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Société Internationale de Plantations d’Hévéas
S I P H
INTERIM FINANCIAL REPORT
AS AT 30 JUNE 2012
C O N T E N T S
1. Interim management report as at 30 June 2012
2. Condensed interim consolidated financial statements
Consolidated Balance Sheet
Consolidated Income Statement
Consolidated statement of comprehensive income
Table of consolidated cash flow
Table of variation in consolidated equity capital
Notes to the condensed interim consolidated financial statements
3. Statement from the manager responsible for the interim financial report
4. Auditors’ report on the interim financial information
1. Interim management report as at 30 June 2012
The rubber market
The market has experienced a down-turn since November 2011. The depreciation of the euro
against the dollar has maintained prices in Euro. Prices for the first half of 2012 have been
lower than those recorded in 2011 over the same period: hence, the average price over the
first half of 2012 has been 2.7 €/kg (3.5 US$/kg) against 3.53 €/kg (4.94 US$/kg) over the
first half of 2011.
Results for the first half of 2012
Consolidated income
statement- in K€ 1st half 2012 1st half 2011
TOTAL IAS41 * Before IAS41
TOTAL IAS41 * Before IAS41
Rubber turnover 174,754 174,754 160,146 160,146 Total turnover 183,589 183,589 167,549 167,549
Cost of goods produced -110,452 -110,452 -106,539 -106,539
Inventory variations -2,162 9,891 -12,054 8,445 -6,867 15,312
Cost of goods sold -112,614 9,891 -122,506 -98,094 -6,867 -91,227
Margin on direct costs 70,975 9,891 61,084 69,455 -6,867 76,322 IAS 41 application across the
plantations 4,643 4,643 -4,697 -4,697
Current operating income 55,372 14,534 40,837 47,662 -
11,564 59,227
Operating income 54,421 14,534 39,887 48,213 -
11,564 59,778
Cost of net debt -125 1,200
NET INCOME 32,981 31,049
(*) Application of IAS 41 across the plantations: cf. Note 24-1 of the appendix to the condensed interim consolidated accounts.
First-half sales of rubber amounted to €174.8 million, representing an increase of 9.12%.
The increase in tonnage sold of 24% (63 thousand tons in 2012 against 51 thousand tons for
the first half of 2011) offset the fall of 12% in the average selling price. Total turnover came
to €183.6 million.
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With 58 thousand tons produced in the first half of 2012, production stood at a higher level
than in 2011 when it was 54 thousand tons.
After application of IAS 41, the margin on direct costs totaled €71 million, against €69.5
million for the first half of 2011, and operating profit stood at €54.4 million against €48.2
million in 2011.
Net income amounted to €33 million against €31 million at 30 June 2011. Net income,
Group share was €20.6 million against €19.3 million on 30 June 2011.
Financial structure
On 30 June 2012 equity stood at €283 million against €257 million on 30 June 2011.
Investments amounted to €25.9 million in the first half of 2012 against €9 million in the first
half of 2011. This situation is mainly due to the acquisition of the 40% interest in the
minority shareholder (CRC) in January 2012 for the sum of €7 million and to making larger
investments in SAPH during the first half of 2012 compared to the same period of the year
before which had been marked by the Ivorian crisis (increase of around €5 million). The
Group has maintained a positive net cash position of €23.8 million as against €39.9 million on
30 June 2011.
Monitoring the risk factors
Risks associated with fluctuations in the rubber market
Against this market background, SIPH continues to use hedging instruments to guard against
the risk of volatility associated with changes in the price of rubber. The Group continues to
apply hedge accounting to these derivative instruments.
Risks associated with fluctuations in interest rates
Interest rate swaps hedge the interest volatility risks on loans contracted by SIPH in
connection with the development of CRC; the Group continues to apply hedge accounting to
these derivative instruments.
Prospects
Uncertainty about the global economic situation continues to affect the price of rubber. The
average price in August was 2.6 US$ / kg, or 2.1 € / kg and remains profitable for the Group.
SIPH continues to strengthen its key position in the 4 regions of West Africa in which it is
established. Its strong financial position is an asset for the Group enabling it to step up its
investment program (€45 million planned in 2012) with a view to modernizing its social
infrastructures and further expanding its plantations. The Group is aiming for a total 144,000
tons of production by the end of the year.
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2. Condensed interim consolidated financial statements
S.I.P.H. GROUP
CONDENSED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
AT 30 JUNE 2012
SOCIETE INTERNATIONALE DE PLANTATIONS D’HEVEAS
Limited company with capital of €11,568,966
53, rue du Capitaine Guynemer – 92400 COURBEVOIE
RCS Nanterre B 312 397 730
SIPH Group – Condensed interim consolidated financial statements – Period from 1 January to 30 June 2012
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CONSOLIDATED BALANCE SHEET
ASSETS Notes 30/06/2012 31/12/2011 30/06/2011
(in thousand Euros)
Non-current assets
Note 6
Goodwill and other intangible assets 21,875 21,377 20,654
Tangible assets Note 7 62,778 53,378 46,189
Biological assets Note 8 159,243 149,848 151,259
Financial assets Note 9 1,792 1,380 1,082
Deferred tax assets Note 20 1,638 8,376 2,072
Other non-current assets Note 10 3,138 2,730 2,832
250,464 237,089 224,089
Current assets
Inventories Note 11 71,077 70,190 77,286
Trade and other receivables Note 12 34,073 67,210 60,353
Other current financial assets Note 13 5,269 3,372 6,116
Cash and cash equivalents Note 14 68,655 79,192 50,480
179,074 219,963 194,235
TOTAL ASSETS 429,538 457,052 418,324
LIABILITIES AND EQUITY
Notes 30/06/2012 31/12/2011 30/06/2011 (in thousand Euros)
EQUITY
Capital and reserves attributable to shareholders
of the Company
Injected capital 11,569 11,569 11,569
Share premiums 25,179 25,179 25,179
Consolidated reserves 158,058 138,899 133,981
Result 20,637 59,130 19,286
Total equity group share 215,443 234,777 190,015
Minority interests 67,244 85,014 67,260
Total equity 282,688 319,791 257,275
LIABILITIES
Non-current liabilities
Loans Note 16 28,414 30,405 7,817
Deferred tax liabilities Note 20 29,751 31,363 28,387
Pension commitments and similar benefits Note 17 6,256 6,161 4,813
Other long term liabilities Note 18 0 6,951 4,434
64,421 74,879 45,451
Current liabilities
Trade and other payables Note 15 42,486 28,147 81,960
Income tax liabilities 20,850 27,210 24,152
Loans Note 16 16,409 5,097 2,790
Other current financial liabilities Note 13 819 46 5,901
Provisions for other liabilities Note 19 1,865 1,883 795
82,429 62,382 115,598
Total liabilities 146,850 137,261 161,048
Total liabilities and equity 429,538 457,052 418,324
SIPH Group – Condensed interim consolidated financial statements – Period from 1 January to 30 June 2012
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CONSOLIDATED INCOME STATEMENT
(in thousand Euros)
Notes 30/06/2012 31/12/2011 30/06/2011
Sales of rubber 174,754 403,016 160,146
Other sales 8,836 19,324 7,403
Total turnover 183,589 422,340 167,549
Total cost of goods sold -112,614 -253,076 -98,094
Margin on direct costs 70,975 169,264 69,455
General expenses -15,341 -30,460 -13,690
Depreciation and amortization -4,104 -7,742 -3,363
Net agricultural investments -4,981 -7,854 -4,740
Variations in fair value of biological assets 8,822 -2,520 0
Other operating income and expenses 0 0 0
Current operating income 55,372 120,689 47,662
Gains and losses on disposals of fixed assets 9 -287 -310
