% IMPORTS FROM NON-ECC 20% COUNTRIES 10% 0% SOURCE: NIMEXE IDM ESPAÑOLA, S.A. AZ/10/05/AAA/070/ 5
  7. 7. FRUSESA PRICE OF WALNUTS SPAIN VS USA (1988) Price paid Cost of Price paid to to American American walnuts Spanish growers 250 growers in Spain 237,50 225,44 Other costs Management Duties 200 Freight Structural ∗90,1% of the price differential between ∗90,1% of the price differential between price differential Spain and the USA isisaccounted for by sel- Spain and the USA accounted for by sel- Selling and ling and marketing, transportation and im- ling and marketing, transportation and im- 150 Marketing portation costs portation costs PRICE (PTAS/KG) 115,43 ∗Minimum additional profit potential compa- ∗Minimum additional profit potential compa- 100 red with plantations in the USA of Ptas red with plantations in the USA of Ptas 110 per Kg, given same production costs 110 per Kg, given same production costs as in the USA as in the USA 50 0 SOURCE: BORGES, S.A. IDM ESPAÑOLA, S.A. AZ/10/05/AAA/070/ 6
  8. 8. FRUSESA WALNUT PRICE EVOLUTION USA VS SPAIN 300 275 Price paid 250 to Spanish growers 225 200 175 The price advantage of the Spanish growers The price advantage of the Spanish growers WALNUT PRICE 150 Price paid vs American growers for the period 1982 to vs American growers for the period 1982 to (PTAS/KG) to American 1989 has fluctuated from aaminimum of 96.6 1989 has fluctuated from minimum of 96.6 growers 125 Ptas /Kg (1982) to aamaximum of 139.3 Ptas Ptas /Kg (1982) to maximum of 139.3 Ptas /Kg (1984) /Kg (1984) 100 75 50 25 0 1982 83 84 85 86 87 88 89 SOURCE: FRUSESA IDM ESPAÑOLA, S.A. AZ/10/05/AAA/070/ 7
  9. 9. FRUSESA PROJECT DEVELOPMENT ∗In 1979, the Borges group, aamajor European importer of unshelled walnuts formed with other industrial groups the company Nuesa. ∗In 1979, the Borges group, major European importer of unshelled walnuts formed with other industrial groups the company Nuesa. Nuesa’s objective was to develop intensive plantations of walnut-trees in Spain Nuesa’s objective was to develop intensive plantations of walnut-trees in Spain ∗In 1986, for the purpose of achieving greater operational flexibility, activities were separated ∗In 1986, for the purpose of achieving greater operational flexibility, activities were separated −Frusesa was born undertaking all plantation management activities and Nuesa and subsequently Tesorero, S.A., Palacitos, S.A. etc −Frusesa was born undertaking all plantation management activities and Nuesa and subsequently Tesorero, S.A., Palacitos, S.A. etc became investment vehicles became investment vehicles ∗In 1986, Borges of California corporation was incorporated for the exploitation of nut-trees plantation in California ∗In 1986, Borges of California corporation was incorporated for the exploitation of nut-trees plantation in California −Subsequently, aa170 hectares walnut and almond trees plantation was acquired −Subsequently, 170 hectares walnut and almond trees plantation was acquired ∗Frusesa currently manages 1,177 hectares of nut-tree plantations, mainly in Extremadura, of which 742 hectares are dedicated to the ∗Frusesa currently manages 1,177 hectares of nut-tree plantations, mainly in Extremadura, of which 742 hectares are dedicated to the intensive cultivation of walnut-trees intensive cultivation of walnut-trees ∗These 10 years of operations in Spain, with continuous access through Borges of California to the most advanced technology has foste- ∗These 10 years of operations in Spain, with continuous access through Borges of California to the most advanced technology has foste- red aamanagement team for Frusesa that isisat the forefront of walnut-tree cultivation in Europe red management team for Frusesa that at the forefront of walnut-tree cultivation in Europe Frusesa isiscurrently the only company in Spain capable of managing an intensive plantation of walnut-trees Frusesa currently the only company in Spain capable of managing an intensive plantation of walnut-trees IDM ESPAÑOLA, S.A. AZ/10/05/AAA/070/ 8
  10. 10. FRUSESA FOUNDER’S DESCRIPTION BORGES GROUP’S EVOLUTION (1979-88) CAGR (%) (1979-88) 25000 ∗The Borges Group isisone of world’s lea- ∗The Borges Group one of world’s lea- ding nut processing and marketing groups ding nut processing and marketing groups 20000 −Spanish market leader, with aamar- −Spanish market leader, with mar- 3.5 ket share of 35.2% and relative mar- ket share of 35.2% and relative mar- ket share of 6.6 ket share of 6.6 −Main Spanish exporter of almonds −Main Spanish exporter of almonds 15000 INDUSTRIAS PONT and leading European importer of un- and leading European importer of un- REVENUES (MM OF 5.4 shelled walnuts shelled walnuts 1988 PTAS) −Antonio Pont has been founder and −Antonio Pont has been founder and president of the International Nut president of the International Nut 10000 Council (1982-89) Council (1982-89) 1.5 BORGES EXPORTS (0.5) ∗The Borges Group isisthe only European ∗The Borges Group the only European 5000 2.8 group which covers comprehensively the group which covers comprehensively the complete nut cycle from nursery to mar- complete nut cycle from nursery to mar- BORGES SPAIN keting keting 0 1979 80 81 82 83 84 85 86 87 88 SOURCE: BORGES GROUP IDM ESPAÑOLA, S.A. AZ/10/05/AAA/070/ 9
