PART 1 - COMPANY REPORT
Annual
Report
2021
The connection to the world
of sustainable tropical agriculture
100%
all the criteria for processing
RSPO certified oil palm products
have been met
RSPO-compliant
certificates
31
granted to the operational
units of the Group
employees (FTE)
21 233
work on the plantations and
in related processing facilities
2017
2018
2019
2020
2021
CASH FLOW FROM
OPERATING
ACTIVITIES*
KASSTROOM UIT
BEDRIJFSACTIVITEITEN
NA BELASTINGEN
(IN KUSD) (IN KUSD) (IN KUSD) (IN EUR)
GROSS
DIVIDEND
NET
FINANCIAL
DEBT
SHAREHOLDER'S
EQUITY
SHARE OF THE GROUP
119 853
36 221
33 988
73 262
160 312
2017
2018
2019
2020
2021
83 697
121 443
164 623
151 165
49 192
2017
2018
2019
2020
2021
634 636
644 509
628 686
638 688
727 329
2017
2018
2019
2020
2021
1.60
0.55
0
0.35
2.00
* As from 2021, the financing of plasma advances has been included under investing activities
instead of operating activities. The prior year figures have been restated accordingly.
50 000
100 000
150 000
200 000
50 000
100 000
150 000
200 000
200 000
100 000
400 000
500 000
300 000
600 000
700 000
800 000
0,5
1,0
1,5
2,0
Key
figures
384 178 tonnes
Produced palm oil
in 2021
1 195 USD/tonne (CIF)
Average world market price of palm oil
in 2021
169 218 KUSD
Gross profit
in 2021
2017
2018
2019
2020
2021
TOTAL
PLANTED
HECTARAGE
(IN HA) (IN TONNES) (USD/TONNE) (IN KUSD)
RECURRING NET PROFIT
SHARE OF THE GROUP
TOTAL OWN PRODUCTION
OF PALM OIL OF
CONSOLIDATED
COMPANIES
AVERAGE
MARKET PRICE
OF PALM OIL
78 213
79 787
82 225
83 893
79 942
2017
2018
2019
2020
2021
272 312
290 441
264 641
271 472
316 740
2017
2018
2019
2020
2021
715
598
566
715
1 195
2017
2018
2019
2020
2021
64 481
22 713
-8 004
14 122
82 746
20 000
50 000
200
400
600
800
1 000
20 000
40 000
60 000
80 000
100 000
120 0001 200
100 000
150 000
200 000
250 000
300 000
350 000
40 000
60 000
80 000
100 000
The connection to the world
of sustainable tropical agriculture
100%
all the criteria for processing
RSPO certified oil palm products
have been met
RSPO-compliant
certificates
31
granted to the operational
units of the Group
employees (FTE)
21 233
work on the plantations and
in related processing facilities
2017
2018
2019
2020
2021
CASH FLOW FROM
OPERATING
ACTIVITIES*
KASSTROOM UIT
BEDRIJFSACTIVITEITEN
NA BELASTINGEN
(IN KUSD) (IN KUSD) (IN KUSD) (IN EUR)
GROSS
DIVIDEND
NET
FINANCIAL
DEBT
SHAREHOLDER'S
EQUITY
SHARE OF THE GROUP
119 853
36 221
33 988
73 262
160 312
2017
2018
2019
2020
2021
83 697
121 443
164 623
151 165
49 192
2017
2018
2019
2020
2021
634 636
644 509
628 686
638 688
727 329
2017
2018
2019
2020
2021
1.60
0.55
0
0.35
2.00
* As from 2021, the financing of plasma advances has been included under investing activities
instead of operating activities. The prior year figures have been restated accordingly.
50 000
100 000
150 000
200 000
50 000
100 000
150 000
200 000
200 000
100 000
400 000
500 000
300 000
600 000
700 000
800 000
0,5
1,0
1,5
2,0
Key
figures
384 178 tonnes
Produced palm oil
in 2021
1 195 USD/tonne (CIF)
Average world market price of palm oil
in 2021
169 218 KUSD
Gross profit
in 2021
2017
2018
2019
2020
2021
TOTAL
PLANTED
HECTARAGE
(IN HA) (IN TONNES) (USD/TONNE) (IN KUSD)
RECURRING NET PROFIT
SHARE OF THE GROUP
TOTAL OWN PRODUCTION
OF PALM OIL OF
CONSOLIDATED
COMPANIES
AVERAGE
MARKET PRICE
OF PALM OIL
78 213
79 787
82 225
83 893
79 942
2017
2018
2019
2020
2021
272 312
290 441
264 641
271 472
316 740
2017
2018
2019
2020
2021
715
598
566
715
1 195
2017
2018
2019
2020
2021
64 481
22 713
-8 004
14 122
82 746
20 000
50 000
200
400
600
800
1 000
20 000
40 000
60 000
80 000
100 000
120 0001 200
100 000
150 000
200 000
250 000
300 000
350 000
40 000
60 000
80 000
100 000
Mission
As a producer of traceable, sustainably
certified and premium tropical agricultural
commodities, mainly high-quality crude palm
oil and other palm products, SIPEF aims to be
a reliable partner and preferred supplier to the
processing industry.
The Group operates in remote areas, where a
sustainable approach is necessary for social
development and economic growth. SIPEF
creates value through sustainable expansion
and optimum yield per hectare, by using the
best planting materials and efficient and
innovative management of all products,
including by-products in the chain. It also
actively promotes employment and works
to train smallholders, with a view to their
integration into the production chain. In all
of its activities, SIPEF continually strives
to achieve a balance between taking care
of the environment and social welfare, and
development at an economic level.
SIPEF also aspires to attain a growing
dividend income and a rising share price for
its shareholders, by means of thorough and
ecient cost management, and an increasing
asset base.
Contents
Mission...................................................... Cover
Key figures 2021............................................. Cover
SIPEF at a glance ................................................ 2
Significant events in 2021 ........................................4
Message from the chairman
......................................6
Message from the managing director.............................9
S
trategy of the Group ...........................................
13
B
usiness model .................................................
18
P
roduct markets
................................................26
S
IPEF operational activities
....................................
34
-
- Palm oil
..........................................36
-
- Bananas
.........................................5
2
-
- Rubber en tea
....................................58
-
- Research and development ......................
63
R
isks and uncertainties
.........................................70
C
orporate governance statement ...............................
76
S
IPEF on the stock market .....................................110
Other information about the Company ........................
1
13
Glossary .......................................................116
Annex
..........................................................122
Responsible persons ........................................... 131
For further information
.......................................
1
32
1
SIPEF Company Report 2021
SIPEF at a
glance
Palm oil
SIPEF manages 36 oil palm plantations. The Group runs nine
palm oil mills in total, of which six in Indonesia and three in
Papua New Guinea. The palm oil mills in Indonesia produce
crude palm oil and palm kernels. The mills in Papua New Guinea
produce crude palm oil and crude palm kernel oil.
The most important certifications
All nine palm oil mills are RSPO certified but also have other
certificates, such as ISPO, ISCC, ISO 14005:2015 and ISO
9001:2015. (For the various certificates, see part 3: Sustainability
Report).
Main operations (own and smallholders)
Indonesia (60% of CPO)
P
apua New Guinea (40% of CPO)
Main markets
The majority of SIPEF's oils are sold directly or indirectly to
the European market, both as a food component and for biofuel.
After all, these markets are the most willing to pay a premium
for sustainable oil.
Average world market price 2021 (vs 2020 in %)
CPO USD 1 195 per tonne (+67.1%)
PKO USD 1 517 per tonne (+83.7%)
:  
77 163
Hectares
planted
2
The connection to the world of sustainable tropical agriculture
The most important certifications
The plantations are fully Rainforest Alliance and Fairtrade
certified. (For the various certificates, see part 3: Sustainability
Report).
Main operations
Ivory Coast
Main markets
SIPEF's main commercial market is Europe, including the United
Kingdom. The rest is sold in the West Africa region and on the
local market of Ivory Coast. The markets in the West Africa
subregion are gradually expanding.
Average European market price 2021 (vs 2020 in %)
EUR 616 per tonne (-1.9%)
:    ( )
Bananas
SIPEF owns five estates in Ivory Coast equipped with seven
packing stations (four currently operational and three in the
course of 2022 and early 2023), where green bananas, the
Cavendish variety, are grown, packed and exported according
to international standards.
794
Hectares
planted
* Including only four months of rubber and tea production of PT Melania
** Of the revenue of the SIPEF group
Palm oil: 384 178 tonnes
Bananas: 32 200 tonnes
Rubber: 3 827 tonnes*
Tea: 965 tonnes*
92%
5%
2%
Indonesia: 65 512 ha
Papua New Guinea: 13 605 ha
Ivory Coast: 825 ha
82%
1%
17%
1%
79 942 ha
Total planted area
**
**
**
**
3
SIPEF Company Report 2021 SIPEF at a glance
Significant events
in 2021
Activities
• Total Group production of palm oil
increased by 16.7% compared with 2020.
• Despite covid-19, all Group production
units remained operational, with no loss of
volume or yield.
• Palm oil production in Indonesia increased
by 8.52%: in North Sumatra, recovery from
last year's drought was limited, while in
the expansion regions, production growth
continued.
• Total palm oil production from the Hargy
Oil Palms Ltd (HOPL) plantations in
Papua New Guinea, which were aected
by volcanic eruptions in 2019, increased by
29.7%.
Investments and divestments
• In May, SIPEF signed the conditional
agreement regarding the sale of PT Melania
to the Indonesian Shamrock Group and
realised a capital gain of USD 11 million,
share of the Group.
• In summer, SIPEF acquired the assets of
the insolvent Wanita banana plantations in
Ivory Coast.
Expansion
• In Musi Rawas, in the past year, in
accordance with the RSPO New Planting
Procedures (NPP), an additional 763
hectares were oset and 956 hectares were
prepared for planting or planted, to reach a
total of 14 970 cultivated hectares.
• Since acquisition in 2017, 7 836 hectares
have already been replanted or planted in
Dendymarker, including 2 630 in 2021.
• About 22% of the comprehensive
investment budget for realising the
expansion projects, which were
temporarily delayed by covid-19-related
logistical problems, will be pushed forward
to 2022.
Total Group production of
palm oil increased by 16.7%
compared with 2020.
