Paseo de la Reforma 725 Col. Lomas de Chapultepec, Miguel...

Paseo de la Reforma 725 Col. Lomas de Chapultepec, Miguel Hidalgo, CP. 11000, Distrito Federal, México.

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2

Highlights 3

Independent Proteak Valuation 3

Capital Increase 4

FINSA Participation 4

MDF Development 5

Forestry Development 6

Results and Key Indicators 7

Balance Sheet Analysis 10

Cash Flow Analysis 12

Environmental and Social Development 12

Stock Development 13

Proteak Informs 14

Financial Statements 15


3

Proteak’s capital increase concluded with a 100% subscription and payment of the 25 million

issued OPCs (Ordinary Participation Certificates or CPOs in Spanish) at a Price of MXP

15.00 per OPC.

Through its participation in the capital increase, Financiera Maderera, S.A. (FINSA) acquired

5.2% of the Company.

414 Capital increased the target Price for Proteak’s OPCs placing it in a range between MXP

28.0 and MXP 31.3.

Signum Research began formal coverage of Proteak, with a target price estimate of MXP

30.69 per OPC at year-end 2016.

Construction of the MDF plant in Huimanguillo, Tabasco continues according to schedule.

414 Capital updated its independent valuation of Proteak, placing the value of the Company’s OPCs

between MXP 28.0 and MXP 31.3 as of May 2015.

The valuation takes into account both Teak plantations and their inherent long-term investment

horizon, as well as the incremental value of the new MDF business line.

The valuation report is currently published on Proteak’s website:

http://proteak.com/index.php/en/investors/financial-information/analyst-coverage

Signum Research, an independent financial and market analyst, began formal coverage of Proteak

with a BUY recommendation. Signum places the 2016 year-end target price for the Company’s

OPCs at MXP 30.69.

The Signum Research Report is available on their website:

http://www.signumresearch.com

Independent Valuation of Proteak

Highlights 2Q15

http://proteak.com/index.php/en/investors/financial-information/analyst-coverage


4

The extraordinary Shareholders’ Meeting celebrated on March 20th declared a capital increase

through the emission of 25,000,000 Ordinary Participation Certificates (OPCs) at a Price of MXP 15

per OPC.

OPCs were offered for subscription to existing Proteak shareholders on April 21st at a rate of 1 (one)

new OPC for every 9.73 OPCs held.

The period for shareholders to exercise their preferential subscription rights ended on May 6th and

unsubscribed OPCs were offered to the third parties previously designated in the Assembly.

The the subscription and payment process was concluded on May 13, in line with Article 132 of the

General Corporations Law and Proteak’s Bylaws.

Through its participation in the capital increase of Proteak, FINSA acquired a 5.2% share of the

Company.

FINSA is the largest producer and wholesaler of boards, resins, melamines and veneers, among

other products, in the Iberian Peninsula. With more than 80 years of experience, it has 12 factories

across Europe, 2,750 employees and annual sales of USD 1,000 million.

Desde abril se encuentra ya en Huimanguillo supervisando la puesta en marcha de la planta el

Director de Planeación del Proyecto de MDF, proveniente de FINSA.

The participation of the Spanish Company brings invaluable technical and commercial knowledge to

the MDF Project, confirming its solidity.

The MDF Project Planning Director comes from FINSA and is on-site since April, supervising the

plant startup process.

FINSA Incorporation

Capital Increase


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The development of the country’s most important industrial forestry project continues according to

schedule.

During the quarter, foundations and platforms including those for the electrical sub-station, were

completed. The assembly of machinery, including the 30m long press, started, as well as the

construction of offices and the resin plant. The installation of the first turbine for energy cogeneration

was also initiated.

Progress was made in the interconnection duct to the Pemex pipeline system that will supply the gas

turbine,

Regarding marketing, Proteak continued strengthening its sales platform, prioritizing the growth of

its customer base for FINSA products. This strategy allows the Company to gain knowledge of the

market and be prepared for the sale of its own products when the MDF plant starts production at

year-end.

MDF Development


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The 2015-2016 planting program, which includes 2,000 hectares of new Eucalyptus plantations,

moves forward in line with local precipitation.

In May, Proteak received the first disbursement of the credit line authorized by Financiera Nacional

de Desarrollo Agropecuario, Rural, Forestal y Pesquero (FND) for new Eucalyptus plantations that

will supply the MDF plant. During the quarter, the first 486 hectares were prepared for planting.

In the case of Teak, the first 113 hectares were prepared for planting once the rainy season begins.

As of quarter-end, 864 hectares of Eucalyptus and 1,381 hectares of Teak have received

maintenance.

