chiquita brands south pacific limited annual report2002

Chiquita Brands South Pacific Limited

Annual Report 2002

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Contents

Chairman’s Report 2

CEO’s Report 2002 4

Highlights 8

Five Year Financial Summary 9

Directors’ Report 10

Financials 17

Directors’ Declaration 58

Independent Audit Report 59

Corporate Governance Statement 60

Shareholder Information 62

Chairman’s Report

2002 was a year of consolidation and transformation

for Chiquita Brands South Pacific (Chiquita) which places

the Company in a sound financial position for 2003.

In May 2002, shareholders endorsed a $25.6 million

recapitalisation of the Company. They also agreed to

the appointment of Mr Mano Babiolakis as CEO and

Managing Director, and Mr Frank Costa and Mr Carl

Schokman to the Board of Directors. These three

men are well credentialed in the fresh produce industry

and bring to the Board a wealth of knowledge and

perspective.

At the board meeting immediately following the AGM,

Mr Babiolakis presented the Board with his strategy to

transform and re-invigorate the Company. At its simplest

level the plan involved the restructuring of the Company

into autonomous and accountable Strategic Business

Units (SBUs), each with their own focus, direction and

targets. The strategy also included the divestment

and rationalisation of non-performing assets.

This strategy presented the Board with some very

tough decisions about the structure of the Company.

The decision to post an abnormal charge for restructuring

costs of $27.4 million followed lengthy and vigorous

debate by the Board and Chiquita executive management.

Since resolving to undertake this restructure, Chiquita

management has remained dedicated to refocusing and

restructuring the business to bring about consolidation

and improvement of previously under-performing

business units.

The cost base of all business units was reviewed and

non-performing assets divested. The areas principally

affected by this strategic review include the banana

farming operations, the market and trading businesses,

and corporate Head Office.

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The banana farming operations have made significant

losses over a number of years. The restructure, now

completed, was a major process with all facets of the

business analysed and assessed to determine continued

investment. As a result, the Company divested non-

profitable farming and packing operations. The Board

is confident that Chiquita’s banana farming operations

are well placed to deliver positive returns going forward.

The rationalisation of the market and trading operations,

including its assets, equipment, warehousing and

staffing, is well underway. Assets have been sold or

written down to their realisable value and non

performing facilities closed or sold. The restructured

and revised cost base of this business unit will ensure

a competitive advantage and leave it better positioned

to service its customer base.

Our strategy to move to autonomous SBUs has

necessitated downsizing the corporate Head Office

whereby redundant services have been eliminated.

The devolvement of responsibility back to the business

units from Head Office did not result in an increase in

administrative or financial personnel within the SBUs.

Following the restructure it is pleasing to note that

operating results excluding abnormal charges have

improved significantly, with the Group posting an

EBIT of $10.4 million for the year. Positive operating

cash flows of $10.0 million, after one-off charges

of $5.0 million, were a marked improvement over the

previous year and have been enhanced as a direct

result of stringent working capital management.

The refocus and rationalisation have given substantive

impetus to Chiquita’s vision to be the dominant player

in the production, processing and marketing of

horticultural products in its chosen categories and

markets. Our vision supports our goal to deliver

consistent after tax returns on shareholder funds

greater than 15% and increasing to 20% over the

next three years.

Throughout the consolidation and transformation

process, Chiquita has appreciated the support given

by its two major shareholders, Chiquita Brands

International (CBII) and the Costa’s Group. They have

added intellectual rigour to the strategic plan and the

vision and direction of the Company.

I believe that under Mr Babiolakis and his Executive

Team, Chiquita is on a solid footing for the future.

The emphasis of the business is very much on gaining

maximum returns and synergies from the existing

business units while focusing on shareholder return,

cash generation and the attainment of further

opportunities in line with Chiquita’s vision.

I would like to acknowledge the contribution and

dedication of all the Chiquita staff in what has been

a year of significant change.

Anthony G. Hartnell

Chairman

Chairman’s Report 2002 continued

As we enter 2003, I want to take the opportunity

to restate our operating model and financial goals.

Our operating model is based on being the dominant

player in the production, processing and marketing

of horticultural products in our chosen categories

and markets. Dominant is in respect to market share,

degree of pricing power, competitive advantage and

where there are barriers to entry. By executing against

this model, we believe that we will achieve our overall

financial goal of delivering consistent improvement

in after tax returns to shareholders of 15% initially,

growing to 20% over the next three years.

In line with the Group’s vision and strategic plan,

a number of objectives were set following Chiquita’s

successful capital raising in May 2002. These were

aimed at stemming losses, restructuring the balance

sheet and attaining a solid platform on which to build.

The establishment of clearly autonomous Strategic

Business Units (SBUs) became the overriding objective.

This now provides each of Chiquita’s businesses with

a clearly defined focus and fiscal accountability, while at

the same time, strengthening communication within the

businesses and within the Company as a whole.

The key to any successful business is the calibre,

dedication and enthusiasm of its people. In order to

harness the power of Chiquita’s people, the Executive

Team was restructured to include the General Manager

of each SBU and our Chief Financial Officer.

The Executive Team are highly committed and competent

individuals, each focused on achieving Chiquita’s clearly

defined objectives and demonstrating credibility by

doing and delivering what we have committed to do

and deliver. Throughout the organisation, building trust

and teamwork, with an emphasis on maximising returns,

remains crucial to our overall success.

CEO’s Report 2002

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Our strategy has already begun to deliver value.

Chiquita’s performance highlights the strong turnaround

over the previous year with earnings before interest,

tax and one-off charges increasing from $2.2 million

in 2001 to $10.4 million in 2002.

It is pleasing to note there was a significant improvement

in underlying cash from trading. The cash generated,

excluding cash outflows for restructuring costs, increased

from $4.5 million to $14.7 million.

Our financial discipline and focus on restructuring

our balance sheet has resulted in reduced investment

in working capital down from $21.0 million (December

2001) to $15.9 million (December 2002). We have

set strict performance measures for managing the

investment in working capital for each SBU. This will

result in improved cash flow in 2003 and reduced

reliance on external seasonal debt.

The improved profitability and cash flow, together

with the capital raising, have translated into a stronger

balance sheet, with Chiquita’s overall debt down from

$88.0 million in December 2001 to $56.0 million in

December 2002. Net debt to shareholders funds at

31 December 2002 was 78%, down from 134% at the

same time last year.

With the establishment of autonomous SBUs, Head

Office has been systematically reduced with significant

cost savings flowing through in the final quarter of 2002.

In conjunction with the Board, the focus of Head Office

is now to provide Chiquita’s strategic direction, allocate

and measure its resources and give strong corporate

governance through effective policy, reinforced by a

robust internal control environment. To this end, an

internal audit function for both Finance and Occupational

Health & Safety, is currently being implemented and

should be in place by the second quarter of 2003.

The SBUs fall into three operational segments:–

- Farming operations which include Chiquita Mushrooms,

Blueberry Farms of Australia and Chiquita Bananas

North Queensland.

- Trading operations which comprise Chiquita Trading,

Chiquita Export and Chiquita Nibbles.

- Processing operations which include Kangara Foods

and Angas Park Fruit Company.

For the purpose of the financial segmental analysis,

it is difficult to draw comparisons to previous years

due to the significant restructuring implemented

during 2002. Going forward, comparisons obviously

will become more meaningful.

FARMING OPERATIONS

Blueberry Farms of Australia (BFA)

BFA enjoyed an exceptional year with earnings well

ahead of forecast. While the drought impacted on both

the size and overall yield of the fruit, this was more than

offset by a very high quality product and strong sales

prices, particularly in our export markets. BFA ended

the year on a high note, culminating in recognition as

winner of the 2002 Premier’s NSW Regional Exporter

of the Year award.

Comprising 530 acres of blueberries, BFA is one

of the largest operations of its kind in the Southern

Hemisphere. Furthermore, additional land, adjacent to

the Corindi Farm, has been purchased and earmarked

for further expansion.

In order to capitalise on BFA’s reputation in the berry

category, BFA also has a substantial raspberry operation.

Whilst production suffered materially from the drought,

the end result, driven primarily from stronger sales prices,

was exceptionally positive. Continued research and

development into out of season raspberries has been

made. We believe this development will provide additional

financial benefits and we have committed to expand.

CEO’s Report 2002 continued


Chiquita Mushrooms

The Chiquita Mushroom business has improved

its quality and yields, resulting in an increase in

market share. Importantly in 2002 we have seen the

establishment of a strong, cohesive management

team that has contributed greatly to improving and

strengthening employee relations, an area of concern

for a number of years. Aligned with this building of

internal confidence, management have also placed

a much stronger focus upon the health and safety

aspects of the business. During 2003, these initiatives

should result in improved productivity and translate

into improved return on funds employed.

Chiquita Mushroom’s operations are at Mernda,

Yarrambat and Nagambie in Victoria, and Casuarina

in Western Australia. Overall we produced about 280

tonnes per week, making Chiquita the largest single

producer of mushrooms in Australia. We are committed

to expanding our mushroom business. This expansion

will come through maximising efficiencies, acquisition

and green field development.

Chiquita Bananas North Queensland

A key objective in 2002 was the restructure of the

banana farming operations, which in recent years

have been a significant drain on Chiquita’s resources.

Now completed, the restructure involved a change

of management, the divestment of two loss-making

packing operations, the sale of one farm and the exit

of a leased farm.

In addition, a regeneration program has been implemented.

This will result in the average age of the plantations falling

in line with international farming practices over the next

three years. The implementation of post-harvest technology

late in 2002 has resulted in better returns to the farms due

to a strong and immediate effect on farm yield, quality and

pack-out of fruit. The financial impact of the restructure

forecasts the operations will break-even in this fiscal year

and return to profitability thereafter.

TRADING OPERATIONS

Chiquita Trading

During the year, all markets, logistics and sales operations

have been combined nationally to form Chiquita Trading.

Operations, in each of the major cities, give a national focus

to our marketing and trading of produce and make Chiquita

Trading one of the only such operations in Australia.

Previously, under the category management system,

the markets and logistics formed part of each of the

individual categories. This approach proved difficult to

effectively operate as lines of ownership, accountability

and control crossed organisational boundaries and

impacted negatively on both return and profitability.

The restructure has focused on eliminating duplication

in terms of warehousing and infrastructure, administration,

procurement and sales.

To date, much of the planning has been achieved, with

implementation some 60% of the way through. It is

anticipated that by June 2003, the entire exercise will

be complete, with some $2.5 million of annual savings

expected to be realised in 2003. Clear accountability

under the restructured unit now gives the appropriate

focus and direction to deliver a positive result in 2003.

Chiquita Nibbles

Directly involved in the processing, packing and marketing

of dried fruit and nut products, Chiquita Nibbles has

had a very good year. This has been underpinned by

the introduction of the pre-pack and punnet ranges,

which resulted in a substantial increase on prior year sales.

A key focus has been new product development and

packaging design.

The challenge for this SBU, in the medium term is to

efficiently manage the logistics and supply chain elements

of its business to support growth expectations. Additional

plans include the broadening of distribution into new

markets.

Brian LeckieGeneral ManagerKangara Foods & Angas Park

David GreenChief Financial Officer & Company Secretary

Executive Team

Peter McPhersonGeneral ManagerBlueberry Farms of Australia & Chiquita Export

Stephen LittleGeneral ManagerChiquita Mushrooms

Ray TantiGeneral ManagerChiquita Nibbles & Banana Farms

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PROCESSING OPERATIONS

Kangara Foods & Angas Park

Kangara Foods has had a mixed year. The returns

from vine fruit exceeded expectations. However, a very

poor citrus season combined with delays in carrot

planting in newly acquired lands, directly caused by

delays in capital spending during the first half of the

year, have diminished financial returns.

During the year, much of the focus has been on

infrastructural development and ensuring that the

required asset base can deliver the expected returns.

To date, a large portion of this work has been

completed. Kangara Foods is a large-scale primary

agricultural business that has exposure to adverse

weather conditions. If the drought, currently being

experienced throughout Australia, continues to affect

the South Australian Riverland, returns from Kangara

for the forthcoming year will be impacted.

Going forward, the focus of the business is very

much to reduce and diversify that risk. Key in that

process is the increased emphasis on new and existing

value-added products that Kangara currently produces.

During the last quarter of the year, Angas Park was

merged with Kangara Foods. Synergies between

these businesses have been exploited particularly in

areas of procurement, rationalisation of product lines,

warehousing and processing facilities, sales and

administration. Strategically, the merger has added

critical mass to this SBU. Enormous focus has been

placed on working capital management and changing

the nature of the business from a production driven

entity to a market driven one, with particular focus on

customer requirements.

Overall, the merged entity performed below anticipated

targets. However, given the magnitude of change,

particularly at Angas Park, the overall result has been

a positive one and although much structural work is

still required, the platform to go forward is very solid.

The accolade Kangara received on being awarded

the 2002 Premier’s South Australia Food Award, is clear

recognition of this business’ position of excellence in

the food industry.

OUTLOOKThe restructuring process is substantially complete.

As Chiquita moves into 2003, each SBU has clearly

defined financial and operational goals aligned with

overall Group targets. In line with our vision, we will

continue to grow and expand our SBUs, and further

focus on areas where we can value-add to our

products and services.

We will continue to extract synergies between business

units. This has particular relevance for Kangara Foods

and Angas Park, and also for Chiquita Trading and its

trading relationships with banana farms, BFA and

Chiquita Mushrooms. The benefits of this integration

have already started to flow through in the improved

Group earnings for 2002, with the full annualised benefit

anticipated in 2003. The growth of our export business,

currently responsible for approximately 15% of the

Group’s turnover, is an area of significant opportunity

and focus.

