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1
SIPH
2012 YEARLY RESULTS
2
PRESENTATION
HIGHLIGHTS AND YEARLY RESULTS
STRATEGY AND OUTLOOK BY COUNTRY
MARKET DATA AND FINANCIAL CALENDAR
3
PRESENTATION
Plantation, harvesting, milling and commercialization of natural rubber for industrial use: 151,000 tons in 2012 Present in 4 countries: Ivory Coast, Ghana, Nigeria and Liberia 54,000 hectares of rubber tree plantations including 38,700 hectares of mature plantations 13,000 employees
Leading producer of natural rubber in Africa
4
PRESENTATION
Strong positioning in Africa
Ivory Coast: constant increase in external purchasing
from independent producers Own production: 35,000 tons – External purchasing: 73,000 tons No. 1 purchaser from independent producers, with a 30 to 40% market share in
Ivory Coast
Country with excellent potential and dynamic independent producers backed by SAPH and the Ivorian government: Ivory Coast is Africa’s top rubber producer
Social investment that began in 2012 and will continue in 2013
Adaptation of processes to produce specific grades despite the inconsistent quality of
rubber purchased Increase in the processing capacities of existing factories
5
PRESENTATION
Strong positioning in Africa
Ghana: potential output of 40,000 tons by 2020 and potential for further expansion
Own production: 11,000 tons – External purchasing: 8,000 tons
Active policy to renew aging plantations:
Acquisition of 4,000 hectares in 2012/2013. Objective to replant or expand crops by 1,200 hectares per year over the next 5 years
History of actively promoting local rubber production:
ROU project: Phase IV of the project will reach completion in 2013, with more than 22,000 hectares planted by more than 5,500 independent producers and successfully laying the solid foundations needed to proceed to Phase V Self-Financed project: 2,000 hectares planted
Gradual adaptation of milling capacities in 2012 and 2013
6
PRESENTATION
Strong positioning in Africa
Nigeria: in search of new lands Own production: 18,000 tons The planting of the new plots obtained 4 years ago will be completed this year resulting in a total of 13,000 hectares of planted land at the end of 2013 No external purchasing from independent producers
Liberia: potential for long-term development
5 ,023 hectares planted, including 4,084 hectares of old plantations and 939 hectares of young, immature plantations Training of teams in a persistently difficult environment Border complications in 2012 delayed the commissioning of the factory which has now been up and running since the start of 2013 An ambitious, lengthy and gradual extension program (concession of 35,000 hectares) which is nonetheless justified given its strong potential in the long term
7
PRESENTATION
Rubber trees produce latex: the raw material used in rubber Life span: 40 years Immature phase: 7 years Seasonal trend in production cycle: 40% in the first half 60% in the second half (winter lay up) At the end of their useful lives, rubber trees are cut down and replanted
Specific properties of rubber trees
8
PRESENTATION
HIGHLIGHTS AND YEARLY RESULTS
STRATEGY AND OUTLOOK BY COUNTRY
MARKET DATA AND FINANCIAL CALENDAR
Clear, strategic industrial challenges
HIGHLIGHTS
Acquire new land: current challenge Search for new land to extend existing plots (Ghana, Nigeria, Ivory Coast)
Development and enhanced use of existing concessions (Liberia)
Need to continue replanting to cement and strengthen our leading position
Define and implement a successful industrial strategy Increase processing capacities in Ghana and Ivory Coast
Adapt processes to improve characteristics of finished products to resolve inconsistent quality of raw rubber sourced from independent producers
Step up social agenda Infrastructures, renovations and housing
Ongoing policy to renew and expand: +3% increase in land in 3 years
Out of 54,000 hectares of rubber tree plantations, over 60% are less than 15 years’ old
HIGHLIGHTS
2012 2011 2010
UNDER PLANTATION 1,987 1,144 1,550
IMMATURE 13,030 12,516 11,547
MATURE < 15 years’ production 17,404 15,758 15,910
MATURE > 15 years’ production 21,209 23,054 23,112
TOTAL 53,630 52,472 52,119
% crops that have been in