Other operating income and expenses -960 568 861
Operating income 54,421 120,969 48,213
Income from cash and cash equivalents 874 2,298 1,633
Cost of gross financial debt -999 -1,140 -434
Cost of net financial debt Note 22 -125 1,157 1,200
Other financial income and expenses Note 22 0 0 0
Income tax expense Note 23 -21,314 -32,802 -18,364
Result for the period 32,981 89,324 31,049
attributable:
- to shareholders of the Company 20,637 59,130 19,286
- to minority interests 12,344 30,194 11,764
32,981 89,324 31,049
Earnings per share : earnings attributable to
Shareholders of the Company (in Euros per share)
- basic
4.08 11.68 3.81
- diluted
4.08 11.68 3.81
SIPH Group – Condensed interim consolidated financial statements – Period from 1 January to 30 June 2012
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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(in thousand Euros)
30/06/2012 30/06/2011 31/12/2011
Net income for the period
32,981 31,049 89,324
Other comprehensive income
Change in fair value of hedging instruments, net of
deferred taxes 680 17,155 22,945
SAPH pension commitment adjustment
-150
REN export subsidy abandonment
-110
Translation adjustment
228 -2,018 -94
Total other comprehensive income
908 15,137 22,592
Comprehensive income for the period 33,889 46,186 111,916
Attributable:
To the shareholders of the company
21,745 34,589 81,874
To the minority interests
12,144 11,597 30,042
33,889 46,185 111,916
SIPH Group – Condensed interim consolidated financial statements – Period from 1 January to 30 June 2012
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TABLE OF CONSOLIDATED CASH FLOW
(in thousand Euros) Notes 30/06/2012 30/06/2011 31/12/2011
NET CASH FLOW FROM OPERATING
ACTIVITIES
Result for the year 32,981 31,049 89,324
Net depreciation for amortisation and provisions 4,336 4,467 10,620
Unrealised gains and losses linked to changes in fair
value Note 24.1 -14,534 11,564 30,845
Other calculated income and expenses - - -
Elimination of dividend income -1 -2 -2
Elimination of spread in derivatives 57 - 229
Gains and losses on disposals 793 353 926
Cost of net financial debt -11 130 517
Tax charge 21,314 18,364 32,802
Cash flow from operating activities before cost of
net financial debt and tax 44,934 65,926 165,262
Taxes paid -23,293 -17,585 -36,048
Variation in working capital Note 24.2 53,484 -1,145 -9,193
NET CASH FLOW FROM OPERATING
ACTIVITIES
75,125 47,197 120,021
NET CASH FLOW FROM INVESTMENT
ACTIVITIES
Acquisitions of tangible and intangible assets -18,501 -9,065 -22,949
Disposals of tangible and intangible assets 20 58 113
(Increase) / Reduction in financial assets -455 193 -511
Impact of changes within the consolidation, net of
cash acquired
-6,951 - -
Dividends received 1 - 2
NET CASH FLOW FROM INVESTMENT
ACTIVITIES
-25,884 -8,814 -23,346
NET CASH FLOW FROM FINANCING
ACTIVITIES
Dividends paid to minority interests of integrated
companies -29,896
-
-26,162
Dividends paid to shareholders of parent company -40,486 - -27,834
Proceeds from borrowings 44 61 24,914
Loan repayments -1,084 -1,331 -2,684
Net financial interest paid 8 -140 -514
Other cash flows linked to financial instruments
(derivatives)
- - -335
Other cash flows linked to financing activities 10,671 -6,860 -6,860
NET CASH FLOW FROM FINANCING
ACTIVITIES -60,743 -8,270 -39,475
Impact of exchange rate fluctuations 72 -560 572
VARIATION IN CASH -11,430 29,552 57,772
CASH AND CASH EQUIVALENTS AT START
OF YEAR Note 24.3
78,641 20,868 20,868
CASH AND CASH EQUIVALENTS AT YEAR
END Note 24.3
67,210 50,421 78,641
SIPH Group – Condensed interim consolidated financial statements – Period from 1 January to 30 June 2012
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TABLE OF VARIATION IN CONSOLIDATED EQUITY CAPITAL
Attributable to the shareholders of the Company
(in thousand Euros)
TOTAL
Capital Premiums Group
reserves Trans. Diff.
Income for the year
Equity Group share
Minority interests
Equity
Equity on 1st January 2011
11,569 25,179 82,473 - 2,104 66,143 183,261 81,825 265,086
Allocation of 2010 income in reserves
- - 66,143 - -66,143 - - -
Dividends paid - - - - - - - -
Income for 1st half 2011
- - - - 19,286 19,286 11,763 31,048
Translation differences
- - - -1,851 - - 1,851 -167 - 2,018
Fair value of derivative
instruments - - 17,155 - - 17,155 - 17,155
Miscellaneous - - -27,834 - - - 27,834 -26,162 - 53,996
Equity on 30 June 2011
11,569 25,179 137,937 -3,955 19,285 190,015 67,260 257,275
Equity on 1st January 2012
11,569 25,179 141,182 -2,282 59,130 234,777 85,014 319,791
Allocation of 2011 income in reserves
- - 59,130 - -59,130 - - -
Dividends paid - - -40,486 - - - 40,486 - 29,896 - 70,382
Income for 1st half 2012
- - - - 20,637 20,637 12,344 32,981
Translation differences
- - - 428 - 428 -200 228
Fair value of financial
instruments - - 680 - - 680 - 680
Miscellaneous - - -592 - - - 592 -18 - 610
Extinguishment of debt on CRC put
- - - - - - 6,951 6,951
Acquisition of CRC minority interests
- - - - - - - 6,951 - 6,951
Equity on 30 June 2012
11,569 25,179 159,912 -1,854 20,637 215,444 67,244 282,688
The share capital consists of 5,060,790 shares, fully paid, with a nominal value of 2.286 euros
each.
As at 30 June 2012 the two largest shareholders were:
SIFCA, holding 55.59% of the share capital and 63.29% of the voting rights;
Compagnie Financière Michelin, holding 20% of the share capital and 22.77% of the
voting rights.
SIPH Group – Condensed interim consolidated financial statements – Period from 1 January to 30 June 2012
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S.I.P.H.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Financial period ending 30 June 2012
NOTE 1: INFORMATION RELATING TO THE BUSINESS
SIPH is a French public limited company, set up on 1st January 1900, listed on the Eurolist
market of Euronext Paris, whose head office is at 53 rue du Capitaine Guynemer, 92400
Courbevoie.
SIPH is the parent company of an international Group whose main business is the production and
marketing of natural rubber. This rubber is produced in factories located in the Ivory Coast,
Ghana, Nigeria and Liberia (currently starting up), from latex coming either from the Group’s
own rubber plantations, or from village farms and independent growers.
Additionally, the Group carries out business operations in other types of products with the
entities related to the main shareholder.
On 31 August 2012, the Board of Directors approved the condensed interim consolidated
financial statements as at 30 June 2012 and authorised their release. They are expressed in
thousand Euros, unless otherwise indicated.
NOTE 2: KEY HIGHLIGHTS OF THE FIRST HALF OF THE YEAR
CRC: minority redemption by SIPH
On 6 January 2012, SIPH increased its holding in Cavalla Rubber Corporation (CRC) in Liberia
from 60% to 100%. The acquisition of the 40% interest in the minority shareholder cost U.S.$ 9
million, i.e. €6,950,612 in SIPH’s accounts.
Taxation in Ivory Coast New taxes have been introduced in the Ivory Coast on rubber and on the land which has been
used for the plantations. In fact, the 2012 annex to the tax law, which came into force on 16
January 2012, introduced a tax of 5% on the sales of granulated rubber specified by the factory
owners in the rubber sector. The impact on SAPH’s profit before tax was €6.5 million in the first
half.
In addition, the exploitation of rubber plantations is now subject to a property tax at the rate of
15,000 FCFA / ha planted. The impact was €0.4 million in the first half of 2012.
SIPH Group – Condensed interim consolidated financial statements – Period from 1 January to 30 June 2012
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Rubber market
The prices in the first half of 2012 were lower than those recorded over the same period in 2011.