The fresh produce industry in Australia is valued at

approximately $4.5 billion and remains fragmented

in many areas. Chiquita accounts for only 6.5% of this

industry sector. However, as one of Australia’s largest

producing and marketing horticultural businesses,

Chiquita is well positioned to involve itself in the

rationalisation and consolidation of the industry as a

whole. Our focus is to continually look for opportunities

in the market to further consolidate our position within

given sectors or that vertically integrate with our existing

businesses, that allows Chiquita to maximise returns

to shareholders. This will further cement Chiquita’s

position as one of Australia’s largest and most successful

suppliers in the fresh produce industry.


Mark RobinsonGeneral ManagerChiquita Trading

2002 Highlights

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2002

EBIT (before significant items)

2001 2000 1999 19980

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4

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Net Cash Flows from operations

2002 2001 2000 1999 1998

Gearing (net debt to shareholders' equity) (%)

2002 2001 2000 1999 19980

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100

150

200

Mill

ions

Mill

ions

Earnings before interest and tax up 378% to $10.4 million

Injection of fresh talent to the Board with the appointments of Mano Babiolakis as Managing Director, Frank Costa and Carl Schokman as non executive directors.Collectively 80 years of experience in the fresh produce industry.

Cash from operating activities up 123% to $10.0 million.

Successful restructure of the banana assets in Far North Queensland, stemming losses and establishing a viable, quality focused farming operation.

Debt reduction through improved trading cash flow and $25.6 million capital raising.

Stage one of the Chiquita Trading rationalisation complete resulting in significant cost savings.

Significant improvement in debt to equity ratio down to 78% from 134% in 2001.

Downsizing of Head Office with staff members reduced to 14 from 39 with no increasein corresponding head count at the SBU’s

Profit after tax excluding significant items of $4.7 million up from a loss of $3.0 million in 2001.

Five Year Financial Summary

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$'000

For years ended 31 December 2002 2001 2000 1999 1998

PROFITABILITYNet Sales 304,135 303,230 241,145 202,944 148,025

EBITDA Earnings before interest, tax,depreciation and amortisation (before significant items) 16,080 9,639 13,404 15,569 7,515

Depreciation and amortisation 5,724 7,474 6,142 6,878 5,090

EBIT Earnings before Interest and tax 10,356 2,165 7,262 8,691 2,425

Net interest (Cr)/Dr 5,739 5,719 3,012 2,491 1,944

Earnings before tax and significant items 4,617 (3,554) 4,250 6,200 481

Net profit after tax (before significant items) 4,674 (3,023) 3,850 3,811 212

Net profit after tax (after significant items) (18,511) (12,209) 3,272 3,609 514

BALANCE SHEETCapital employed 127,865 153,676 160,331 72,098 75,458

Net debt 56,178 87,881 88,890 30,720 49,040

Shareholder funds 71,687 65,795 71,441 41,378 26,418

CASH FLOWNet Cash Flows from operations 9,982 4,486 7,426 9,775 (2,069)

Capital expenditure and acquisitions 8,861 9,556 64,426 7,138 32,979

FINANCIAL RATIOSBasic EPS (cents) (17.32) (18.10) 6.65 11.63 2.28

Basic EPS before significant items (cents) 4.37 (4.48) 7.82 12.28 0.94

Return on average shareholders' equity (%) (1) 6.80% (4.41%) 6.83% 11.24% 1.60%

Net tangible asset backing per share (cents) 0.42 0.79 0.81 1.06 0.92

Net interest cover (times) 1.8 0.4 2.4 3.5 1.2

Gearing (net debt to shareholders' equity) (%) 78% 134% 124% 74% 186%

OTHERFully paid shares ('000) 144,048 68,032 66,214 35,421 23,746

Convertible securities - number of shares ('000) (2) 6,100 6,100 6,100 6,100 6,100

Share price

- year low ($) $0.30 $0.32 $0.78 $0.95 $0.70

- year high ($) $0.50 $0.90 $1.30 $1.12 $1.20

- close ($) $0.47 $0.45 $0.85 $1.01 $1.20

Market capitalisation $'000 67,703 30,614 56,282 35,775 28,495

Number of shareholders 1,464 1,457 1,201 878 634

(1) Based on net operating profit before significant items(2) Repaid via intercompany funding on 15 January 2003

Directors’ Report

Your directors submit their report for the year ended 31 December 2002.

DIRECTORSThe names of the Directors of the Company in office during the financial year and until the date of this report are:

Anthony G. Hartnell Dennis M. Doyle

Mano D. Babiolakis Craig A. Stephen

Bruce W. Kemp Francis A. Costa

Carl C. Schokman Donald J. Taig

Donald J. Taig resigned from the Board on 29 May 2002

Mano D. Babiolakis was appointed to the Board, effective 12 April 2002

Francis A. Costa and Carl C. Schokman were appointed to the Board, effective 29 May 2002

The details of the Directors of the Company in office at the date of this report are:

Anthony Geoffrey Hartnell – Chairman

Solicitor B.Ec (ANU); LLB (Hons)(ANU); LLM (Highest Hons.)(George Washington University) A.M.

Appointed Chairman 1985. Board member since 1984. Former Chairman of the Australian Securities Commission and

National Companies & Securities Commission. Serves and has served on boards of both public (including listed) and

private companies. Directorships currently held include Chairman of BT Australian Equity Management Ltd, BT Global

Asset Management Ltd, BT Resources Management Ltd, Television & Media Services Ltd, KAZ Computer Services

Ltd, NSW Thoroughbred Racing Board, and ANU Endowment for excellence.

Dennis Michael Doyle

Solicitor. B.S. (Xavier University); J.D. (University of Cincinnati) Order of the Coif.

Appointed to the Board on 15 January 1998. Former Chairman of the International Banana Association. In 1984

was appointed Vice President, General Counsel and Secretary of Chiquita Brands International, Inc. Presently serves

as Executive Vice President – Regulatory Affairs.

Bruce William Kemp

Dip. Mech. Eng., Dip. Ind. Eng.

Appointed to the Board 24 February 2000. Former Chief Executive of Southcorp Wines. Presently Chief Executive

of Global Wine Advice. Directorships include Anthony Smith Australasia Pty Ltd, Pipers Brook Vineyards Limited and

Rabobank Advisory Board.

Craig Allan Stephen

CPA. B.S. (University of Cincinnati)

Appointed to the Board on 15 January 1998. Has several years experience consulting to large public clients whilst

with Ernst & Young. Joined Chiquita Brands International, Inc. in 1990 as a Corporate Planner. Currently serves as

President & Chief Operating Officer, Chiquita Banana – Far and Middle East, Austral/Asia Region.

Anthony Hartnell – Chairman Dennis Doyle Bruce Kemp

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Francis Aloysius Costa

OAM

Appointed to the Board on 29 May 2002. Director of Costa Bros. Annuities Pty Ltd and Managing Director and

CEO of Costa’s Pty Ltd. President of the Geelong Football Club. Honoured with an Order of Australia Medal for

services to youth and the community.

Carl Christopher Schokman

B. Com. (Deakin University); FCPA; FAICD; FTIA

Appointed to the Board on 29 May 2002. Presently the Chief Financial Officer of Costa Bros. Annuities Pty Ltd and

Group General Manager Commercial of Costa’s Pty Ltd. Has several years experience in public accounting with an

emphasis on business advisory services. Is a Fellow of the Institute of Company Directors and the Taxation Institute

of Australia.

Manoussos Diogenis Babiolakis – Managing Director

B. Com. (Rhodes University South Africa)

Appointed to the Board on 12 April 2002. Former CEO of Interfresh Limited, the largest horticultural concern

in Zimbabwe. Presently CEO and Managing Director of CBSP and Director of Zymex Holdings Pty Ltd.

Has 17 years experience in the agricultural sector.

Directors were in office from the beginning of the financial year until the date of this report, unless otherwise stated.

INTEREST IN THE SHARES OF THE COMPANYThe relevant interests of each of the directors in the shares and options issued by the companies within the

consolidated entity as notified by the directors to the Australian Stock Exchange in accordance with S205G(1)

of the Corporations Act 2001, at the date of this report are as follows:

Directors Ordinary Shares Exchange Quoted Options Executive Options

Anthony Hartnell 548,185 Nil Nil

Dennis Doyle Nil Nil Nil

Bruce Kemp 174,999 Nil Nil

Mano Babiolakis 5,400,000 Nil 1,000,000

Francis Costa 37,175,221 Nil Nil

Carl Schokman 350,000 Nil Nil

Craig Stephen 390,000 Nil Nil

Directors’ Report continued

Craig Stephen Francis Costa Carl Schokman Mano Babiolakis – Managing Director

(1)

(1) As trustee for the CBSP Employee Share Plan.


PRINCIPAL ACTIVITIESThe principal activities of entities within the consolidated entity during the year were:

- The manufacturing, marketing and distribution of fruit, vegetables and dried fruit and nuts within Australia and to

export markets; and

- The growing of bananas, mushrooms, blueberries, raspberries, carrots, grapes, citrus and other fruits, in Australia.

EARNINGS PER SHAREBasic earnings per share, was a loss of 17.32 cents per share. Diluted earnings per share, was a loss of

17.25 cents per share.

DIVIDENDS PAID OR RECOMMENDEDNo dividend will be paid in respect of the year ended 31 December 2002. A final dividend for 31 December 2000

(3 cents per share fully franked) of $1.986 million was paid during 2001. No dividends were paid in respect of the

year ended 31 December 2001.

REVIEW AND RESULTS OF OPERATIONSRefer to the Chairman’s Report and CEO’s Report in the front section of this Annual Report.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRSIn the opinion of the directors there were no significant changes in the state of affairs of the consolidated entity that

occurred during the financial year under review not otherwise disclosed in this report or the financial statements.

LIKELY DEVELOPMENTS AND RESULTSRefer to the Chairman’s Report and CEO’s Report in the front section of this Annual Report.

ENVIRONMENTAL REGULATIONS AND PERFORMANCEChiquita Brands South Pacific Limited and all of its subsidiaries are committed to conducting all business

activities having proper respect for the environment while continuing to meet other expectations of shareholders,

employees, customers and suppliers.

All group companies are subject to environmental regulations under various Federal, State and local laws relating

predominantly to air, noise and water emission levels, and the Directors are not aware of any non-compliance

with these regulations.

The consolidated entity is committed to achieving a level of environmental performance that meets or exceeds

Commonwealth, State and local, requirements, and improves its use of natural resources and minimises waste.

Chiquita Mushrooms Pty Ltd is participating in an initiative of the Victorian State Government to establish World’s

Best Environmental Practice for Victoria’s Food Industry.

Chiquita Mushrooms Pty Ltd and Angas Park Fruit Company Pty Ltd have entered into the Greenhouse Challenge,

a Commonwealth Government initiative designed to reduce greenhouse gas emissions while improving performance.

SHARE OPTIONSAs at the date of this report, there were 2,583,425 unissued Ordinary Shares in the Company under options.

During the financial year, the Company issued 1,000,000 executive options to the Managing Director. Since the end of

the financial year the Company has issued a further 1,050,000 executive options to the Chiquita Executive, excluding

the Managing Director. The executive options were issued in four tranches in amounts, exercise prices per ordinary

share and expiry dates as set out in the table below.

No options were exercised during the financial year.

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As at the date of this report, the following options were on issue:

Details Number of Exercise Options Price

Employee options expiring 27 March 2003 111,000 $1.00

Employee options expiring 12 February 2004 142,000 $1.00

Employee options expiring 29 December 2004 20,000 $1.00

Employee options expiring 27 March 2005 260,425 $1.154

Executive options expiring 29 May 2004 400,000 $0.435

Executive options expiring 29 May 2005 750,000 (a)



Total options on issue at balance date 2,583,425

(a) Options expiring 29 May 2005, 29 May 2006 and 29 May 2007 have an exercise price based on the weighted

average price of Ordinary Shares of Chiquita Brands South Pacific Limited on the 20 business days immediately

prior to 29 May 2003, 2004 and 2005 respectively.

INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERSThe Company has not, during or since the reporting period, in respect of any person who is or has been an officer

of the Company:

– Indemnified or made any relevant agreement for indemnifying against a liability incurred as an officer, including

costs and expenses in successfully defending legal proceedings; or

– Paid or agreed to pay a premium in respect of a contract insuring against a liability incurred as an officer for the

costs or expenses to defend legal proceedings;

with the exception of the following matters:

During the financial year the Company paid premiums to insure all of the directors and officers against liabilities

for costs incurred by them in defending proceedings for conduct involving any actual or alleged error, mis-statement,

misleading statement, omission, neglect or breaches of duties and wrongful acts resulting in loss arising from

discharge of pollutants. Disclosure of the total amount of the premiums paid under this renewed insurance policy

is prohibited under the provisions of the insurance contract.

DIRECTORS’ AND OTHER OFFICERS’ EMOLUMENTSThe Remuneration Committee of the Board of Directors is responsible for determining and reviewing compensation

arrangements for the Managing Director and management team and determining and reviewing the annual bonus

system for employees. The Committee is also responsible for recommending a total of Directors’ remuneration to

be approved by resolution of shareholders at the Annual General Meeting of the Company.



The appropriateness of the nature and amount of emoluments is reviewed on a periodic basis by reference to the

relevant employment market conditions with the overall objective of ensuring maximum shareholder benefit from the

retention of a high quality Board and management team. The Managing Director and management team are given

the opportunity to receive their base emolument in a variety of forms including cash and fringe benefits such as

motor vehicles and expense payment plans. It is intended that the manner of payment chosen will be optimal for

the recipient without creating undue cost for the Company.

To assist in achieving these objectives, the nature and amount of the Managing Directors’ and management team

members’ emoluments are linked to the Company’s financial and operational performance. All senior executives have

the opportunity to participate in the annual bonus system which currently provides cash and share option incentives

where specified criteria are met including criteria relating to profitability, cash flow, share price growth and individual

performance targets.