+16.7
%
2020
2021
4
The connection to the world of sustainable tropical agriculture
Sustainability
• The Group's 2021 sustainability reporting
was drafted using the Global Reporting
Initiative (GRI) reference framework.
• The uniform calculation of greenhouse gas
(GHG) emissions for all Group's crops in
accordance with ISO 14064 was completed
and an initial overview published, with
2019 as the base year.
• SIPEF participated for the first time in
the Carbon Disclosure Project (CDP)
reporting.
• By November 2021, 92% of the SIPEF
employees and their dependents in
Indonesia had been fully vaccinated
against covid-19 at SIPEF’s expense. A
booster program will follow in 2022.
• SIPEF was ranked 4th out of the 350 most
influential companies of the commodity
sector by Forest 500 and 9th out of 100
palm oil companies by the Sustainability
Policy Transparency Toolkit (SPOTT).
By November 2021, 92% of
the SIPEF employees and their
dependents in Indonesia had
been fully vaccinated against
covid-19 at SIPEF’s expense.
92
%
Results
• The palm oil market experienced a steady
increase in prices throughout the year.
• In Indonesia, the combined export levy and
tax on sales prices remained in place, but
was relaxed during the first half of the year,
eective from 2 July 2021.
• The combination of excellent production
and selling prices resulted in outstanding
financial performances:
• The net recurring result, share of the
Group, after tax, amounted to
KUSD 82 746, compared to
KUSD 14 122 last year.
• Including the capital gain of USD
11 million on the sale of PT Melania
(Indonesian tea estate and half of the
rubber operations) net results, share of
the Group, reached KUSD 93 749.
• Operational cash flow amounted to
KUSD 160 312, an increase of 118.8% on
the previous year.
• Net debt decreased by more than two
thirds, from KUSD 151 165 to
KUSD 49 192.
• In line with the 30% pay-out ratio of
previous years, the board of directors
proposes to increase the gross dividend
from EUR 0.35 per share last year to EUR
2.00 per share, payable on 6 July 2022.
5
SIPEF Company Report 2021 Significant events in 2021
Our employees, as well as the local
smallholders, with whom the Group works,
continued to devote themselves wholeheartedly
to their work during the pandemic. Thanks
to their great commitment, the favourable
climate and the strong markets, SIPEF is able
to present excellent figures for 2021.
-- Baron Luc Bertrand
6 The connection to the world of sustainable tropical agriculture
Message
from the
chairman
In 2021, the world remained in the grip of
covid-19. Indonesia was more aected by the
pandemic than Ivory Coast and Papua New
Guinea, where the populations seemed to be more
resistant to the virus. However, the public health
system in Indonesia was inadequate to treat
everyone eciently. Therefore, we felt called
to come to the rescue and set up a vaccination
program at SIPEF’s expense. This allowed almost
92% or 20 000 people, employees of the Group's
Indonesian subsidiaries and their close relatives,
to be vaccinated. We also organised vaccination
programs in Ivory Coast and Papua New Guinea.
45% of the employees in Ivory Coast were double
vaccinated and 15% received a single dose. In
Papua New Guinea, however, the program
did not initially meet with much success, but
gradually took o, thanks to the eorts of the
local management. This enabled the Group to
help the local population as much as possible to
cope during these dicult times.
Covid-19 aected the Group's operations in a
limited way. Our employees, as well as the local
smallholders, with whom the Group works,
continued to devote themselves wholeheartedly
to their work during the pandemic. Thanks to
their great commitment, the favourable climate
We set up a vaccination
program at SIPEF’s
expense. This allowed
almost 92% or 20 000
people, employees of
the Group's Indonesian
subsidiaries and their
close relatives, to be
vaccinated.
and the strong markets, SIPEF is able to present
excellent figures for 2021. I would particularly
like to mention the team in Papua New Guinea.
Despite the years with lower palm oil prices
and the volcanic eruptions in 2019, it made an
unprecedented contribution to the SIPEF group's
2021 operating results.
The strong performance, combined with the
conditional sale of PT Melania, provided ample
cash flow, which, subject to the continuation of
the expansion in Indonesia and Ivory Coast, also
allowed for a more than two-thirds reduction
in net financial debt in one year, to a level below
USD 50 million. Despite an extensive investment
program for the next few years, it is strategically
desirable to keep the debt level as low as possible.
7
SIPEF Company Report 2021 Message from the chairman
2021 was also an important year for succession
in the Group. The general manager of Papua
New Guinea was successfully replaced at the
start of the new year. In Indonesia, as of April
2022, the succession of the president director is
in place. A new general manager has also been
appointed in Ivory Coast, and a rejuvenated
and expanded team is ready to cope with the
expansion there. In June 2021, Petra Meekers
left the board of directors to become the first
woman to join the executive committee. Ever
since, as chief operating officer Asia-Pacific,
she has been monitoring the Group's activities
in Indonesia and Papua New Guinea out of
Singapore. Moreover, as a sustainability
expert, she is assisting the executive committee
in implementing the Group's sustainable
development policy and the various complex
rules and regulations that come with it. Finally,
in June 2021 the board of directors welcomed
Yu-Leng Khor. As a new independent director, she
will be able to expertly guide the Group, thanks
to her vast experience in the tropical agriculture
sector and in the field of sustainability. Looking
to the future, SIPEF is thus well prepared at all
levels of management in the various countries
where the Group operates.
I am therefore convinced, that we can continue
and expand our activities with confidence in a
sustainable and ecient manner, but above all
take on new challenges with the drive to actively
contribute to a better world.
baron luc bertrand
chairman of the board of directors
8
Message from
the managing
director
2021 was an excellent year for the SIPEF group
with strong recurrent results, which could also
be increased with exceptional capital gain.
Over the past year, the palm oil market experien-
ced a very stable environment with high prices
that reached peaks unprecedented in the last
decade. It was also a positive year for the Group's
palm oil production which, thanks to generally
very favourable weather conditions, reached a
record figure of 384 178 tonnes. The good climate
also led to higher oil extraction rates (OER) for
the palm oil mills.
Unfortunately, the Group continued to face an
exceptional export tax on its Indonesian palm oil
production in order to finance the B30 palm oil
blending program. However, this tax was revised
downwards and capped in July.
The exceptionally good operational performances,
combined with sustained rising prices, enabled
SIPEF to end the year with a record recurring
profit, six times the previous year's figure.
In 2021, the expansion of the palm plantations,
which was hampered in 2020 by the covid-19
pandemic, continued steadily and already bore
its first fruits. The banana activities were also
expanded further, with the purchase of the
plantations and factories of the insolvent Wanita
banana plantations.
Furthermore, practical preparations were started
for the conversion from rubber to oil palms. This
conversion is the result of the 2020 strategic
decision to further focus on the production of
crude palm oil, palm kernels and palm kernel
oil, and to phase out rubber production. More
specifically, the conversion of the rubber
plantations into oil palm was started in North
Sumatra and Bengkulu, in an agronomically
ecient and responsible manner. A further step
in this direction was taken with the conditional
transfer of PT Melania, which represents half of
the Group's rubber operations and tea plantation.
As from May 2021, the management of the rubber
activities was transferred to Shamrock Group
and, in addition, at a later stage the entire tea
business will also leave the Group.
With the expansion and greater concentration
on palm products, at the expense of rubber and
tea, SIPEF wants to respond to the strong future
of palm oil as the main vegetable oil in the food
and energy sector. This is based on the fact that
there is a growing world population, especially in
southern hemisphere countries. It goes without
saying, that the consumption of palm oil as a basic
ingredient in people's diets will increase. For
one reason, this is due to the ecient industrial
processing and the low cost of palm oil compared
to other vegetable oils. In addition, palm oil has a
9
SIPEF Company Report 2021 Message from the managing director
SIPEF ended the
year with a record
recurring profit, six
times the previous
year's figure.
-- François Van Hoydonck
10 The connection to the world of sustainable tropical agriculture
yield per hectare that is five to ten times higher
than any other vegetable oil. This is an important
factor in a world where agricultural soils are
becoming increasingly scarce.
Hence, the Group will concentrate mainly on
improving the eciency of the areas already
planted and on innovations, with a view to high
productivity. In short, research and development
remain very important for the palm oil sector.
But above all, 'sustainability' runs like a thread
through the life of the Group. SIPEF wants to
realise its activities, and also its growth, in
a sustainable and economically responsible
manner, and all this in cooperation with local
smallholders. As a listed European company
investors must be able to receive the guarantee
of respect for people and planet, through the
reputable certification of all SIPEF's activities
and products. Today, the Group is fully RSPO
compliant for all oil palm plantations, with
certification for all areas that can already
be certified. The Group continues to follow
the trends indicated by its customers and
stakeholders, according to their needs for
confirmation that sustainability standards are
respected at all times. In that context, a research
project was started in 2021, to test the level of
contaminants in the crude palm oil and to
produce high quality oil with low contaminant
content via the application of new technologies
in the mills.
In 2021, SIPEF also took an important step in
reducing greenhouse gas emissions by mapping
its carbon footprint at the group level. The
determination of a ‘baseline assessment’ was the
necessary basis for improvement in the following
years. SIPEF intends to continue investing in new
technologies to significantly reduce its current
ecological footprint.
As the managing director, I think I can say that
we have completed an important obstacle course
in recent years that was crowned with success
in 2021. We were able to achieve this through
the commitment of our employees around the
world who have continued to support us through
thick and thin, and have all worked together for
a better world.
We also want our shareholders to enjoy this
record year by presenting them with a gross
dividend of 2 euro per share, for approval on 8
June.
Following the successful year of 2021, SIPEF
is well placed to therefore embark on the next
few years with a great deal of ambition, once
again supported by strong market prices. The
expansion achieved in recent years will only
strengthen its position as a coveted producer of
quality palm oil.
françois van hoydonck
managing director
11
SIPEF Company Report 2021 Message from the managing director
SIPEF wants to realise
its activities, and also its
growth, in a sustainable and
economically responsible
manner, and all this in
cooperation with local
smallholders.
-- François Van Hoydonck
12 The connection to the world of sustainable tropical agriculture
Strategy of
the Group
SIPEF increasingly focuses on the produc-
tion of crude palm oil, palm kernels and
palm kernel oil in Indonesia and Papua New
Guinea
In 2020, the decision was made to convert
the rubber plantations of North Sumatra
and Bengkulu to oil palm plantations in an
agronomically ecient and responsible manner.
