SIPEF : Half year results of the Sipef group per 30 June 2021 ( EN NL )

Regulated information within the meaning of the Royal Decree of 14 November 2007

Press release

Schoten, August 12, 2021

1. Interim management report

1.1.Group production 1.2.Markets

1.3.Consolidated income statement 1.4.Consolidated cash flow 1.5.Consolidated balance sheet 1.6.Prospects

2. Condensed half-yearly financial statements

2.1.Condensed half-yearly financial statements of the SIPEF group

1. Condensed consolidated balance sheet (see annex 1)
2. Condensed consolidated income statement (see annex 2)
3. Condensed consolidated statement of comprehensive income (see annex 2)
4. Condensed consolidated cash flow statement (see annex 3)
5. Condensed statement of changes in consolidated equity (see annex 4)
6. Segment information (see annex 5)
7. Sale PT Melania (see annex 6)

2.2.Notes

1. 1. General information
   2. Basis of preparation and accounting policies
   3. Updated use of accounting estimates and judgements
   4. Consolidation scope
   5. Income taxes
   6. Segment information
   7. Turnover
   8. Equity consolidation - share of results of associated companies and joint ventures
   9. Shareholders' equity
   10. Net financial assets/(liabilities)
   11. Financial instruments
   12. Business combinations, acquisitions and divestitures
   13. Related party transactions
   14. Important events
   15. Events after balance sheet date
   16. Risks
   17. Covid-19
2. Certification of responsible persons
3. Report of the statutory auditor

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Half-Year Results of the SIPEF group

as per 30 June 2021 (6m/21)

Good production and high prices lead to strong results, notwithstanding high levies

• • Total group production of palm oil increased by 18.0%, compared to the first half of last year, due to higher yields in favourable agronomic conditions.
  • The coronavirus continues to complicate the management of overseas companies, but without any significant impact on 2021 group production.
  • The SIPEF group will be able to exceed the predicted growth in annual palm oil production by more than 10%, barring exceptional weather effects.
  • The first semester in the palm oil market can be characterised as a very stable environment, with high prices averaging above USD 1 100 per tonne CIF Rotterdam.
  • SIPEF is confident of continued strong prices in the second half of 2021.
  • The recent easing of the system of government levies on palm oil supplies will further improve the profitability of Indonesian palm oil companies.
  • The recurring* operating result increased from KUSD 4 621 at the end of June 2020 to KUSD 50 129 at the end of June 2021.
  • The sale of PT Melania (rubber and tea operations), of which 40% was realised in May, has generated a cash flow of USD 19 million to date and a total capital gain, share of the Group, of KUSD 11 003.
  • The net result, share of the Group, including this capital gain, amounted to KUSD 43 519, compared to KUSD -712 at 30 June 2020.
  • With 75% of the expected palm oil production sold and the prospect of continued favourable market prices for palm oil, the Group's recurring annual results should be in the range of USD 60 - 70 million.
  • Net financial debt position will decrease further.
  • The expansion in South Sumatra is being pursued steadily, with 14 490 hectares already cultivated in Musi Rawas and 5 832 hectares replanted in Dendymarker.
  • The recently announced project to expand almost 80% of the banana production in Ivory Coast will start in the third quarter.
  • SIPEF is offering covid-19 vaccinations, free of charge, to all employees and their families in line with its ESG policies.
  • As an RSPO-compliant producer, SIPEF continues to supply certified, traceable sustainable palm oil to the European and Asian markets.
• Recurring results are exclusive of the capital gain of KUSD 11 640 (of which KUSD 11 003 share of the Group) related to the sale of PT Melania.

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1. Interim management report

1.1. Group production

Group production

2021 (in tonnes)	Own	Third	Q2/21	YoY%		Own	Third	YTD	YoY%
		parties					parties	Q2/21
Palm oil	82 312	17 707	100 019	19.30%	157 534	34 118	191 652	18.04%
Rubber*	741	67	808	-43.28%	2 236	219	2 455	-19.40%
Tea*	182	45	227	-66.02%	829	136	965	-34.71%
Bananas	7 204	0	7 204	0.76%	16 653	0	16 653	2.99%
2020 (in tonnes)	Own	Third	Q2/20			Own	Third	YTD
		parties					parties	Q2/20
Palm oil	67 752	16 083	83 835		130 894	31 474	162 368
Rubber	1 370	55	1 425		2 787	259	3 046
Tea	668	0	668		1 478	0	1 478
Bananas	7 150	0	7 150		16 169	0	16 169

*PT Melania tea and rubber productions have only been included for 4 months due to sale of PT Melania per 30/04.