Details of the nature and amount of each element of the emolument of each director of the Company and each of the

five executive officers of the Company and the consolidated entity receiving the highest emolument for the financial

year are as follows:

Emoluments of directors of Chiquita Brands South Pacific Limited

Annual Long Term Emoluments Emoluments

Base Fee Bonus Other Termination Super TotalPayments -annuation

$ $ $ $ $ $

A.G. Hartnell 52,000 - - - - 52,000

D.M. Doyle - - - - - -

M.D. Babiolakis* 326,826 - 33,054 - 23,710 383,590Managing Directorand CEO appointed29 May 2002

D.J. Taig** 194,697 - 18,602 1,522,840 14,458 1,750,597

F.A. Costa - - - - - -

C.C. Schokman - - - - - -

C.A. Stephen - - - - - -

B.W. Kemp 30,000 - - - 2,550 32,550

* During the year 1,000,000 options were issued to Mr Babiolakis, the terms and conditions are included in the share options section of this

Annual Report.

** 1,000,000 options issued to Mr Taig in 2001 were cancelled in 2002 following the termination of his contract with the Company.

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15

Emoluments of the five most highly paid executive officers of the Company and the consolidated entity

Annual Long Term Emoluments Emoluments

Base Fee Bonus Other Termination Super TotalPayments -annuation

$ $ $ $ $ $

D.K. Green 115,108 - 18,825 - 7,460 141,393CFO and CompanySecretary appointed5 July 2002

S. Little 149,000 20,000 25,216 - 9,661 203,877General ManagerChiquita Mushrooms

P. McPherson 132,911 20,000 26,164 - 19,218 198,293General ManagerBFA & Chiquita Export

R.Tanti 123,644 30,000* 23,245 - 20,370 197,259General ManagerChiquita Nibbles & Banana Farms

M. Robinson 132,154 15,000 37,654 - 10,260 195,068General ManagerChiquita Trading

*Includes hardship allowance of $20,000 for relocating to Far North Queensland during the rationalisation of the Banana farms.

The elements of emoluments have been determined having regard to the cost to the Company and the consolidated

entity. Executives are those directly accountable and responsible for the operational management and strategic

direction of the Company and the consolidated entity. The category ‘Other’ includes the value of any non-cash

benefits provided. No value has been included in emoluments in respect of employee or executive options, as all

options were issued at exercise prices greater than the market value of ordinary shares as at 31 December 2002.

Bonuses paid in 2003 relate to the 2002 year performance and were only made where business unit performance

exceeded original budget estimates.

Options granted to directors and any of the five most highly paid officers

In addition to those options granted to the Managing Director Mr. Babiolakis, detailed above, the Remuneration

Committee resolved in January 2003 to issue each member of the Chiquita Executive, excluding Mr Babiolakis,

options over unissued shares in Chiquita Brands South Pacific Limited. The terms and conditions of these options

are included in the notes to the Financial Statements.



MEETINGS OF DIRECTORSThe number of meetings of directors (including meetings of committees of directors) held during the year and the

number of meetings attended by each director were as follows:

Director Board of Directors Remuneration Committee Audit Committee Meetings Meetings Meetings

Eligible Number Eligible Number Eligible Numberto attend attended to attend attended to attend attended

A.G. Hartnell 13 13 3 3 Nil Nil

D.M. Doyle 13 13 3 3 Nil Nil

M.D. Babiolakis* 8 8 Nil Nil Nil 1

D.J. Taig* 7 7 Nil Nil Nil 1

F.A. Costa 6 6 2 2 Nil Nil

C.C. Schokman 6 6 Nil Nil 1 1

C.A. Stephen 13 13 Nil Nil 2 2

B.W. Kemp 13 13 Nil Nil 2 2

At the date of this report, the Company had an Audit Committee and a Remuneration Committee of the

Board of Directors.

The members of the Audit Committee during the year were C. A. Stephen (Chairman), B. W. Kemp and

C. C. Schokman. *The Managing Director and CEO is an ex officio member of the Audit Committee.

The members of the Remuneration Committee are A. G. Hartnell (Chairman), D. M. Doyle and F. A. Costa.

ROUNDINGThe amounts contained in this report and in the financial statements have been rounded off under the option available

to the Company under ASIC Class Order 98/100. The Company is an entity to which the Class Order applies.

The numbers have been rounded to the nearest thousand dollars.

SIGNIFICANT EVENTS AFTER BALANCE DATENo matters or circumstances have arisen since the end of the financial year which significantly affected or may

significantly affect the operations of the consolidated entity, the results of those operations or the state of affairs

of the consolidated entity in future financial years.

CORPORATE GOVERNANCEIn recognising the need for the highest standards of corporate behaviour and accountability, the Directors of Chiquita

Brands South Pacific Ltd support and adhere to the principles of corporate governance. The Company’s corporate

governance statement is contained within this Annual Report.

Signed in accordance with a resolution of the Board of Directors,

Anthony G. Hartnell

Chairman

25 February 2003

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17

Financials 2002

Statement of Financial PerformanceFor the year ended 31 December 2002

Consolidated Chiquita BrandsSouth Pacific Ltd

2002 2001 2002 2001Note $'000 $'000 $'000 $'000

Revenues from ordinary activities 2 312,359 311,592 16,723 19,604 Other expenses from ordinary activities, excluding borrowing costs 3 (329,494) (319,902) (33,456) (33,956)Borrowing costs 4 (5,739) (5,719) (1,275) (1,802)

Loss from ordinary activities before income tax expense 4 (22,874) (14,029) (18,008) (16,154)Income tax expense/(benefit) relating to ordinary activities 6 (4,363) (1,820) 470 94

Loss attributable to members of Chiquita Brands South Pacific Ltd 20 (18,511) (12,209) (18,478) (16,248)

Non-owner transaction changes in equityIncrease in retained profits on adoption of revised accounting standards:

Self-Generating & Regenerating Assets - AASB 1037 1,13 - 7,404 - 9,474

Total revenues, expenses and valuation adjustments attributable to members of Chiquita Brands South Pacific Limited and recognised directly into equity - 7,404 - 9,474

Total changes in equity from non-owner transactions attributable to members of Chiquita Brands South Pacific Limited (18,511) (4,805) (18,478) (6,774)

Basic earnings per share (cents per share) 26 (17.32) (18.10)Diluted earnings per share (cents per share) 26 (17.25) (18.10)Franked dividends per share (cents per share) 7 - 3.00

The accompanying notes form part of these financial statements.


2002 2001 2002 2001Note $'000 $'000 $'000 $'000

CURRENT ASSETSCash assets - 1,009 - 1 Receivables 8 22,845 28,438 2,486 2,139 Inventories 9 23,807 21,631 1,339 801 Self-generating and regenerating assets 13 4,718 2,379 - - Current tax assets 6 1,921 1,900 - - Other 10 2,188 1,885 78 38

TOTAL CURRENT ASSETS 55,479 57,242 3,903 2,979

NON-CURRENT ASSETSReceivables 8 605 345 45,339 33,287 Other financial assets 11 409 409 12,248 20,616 Property, plant and equipment 12 68,657 72,633 9,804 9,046 Self-generating and regenerating assets 13 33,114 47,923 9,318 13,059 Intangible assets 14 10,877 12,020 555 589 Deferred tax assets 6 5,312 3,291 177 108 Other 10 - 139 - 63

TOTAL NON-CURRENT ASSETS 118,974 136,760 77,441 76,768

TOTAL ASSETS 174,453 194,002 81,344 79,747

CURRENT LIABILITIESPayables 15 32,712 27,198 1,844 1,929 Interest-bearing liabilities 16 15,471 21,494 6,858 4,536 Current tax liabilities 6 - - 180 284 Provisions 17 9,646 4,058 140 231 Other liabilities 18 47 - - -

TOTAL CURRENT LIABILITIES 57,876 52,750 9,022 6,980

NON-CURRENT LIABILITIESPayables 15 108 105 66 - Interest-bearing liabilities 16 40,707 67,396 288 6,854 Deferred tax liabilities 6 2,967 5,191 195 72 Provisions 17 1,108 2,765 87 80

TOTAL NON-CURRENT LIABILITIES 44,890 75,457 636 7,006

TOTAL LIABILITIES 102,766 128,207 9,658 13,986

NET ASSETS 71,687 65,795 71,686 65,761

EQUITYContributed equity 19 92,895 68,492 92,895 68,492 Accumulated losses 20 (21,208) (2,697) (21,209) (2,731)

TOTAL EQUITY 71,687 65,795 71,686 65,761


Statement of Financial PositionAs at 31 December 2002

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19

Statement of Cash FlowsFor the year ended 31 December 2002


2002 2001 2002 2001Note $'000 $'000 $'000 $'000

CASH FLOWS FROM OPERATING ACTIVITIESCash receipts in the course of operations 309,628 301,333 15,128 18,282 Cash payments in the course of operations (294,325) (290,241) (13,972) (16,546)Dividends received 20 18 - - Interest received 72 90 560 540 Borrowing costs paid (5,510) (6,329) (1,248) (1,809)Income taxes paid 97 (385) (89) (133)

NET OPERATING CASH FLOWS 21 9,982 4,486 379 334

CASH FLOWS FROM INVESTING ACTIVITIESPurchase of property, plant and equipment (8,861) (9,556) (1,135) (396)Proceeds from sale of property, plant and equipment 5,414 5,681 209 - Advances to related parties - - - 1,509 Repayment of advance to other persons 411 414 - 173Purchase of controlled entities - - (172) (1,004)

NET INVESTING CASH FLOWS (3,036) (3,461) (1,098) 282

CASH FLOWS FROM FINANCING ACTIVITIESProceeds from issue of ordinary shares 25,606 - 25,606 -Share issue costs (1,203) - (1,203) - Repayment of borrowings - other loans (50,911) (10,000) (4,787) - Repayment of borrowings - related parties (4,161) - (19,129) -Proceeds from borrowings 21,615 12,499 - 214 Dividends paid - (830) - (830)Finance lease and hire purchase borrowings 711 - 361 -Finance lease and hire purchase payments (406) - (130) -

NET FINANCING CASH FLOWS (8,749) 1,669 718 (616)

NET INCREASE/(DECREASE) IN CASH HELD (1,803) 2,694 (1) -

Cash at the beginning of the financial year 1,009 (1,685) 1 1

CASH AT THE END OF THE FINANCIAL YEAR 21 (794) 1,009 - 1


The financial report is a general purpose financial report,which has been prepared in accordance with the requirementsof the Corporations Act 2001, which includes applicableAccounting Standards. Other mandatory professional reportingrequirements (Urgent Issues Group Consensus Views) have also been complied with.

The financial report has been prepared in accordance with the historical cost convention, except for self-generating and regenerating assets measured at net market value.

Changes in accounting policiesThe accounting policies adopted are consistent with those of the previous year.

Principles of consolidationThe consolidated financial statements are those of the consolidated entity, Chiquita Brands South Pacific Limited,and all entities that Chiquita Brands South Pacific Limited controlled from time to time during the year and at balance date.

Information from the financial statements of subsidiaries is included from the date the parent company obtains controluntil such time as control ceases. Where there is a loss of control of a subsidiary, the consolidated financial statementsinclude the results for the part of the reporting period duringwhich the parent company has control.

Subsidiary acquisitions are accounted for using the purchasemethod of accounting.

The financial statements of subsidiaries are prepared for thesame reporting period as the parent company, using consistentaccounting policies.

All intercompany balances and transactions, including unrealised profits arising from intra-group transactions,have been eliminated in full.

Cash and cash equivalentsCash on hand and in banks are stated at nominal value.

For the purposes of the Statement of Cash Flows, cash includescash on hand and in banks, and money market investmentsreadily convertible to cash within two working days, net of outstanding bank overdrafts.

Bank overdrafts are carried at the principal amount.Interest is charged as an expense as it accrues.

ReceivablesTrade receivables are recognised and carried at original invoice amount less a provision for any uncollectable debts.An estimate for doubtful debts is made when collection of thefull amount is no longer probable. Bad debts are written-off as incurred.

Receivables from related parties are recognised and carried at the nominal amount due. Interest is taken up as income on an accruals basis.

InventoriesRaw material and stores

Raw material and stores are valued at the lower of cost andnet realisable value. Costs incurred in bringing each product to its present location and condition are accounted for on afirst-in first-out basis.

Finished goods and work in progress

Finished goods and work in progress are valued at the lower of cost and net realisable value. Costs incurred in bringing eachproduct to its present location and condition are accounted forusing average cost.

Self-generating and Regenerating Assets (SGARAs)Self-generating and regenerating assets are measured at theirnet market value at each reporting date. The net market valueis determined, in the absence of an active and liquid market inthe Group’s growing assets, as the net present value of cashflows expected to be generated by these crops (discounted at a risk adjusted interest rate).

Net increments or decrements in the market value of the cropsare recognised as revenues or expenses in the profit or loss,determined as:

(i) The difference between the total net market value ofthe crops recognised at the beginning of the financialyear and the total net market value of the crops recognised at the reporting date, less

(ii) Costs incurred during the financial year to acquire and plant the crops.

Costs incurred in maintaining or enhancing crops and plants are recognised as expenses when incurred.

Notes to the Financial StatementsFinancial Statements for the year ended 31 December 2002

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21

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


The market value of produce picked during the year and recognised as revenue is determined as the net market value of the crops immediately after picking, less the cost of picking.

Short lived crops such as mushrooms and carrots are accountedfor on a cost basis because cost is considered more relevantand reliable.

All non-current SGARA values have been determined in accordance with a directors’ valuation at each reporting date.In determining the market value the following factors havebeen taken into account:

(a) The productive life of the SGARA;

(b) The period over which the SGARA will mature;

(c) The expected future sale prices;

(d) The cost expected to arise throughout the life of the SGARA; and

(e) Net cash flows are discounted at a pre-tax averagereal rate of 15% per annum and it is assumed thatinflation will continue at the current rate.