The conditional sale of 95% of PT Melania shares
in 2021 is also part of this strategy, as PT Melania
manages rubber and tea plantations. At the end
of 2021, palm products in Indonesia and Papua
New Guinea accounted for approximately 92% of
the Group’s total turnover. The growing banana
business in Ivory Coast also continues to be part
of the Group's strategic interests.
SIPEF actively works on its internal and
external growth as a palm oil producer in
Indonesia and Papua New Guinea in part-
nership with local smallholders
 
SIPEF invests in research via Verdant Bioscience
Pte Ltd (VBS) to ensure it can profit from the
strong growth the sector is set to experience.
As the global population rises, there is increasing
demand for vegetable oils and fats, but available
farmland is decreasing. In addition, climate
change is bringing more and more extreme
weather events. Most of the required growth
in production can be achieved in palm oil, the
most ecient vegetable oil. Only by developing
stronger, more productive palm varieties can
SIPEF rise to these challenges.
SIPEF therefore wants to bring the productivity
of its oil palm plantations to a significantly
higher level in the medium term by applying
the scientific developments of VBS, thereby
substantially supporting, and improving the
Group's future profitability.
At the end of 2021, palm products
in Indonesia and Papua New Guinea
accounted for approximately 92%
of the Group’s total turnover.
SIPEF invests in research
via Verdant Bioscience
Pte Ltd (VBS) to ensure it
can profit from the strong
growth the sector is set to
experience.
92
%
13
SIPEF Company Report 2021 Strategy of the Group
13
SIPEF aims
for a sustainably
developed area of
100 000 hectares.
 
SIPEF aims for a sustainably developed area of
100 000 hectares.
The Group wants to expand in a sustainable
and economically responsible manner, with a
limited debt ratio and in partnership with local
smallholders. That is why SIPEF continues
to actively search for existing areas that can
meet RSPO certification criteria. Furthermore,
expansion is increasingly realised in close
partnership with local smallholders who wish to
sell their production to and work with SIPEF. The
Group is committed to training these farmers
and working together to create a sustainable
production environment.
14
The connection to the world of sustainable tropical agriculture
SIPEF invests in the development of
high-quality crude palm oil with low levels of
contaminants
SIPEF has launched a research project to measure
and reduce the level of contaminants in its crude
palm oil using new technologies in its mills. This
project is the first big step towards the production
of high-quality oil with a low contaminant
content. In this way, the Group wants to further
develop and innovate, with a focus on high-
quality palm oil, and target customers, both
i
n the food sector and in all other sectors, for
whom the added value of this product is a very
important focal point and who are prepared to
pay a higher premium for it.
Sustainability remains an absolute priority
for SIPEF with value creation as the com-
mon denominator
Continuing to be a role model in terms of
sustainability is of vital importance to SIPEF.
As a listed European company, SIPEF wishes to
provide its investors with formal assurance of
its respect for people and the planet. It does so
by means of the certification of all its activities
and products that gives due consideration to
ecological and socially responsible standards
for tropical industrial agriculture. In the future,
SIPEF will continue to endeavour to deliver all
Continuing to be a
role model in terms of
sustainability is of vital
importance to SIPEF.
15
SIPEF Company Report 2021 Strategy of the Group
its products in certified physical goods flows (for
more details about certification, see page 69 of
the Sustainability Report.) The Group focuses
on a limited number of regular customers who
are prepared to pay a premium for quality
certification.
The Company also goes beyond certification to
increase its impact in the area of sustainability
and has established a Responsible Plantations
Policy (RPP), which is updated annually. The
RPP encourages SIPEF to apply the most
innovative standards, often going beyond what
the certifications require.
SIPEF remains very actively involved in
the organisations that encourage the use of
sustainable palm oil in the food industry and with
consumers in Europe and the rest of the world.
All goods sold by SIPEF are fully traceable
SIPEF wants to be completely transparent about
its goods supply chain with full traceability of the
commodities. The place of production for every
product sold by SIPEF can be verified, be that a
plantation managed by the Group or land farmed
by a local smallholder in partnership with SIPEF.
SIPEF has a Responsible Purchase Policy (RPuP)
that defines the criteria for selecting and working
with smallholders on their way to certification.
The policy guarantees that all SIPEF suppliers
are or shall be certified in accordance with the
RSPO standards, as far as this is possible.
SIPEF achieves the protection, conservation
and restoration of terrestrial ecosystems and
biodiversity
For several years now, SIPEF has made a long-
term contribution to the conservation, protection
and restoration of important ecological areas
in Indonesia. It does this, among other things,
through an Indonesian foundation established
by the Group in 2009 (see page 69 of the
Sustainability Report).
SIPEF aims to optimise its results
The Group pursues the optimisation of its
results by improving its production volumes
and eciently controlling the costs of the palm
oil activities.
SIPEF has the ambition to increase the volume
of the Group’s annual palm oil production to
500 000 tonnes per year by 2026. This equates to
a compound annual growth rate (CAGR) of 5%.
For the other businesses, mainly bananas,
management is concentrating on yield increases
and cost reductions with a focus on labour costs,
as these cultures are more labour-intensive than
the palm oil activities.
16
The connection to the world of sustainable tropical agriculture
SIPEF has the ambition to
increase the volume of the
Group’s annual palm oil
production to 500 000
tonnes per year by 2026.
This equates to a com-
pound annual growth rate
(CAGR) of 5%.
It is SIPEF’s intention to continue to reduce
its current debt level and maintain its divi-
dend policy in the future
With a limited debt ratio, SIPEF wants to find the
right balance between the planned investments
and their financing from the operational cash
flows. The Company also intends to maintain
its dividend policy, which has been set at 30% of
recurring profit for many years.
17
SIPEF Company Report 2021
High quality, fully traceable,
certified palm products
SIPEF
customers: refiners
Methane
capture
SIPEF
employee
housing and
facilities
SIPEF
factories
Public power grid
Power
supply
Electricity
generation
SIPEF
employees
Investments
in mills
Engineering and
industrial suppliers
Investments in
agricultural equipment
Machinery producers,
agricultural equipment
and tools
Production resources,
e.g. fertilisers
Supplier production
resources
Seeds and plants
(including Verdant Bioscience Pte Ltd)
Seed producers and
plant suppliers
Other stakeholders
and government
Long term lease
of land
Flaring
Retailers
Consumers
Biofuel
Cosmetics
industry
Chemical
industry
Detergent
industry
Food industry
Distribution
network
SIPEF plantations
& smallholder
plantations
REDUCING
EMISSIONS
RECYCLING
via gas engine
Fibres
EFB
torrefaction
Pellets
For the
industry
RECYCLING
Empty fruit bunches
and euent compost
Shipping
(Traders)
Storage of palm oil,
also in tanks at
the port
CERTIFICATIONS (see Sustainability Report page 18)
Extraction
mill
Value creation:
• Employment
• Housing
• Schools
• Health centres
• Roads and bridges
• Access to basic daily needs
(clean water, electricity, ATM,
mobile phone network)
• Houses of worship
• Access to the international market
for smallholder production
• Poverty alleviation for employees
and local communities
Use and preservation of
ecosystem services such as:
• Water management
• Biodiversity control
• Forest protection
• Preventing methane emissions
• Reducing the use of imported
fertilisers
• Preserving soil fertility
• Euent management
SIPEF activities
Value creation
Third party activities
SIPEF product destination
Business model
The chart illustrates SIPEF’s palm oil production
business model. Palm oil production constitutes the
Company’s main production activity, generating
98.4% of the Group’s gross margin. Broadly speaking,
this model also applies to the Group’s other activities.
18 The connection to the world of sustainable tropical agriculture
High quality, fully traceable,
certified palm products
SIPEF
customers: refiners
Methane
capture
SIPEF
employee
housing and
facilities
SIPEF
factories
Public power grid
Power
supply
Electricity
generation
SIPEF
employees
Investments
in mills
Engineering and
industrial suppliers
Investments in
agricultural equipment
Machinery producers,
agricultural equipment
and tools
Production resources,
e.g. fertilisers
Supplier production
resources
Seeds and plants
(including Verdant Bioscience Pte Ltd)
Seed producers and
plant suppliers
Other stakeholders
and government
Long term lease
of land
Flaring
Retailers
Consumers
Biofuel
Cosmetics
industry
Chemical
industry
Detergent
industry
Food industry
Distribution
network
SIPEF plantations
& smallholder
plantations
REDUCING
EMISSIONS
RECYCLING
via gas engine
Fibres
EFB
torrefaction
Pellets
For the
industry
RECYCLING
Empty fruit bunches
and euent compost
Shipping
(Traders)
Storage of palm oil,
also in tanks at
the port
CERTIFICATIONS (see Sustainability Report page 18)
Extraction
mill
Value creation:
• Employment
• Housing
• Schools
• Health centres
• Roads and bridges
• Access to basic daily needs
(clean water, electricity, ATM,
mobile phone network)
• Houses of worship
• Access to the international market
for smallholder production
• Poverty alleviation for employees
and local communities
Use and preservation of
ecosystem services such as:
• Water management
• Biodiversity control
• Forest protection
• Preventing methane emissions
• Reducing the use of imported
fertilisers
• Preserving soil fertility
• Euent management
SIPEF activities
Value creation
Third party activities
SIPEF product destination
From palm seed to palm oil
19
SIPEF Company Report 2021 Business model
The costs stated in this chapter do not include
the figures for the PT Melania rubber and tea
activities. This company was the subject of a
conditional sale in May 2021 and is no longer
included in the Group consolidation from that
date onwards. However, the number of people
employed by PT Melania in rubber and tea
production is included in the calculation of the
number of employees per 100 hectares and the
total number of employees of the Group.
Costs of the Group
The production of palm products, rubber,
tea, bananas and horticulture is very labour-
intensive. The accompanying chart shows the
employee ratio.
In total, the Group currently has 21 233 employees
(full-time equivalents - FTEs). Labour is one
of SIPEF’s largest cost items. Other important
recurring costs of the Group relate to the
purchase of chemical and organic fertilisers.