The average for the first half was thus 3.55 USD/kg, i.e. 2.73 €/kg, against 4.94 USD/kg, or 3.53
€/kg, in the first half of 2011.
NOTE 3: BASIS FOR PREPARING THE CONDENSED INTERIM FINANCIAL
STATEMENTS
The condensed interim consolidated financial statements as at 30 June 2012 have been prepared
in accordance with IAS standard 34 "Interim Financial Reporting". This summary set of
financial statements includes for comparative purposes the income statements for the first half of
2011 and as at 31 December 2011 and the balance sheets as at 31 December 2011 and at 30 June
2011. They do not include all the information required in the full annual financial statements and
should be read in conjunction with the Group’s consolidated financial statements for the financial
year ended 31 December 2011, prepared in accordance with the IFRS standards as adopted by the
European Union.
The accounting principles and methods used on 30 June 2012 are identical to those applied by
the Company for its annual consolidated financial statements as at 31 December 2011.
In the annual consolidated financial statements, the changes in fair value of mature and immature
crops recorded in the current operating income include the changes in fair value of plantations
resulting from the valuation conducted by an independent expert on the basis of discounted
future cash flows expected from the exploitation of the rubber plantations, less the amount of net
investments made during the financial year (felling, replanting and maintenance of immature
plantations).
In 2012, the SIFCA Group set up plot monitoring and a procedure for updating the areas and the
agricultural business plans every quarter. This now makes it possible for an updated assessment
of the fair value of the plantations to be made by an independent expert on 30 June.
On 30 June 2012, the variation in fair value of the biological assets, compared to
31 December 2011, was 8,822 thousand Euros (before deduction of agricultural net investments
and tax effect).
The interim financial statements on 30 June 2011 presented in comparison do not include the
variation in fair value of the biological assets in relation to 31 December 2010 since, until 2011,
fair value calculations could only be made once a year, at year-end.
Moreover, it should be noted that the following Standards and Interpretations, that are mandatory
for financial years beginning on or after 1 January 2012, have no material impact on the SIPH
Group's accounts:
- IFRS 7 “Financial instruments: Disclosures” – “Transfers of Financial Assets”
- whose early application is permitted in the IASB system of reference "as published" and
adopted by the European Union. This concerns the amendments published by the IASB
on 16 June 2011 and adopted by the European Union in June 2012:
SIPH Group – Condensed interim consolidated financial statements – Period from 1 January to 30 June 2012
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Amendments to IAS 1 "Presentation of other components of comprehensive income",
for application to financial years beginning on or after 1 July 2012. These
amendments notably require the submission of separate subtotals for the items
comprising the "other comprehensive income" which are included in a subsequent
reclassification in the "net income" section of the income statement and for those that
cannot be recycled in income. These amendments also require that the taxes relating
to the items presented before tax be presented separately for each of the two groups
of items comprising other comprehensive income.
Amendments to IAS 19 "Employee Benefits" for application to financial years
beginning on or after 1 January 2013. These amendments relate to the abandonment
of the "corridor" method, to streamlining the presentation of changes in assets and
liabilities deriving from defined benefit schemes, including the obligation to present
in other comprehensive income (OCI ) re-estimates in order to distinguish these
changes from those that many perceive as the result of the entity’s daily activities, to
the clarification of certain points, including the classification of employee benefits,
current estimates of mortality rates, taxes and administrative costs, risk sharing and
conditional indexation, and improving disclosures for defined benefit schemes by
requiring better information about the features of these schemes and the risks to
which the entity is exposed through its participation in these plans.
- whose early application is authorized by the IASB standard "as published" but not yet
adopted by the European Union. These are:
Amendment to IFRS 1 “First-time adoption of the IFRS” published by the IASB
on 13 March 2012, not yet adopted by the European Union. This amendment
addresses the accounting for a government loan with a below market interest rate
available to entities when they first adopt the IFRS.
Annual Improvements to the IFRS standards issued by the IASB on 17 May 2012
and not yet adopted by the European Union. The IASB is implementing this
process in order to make changes deemed necessary but non-urgent to its
standards, when these are not already the object of a major project.
Lastly, the Group has not opted for early application of standards, amendments and
interpretations, whose mandatory date of application is after 1st January 2012.
SIPH Group – Condensed interim consolidated financial statements – Period from 1 January to 30 June 2012
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NOTE 4 – SCOPE OF THE CONSOLIDATION
On 30 June 2012, the companies included in the consolidation are the following:
Name Address
Société Internationale de Plantations d’Hévéas SA (SIPH)
53, rue du Capitaine Guynemer, 92400 Courbevoie (France)
Cavalla Rubber Estates Ltd Gedetarbo, Maryland County (Republic of Liberia)
Ghana Rubber Estates Ltd (GREL) P.O. Box 228, Takoradi (Ghana)
Société Africaine de Plantations d’Hévéas (SAPH)
Rue des Gallions ; Zone Portuaire Abidjan 01 (Ivory Coast)
Rubber Estates Nigeria Limited (REN) Ovia s/w LG (Nigeria)
The control and interest percentages for 2012 and 2011 are as shown below:
Companies
Percentage of control Percentage of interest
30/06/2012 31/12/2011 30/06/2011 30/06/2012 31/12/2011 30/06/2011
SIPH (parent company) 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
CRC 100.00% 60.00% 60.00% 100.00% 60.00% 60.00%
GREL 60.00% 60.00% 60.00% 60.00% 60.00% 60.00%
SAPH 68.06% 68.06% 68.06% 68.06% 68.06% 68.06%
REN 70.32% 70.32% 70.32% 70.32% 70.32% 70.32%
All the subsidiaries listed above are fully consolidated.
SIPH Group – Condensed interim consolidated financial statements – Period from 1 January to 30 June 2012
13
NOTE 5 – CONVERSION OF THE FINANCIAL STATEMENTS
The financial statements of the company REN included in the consolidation, denominated in
Nigerian Nairas, were converted into Euros at the following rates in 2012 and 2011:
Rate
Rate on 1 January 2012 206.495
Rate on 30 June 2012 204.368
Average rate for the first half of 2012 205.320
The financial statements of the company SAPH included in the consolidation, denominated in
CFA Francs, were converted into Euros at the following rates in 2012 and 2011:
Rate
Rate on 1 January 2012 655.957
Rate on 30 June 2012 655.957
Average rate for the first half of 2012 655.957
The accounts for the company GREL are written in Euros and therefore not affected by
conversion problems.
The financial statements of the company CRC included in the consolidation, denominated in US
Dollars, were converted into Euros at the following rates in 2012 and 2011:
Rate
Rate on 1 January 2012 1.295
Rate on 30 June 2012 1.258
Average rate for the first half of 2012 1.298
SIPH Group – Condensed interim consolidated financial statements – Period from 1 January to 30 June 2012
14
NOTE 6 – GOODWILL AND OTHER INTANGIBLE ASSETS
6-1 GOODWILL
Goodwill is allocated to the Group’s cash-generating units, which are identified according to the
country in which the activities take place and the business sector:
Cash generating units / Items SAPH (Ivory
Coast)
REN
(Nigeria)
CRC
(Liberia) Total
Net value on 31 December 2011 11,606 3,982 5,318 20,906
Variation in translation difference - 41 157 199
Net value on 30 June 2012 11,606 4,024 5,475 21,104
6-2 OTHER INTANGIBLE ASSETS
Other fixed assets, amounting to 770,000 Euros on 30 June 2012 and 471,000 Euros on 31
December 2011, mainly concern software.