  11. 11. FRUSESA SPANISH EXPORTS OF ALMONDS BORGES SHARE EVOLUTION (1979-88) 22.6 15.2 23.2 33.1 40.7 25.7 21.6 25.4 25.7 12.4 (000 TM) 100% 90% 80% 70% ∗Additionally the Pont Group isisaasolid group ∗Additionally the Pont Group solid group 60% because of its balanced management because of its balanced management SHARE OF SPANISH −Strong growth in its share of exports: −Strong growth in its share of exports: EXPORTS OF ALMONDS 50% 37% in 1988 vs. 13.3% in 1979, gro- 37% in 1988 vs. 13.3% in 1979, gro- (PERCENTAGE) wing even in years of export reductions wing even in years of export reductions 40% (31.6% in 1986) (31.6% in 1986) 30% −Last five years average return on sha- −Last five years average return on sha- reholders funds of ± 30%. reholders funds of ± 30%. 20% 10% BORGES EXPORTS 0% 1979 80 81 82 83 84 85 86 87 88 SOURCE: BORGES S.A. IDM ESPAÑOLA, S.A. AZ/10/05/AAA/070/ 10
  12. 12. FRUSESA SHAREHOLDERS STRUCTURE (1989) ∗Borges Group 51% ∗Borges Group 51% ∗Ramírez Group 17.5% ∗Ramírez Group 17.5% −One of the largest Spanish wine producers with 1,147 hectares of intensive cultivation of vineyards, located in Castilla La Mancha −One of the largest Spanish wine producers with 1,147 hectares of intensive cultivation of vineyards, located in Castilla La Mancha ∗Nutrexpa Group 15.3% ∗Nutrexpa Group 15.3% −Spanish food industry holding leader in the cocoa by-products market, with production facilities in America, Europe, Africa and Asia −Spanish food industry holding leader in the cocoa by-products market, with production facilities in America, Europe, Africa and Asia (Main brands are Cola Cao, Granja San Francisco and La Piara) (Main brands are Cola Cao, Granja San Francisco and La Piara) ∗BBVG Inversiones 5% ∗BBVG Inversiones 5% −Managing company of over Pta 33billion venture capital funds. Created as aajoint-venture between the BBV (Banco Bilbao Vizcaya) −Managing company of over Pta billion venture capital funds. Created as joint-venture between the BBV (Banco Bilbao Vizcaya) and BBHQ (Baring Brothers Hambrecht & Quist) and BBHQ (Baring Brothers Hambrecht & Quist) ∗Riera Marsa Group 3.2 % ∗Riera Marsa Group 3.2 % ∗Others 8% ∗Others 8% −Including Frusesa management and Banif (Banco Hispano Americano) −Including Frusesa management and Banif (Banco Hispano Americano) IDM ESPAÑOLA, S.A. AZ/10/05/AAA/070/ 11
  13. 13. FRUSESA PLANTATIONS LOCATION IDM ESPAÑOLA, S.A. AZ/10/05/AAA/070/ 12
  14. 14. FRUSESA PLANTATIONS CURRENTLY UNDER MANAGEMENT DESCRIPTION OF CULTIVATED PRODUCTS C O M P A N Y ES T A T E P R O D U C T U N D ER H EC T A R ES C U L T IV A T IO N A G R O F U S E , S .A . B E N A V ID E S W A LN U T 1 8 9 A LM O N D 1 1 9 .5 P LU M 6 .7 P IS T A C H IO 1 1 S U LT A N A 3 5 .5 L A S M O N J IA S , S .A . L A S M O N J IA S W A LN U T 5 9 A LM O N D 6 7 P IS T A C H IO 4 F IG 0 .6 E L T E S O R E R O , S .A . EL T ES O R ER O W A LN U T 8 5 P IS T A C H IO 5 P A L A C IT O S , S .A . P A L A C IT O S W A LN U T 2 8 .5 P O N T F A M IL Y LA S O LA N A S U LT A N A 2 1 FR U S ES A LA S M ES A S W A LN U T 9 0 M O N T E P IS T A C H O , S .A . M O N T E P IS T A C H O W A LN U T 9 0 (1 ) P IS T A C H IO 3 5 (1 ) F IG 1 0 (1 ) FR U S ES A EL C A R Q U I W A LN U T 2 0 0 (1 ) A LM O N D 6 0 (1 ) P IS T A C H IO 6 0 (1 ) (1) Development scheduled for 1990 ∗Frusesa’s cultivation planning isisdetermined by land quality but based upon economic reasons ∗Frusesa’s cultivation planning determined by land quality but based upon economic reasons −High profitability of the intensive cultivation of almond and pistachio-trees −High profitability of the intensive cultivation of almond and pistachio-trees −Diversification of risk by product diversification −Diversification of risk by product diversification IDM ESPAÑOLA, S.A. AZ/10/05/AAA/070/ 13
  15. 15. FRUSESA INTENSIVE CULTIVATION OF WALNUT TREES AVERAGE ANNUAL PRODUCTIONS 35 ∗After testing different varieties, the Hart- ∗After testing different varieties, the Hart- ley variety has proved to be the most ade- ley variety has proved to be the most ade- Hartley variety 31,2 in Extremadura quate for Extremadura quate for Extremadura 30 "When we commenced our operations "When we commenced our operations we hired an American technician who we hired an American technician who 25 25 Serr variety recommended the Serr variety, which recommended the Serr variety, which 23,8 in Extremadura 22,9 was in great demand at the time, due was in great demand at the time, due to the high quality of its kernels. Three to the high quality of its kernels. Three 