Cash flows are gross of income tax and are expressed in real terms.

Expected future sale prices for all SGARAs, except vines,is constant in real terms, based on average prices throughoutthe current year. Vine sale prices are expected to decline overthe next 5 years. Costs, expected to arise throughout the life ofthe SGARAs, are constant in real terms, based on average coststhroughout the year. Details of plantings are outlined in Note 13.

Mushrooms and carrots (being short lived growing crops) have been valued on a cost basis and are disclosed as current SGARAs.

InvestmentsInvestments are brought to account at cost. The carryingamount of investments is reviewed annually by Directors to ensure it is not in excess of the recoverable amount of the investments. The recoverable amount is assessed from the underlying net assets in the particular entities.Dividends are brought to account in the profit and loss when received.

Property, Plant and EquipmentCost and valuation

Property, plant and equipment are brought to account at cost, less where applicable, any accumulated depreciation or amortisation. The carrying amount of property, plant and equipment is reviewed by Directors to ensure it is not in excess of the recoverable amount.

Depreciation and amortisation

The depreciable amounts of all fixed assets including buildingsand capitalised leased assets, but excluding freehold land aredepreciated over their useful lives commencing from the timethe asset is held ready for use.

Depreciation is provided on a straight line basis on all property,plant and equipment other than freehold land and water rights.

Major depreciation periods are:

- Freehold buildings 33 years

- Leasehold improvements 5 years

- Plant and equipment 5 to 20 years

- Market lease premiums 20 years

LeasesLeases are classified at inception as either operating or finance leases based on the economic substance of the agreement so as to reflect the risks and benefits incidental to ownership.

Operating leases

The minimum lease payments of operating leases, where the lessor effectively retains substantially all of the risks andbenefits of ownership of the leased item, are recognised as an expense on a straight line basis.

Finance leases

Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of the asset, but not the legal ownership, are transferred to the Company are classified as finance leases. Finance leases are capitalised,recording an asset and a liability equal to the present value of the minimum lease payments, including any guaranteedresidual values. Leased assets are amortised over their estimated useful lives. Lease payments are allocated betweenthe reduction of the lease liability and the lease interestexpense for the period. Lease payments for operating leases,where substantially all the risk and benefits remain with thelessor, are charged as expenses in the periods in which they are incurred.

Costs of improvements to or on leasehold property is capitalised, disclosed as leasehold improvements, and amortised over the unexpired period of the lease or the estimated useful lives of the improvements, whichever is the shorter.

IntangiblesShare issue expenses

Costs associated with the public issue of shares and the listingof the Company on the Australian Stock Exchange incurredprior to 1999 are being written off over a period of twentyyears. Costs incurred from 1999 onwards have been written off against the proceeds of the share issues.

Acquisition costs

Professional costs associated with the listing of Chiquita and the associated acquisition, have been capitalised in these accounts and are being written off over a period of twenty years from the completion date of 15th January,1998. Costs associated with all acquisitions by Chiquita are also capitalised and written off over 20 years.

Goodwill

Goodwill is amortised using the straight line method over the period during which benefits are expected to be received,which is assumed to be twenty years.

Brand Names

The value of brand names has been supported by an external valuation. Brand names are recorded in the financial statementsat cost. No amortisation is provided against the carrying value of these brand names on the basis that their lives are consideredto be very long (in excess of 50 years) and that their terminalvalue approximates their carrying value.

Recoverable AmountNon-current assets are not carried at an amount above theirrecoverable amount, and where carrying values exceed thisrecoverable amount assets are written down. In determiningrecoverable amount, the expected net cash flows have been discounted to their present value using a market determined discount rate.

PayablesLiabilities for trade creditors and other amounts are carried at cost which is the fair value of the consideration to be paid in the future for goods and services received, whether or notbilled to the consolidated entity.

Payables to related parties are carried at the principal amount.Interest, when charged by the lender, is recognised as anexpense on an accruals basis.

Employee EntitlementsProvision is made for employee entitlement benefits accumulated as a result of employees rendering services up tothe reporting date. These benefits include wages and salaries,annual leave and long service leave. Liabilities arising inrespect of wages and salaries, annual leave and any other

employee entitlements expected to be settled within twelvemonths of the reporting date have been measured at theirnominal amount. All other employee entitlement liabilities are measured at the present value of estimated future cash outflows to be made in respect of services provided by employees up to the reporting date.

Employee entitlement expenses arising in respect of the following categories:

- Wages and salaries, non-monetary benefits, annualleave, long service leave, sick leave and other leave entitlements: and

- Other types of employee entitlements are chargedagainst profits on a net basis in their respective categories.

The employee share plans described in Note 24 do not result inany values being charged as an employee entitlement expense.

Interest-bearing liabilitiesAll loans (including commercial bills and convertible notes) are measured at the principal amount. Interest is charged as an expense as it accrues.

The finance lease liabilities are as determined in accordancewith the requirements of AASB 1008 “Leases“.

Contributed EquityIssued and paid-up capital is recognised at the fair value of the consideration received by the Company.

Any transaction costs arising on the issue of ordinary sharesare recognised directly in equity as a reduction of the shareproceeds received.

Revenue RecognitionRevenue is recognised to the extent that it is probable that the economic benefits will flow to the entity and the revenuecan be reliably measured. The following specific recognitioncriteria must also be met before revenue is recognised:

Sale of Goods:

Control of goods has passed to the buyer.

Rendering of Services:

Revenue from rendering services is recognised in the period in which the service is provided.

Interest:

Control of a right to receive consideration for the provision of, or investment in, assets has been attained.

Dividends:

Control of a right to receive consideration for the investment in assets is attained, usually evidenced by approval of the dividend at a meeting of shareholders.


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TaxesIncome Tax

Tax-effect accounting is applied using the liability methodwhereby income tax is regarded as an expense and is calculated on the accounting profit after allowing for permanent differences. The extent to which timing differencesoccur between the time items are recognised in the accountsand when items are taken into account in determining taxableincome, the net related taxation benefit or liability calculated at current rates is disclosed as a future income tax benefit or a provision for deferred income tax. The net future income tax benefit relating to tax losses and timing differences is not carried forward as an asset unless the benefit is virtually certain of being realised.

Goods and Services Tax (GST)

Revenue, expenses and assets are recognised net of theamount of GST except:

- Where the GST incurred on a purchase of goods andservices is not recoverable from the taxation authority,in which case the GST is recognised as part of the costof acquisition of the asset or as part of the expenseitem as applicable; and

- Receivables and payables are stated with the amountof GST included.

The net amount of GST recoverable from the taxation authorityis included as part of receivables in the Statement of FinancialPosition.

Cash flows are included in the Statement of Cash Flows on agross basis and the GST component of cash flows arising frominvesting and financing activities, which is recoverable from,payable to, the taxation authority are classified as operatingcash flows.

Foreign CurrenciesTransactions in foreign currencies of entities within the consolidated entity are converted to local currency at the rate of exchange ruling at the date of the transaction.

Amounts payable to and by the entities within the consolidatedentity that are outstanding at the balance date and are denominated in foreign currencies have been converted to local currency using rates of exchange ruling at the end of the financial year.

All resulting exchange differences arising on settlement or re-statement are brought to account in determining the profitor loss for the financial year, and transaction costs, premiumsand discounts on forward currency contracts are deferred and amortised over the life of the contract.

The Company does not enter into speculative forwardexchange contracts.

Earnings per Share (EPS)Basic EPS is calculated as net profit attributable to members,adjusted to exclude costs of servicing (other than dividends)and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus element.

Diluted EPS is calculated as the net profit attributable to members, adjusted for:

- Cost of servicing equity (other than dividends) and preference share dividends;

- The after tax effect of dividends and interest associatedwith the dilutive potential ordinary shares that havebeen recognised as expenses; and

- Other non-discretionary changes in revenue or expenses during the period that would result from the dilution of potential ordinary shares;

divided by the weighted average number of ordinary sharesand dilutive potential ordinary shares, adjusted for any bonuselement.

ComparativesWhere necessary, comparatives have been reclassified for consistency with current year disclosures as a result of the firstapplication of revised Accounting Standard AASB 1005“Segment Reporting”.



2002 2001 2002 2001Note $'000 $'000 $'000 $'000

2. REVENUE FROM ORDINARY ACTIVITIESRevenues from operating activitiesRevenue from sales of goods 229,843 237,555 8,453 9,585 Revenue from services 4,077 4,724 234 394 Net market value of growing crops harvested 68,715 59,433 6,923 7,072 Net increment/(decrement) in market value of plant and growing crops 1,500 1,518 246 (91)

Total revenues from operating activities 304,135 303,230 15,856 16,960

Revenues from non-operating activitiesDividends and distributions

Wholly owned controlled entities - - - 1,900 Other persons / corporations 20 19 - -

Total dividends and distributions 20 19 - 1,900

Interest Wholly owned controlled entities - - 540 540 Other persons / corporations 72 91 20 -

Total interest 72 91 560 540

Proceeds on sale of non-current assets 5,414 5,681 209 - Rent 139 119 - - Other revenue 2,579 2,452 98 204

Total revenues from non-operating activities 8,224 8,362 867 2,644

Total revenues from ordinary activities 312,359 311,592 16,723 19,604

3. EXPENSES FROM ORDINARY ACTIVITIES(EXCLUDING BORROWING COSTS)

Cost of Goods Sold 253,455 252,707 9,983 12,213 Farming and production costs 21,943 15,818 3,921 1,212 Marketing, selling and distribution expenses 16,734 15,322 - 40 Administration costs 9,301 10,655 364 433 Other expenses from ordinary activities 570 14,925 - 858Significant items 5 27,491 10,475 19,188 19,200

Total expenses from ordinary operations (excluding borrowing costs) 329,494 319,902 33,456 33,956

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25



2002 2001 2002 2001Note $'000 $'000 $'000 $'000

4. PROFIT FROM ORDINARY ACTIVITIES BEFORE INCOME TAX EXPENSE

Profit and loss from ordinary activities before income tax has been arrived at after charging/(crediting) the following items:

ExpensesDepreciation of non-current assets

Buildings and improvements 1,160 1,175 37 5 Plant and equipment 3,815 4,996 54 412

Total depreciation of non-current assets 4,975 6,171 91 417

Amortisation of non-current assetsGoodwill 536 770 35 - Market lease premiums 149 189 - - Plant and equipment under lease 64 227 53 - Option premiums - 76 - - Acquisition costs - 41 - 41

Total amortisation of non-current assets 749 1,303 88 41

Total depreciation and amortisation expenses 5,724 7,474 179 458

Borrowing costs expensedOther related parties 469 632 1,243 1,802 Finance lease costs 70 96 27 - Other persons / corporations 5,200 4,991 5 -

Total borrowing costs expensed 5,739 5,719 1,275 1,802

Net foreign currency (gain)/loss 119 270 (1) - Bad and doubtful debts - trade debtors 351 1,425 - 3 Provision for employee entitlements 4,160 3,148 179 112 Operating lease rentals 6,957 6,272 99 138 Superannuation contributions 3,769 3,684 537 526 Net loss /(gain) on disposal of property, plant and equipment 764 395 (25) -



2002 2001 2002 2001Note $'000 $'000 $'000 $'000

5. INDIVIDUALLY SIGNIFICANT ITEMS CHARGED IN OPERATING PROFIT FROM ORDINARY ACTIVITIES BEFORE INCOME TAX EXPENSE

Restructuring provision 10,186 1,018 - - Write-down of market lease premiums 1,407 - - - Write-down of plant and equipment 4,596 1,852 - - Write-down of land and buildings 5,568 580 - - Loss on sale of property, plant and equipment 1,077 - - - SGARA write-down 3,294 - 3,294 - Debtor provisioning 756 1,425 - - Write-down of carrying value of goodwill 607 5,600 - - Provision for diminution in value of investment in controlled entities - - 8,540 19,200 Provision for diminution in value of receivables from controlled entities - - 6,660 -

27,491 10,475 18,494 19,200

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2002 2001 2002 2001Note $'000 $'000 $'000 $'000

6. INCOME TAX

Prima facie tax on profit/(loss) from ordinary activities differs from the income tax provided in the financial statements as follows:

Loss from ordinary activities before income tax (22,874) (14,029) (18,008) (16,154)

Income tax expense calculated on profit/(loss) from ordinary activities at 30% (2001: 30%) (6,862) (4,209) (5,402) (4,846)Tax effect of permanent differences

Rebateable dividends - - - (570)SGARA adjustment 988 - 988 -Amortisation of intangible assets 226 114 10 - Other items (net) (866) (266) (230) (46)Write-down of intangible assets 565 1,680 - - Write-down of land & buildings 1,757 - - - Provision for diminution in value of investments and receivables - - 4,560 5,759 Tax losses not carried forward as future income tax benefits - 1,070 - -

Under/(over) provision of previous year (171) (209) 84 (203)

Income tax (benefit)/expense relating to profit from ordinary activities (4,363) (1,820) 470 94

Deferred tax assets and liabilitiesCurrent tax payable - - 180 284 Provision for deferred income tax - non-current 2,967 5,191 195 72 Future income tax benefit - current 1,921 1,900 - - Future income tax benefit - non-current 5,312 3,291 177 108

Income tax losses recognisedFuture income tax benefit arising from tax losses included in future income tax benefit 1,921 2,265 - -

Income tax losses not recognisedFuture income tax benefit arising from tax losses of a controlledentity not brought to account at balance date as realisation of thebenefit is not regarded as virtually certain 1,070 1,070 - -

The future tax benefit will only be obtained if:

(a) Future assessable income is derived of a nature and an amount sufficient to enable the benefit to be realised;

(b) The conditions of deductibility imposed by income tax legislation continue to be complied with; and

(c) No changes in income tax legislation adversely affect the consolidated entity in realising the benefit.