NOTE 7 – PROPERTY, PLANT AND EQUIPMENT
This item is detailed as follows by type:
Items
Gross
value on Acquisitions Disposals Transfers Translation
difference
Gross
value on
01/01/2012 30/06/2012
. Land 278 - - - - 278
. Buildings 44,699 956 - 12 615 217 46,475
. Industrial machinery and
equipment 23,033 1,518 - 232 84 24,866
. Office equipment 4,205 380 -6 130 19 4,728
. Vehicles 14,221 1,732 -171 604 93 16,479
. Installations and fittings 9,450 934 - 246 3 10,633
. Other current assets 12,478 8,848 - -3,156 229 18,399
. Other tangible fixed
assets 357 - - 12 - 369
TOTAL 108,720 14,368 -190 -1,317 645 122,227
SIPH Group – Condensed interim consolidated financial statements – Period from 1 January to 30 June 2012
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Items Amortization
on Depreciation Disposals Transfers
Translation
difference
Amortization
on
01/01/2012 30/06/2012
. Land - - - - - -
. Buildings 22,156 871 -12 - 48 23,062
. Industrial machinery and
equipment 16,898 1,257 - - 49 18,203
. Office equipment 2,861 290 -5 - 10 3,156
. Vehicles 9,322 1,196 -161 - 60 10,418
. Installations and fittings 3,930 469 - - 1 4,400
. Other tangible fixed
assets 176 33 - - - 209
. Tangible assets in
progress - - - - - -
. Advances and
prepayments on tangible
assets
- - - - - -
TOTAL 55,342 4,117 -179 - 168 59,449
The net value of property, plant and equipment is as follows by type:
Items Net value on Net value on
30/06/2012 31/12/2011
. Land 278 278
. Buildings 23,412 22,543
. Industrial machinery and equipment 6,663 6,135
. Office equipment 1,572 1,345
. Vehicles 6,061 4,898
. Installations and fittings 6,233 5,520
. Other tangible fixed assets 160 181
. Other current assets 18,399 12,478
TOTAL 62,778 53,378
The increase in “Other current assets” is derived from the agricultural investment drive in the
companies GREL and CRC.
SIPH Group – Condensed interim consolidated financial statements – Period from 1 January to 30 June 2012
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NOTE 8 – BIOLOGICAL ASSETS
This item breaks down as follows by type of biological asset (heveas):
Item Net value Net value
30/06/2012 31/12/2011
Immature and mature plantations 156,208 147,385
Nurseries 3,035 2,463
TOTAL 159,243 149,848
From:
SAPH 79,631 70,786
GREL 31,239 33,649
REN 40,849 38,380
CRC 7,524 7,034
TOTAL 159 243 149,848
Changes in the book value of the biological assets between 1st January and 30 June 2012 are as
follows:
Item 2012 (6 months) 2011 (12 months)
On 1st January 149,848 151,809
Net change in nurseries 559 551
Translation difference 13 7
Change in assessment -32,240
Changes in fair value 8,822 29,721
On 30 June 2011 159,243 149,848
Since 31 December 2011, the values of the plantations are determined by an independent expert.
Based on the same assessment according to which there is no active market for the rubber
plantations and that transactions are infrequent, especially for plantations with no processing
plant, the method used therefore is the Discounted Cash Flows (DCF) method.
The discount rate stands at 14.77% for the Ivory Coast (SAPH), 11.30% for Nigeria (REN),
12.40% for Ghana (GREL) and 15.84% for Liberia (CRC). They remain unchanged from 31
December 2011.
The price of rubber (SICOM) is estimated at 2.479 €/kg for the second half of 2012, at 2.57 €/kg
for 2013, and at around 2.25 €/kg for subsequent years. The price used for the second half of
2012 is the average of the sales prices for the contracts concluded with shipments over the same
period. These contracts representing a volume approaching 50% of the total volume of
shipments expected between now and the end of the year, they seem to us to be representative of
the 2nd
half of 2012. As of 2013, the projections will be based on the official data released by the
World Bank.
On 31 December 2011, price projections were 2.48 €/kg for 2012, 2.32 €/kg for 2013, and 2.10
€/kg for the following years.
SIPH Group – Condensed interim consolidated financial statements – Period from 1 January to 30 June 2012
17
Valuation of the plantations at fair value is therefore sensitive to the price of rubber used:
a variation of +50 € /T on the price estimates for the second half of 2012 and subsequent
years of economic lifetime produces a variation of around 9%, i.e.11.9 M€ in the fair
value of the plantations on 30 June 2012;
a variation of +75 € /T on the price estimates for the second half of 2012 and subsequent
years of economic lifetime produces a variation of around 11%, i.e. 17.8 M€ in the fair
value of the plantations on 30 June 2012;
a variation of -50 € /T on the price estimates for the second half of 2012 and subsequent
years of economic lifetime produces a variation of around -11%, i.e. -16.8 M€ in the fair
value of the plantations on 30 June 2012;
a variation of -75 € /T on the price estimates for the second half of 2012 and subsequent
years of economic lifetime produces a variation of around -16%, i.e. -22.2 M€ in the fair
value of the plantations on 30 June 2012.
NOTE 9 – FINANCIAL ASSETS
This item comprises:
Items
Gross value
on
Provisions
on
Net value
on
Net value
on
30/06/2012 30/06/2012 30/06/2012 31/12/2011
Non consolidated equity investments 89 12 76 76
Other financial assets 2,117 401 1,716 1,304
TOTAL 2,206 414 1,792 1,380
NOTE 10 – OTHER NON-CURRENT ASSETS
Other non-current assets concern SAPH, GREL and CRC and are detailed as follows:
Item 30/06/2012 31/12/2011
Advances to staff and other receivables 3,138 2,730
Advances to growers - -
Total 3,138 2,730
The item “Advances to staff and other receivables” mainly concerns SAPH.
SIPH Group – Condensed interim consolidated financial statements – Period from 1 January to 30 June 2012
18
NOTE 11 - INVENTORIES
Inventories and work in progress are broken down as follows by category:
30/06/2012 31/12/2011
Rubber
* Raw materials 33,268 39,175
* Finished products 23,462 19,718
Others 14,347 11,297
Total 71,077 70,190
Inventories of raw materials (cup lump) are valued at fair value, which corresponds to the market
price for unprocessed rubber. This fair value appears as follows:
1.562 € per kg on 30 June 2012 (against 1.388 € on 31 December 2011) for the
SAPH subsidiary;
1.69 € per kg on 30 June 2012 (against 1.564 € on 31 December 2011) for the
GREL subsidiary;
1.69 € per kg on 30 June 2012 for the REN subsidiary (against 1.564 € per kg on 31
December 2011; the market price used for REN is that used for the company GREL, by close
reference since in Nigeria there is no official professionally structured market);
11.562 € per kg on 30 June 2012 (against 1.388 € on 31 December 2011) for the CRC
subsidiary.
In Ghana, as in the Ivory Coast, the profession is organised and fixes the monthly minimum
purchase price for unprocessed rubber.
The finished goods are valued at cost, which includes the cost of raw materials and processing
costs.
On 30 June 2012, rubber inventories for raw materials and finished products are as follows:
Item
Quantity
(in tons)
on
01/01/2012
Unit price
(€/Kg) on
01/01/2012
Value (in
thousand
euros) on
01/01/2012
Quantity
(in tons)
on
30/06/2012
Unit price
(€/Kg)
on30/06/2012
Value (in
thousand
euros) on
30/06/2012
Variation
(Tons)
Variation
(K€)
Raw
materials :
SAPH 20,428 1.3882 28,358 16,842 1.5622 26,312 -3,586 -2,046
GREL 2,453 1.5642 3,837 532 1.6900 898 -1,921 -2,938
REN 3,025 1.5642 4,732 2,671 1.6900 4,513 -355 -219
CRC 1,619 1.3882 2,248 989 1.5622 1,545 -630 -703
Total 27,525 1.4232 39,175 21,034 1.5817 33,268 -6,492 -5,906
SIPH Group – Condensed interim consolidated financial statements – Period from 1 January to 30 June 2012
19
Item
Quantity
(in tons)
on
01/01/2012
Unit price
(€/Kg) on
01/01/2012
Value (in
thousand
euros) on
01/01/2012
Quantity
(in tons)
on
30/06/2012
Unit price
(€/Kg) on
30/06/2012
Value (in
thousand
euros) on
30/06/2012
Variation
(Tons)
Variation
(K€)
Finished
products :
SAPH 9,207 1.5582 14,346 9,045 1.7389 15,727 -162 1,381
GREL 1,342 1.7406 2,336 1,567 1.8995 2,976 225 640
REN 1,728 1.7570 3,036 2,422 1.9547 4,734 694 1,698
CRC - - - 12 2.0163 25 12 25
Total 12,277 1.6061 19,718 13,046 1.7985 23,462 769 3,744
No impairment has been registered on the inventories in the accounts on 30 June 2012 or on
31 December 2011.
NOTE 12 – TRADE AND OTHER RECEIVABLES
Items 30/06/2012 31/12/2011
Trade and other receivables 23,960 53,951
of which trade receivables 22,242 36,933
of which current accounts 1,718 17,018
Depreciation of trade and other receivables -1,340 -1,293
Trade receivables - net 22,620 52,658
Other receivables 11,139 14,273
Prepaid expenses 314 279
Total 34,073 67,210
Long term portion - -
Short term portion 34,073 67,210
The customer payment methods generally accepted within the Group (documentary remittance
against payment) limit the credit granted to customers.