The total operational charges (including
depreciations) of the SIPEF group can be split
into five dierent categories, based on the Group’s
business model:
Estate charges (60.8%): include all
charges relating to the fieldwork to produce
the base agricultural products (i.e. fresh
fruit bunches (FFB), latex, bananas,
horticulture);
16
31
81
96
153
30
100
150
Palm oil Rubber Horticulture Tea Bananas
Estate charges
60.8%
FFB / crude palm oil
purchases
24.4%
Processing charges
13.4%
Sales charges
8.7%
Stock movement
-7.3%
NUMBER OF FIELD WORKERS PER 100 HECTARES OF CROP
TOTAL OPERATIONAL CHARGES
20
The connection to the world of sustainable tropical agriculture
FFB/crude palm oil (CPO)/latex
purchases (24.4%): include all purchases
from third parties (smallholders) or
associates and joint ventures;
Processing charges (13.4%): include all
charges relating to the processing of the
base agricultural products into finished
agricultural commodities (i.e. palm oil and
rubber);
S
ales charges (8.7%): include all direct
costs attributable to the sales in the course
of the year (i.e. transport charges, palm oil
export levy and tax);
Stock movement (-7.3%): includes the
variance in stock compared with the
previous year.
(For additional information on the Group’s costs,
see Note 7 – Operational result and segment
information in the Financial Statements.)
In addition to these charges incurred in the
course of the year, the Group makes considerable
investments in biological assets (bearer plants),
buildings, infrastructure, installations and
machinery, vehicles, office equipment and
other property, plant and equipment. These
investments are capitalised on the balance sheet
and subsequently depreciated. Depreciation costs
are calculated over the estimated useful life of
an asset and, depending on the asset, recognised
in either estate charges or processing charges.
To ensure the continuity of its activities, SIPEF
must acquire and retain concession rights,
and renew the concession agreements for the
long term. The acquisition of these concession
rights is capitalised, but not depreciated over
time, as they are deemed indefinite. The costs
of renewing the original concession rights are
capitalised and depreciated over the period of the
renewal. Lastly, the Group continues to look for
expansion opportunities by acquiring plantations
from other companies and/or working with local
owners.
21
SIPEF Company Report 2021 Business model
Value creation by the Group
In implementing its business model, the Group
does its utmost to improve its productivity
and to stimulate its growth as efficiently as
possible, based on sustainable practices. By
doing so, SIPEF creates value for the Company,
the environment and society. Furthermore,
as a sustainable company, in its business
model SIPEF constantly takes account of the
sustainable development and value creation
requirements of the stakeholders.
SIPEF creates value for
the company
Since 2005, SIPEF has actively driven its
growth, particularly in the palm oil industry
in Indonesia and Papua New Guinea. It actively
seeks investment opportunities to enlarge the
planted areas in remote regions, where most
people work in agriculture. Thanks to the
partnership with Verdant Bioscience Pte Ltd
(VBS), a renowned palm oil production research
centre in Singapore, the Group will be able to
benefit from the development of high-yield palms.
By applying these scientific developments, SIPEF
expects to raise the productivity of the oil palm
plantations in the medium to long term and
significantly strengthen and improve their future
profitability.
22
The connection to the world of sustainable tropical agriculture
SIPEF creates value for the environment
Sustainability has been an essential part of the
Group’s business model from the very beginning,
and is a key factor in SIPEF’s whole existence
and achievements.
The Group is committed to working to improve
its results, and to integrating and tailoring its
sustainability eorts to its activities.
In recent years SIPEF has shown its engagement
by taking various steps to reduce the greenhouse
gas (GHG) emissions of its mills and factories.
SIPEF has long put this policy into practice by
protecting, conserving and restoring terrestrial
ecosystems and biodiversity. The Group has
contributed to nature conservation in Indonesia
for many years and remains active in research
and development to improve aorestation.
The Group is constantly working on new projects
and encourages new ideas to create a better
environment.
SIPEF creates value for society
SIPEF is conscious of being part of the
community everywhere it operates, and of
having a duty to change for the better the lives
of its employees, their families and the local
communities. It makes continual adjustments
to maintain the highest possible standards
with regard to the wellbeing of employees and
their families. These include constructing and
improving housing for managers and workers of
the Group. The Company wishes to continue to
play a positive role by assuming its responsibility
for problems that occur and dealing with them
in an amicable and transparent manner, within
the framework of appropriate complaints
procedures in the spirit of the Roundtable on
Sustainable Palm Oil (RSPO). This all occurs
within the context of a long-term commitment
and the ‘creation of shared value’, which is an
important step on the road towards a sustainable
and successful business.
More detailed insight into how the Group
creates value at various levels is provided in
the Sustainability Report, part 3 of this Annual
Report.
23
SIPEF Company Report 2021 Business model
Products - customers
Oil palm products
SIPEF oers its customers crude palm oil (CPO),
palm kernel oil (PKO) and palm kernels (PK). It
targets RSPO certification for 100% of its palm
oil products. However, the Company applies
other generally recognised standards, such as
the Indonesian Sustainable Palm Oil (ISPO)
system and the International Sustainability and
Carbon Certification (ISCC) standard. A detailed
overview of all certifications is provided on page
18 of the Sustainability Report, part 3 of this
Annual Report. The Group’s oil palm products
are sold on the local market in Indonesia and
on the European market. They are used in the
food industry and for green energy (biodiesel)
production.
SIPEF’s customers are refineries that are
prepared to pay a sustainability premium for
fully traceable and certified palm products.
Rubber products
SIPEF manages two rubber plantations and two
natural rubber factories in Indonesia. These
two plantations are covered by the procedure
for conversion into oil palm plantations, which
should be completed by 2028. The conversion
will be conducted in compliance with the RSPO
‘New Planting Procedures’, so that the new oil
palm plantations can be certified as soon as
possible. Since 30 April 2021, a third plantation
and a factory owned by PT Melania have been
managed by the Shamrock Group, following their
conditional sale to this Indonesian group.
The United States of America are the biggest
market for the rubber products.
24
The connection to the world of sustainable tropical agriculture
Tea
SIPEF has a 1 700-hectare tea estate, one of the
largest in the world, in West Java. The bushes
continue to be hand-plucked to meet the high
standards of a superior black ‘Cut, Tear and Curl’
(CTC) tea. Since 30 April 2021, this plantation
has been subject of a conditional forward sale,
but will be managed by the Group until the
realisation of the transfer.
Pakistan is the biggest market for this tea. The
rest is sold to multinationals specialised in
blending tea to order. There is also increasing
demand for tea on the local market in Indonesia.
The estate is Rainforest Alliance certified.
Bananas
Bananas grown by SIPEF are sold within
certified goods flows with full raw material
traceability. The bananas are picked and packed
in the Group’s packing stations. SIPEF cultivates
the Cavendish variety, which is packed in
standard SIPEF-branded cardboard boxes or in
customer-branded packaging as ordered. SIPEF’s
customers are ‘ripeners’ that distribute ‘ready-
to-eat’ bananas to supermarkets and wholesale
markets. After shipment, more than 80% of the
high-quality bananas are sold to the European
market in accordance with EU guidelines, and to
the United Kingdom. The rest are sold in the West
Africa region and at local markets in Ivory Coast.
The Group has privileged access to Europe, as
it is exempt from import duties in Europe. In
2021, the commercial agreements with the UK
government, particularly with regard to bananas,
were renewed for the majority of the supply
countries, including Ivory Coast. This means
that Brexit has had no negative impact on SIPEF’s
banana exports.
25
SIPEF Company Report 2021 Business model
Product
markets
Palm oil
The 2021 vegetable oil market started o with
a very tight stock scenario across all major
vegetable oils. Great demand from the food and
biofuel industry in recent years in a relative
low-price environment had depleted most
origin stocks. Big inverses also led to minimal
stored oil in destinations. Sunflower oil was
leading the bullish price environment after the
strongly reduced 2020 crop. The palm oil market
was tight, but at the beginning of the year it was
mainly following the price movements of the
other vegetable oils.
The production of palm oil throughout the year
has been below expectations for the industry
as a whole. In Malaysia, the lack of foreign
labour was one element; however, there have
been more factors at play: due to the low-price
environment, for several years a consistent
below par volume of fertiliser has been applied
and very little replanting has been done. As a
result, the industry is faced with an aging tree
profile, that is being fertilised less than ideally,
and experiencing a general yield decline. Due
to the existing planting moratorium and No
Deforestation, No Peat, No Exploitation (NDPE)
requirements, there is also hardly any new oil
palm acreage coming into play.
The Indonesian palm plantation industry
benefitted least from the high-price environment,
due to the export tax and export levy system. At
the beginning of the year, the system reduced
nearly all the upside in selling price, but the
export levy was amended in July, whereby a
decreased levy was collected, and a maximum
level was also introduced. The B30 biodiesel
fund was suciently warranted, and there was
again an upside for Indonesian plantations when
there was a rising market. As the market price
continued to rally, in November 2021, the market
reached a maximum of USD 175 export levy and
USD 200 export tax, but the net price for crude
palm oil (CPO) almost reached USD 1 000.
26
The connection to the world of sustainable tropical agriculture
Given the tight vegetable oil picture, the new
annual crops of soybeans, rapeseed and sunflower
seed were very important. The heat wave that hit
Canada and the eastern United States soybean
belt had a devastating eect, particularly on the
canola crop. It triggered another rally across the
complex and, despite a good soybean crop in the
United States and great sunflower seed crops
in Russia and Ukraine, it reshued all kinds
of trade flows. It demonstrated the tightness
in vegetable oils, and more than one good crop
would be required to bring relief.
In 2021, several governmental actions triggered
a change in trade patterns. The Indonesian
differential export tax and levy system has
already been mentioned, but there were other
producing countries introducing or increasing
export taxes. Temporary reductions were also
seen in the biodiesel mandates in Brazil. And
importing countries have amended import
taxes to curb food inflation, whereby India, in
particular, has made strong reductions during
the year. Most of these governmental actions are
dicult to predict and timing can be essential.
It certainly created a lot of volatility.
The demand in itself has been reasonably good
throughout 2021. However, high prices and big
inverses are normally two ways to reduce demand
and lower the inland inventories. Lockdowns
at the beginning of the year had a dampening
effect on demand in certain regions as well.
Therefore, demand has certainly not grown as
in previous years, but despite its lower growth,
prices remained in a very high range.
