3047=sipef 02=cover fr1)eng.pdf · net result, share of the group, up by 142%. net financial debt...

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Annual report 2004 SIPEF

2

Key f igures

Key figures (IN K€)

Palm oil production (in tonnes) Equity (in K€)

ACTIVITY

PRODUCTION (IN TONNES)

Palm oil

Rubber

Tea

AVERAGE MARKET PRICE (USD/TONNE)

Palm oil

Rubber

Tea

RESULTS

Turnover

Operating result

Share of the Group in the result

Earnings (1)

Operating cash flow (2)

Free cash flow (3)

BALANCE

Investments in intangible and tangible assest

Fixed assets

Equity

Net financial debt

2004

256,091

12,465

6,530

471

1,304

1,160

139,080

26,410

14,841

12,995

9,356

20,175

12,006

75,563

57,825

23,673

2003

234,430

10,934

6,925

443

1,083

1,070

127,018

19,774

6,145

8,147

-463

-6,670

11,319

95,547

33,916

64,919

2002

219,542

10,743

6,238

390

765

1,130

114,265

18,484

6,021

7,106

6,090

6,738

11,357

70,363

28,897

50,355

2001

204,161

10,039

6,759

286

575

1,080

91,619

4,575

-1,885

-495

-7,914

-6,182

13,154

68,813

28,605

56,122

2000

205,884

9,489

6,746

310

667

1,270

104,578

11,040

1,379

2,567

-15,678

-12,368

13,916

65,749

31,886

49,575

SIPEF Annual report 2004

3

Key f igures

Share price SIPEF vs Bel 20 index

Share price SIPEF vs palm oil price

DATA PER SHARE (IN €)

Number of shares

Equity

Net result, share of the Group (4)

Earnings (4)

Operating cash flow (4)

Free cash flow (4)

STOCK EXCHANGE SHARE PRICE (IN €)

Maximum

Minimum

Closing 31/12

Stock Exchange capitalization at 31/12 (in K€)

RATIO’S

Debt ratio Net financial debt

Equity

P/E Share price as per 31/12

Earnings(1)

(1) Earnings = share of the Group in the net current result, adjusted by the 'Amounts written off positive consolidation differences' (heading V.B.), by the 'Adjustments of income taxes' (heading XI.B.) and by the Director's Fees paid by S.A. SIPEF N.V.

(2) Cash flow after capital expenditure in intangible and tangible assets.

(3) Cash flow after sale and acquisition of assets.

(4) Denominator 2004 = weighted average number of shares issued (786,626 shares).

2004

865,196

66.83

18.87

16.52

11.89

25.65

136.00

108.55

124.70

98,092

40.94%

7.55

2003

708,054

47.90

8.68

11.51

-0.65

-9.42

135.00

92.00

130.00

92,047

191.41%

11.30

2002

708,054

40.81

8.50

10.04

8.60

9.52

99.00

62.00

96.00

67,973

174.26%

9.57

2001

708,054

40.40

-2.66

-0.70

-11.18

-8.73

82.50

50.00

67.95

48,112

196.19%

n.s.

2000

708,054

45.03

1.95

3.62

-22.14

-17.47

94.99

64.01

64,01

45,320

155.48%

17.66

S I P E FS O C I E T E A N O N Y M E

Reports of the Board of Directors and of the Statutory Auditor

to be submitted at the 86th Ordinary General Meeting to be held on the 8 June 2005

Financial year 2004


5Left:Impression of our activities in Indonesia – P.T. TOLAN TIGA

The periodical and occasional information relating to the Company and to the Group are communicated as

follows:

- the results of the first semester will be published on September 8, 2005 and the results of the financial

year on March 2, 2006. Together with these figures you will find the comments on the activities of the

Group;

- the production figures of the Group are communicated per trimester;

- in accordance with the legal regulations all important data that could influence in one way or another

the results of the Company and of the Group will be subject to a separate press release.

The next Annual Meeting of Shareholders will be held on June 14, 2006 at 15.00 hrs.