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2002 2001 2002 2001Note $'000 $'000 $'000 $'000

7. DIVIDENDS PAID OR PROVIDED FOR

(a) Dividends paid during the yearCurrent year interimFranked dividends (2001: 3.0 cents per share) - 1,986 - 1,986

- 1,986 - 1,986

The rate at which dividends have or will be franked is 30% (2001:30%).(b) Franking credit balance

The amount of franking credits available for the subsequent financial year are:

Franking credit balance at the end of the financial year 137 137

Franking credits available within the group 2,378 2,441

Total franking credits 2,515 2,578

8. RECEIVABLES

CurrentTrade debtors 8(a),(b),(c) 21,972 27,512 2,400 1,987 Provision for doubtful debts (1,105) (1,665) - -

20,867 25,847 2,400 1,987 Sundry loans 8(c) 451 872 - - Other debtors 8(c) 1,513 1,715 75 148 Amounts other than trade debts receivable from related parties:

Employees 8(c) 14 4 11 4

22,845 28,438 2,486 2,139

Non-CurrentTrade debtors 264 - - - Deposits 119 120 - - Sundry loans 8(c) 222 225 222 224 Amounts other than trade debts receivable from:

Wholly owned controlled entities 8(c),31 - - 51,777 33,063 Provision for diminution in value of receivables from wholly controlled entities - - (6,660) -

605 345 45,339 33,287

(a) Related party trade receivablesTrade debtors include the following amounts receivable from related parties:

Wholly owned controlled entities - - 1,035 1,173

(b) Australian dollar equivalents Australian dollar equivalent of amounts receivable in foreign currency not effectively hedged:

- United States Dollar 642 - - -- New Zealand Dollar 87 - - -- Japanese Yen 276 - - -

1,005 - - -


8. RECEIVABLES continued

(c) Terms and conditionsTerms and conditions relating to the above financial instruments(i) Trade debtors are non-interest bearing and credit sales terms vary from 14 to 30 days depending

on the individual terms negotiated with customers.

(ii) Sundry loans are to unrelated suppliers of produce to the group and have an average maturity of four years.Interest is charged at rates specified in the loan agreements.

(iii) Employee loans are unsecured and bear interest at the rate necessary to avoid incurrance of Fringe Benefit Tax.They represent temporary advances repayable over ten years.

(iv) Detail of the terms and conditions of related party receivables are set out in Note 31.


2002 2001 2002 2001Note $'000 $'000 $'000 $'000

9. INVENTORIESCurrentRaw materials and stores - at cost 3,604 2,920 324 324 Work in progress - at cost 1,699 8,885 - - Work in progress - at net realisable value 7,639 - - -Finished goods - at cost 10,865 9,826 1,015 477

23,807 21,631 1,339 801

10. OTHER ASSETSCurrentPrepayments 2,188 1,885 78 38

Non-CurrentOther - 139 - 63

11. OTHER FINANCIAL ASSETSNon-CurrentInvestments comprise:

Unlisted Shares - at cost 409 409 32 32 Unlisted shares in controlled entities - at cost - - 39,956 39,784 Provision for diminution in value of unlisted shares in controlled entities - - (27,740) (19,200)

409 409 12,248 20,616


Chiquita BrandsSouth Pacific Ltd2002 2001$'000 $'000

11. OTHER FINANCIAL ASSETS continuedInvestments in controlled entities comprises:

Beneficial percentage held 2002 2001

Name % %

Angas Park Fruit Company Pty Ltd 100 100 19,548 19,420

CBSP Pty Ltd 100 100 18,290 18,290

Chiquita Brands Brisbane Pty Ltd* 100 100 - -

Chiquita Brands Melbourne Pty Ltd* 100 100 - -

Chiquita Nibbles Pty Ltd (formerly Chiquita Brands Sydney Pty Ltd)* 100 100 - -

Chiquita Foods Pty Ltd* 100 100 - -

Chiquita Mushrooms Holdings Pty Ltd 100 100 - -

Chiquita Mushrooms Pty Ltd 100 100 - -

Chiquita North Queensland Pty Ltd* 100 100 - -

Chiquita Plantations Innisfail Pty Ltd* 100 100 - -

Fruitexpress Pty Ltd* 100 100 - -

Chiquita Export (Australia) Pty Ltd (formerly Golden Goodness Fresh Pty Ltd)* 100 100 - -

Kangara Foods Pty Ltd 100 100 2,118 2,074

Loxton Fruit Processors Pty Ltd 100 100 - -

39,956 39,784

* Wholly owned subsidiaries of CBSP Pty Ltd

All controlled entities are incorporated in Australia.

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2002 2001 2002 2001Note $'000 $'000 $'000 $'000

12. PROPERTY, PLANT AND EQUIPMENTLand and Buildings:

At cost 38,295 49,863 6,960 7,065 Provision for depreciation (12,640) (11,392) (277) (240)

Total land and buildings 12(c) 25,655 38,471 6,683 6,825

Plant and equipmentAt cost 61,082 58,867 4,765 4,136 Provision for depreciation (25,012) (33,037) (2,137) (2,153)

12(c) 36,070 25,830 2,628 1,983

Plant and equipment under leaseAt cost 2,258 2,242 546 238 Provision for amortisation (908) (1,048) (53) -

12(c) 1,350 1,194 493 238

Total plant and equipment 37,420 27,024 3,121 2,221

Market lease premiumsAt cost 1,159 4,143 - - Provision for amortisation (559) (1,987) - -

12(c) 600 2,156 - -

Water RightsAt cost 4,982 4,982 - - Provision for amortisation - - - -

12(c) 4,982 4,982 - -

Total property, plant and equipmentAt cost 107,776 120,097 12,271 11,439 Provision for depreciation and amortisation (39,119) (47,464) (2,467) (2,393)

Total written down amount 68,657 72,633 9,804 9,046

(a) Assets pledged as securityAll freehold land and buildings are secured by mortgage debenture which has been granted as security over bank loans (see Note 16). Assets under lease are pledged as security for the associated lease liabilities.

(b) ValuationsAll freehold land and buildings were independently valued by Mason Green, during June 2000, on the basis of estimates of theamounts for which the assets could be exchanged between a knowledgeable willing buyer and a knowledgeable willing seller inan arm’s length transaction at valuation date. The total valuation for freehold land and buildings was $39.034 million.



2002 2001 2002 2001Note $'000 $'000 $'000 $'000

12. PROPERTY, PLANT AND EQUIPMENT continued(c) ReconciliationsLand and Buildings:

Carrying amount at beginning of year 38,471 39,164 6,825 5,937 Additions 310 709 128 - Disposals (6,398) (74) (233) - Transfer from plant and equipment - 427 - 893 Depreciation expense (1,160) (1,175) (37) (5)Write-down of land and buildings (5,568) (580) - -

25,655 38,471 6,683 6,825

Plant and Equipment at cost

Carrying amount at beginning of year 25,830 32,474 1,983 3,131 Additions 8,243 8,609 699 158 Disposals (769) (5,932) - - Transfer from /(to) SGARA 11,177 (3,129) - (894)Depreciation expense (3,815) (4,996) (54) (412)Write-down of plant and equipment (4,596) (1,196) - -

36,070 25,830 2,628 1,983

Plant and Equipment under lease

Carrying amount at beginning of year 1,194 1,262 238 - Additions 308 238 308 238 Disposals (88) (80) (1) - Depreciation expense (64) (226) (52) -

1,350 1,194 493 238

Market lease premiums

Carrying amount at beginning of year 2,156 2,346 - - Write-down of market lease premiums (1,407) - - - Depreciation expense (149) (190) - -

600 2,156 - -

Water Rights

Carrying amount at beginning of year 4,982 4,982 - -

4,982 4,982 - -

Total written-down amount 68,657 72,633 9,804 9,046

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2002 2001 2002 2001Note $'000 $'000 $'000 $'000

13. SELF-GENERATING AND REGENERATING ASSETSCurrentVines - at net market value 1,850 - - - Vegetables - at cost 2,868 2,379 - -

4,718 2,379 - -

Non-CurrentVines - at net market value 11,874 26,420 - - Fruit - at net market value 21,240 21,503 9,318 13,059

33,114 47,923 9,318 13,059

The SGARA valuations are based on the following plantings:

SGARAs Hectares Location Growing crop Productive life Non-matureplanted (approx) plant maturity

Vines 430 ha South Australia Primarily Shiraz In excess of 25 yrs Between now& Cabernet grapes and 2006

Fruit

Citrus 320 ha South Australia Primarily oranges In excess of 40 yrs Between nowand 2014

Blueberries 210 ha New South Wales Blueberries Between 1 & 11 yrs Between nowand 2006

Bananas* 315 ha Queensland Bananas Up to 9 yrs N/A

Other 77 ha South Australia Prunes & Apricots Between 5 & 10 yrs N/A

Vegetables

Mushrooms N/A Victoria Mushrooms Less than 1 yr N/A

Carrots 171 ha South Australia Carrots Less than 1 yr N/A

* The net market value of bananas has been assessed as nil (2001:Nil) at 31 December 2002.



2002 2001 2002 2001Note $'000 $'000 $'000 $'000

14. INTANGIBLE ASSETSGoodwill 7,420 10,683 - - Provision for amortisation (1,114) (3,268) - -

6,306 7,415 - -

Share issue expenses 618 618 618 618 Provision for amortisation (212) (188) 212 (188)

406 430 406 430

Brand Names 4,016 4,016 - - Provision for amortisation - - - -

4,016 4,016 - -

Acquisition costs 199 199 199 199 Provision for amortisation (50) (40) (50) (40)

149 159 149 159

10,877 12,020 555 589

15. PAYABLESCurrentTrade creditors 15(a),(b) 32,125 22,415 1,313 1,030 Sundry creditors 15(b) 587 4,783 531 899

32,712 27,198 1,844 1,929

Non-CurrentSundry Creditors 15(b) 108 50 66 - Amounts other than trade debts payable to:

Related party - related company 15(b),31 - 55 - -

108 105 66 -

(a) Australian dollar equivalents Australian dollar equivalent of amounts payable inforeign currency not effectively hedged:

- United States Dollar 438 - - -- New Zealand Dollar 20 - - -

458 - - -

(b) Terms and conditionsTerms and conditions relating to the above financial instruments(i) Trade creditors for operating expenses are normally settled on 30 day terms. Trade creditors for purchase of trading stock

are normally settled on 21 day terms.(ii) Sundry creditors are normally settled on 30 day terms once invoices have been received.(iii) Detail of the terms and conditions of related party payables are set out in Note 31.

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2002 2001 2002 2001Note $'000 $'000 $'000 $'000

16. INTEREST BEARING LIABILITIESCurrent Secured liabilitiesBank Overdraft 21 794 - - - Commercial bill borrowings 16(a) 7,201 16,497 - - Convertible notes - related party 16(a),31 6,710 - 6,710 - Lease liability 16(a),22 633 432 148 82 Hire purchase liability 16(a),22 133 111 - - Unsecured liabilitiesLoan - related party - associated company 16(a),31 - 4,454 - 4,454

15,471 21,494 6,858 4,536

Non-CurrentSecured liabilitiesCommercial bill borrowings 16(a) 40,000 60,000 - - Lease liability 16(a),22 288 531 288 123 Hire purchase liability 16(a),22 419 - - - Unsecured liabilitiesConvertible notes - related party 16(a),31 - 6,710 - 6,710 Other Loans - 155 - 21

40,707 67,396 288 6,854

(a) Terms and conditionsTerms and conditions relating to the above financial instruments

(i) As at balance date, the Company had finance leases with an average lease term remaining of 6 months. The average discount rate implicit in the leases is 11%. Secured lease liabilities are secured by a charge over the leased assets.

(ii) As at the balance date, the economic entity had hire purchase agreements with an average term remaining of 3 years.The average discount rate implicit in the hire purchase agreements is 10.3%. Secured hire purchase liabilities are securedby a charge over the hire purchase assets.

(iii) Details of the terms and conditions of related party loans and convertible notes are set out in Note 31.

(iv) Commercial bill borrowings have an average maturity of 99.6 days and effective interest rates averaging 6.47% p.a.The facilities are secured by cross deeds of covenant between mortgage debentures over all assets of Chiquita Brands South Pacific Limited and its subsidiaries.



2002 2001 2002 2001Note $'000 $'000 $'000 $'000

17. PROVISIONSCurrent Employee entitlements 24 7,465 4,058 140 231Other 22 2,181 - - -

9,646 4,058 140 231

Non-Current Employee entitlements 24 893 2,765 87 80Other 22 215 - - -

1,108 2,765 87 80

18. OTHER LIABILITIESCurrentOther 47 - - -

19. CONTRIBUTED EQUITYIssued and paid-up capital 2 Class “A” Shares each fully paid - - - - 144,048,386 (2001: 68,032,370) Ordinary Shares each fully paid 92,895 68,492 92,895 68,492

92,895 68,492 92,895 68,492

Class “A” shares have the same properties as ordinary shares.

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Movements in issued and paid-up ordinary share capital of the company during the last two years were:

Date Details Number of shares Issue price $'000

1 January 2001 Balance 66,214,471 67,347 29 April 2001 Shares issued pursuant to Dividend

Reinvestment Plan issued price 0.66 cents less 5% discount 1,817,899 0.63 1,145

31 Dec 2001 Balance 68,032,370 68,492

28 June 2002 Shares issued under Prospectus- 1 for 2 Rights Issue 34,016,016 0.30 10,206- Private Placements 28,000,000 0.40 11,200- Placement in lieu of 1 for 2 Rights Issue 14,000,000 0.30 4,200Transaction costs relating to Rights IssuePrivate Placement and Vendor Placements (1,203)

31 Dec 2002 Balance 144,048,386 92,895


19. CONTRIBUTED EQUITY continuedTerms and conditions of contributed equity(a) Ordinary shares

Ordinary shares have the right to receive dividends as declared and, in the event of winding up the Company, to participate in theproceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held.