The average price for CPO CIF Rotterdam in 2021
was USD 1 195 per tonne against an average of
USD 715 per tonne in 2020, an increase of almost
55%. However, the year closed near USD 1 250.
27
SIPEF Company Report 2021 Product markets
Palm kernel oil
The lauric oil market, the generic term for
palm kernel oil (PKO) and coconut oil, has been
following the path of the palm oil market for
most of the year, trading at its usual premium
over palm oil. Despite coconut oil showing more
volatility and a higher price path, PKO could not
get overly excited till the last quarter of 2021. The
dierential export tax system in Indonesia has
certainly contributed to this, as local refining and
oleochemical industry in Indonesia has a massive
competitive advantage when its products are
exported around the globe. The recent typhoon
in the Philippines also supported overall lauric
oil prices, with millions of trees being severely
damaged.
The price of PKO was around a normal USD
200-300 premium over palm oil for most of the
year, but the premium really exploded in the last
quarter once the tightness really kicked in. The
average price of PKO CIF Rotterdam in 2021
was USD 1 517 against an average in 2020 of USD
826, a 83.7% increase. But the year ended with
prices above USD 1 800, with huge volatility and
a massive USD 650 premium over palm oil.
The average price of PKO CIF
Rotterdam increased with 83.7%.
+83.7
%
2020
2021
28
The connection to the world of sustainable tropical agriculture
Events after the balance sheet date
The sudden lack of
sunflower seeds and
sunflower oil is having
a tremendous effect on
the global vegetable oil
market.
Russia’s invasion of Ukraine;
impact on commodity prices
Russia’s decision to invade Ukraine on 24
February 2022 radically changed the geopolitical
landscape. This war is having a tremendous eect
on (agricultural) commodities. Ukraine is the
world’s largest sunflower seed producer, as well
as the top sunflower oil exporter. It was also
expected to rank No. 3 in rapeseed and wheat
exports this season. The ports are closed and
hardly any products are being exported. As a
result, many prices of staple food commodities
have rallied strongly, further fuelling food price
inflation.
In addition, Russia is a big producer of wheat,
sunflower seeds and barley, and despite the
Russian ports not being closed, the usual flows
are being significantly interrupted due to the war.
Many Western companies are currently rather
reluctant to trade with Russian companies or in
Russian goods.
The sudden lack of sunflower seeds and sunflower
oil is having a tremendous eect on the global
vegetable oil market. Rapeseed oil and palm oil
were already in rather short supply due to adverse
weather, but in the last couple of months there
has also been the drought impact of La Niña in
South America. It reduced the soybean crop by
approximately 25 million tonnes, equivalent
to 5 million tonnes of soybean oil. Therefore,
many countries were depending more than ever
on the supply of sunflower oil from Ukraine and
Russia. There is not sucient vegetable oil in the
market to overcome this deficit; therefore, a price
mechanism needs to drive demand reduction.
It is expected that there will be more pressure
to reduce certain biofuel blending mandates,
such as in the European Union, the United States
and Indonesia, to release more oil into the food
industry.
Normally, the planting season for the new crops
commences late March to early April; however,
this will be strongly impacted for as long as the
war continues. The duration of this war will
determine its short- and medium-term impacts
on agricultural commodities, although it is
almost a certainty that there will be shortages for
the time being. Agricultural commodity prices
will stay strong for the foreseeable future.
29
SIPEF Company Report 2021 Product markets
Rubber
The rubber market remained in a rather narrow
trading range. The supply side was impacted by
lower production due to adverse weather and
diseases; however, the demand was impacted in
a fiercer manner. New car deliveries were slow,
triggering low fresh rubber demand, and the cost
of container freight increased tenfold or more,
becoming a massive element of the landed prices.
Strangely enough, these supply and demand
eects seemed to balance each other to a large
extent, and the market remained in a stable, but
low-price environment.
Where in 2020 the demand for latex gloves was
peaking, it slowed down during 2021 as the
worst covid-19 fears subsided. Therefore, the
latex grades such as RSS1 also returned to their
usual premium over block rubber.
Prices for the standard RSS3 latex grade started
the year at USD 2 340 per tonne on SICOM
(Singapore Commodity Exchange) and closed
at USD 1 850 per tonne, a decrease of 21%. The
average price for 2021 was USD 2 071 per tonne
versus USD 1 728 in 2020.
30
The connection to the world of sustainable tropical agriculture
Bananas
In 2021, there were no fundamental changes
with regard to global production and supplies
to consumer markets. Thanks to the volumes
from the South and Central America production
areas, particularly Ecuador, Colombia and Costa
Rica, but also Guatemala and Honduras, the
global supply of dollar bananas remained close
to the level of recent years. As a reminder, at the
end of 2020, Guatemala and Honduras were hit
by severe flooding, but production has since
resumed. The Africa, Caribbean, Pacific (ACP)
production area also remained generally stable,
with a slight decline in the Caribbean region
in favour of Africa, Ivory Coast in particular,
which saw exports increase slightly. European
production also ended the year in balance, as the
decline in production since September 2021 in
the Canary Islands, following the eruption of the
Cumbre Vieja volcano on La Palma, was oset by
an increase in the Antilles.
The Panama disease, also known as Tropical
Race 4 (‘TR4’), is a fungus which ravages
plantations. The disease continues to spread in
South America. Initially detected in Colombia
in 2019, the first infected plots were recently
discovered in Peru. The global banana sector is
seriously concerned about the disease, although
it has not yet had a significant impact on global
production of the Cavendish banana, which
remains the main variety of dessert banana
produced and sold worldwide. The Cavendish
variety may disappear fairly soon. However,
plant matter research institutes and production
laboratories have redoubled their efforts to
improve the banana variety.
The covid-19 pandemic aected the consumer
market to a much lesser extent in 2021 than in
2020. Bananas continue to be a basic consumer
good, which is included in the essential
household basket, and all in all, global supply,
distribution and consumer flows are relatively
well maintained. However, the demand for
bananas that are packed, labelled, barcoded
or tied with tape at source has increased
considerably. This speeds up the sales process
and avoids unnecessary manipulation for
weighing the bananas at the fruit department
of the supermarket.
31
SIPEF Company Report 2021 Product markets
The demand for bananas
that are packed, labelled,
barcoded or tied with tape
at source has increased
considerably. This speeds
up the sales process
and avoids unnecessary
manipulation for weighing
the bananas at the
fruit department of the
supermarket.
32 The connection to the world of sustainable tropical agriculture
The EU 27 plus the United Kingdom remains
the world’s primary market. Consumption has
generally remained stable after some years
of constant growth. In 2021, consumption in
Europe was 6 675 457 tonnes, which corresponds
to nearly 13 kg per inhabitant per year. As a
reminder, the ten-year average is 11.7 kg. There
are substantial dierences from one EU country
to another. Annual consumption in Sweden, for
example, is 17 kg, compared with 7-8 kg in the
Baltic countries. As purchasing power increases
in some EU countries, it is clear that production
areas continue to be in competition for supply
and market share. The dollar area accounts for
75% of the market, with ACP at 16% and the EU
at 9%. The rules of access to the United Kingdom
remain in lockstep with the rules in the UE 27.
They are not expected to change on the European
continent, with customs duty on dollar bananas
at EUR 75 per tonne and unfettered access for
bananas from the ACP area.
The problems in Guatemala and Honduras did
not disrupt the United States market, as Ecuador,
Colombia and Costa Rica quickly stepped in to
make up the shortfall. Consumption therefore
remained stable at 4 632 397 tonnes.
In 2021, two major developments had a large
impact on the market in 2021, leading to a
significant change in contractual sales prices
for 2022. For one, the costs of various factors
of production have increased since the end of
2020. This particularly goes for fertiliser and
packaging materials, such as cardboard and
plastic. Secondly, the global shipping crisis, which
has resulted in a hike in shipping costs, continues
in 2022. This crisis, which aects all sectors of
the economy, naturally led to the revision of
contractual sales prices in 2022, while bananas
from Ivory Coast also benefited from a favourable
USD/EUR exchange rate eect.
On the one hand, European customs duties on
dollar banana imports remain at EUR 75 per
tonne, as expected. On the other hand, and as
announced, the British government has renewed
its import rules based on the ex-EU Trade
Agreements, notably those concerning bananas,
in particular for Ivory Coast. Consequently,
Brexit did not have a negative impact on the
Group’s exports to British customers.
However, and unsurprisingly, the European
price (CIRAD reference) has again reached a
rather lower price at USD 11.4 per box, i.e. 2% or
USD 30 cents less per box, compared to 2020.
Since 2015, the peak of the European import
price in the last decade, the loss has been
USD 2.7 per box, a collapse of 20%.
The covid-19 pandemic
affected the consumer
market to a much
lesser extent in 2021
than in 2020.
33
SIPEF Company Report 2021 Product markets
SIPEF
operational
activities
History in brief
Société Internationale de Plantations et de
Finance (SIPEF) was founded in 1919. Initially,
the Company developed and managed plantation
companies in tropical and subtropical areas
through two agencies: one in Kuala Lumpur,
Malaysia, and one in Medan, Indonesia.
Gradually, SIPEF grew into a diversified agro-
industrial group, with production and export
facilities in Asia, Oceania, Africa and South
America. It managed large plantations of
traditional crops such as rubber, palm oil and
tea. From 1970 onwards, the Group also invested
in other products, such as bananas, pineapples,
ornamental plants, guava and pepper, and in
Belgian and American real estate. Over time,
most of these interests, with the exception of
bananas, have been phased out completely.
In recent years, SIPEF has concentrated almost
exclusively on the production of palm oil in
Indonesia and Papua New Guinea, and bananas in
Ivory Coast. The SIPEF group is headquartered
in Belgium. From here, the Group is managed on a
strategic, financial and economic level. In recent
years, SIPEF has strengthened its information
technology (IT), sustainability and legal services.
The team in Schoten employs 23 people.
SIPEF is listed on Euronext Brussels.
Since 2021, SIPEF has also been operating in
Singapore through SIPEF Singapore Pte Ltd.
From there, the COO APAC, Petra Meekers,
who resides in Singapore, closely monitors all
the Group's activities in Indonesia and Papua
New Guinea.