Responsible for the financial information

Michael A. St. Clair-George

François Van Hoydonck

Phone 32 (0)3 641 97 00

Fax 32 (0)3 646 57 05

e-mail: [email protected]

Registered office

Lange Nieuwstraat 17

2000 Antwerpen

Offices

Kasteel Calesberg

2900 Schoten

Phone 32 (0)3 641 97 00

Fax 32 (0)3 646 57 05

e-mail: [email protected]

Register Legal Persons Antwerpen

V.A.T. BE-0404.491.285

www.sipef.be

Financial calendar and addresses


6

Financial calendar

and addresses

Key figures 2-3

Financial calendar and addresses 6

Contents 7

Key events affecting the SIPEF Group in 2004 8

History 8

Principal activities 9

Corporate policies 9

Directors, auditors and management 10

Organisation chart 11

Corporate governance 12

Chairman's message 16

Activity report - by product 19

- by country 25

Analysis of operating result 33

Group production 34

Group planted area 35

Palm Oil 37

Consolidated accounts 43

Consolidated cash flow statement 48

Notes to the consolidated accounts 49

Report of the Statutory Auditor on the consolidated accounts 67

Statutory accounts 69

Notes to the statutory accounts 74

Social report 82

Participating interests 84

Report of the Statutory Auditor on the statutory accounts 86

Complementary information 87

Contents


7

Contents

January/December 2004

Palm oil and rubber production and prices

increase.

Operating results rise by 33%.

Net result, share of the Group, up by 142%.

Net financial debt reduced by € 41 million.

June 2004

Successful rights issue for € 16.5 million at € 105

per share.

August 2004

Sale of one of our buildings in the U.S.A.

September 2004

Sale of Medan Office (Indonesia) and of P.T. TANAH

ABANG.

December 2004

Disposal of 38% of the shares in SIPEF-CI S.A.

Société Internationale de Plantations et de Finance

was incorporated in 1919 with the principal aims of

promoting and managing plantation companies

which would operate in both tropical and sub-tropical

areas. At that time the company had two "agencies"

one operating in Kuala Lumpur, Malaysia, the other

in Medan, Indonesia.

Since then the Company has developed into an agro-

industrial group of established plantations with

processing and shipping facilities in Asia and

Oceania, Africa and South America. In addition S.A.

SIPEF N.V. provides management, marketing and

consultancy services in the agro-industry.

A programme of diversification was started in the

1970's when, in addition to the traditional crops of

rubber, oil palm and tea, other crops such as

bananas, pineapples, ornamental plants, guava and

pepper were introduced. These products are

marketed by the Group worldwide. Currently the

estates extend to some 64,000 planted hectares.

An insurance business, originating from our

involvement in commodities and their shipping, has

been extended and now includes a wide range of

insurance services. Investments in real estate have

been made in Belgium and the United States of

America, although agro-industry remains our core

business.

Key events affecting the SIPEF Group

History


8

Key events affecting

the SIPEF Group -

History

S.A. SIPEF N.V. is a Belgian agro-industrial company

quoted on the Brussels Euronext Stock Exchange.

The company mainly holds majority stakes in

tropical plantation businesses, which it manages and

operates.

The Group is geographically diversified and produces

various commodities, principally palm oil.

Its investments are largely long-term ventures in

developing countries.

Principal Activities

Management

S.A. SIPEF N.V. aims to play a decisive role in the

management of the companies in which it holds a

majority stake or which it controls with other

partners. This involves playing an active part on the

boards of directors of these subsidiaries, as well as

supervising the management and operations of the

companies concerned.

Customers

Every effort is made to meet the needs of our

customers so that goods and services of the very best

quality are delivered to them on time.

Employees

In order to improve the quality of management of

our plantations a particular effort is made to pass on

agronomic expertise and management know-how to

the nationals.

A group training center was established in Indonesia

several years ago. Training manuals set out the

Group's agricultural, engineering and general

policies and how they should be attained.

We seek to make sure that all employees work in a

safe and healthy environment.

Environment

The Group recognizes that, in addition to its

statutory and commercial obligations, it has a

responsibility to the communities and environment

in which it operates.

The Group is committed to safeguarding the

environment by maintaining sound and sustainable

agricultural policies. These include a "zero-burn"

policy, integrated pest management, the treatment of

effluent and the utilisation of biomass.

Corporate policies


9

Principal Activit ies -

Corporate policies

Board of Directors

Baron BRACHT Chairman and General Manager

Michael A. ST. CLAIR-GEORGE Managing Director

Luc BERTRAND Director

Priscilla BRACHT Director

Eric DEMOLE(*) Director

Bernard de GERLACHE de GOMERY Director

Count Henry le GRELLE Director

Regnier HAEGELSTEEN Director

Richard ROBINOW Director

(*) until 19 November 2004

Statutory Auditor

DELOITTE & TOUCHE Réviseurs d'entreprises SC s.f.d. SCRL Auditors

represented by

Jos VLAMINCKX

Philip MAEYAERT

Management

Baron BRACHT Chairman and General Manager

Michael A. ST. CLAIR-GEORGE Managing Director

Didier CRUYSMANS Manager Africa and South America

Bertrand de DECKER Manager Asia and Oceania

Thomas HILDENBRAND Manager Marketing Fruits/Various

Paul NELLENS Manager Marketing Commodities

François VAN HOYDONCK Chief Financial Officer

Directors, Auditors andManagement


10

Directors, Auditors and

Management

Organisation chart


11

Organisation chart

Controlling interests

Beneficial interests

INSURANCE AMERICA INDONESIA AFRICA EUROPE FAR EAST

50% 50%

ASCO N.V.