20 20 20 20 20 IDM's model years ago, once we were fully aware years ago, once we were fully aware AVERAGE ANNUAL of the deficiencies of the Serr variety, of the deficiencies of the Serr variety, PRODUCTION we decided to plant Hartley variety we decided to plant Hartley variety (KILOGRAMES PER TREE) 15 14,3 trees in-between” trees in-between” 14 13,3 14,1** (R. Pont, CEO, Frusesa) (R. Pont, CEO, Frusesa) 12,3* 12,1 10 8,5 10,5 "The Hartley variety grows and deve- "The Hartley variety grows and deve- 7,9 lops perfectly in Extremadura, despite lops perfectly in Extremadura, despite 5,5 5,8 5,8** aacertain delay in achieving normal pro- certain delay in achieving normal pro- 5 4,4 duction of 25.8 kilograms per tree du- duction of 25.8 kilograms per tree du- ring the harvest of 1989, aaproduction ring the harvest of 1989, production fully comparable to California’s levels” fully comparable to California’s levels” 0 YEAR 7 YEAR 8 YEAR 9 YEAR 10 YEAR 11 YEAR 12 (J.M. Sau, Technical Manager, Frusesa) (J.M. Sau, Technical Manager, Frusesa) * HEAVY RAINS DURING THE FLOWERING PERIOD ** LACK OF THE NECESSARY COLD HOURS SOURCE: FRUSESA IDM ESPAÑOLA, S.A. AZ/10/05/AAA/070/ 14
  16. 16. FRUSESA CLIMATIC CONDITIONS BADAJOZ VS WALNUT-TREE CULTIVATION "" Whenwe decided to develop walnut plantations in Spain, we analysed the climatic conditions of Modesto, the most important walnut- When we decided to develop walnut plantations in Spain, we analysed the climatic conditions of Modesto, the most important walnut- tree growing area in California. Quickly afterwards ititbecame clear that Badajoz has exactly the same climatic conditions of Modesto” tree growing area in California. Quickly afterwards became clear that Badajoz has exactly the same climatic conditions of Modesto” (R. Pont, CEO, Frusesa) (R. Pont, CEO, Frusesa) CLIMATIC REQUIREMENTS FOR WALNUT-TREES CLIMATIC REQUIREMENTS FOR WALNUT-TREES CLIMATIC CONDITIONS IN BADAJOZ CLIMATIC CONDITIONS IN BADAJOZ ∗A minimum of 800 hours of cold weather per annum (temperature ∗Between 905 and 1521 cold hours per annum ∗A minimum of 800 hours of cold weather per annum (temperature ∗Between 905 and 1521 cold hours per annum lower than 7º C) lower than 7º C) ∗The most frequent period for the last frosts isisthe first half of ∗The most frequent period for the last frosts the first half of ∗No frost during the flowering period, which for the varieties with ∗No frost during the flowering period, which for the varieties with March, with the period from Mid March until Mid November nor- March, with the period from Mid March until Mid November nor- most interest to our project happens in early April most interest to our project happens in early April mally being frost-free mally being frost-free ∗A minimum period of 77months with an average temperature ∗A minimum period of months with an average temperature ∗Average monthly temperatures in excess of 10º CCduring the pe- ∗Average monthly temperatures in excess of 10º during the pe- greater than 10º CC greater than 10º riod February to November (10 months) riod February to November (10 months) The climatic conditions of Extremadura are optimal for the cultivation of walnut-trees The climatic conditions of Extremadura are optimal for the cultivation of walnut-trees SOURCE: TABUENCA, CARACTERIZACION AGROCLIMATICA DE BADAJOZ IDM ESPAÑOLA, S.A. AZ/10/05/AAA/070/ 15
  17. 17. FRUSESA SOIL CONDITIONS WALNUT-TREE REQUIREMENTS "" Thewalnut-tree isisone of the most exacting orchard crops and sensitive to the different variables that define soil conditions. Soil ade- The walnut-tree one of the most exacting orchard crops and sensitive to the different variables that define soil conditions. Soil ade- quacy and systematic testing of soil conditions become critical factors for the optimal development of intensive plantations of walnut- quacy and systematic testing of soil conditions become critical factors for the optimal development of intensive plantations of walnut- trees” trees” (J.M. Sau, Technical Manager, Frusesa) (J.M. Sau, Technical Manager, Frusesa) ∗Ideal soils for walnut-tree cultivation must meet the following criteria ∗Ideal soils for walnut-tree cultivation must meet the following criteria −To be deep, permeable, without too many stones, well aerated and non-stratified −To be deep, permeable, without too many stones, well aerated and non-stratified −To be moderately acid or non-acid −To be moderately acid or non-acid −Not to have nutrient deficiencies: adequate levels of nitrogen, calcium, potassium, phosphorous, magnesium and sulphur are requi- −Not to have nutrient deficiencies: adequate levels of nitrogen, calcium, potassium, phosphorous, magnesium and sulphur are requi- red, to permit an active microbial life red, to permit an active microbial life −Not to have excess soluble salts, sodium, boron or active limestone −Not to have excess soluble salts, sodium, boron or active limestone ∗A precise control of irrigation waters isisrequired due to the high sensitivity of the walnut-trees to salinity ∗A precise control of irrigation waters required due to the high sensitivity of the walnut-trees to salinity IDM ESPAÑOLA, S.A. AZ/10/05/AAA/070/ 16