(b) Share Options

Options over ordinary shares:

Employee share option plan

During the year nil options were issued over ordinary shares. Details of the term and exercise prices is outlined in Note 24.

Executive share option plan

During the year 1,000,000 options were issued over ordinary shares. Details of the term and exercise prices are outlined in Note 24.


2002 2001 2002 2001Note $'000 $'000 $'000 $'000

20. RESERVES AND RETAINED PROFITSAccumulated losses (21,208) (2,697) (21,209) (2,731)

Movements in accumulated losses/retained profitsBalance at the beginning of the year (2,697) 4,094 (2,731) 6,029 Net loss attributable to the members of Chiquita Brands South Pacific Limited (18,511) (12,209) (18,478) (16,248)Adjustments arising from the adoption of revised accounting standards:

AASB 1037 "Self-Generating and Regenerating Assets” - 7,404 - 9,474

Available for appropriation (21,208) (711) (21,209) (745)Dividends provided for or paid 7 - (1,986) - (1,986)

Closing balance (21,208) (2,697) (21,209) (2,731)



2002 2001 2002 2001Note $'000 $'000 $'000 $'000

21. CASH FLOW INFORMATION(a) Reconciliation of cashCash balance comprises:

Cash on hand - 1,009 - 1 Bank overdraft (794) - - -

Closing cash balance (794) 1,009 - 1

(b) Reconciliation of the net loss after tax to the net cash flows from operations

Net loss after income tax (18,511) (12,209) (18,478) (16,248)

Non-Cash ItemsDepreciation of non-current assets 4,975 6,171 106 417 Amortisation of non-current assets 749 1,303 72 41 (Increase)/decrease in value of SGARA's (2,001) (1,518) 3,048 91 Write-down of intangible assets 607 5,600 - - Write-down of market lease premiums 1,407 - - - Write-down of property, plant and equipment 10,164 1,677 - - Write-down of SGARA 3,294 - - - Loss on disposal of non-current assets 1,841 395 25 - Decrease in investments in controlled entities - - 8,540 19,465

Changes in assets and liabilitiesTrade and other debtors 3,719 3,586 7,422 (960)Inventories (2,176) 3,681 (538) 159 Trade creditors and accruals 6,462 (1,595) 293 (2,260)Provision for employee entitlements 1,535 1,295 (84) 54 Provisions - other 2,347 (1,384) - - Income in advance - - 63 -Prepayments (164) (335) (40) - Provision for income tax - (859) (104) (353)Deferred income tax liability (2,224) 375 123 (69)Future income tax benefit (2,042) (1,697) (69) (3)

Cash flow from operations 9,982 4,486 379 334

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2002 2001 2002 2001Note $'000 $'000 $'000 $'000

21. CASH FLOW INFORMATION continued(c) Financing facilities availableAt balance date, the following financing facilities had been negotiated and were available:Total facilitiesBank overdraft 3,000 3,000 Commercial bills 47,201 76,497

50,201 79,497 - -

Facilities used at balance date:Bank overdraft 794 - Commercial bills 47,201 76,497

47,995 76,497 - -

In addition to the above facilities, a seasonal finance line of $10.0 million is available, 1 January to 31 October of each year, to assist with the finance of the seasonal build up in inventories. This facility was unutilised at 31 December 2002. All financing is held in the name of CBSP Pty Ltd.

(d) Non-cash Financing and Investing ActivitiesFinance Lease Transactions

During the financial year the consolidated entity acquired plant and equipment with an aggregate fair value of $308,000 (2001: 238,000) by means of finance leases.



2002 2001 2002 2001Note $'000 $'000 $'000 $'000

22. EXPENDITURE COMMITMENTSFinance lease commitmentsDue within one year 679 486 180 95 Due later than one year but not later than five years 324 564 324 140 Due later than five years - - - -

Total minimum lease payments 1,003 1,050 504 235 Less future finance charges (82) (87) (68) (30)

Lease liability 921 963 436 205

Current liability 16 633 432 148 82 Non-current liability 16 288 531 288 123

921 963 436 205

Hire purchase commitmentsDue within one year 150 111 - - Due later than one year but not later than five years 442 - - - Due later than five years - - - -

Total minimum hire purchase payments 592 111 - - Less future finance charges (40) - - -

Hire purchase liability 552 111 - -

Current liability 16 133 111 - - Non-current liability 16 419 - - -

552 111 - -

Operating lease commitments (non-cancellable)Due within one year 4,344 3,916 58 76 Due later than one year but not later than five years 11,216 9,796 76 139 Due later than five years 1,995 1,665 - -

Aggregate lease expenditure contracted for at balance date 17,555 15,377 134 215

Aggregate expenditure commitments comprise:Amounts provided for surplus lease space

- current 17 213 - - - - non-current 17 215 - - -

428 - - -

Amounts not provided for rental commitments 17,127 15,377 134 215 Aggregate lease expenditure contracted for at balance date 17,555 15,377 134 215

The consolidated entity leases production plant and equipment under finance leases expiring within one year.At the end of the lease term the consolidated entity has the option to purchase the equipment at a residual value.

The consolidated entity leases property, plant and equipment under operating leases expiring from one to eight years.Leases generally provide the consolidated entity with the right to renewal at which time all terms are renegotiated.Some lease payments comprise a base amount plus an incremental rental. Incremental rentals are based on movements in the Consumer Price Index.

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2002 2001 2002 2001Note $'000 $'000 $'000 $'000

23. CONTINGENT LIABILITIESBank guarantees have been provided to cover certain trade creditors providing fresh produce to the group. 296 1,771 - -

24. EMPLOYEE ENTITLEMENTS

Employee entitlementsThe aggregate employee entitlement liability is comprised of:

Provision for employee entitlementsAccrued wages and salaries and on costsProvisions - current 7,465 4,058 140 231 Provisions - non-current 893 2,765 87 80

8,358 6,823 227 311

22. EXPENDITURE COMMITMENTS continuedSurplus lease space commitments represents payment due for vacant premises under a non-cancellable operating lease,and have been recognised as a liability in the current financial year, as the remaining payments for the premises will provideno further benefits to the consolidated entity. The payments have been discounted at the rate implicit in the lease.Certain assets under operating leases have been sub-let to third parties. The total of future minimum lease payments expected to be received at the reporting date is $790,139.

Capital Expenditure CommitmentsThe consolidated entity did not have any material commitments for capital expenditure at balance date.


(a) Employee and Executive Share and Option schemes(i) Chiquita Brands South Pacific Limited Employee Share

Option Plan and Share Acquisition Plan

The Company has established an Employee Share Option Plan (“Option Plan”) and an Employee Share Acquisition Plan (“Acquisition Plan”). The Option Plan and Acquisition Plan provide that shares issued pursuant to these plans will be limited to a maximum of 4% of the issued ordinary capital of the Company at any time. Eligibility for both plans is to be determined at the discretion of the Board.

The exercise price for options issued under the Option Plan is the higher of $1.00 or the weighted average price of shares on the ASX in the three business days preceding the grant date (or if no shares are traded on any of these days, the three business days on which shares are traded precedingthe grant date) that is specified as the initial price on the face of the certificates. The Board reserves the right to set a higher exercise price, however under no circumstances may the exercise price be less than $0.20. Options issuedunder the Option Plan are to be issued free of charge and are not able to be traded.

The issue price of shares issued pursuant to the AcquisitionPlan is the higher of $1.00 or the weighted average price ofshares sold on the ASX during the three trading days prior to the allotment date or, if in the opinion of the Board the average price so determined is unrepresentative or otherwisedistorted, the Board may fix a sale price by reference to thesale price of shares on the ASX on such other number of daysor such basis as the Board deems appropriate. Considerationfor the issue of shares under the Acquisition Plan will be byway of interest-free loans repayable on termination of employment.

No ordinary shares were issued under the Acquisition Plan during the year (2001: 340,000). At the inception of this planshares were issued to the CBSP Employee Share Plan Trustee at an issue price of $1.20 per share. A loan of $408,000 wasalso advanced by the Company to the Plan Trustee, at thattime, to fund the purchase of the shares. At the balance date,the balance of the loan was $224,307.

The market value of Ordinary Shares in Chiquita Brands SouthPacific Limited closed at $0.47 on 31 December 2002.

(ii) Chiquita Brands South Pacific Limited Executive

Share Option Plan

In May 2002 the Board resolved to grant 1,000,000 options to the Managing Director Mr. M.D. Babiolakis. The optionswere issued in 3 separate tranches: 400,000 options at an exercise price of $0.435, exercisable from 29 May 2003 for 12 months and 2 tranches of 300,000 options exercisable from 29 May 2004 and 2005 respectively. The exercise pricefor these last two tranches is to be determined based on theweighted average price of ordinary shares of Chiquita BrandsSouth Pacific Limited on the 20 business days immediately prior to 29 May 2003 and 2004 respectively.

(b) Employee numbersIn 2002 the consolidated entity employed on average 1,503staff (2001: 1,850).

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24. EMPLOYEE ENTITLEMENTS continued


(c) Information with respect to the number of options granted is as follows:

2001 Number of Options Details Opening Granted Forfeited Exercised Closing Exercise $'000

Balance Balance price

Listed Options

Expiring 16 Jan 2003 6,803,660 - - - 6,803,660 $1.044 7,103

Employee Options

Expiring 27 March 2003 259,000 - (27,000) - 232,000 $1.000 232 Expiring 12 Feb 2004 250,750 - (39,000) - 211,750 $1.000 212 Expiring 29 Dec 2004 40,000 - - - 40,000 $1.000 40 Expiring 26 March 2005 570,900 - (142,250) - 428,650 $1.154 495

Executive Options

Expiring 29 May 2003 300,000 - (300,000) - - $1.040 - Expiring 21 April 2004 300,000 - (300,000) - - $1.000 - Expiring 7 April 2005 85,000 - (85,000) - - $1.183 - Expiring 18 May 2006 - 400,000 - - 400,000 $0.796 318 Expiring 18 May 2006 - 300,000 - - 300,000 (a) - Expiring 18 May 2006 - 300,000 - - 300,000 (b) -

8,609,310 1,000,000 (893,250) - 8,716,060 8,400

2002 Number of Options Details Opening Granted Forfeited Exercised Closing Exercise $'000

Balance Balance price

Listed Options

Expiring 16 Jan 2003 6,803,660 2,800,000 - - 9,603,660 $0.997 9,575

Employee Options

Expiring 27 March 2003 232,000 - (121,000) - 111,000 $1.000 111 Expiring 12 Feb 2004 211,750 - (69,750) - 142,000 $1.000 142 Expiring 29 Dec 2004 40,000 - (20,000) - 20,000 $1.000 20 Expiring 26 March 2005 428,650 - (168,225) - 260,425 $1.154 301

Executive Options

Expiring 18 May 2006 400,000 - (400,000) - - $0.796 - Expiring 18 May 2006 300,000 - (300,000) - - $0.354 - Expiring 18 May 2006 300,000 - (300,000) - - (a) - Expiring 29 May 2004 - 500,000 (100,000) - 400,000 $0.435 174 Expiring 29 May 2005 - 400,000 (100,000) - 300,000 (b) - Expiring 29 May 2006 - 400,000 (100,000) - 300,000 (b) -

8,716,060 4,100,000 (1,678,975) - 11,137,085 10,323

(a) Options expiring 18 May 2006 have an exercise price based on the weighted average price of Ordinary Shares of ChiquitaBrands South Pacific Limited for the 5 trading days immediately prior to 5 March 2003.

(b) Options expiring 29 May 2005 and 2006 have an exercise price based on the weighted average price of Ordinary Shares of Chiquita Brands South Pacific Limited for the 20 trading days immediately prior to 29 May 2004 and 2005 respectively.


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25. SUBSEQUENT EVENTSNo matters or circumstances have arisen since the end of the financial year which significantly affected or may affect theoperations of the consolidated entity.

Consolidated2002 2001$'000 $'000

26. EARNINGS PER SHAREThe following reflects the income and share data usedin the calculations of basic and diluted earnings per share

Net profit - used in calculating basic earnings per share (18,511) (12,209)Net profit - used in calculating diluted earnings per share (18,506) (12,209)

Number of shares

Weighted average number of ordinary shares outstanding during the period used in calculation of basic EPS 106,875,719 67,443,051

Effect of dilutive securities:Share options 400,000 -

Adjusted weighted average number of ordinary shares used in calculating dilutive earnings per share 107,275,719 67,443,051

Excluded from the calculation of diluted earnings per share are 6.1 million convertible notes with an exercise price of $1.10 expiring on 15 January 2003 and 10,137,085 options with an exercise price in excess of $0.99 per share, and 600,000 executiveoptions with an exercise price to be determined.