The coronavirus continues to impose many business restrictions on SIPEF's overseas companies and complicate the management of the plantations and mills. Nevertheless, it has not had a substantial impact on the Group's production.

The Group's total palm oil production grew by 19.3% and 18.0% respectively, compared to the second quarter and the first half of last year.

In Indonesia, the exceptionally good start of the year, in agronomic and operational terms, continued in the second quarter. Thanks to the favourable impact of regular rainfall, the volumes of which approached or exceeded the long-term averages, yields per hectare increased. In all production centres, the volume of fruits harvested exceeded that of the second quarter of last year. As a result, for the whole of Indonesia's palm operations, including the increasing purchases from smallholders, fruit production exceeded that of the second quarter of 2020 by 13.5%, while that of the half-year increased by 13.0%.

Weather conditions in North Sumatra were conducive to palm growth and fruit development. As a result, for the first semester, the own production of both the mature plantations with mineral soil (+3.5%) and the UMW/TUM plantations with organic soil (+14.5%) increased. These latter plantations have meanwhile seen their yields rise again, thanks to the adjusted fertilisation programs.

In Bengkulu province, own fruit production for the first half of the year exceeded that of the same period in 2020 by 10.3%. Barring the effect of positive weather conditions, this growth is due to an increasing number of hectares coming into production after replanting in the second generation, with palms delivering higher yields per hectare.

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In South Sumatra, more than 7 000 hectares of young plantings are already in production, resulting in increasing yields (+117.1%). However, the replanting in Dendymarker was temporarily taking more mature hectares out of production, resulting in a 36.6% drop in this production, compared with the first six months of last year. The combined production of palm fruits in South Sumatra still increased by 52.9%.

Due to generally favourable average oil extraction rates (OER) compared with last year, palm oil production in Indonesia rose, including that from the increasing purchases from smallholders. This rise was 14.9% and 12.9% for the second quarter and six months respectively, compared with those for the same periods last year.

After a relatively 'dry' rainy season in the first quarter in Papua New Guinea, normalised precipitation volumes in the second quarter provided agronomically good conditions in the region. In particular, the plantings recovering from the 2019 ash fall experienced almost a doubling of their production, compared with the first half of last year. As a result, own plantations recorded an overall growth of 38.1% on a half-year basis. The harvested fruit volumes of smallholders, who were much less affected by the volcanic eruptions two years ago, increased by only 2.1%.

Due to favourable oil extraction rates at the three palm oil extraction mills, (OER of 25.5% on average versus 24.4% last year), the palm oil production of Hargy Oil Palms in Papua New Guinea increased by 26.6% versus the first half of 2020.

Despite higher precipitation volumes, rubber production in the Group decreased by 8.8%, compared with the first half of last year. The main reasons for this decrease were, besides the sale of PT Melania, for which the rubber productions have only been included until 30 April 2021, the delayed leaf formation after the wintering period, combined with the effects of the Pestalotiopsis fungus. In addition, the productive hectares decreased in preparation for the divestment in natural rubber and conversion to oil palm plantations.

Due to the sale of PT Melania, tea production has only been included until 30 April 2021. During these four months in the Cibuni tea plantation in West Java, the production limiting effect of an intensive pruning was felt in the first semester, compensated by purchases from third parties. Even so, total production decreased by 34.7%. After the sale of PT Melania, no more additional tea production will be included in the group productions of the SIPEF group.

In Ivory Coast, the banana production at Plantations J. Eglin increased by 3.0%, compared with the first half of last year. A limited impact of the colder Harmattan wind at the start of the year, combined with good production cycles, resulted in more bunches with a higher average weight and a consequently better volume for export to Europe and Africa.

1.2. Markets

Average market prices

In USD/tonne		YTD Q2/21		YTD Q2/20		YTD Q4/20
Palm oil	CIF Rotterdam*	1 116	649	715
Rubber	RSS3 FOB Singapore**	2 263	1 479	1 728
Bananas	CFR Europe***	641	671	628

* Oil World Price Data

** World Bank Commodity Price Data (updated database)

*** CIRAD Price Data (in EUR)

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