production for less than 15 years 60% 56% 56%
Global natural rubber market
HIGHLIGHTS
Hampered by the current economic climate, growth in the global consumption of rubber slowed in 2012 (+0.2% to 10.6 million tons) after a steady increase of +3.6% per year over the last 10 years
Global supply slightly exceeded demand in 2012 (10.9 million tons)
Despite a more difficult market backdrop, SIPH nonetheless continued to
sell at satisfactory prices, with demand in Asia compensating for the slowdown in Europe
12
Low volatility in the first half of 2012 (3.49 US$/kg) before
the downturn from Q3 (2.75 US$). The average price in 2012 is down -24% on the average price in 2011
Price of rubber over the last 3 years
SICOM 20 (Singapore Commodities Exchange)
0,0
0,3
0,6
0,9
1,2
1,5
1,8
2,1
2,4
2,7
3,0
3,3
3,6
3,9
4,2
4,5
4,8
5,1
5,4
5,7
6,0
6,3
€/kg US $/kg
2.99 US$/kg
2.26 €/kg
2.92 US$/kg
2.04 €/kg
Average price in 2012:
2.45 €/kg
Average price in 2010:
2.55 €/kg
Average price in 20101:
3.24 €/kg
HIGHLIGHTS
Natural rubber
Synthetic rubber
14.5 Mt
13
In millions of tons and as a % Source: LMC Rubber survey Q4 2012
10.6 Mt
42%
Breakdown in global consumption
36%
31%
11% 10%
14%
Significant weight of emerging countries, particularly China and India. Slowdown in Europe despite a buoyant market
Breakdown in global consumption of natural/synthetic rubber
Breakdown in global consumption of natural rubber
China
Other Asia
Europe
Rest of World
North America
Consumption in China has risen from 25 to 36% in less than 10 years
HIGHLIGHTS
Summary of the highlights of the year
Robust growth in activity
Strong level of production with 151,000 tons
Acquisition of an additional 40% of CRC for US$9m
Higher investment levels in 2012 linked to the acquisition of new land, the intensification of planting and the adaptation of factories and social infrastructures (housing): €42m vs. €23m in 2011
Poorer market climate
Lower prices and a more morose market after the historic levels seen in 2011
New 5% tax on revenues in Ivory Coast: impact of €12.8m on production costs in 2012
HIGHLIGHTS
67.6 64.5 65.8 68
64.7 63.573.3 83
0
25
50
75
100
125
150
2009 2010 2011 2012
15
In thousands of tons
132. 3
128.0
External purchasing
Own production
A new record in production (+8.8%) linked to dynamic activity of independent producers
(55% of total production)
139.1
151.0
+13.2%
+3.9%
2012 YEARLY RESULTS
0,0
0,3
0,6
0,9
1,2
1,5
1,8
2,1
2,4
2,7
3,0
3,3
3,6
3,9
4,2
4,5
4,8
5,1
5,4
5,7
6,0
6,3
Prix vente trimestriel SIPh €/kg moyenne mobile 90jours €/kg
16
Time lag of approximately 3 months between trend and the point at which prices are set
SICOM 20 (Singapour Commodities Exchange)
U$/kg
€/kg
Moving average over 90 days (€/kg)
SIPH quarterly sales price (€/kg)
SIPH manages its volatility risk by selling its production in tandem with harvesting and purchases (square position)
2012 YEARLY RESULTS
17
Rubber revenues: €358.5 million
(in € millions)
295.4
403.0358.5
2010 2011 2012
Rubber revenues
Other revenues
318.0
422.3
2012 YEARLY RESULTS
419.4
Drop of 11.2%: volume effect (+8.64%) which partially compensates for the price effect
Average sales price of 2.45€/kg (down 18.1% on 2011)
Strong growth in other activities with lower margins
18
Rubber inventories: correction of accounting errors
2012 YEARLY RESULTS
Stricter application of IAS 41 & IAS 2 - Inventories of raw materials from plantations are now valued at their fair
value for the month of production (rather than at their fair value on the closing date as was previously the case). This is because the volatility of the market over the year means the closing price is an increasingly irrelevant yardstick
- Inventories of raw materials that are purchased are now valued at their cost price (rather than at their fair value on the closing date as was previously the case)
- Previously, the fair value of raw materials equated to the floor price paid to local producers in their respective countries: as competition increases, the gap between the floor price and the real cost price (premium) has widened
- Inventories of finished products are valued at their production cost (cost of
raw material + cost of transformation).