  18. 18. FRUSESA PROFITABILITY OF THE INTENSIVE CULTIVATION OF WALNUT-TREES SUMMARY ∗Initial investment necessary stand-alone (non including land investment) ∗Initial investment necessary stand-alone (non including land investment) 2,198,000 Ptas/Hectare 2,198,000 Ptas/Hectare ∗Annual gross profit full production year ∗Annual gross profit full production year 629,000 Ptas/Hectare 629,000 Ptas/Hectare ∗Net present value (5%) ∗Net present value (5%) 5,423,000 Ptas/Hectare 5,423,000 Ptas/Hectare ∗Real internal rate of return ∗Real internal rate of return 13.35% 13.35% ∗Payback period ∗Payback period 10.7 Years 10.7 Years Non speculative investment with 10 years maturity period and high profitability thereafter. Ratio of initial investment/PV of income of Non speculative investment with 10 years maturity period and high profitability thereafter. Ratio of initial investment/PV of income of 28.8% 28.8% IDM ESPAÑOLA, S.A. AZ/10/05/AAA/070/ 17
  19. 19. FRUSESA INTENSIVE CULTIVATION OF WALNUT-TREES INITIAL INVESTMENT NECESSARY 3250 3000 Alfalfa Expenditures 2750 Overheads 2500 Initial 2250 2,198 investment necessary 2000 Planting 1750 1500 In addition to the investment in planting and In addition to the investment in planting and BREAKDOWN Operations OF INITIAL 1250 equipment, 48.9% of the initial investment equipment, 48.9% of the initial investment INVESTMENT required relates to operation of the planta- required relates to operation of the planta- (000 PTAS) 1000 tion during the first seven years with limited tion during the first seven years with limited 750 crops crops 500 Equipment 250 0 -250 Alfalfa revenues -500 Walnuts revenues -750 -1000 SOURCE: IDM ESPAÑOLA COSTING MODEL IDM ESPAÑOLA, S.A. AZ/10/05/AAA/070/ 18
  20. 20. FRUSESA INTENSIVE CULTIVATION OF WALNUTS PRODUCTION CASH FLOW BREAKDOWN REVENUES EXPENDITURES 950,000 321,000 100% Plantation maintenance General expenses Security Selling & Marketing 80% Fertilisers Herbicides Harvesting 60% ∗High profitability once full production isis ∗High profitability once full production Irrigation CASH FLOW reached reached (PERCENTAGE) Overheads −Ratio revenues/expenditures of 2.97 −Ratio revenues/expenditures of 2.97 40% Fumigants Pruning 20% Expenditures Processing 0% SOURCE: IDM ESPAÑOLA COSTING MODEL IDM ESPAÑOLA, S.A. AZ/10/05/AAA/070/ 19
  21. 21. FRUSESA INTENSIVE CULTIVATION OF WALNUTS PROFITABILITY AT FULL PRODUCTION 1000 750 ∗The operating margin for aaplantation in full ∗The operating margin for plantation in full production at Spanish price levels isis66.3% production at Spanish price levels 66.3% ∗The above operating margin isisreduced, but ∗The above operating margin reduced, but isisstill positive, 30.7% at USA’s price levels still positive, 30.7% at USA’s price levels REVENUES 500 PER HECTARE (000 PTAS) 321 Operating ∗Frusesa, with the experience accumulated ∗Frusesa, with the experience accumulated expenditures in the last 10 years, has developed aafully in the last 10 years, has developed fully 250 competitive system for walnut plantations competitive system for walnut plantations management management 0 SPANISH USA PRICES PRICES SOURCE: IDM ESPAÑOLA COSTING MODEL IDM ESPAÑOLA, S.A. AZ/10/05/AAA/070/ 20
  22. 22. FRUSESA INTENSIVE CULTIVATION OF WALNUTS CASH-FLOW EVOLUTION YEAR 0 1 2 3 4 5 6 7 8 9 TO 50 750 600 450 300 150 0 -150 Negative cash flows up to year 7, reaching aa Negative cash flows up to year 7, reaching CASH FLOW constant cash flow of Ptas 629,000 per constant cash flow of Ptas 629,000 per PER HECTARE -300 (000 PTAS) hectare from year 99to year 50 hectare from year to year 50 -450 -600 -750 -900 -1050 -1200 -1350 SOURCE: IDM ESPAÑOLA COSTING MODEL IDM ESPAÑOLA, S.A. AZ/10/05/AAA/070/ 21
  23. 23. FRUSESA INTENSIVE CULTIVATION OF WALNUT-TRESS SUMMARY ∗The European walnut market has aastrong and increasing dependence on imports, principally those from the USA. Imports of 55,000 me- ∗The European walnut market has strong and increasing dependence on imports, principally those from the USA. Imports of 55,000 me- tric tonnes per annum could justify about 1,750 hectares of walnut-trees plantations in Europe tric tonnes per annum could justify about 1,750 hectares of walnut-trees plantations in Europe ∗Given the leadership of the USA as aawalnut supplier, worldwide European market prices are strongly influenced by USA’s selling prices. ∗Given the leadership of the USA as walnut supplier, worldwide European market prices are strongly influenced by USA’s selling prices. Due to the marketing, transport and other costs, there isisaastructural price differential of Ptas 110 per kilogram to the advantage