The carrying values of trade and other receivables are denominated mainly in Euros.
The other categories included in trade and other receivables do not include impaired assets.
The maximum exposure to credit risk at reporting date represents the fair value of each class of
receivables mentioned above.
SIPH Group – Condensed interim consolidated financial statements – Period from 1 January to 30 June 2012
20
NOTE 13 – OTHER CURRENT FINANCIAL ASSETS / CURRENT FINANCIAL
LIABILITIES
Items 30/06/2012 31/12/2011 VARIATION
Other Current financial assets 5,269 3,372 1,897
Fair value of hedging contracts for rubber 4,450 3,325 1,124
Foreign currency accounts 819 46 773
Items 30/06/2012 31/12/2011 VARIATION
Other Current financial liabilities 819 46 773
Fair value of hedging contracts for rubber - - -
Foreign currency accounts 819 46 773
These items include:
The foreign currency accounts (currency futures contracts) used by the Group to deal with
currency risk. These items are valued at the year-end exchange rates;
forward hedging instruments to guard against the risk of volatility in rubber prices. These
items are valued at their fair value.
COMMODITY DERIVATIVE FINANCIAL INSTRUMENTS
SSWWAAPP aaggrreeeemmeennttss
On 30 June 2012, the commitment given within the context of SWAP agreements was 12,280
tons of rubber due in 2012 & 2013, or 31.6 million Euros. The valuation of these derivatives at
the closing price amounted to 4,450 thousand Euros.
Hedging contracts settled during the first half of the year posted a net income of 3,862 thousand
Euros recorded as an increase in turnover.
Changes in fair value of commodity derivative instruments directly recognised in equity:
In K€
On 31 December 2011 3,325
recycled in expenses / (income) for the financial year -3,862
Change for the period 4,986
On 30 June 2012 4,450
SIPH Group – Condensed interim consolidated financial statements – Period from 1 January to 30 June 2012
21
NOTE 14 – CASH AND CASH EQUIVALENTS
Items 30/06/2012 31/12/2011
Liquidity (Note 24-3) 50,917 46,338
Investment securities and short-term bank deposits
(Note 24-3) 17,738 32,853
68,655 79,192
NOTE 15 – TRADE AND OTHER PAYABLES
Items 30/06/2012 31/12/2011
Trade 16,522 14,635
Tax and social security liabilities, excluding tax debt 15,179 7,789
Other payables 10,784 5,723
Total 42,486 28,147
Long-term portion - -
Short-term portion 42,486 28,147
The significant increase in the item « other payables » is due to the minority interest dividends
for GREL and SAPH not yet paid out as at 30 June 2012.
NOTE 16 – LOANS
Items 30/06/2012 31/12/2011
Non-current
Bank loans 26,003 26,379
Convertible bonds - 361
Government bonds 2,411 2,637
Other borrowings 0.37 1,028
28,414 30,405
Current
Bank overdrafts (Note 24-3) 1,410 516
Bank loans 3,512 3,809
Government bonds 815 771
Spot credit 10,671 -
16,409 5,097
Total loans 44,823 35,502
of which bank loans 32,742 33,597
SIPH Group – Condensed interim consolidated financial statements – Period from 1 January to 30 June 2012
22
The item “other non-current borrowings” is a non-bank debt and mainly concerns CRC.
The items “non-current bank loans” and “current bank loans” include respectively 166 thousand
Euros and 47 thousand Euros at fair value of the Société Générale interest rate Swap. This same
item also includes 479 thousand Euros at fair value of the Crédit Agricole rate Swap.
The item “spot credit” refers to SAPH. This spot credit was set up in the first half of 2012 to
deal with the payment of dividends.
Rate swap
On 30 June 2012, the valuation of the Société Générale interest rate swap stood at -213 K€ (with
a counterpart in equity capital).
Changes in fair value of interest rate derivatives recognised directly in equity:
In K€ Flow hedge Rate
On 31 December 2011 -245
Change in value -6
recycled in expenses / (income) for the year 38
Variation for the period 32
On 30 June 2012
-213
On 30 June 2012, the valuation of the Crédit Agricole interest rate swap was -479 K€ (with a
counterpart in equity).
Changes in fair value of financial instruments recognised directly in equity:
In K€ Flow hedge Rate
On 31 December 2011 -360
Change in value -270
recycled in expenses / (income) for the year 151
Variation for the period -119
On 30 June 2012 -479
The maturities of the long-term borrowings are given below:
SIPH Group – Condensed interim consolidated financial statements – Period from 1 January to 30 June 2012
23
Items 30/06/2012 31/12/2011
Between 1 and 2 years 9,850 6,984
Between 2 and 5 years 13,870 13,612
More than 5 years 4,694 9,809
28,414 30,405
The features of the bank loans taken out by the subsidiaries are summarised as follows:
Organisation Rate Fixed/variable
rate
Amount due on
30/06/2012 (in thousand Euros)
Amount due on
31/12/2011 (in thousand Euros)
SIPH
.Société Générale 5.65% Fixed*
Principal 3,641 4,245
Interest 70 75
.Banque Palatine 3.20% Fixed*
Principal 8,000 8,000
Interest 21 1
.Crédit Agricole 3.99% Fixed*
Principal 7,979 7,860
Interest 1 17
REN
.Zenith bank 7.50% Fixed
Principal 9,786 9,685
Interest - -
SAPH
. BICICI 7.50% Fixed
Principal - 287
Interest - 0
GREL
.Ghanaian
government 2.50% Fixed
Principal 3,226 3,408
Interest 17 18
Total 32,742 33,597
* fixed rate after hedging
SIPH Group – Condensed interim consolidated financial statements – Period from 1 January to 30 June 2012
24
NOTE 17 – RETIREMENT BENEFITS AND SIMILAR COMMITMENTS
In addition to the other long-term benefits for the staff of the REN & GREL subsidiaries in the
amount of 328 thousand Euros on 30 June 2012, this item includes the retirement benefits for the
Group’s employees summarised as follows:
Balance on
31/12/11 Increase Decrease
Translation
adjustment
Balance
on
30/06/12
Retirement benefits 5,844 268 -201 17 5,927
The consolidated annual variation in pension commitments which is recorded under “General
Expenses” in the consolidated income statement breaks down as follows:
Items 30/06/2012 30/06/2011 31/12/2011
Cost of services rendered 29 197 498
Financial cost 38 255 152
(Gains) / losses - - 1,059
Total (gain)/loss amount 67 452 1,709
The main actuarial assumptions are as follows (the rate of inflation is taken into account in the
salary escalation rate):
Items REN SIPH SAPH GREL
2012 2011 2012 2011 2012 2011 2012 2011
Discount rate 12.00% 12.00% 4.60% 4.60% 3.50% 3.50% 12.00% 12.00%
Future salary escalation rate 10.00% 10.00% 2.50% 2.50% 3.00% 3.00% 15.00% 15.00%
SIPH Group – Condensed interim consolidated financial statements – Period from 1 January to 30 June 2012
25
NOTE 18 - OTHER LONG-TERM LIABILITIES
Items 30/06/2012 31/12/2011
Other long-term financial liabilities 0 6,951
Total 0 6,951
This item included on 31 December 2011 the evaluation of future debt on the put option (“put”)
granted to the minority shareholders of CRC, valued at the cost of acquiring the shares.