ASCO LEVEN N.V.

B.D.M. N.V.

25% 25%

50% 50%

BRUNS TEN BRINK B.V.

50% 50%

A.I.S. N.V.

40% 40%

97% 97%

SENOR LTD

BONAL S.A.

70% 70%

FRANKLIN FALLS TIMBER CY, INC

100% 100%

90% 90%

P.T. EASTERN SUMATRA

P.T. TIMBANG DELI

P.T. BANDAR SUMATRA

90% 90%

90% 90%

P.T. KERASAAN

54% 54%

P.T. TOLAN TIGA

90% 90%

P.T. AGRO MUKO

40% 37%

P.T. MELANIA

90% 70%

SIPEF-CI S.A.

SOGRAKIN SCARL

32% 32%

50% 50%

SIPEF GUINEE S.A.

84% 84%

CAVALLA RUBBER CORP.

80% 80%

C.K.E. SCARL

81% 81%

PLANT. J. EGLIN S.A.

100% 100%

AGRIDUS N.V.

JABELMALUX S.A.

86% 86%

77% 77%

SOUTH EAST ASIA HOLDINGS N.V.

81% 62%

100% 100%

HARGY OIL PALMS LTD

GALLEY REACH HOLDINGS LTD

SIPEF PACIFIC TIMBERSPTY LTD

100% 100%

75% 75%

PHU BEN TEA CY

100% 62%

S.A. SIPEF N.V.

The role of S.A. SIPEF N.V. in relationto its subsidiaries

S.A. SIPEF N.V. plays a decisive role in the

management of the companies in which it holds a

majority stake or which it controls with other

partners. This involves playing an active part on the

boards of directors of these subsidiaries, as well as

supervising the management and operation of the

companies concerned. S.A. SIPEF N.V. makes a

particular effort to pass on agronomic and

management know-how to local managements.

Management and control bodies

The Board of Directors lays down the strategy for the

Group, approves the investments, supervises the

management and makes recommendations to the

General Meeting concerning the annual accounts

and the dividend policy.

Day-to-day management is carried out by the

Chairman General Manager, Baron Bracht, and by

the Managing Director, Michael A. St. Clair-George,

in conjunction with the Management Committee

with whom they meet once a week.

External auditing of the consolidated and statutory

accounts is carried out by the statutory auditor,

Deloitte & Touche Réviseurs d'Entreprises SC s.f.d.

SCRL, represented by Jos Vlaminckx and Philip

Maeyaert.

The statutory auditor has a meeting with the Board of

Directors once a year. The statutory auditor received

fees totalling K€ 48 in 2004. The company also paid

an amount of K€ 15 for legal and taxation matters to

a company associated professionally with the

statutory auditor.

Board of directors

The Board of Directors is made up of nine members.

Term of officeexpiring in

Baron Bracht 2006

Chairman

Michael A. St. Clair-George 2010

Managing Director

Luc Bertrand 2008

Director

Priscilla Bracht 2010

Director

Eric Demole 2008

Director

Bernard de Gerlache de Gomery 2008

Director

Count Henry le Grelle 2007

Director

Regnier Haegelsteen 2005

Director

Richard Robinow 2007

Director

At the coming AGM, the term of office to expire is

that of Regnier Haegelsteen. The Board of Directors

proposes to renew the appointment of Regnier

Haegelsteen for a further period of six years,

expiring at the end of the AGM in 2011.

At the board meeting of the 19th November 2004,

Eric Demole expressed, for personal reasons, its

willingness to retire from the Board. We thank Eric

Demole for the many years of excellent cooperation.

Corporate governance


12

Corporate Governance

The Board of Directors proposes to appoint Jacques Delen as

Director to fulfil the mandate up to the AGM in 2008.

Composition

The composition of the Board of Directors is

determined in accordance with the legal provisions;

its members are appointed by the General Meeting

of Shareholders, on the unanimous proposal of the

Board of Directors. The directors are appointed for a

period of six years, and the statutory auditor for a

period of three years.

