INTERIM FINANCIAL REPORT AS AT 30 JUNE 2012siph.wipiv.com/sites/default/files/documents_pdf... ·...

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.

3

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

4

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


5

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


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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


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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


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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.


9

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.


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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:


11

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.


12

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.


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 30 June 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 30 June 2012 1.258



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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


15

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.


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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.


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


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


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.


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


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.


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


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


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:


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*


Interest 21 1

.Crédit Agricole 3.99% Fixed*


Interest 1 17

REN

.Zenith bank 7.50% Fixed


Interest - -

SAPH

. BICICI 7.50% Fixed

Principal - 287

Interest - 0

GREL

.Ghanaian

government 2.50% Fixed


Interest 17 18

Total 32,742 33,597

* fixed rate after hedging


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%


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.


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.


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


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.


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


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


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.


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.


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.


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


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

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