Finally, SIPEF is also represented in Luxembourg
by Jabelmalux SA. This company is the
Luxembourg parent company of the oil palm
expansions in North Sumatra (PT Umbul Mas
Wisesa, PT Toton Usaha Mandiri and PT Citra
Sawit Mandiri) and of one of the expansions in
the Musi Rawas region in South Sumatra (PT
Agro Muara Rupit). After the successful public
purchase oer issued in 2011, Jabelmalux SA left
the Luxembourg stock exchange.
At the end of 2021, the SIPEF group controls
99.9% of the company. SIPEF aims, in the future,
to also acquire the remaining shares that are still
in public hands.
34
The connection to the world of sustainable tropical agriculture
PLANTED AREA IN HECTARES
INDONESIA PAPUA NEW GUINEA IVORY COAST TOTAL %
Oil palms 63 558 13 605 0 77 163 96.5%
Rubber 1 954 0 0 1 954 2.4%
Bananas 0 0 794 794 1.0%
Horticulture 0 0 31 31 0.1%
Tea 0 0 0 0 0%
Total 65 512 13 605 825 79 942
%
81.9% 17.1% 1.0% 100%
At the end of the 2021 financial year, the number
of hectares of oil palms planted amounts to
77 163, and the total planted hectares including
bananas, rubber and horticulture amounts to
79 942, compared to 64 088 hectares in 2011. The
annual hectarage growth rate was therefore 2.4%
on average for the last 10 years.
Slowly but surely, the goal of 100 000 planted
hectares is becoming a reality. SIPEF continues
to actively look for investment opportunities by
expanding the planted hectares in areas remote
from the cities where the agricultural sector is
the main employer.
In this context, the retention of property rights
and concession rights is of prime importance for
the Group, in order to ensure and further develop
production in the various countries.
Papua New Guinea
Indonesia
Belgium & Luxembourg
Ivory Coast
Singapore
35
SIPEF Company Report 2021 Operational activities
Palm oil
INDONESIA
North Sumatra
1
2
3
Kerasaan
4
Eastern Sumatra
5
Citra Sawit Mandiri
6
Toton Usaha Mandiri
Umbul Mas Wisesa
Tolan Tiga
1
2
Agro Rawas Ulu
3
Agro Muara Rupit
4
Dendymarker Indah Lestari
Agro Kati Lama
1
Agro Muko
2
Mukomuko Agro Sejahtera
South Sumatra
Bengkulu
1
2
3
4
5
6
1
2
1 2
3
4
36 The connection to the world of sustainable tropical agriculture
Hargy Oil Palms
West New Britain
1
1
PAPUA NEW GUINEA
37
SIPEF Company Report 2021 Operational activities
Indonesia
In 2021, the Group fresh fruit bunch (FFB)
production increased for both, own plantations and
smallholders. This rise remained above 14% for the
three first quarters, dropped slightly for the fourth
quarter, while being back in line for the month of
December, to end the year with a total production
growth of 13.7% versus the previous year.
Not only has the FFB production been very good,
but the extraction rates have improved, compared
with 2020. The Group's total palm oil production
reached the record figure of 384 178 tonnes, showing
an increase of 16.7% compared to the previous year.
This growth rate was similar for the production from
own plantations and from the smallholders selling
their FFB to the SIPEF mills.
Indonesia
SIPEF controls directly and indirectly through
its subsidiary PT Tolan Tiga Indonesia,
Jabelmalux and SIPEF Singapore Pte Ltd, 30 oil
palm estates, two rubber estates, one tea estate,
six crude palm oil mills, two rubber factories and
one tea factory. PT Tolan Tiga Indonesia manages
the activities via its Head Oce based in Medan,
North Sumatra and three regional management
oces located in North Sumatra, Bengkulu and
South Sumatra province.
38
The connection to the world of sustainable tropical agriculture
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
100
200
300
400
500
long-term average current rainfall
long-term average current rainfall
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
100
200
300
400
500
long-term average current rainfall
long-term average current rainfall
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
100
200
300
400
500
long-term average current rainfall
After the 2019 drought and a relatively dry 2020
production year, except for South Sumatra, the
annual rainfall in 2021 was found to be slightly
above the five-year average in all regions. As
good as normal weather conditions have been
promoting palm growth and fruit development.
Only the first four months of the year showed a
water deficit for the regions of North Sumatra
and Bengkulu. The region of South Sumatra had
a water surplus almost all year round, and all
estates exceeded the 10-year mean, very often
by 30% or more. Nevertheless, a slightly delayed
stress eect of the 2019 drought on the reduced
formation of female fruit could still be observed.
Estates
Due to low palm oil prices in 2019, management
decided to postpone Indonesia's replanting
program in North Sumatra and Bengkulu in
2020, in order to focus financial resources on
developments in South Sumatra. The replanting
program of these regions resumed in 2021. In
South Sumatra, planting activities continued at
a rapid pace during the year.
Also in 2021, the Group continued to focus mainly
on the investment programs in South Sumatra,
which concerned the further expansion of the
planted areas and infrastructure in Musi Rawas,
the replanting and improvement of SIPEF’s own
oil palm plantations, and of the plantations of
smallholders (plasma) in Dendymarker. In
the other operating units, the usual renewal of
investments and/or materials was done as and
when necessary.
A significant achievement in the continuing
growth and development of SIPEF Indonesia
was observed over the Christmas week, when the
NORTH SUMATRA 2021 RAINFALL VS. AVERAGE IN MM
BENGKULU 2021 RAINFALL VS. AVERAGE IN MM
SOUTH SUMATRA 2021 RAINFALL VS. AVERAGE IN MM
The production milestone of
one million tonnes of fresh fruit
bunches within a calendar
year from own estates was
achieved for the first time in the
Company history.
39
SIPEF Company Report 2021 Operational activities
The estates of the North Sumatran business unit
are the most mature of the SIPEF Indonesia
group. Up to June 2021, they produced as
expected, but then in the third and fourth
quarters were aected by a real drop in crop.
With a generally wet 2021, the crop performance
was variable, still aected by the abortion of
female flower buds due to the water deficit
from 2018, 2019 and early 2020. Some progress
was noted late in the year, but overall, own
plantations ended the year at -0.51% for Tolan
Tiga group and 8.43% for Umbul Mas Wisesa
group, versus last year.
FFB production in the mature plantations with
the mineral soil of North Sumatra had a slower
than expected start at the beginning of the year
as a result of two dry months, followed by a much
better second quarter. The third and fourth
quarters were again lower than last year, and
are detailed as follows.
Perlabian estate (PLE) has 3 708 hectares
of mature oil palms, while 493 hectares are
immature, and 310 hectares were felled
in preparation for planting by September
2022, after one year of fallow to mitigate the
Ganoderma problems.
production milestone of one million tonnes of
fresh fruit bunches (FFB) within a calendar year
from own estates was achieved for the first time
in the Company history. The year 2021 actually
ended with 1 019 009 tonnes of FFB.
This remarkable accomplishment has been
built on the vision, hard work, dedication and
commitment of so many people, past and present,
and is a positive sign of things to come. This is
especially as the South Sumatra projects continue
to mature and further boost production, and the
Company’s replants across North Sumatra and
Bengkulu produce steep yield curves earlier than
expected.
A ‘Smallholders Department’ has recently
been created within the SIPEF Medan Head
Office, to comply with the new Indonesian
regulation. It stipulates that plantation
companies must reserve a further 20% of the
area for smallholders, in addition to their own
number of hectares. It is already managing
90 cooperatives in the three regions, with
5 098 members, representing more than 15 000
hectares of smallholder production, of which
1 178 hectares are already RSPO certified.
PLANTED AREA AND PRODUCTION
MATURE
(IN HECTARES)
IMMATURE
(IN HECTARES)
AVERAGE OIL
PALM AGE
FFB
PRODUCED 2020
(IN TONNES)
FFB
PRODUCED 2021
(IN TONNES)
YIELD 2021
FFB/HA
(IN TONNES)
Tolan Tiga group 12 027 875 13.90 298 757 297 229 24.7
Umbul Mas Wisesa group 9 937 0 12.60 206 984 224 429 22.6
Subtotal own plantations 21 964 875 13.33 505 741 521 659 23.8
Smallholders NA NA NA 4 333 7 715 NA
TOTAL 510 074 529 374
  
40
The connection to the world of sustainable tropical agriculture
In all, by end of the year PLE was at -1.46% in
crop compared to the previous year, bringing
the estate to an annual yield of 24.77 tonnes per
hectare.
Tolan estate (TLE), with 3 614 hectares of mature
oil palms, is currently in a planting break, and the
first replant is expected in 2023 for 173 hectares,
whereafter every year between 170 and 300
hectares will be replanted.
TLE experienced a better than usual year with
rainfall 20% over the 10-year mean. Production
was also good up to September, but dropped for
the rest of the year, however ending at 1.22%
above last year.
Over the last three years, yields have been
dropping, as the average age of the palms is
higher, and a continuous replant will be required
in the next 10 years.
Bukit Maradja estate (BME), which has 2631
hectares of mature palms next to 279 hectares
of immature plantings, has in wet circumstances
performed in line with expectations for most
of the year, but lost out on performance in the
last quarter, ending the year at -2.52% versus
last year.
BME is one of the estates suffering from
Ganoderma and has a constant replanting
program ahead for the next 10 years at a rate
between 140 and 200 hectares per year.
41
SIPEF Company Report 2021 Operational activities
Kerasaan estate (KER) was showing a similar
picture as BME, also suffering from the
Ganoderma fungus eects. With 2 073 mature
hectares and the 102 immature hectares, it
allowed a harvest of 55 212 tonnes of FFB by the
end of December, but finished at 0.74% compared
to last year. KER reached its highest yield in the
last 10 years, 26.63 tonnes per hectare, also the
highest for the area.
The replanting program will continue up to
2026, with annual replanting between 80 and
145 hectares.
In the Umbul Mas Wisesa (UMW) group's
organic soil plantations, the normalised rainfall
supported the fruit harvest. In combination
with the application of the adjusted fertilisation
recommendations over the past two years, this
resulted in a fruit production that was higher for
all four plantations of this group.
There has been no replanting and no nursery
work in the Umbul Mas Wisesa/Toton Usaha
Mandiri (UMW/TUM) estates, as all these
estates are mature and the first replanting is
projected in a few years from now.