The application of these standards has no impact on cash flow
19
Impact of the new valuation methods for rubber inventories: correction of accounting errors
+€15.5m in equity in 2011 (profit + opening)
2012 YEARLY RESULTS
+ Correction of inventories in 2011 8, 125
+ Correction of inventories (opening 2011) 7,366
Restatement of equity after correction 15, 491
Restatement of equity in 2011
Net consolidated profit (published) 89,324
+ Correction of inventories 11,138
- Tax on correction of inventories 3,013 -
Correction of net profit for 2011 8,125
2011 profit after correction 97,449
2011 PROFIT
RUBBER INVENTORIES at 31/12/2012 after correction
Tons UP €/kg € thousands
2011 (after correction) 39, 802 2,005 79,786
2012 47,889 1,592 76,223
20
In € thousands 2012 2011 restated*
TOTAL IAS41 Before IAS41 TOTAL IAS41 Before IAS41
Rubber revenues 358,534 358,534 403,016 403,016
Total revenues 419,353 419,353 422,340 422,340
Cost of goods produced -294,316 -294,316 -252,572 252,572
Inventories -3,563 -3,501 -62 10,573 -10,032 20,606
Cost of goods sold -297,879 -3,501 -294,378 -241,999 -10,032 -231,966
Margin on direct costs 121,474 -3,501 124,975 180,342 -10,032 190,374
Application of IAS 41 to plantations -10,451 -10,451 -9,735 -9,735
Current operating profit 67,684 -13,952 81,637 131,766 -19,767 151,533
Operating profit 63,637 -13,952 77,589 132,047 -19,767 151,814
Cost of net debt -2,664 -2,664 1,157 1,157
Income tax expense -24,990 1,247 -26,237 -35,756 4,839 -40,595
NET PROFIT 35,983 97,449
GROUP NET PROFIT 20,308 64,593
Simplified consolidated profit & loss statement
2012 YEARLY RESULTS
*After correction of the valuation of inventories (IAS 41) – no impact on cash flow
No major discrepancy between the two financial years following the application of IAS 41 to plantations
The difference is linked to the increase in net agricultural investment
21
Simplified consolidated profit & loss statement by activity
2012 YEARLY RESULTS
2011 accounts restated to correct an error in the valuation of inventories (IAS 41) – no impact on cash flow
In € thousands
2012 2011
Total Rubber Other sales Total Rubber Other sales Change
(Rubber)
Revenues 419,353 358,534 60,819 422,340 403,016 19,324 -44,482
Cost of goods produced -294,316 -233,022 -61,294 -252,572 -232,998 -19,574
Inventories -3,563 -3,563 10,573 10,573
Cost of goods sold -297,879 -236,585 -61,294 -241,999 -222,425 -19,574 -14,160
Margin on direct costs 121,474 121,949 -475 180,341 180,591 -250 -58,642
Overheads -33,293 -33,293 -30,460 -30,460 -3,121
Depreciation and amortization -8,030 -8,030 -7,742 -7,742
Plantations: investments and JV -12,467 -12,467 -10,374 -10,374 -2,093
Current operating profit 67,684 68,159 -475 131,765 132,016 -250 -61,763
Capital gains/losses, Other income &
expenses -4,048 281 -4,329
Operating profit 63,637 132,047 -66,092
Cost of net debt -2,664 1,157 -3,821
Income tax expense -24,990 -35,756 10,766
NET PROFIT 35,983 97,449 -61,466
GROUP NET PROFIT 20,308 64,593
Liberia: project penalized by the country’s current economic backdrop
€4.2m depreciation in the goodwill of CRC
The acquisition of the additional 40% of CRC was carried out in order to allow for the development program planned by SIPH (extension of 35,000 hectares) The incidents in the east of Ivory Coast resulted in the closure of the border in 2012 (which has since been reopened), penalizing the CRC project and delaying the commissioning of the factory until the start of 2013 The development program was reviewed and updated to factor in these circumstances which in turn led to a €4.2m depreciation in the goodwill of CRC
2012 YEARLY RESULTS
2012 YEARLY RESULTS
Persistently strong cash flow (before tax) of €93m