of the Due to the marketing, transport and other costs, there structural price differential of Ptas 110 per kilogram to the advantage of the Spanish growers Spanish growers ∗In 1979 the Borges Group which was aware of the situation given its role as aamajor European importer of unshelled walnuts, promoted ∗In 1979 the Borges Group which was aware of the situation given its role as major European importer of unshelled walnuts, promoted the incorporation of Frusesa to develop nut-tree plantations in Spain the incorporation of Frusesa to develop nut-tree plantations in Spain ∗Currently, Frusesa has 1,177 hectares under management mainly in Extremadura, aaregion which enjoys optimal climatic conditions for ∗Currently, Frusesa has 1,177 hectares under management mainly in Extremadura, region which enjoys optimal climatic conditions for the growing of walnut-trees. The company has developed the most advanced technology available for intensive cultivation of walnut- the growing of walnut-trees. The company has developed the most advanced technology available for intensive cultivation of walnut- trees trees ∗The investment on intensive cultivation of walnut-trees needs aalong term view/approach, requiring high initial investment (Pta 2.2 MM ∗The investment on intensive cultivation of walnut-trees needs long term view/approach, requiring high initial investment (Pta 2.2 MM per hectare) and aamaturity period over 10 years but enjoys high real profitability (IRR of 13.35%) per hectare) and maturity period over 10 years but enjoys high real profitability (IRR of 13.35%) Frusesa considers that the investment capability of entities interested in agricultural or real estate can be combined with its experience on Frusesa considers that the investment capability of entities interested in agricultural or real estate can be combined with its experience on managing intensive plantations of walnut-trees, to the benefit of both parties managing intensive plantations of walnut-trees, to the benefit of both parties IDM ESPAÑOLA, S.A. AZ/10/05/AAA/070/ 22
  24. 24. FRUSESA INTENSIVE CULTIVATION OF WALNUT-TRESS ADVANTAGES OF MANAGEMENT BY FRUSESA (I) Stand-alone plantation Management by Frusesa 3250 3000 Alfalfa 2750 Expenditures Overheads 2500 Alfalfa Expenditures 2,198 2250 Overheads Initial 2000 Planting Investment 1,775 Necessary 1750 Planting Initial 1500 Operations Investment Necessary The transfer of the management of the plan- The transfer of the management of the plan- BREAKDOWN OF INITIAL 1250 tations to Frusesa eliminates the need for in- tations to Frusesa eliminates the need for in- INVESTMENT 1000 vestment in equipment, reducing the required vestment in equipment, reducing the required (000 PTAS) Operations Other initial investment by Pta 423,000 per hectare initial investment by Pta 423,000 per hectare 750 Equipment 500 250 Irrigation Irrigation System System 0 Alfalfa Alfalfa -250 revenues revenues -500 Walnuts Walnuts -750 revenues revenues -1000 SOURCE: IDM ESPAÑOLA COSTING MODEL IDM ESPAÑOLA, S.A. AZ/10/05/AAA/070/ 23
  25. 25. FRUSESA INTENSIVE CULTIVATION OF WALNUT-TRESS ADVANTAGES OF MANAGEMENT BY FRUSESA (II) ∗Management team with the maximum experience ∗Management team with the maximum experience −−Ramón Pont, (Founder, President and CEO) Ramón Pont, (Founder, President and CEO) President and CEO Industrias Pont, S.A. President and CEO Industrias Pont, S.A. BA in Economics, EEM, Barcelona; Industrial Engineer, EUITI, Barcelona; Business Courses, Georgia University, USA; Executive BA in Economics, EEM, Barcelona; Industrial Engineer, EUITI, Barcelona; Business Courses, Georgia University, USA; Executive MBA, IESE, Barcelona; Walnut Production Course, University of California, USA MBA, IESE, Barcelona; Walnut Production Course, University of California, USA −−José María Sau (Technical Manager) José María Sau (Technical Manager) Agricultural Engineer, EUIA, Barcelona; Walnut Production Course, University of California, USA Agricultural Engineer, EUIA, Barcelona; Walnut Production Course, University of California, USA ∗Only Spanish nurseries with substantial own-production of budded walnut-trees ∗Only Spanish nurseries with substantial own-production of budded walnut-trees ∗Complete automatisation of the operations using the most modern machinery available in the USA ∗Complete automatisation of the operations using the most modern machinery available in the USA ∗Non-existence of personnel liabilities as all tasks are carried out by employees from Frusesa ∗Non-existence of personnel liabilities as all tasks are carried out by employees from Frusesa ∗Economies of scale in the use of equipment, personnel and of the processing plant, as well as for the purchasing of all raw materials ∗Economies of scale in the use of equipment, personnel and of the processing plant, as well as for the purchasing of all raw materials ∗Exhaustive control of