2021 has indeed seen an excellent crop
performance in UMW/TUM estates, with
reasonable rainfall, only two dry months at
the start of the year, and the very wet months
of September and October. Crop came down
in the fourth quarter, but the estates are back
on track in terms of yield per hectare, at an
average of 22.58 tonnes. The amended manuring
schedules and increased micro-nutrients have
had their positive impact on the fruit setting,
and it is expected that this will not change in the
coming year. Total FFB production for the year
closed at 224 429 tonnes.
PLANTED AREA AND PRODUCTION
MATURE
(IN HECTARES)
IMMATURE
(IN HECTARES)
AVERAGE OIL
PALM AGE
FFB
PRODUCED 2020
(IN TONNES)
FFB
PRODUCED 2021
(IN TONNES)
YIELD 2021
FFB/HA
(IN TONNES)
Agro Muko 16 332 1 508 13.03 333 172 362 121 22.2
Mukomuko Agro Sejahtera 2 822 471 9.21 29 374 34 661 12.3
Subtotal own plantations 19 154 1 979 12.44 362 545 396 782 20.7
Smallholders NA NA NA 16 386 18 277 NA
TOTAL 378 931 415 059
 
In the oil palm plantations in Bengkulu Province,
the weather conditions were favourable for palm
growth and fruit development. Especially the
young mature palms produced more. But the
volumes of the hectares with older palms also
increased, compared with last year, by more
than 10%. In addition, more hectares were put
into production. The crops exceeded last year’s
production by 8.69%.
42 The connection to the world of sustainable tropical agriculture
The business unit comprises the operations
of Agro Muko’s nine own plantations and four
Mukomuko Agro Sejahtera (MMAS) plantations,
which include the two recent extensions with
Sungei Teramang estate (Asri Rimba acquired
in 2019) and with Batu Kuda estate (Agricinal
conditionally acquired in 2021). The regional
management office is also taking care of the
Corporate Social Responsibility (CSR) activities
of the Yayasan SIPEF Indonesia (YSI), protecting
the turtles, and the SIPEF Biodiversity Indonesia
(SBI) operations, protecting the forest.
A key topic over the last two years has been
the renewal of cultivation licences (Hak Guna
Usaha - HGU) for the large majority of the estates
of Agro Muko and, with the plasma obligation
being introduced during the process of
application, the team had to adjust plans to
introduce and prove the existence of the 20% of
plasma areas before arial maps could be made.
Agro Muko plantations have harvested 362 121
tonnes of FFB, being 8.69% above last year’s
production.
MMAS, with the newly acquired estates, has
produced 34 661 tonnes, corresponding to 18.25%
above last year.
SIPEF Company Report 2021
43
PLANTED AREA AND PRODUCTION
MATURE
(IN HECTARES)
IMMATURE
(IN HECTARES)
AVERAGE OIL
PALM AGE
FFB
PRODUCED 2020
(IN TONNES)
FFB
PRODUCED 2021
(IN TONNES)
YIELD 2021
FFB/HA
(IN TONNES)
PT Agro Kati Lama 3 638 538 4.67 29 005 38 940 10.7
PT Agro Rawas Ulu 1 816 728 3.81 14 064 22 684 12.5
PT Agro Muara Rupit 3 294 2 355 2.76 11 777 23 658 7.2
PT Dendymarker Indah Lestari 1 447 5 770 2.26 27 721 15 287 10.6
Subtotal own plantations 10 194 9 391 3.12 82 567 100 568 9.9
Smallholders NA NA NA 7 933 14 855 NA
TOTAL 90 500 115 424
  
In the South Sumatra Musi Rawas region,
the harvested crop increased by 59.8%. The
exceptional production in the Agro Muara Rupit
(AMR) plantations was more than double than
that of last year: +101.4% and 149.2% respectively
for the East and West estates. This was the result
of an increase in the hectares harvested and an
increase in the average fruit weight in most of
the young plantations.
It is satisfying to see that the total planting/
replanting for the South Sumatra projects,
which started 10 years ago, now nearly reach
20 000 hectares own and almost 5 000 hectares
plasma. The teams on the ground achieved 3 711
hectares of planting in 2021, of which 2 070 were
for Dendymarker Indah Lestari (DIL).
In DIL, a further 1 077 hectares are expected
to be completed in 2022 and 2023 in the own
estates, bringing the total figure for own estates
to 7 806 hectares. The plasma will require
another 1 648 hectares of replanting in the
following three years, to complete the plasma
area of 2 760 hectares, and a total project area
of 10 566 hectares planted in DIL.
The plasma replanting in DIL was started in 2020
and currently 1 112 hectares have been replanted
(40%), while this replanting is supposed to be
continued for another three years, at a speed of
up to 550 hectares a year.
The remaining older DIL plantations experienced
solid production in the first quarter. However,
due to the intensive replanting program, total
fruit production at the end of the year decreased
by 45.49% compared with last year.
44
The connection to the world of sustainable tropical agriculture
MILLS NORTH SUMATRA BMPOM PLPOM UMWPOM
2020 2021 2020 2021 2020 2021
Capacity (tonnes FFB/h) 30 30 55 55 40 40
Actual throughput 27.24 30.05 54.32 54.28 40.18 40.16
FFB processed (tonnes) 121 660 122 769 179 502 179 193 166 814 183 649
Crude palm oil produced (tonnes) 28 427 28 910 39 432 39 734 38 544 42 792
Oil extraction rate (%) 23.37 23.55 21.97 22.17 23.11 23.30
Kernel extraction rate (%) 4.91 4.92 5.79 5.76 4.06 4.04
Mills
The average oil extraction rates (OER) of the
Indonesian palm oil processing mills, accordingly
with the local rainfall volumes, varied in a larger
range compared with last year. They fluctuated
from 21.4% to 22.4% in South Sumatra, which
still processes a relatively high percentage of old
palm fruits with low oil content, to 23.3% in the
fully mature plantations with organic soils in
North Sumatra.
Thanks to these high extraction rates, the
increase in palm fruit volumes (13.55%) were also
reflected in an even higher increase in palm oil
volumes (16.68%) compared with the year 2020.
A good performance was achieved in the Bukit
Maradja Palm Oil Mill (BMPOM), the smallest
mill in North Sumatra: the OER was 23.55%
against 23.37% last year.
The Perlabian Palm Oil Mill (PLPOM) which
is the biggest but also the oldest mill in North
Sumatra, is the key operator and many upgrades
have been done over the last few years to improve
its performance.
The PLPOM has increased the OER from about
20% some years ago to currently 22.17%, but
remains hampered by the low oil content of the
remaining old fruit coming mainly from PLE.
At the Umbul Mas Wisesa Palm Oil Mill
(UMWPOM), due to the wet weather in
September/October and the lower bunch set,
the overall performance of the mill came down
in OER, FFA during the last quarter: the final
OER was an average of 23.30%, against 23.11%
last year.
45
SIPEF Company Report 2021 Operational activities
MILLS BENGKULU AND SOUTH SUMATRA MMPOM BTPOM DILPOM
2020 2021 2020 2021 2020 2021
Capacity (tonnes FFB/h) 60 60 30 30 20 60
Actual throughput 59.38 58.18 29.83 30.22 20.31 20.16
FFB processed (tonnes) 242 611 264 497 134 445 145 934 81 504 108 698
Crude palm oil produced (tonnes) 56 968 62 538 30 249 32 460 17 540 24 541
Oil extraction rate (%) 23.48 23.64 22.50 22.24 21.52 22.57
Kernel extraction rate (%) 4.52 4.33 5.05 4.68 3.84 3.55
The Mukomuko Palm Oil Mill (MMPOM), which
takes most of the crop of the northern estates
of the Agro Muko group, reached an average
OER of 23.64% at the end of 2021, better than
the 23.48% of last year. The main reason for the
good performance is the increase in the ripeness
standards of the harvested fruits.
FFA numbers were slightly higher, especially
around the Ramadan and the Lebaran break.
The Bunga Tanjung Palm Oil Mill (BTPOM),
which takes the crop of the southern estates,
continues to struggle in terms of performance,
mainly because it is not running at full capacity:
at 83% on the basis of 30 tonnes per hour and
only 42% on a calculation of 60 tonnes per hour.
OER was 22.24% at the end of the year, versus
22.50% the year before.
An additional industrial asset was the Agro
Muko Tank Terminal located in Padang, which
remained essential in terms of shipping, if and
when required. Its capacity remained unchanged,
with a total of 26 000 tonnes stored in eight
tanks.
The ongoing upgrade of the Dendymarker Indah
Lestari Palm Oil Mill (DILPOM) from 20 to 60
tonnes per hour capacity has continued, while
the mill was running and processing at full speed.
The mill will have a horizontal Compact Modular
Concept (CMC) Indexing System steriliser and
entirely new power supply (boilers, turbines,
etc.), while the old material will be dismantled
as soon as possible. The old boiler will remain
on standby. The mill should provide a better oil
recovery and kernel recovery, less oil loss and a
good steaming process. The final commissioning
could be expected by the end of April 2022.
For the year 2021, OER was at 22.57% compared
with 21.52% for the previous year.
46 The connection to the world of sustainable tropical agriculture
Papua New Guinea
Papua New Guinea
Hargy Oil Palms Ltd (HOPL) has six oil palm
plantations regrouped under three estates,
together with 3 635 independent smallholder
plantations that supply its palm oil mills on a
regular basis.
After a dry month of December 2020 and
a relatively mild rainy season in the first
quarter of 2021, followed by lower than average
precipitation volumes in the second half, the
yearly average rainfall in the oil palm plantations
in Papua New Guinea was about 30% lower than
the five-year average.
These weather circumstances provided
agronomically good conditions in the region,
leading to steady high production coupled with
the unexpectedly rapid recovery of the areas
affected by the Navo volcano. This has had a
generally positive impact on all aspects of the
operations.