Forestry Development


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SUMMARY OF RESULTS AND KEY INDICATORS

I. Income Statement Analysis

Sales

Quarterly results were positive, with profits in all business lines of the Company.

2Q15 sales amounted to MXP 38MM, 28% higher than those registered during 1Q15 and 22% below

2Q14. This variation responds to the Company’s Teak sale strategy, privileging price over volume.

Furthermore, results were favored by an increase in exports to China and the sale of a more efficient

mix of wood sizes, driven mainly by thick wood sold in India.

In the case of Eucalyptus, after honoring all sales contracts of FOMEX, Proteak decided to modify its

sales strategy and keep, from now on, all the wood in order to supply the MDF plant.

In '000 MXP 2Q'15 2Q'14 T vs T YTD 2015 YTD 2014 YoY

Teak Sales 28,126 41,723 (33% ) 48,878 73,217 (33% )

Eucalyptus Sales 9,778 7,014 39% 18,610 20,251 (8% )

Income from Revaluations 45,556 21,023 117% 90,994 42,723 113%

Other Income 1,745 1,058 65% 3,936 (1,452) N/C

Teak Sales Cost 22,939 38,842 (41% ) 40,796 64,772 (37% )

Eucalyptus Sales Cost 7,833 5,908 33% 16,370 18,656 (12% )

Gross Margin 52,688 25,161 109% 102,370 53,253 92%

Teak Gross Margin Without Revaluation 5,187 2,881 80% 8,082 8,445 (4% )

Eucalyptus Gross Margin Without Revaluation 1,945 1,107 76% 2,240 1,595 40%

Operating Income 29,883 12,532 138% 55,050 18,288 201%

Debt 1,072,072 236,872 353% 1,072,072 236,872 353%

Total Liabilities / Total Assets 0.3 0.2 90% 0.3 0.2 90%

Debt / Equity 0.4 0.1 226% 0.4 0.1 226%

Debt / Total Assets 0.2 0.1 163% 0.2 0.1 163%

Debt / Current Assets 1.1 0.4 204% 1.1 0.4 204%

N/C Not Comparable

(1) Other Net Income considers subsidies, asset sales and other expenses.

Results and Key Indicators


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Net Quarterly Sales totaled MXP 84MM, growing 20% over the same quarter last year, mainly driven

by an increase in income from wood revaluation. The latter totaled MXP 46MM and was determined

by projecting the reasonable value of plantations based on their historical growth, according to

international accounting standards.

Net Sales include the sale of goods, revaluations resulting from the change in fair value of Biological

Assets and Subsidies received

Proteak prices continued to strengthen in Asia. 80% of the volume was sold at a price 23% above

target. Furthermore, prices were 5% higher than those obtained in 2014.


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During 2Q15, the Company delivered 127 Teak containers to Asia, all from Proteak’s plantations in

Colombia.

Sales Costs, General Expenses and Net Income

Gross Profit for the quarter reached MXP 53MM, 109% above the 2Q14 figure, reflecting a

combination of the following factors: higher sale prices, a more efficient product mix and a higher

revaluation of biological assets.

General Expenses totaled MXP 25MM, in line with the Company Budget; they are 81% higher than

the ones registered during 2Q14, mainly driven by expenses related to the MDF Project.

The increase in Net Sales, combined with an significant improvement in margins, the provision for

revaluation of Biological Assets and a strict control of General Expenses, resulted in an Operating

Income of MXP 30MM, 138% higher than the one registered the same quarter last year and 19%

above 1Q15.

Net Income for the quarter reached MXP 24MM.


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II. Balance Sheet Analysis

Assets

As of June 2015, total assets of the Company amounted to MXP 4,354MM, 41% higher than year-

end 2014, mainly driven by investment in the MDF plant, the capital increase that took place in May

(MXP 375MM), and the exchange rate effect on Teak Assets.

Among Current Assets, Other Assets stand out, with the reclassification of MXP 114MM in deferred

payments of the MDF plant.

Real Estate reflects a value increase of 12% compared to year-end 2014, the key factor being the

construction of the main industrial structure of the MDF plant.

Machinery and Industrial Equipment recorded a value increase of MXP 352MM driven by the

integration of equipment for the MDF plant, which is already being installed.

Biological Assets (Current and non-Current) reflect an increase of 11% compared to December 2014

mainly due to the growth of Biological Assets corresponding to the first semester of 2015.

The value of Proteak’s plantations is mainly modified by four factors: (i) capitalized forestry

expenses, (ii) exchange rate, (iii) revaluations representing the growth of biological assets, and (iv)

outflows from the wood’s cost of sales.