Directors bearing offices in other Belgian companies

listed on the stock exchange are as follows:

Luc Bertrand: Ackermans & van Haaren, Agridec,

Atenor Group, Solvus, Leasinvest Real Estate and Virgin Express;

Bernard de Gerlache de Gomery: Floridienne, Leasinvest Real

Estate and Texaf;

Regnier Haegelsteen: Atenor Group and Fountain Industries

Europe.

The Board of Directors is made up of seven non-executive

directors and two executive directors. The latter are Baron Bracht

and Michael A. St. Clair-George, who participate in the day-to-day

management of the company. Bernard de Gerlache

de Gomery, Regnier Haegelsteen and Richard

Robinow act as independent directors.

The non-independent directors Baron Bracht,

Priscilla Bracht and Count Henry le Grelle represent

the Bracht families; Luc Bertrand and Jacques Delen

represent Ackermans & van Haaren.

Ackermans & van Haaren and Baron Bracht have

disclosed that they hold more than 5% of the shares

in S.A. SIPEF N.V. Michael A. St. Clair-George holds

the position of Managing Director and does not represent a major

shareholder.

Baron Bracht, Michael A. St. Clair-George, Luc Bertrand, Priscilla Bracht, Eric Demole, Bernard de Gerlache de Gomery, Graaf Henry le Grelle,Regnier Haegelsteen,Richard Robinow


13


Meetings

The number of meetings is not laid down by the

Articles of Association, but varies according to

requirements and the importance of the decisions to

be taken. The Board has met 5 times in 2004.

The agenda for the meetings is sent to the directors at

least 7 days in advance, together with information

such as operational reports, business plans, financial

reports and studies on new investments, etc.

Board decisions are taken by consensus. If for any

particular reason a consensus is not possible, the

decision is taken by a majority of votes. Thanks to the

limited number of members, it is possible for

decisions to be taken rapidly and efficiently.

Remuneration

Directors do not receive any remuneration, except for

a fee related to the dividend distribution. The fee

permitted under the articles is up to 10% of the

dividend distribution including the fee. In practice

the fee has been limited to 5%. No fee is payable in

the event there is no dividend.

No credits or advances are granted to directors or

personnel. The executive directors receive a monthly

emolument plus benefits in kind.

Management Committee

Day-to-day management is carried out by the

Chairman General Manager, Baron Bracht, and the

Managing Director, Michael A. St. Clair-George.

These persons also preside over the weekly

Management Committee meetings, attended by the

following members:

Didier Cruysmans

Manager Africa and South America

Bertrand de Decker

Manager Asia and Oceania

Thomas Hildenbrand

Manager Marketing Fruits/Various

Paul Nellens

Manager Marketing Commodities

François Van Hoydonck

Chief Financial Officer

In accordance with policies approved by the Board of

Directors, the Committee reviews operations

worldwide through business plans, estimates and

monthly or weekly reports on operations, production,

monthly financial and cash flow performance. In the

presence of the senior marketing executives, part of

every meeting is devoted to reviewing and

monitoring sales strategies for the Group's products.

The emoluments of the Chairman, the Managing

Director and the five members of the Management

Committee, including the benefits in kind and

bonuses, amounted to K€ 1,825 in 2004.


14


Age limit

An age limit for directors is not mentioned

specifically in the Articles of Association, but is set by

consensus at 70 years. The age limit for members of

the management is set at 65 years.

Dividend strategy

The cash-flow is used to internally finance the

expansion of our activities, while pursuing a policy of

dividends to the extent that the financial situation of

the Group permits.

Shareholders

Note 7 annexed to the company accounts states that

three shareholders have disclosed a holding of more

than 5%. The company does not have any knowledge

of agreements between shareholders or of the

existence of groupings of shareholders or directors.

Protection against insider trading ofthe SIPEF Group

The directors, members of management and

personnel are urged to obtain the advice of the Chief

Financial Officer concerning the possible existence of

non-public stock exchange information before

considering the purchase or sale of shares of S.A.

SIPEF N.V.

Stock option plan

28,000 warrants were issued in 1999 under the S.A.

SIPEF N.V. stock option plan. These warrants give

entitlement to the same number of S.A. SIPEF N.V.

shares which will be issued under the form of a

capital increase within the limits of the authorised

capital. After prolongation, this programme runs for

13 years, in accordance with the law of 26 March 1999

introducing a new tax regime for warrants. The

participants are the directors, managers and

employees, together with certain key executives of our

operating subsidiaries.

A second stock option plan was introduced in 2002,

which is also in accordance with the law of 26 March

1999 and runs, after prolongation, till 2015.