2002 2001 2002 2001Note $'000 $'000 $'000 $'000

27. REMUNERATION OF DIRECTORSIncome paid or payable, or otherwise made available, in respect of the financial year, to all directors of each entity in the consolidated entity, directly or indirectly, by the entities of which they are directors or any related party: 2,218,737 1,354,551

Income paid or payable, or otherwise made available, in respect of the financial year, to all directors of the Company, directly or indirectly, from the entity or any related party: 2,218,737 1,354,551

The number of directors of Chiquita Brands South Pacific Ltd whose income (including superannuation contributions) falls within the following bands is:

2002 2001

Nil - $9,999 4 2$20,000 - $29,999 - - $30,000 - $39,999 1 1$50,000 - $59,999 1 1$100,000 - $109,999 - 1$380,000 - $389,999 1 -$450,000 - $459,999 - 1$1,750,000 - $1,759,999 1 -

28. REMUNERATION OF EXECUTIVESRemuneration received or due and receivable by executive officers of the consolidated entity whose remuneration is $100,000 or more, from entities in the consolidated entity or a related party, in connection with the management of the affairs of the entities in the consolidated entity whether as an executive officer or otherwise: 935,890 1,212,165

Remuneration received or due and receivable by executive officers of the Company whose remuneration is $100,000 or more, from entities in the consolidated entity or a related party, in connection with the management of the affairs of the Company or any related party, whether as an executive officer or otherwise: 935,890 1,212,165


28. REMUNERATION OF EXECUTIVES continuedThe number of executives of the consolidated entity and the Company whose remuneration falls within the following bands is:

Consolidated entity Company2002 2001 2002 2001

$120,000 - $129,999 - 1 - 1$140,000 - $149,999 1 - 1 - $160,000 - $169,999 - 2 - 2$180,000 - $189,999 - 1 - 1$190,000 - $199,999 3 - 3 - $200,000 - $209,999 1 - 1 -$220,000 - $229,999 - 1 - 1$350,000 - $359,999 - 1 - 1

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2002 2001 2002 2001Note $'000 $'000 $'000 $'000

29. AUDITOR’S REMUNERATIONAmounts received or due and receivable by the auditors for:

Auditing the financial report 242,000 215,000 25,000 25,000

Other reviews - 50,000 - -

Other services 71,766 237,039 - -

313,766 502,039 25,000 25,000

30. DEED OF CROSS GUARANTEEPursuant to Class Order 98/1418, relief has been granted to certain entities controlled by Chiquita Brands South Pacific Limitedfrom the Corporations Act requirements for preparation, audit and publication of financial reports.

As a condition of the Class Order, Chiquita Brands South Pacific Limited and the controlled entities subject to the Class Order,CBSP Pty Ltd, Chiquita Foods Pty Ltd, Chiquita Brands Brisbane Pty Ltd, Chiquita Brands Melbourne Pty Ltd, Chiquita Nibbles Pty Ltdand Chiquita Mushrooms Holdings Pty Ltd, entered into a Deed of Cross Guarantee on 23 December, 1998. The effect of the Deed isthat Chiquita Brands South Pacific Limited has guaranteed to pay any deficiency in the event of winding up the controlled entities.The controlled entities have also given a similar guarantee in the event that Chiquita Brands South Pacific Limited is wound up.

The consolidated statement of financial performance and statement of financial position of the entities which are parties to theDeed of Cross Guarantee are as follows:


Consolidated2002 2001$'000 $'000

30. DEED OF CROSS GUARANTEE continuedStatement of financial performanceRevenues from ordinary activities 177,332 191,987

Other expenses from ordinary activities excluding borrowing costs (179,495) (220,826)

Borrowing costs (5,570) (4,000)

Loss from ordinary activities before income tax (7,733) (32,839)

Income tax benefit relating to ordinary activities (2,152) (3,476)

Net loss attributable to closed group (5,581) (29,363)

Non-owner transaction changes in equityIncrease in retained profits on adoption of revised accounting standards:Self-Generating and Regenerating Assets -AASB 1037 - 9,474 Total revenue, expenses and valuation adjustments attributed to the closed group - 9,474

Total changes in equity from non-owner transactions attributable to the closed group (5,581) (19,889)


Consolidated2002 2001$'000 $'000

30. DEED OF CROSS GUARANTEE continuedStatement of financial positionCurrent assets

Cash - 7,943 Receivables 22,979 15,951 Inventories 9,168 7,146 Other 573 935

Total current assets 32,720 31,975

Non-current assets

Receivables 52,566 40,606 Other financial assets 34,143 34,167 Property, plant and equipment 12,846 15,882Self-generating and regenerating assets 9,318 13,059 Intangibles 1,819 2,542 Deferred tax assets 2,661 4,739 Other - 90

Total non-current assets 113,353 111,085

Total assets 146,073 143,060

Current liabilities

Payables 18,145 24,351 Interest-bearing liabilities 15,444 4,647Provisions 3,607 1,424

Total current liabilities 37,196 30,422

Non-current liabilities

Payables 58 - Interest-bearing liabilities 40,288 62,854 Deferred tax liabilities 460 316 Provisions 248 414 Other 47 100

Total non-current liabilities 41,101 63,684

Total liabilities 78,297 94,106

Net assets 67,776 48,954

Equity

Issued capital 92,895 68,492 Accumulated losses (25,119) (19,538)

Total Equity 67,776 48,954

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31. RELATED PARTY DISCLOSURES(a) DirectorsThe directors of Chiquita Brands South Pacific Ltd during the financial year were:

A.G. Hartnell D.M. DoyleM.D. Babiolakis C.C. SchokmanB.W. Kemp F.A. CostaC.A. Stephen D.J. Taig

D.J. Taig resigned from the Board on 29 May 2002.

M.D. Babiolakis was appointed to the Board, effective 12 April 2002.

F.A. Costa and C.C. Schokman were appointed to the board, effective 29 May 2002.

(b) Wholly-owned group transactionsThe Company has received interest income totalling $539,581 (2001: $539,581) from a controlled entity under normal terms and conditions.

The Company received dividend income totalling $Nil (2001: $2,165,150) from a controlled entity.

The Company supplied product totalling $8,648,421 (2001: $9,609,099) of sales revenue to controlled entities under normal commercial terms and conditions.

Significant amounts of product are sold from farming and processing operations to merchant operations. These sales are made at arms length and are eliminated upon consolidation.

(c) Transactions with other related partiesTransactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated. The following related party transactions occurred during the year:

The Company issued 6,100,000 convertible notes at $1.10 each to Chiquita Far East Holdings B.V. as part of the acquisition,on 15 January 1998, of CBSP Pty Ltd and its subsidiaries. Interest accrues on the convertible notes at 5% per annum and the amount accrued for the financial year is $335,500 (2001: $335,500). Each note is convertible to one ordinary share at theoption of the noteholder until the redemption date in January 2003. The convertible notes were repaid on 15 January 2003,through a term loan with Chiquita Far East Holdings B.V.. The loan attracts interest at the same rate charged by the ANZ BankingGroup on the consolidated entity senior debt and is payable in monthly installments over the next 12 months. Chiquita Far EastHoldings B.V. is a shareholder in Chiquita Brands South Pacific Limited.

The Company borrowed $20,250,000 from Chiquita Brands International, Inc. (CBII) to assist in the purchase of the ChiquitaMushrooms business and related land acquisitions in 1998. Since that date the loan has been reduced through repayment and was $Nil as at balance date (2001: $4,453,673). The loan bore interest at the same rate as the ANZ Banking Group Ltd rateapplying to the consolidated entity’s commercial bill borrowings, inclusive of line and acceptance fees. The interest expense for this financial year amounted to $133,870 (2001: $296,169). Chiquita Brands International, Inc. has an interest in Chiquita Far East Holdings B.V., which is a shareholder in the Company.

(d) DirectorsThere were no transactions with directors during the year, other than as disclosed elsewhere.

(e) Director-related entitiesMr F. Costa is a director of and has an interest in the Costa’s Group. During the period since becoming a related party the Costa’s Group acquired produce from the consolidated entity totalling $9,038,840. These purchases were on the same terms andconditions as the consolidated entities other customers.

There were no other transactions with director-related entities during the year, other than disclosed elsewhere.


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31. RELATED PARTY DISCLOSURES continued(f) Equity instruments of directors

Ordinary Shares Options overFully Paid Ordinary Shares

Directors 2002 2001 2002 2001

(i) Interest in the equity instruments of entities in the consolidated entity held by directors of the reporting entity and their director-related entities at balance date,being the number of instruments held:

A.G. Hartnell 548,185 393,364 Nil 17,903

D.M. Doyle Nil Nil Nil Nil

M.D. Babiolakis 5,400,000 Nil 1,000,000 Nil

D.J. Taig - 100,000 - 1,000,000

B.W. Kemp 174,999 116,666 Nil Nil

C.A. Stephen 390,000 320,000 Nil Nil

F.A. Costa 37,175,221 Nil Nil Nil

C.C. Schokman 350,000 Nil Nil Nil

44,038,405 930,030 1,000,000 1,017,903

(ii) Movements in directors’ equity holdings:

1,000,000 executive options to take up one Ordinary Share were issued in May 2002 to Mr M.D. Babiolakis on terms and conditions set out in Note 24 to these accounts.

During the year:- Mr M. D. Babiolakis and parties in which he had an interest, acquired 5,400,000 ordinary shares;- Mr A.G. Hartnell and parties in which he had an interest acquired a net 154,821 shares and disposed of 17,903 options;- Mr B.W. Kemp acquired 58,333 shares pursuant to the rights issue;- Mr C. A. Stephen acquired 160,000 shares as part of the rights issue and subsequently disposed of 90,000 shares;- Mr F.A. Costa and parties in which he had an interest acquired a net 37,175,221 shares;- Mr C. C. Schokman and parties in which he had an interest acquired 350,000 shares; and- 1,000,000 executive options issued to Mr D. Taig were forfeited.

All shares and options apart from those options granted to Mr M. D. Babiolakis were acquired on the open market or as part of the share issue during the year.

(g) Ultimate parentChiquita Brands South Pacific Limited is the ultimate parent entity.

32. SEGMENT INFORMATIONSegment products and locationsThe consolidated entity’s operations are organised and managed separately according to the nature of the products and services they provide, with each segment offering different products and serving different markets.

The farm segment is involved in the growing and selling of own farm fruit. The processing segment is involved in packing and selling fruit. The Trading Merchant and Export segment is involved in the marketing and distribution of fruit and vegetables,dried fruits and nuts. Geographically, the group operates primarily in Australia.

Segment accounting policiesThe group generally accounts for intersegment sales and transfers as if the transfers were to third parties at current market prices.

Segment accounting policies are the same as the consolidated entity’s policies described in Note 1. During the financial year, therewere no changes in segment accounting policies that had a material effect on the segment information.


(1)

(1) As trustee for the CBSP Employee Share Plan.

Farms Processing

2002 2001 2002 2001$'000 $'000 $'000 $'000

RevenueSales to customers outside the consolidated entity 58,632 53,376 81,937 76,617

Other revenues from customers outside the consolidated entity 4,308 1,572

Intersegment revenues 36,074 37,694 285 19

Total segment / consolidated revenue 99,014 91,070 83,794 76,636

ResultsEarnings before interest, tax and significant items 10,211 5,988 6,065 2,731

Interest expense

Segment / consolidated profit/(loss) before tax and significant items 10,211 5,988 6,065 2,731

Significant items (13,148) (871) (4,270) (5,600)

Segment / consolidated profit/(loss) before tax (2,937) 5,117 1,795 (2,869)

Income tax (benefit) / expense

Net (loss)/profit

AssetsSegment assets / total assets 59,607 82,222 86,139 78,220

Liabilities Segment liabilities / total liabilities 35,841 44,905 46,435 63,313

Other segment information:Acquisition of property, plant and equipment, intangible assets and other non-current assets 3,988 3,970 4,180 2,995

Depreciation 2,898 3,746 878 1,567

Amortisation 61 17 172 213

32. SEGMENT INFORMATION continued


Trading Merchants Unallocated Consolidated& Export

2002 2001 2002 2001 2002 2001$'000 $'000 $'000 $'000 $'000 $'000

162,066 171,719 - - 302,635 301,712

920 2,924 9,880 9,724 9,880

335 - (36,694) (37,713) - -

163,321 171,719 (33,770) (27,833) 312,359 311,592

2,196 4,986 (8,116) (11,540) 10,356 2,165

(5,739) (5,719) (5,739) (5,719)

2,196 4,986 (13,855) (17,259) 4,617 (3,554)

(4,714) (4,004) (5,359) - (27,491) (10,475)

(2,518) 982 (19,214) (17,259) (22,874) (14,029)

(4,363) (1,820)

(18,511) (12,209)

25,043 28,030 3,664 5,530 174,453 194,002

19,942 18,972 548 1,017 102,766 128,207

385 558 308 2,033 8,861 9,556

335 724 864 134 4,975 6,171

112 317 404 756 749 1,303

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33. FINANCIAL INSTRUMENTS(a) Net fair valuesThe aggregate net fair values of financial assets and financial liabilities, both recognised and unrecognised,at the balance date are as follows:

Total carrying amount Aggregate net fair valueas per the balance sheet

2002 2001 2002 2001$’000 $’000 $’000 $’000

Financial assetsCash - 1,009 - 1,009

Receivables - trade debtors 20,867 25,847 20,867 25,847

Sundry loans/other debtors 2,305 2,932 2,305 2,932

Director’s/employee loans 14 4 14 4

Unlisted shares 409 409 709 679

Total financial assets 23,595 30,201 23,895 30,471

Financial liabilitiesBank overdraft 794 - 794 -

Trade creditors and accruals 32,125 22,415 32,125 22,415

Sundry creditors 695 4,888 695 4,888

Commercial bill borrowings 47,201 76,497 47,201 76,285

Finance lease liability 921 963 921 963

Hire purchase liability 552 111 552 111

Loan - related party - 4,454 - 4,454

Convertible notes - related party 6,710 6,710 6,710 6,710

Total financial liabilities 88,998 116,038 88,998 115,826


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33. FINANCIAL INSTRUMENTS continued

The following methods and assumptions are used to determine the net fair values of financial assetsand liabilities:

Recognised financial instrumentsCash, cash equivalents and short-term investments:

The carrying amount approximates fair value because of their short-term to maturity.

Trade receivables, trade creditors and dividends

receivable:

The carrying amount approximates fair value because of their short-term to maturity.

Sundry, Directors’ and employee loans receivable:

The carrying amount approximates fair value due to the nature of the loan arrangements and the security held.

Unlisted shares:

For investments where there is no quoted market price,a reasonable estimate of the fair value is determined by reference to the expected cash flows or the underlyingnet asset base of the investment/security.