So far this year, the following has been registered: (i) MXP 66MM in capitalized forestry expenses,

destined for the maintenance of existing plantations to improve their expected return by promoting

higher growth rates; (ii) MXP 16MM from revaluation of the USD; (iii) MXP 91MM in revaluation

derived from the previously discussed growth; and (iv) MXP 28MM, which represent the wood’s cost

of sales. During the quarter, harvested wood amounted to 16 Mm3 (thinning and harvest).

Long-Term Assets Kept for Sale is mainly non-strategic land that will be sold in the medium term.

These assets are located in Costa Rica and were worth MXP 93MM as of quarter-end.


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Liabilities and Equity

Accounts Payable increased MXP 71MM reflecting deferred payments to MDF plant suppliers.

Deferred Tax Liabilities show the provisions that were generated by the annual calculation of 2014

Taxes.

Other Liabilities with Cost recorded an increase of MXP 740MM, mainly due to both, the

disbursements of the credit with AKA-Commerzbank for the acquisition of machinery for the MDF

plant, as well as the first disbursement of the credit line with FND in May 2015 and the last

disbursement of the IFC loan.

During the quarter, Proteak made the first amortizations of principal and interests (MXP 4MM) of the

two credits signed with Financiera Rural 5 years ago.

Total Equity of the Company at the end of the semester reached MXP 2,888MM, MXP 450MM above

year-end 2014, reflecting the capital increase that took place in May. Proteak’s solvency continues

strong with and Equity to Liabilities ratio of 2 to 1.


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III. Cash Flow Analysis

During the quarter, the Company Cash Flow position recorded a net growth of MXP 283MM, mainly

due to the capital increase and the first disbursement of the FND credit line; in addition, Proteak

financed its investment activities and new plantations.

Investments reflect the use of MXP 519MM, net of the sale of certain Assets Available

for Sale, destined mainly to the acquisition of Equipment, Advanced Payments to suppliers and Civil

Works costs related to the MDF plant.

The difference between Operating Flows and Investment Activities was mainly financed with capital

contributions from institutional investors (MXP 371MM), coupled with disbursements of credits with

AKA/Commerzbank (USD 40MM), FND (MXP 89MM) and IFC (USD 1MM).

The period’s cash flow evolved in line with the Company’s investment plan, ending in a cash position

of MXP 405MM.

The annual FSCR Forest Management audit for Teak plantations in Costa Rica concluded succesfully

as well as the Chain of Custody audit in Colombia. Furthermore, in compliance with the investment

agreement celebrated with FINNFUND, the Company completed its Annual Monitoring Report,

empahising health, security and pollutant controls.

Moreover, AENOR was selected to carry out the verification of carbon capture that will determine

the amount of credits that Proteak will be able to issue for sale in the voluntary market.

Regarding Social Development, Proteak continues strenghtening its relations with surrounding

communities. The company carried out a diagnostic of the schools in Huimanguillo in order to

develop a support program for infrastructure and teaching materials.

During the quarter, the elementary school Jose María Pino Suárez (50 children) was supported with

teaching materials and infrastructure repairs.

Finally, over 130 students from 4 Universities of the region were received at the Las Choapas

nursery.

Environmental and Social Development


13

During the quarter, the market continue recognizing the fundamental value of Proteak and the Price

of its OPC reached a maximum Price of MXP 18.20, vs. MXP 11.35 during 2Q14.

Stock Development


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Independent Analyst

As part of the independent analyst program, follow-up of Proteak’s OPC is performed by:

Ernesto Gustavo O´Farrill Santoscoy

[email protected]

Tel: (55) 5531 0042

Bahía de Todos los Santos #26

Col. Verónica Anzures

Delegación Miguel Hidalgo

C.P. 11590, México, D.F.

Investor Relations Agency

Alejandro Ramírez Arcia

[email protected]

Tel: +52 (55) 5256 – 5705

Proteak Informs


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The following table presents a summarized quarterly Income Statement in MXP ‘000, and a

comparison with the same period of 2014. Regarding Gross Profit, Operating Profit and Net Income,

the table shows the percentage of net sales plus revaluation income they represent.