WCR is positive: €8.7m vs. €-9.2m
Additional resource in the form of a €15.1m intragroup repayment (unbundling of clearing operations during the Ivory Coast crisis in 2011), booked to “Other cash flow linked to financing activities” Operating cash flow: €63.2m, largely sufficient to meet investment needs Free cash flow of €41.1m with a very active dividend payout policy in 2012: €70m paid to shareholders (€40.5m to group shareholders and €29.9m to minority interests) Positive net cash position of €2.3m
Cash
24
Cash flow statement In € million 31/12/2012 31/12/2011 31/12/2010
Cash flow 93.1 165.3 115.6
Taxes -38.5 -36.0 -9.0
Change in WCR 8.7 -9.2 -62.6
Total Cash Flow from Operating activities 63.2 120.0 44.0
Investments -41.9 -22.9 -18.6
Financial fixed assets -0.3 -0.5 -0.2
Change in scope, net of cash -6.9 - -4.4
Total Cash Flow from Investing activities -49.2 -23.3 -23.0
SIPH dividends -40.5 -27.8 -15.2
Minority dividends -29.9 -26.1 -8.7
Net LT debt -4.0 22.2 -2.4
Other cash flow linked to financing activities 23.9 -6.9 3.0
Total Cash Flow from Financing activities -51.4 -39.5 -23.8
Exchange rate effect -0.1 0.5 0.4
Net change in cash position -37.5 57.8 -2.4
Opening cash position 78.6 20.9 23.3
Closing cash position 41.1 78.6 20.8
2012 YEARLY RESULTS
Double the amount of investment in 2012 and an extremely active dividend policy Persistently positive and comfortable operating cash flow of €63m Positive change in WCR (€8.7m vs. €-9.2m) and a €15.1m intra-group repayment restated under “Other cash flow linked to financing activities”
25
Increase in investment to adapt tools and resources to the growth in production and external purchasing
2012 YEARLY RESULTS
Investment of €42m in 2012
Ivory Coast (€18m): refurbishment of factories, renewal of plantations (45%) and social investments (37%)
Ghana (€11m): acquisition of new land and planting, increase in factory capacities and infrastructures
Nigeria (€8m): extension of plantations, adaptation of processes, social infrastructures
Liberia (€5m): rehabilitation of plantations, reconstruction of infrastructures
An investment strategy that will continue in 2013 (€60m)
26
Simplified balance sheet
2012 YEARLY RESULTS
Impact of €15.4m on equity in 2011 after correction of accounting error linked to the valuation of inventories according to IAS 41 (no impact on cash flow) Net positive cash flow in 2012
In € million 31/12/2012 31/12/2011 31/12/2012 31/12/2011
Non-current assets 248.3 229.6 Shareholders’ equity 297.4 335.3
o/w Goodwill 17.5 21.3 LT financial debt 25.3 30.4
o/w Bio. assets 150.4 149.8 ST financial debt 18.6 5.1
Current assets 181.1 240.8 Non-current liabilities 36.1 42.4
o/w Inventories 85.8 91.1 Current liabilities 51.5 57.3
o/w Cash and 46.2 79.2 cash equivalents
ASSETS 429.5 470.4 LIABILITIES 429.5 470.4
27
Review of financial year 2012
Strong performance despite an unfavorable economic backdrop – Positive bottom line and cash flow of €63.2m
Robust financials that give SIPH the structural backing needed to pursue its investments
Leading position on a structurally buoyant market
Proposed dividend of €20.2m (€4.00/share)
Events after the close of FY 2012 - 2013 Finance Act: VAT on the acquisition of goods and services for companies that generate more than 30% of their sales by export which SIPH will have to pay and then recuperate from the Ivorian government (mobilization of WCR of €10m)
2012 YEARLY RESULTS
28
PRESENTATION
HIGHLIGHTS AND YEARLY RESULTS
STRATEGY AND OUTLOOK BY COUNTRY
BOURSE ET CALENDRIER
• Chairman of the Board of Directors: Pierre Billon In replacement of Jean Louis Billon who accepted the appointment of Minister of
Commerce, Craft and SME Promotion for Ivory Coast.