NOTE 19 - PROVISIONS FOR OTHER LIABILITIES
This item consists of various provisions for litigation totalling 1,865 thousand Euros at 30 June
2012, which mainly concern the subsidiaries SAPH, GREL & REN.
Items 30/06/2012 31/12/2011
Other provisions for charges less than one year
228 235
Other provisions for risks less than one year
498 518
Provisions for litigation less than one year
1,139 1,130
Total 1,865 1,883
The risk provision includes an on-going tax audit in Ivory Coast and Nigeria.
The litigation provision mainly includes a provision relating to employment in Ghana and a
provision for customer credit risk in Nigeria.
NOTE 20 – DEFERRED TAXES
Deferred tax assets and liabilities on 30 June 2012 stood at a net liability of 28,113 thousand
Euros (of which, deferred tax assets of 1,638 thousand Euros and deferred tax liabilities of
29,751 thousand Euros), against a net liability of 22,986 thousand Euros at 31 December 2011.
SIPH Group – Condensed interim consolidated financial statements – Period from 1 January to 30 June 2012
26
The variation in net deferred tax liabilities during the first half of 2012 is detailed below:
Fair value
of
biological
assets
Fair value
of
agricultural
production
Financial
instruments
at amortised
cost
Pension
commit-
ments
Tax losses
carried
forward
chargeable
to future
profits
Fair value of
hedging
instruments
Misc. Total
On 1st January
2012 19,831 -941 -20 -1,183 -1,370 835 5,835 22,986
Impact of
reserves - - - - -9 357 -90 258
Debited
from/(credited
to) statement of
income (Note
23)
1,966 2,787 -4 12 -269 -11 387 4,869
On 30 June
2012 21,797 1,846 -23 -1,171 -1,648 1,180 6,132 28,113
NOTE 21 - STAFF EXPENSES
Staff expenses were as follows:
Items 30/06/2012 30/06/2011 31/12/2011
Wages and salaries 15,561 12,219 27,862
Social security costs 1,577 1,483 3,077
TOTAL 17,138 13,701 30,940
And the average workforce of the consolidated companies is as follows:
Category 30/06/2012 30/06/2011 31/12/2011
Permanent 7,508 7,199 7,452
Non-permanent 4,045 4,246 3,970
TOTAL 11,553 11,445 11,422
The non-permanent staff are the agricultural labourers employed without a permanent contract,
who are paid, depending on local conditions and in accordance with current legislation, either by
the job or on a seasonal basis.
SIPH Group – Condensed interim consolidated financial statements – Period from 1 January to 30 June 2012
27
NOTE 22 - COST OF NET FINANCIAL DEBT
Items 30/06/2012 30/06/2011 31/12/2011
Interest revenue 880 156 1,161
Interest charges -987 -337 -1,106
Income from securities 172 30 169
Result of discounting receivables and payables - - 87
Other financial income and expenses -190 1,351 847
Total -125 1,200 1,157
NOTE 23 - CORPORATION TAX
The tax charge is as follows:
Items 30/06/2012 30/06/2011 31/12/2011
Current taxes -16,446 -20,322 -40,562
Other taxes payable on income - - 1
Deferred taxes (Note 20) -4,869 1,958 7,759
Total -21,314 -18,364 -32,802
Rationalisation of the tax charge is as follows:
Items 30/06/2012 30/06/2011 31/12/2011
Result for the year 32,981 31,049 89,324
Expense / (tax income) 21,314 18,364 32,802
Income before tax 54,296 49,413 122,127
Tax rate of the parent company 34.43% 34.43% 34.43%
Notional tax charge / (profit) 18,694 17,013 42,048
Reconciliation:
- Permanent differences 1,231 812 -320
- Differences in tax rates -4,550 -4,712 -13,148
- Taxes on distributed earnings 5,978 5,143 5,143
- Tax assets not recognised as a matter of prudence 238 107 -441
- Use of losses not recognised before - 277 - -481
Actual tax charge 21,314 18,364 32,802
SIPH Group – Condensed interim consolidated financial statements – Period from 1 January to 30 June 2012
28
NOTE 24 - CONSOLIDATED CASH FLOW STATEMENT
24-1 GAINS AND LOSSES LINKED TO CHANGES IN FAIR VALUE
Items 30/06/2012 30/06/2011 31/12/2011
Net agricultural investments 4,179 4,697 7,215
* of which investments 4,981 4,740 7,854
* of which gross value of output -802 -43 -639
(Gain) / loss in fair value of the plantations - 8,822 - 2,520
(Gain) / loss in fair value of inventories -9,891 6,867 21,110
Total -14,534 11,564 30,845
24-2 CHANGE IN WORKING CAPITAL FUND
Items 30/06/2012 30/06/2011 31/12/2011
Change in inventories 8,569 -16,367 -22,975
Change in trade and other receivables 20,177 11,683 10,897
Change in trade and other payables 24,737 3,539 2,886
Total 53,484 -1,145 -9,193
The change in working capital requirements is due to a combination of factors:
dividends for the minority shareholders of GREL and SAPH not yet paid as at 30 June
2012 (see note 15);
increased tax liabilities for SAPH due to withholding tax on dividends and the new tax on
sales of rubber;
the reimbursement of SAPH’s financial current account assets by the sister companies.
SIPH Group – Condensed interim consolidated financial statements – Period from 1 January to 30 June 2012
29
24-3 CASH AND CASH EQUIVALENTS AT THE BEGINNING AND THE END OF THE PERIOD
The components of cash and cash equivalents at the beginning and end of the period are as
follows:
Items
Cash and cash
equivalents at end of
period
Cash and cash
equivalents at
beginning of period
Notes
Investment securities 17,736 32,852 Note 14
Liquid assets 50,917 46,338 Note 14
Accrued interest not yet due on liquid assets - Note 14
Cash and cash equivalents Subtotal 68,653 79,190
Bank overdrafts -1,410 -516 Note 16
Accrued interest not yet due - passive -34 -33
Total 67,210 78,641
NOTE 25 - SEGMENT INFORMATION
In accordance with management directives and the internal reporting structure of the Group,
segment information is presented by business activity.
Information by business activity for the financial years 2012 and 2011 is as follows:
INCOME STATEMENT
Rubber Other activities Total
2012 (6 months)
2011 (6 months)
2011 (12 months)
2012 (6 months)
2011 (6 months)
2011 (12 months)
2012 (6 months)
2011 (6 months)
2011 (12 months)
Turnover 174,754 160,146 403,016 8,836 7,403 19,324 183,589 167,549 422,340
Depreciation and amortisation -4,104 -3,363 -7,742 - - - -4,104 -3,363 -7,742
Current operating
income 54,815 47,462 120,939 557 201 -250 55,372 47,662 120,689
Other operating income and expenses -960 861 568 - - - -960 861 568
Operating income 53,864 48,013 121,219 557 201 -250 54,421 48,213 120,969
Net borrowing cost -125 1,200 1,157 - - - -125 1,200 1,157
Result for the period 32,424 30,849 89,574 557 201 -250 32,981 31,049 89,324
SIPH Group – Condensed interim consolidated financial statements – Period from 1 January to 30 June 2012
30
NOTE 26 – TRANSACTIONS WITH RELATED PARTIES
26-1 PURCHASES AND SALES OF GOODS AND SERVICES
The consolidated financial statements include transactions carried out by the Group in the normal
course of business with its shareholders and subsidiaries. The transactions are carried out at
market prices.