2Q15 % Jun'15 % 2Q14 % Jun'14 %Δ 2Q'15 vs

2Q'14

Δ Jun'15

vs Jun'14

Teak Sales 28,126 34% 48,878 31% 41,723 60% 73,217 54% (33% ) (33% )

Eucalyptus Sales 9,778 12% 18,610 12% 7,014 10% 20,251 15% 39% (8%)

Income from Revaluations 45,556 55% 90,994 57% 21,023 30% 42,723 31% 117% 113%

Subsidies - 0% 1,053 1% 151 0% 490 0% (100%) 115%

Teak Cost of Sales 22,939 27% 40,796 26% 38,842 56% 64,772 47% (41% ) (37% )

Eucalyptus Cost of Sales 7,833 9% 16,370 10% 5,908 8% 18,656 14% 33% (12% )

GROSS PROFIT (LOSS) 52,688 63% 102,370 64% 25,161 36% 53,253 39% 109% 92%

General Expenses 24,550 29% 50,203 31% 13,537 19% 33,023 24% 81% 52%

Other Income/Expenses 1,745 2% 2,883 2% 907 1% (1,942) (1%) 92% 248%

OPERATING PROFIT (LOSS) 29,883 36% 55,050 35% 12,532 18% 18,288 13% 138% 201%

Products / Financial Expenses 9,378 11% 660 0% 3,189 5% 4,564 3% 194% (86% )

Other Financial Expenses (5,037) (6%) (9,825) (6%) (2,027) (3%) 0 0% N/A N/A

Conversion Effect (18,842) (23%) (2,347) (1%) 11.00 0% 0 0% N/A N/A

Financing Results 14,501 17% 11,512 7% (1,173) (2%) (4,564) (3%) 1336% 352%

(Loss) Profit Before Income Taxes 44,384 53% 66,562 42% 11,359 16% 13,724 10% 291% 385%

Income Taxes 19,968 24% 19,968 13% 25 0% 25 0% N/A N/A

Net Income 24,415 29% 46,594 29% 11,334 16% 13,699 10% 115% 240%

Conversion Effect - 0% - 0% - 0% - 0% N/A N/A0 0 0 0 0 0 - 0 0 0

Comprehensive Income 24,415 29% 46,594 29% 11,334 16% 13,699 10% 115% 240%

Income Statement

Financial Statements


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The following table presents the consolidated Balance Sheet as of the second quarter of 2015 in

MXP ‘000, and its comparison with 2Q14.

Jun'15 Dec'14 (1)

Δ Jun'15 vs

Dec'14 %

Cash & Equivalents 405,219 121,875 283,344 232%

Accounts Receivable (Clients) 70,728 65,120 5,608 9%

Other Accounts Receivable 127,199 128,797 (1,598) (1%)

Inventory 50,987 35,661 15,326 43%

Current Biological Assets (Mature) 221,002 267,000 (45,998) (17%)

Assets Available for Sale 92,777 88,942 3,834.81 4%

Other Assets 12,951 126,541 (113,590) (90%)

CURRENT ASSETS 980,862 833,936 146,926 18%

Property 1,064,020 946,956 117,064 12%

Plant and Equipment 551,650 207,877 343,773 165%

Other Equipment 18,115 - 18,115 N/A

Non-Current Biological Assets 1,232,912 1,041,884 191,028 18%

ISR 19,449 19,205 244 1%

Other 42,964 27,200 15,764 58%

Deferred Payment 443,942 16,411 427,531 2605%

NON-CURRENT ASSETS 3,373,051 2,259,533 996,455 49%

ASSETS 4,353,914 3,093,469 1,143,381 41%

Accounts Payable 110,842 39,868 70,974 178%

Payable taxes - 5,798 (5,798) (100%)

Other Current Liabilities 58,967 54,344 4,623 9%

Current Credit 108,025 6,893 101,132 1467%

CURRENT LIABILITIES 277,834 106,903 69,799 160%

Long Term Debt 964,047 324,750 639,297 197%

Deferred Taces 223,646 223,757 (111) (0%)

LONG TERM LIABILITIES 1,187,693 548,507 639,186 117%

LIABILITIES 1,465,527 655,410 708,985 124%

Capital Stock 2,356,398 1,984,922 371,476 19%

Accumulated Earnings (Loses) 73,447 26,873 46,574 173%

Conversion Effect 229,847 220,858 8,989 4%

Revaluation Surplus 101,295 101,295 0 0%

Other Integral Results 127,400 104,111 23,289 22%

TOTAL EQUITY 2,888,387 2,438,059 450,328 18%

TOTAL LIABILITIES + EQUITY 4,353,914 3,093,469 1,159,313 41%

(1) Dictaminated Financial Statements 2014

Balance Sheet


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June 28th, 2015, Mexico City. Today, Proteak Uno, S.A.B. de C.V. (BMV: TEAK) published its

2Q15 results. This information is presented according to Financial Reporting Standards (NIF) in

nominal terms.

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