costs, with continuous monitoring against Borges of California’s plantation in USA ∗Exhaustive control of costs, with continuous monitoring against Borges of California’s plantation in USA ∗Computer models for the control of pests and blights, optimisation of irrigation and prevention of frosts ∗Computer models for the control of pests and blights, optimisation of irrigation and prevention of frosts ∗Guarantee that the production will be marketed by the Borges Group ∗Guarantee that the production will be marketed by the Borges Group ∗Only company which has developed plantations for intensive cultivation of walnut-trees in Spain ∗Only company which has developed plantations for intensive cultivation of walnut-trees in Spain IDM ESPAÑOLA, S.A. AZ/10/05/AAA/070/ 24
  26. 26. FRUSESA INVESTMENT PROPOSAL 1 INVESTMENT IN LAND, PLANTING AND CULTIVATION ∗Investment in irrigated agricultural land in Extremadura, as well as in the intensive planting and cultivation of walnut-trees on the land ∗Investment in irrigated agricultural land in Extremadura, as well as in the intensive planting and cultivation of walnut-trees on the land ∗Frusesa manages the plantation ∗Frusesa manages the plantation ∗Annual return to investor based on the profits of the plantations, after deducting the following management charges by Frusesa ∗Annual return to investor based on the profits of the plantations, after deducting the following management charges by Frusesa −Ptas 20,000 per hectare adjusted annually by the Spanish GPI −Ptas 20,000 per hectare adjusted annually by the Spanish GPI −13% of NET profits −13% of NET profits ∗The management contract between Frusesa and the investor will last aaminimum of 50 years (estimated life cycle of the walnut-tree) ∗The management contract between Frusesa and the investor will last minimum of 50 years (estimated life cycle of the walnut-tree) ∗Annual profitability (Ptas/hectare) ∗Annual profitability (Ptas/hectare) −Initial investment necessary −Initial investment necessary 1,775,000 + Land (±1,100,000) 1,775,000 + Land (±1,100,000) −Income full production year −Income full production year 511,000 511,000 −Present value of income (5%) −Present value of income (5%) 4,738,000 + Revaluation of land and plantation 4,738,000 + Revaluation of land and plantation −Residual value −Residual value Land + Plantation Land + Plantation ∗Divestment mechanisms ∗Divestment mechanisms −The investor could divest at any time in any way he considers appropriate through third parties −The investor could divest at any time in any way he considers appropriate through third parties −Frusesa undertakes the obligation, ten year after the investment, to acquire the properties of the investor at aaprice equivalent to 15 −Frusesa undertakes the obligation, ten year after the investment, to acquire the properties of the investor at price equivalent to 15 times the cash-flow earned by the investor during the previous year times the cash-flow earned by the investor during the previous year ∗Investment characteristics ∗Investment characteristics −Investment in real estate recoverable at the end of the contractual period −Investment in real estate recoverable at the end of the contractual period −No income during the development stage and high but variable income during the period of full production −No income during the development stage and high but variable income during the period of full production IDM ESPAÑOLA, S.A. AZ/10/05/AAA/070/ 25
  27. 27. FRUSESA INVESTMENT PROPOSAL 1 TAXATION IMPACT TAX TAX TAX BEFORE RATE RATE RATE TAXES AT 25% AT 35% AT 56% 3000 2,875 2,452 2500 2,301 2000 1,983 ∗The tax effect isisaareduction on the requir- ∗The tax effect reduction on the requir- ed initial investment of: ed initial investment of: REQUIRED INITIAL INVESTMENT −14.7% for aatax rate of 25% −14.7% for tax rate of 25% (000 PTAS) 1500 −20.0% for aatax rate of 35% −20.0% for tax rate of 35% Investment −31.0% for aatax rate of 56% −31.0% for tax rate of 56% in land 1000 500 0 SOURCE: IDM ESPAÑOLA COSTING MODEL IDM ESPAÑOLA, S.A. AZ/10/05/AAA/070/ 26
  28. 28. FRUSESA INVESTMENT PROPOSAL 2 INVESTMENT IN LAND ∗Investment in irrigated agricultural land in Extremadura ∗Investment in irrigated agricultural land in Extremadura ∗Management of the land by Frusesa, as well as all the investment necessary for the intensive planting and cultivation of walnut-trees on ∗Management of the land by Frusesa, as well as all the investment necessary for the intensive planting and cultivation of walnut-trees on the land the land ∗Annual return to investor based on aafixed annual rental of 5% on the value of the land, adjusted annually by the Spanish GPI during the ∗Annual return to investor based on fixed annual rental of 5% on the value of the land, adjusted annually by the Spanish GPI during the life of the plantation life of the plantation ∗The management contract between Frusesa and the