They can be summarised as follows for the years 2012 and 2011:
26-1-1 Transactions carried out between SIPH and its shareholders
Expenses Income
Service Provider
Beneficiary Company 2012 2011 2011 2012 2011 2011
Nature of transaction
(6
months) (6
months) (12
months) (6
months) (6
months) (12
months)
SIPH SIFCA - 130 - 96 - 152 Sales of goods
SIFCA SIPH 2,548 1,063 2,418 - - - Technical assistance
Michelin SIPH 519 1,366 2,315 - - - Technical assistance
SIFCA SAPH - 69 - - - - Technical assistance
SIFCA SAPH 106 59 204 - - - Office rental
26-1-2 Transactions carried out between SIPH and its subsidiaries
In thousand Euros 30/06/2012 30/06/2011 31/12/2011
Income 6,529 5,612 12,136
Expenses 157,276 147,174 373,365
26-1-3 Transactions carried out between SIPH and related companies
Service Beneficiary Receivables
Nature of transaction Provider Company
30/06/2012 31/12/2011
CRC MOPP 46 44 Financial current account
SIPH SIFCA 231 231 Financial current account
SAPH PALMCI 484 10,821 Financial current account
SAPH SUCRIVOIRE 912 6,150 Financial current account
SIPH Group – Condensed interim consolidated financial statements – Period from 1 January to 30 June 2012
31
26-2 TERMS OF GUARANTEES GIVEN OR RECEIVED
26-3-1 Shareholders’ agreement between the Compagnie Financière Michelin, SIFCA,
Parme Investissement and Immoriv
A shareholders’ agreement was signed on 18 July 2007, in the presence of SIPH, between the
partnership limited by shares Compagnie Financière Michelin (hereinafter "CFM"), the Ivorian
limited liability company SIFCA, the company incorporated under Ivorian law Parme
Investissement and the British Virgin Islands limited liability company Immoriv.
This agreement supersedes and replaces the shareholders’ agreement signed on 21 October 2006
between AIFH, CFM, SIFCA, Immoriv and Parme Investissement.
The pact forms part of the growth policy in natural rubber being pursued through the SIPH
company. The parties’ intention is to reorganise SIPH on both an operational and functional
level in order to confer on it and optimise the role of financial and trade holding company, leader
of the SIPH Group.
The parties have declared that they will not act in concert within the company SIPH.
On 18 July 2007, the parties to the agreement held 3,825,570 SIPH shares, representing 75.59%
of the capital and 84.26% of the voting rights of this company, apportioned as follows:
Company Shares % of capital Voting rights % of voting
rights
SIFCA 2,813,410 55.59% 562,682 71.41%
CFM 1,012,160 20.00% 101,216 12.85%
Total 3,825,570 75.59% 663,898 84.26%
Entry into force and duration of the agreement
The agreement came into force on the date it was signed, 18 July 2007, for a term ending on 30
March 2015.
Commitment to maintaining the level of participation
Parme Investissement and Immoriv, the principal shareholders of SIFCA, have undertaken to
maintain directly or indirectly, a holding of at least 51% of the voting rights of SIFCA, the latter
being obliged meanwhile, to maintain, directly or indirectly, an interest of at least 34% of the
voting rights of SIPH.
In case of non-compliance with these commitments, the agreement provides that CFM can:
exercise its full tag-along right,
terminate certain contracts in force between the entities of the Michelin Group and the SIPH
Group.
However, if such a change of control should lead to a standing market offer or a mandatory
public tender offer, the proportional and full tag-along rights will lapse.
SIPH Group – Condensed interim consolidated financial statements – Period from 1 January to 30 June 2012
32
CFM’s full tag-along right
If the commitments to maintain the level of participation of Parme Investissement and Immoriv,
on the one hand, and of SIFCA on the other are not respected, the agreement provides that CFM
can exercise its full tag-along right.
This full tag-along right will allow CFM to transfer to the assignee all the shares it holds at the
time when the planned disposal by SIFCA is announced.
Right of pre-emption
The signatories have granted each other the right of first refusal on the SIPH shares they hold.
Any transferring party shall give prior notice to the others of any planned transfer to a third party
or to any other shareholder.
The other parties have a period of twenty days from the date of such notification, to notify the
selling shareholder of their intent to exercise their right of first refusal. If this right of first
refusal is not exercised within this period, the proposed transfer may be made in favour of the
proposed transferee under the conditions provided for initially, within thirty days. Any third
party who becomes a shareholder of the company following an off-market transfer by one of the
parties shall, as a condition of validity of such assignment, grant the other parties the right of pre-
emption on the shares which are the subject of the assignment.
CFM’s proportional tag-along right
The agreement provides for a proportional tag-along clause through which SIFCA has pledged to
inform CFM of any proposed assignment. CFM will have a period of twenty days:
to exercise its right of pre-emption, or
to exercise its right to sell to the prospective transferee a number of shares proportional
to the number of shares sold by SIFCA.
If CFM exercises its co-sale rights, the transfer will be made on the date, at the price and under
the conditions specified in the notification sent by SIFCA, including in the event of contribution
transfer.
If the transferee refuses to acquire the securities held by CFM, SIFCA will not be able to proceed
with the proposed transfer, unless it buys the securities from CFM.
Clause relating to the management of SIPH
A clause has been stipulated relating to the composition and operation of SIPH’s Board of
Directors. This clause provides that the company shall be administered by a Board of Directors
composed of six directors, four of whom shall be appointed by SIFCA, and two by CFM. It is
anticipated that CFM would lose its right to be represented on the Board if its participation
should fall below 5% of SIPH’s capital.
SIPH Group – Condensed interim consolidated financial statements – Period from 1 January to 30 June 2012
33
It is provided that for SIPH to adopt certain important decisions, the Board of Directors will have
to act, on first call, by unanimity of those present.
Sanctions for failing to comply with the clause in the shareholders’ agreement relating to the
management of the company SIPH
If the clause in the shareholders’ agreement concerning the management of SIPH is not
respected, the agreement provides that CFM will be entitled to automatically terminate, without
any penalty on its part, certain contracts entered into between an entity from the SIPH Group and
an entity from the Michelin Group.
Sale of shares by SIFCA and its affiliates to an undesirable shareholder
“Undesirable shareholder” is understood by the agreement to mean any person:
having an activity that competes with that of CFM or of any other entity from the Michelin
Group, or demonstrably not respecting the ethics that CFM and the other entities in the
Michelin Group strive to respect particularly in terms of corporate governance, compliance
with professional standards and sustainable development, and,
being likely to hold more than 5% of the share capital and voting rights of the company
SIPH.
In the event that SIFCA and its affiliates were to contemplate selling any shares to an
"undesirable shareholder", CFM would be offered the right of first refusal on the shares sold and
the right of substitution. CFM should notify SIFCA of its intention to exercise its right of
substitution within three months of the end of the period of twenty days during which the pre-
emptive right may be exercised. Should CFM exercise its right of substitution, the transfer will
take place on the date, at the price and under the terms stated in the transfer proposal.
In the event that CFM does not exercise its right of first refusal, or its right of substitution within
the time delays specified, CFM will still have the option of benefitting from the right of pre-
emption with the other shareholders or from the right to terminate certain contracts in force with
the entities from the Michelin Group and the SIPH Group. The right to terminate must be
exploited within one month.
26-3-2 Commitment given by SIFCA in respect of the shares it holds in the share capital of
SIPH
1,562,580 shares in SIPH held by SIFCA have been pledged in favour of credit institutions in the
context of a bond issue subscribed by the latter.
SIPH Group – Condensed interim consolidated financial statements – Period from 1 January to 30 June 2012
34
NOTE 27 – COMMITMENTS GIVEN AND RECEIVED
27-1 COMMITMENTS GIVEN
A lock-up agreement between SICAV and Société Générale to the amount of €32,500, as
collateral for a deposit given by Société Générale in favour of the lessor of the offices occupied
by SIPH in Courbevoie.