• Chief Executive Officer: Bertrand Vignes
• Corporate Secretary: Frédérique Varennes
• Olivier de Saint Seine has resigned from his role as Co-Chief Executive Officer
Governance at SIPH: change & continuity
GOVERNANCE
A solid group backed by longstanding and specialist shareholders
SIFCA : 55 % Leading operator in the agro-industry in West Africa Michelin : 20%
Long-term industrial partner Historic backing in the form of a technical assistance
partnership which is evolving
STRATEGY
Technical Assistance Partnership
Upcoming amendment to the Technical Assistance contract with Michelin
From the transfer of know-how and expertise (phase 1: 2007-2011) …
SIPH benefits from the extensive know-how and expertise of the Michelin Group thanks to a technical assistance partnership that extends to:
The supervision of the operational management of SIPH plantations (SIPH subsidiaries)
Agronomic and industrial technical assistance
Research & Innovation
Financing for external development
…to a lighter framework in 2012 as part of a long-term industrial partnership
Ongoing technical assistance (factory and fields)
Research & Innovation
STRATEGY
Group takeover of the key functions previously entrusted to Michelin
Operational management of subsidiaries
Coordination of technical expertise division
Experts on secondment
Follow-up of tools (consolidation, internal reporting)
Creation and development of certain functions backed by SIFCA resources:
Safety of goods and people, sustainable development…
Legal and tax assistance, support for external developments
Gradual increase in the role of SIFCA in the future development of SIPH
STRATEGY
33
A new global production target: 160,000 tons
STRATEGY AND OUTLOOK BY COUNTRY
In thousands of
tons
64.5 65.8 68
63.5 73.3 83
0255075
100125150
2010 2011 2012 2013
128
External purchasing
Own production
139.1 151.0
A policy of replantation and expansion that continues to bear fruit
An external purchasing policy that varies according to market climate
External purchases estimated at 57% in 2013
160.0
STRATEGY AND OUTLOOK BY COUNTRY
With an estimated budget of €60m, SIPH investments are set to accelerate in 2013, particularly the level of investment set aside to adapt the Group’s industrial resources
Solid financials to enable these investments. Leverage provided by the relatively unused credit facilities available to SIPH (in particular for SAPH and GREL)
Investments in 2013
35
Structural growth drivers are still strong
Sustained demand in emerging countries and in particular in Asia despite the slight downturn in global consumption in 2012
Natural rubber is difficult to replace by synthetic rubber
Inertia in global production (new plantations cannot be rushed – immaturity period of 7 years is unavoidable)
STRATEGY AND OUTLOOK BY COUNTRY
36
Ivory Coast: 1st geographic cornerstone
Increase the global volume of activity and keep our position as the leading buyer in Ivory Coast whilst maintaining our margins
Continue to support the development of independent producers
Investment challenges:
Step up industrial production to accommodate the
increase in volumes
Implement processes to manage the inconsistent quality of rubber as external purchases continue to increase
Clear long-term growth potential in all countries in which SIPH has plantations
STRATEGY AND OUTLOOK BY COUNTRY
37
Ghana : potential of 40,000 tons in 2020
Continue to support village farmers in Ghana
Continue to invest: expansion and replanting program
Adjust milling capacity to cope with the increase in volume
Nigeria : own production of 27,000 tons in 2020
Pursue policy of finding new land
Begin development of independent rubber producers
Liberia : strong potential of 35,000 hectare concession
Long and gradual investment in the new concession in tranches of 500 to 1,000 hectares per year
Ongoing training of teams
STRATEGY AND OUTLOOK BY COUNTRY
Clear long-term growth potential in all countries in which SIPH has plantations
38
Global production of 300,000 tons Over 10 years
Own production estimated at 100,000 tons (vs. 68,000 in 2012) Strong dynamism of independent producers in Ivory Coast and Ghana will increase external purchases to 200,000 tons over 10 years (vs. 73,000 in 2012)
STRATEGY AND OUTLOOK BY COUNTRY
0
50 000
100 000
150 000
200 000
250 000
300 000
350 000
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Total production TONS
Purchases
Own production
300,000 Tons
200,000 Tons
100,000 tons
39
PRESENTATION
HIGHLIGHTS AND YEARLY RESULTS
STRATEGY AND OUTLOOK BY COUNTRY
MARKET DATA AND FINANCIAL CALENDAR
40
SIPH share price from 02/01/2012 to 31/03/2013
MARKET DATA AND FINANCIAL CALENDAR
41
Euronext compartment B
ISIN Code: FR0000036857
5,060,790 shares
Market capitalization: €307.29m on April 22, 2013
Breakdown in capital
SIFCA
Float
55.6 %
20.0 % 24.4 %
MARKET DATA AND FINANCIAL CALENDAR
Financial Calendar
Q1 revenues May 15, 2013
Half-yearly revenues August 14, 2013
Half-yearly results August 30, 2013
Q3 revenues November 15, 2013
Michelin