investor will last aaminimum of 50 years (estimated life cycle of the walnut-tree) ∗The management contract between Frusesa and the investor will last minimum of 50 years (estimated life cycle of the walnut-tree) ∗Annual profitability (Ptas/hectare) ∗Annual profitability (Ptas/hectare) −Initial investment necessary −Initial investment necessary Land (±1,100,000) Land (±1,100,000) −Annual income −Annual income 55,000 55,000 −Present value of income (5%) −Present value of income (5%) 1,004,000 + Revaluation of land and plantation 1,004,000 + Revaluation of land and plantation −Residual value −Residual value Land + Plantation Land + Plantation ∗Divestment mechanisms ∗Divestment mechanisms −The investor could divest at any time in any way he considers appropriate through third parties −The investor could divest at any time in any way he considers appropriate through third parties −Frusesa undertakes the obligation, ten years after the investment, to acquire the properties of the investor at aaprice equivalent to −Frusesa undertakes the obligation, ten years after the investment, to acquire the properties of the investor at price equivalent to 20 times the cash-flow earned by the investor during the previous year 20 times the cash-flow earned by the investor during the previous year ∗Investment characteristics ∗Investment characteristics −Investment in real estate recoverable at the end of the contractual period −Investment in real estate recoverable at the end of the contractual period −Moderate income but perfectly defined −Moderate income but perfectly defined IDM ESPAÑOLA, S.A. AZ/10/05/AAA/070/ 27
  29. 29. FRUSESA INVESTMENT PROPOSAL 3 INVESTMENT IN LAND AND PLANTING ∗Investment in irrigated agricultural land in Extremadura, as well as in the intensive planting of walnut-trees on the land ∗Investment in irrigated agricultural land in Extremadura, as well as in the intensive planting of walnut-trees on the land ∗Management of the plantations by Frusesa, as well as all the investment necessary to develop the walnut-trees plantations ∗Management of the plantations by Frusesa, as well as all the investment necessary to develop the walnut-trees plantations ∗Annual return to investor based on the value of 50% of the obtained production ∗Annual return to investor based on the value of 50% of the obtained production ∗The management contract between Frusesa and the investor will last aaminimum of 50 years (estimated life cycle of the walnut-tree) ∗The management contract between Frusesa and the investor will last minimum of 50 years (estimated life cycle of the walnut-tree) ∗Annual profitability (Ptas/hectare) ∗Annual profitability (Ptas/hectare) −Initial investment necessary −Initial investment necessary 1,176,000 + Land (±1,100,000) 1,176,000 + Land (±1,100,000) −Annual income −Annual income 475,000 475,000 −Present value of income (5%) −Present value of income (5%) 5,130,000 + Revaluation of land and plantation 5,130,000 + Revaluation of land and plantation −Residual value −Residual value Land + Plantation Land + Plantation ∗Divestment mechanisms ∗Divestment mechanisms −The investor could divest at any time in any way he considers appropriate through third parties −The investor could divest at any time in any way he considers appropriate through third parties −Frusesa undertakes the obligation, ten years after the investment, to acquire the properties of the investor at aaprice equivalent to −Frusesa undertakes the obligation, ten years after the investment, to acquire the properties of the investor at price equivalent to 15 times the cash-flow earned by the investor during the previous year 15 times the cash-flow earned by the investor during the previous year ∗Investment characteristics ∗Investment characteristics −Investment in real estate recoverable at the end of the contractual period −Investment in real estate recoverable at the end of the contractual period −Limited income during the development stage and high but variable income during the period of full production −Limited income during the development stage and high but variable income during the period of full production IDM ESPAÑOLA, S.A. AZ/10/05/AAA/070/ 28