Commercial bill borrowings:

The carrying amount approximates fair value.

Finance lease and hire purchase liabilities:

The carrying amount approximates fair value due to the natureof the lease and hire purchase arrangements and the currentlending rates for similar types of lending arrangements.

Borrowings – related entity:

The carrying amount approximates fair value due to the nature of the lending arrangement and the current lendingrates for similar types of lending arrangements.

Convertible notes – related entity:

The carrying amount approximates fair value.

(b) Credit risk exposuresThe consolidated entity’s maximum exposures to credit risk atbalance date in relation to each class of recognised financialasset is the carrying amount of those assets as indicated in the balance sheet.

Concentrations of credit risk

The consolidated entity’s credit risk in relation to tradeaccounts receivable is concentrated in the major national fruit and vegetable retailers operating within Australia.

Credit risk in trade receivables is managed in the followingways:

- Payment terms range from 14 to 30 days depending on terms negotiated with major customers; and

- The consolidated entity uses the market credit servicein each wholesale market location to collect debts from smaller customers. This guarantees collection on 14 day terms.

The maximum credit risk exposure does not take into accountthe value of any collateral or other security held, in the eventother entities/parties fail to perform their obligations under the financial instruments in question.


Financial Instruments Floating interest rate Fixed interest rate maturing in:1 year or less Over 1 to 5 years

2002 2001 2002 2001 2002 2001$'000 $'000 $'000 $'000 $'000 $'000

(i) Financial assetsCash - 1,009 - - - -

Trade & other receivables - - - - - -

Sundry loans - - 451 872 222 224

Director’s/employee loans - - - - - -

Unlisted shares - - - - - -

Total financial assets - 1,009 451 872 222 224

(ii) Financial liabilitiesBank overdraft 794 - - - - -

Trade creditors and accruals - - - - - -

Sundry creditors - - - - - -

Commercial bill borrowings 47,201 76,497 - - - -

Finance lease liability - - 633 432 288 531

Hire purchase liability - - 133 111 419 -

Loan - related party - 4,454 - - - -

Convertible notes - related party - - - - 6,710 6,710

Total financial liabilities 47,995 80,951 766 543 7,417 7,241

N/A - not applicable for non-interest bearing financial instruments.

33. FINANCIAL INSTRUMENTS continued(c) Interest rate riskThe consolidated entity’s exposure to interest rate risks and the effective interest rates of financial assets and financial liabilities,both recognised and unrecognised, at the balance date are as follows.


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Non-interest bearing Total carrying amount Weighted average effective More than 5 years as per the balance sheet interest rate

2002 2001 2002 2001 2002 2001 2002 2001$'000 $'000 $'000 $'000 $'000 $'000 % %

- - - - - 1,009 3.92% 3.75%

- - 20,867 25,847 20,867 25,847 N/A N/A

- - 1,632 1,835 2,305 2,931 6.80% 6.80%

- - 14 4 14 4 N/A N/A

- - 409 409 409 409 N/A N/A

- - 22,922 28,095 23,595 30,200

- - - - 794 - 8.60% 8.25%

- - 33,328 22,415 33,328 22,415 N/A N/A

- - 695 4,888 695 4,888 N/A N/A

- - - - 47,201 76,497 6.61% 6.91%

- - - - 921 963 11.00% 11.00%

- - - - 552 111 10.30% 10.30%

- - - - - 4,454 6.65% 6.65%

- - - - 6,710 6,710 5.00% 5.00%

- - 34,023 27,303 90,201 116,038


Directors’ Declaration

In accordance with a resolution of Directors of the Company, I state that:

(1) In the opinion of the Directors:

(a) The financial statements and notes of the Company and of the consolidated entity are in accordance with

the Corporations Act 2001, including:

(i) giving a true and fair view of the Company’s and consolidated entity’s financial position as at 31 December

2002 and of their performance for the year ended on that date; and

(ii) complying with Accounting Standards and Corporations Regulations 2001; and

(b) There are reasonable grounds to believe that the Company will be able to pay its debts as and when they

become due and payable.

(2) In the opinion of the Directors, as at the date of this declaration, there are reasonable grounds to believe that the

members of the Closed Group identified in Note 30 will be able to meet any obligations or liabilities to which they

are or may become subject to, by virtue of the Deed of Cross Guarantee.

On behalf of the Board

Anthony G. Hartnell

Director

25 February 2003

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To the members of Chiquita Brands South Pacific Limited

ScopeWe have audited the financial report of Chiquita Brands South Pacific Limited for the financial year ended

31 December 2002, as set out on pages 10 to 58, including the Directors’ Declaration. The financial report includes

the financial statements of Chiquita Brands South Pacific Limited, and the consolidated financial statements of the

consolidated entity comprising the Company and the entities it controlled at year's end or from time to time during the

financial year. The Company's directors are responsible for the financial report. We have conducted an independent

audit of the financial report in order to express an opinion on it to the members of the Company.

Our audit has been conducted in accordance with Australian Auditing Standards to provide reasonable assurance

whether the financial report is free of material mis-statement. Our procedures included examination, on a test basis,

of evidence supporting the amounts and other disclosures in the financial report, and the evaluation of accounting

policies and significant accounting estimates. These procedures have been undertaken to form an opinion whether,

in all material respects, the financial report is presented fairly in accordance with Accounting Standards, other

mandatory professional reporting requirements in Australia, and statutory requirements so as to present a view which

is consistent with our understanding of the Company’s and the consolidated entity’s financial position and performance

as represented by the results of their operations and their cash flows.

The audit opinion expressed in this report has been formed on the above basis.

Audit OpinionIn our opinion, the financial report of Chiquita Brands South Pacific Limited is in accordance with:

(a) The Corporations Act 2001 including:

(i) giving a true and fair view of the Company’s and consolidated entity’s financial position as at 31 December

2002 and of their performance for the year ended on that date; and

(ii) complying with Accounting Standards in Australia and the Corporations Regulations 2001; and

(b) Other mandatory professional reporting requirements in Australia.

Ernst & Young

D. Balcombe

Partner

Melbourne

25 February 2003

Independent Audit Report

Corporate Governance Statement

Corporate Governance of the consolidated entity, including its strategic direction, review of plans established by

the management team and the monitoring of performance against those plans, is the overall responsibility of the

Board of Directors.

POLICIES AND PROCESSESThe specific policies and processes which have been adopted by the Board are set out below.

1. Chairman

The Board will at all times appoint a non-executive Director to the office of Chairman.

2. Composition of the Board

The majority of the Directors shall be non-executive Directors.

There are no formal criteria in place for Board membership, for reviewing the membership of the Board or nomination

of Directors. The Board is however responsible for establishing the criteria for Board membership and identifying

and nominating directors. Board membership is reviewed annually to ensure the Board has an appropriate mix of

qualifications, skills and experience. External advisors may be used in this process. Candidates are appointed by

the Board and must stand for election at the next annual general meeting of shareholders.

There is a formal and transparent procedure for the appointment and retirement of directors contained in the

Company’s constitution.

The Directors in office at the date of this report are:

Name Position

A.G. Hartnell Chairman, Non-executive Director

D.M. Doyle Non-executive Director

B.W. Kemp Non-executive Director

C.A. Stephen Non-executive Director

M.D. Babiolakis Managing Director

F.A. Costa Non-executive Director

C.C. Schokman Non-executive Director

3. Strategy and Risk Management

The Board is responsible for identifying areas of significant business risk and ensuring arrangements are in place

to properly manage those risks and periodically reviews the principal strategies of the Company. Where possible,

risks deemed unacceptable are insured through reputable insurance companies.

The Company has always adopted the highest ethical standards and insists on this throughout the Company.

The maintenance of such standards of behaviour are enforced by the Chairman and the Managing Director.

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4. Board Committees Generally

Board Committees are:

- Made up predominantly of non-executive Directors;

- Entitled to obtain such resources and information from the Company, including direct access to employees of

and advisers to the Company, as they may require; and

- Entitled to access the Company’s solicitors and auditors at the Company’s expense should they wish to seek advice

on matters relating to their duties as Directors of the Company.

5. Audit

The Company has an Audit Committee comprising C.A. Stephen (Chairman), C.C. Schokman, and B.W. Kemp.

The Managing Director and CEO is an ex officio member of the Committee. The Audit Committee meets with the

external auditors and is subject to an Audit Committee Charter, which is reviewed from time to time in accordance

with best practice. The Committee reviews all matters raised by the external auditors and reports to the Board on

any material items. It maintains open lines of communication with the Board, internal accounting and financial officers

and the external auditors to exchange views and information as well as confirms their respective authorities and

responsibilities.

Other than set out in the Corporations Law and the Constitution no specific procedures exist for the nomination

or appointment of external auditors.

6. Remuneration Committee

The Remuneration Committee comprises A.G. Hartnell (Chairman), D.M. Doyle, and F.A. Costa. All members of

the Committee are non-executive directors.

Executive RemunerationThe Committee is responsible for determining and reviewing the remuneration of the Managing Director and special

consultants for the Board. The Committee is also responsible for determining and reviewing the annual bonus

system for employees.

Directors’ RemunerationThe Committee is responsible for recommending a total of Directors’ remuneration to be approved by resolution

of shareholders at the Annual General Meeting of the Company pursuant to the Company’s Constitution.

The Directors may also be paid all travelling and other expenses properly incurred by them in attending and returning

from meetings of Directors or any Committee of Directors or general meetings of the Company or otherwise in

connection with the business or affairs of the Company. The attendance of Directors of the Board and the membership

of and attendance of Directors at Committees of the Board are disclosed on page 16 of this Annual Report in

the Directors’ Report.

7. Material Disclosure

Directors’ interests in contracts with the Company, and all other benefits received by the Directors are disclosed

in Notes 27 & 31 and Directors’ Report of this Annual Report.

Corporate Governance Statement continued

Statement of Quoted Shares as at 20 February 2003Fully paid ordinary shares 143,708,386

Number of shareholders 1,458

Voting rights are one vote per person on a show of hands or one vote per fully paid share on a poll.

Statement of Quoted Shares as at 20 February 2003Shareholders Shareholding % of Totals

Units Shares

1 to 1,000 123 62,143 0.04%

1,001 to 5,000 533 1,548,588 1.08%

5,001 to 10,000 255 1,987,608 1.38%

10,001 to 100,000 470 13,344,940 9.29%

100,001 and over 77 126,765,107 88.21%

1,458 143,708,386 100.00%

As at 20 February 2003 there were 129 shareholders who held less than a marketable parcel of 1,087 shares.

Twenty Largest Shareholders (of quoted shares) as at 20 February 2003:Shareholding % of Totals

Units Shares

Chiquita Far East Holdings B.V. 41,617,950 28.96%

Costa Bros Annuities Pty Ltd 36,600,000 25.47%

Invia Custodian Pty Ltd - Black A/C 10,111,752 7.04%

Permanent Trustee Australia Limited - MMC0002 A/C 6,475,000 4.51%

Zymex Holdings Pty Ltd 5,400,000 3.76%

Permanent Trustee Australia Limited - MMC0001 A/C 2,794,744 1.94%

National Nominees Limited 2,157,939 1.50%

National Nominees Limited - Equip super Account 1,500,000 1.04%

Argo Investments Limited 1,481,443 1.03%

Gwynvill Trading Pty Ltd 1,150,000 0.80%

Robert Duncan Robson 1,000,000 0.70%

Qualvest Pty Ltd 923,574 0.64%

Invia Custodian Pty Limited - White A/C 806,400 0.56%

Lentell Nominees Pty Ltd 758,874 0.53%

Permanent Trustee Australia Limited - CDL0001 A/C 722,430 0.50%

HSBC Custody Nominees (Australia) Limited 663,093 0.46%

Rathvale Pty Ltd 544,486 0.38%

Paul Andrew Mariani 528,139 0.37%

Graham and Maureen Thompson 505,671 0.35%

Alvastar Pty Ltd 450,000 0.31%

115,235,824 80.19%

Unquoted SharesCraig Allan Stephen as Trustee for CBSP Employee Share Plan was the holder of 390,000 ordinary shares at the date

of this report.

Substantial Shareholders’ Register as at 20 February 2003.Chiquita Far East Holdings B.V. 41,617,950

Costa Bros. Annuities Pty Ltd 36,600,000

Invia Custodian Pty Ltd 10,111,752

MMC Asset Management Limited 9,535,244

Shareholder Information

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Corporate Directory

CHIQUITA BRANDS SOUTH PACIFIC LIMITED(Incorporated in Australia)ACN 002 687 961

ABN 41 002 687 961

Registered OfficeGround Floor, 582 Heidelberg Road

Fairfield Victoria 3078

Telephone: +61 3 8481 1500

Facsimile: +61 3 8481 1574

Internet: www.chiquita.com.au

DirectorsAnthony G. Hartnell, Chairman

Mano D. Babiolakis, Managing Director

Dennis M. Doyle

Bruce W. Kemp

Craig A. Stephen

Francis A. Costa

Carl C. Schokman

Company SecretaryDavid K. Green

Stock Exchange ListingChiquita Brands South Pacific Ltd shares are quoted on the Australian Stock Exchange.

The code under which the Company’s Ordinary Shares are traded is CHQ.

The code under which the Company’s Quoted Options are traded is CHQO.

Share RegisterComputershare Registry Services Pty Ltd

Level 3, 60 Carrington Street

Sydney New South Wales 2000

Telephone: +61 2 8234 5222

Facsimile: +61 2 8234 5050

Registered Office

Ground Level

582 Heidelberg Road

Fairfield VIC 3078

PO Box 5200

Alphington VIC 3078

Telephone+61 3 8481 1500

Facsimile +61 3 8481 1574

www.chiquita.com.au

This Annual Report was designed and produced by CKAOS Ink Pty Ltd

chiquita brands south pacific limited annual report2002

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