Pledge in favour of Société Générale of the 7,979,310 shares held by SIPH in the share capital of
the company CAVALLA RUBBER CORPORATION Inc., as security for the loan of 8 million
Euros granted by the bank to SIPH. In the event of a transfer of ownership, SIPH will give
Société Générale a pledge on these shares to guarantee the repayment of all the amounts in
principal, the interest subject to be payable by SIPH to the Bank in respect of this loan.
Commitment in favour of Société Générale for the credit facility of 8 million Euros over a period
of 7 years for the acquisition of shares in the company CAVALLA RUBBER CORPORATION
subject to the payment of dividends to repay the maturities of the credit facility and subject to not
transferring, without the prior agreement of the Bank, the shareholdings that SIPH has in its
subsidiaries SAPH, GREL, and REN, without retaining at least 51% of their capital.
For the loan of 8 million Euros taken out with the Banque Palatine in 2011, SIPH is committed
to maintaining (i) the net corporate position at a level at least equivalent to 90% of that existing
on 31-12-10, (ii) a consolidated adjusted debt to consolidated cash flow ratio of less than or equal
to 2, and (iii) a ratio of consolidated adjusted debt to consolidated equity of less than or equal to
0.5.
For the loan of 7.5 million Euros taken out with Crédit Agricole in 2011, SIPH is committed to
maintaining (i) a ratio of consolidated net debt to EBITDA of less than 1, and (ii) a ratio of
consolidated net debt to consolidated equity of less than 0.7.
Commitment in favour of Theodoro GONZALES to pay all the costs and damages incurred by
DHL losing documents, although they are due to DELMAS if the guarantee is called. This
commitment ends on 7 May 2018.
Commitments given on forward contracts for rubber on 30 June 2012:
- EUR SWAP agreements covering 8,480 tons
- USD SWAP agreements covering 3,800 tons
SIPH Group – Condensed interim consolidated financial statements – Period from 1 January to 30 June 2012
35
27-2 COMMITMENTS RECEIVED
Guarantees of assets and liabilities granted to SIPH by Compagnie Financière Michelin in the
context of the asset contribution of shares from REN to SIPH:
Specific guarantee for the tax losses of the subsidiaries AREL, ORREL and WAREL
chargeable to future performance; these deficits came to about 1.6 million Euros on
1st January 2006. This guarantee is not subject to any time limit;
Specific guarantee on certain tax risks amounting to approximately 2.8 million Euros.
This guarantee is not subject to any time limit.
These guarantees have not been called into play during the first half of 2012.
Interest rate hedging (interest rate swap) issued by Société Générale following the setting up
of a loan for 8 million Euros (variable rate). The effective interest rate of this loan is 5.65%.
Interest rate hedging (rate cap) issued by Banque Palatine following the setting up in 2011 of
a loan for 8 million Euros (variable rate). The effective interest rate of this loan after hedging
is 3.2 % maximum.
Interest rate hedging (rate swap) issued by Crédit Agricole following the setting up in 2011 of
a loan for 7.5 million Euros (variable rate). The effective interest rate of this loan after
hedging is 3.99%.
Commitments received from SIPH’s subsidiaries on the SWAP hedging contracts, in parallel
with the commitments given:
- EUR SWAP agreements covering 8,480 tons
- USD SWAP agreements covering 3,800 tons
NOTE 28 – EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE
Nil
36
3. Statement from the manager responsible for the interim financial report
I hereby declare that, to the best of my knowledge, the condensed financial statements for the last six months, contained in Chapter 2 of this interim financial report have been prepared in accordance with the applicable accounting standards and give a true and fair view of the assets, financial position and results of the Company and of all the entities in the SIPH Group consolidation, and that the interim business report found in Chapter 1 of this interim financial report presents an accurate picture of the main events that have occurred during the first six months of the financial year, their impact on the financial statements, the principal transactions between related parties, as well as a description of the key risks and uncertainties for the remaining six months of the year. Done in Courbevoie, 31 August 2012
(Signature of B. Vignes)
Bertrand VIGNES
Chief Executive Officer
37
4. Statutory Auditors Report on the interim financial information
Mazars Deloitte & Associés
61, rue Henri Regnault 185, avenue Charles de Gaulle
92075 Paris la Défense Cedex 92524 Neuilly-sur-Seine Cedex
SOCIETE INTERNATIONALE DE PLANTATIONS D’HEVEAS
(S.I.P.H.)
Limited Company (Société Anonyme)
53, Rue du Capitaine Guynemer
92400 Courbevoie
__________
Statutory Auditors Report
on the interim financial information
Period from 1st January to 30 June 2012
_________
To the shareholders,
In fulfilment of the assignment entrusted to us by your Annual Shareholders’ Meeting and in
accordance with the requirements of Article L.451-1-2 III of the French Monetary and
Financial Code, we hereby report to you on:
the limited audit report on the condensed consolidated interim financial statements of
the company SOCIETE INTERNATIONALE DE PLANTATIONS D’HEVEAS
(S.I.P.H.), relating to the period from 1st January to 30 June 2012, which are attached
to this report;
the audit of the information given in the interim activity report.
These condensed consolidated interim financial statements have been prepared under the
responsibility of the Board of Directors. Our role is to report our conclusions on these
financial statements, based on our limited audit.
I. Conclusions on the financial statements
We have conducted our review in accordance with professional standards applicable in
France. A limited review consists primarily of meeting with the members of senior
management responsible for financial and accounting matters, and implementing analytical
procedures. These investigations are less extensive than those required for an audit carried
out in accordance with the standards of professional practice applicable in France.
Consequently, the assurance obtained through a limited review, that the financial statements
taken as a whole do not contain misstatements, is a moderate assurance, not as great as that
obtained through an audit.
38
SOCIETE INTERNATIONALE DE PLANTATIONS D’HEVEAS (S.I.P.H.) 2/3
On the basis of our limited audit, we have not identified any significant anomalies which
could call into question the compliance of the condensed consolidated interim financial
statements with IAS 34 – the IFRS Interim financial reporting standard as adopted by the
European Union.
Without qualifying the conclusions expressed above, we should like to draw your attention to
Notes 3 and 8 of the appendix to the condensed interim consolidated financial statements
regarding the valuation at fair value of the SIPH Group’s biological assets (rubber plantations)
in accordance with IAS 41 which recommends evaluating fixed biological assets on initial
recognition and at each closing date, according to the fair value method. These notes set out
the procedures for valuating biological assets at fair value:
Valuation of the plantations at fair value was updated on 30 June 2012 for the first
time at the interim closing, and was based on the areas and the agricultural business
plans, henceforth to be updated every quarter, as indicated in Note 3 of the Appendix.
The interim financial statements as at 30 June 2011 presented in comparison do not
include changes in fair value of the biological assets in relation to 31 December 2010
insofar as, until 2011, fair value calculations could only be carried out once a year, at
the year-end closure.
The valuation of the biological assets at fair value corresponds to the sum of the net
discounted cash flows expected from the agricultural programmes being run by the
subsidiaries. This valuation is based on estimates and parameters whose volatility
generates uncertainty about the future value of these assets. In particular, these
estimates concern the price of rubber, for which the assumptions made and the
sensitivity analyses for fair value of the plantations to these assumptions are indicated
in Note 8 of the Appendix. Given the volatility of these parameters, the fair value of
these biological assets is likely to undergo adjustments in subsequent years.
II. Specific checks
We have also verified the information given in the interim management report accompanying
the condensed interim consolidated financial statements subject of our limited review.
39
SOCIETE INTERNATIONALE DE PLANTATIONS D’HEVEAS (S.I.P.H.) 3/3
We are satisfied that this information is fairly stated and consistent with the condensed interim
consolidated financial statements.
Paris La Défense and Neuilly-sur-Seine, 31 August 2012
The Auditors
Mazars Deloitte & Associés
(Signature) (Signature)
Gaël LAMANT Thierry BILLAC