14,170 warrants were issued giving entitlement to the

same number of shares of S.A. SIPEF N.V. The

participants of this plan are the members of the

Board and the Managers of the company.

For both stock option plans, the Board members hold

9,335 warrants and the Managers hold 14,070

warrants.

The current total number of warrants issued but not

exercised amounts to 33,845.

Proposed appropriation of profits

The profit for the year of the company is K€ 7,909 to

which is added an amount brought forward of

K€ 5,003 making the total profit available K€ 12,912.

We propose to transfer K€ 396 to legal reserve and to

carry a balance of K€ 9,784 over to the next financial

year and to distribute K€ 2,732, by the payment of

Directors' fees for K€ 137 and K€ 2,595 as dividend to

shareholders. We propose to pay as from 6th July

2005 an amount of € 3 gross, being € 2.25 net and

€ 2.55 for the holders of scripts, against remittance of

coupon 51 at the offices of Bank Degroof, Bank

Delen, Dexia Bank, Fortis Bank, ING Bank and KBC

Bank and at the administrative office of the company.


15


It is my pleasure to present to you our

annual report with the accounts of the

company and the consolidated

accounts of the Group ended

December 31st 2004.

The capital increase that was effected in June 2004

has been fully subscribed and I wish to thank our

shareholders who have been loyal to our company

and have participated in this injection of funds.

157,142 new shares have been issued, bringing the

total to 865,196.

Our indebtedness, which at the end of 2003 had

reached € 64.9 million, has been reduced to € 23.7

million at the end of 2004.

In conjunction with the funds from the capital

increase, we sold some "non-core" assets which

included the offices of P.T. TOLAN TIGA, situated in

the centre of Medan, for € 2.47 million, the rubber

estate of P.T. TANAH ABANG for € 2.5 million and

the Great View building in the United States for € 2.8

million.

Finally, on December 17th 2004, an agreement was

concluded with the Ivorian group, United Oil

Company, for the sale of 38% of our subsidiary SIPEF-

CI S.A. for € 2.44 million. This amount will be

collected in accordance with palm oil delivered by

SIPEF-CI S.A. to U.O.C.

This sale has allowed us to proportionally

deconsolidate SIPEF-CI S.A. in our books and to

reduce our assets by an amount of € 11.7 million and

the indebtedness of the Group by € 5.9 million.

The sale of these assets and the excellent prices of what

I call "our" raw materials, has turned 2004 into a

remarkable year. The net result, share of the Group,

has improved to € 14.8 million, or € 18.87 per share,

compared to € 6.1 million and € 8.68 respectively in

2003.

In 2004 the palm oil market underwent strong

fluctuations reaching USD 575 CIF Rotterdam in the

first trimester and ending the year at USD 400.

Rubber, on the other hand, remained strong

throughout the whole period and will certainly

continue to be so in 2005. Tea experienced no major

movement. In our own company, however, an increase

of price was obtained for our Indonesian and

Vietnamese productions.

Chairman's message


16

Chairman's message

Inauguration of our newoil terminal in TelukBayur at Padang op

12-12-2004.

Chairman Baron Brachtwith Mr. MatthewAdams, President

Director of ourIndonesian companies.

Again, China has been the main operator on the

vegetable oil and natural rubber markets. The

general feeling is that the explosion of their needs will

continue to support the prices of commodities for

several years.

On the technical level, in 2004 we have nearly

completed the expansion and modernisation of the

Cibuni tea factory resulting in a marked

improvement in the quality of the tea produced.

In Vietnam, the rehabilitation work on the Doan

Hung factory has been finalised.

The oil terminal situated in Padang to store palm oil

from P.T. AGRO MUKO was inaugurated in

December 2004. Two of the four tanks have been let

to Cargill, a very important vegetable oil exporter.

In 2005, on top of our usual annual investments, our

program foresees new plantings of more than 1,200

hectares and the installation of two new boilers in

Papua New Guinea. The total amount of these

projects is estimated at € 9.4 million.

I draw your attention to the fact that our interim

balance sheet at the end of June 2005 will be drawn

up on the basis of the new accounting standard IAS

41 (International Accounting Standards). This

regulation compels us to implement additional and

expensive work such as the valuation of our assets.

Our accounting services have already prepared the

necessary foundation to effect these changes.

The Management has also prepared the necessary

steps to introduce the new rules of "Corporate

Governance". In this annual report you will find

further information on this subject.

I wish to thank my colleagues working in Europe as

well as in overseas countries for their efforts and the

quality of work they have delivered in the course of

the past year.


17

Chairman's message

Baron Bracht

Chairman

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