  30. 30. FRUSESA INVESTMENT PROPOSAL 4 INVESTMENT IN LAND ∗Investment in irrigated agricultural land in Extremadura ∗Investment in irrigated agricultural land in Extremadura ∗Management of the land by Frusesa, as well as all the investment necessary for the intensive planting and cultivation of walnut-trees on ∗Management of the land by Frusesa, as well as all the investment necessary for the intensive planting and cultivation of walnut-trees on the land the land ∗Annual return to investor based on aafixed annual rental of 2.5% on the value of the land, adjusted annually by the Spanish GPI, plus ∗Annual return to investor based on fixed annual rental of 2.5% on the value of the land, adjusted annually by the Spanish GPI, plus 15% of the obtained production 15% of the obtained production ∗The management contract between Frusesa and the investor will last aaminimum of 50 years (estimated life cycle of the walnut-tree) ∗The management contract between Frusesa and the investor will last minimum of 50 years (estimated life cycle of the walnut-tree) ∗Annual profitability (Ptas/hectare) ∗Annual profitability (Ptas/hectare) −Initial investment necessary −Initial investment necessary Land (±1,100,000) Land (±1,100,000) −Minimum annual income −Minimum annual income 27,500 27,500 −Income full production year −Income full production year 170,000 170,000 −Present value of income (5%) −Present value of income (5%) 2,394,000 + Revaluation of land and plantation 2,394,000 + Revaluation of land and plantation ∗Divestment mechanisms ∗Divestment mechanisms −The investor could divest at any time in any way he considers appropriate through third parties −The investor could divest at any time in any way he considers appropriate through third parties −Frusesa undertakes the obligation, ten years after the investment, to acquire the properties of the investor at aaprice equivalent to −Frusesa undertakes the obligation, ten years after the investment, to acquire the properties of the investor at price equivalent to 10 times the cash-flow earned by the investor during the previous year 10 times the cash-flow earned by the investor during the previous year ∗Investment characteristics ∗Investment characteristics −Investment in real estate recoverable at the end of the contractual period −Investment in real estate recoverable at the end of the contractual period −Minimum income perfectly defined, with additional income varable and dependant on production achieved −Minimum income perfectly defined, with additional income varable and dependant on production achieved IDM ESPAÑOLA, S.A. AZ/10/05/AAA/070/ 29
  31. 31. FRUSESA INVESTOR EXPENDITURES/REVENUES (1990 PTAS PER HECTARE) YEA R PR O PO SA L 1 PR O PO S A L 2 PR O PO SA L 3 PR O PO S A L 4 0 -2 ,3 6 5 ,3 0 0 -1 ,1 0 0 ,0 0 0 -2 ,2 7 6 ,4 0 0 -1 ,1 0 0 ,0 0 0 1 -6 3 ,8 0 0 + 5 5 ,0 0 0 + 5 4 ,0 0 0 + 4 3 ,7 0 0 2 -6 9 ,2 0 0 + 5 5 ,0 0 0 + 5 4 ,0 0 0 + 4 3 ,7 0 0 3 -5 9 ,2 0 0 + 5 5 ,0 0 0 + 5 4 ,0 0 0 + 4 3 ,7 0 0 4 -1 2 6 ,5 0 0 + 5 5 ,0 0 0 + 6 5 ,9 0 0 + 4 7 ,3 0 0 5 -9 3 ,9 0 0 + 5 5 ,0 0 0 + 8 2 ,5 0 0 + 5 2 ,3 0 0 6 -9 6 ,7 0 0 + 5 5 ,0 0 0 + 9 5 ,0 0 0 + 5 6 ,0 0 0 7 + 9 7 ,7 0 0 + 5 5 ,0 0 0 + 2 0 1 ,9 0 0 + 8 8 ,0 0 0 8 + 32 5 ,2 0 0 + 5 5 ,0 0 0 + 3 3 2 ,5 0 0 + 1 2 7 ,3 0 0 9 + 58 7 ,6 0 0 + 5 5 ,0 0 0 + 4 7 5 ,0 0 0 + 1 7 0 ,0 0 0 10 + 58 7 .6 0 0 + 5 5 ,0 0 0 + 4 7 5 ,0 0 0 + 1 7 0 ,0 0 0 11 + 53 4 ,2 0 0 + 5 5 ,0 0 0 + 4 7 5 ,0 0 0 + 1 7 0 ,0 0 0 12 + 51 1 ,2 0 0 + 5 5 ,0 0 0 + 4 7 5 ,0 0 0 + 1 7 0 ,0 0 0 IN V E S T M E N T -2 ,8 7 5 ,0 0 0 -1 ,1 0 0 ,0 0 0 -2 ,2 7 6 ,5 0 0 -1 ,1 0 0 ,0 0 0 R E Q U IR E D DIVESTMENT ON THE 10TH YEAR S E L L IN G P R IC E + 8 ,8 1 5 ,0 0 0 + 1 ,1 0 0 ,0 0 0 + 7 ,1 2 5 ,0 0 0 + 1 ,7 0 0 ,0 0 0 -N P V (5 % ) 3 ,2 9 0 ,0 0 0 0 3 ,1 0 9 ,0 0 0 4 4 3 ,0 0 0 10 YEA R S -R E A L IR R 10 YEA R S % 1 4 .1 5 .0 1 5 .3 9 .2 NO DIVESTMENT -N P V (5 % ) 3 ,7 3 4 ,0 0 0 0 4 ,1 2 6 ,0 0 0 1 ,3 9 0 ,0 0 0 50 YEA R S -R E A L IR R 9 .8 5 .0 1 1 .3 1 0 .0 50 YEA R S % (£1=Pts 180, $1=Pts 90, FF1=Pts 20, SFR=Pts 75) IDM ESPAÑOLA, S.A. AZ/10/05/AAA/070/ 30
  32. 32. FRUSESA INVESTMENT PROPOSALS SUMMARY (1990 PTAS PER HECTARE) PROPOSAL 1 PROPOSAL 2 PROPOSAL 3 PROPOSAL 4 INVESTMENT REQUIRED LA N D 1 ,1 0 0 ,0 00 1 ,1 1 0 ,0 0 0 1 ,1 0 0 ,0 0 0 1 ,1 0 0 ,0 0 0 IR R IG A T IO N S Y S T E M S 50 4 ,7 00 FR U SESA 5 0 4 ,7 0 0 FR U SESA P L A N T IN G 67 1 ,7 00 FR U SESA 6 7 1 ,7 0 0 FR U SESA A L F A L F A C U L T IV A T IO N 2 6 ,9 00 FR U SESA FRU SESA FR U SESA M A N A G EM EN T 2 0 ,0 00 FR U SESA FRU SESA FR U SESA C U L T IV A T IO N + 4 2 ,1 00 FR U SESA FRU SESA FR U SESA G EN ERA L EX PEN SES F IR S T Y E A R 2 ,3 6 5 ,4 0 0 1 ,1 0 0 ,0 0 0 2 ,2 7 6 ,4 0 0 1 ,1 0 0 ,0 0 0 IN V E S T M E N T R E M A IN IN G IN V E S T M E N T 5 0 9 ,7 0 0 FRU SESA FRU SESA FRU SESA (6 Y E A R S ) O V E R A L L IN V E S T M E N T 2 .8 7 5 ,1 0 0 1 ,1 0 0 ,0 0 0 2 ,2 7 6 ,4 0 0 1 ,1 0 0 ,0 0 0 R E Q U IR E D PROFITABILITY ESTIMATES A N N U A L IN C O M E 87% OF 5 5 ,0 0 0 P t s /H A . 50% OF CROPS 2 7 ,5 0 0 P t s /H A .+ P R O F IT S 15% OF CROPS P O S IT IV E R E V E N U E S Y E A R 7 (* ) YEA R 1 YEA R 1 YEA R 1 A FTER IN C O M E F U L L P R O D U C - 5 8 7 ,6 0 0 5 5 ,0 0 0 4 7 5 ,0 0 0 1 7 0 ,0 0 0 T IO N Y E A R REVEN U ES FRO M 8 ,8 1 5 ,0 0 0 1 .1 0 0 ,0 0 0 7 ,1 2 5 ,0 0 0 1 ,7 0 0 ,0 0 0 O P T IO N A L D IV E S T M E N T IN Y E A R 1 0 R E A L IR R 1 0 Y E A R S 1 4 .1 % 5 .0 % 1 5 .3 % 9 .2 % R E A L IR R 5 0 Y E A R S 9 .8 % 5 .0 % 1 1 .3 % 1 0 .0 % (*) This proposal generates tax advantages during the initial years IDM ESPAÑOLA, S.A. AZ/10/05/AAA/070/ 31
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