SIPEF Company Report 2021
47
PLANTED AREA AND PRODUCTION
MATURE
(IN HECTARES)
IMMATURE
(IN HECTARES)
AVERAGE OIL
PALM AGE
FFB
PRODUCED 2020
(IN TONNES)
FFB
PRODUCED 2021
(IN TONNES)
YIELD 2021
FFB/HA
(IN TONNES)
Hargy estate 4 023 393 9.03 106 610 133 587 33.2
Navo estate 6 262 343 11.60 95 607 154 969 24.7
Pandi estate 2 584 0 8.54 67 398 78 293 30.3
Subtotal own plantations 12 869 736 10.18 269 616 366 849 28.5
Smallholders 14 074 744 15.89 209 791 232 134 16.5
TOTAL
26 943 1 480 -
479 407 598 983
22.2
Estates
Following almost two years without replanting,
due to having focused on rehabilitation and
recovery of the areas affected by the 2019
volcanic eruptions, HOPL resumed its replanting
programme in 2021.
All seedlings have been from the DAMI ‘Super
Family’ type since 2015, enabling the yields
for the future to be enhanced. The seedling
quality issues experienced late 2020 and early
2021 have been steadily overcome. However,
the new overhead sprinkler irrigation system
being installed this year in the nursery will
surely improve the uniformity of the seedling
development.
Replanting has progressed well, despite some
diculties with contractor felling equipment
and seed delivery delays. The replanting team
achieved nearly 675 hectares own, allowing an
average palm age of 10.2 years to be maintained.
About 150 hectares have been deferred to 2022,
mainly due to delays in seed deliveries. For the
smallholders, the replanting is ongoing at a slower
pace, and the average palm age is 15.9 years at
the end of 2021.
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
long-term average current rainfall
300
600
900
1 200
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
long-term average current rainfall
300
600
900
1 200
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
300
600
900
1 200
long-term average current rainfall
HARGY ESTATE 2021 RAINFALL VS. AVERAGE IN MM
NAVO ESTATE 2021 RAINFALL VS. AVERAGE IN MM
BAKADA ESTATE 2021 RAINFALL VS. AVERAGE IN MM
48
The connection to the world of sustainable tropical agriculture
In 2021, the replanting
programme resumed in the
areas affected by the 2019
volcanic eruptions.
For SIPEF’s subsidiary in Papua New Guinea,
2021 will remain an exceptional year in
the history of HOPL’s production since its
establishment in the country 45 years ago. On
the one hand, the plantations benefitted from
very favourable and extraordinary weather
conditions, with very moderate rainfalls all
year round. On the other hand, as the estates
continued to recover reasonably well in the
areas aected by the 2019 volcanic eruptions,
production has shown a record year, closing
2021 with an increase of 41.9 % on own palm
oil volumes, and 14.1% on smallholder palm
oil volumes, for whom the harvesting was also
encouraged by the high world market prices for
their delivered fruit.
All three estates surpassed their peaks from
2018. Helped by the weather, the harvesting
teams have controlled the daily harvesting
rounds well, resulting in good quality fresh fruit
bunches (FFB). They significantly increased crop
collection, ending the year with a 36.1% FFB
production rise versus last year.
The rehabilitation pruning work of the
plantations at Navo impacted by the volcano was
completed early in the year with the assistance
of contractors. Subsequent access to the crop on
the most aected areas assisted Navo, almost
doubling its production.
49
SIPEF Company Report 2021 Operational activities
The smallholders had more diculty, delivering
decreased fruit volumes at the start of the year.
However, they finally ended the year with a
significant rise, a record-breaking performance at
10.7%, surpassing their highest volumes in 2018.
The outstanding prices have seen smallholder
block maintenance improve across the project
area and, with the regular uninterrupted 14-day
crop pickup schedules, largely contributed to
their good production. Also, no crop has been
rejected.
Road access has been good all year, even
though there has been little assistance from
the Government for the main and smallholder
roads, which are still primarily maintained by
the Company.
Mills
Mill extraction rates have also been at record
levels. Whilst these are significantly influenced
by the exceptional weather, good fruit quality
as a consequence of well controlled harvest
day rounds, an overall improvement in field
management, regular uninterrupted smallholder
14-day crop pickup schedules, and excellent work
by the mill teams have made this possible.
The three palm oil mills in Papua New Guinea
reached a peak annual average of 25.8%. At year
end, Hargy Palm Oil Mill (HPOM) was on average
at 24.9%, with Barema Palm Oil Mill (BPOM) at
25.6% and Navo Palm Oil Mill (NPOM) at 26.0%.
50 The connection to the world of sustainable tropical agriculture
On the other hand, the same reasons of a mild
wet season, well-maintained plantation harvest
rounds and regular smallholder crop collections,
have combined to enable the mills to maintain
FFAs below 4.00%, ending the year on average
at 2.71% for HPOM, 3.63% for BPOM and 3.06%
for NPOM. These rather low FFA levels led to a
premium achieved on every shipment. To further
improve on FFA and to avoid quick increases
of FFA during the tank storage period before
loading the ships, all storage tanks at the tank
farm are emptied and cleaned on a routine basis.
The Company’s wharf and oil pipeline remain
certified as compliant with the International
Ship and Port Facility Security Code (ISPS Code).
Crude palm oil (CPO) and crude palm kernel oil
(CPKO) produced were also on the record side,
with 13 shipments loaded for the first time this
year, compared with the usual 12 shipments a
year. As a result of both good crop production
and extraction rates, CPO volume is 29.7% above
2020.
MILLS HPOM NPOM BPOM TOTAL
2020 2021 2020 2021 2020 2021 2020 2021
Capacity (tonnes FFB/h) 45 45 50 50 45 45 140 140
Actual throughput 45.32 46.74 48.88 50.95 44.61 42.90 138.81 140.60
FFB processed (tonnes) 50 583 70 654 130 272 191 604 89 812 104 591 269 837 366 849
FFB processed smallholders (tonnes) 90 848 94 893 27 730 37 633 91 213 99 608 209 791 232 134
Crude palm oil produced (tonnes) 33 569 41 242 38 999 59 596 45 555 52 365 118 123 153 203
Oil extraction rate (%) 23.74 24.91 24.68 26.00 25.27 25.64 24.63 25.58
Crude palm kernel oil produced (tonnes) 2 723 3 590 - - 6 673 8 660 9 397 12 251
Palm kernels produced (tonnes) 7 093 8 679 8 302 11 601 9 311 10 523 24 706 30 803
Kernel extraction rate (%) 5.02 5.24 5.25 5.06 5.17 5.15 5.15 5.14
Kernel oil extraction rate (%) 1.93 2.17 - - 1.97 2.00 1.96 2.05
51
SIPEF Company Report 2021 Operational activities
Bananas
IVORY COAST
1
Plantations J. Eglin - Azaguié 1 & 2
2
Plantations J. Eglin - Agboville
3
4
5
Plantations J. Eglin - Motobé
Plantations J. Eglin - Lumen 1 & 2
Plantations J. Eglin - Akoudié
1
2
3
4
5
Région des Lagunes
52 The connection to the world of sustainable tropical agriculture
53
SIPEF Company Report 2021 Operational activities
Plantations J. Eglin is a major player in the banana
production in Ivory Coast, the most important
banana producing and exporting country in Africa.
The company produces nearly 33 000 tonnes of
bananas for export annually, the vast majority for
the European market, on a planted area of about
800 hectares, split into three locations Azaguié,
Agboville and Motobé. However, with the
assets acquisition by mid-2021 of an old banana
plantation which ceased producing for the last two
years, the planted area of Plantations J. Eglin will
grow within the coming three years from 800 to
1 350 hectares. It will introduce two new locations,
being Akoudié and Lumen.
Ivory Coast
Rainfall
Only Azaguié 1 got rainfall figures comparable to
the long-term average. Otherwise all other sites
were below the average. Motobé experienced the
driest year within the sites in 2021, with -29%
compared to last year, and -25% compared to
the long-term average.
54
The connection to the world of sustainable tropical agriculture
Estates
The activities of the banana plantations remain
concentrated on the same historical three
production areas, where there were no major
changes in 2021. As of 31 December 2021, the
total banana area planted is 794 hectares, which
is 4% more compared with last year.
Plantations J. Eglin has the ambition to make
optimal use of the area available for bananas
by maintaining the regular replanting cycle,
including fallow periods. With the use of in-vitro
cultivated banana plants every seven years on
average, the current strategy focuses on planting
healthy plant material in healthy soil having had
a period of fallow.
In 2021, the banana area in Ivory Coast was
expanded with a first new plantation. 22 hectares
of this area were eectively planted in the fourth
quarter and were, therefore, still unproductive in
2021. The annual production should consequently
increase by more than 15% in 2022, mainly due
to the new harvesting areas in the second half
of the year.
long-term average current rainfall
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
long-term average current rainfall
100
300
200
400
AZAGUIÉ 1 & 2 2021 RAINFALL VS. AVERAGE IN MM
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
long-term average current rainfall
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
100
300
200
400
AGBOVILLE 2021 RAINFALL VS. AVERAGE IN MM
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
100
300
200
400
long-term average current rainfall
MOTOBÉ 2021 RAINFALL VS. AVERAGE IN MM
PLANTED AREA AND PRODUCTION
PLANTED AREA
(IN HECTARES)
PRODUCTION
2020 (IN TONNES)
PRODUCTION
2021 (IN TONNES)
YIELD 2021
TONNES/HA
Azaguié 1 146 5 152 5 600 38.4
Azaguié 2 191 8 447 7 512 39.3
Agboville 230 8 988 9 507 41.3
Motobé 226 8 571 9 581 42.4
Lumen 1 IN PREPARATION
Lumen 2 IN PREPARATION
Akoudié IN PREPARATION
TOTAL
794 31 158
32 200
40.6
55
SIPEF Company Report 2021 Operational activities
After disappointing banana volumes at the end of
2020, expected higher production was achieved
in most of the plantations as from the start of
2021. A limited impact of the colder Harmattan
wind in the second quarter, 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 for the
first six months of the year.
The third quarter saw a slight decrease in
production, due to the variations in the
production cycles of the four banana plantations.
For the full year, the agronomic performance
has been slightly higher than last year (+3.3%).
Despite more bunches than expected being
harvested overall, lower weights were however
observed per bunch, from an almost identical
harvested area.
Packing stations
The development of the new plantations which
started in the second semester should not, above
all, aect the current operations on the historical
four sites. Therefore the new areas have been
managed as a separate business unit.
At Lumen 1 and 2, as at 31 December 2021,
22 hectares had been prepared, drained,
irrigated and planted. The tissue culture plants
were grown in Azaguié’s own nursery. The
cableway is being installed, to be ready for the
first harvesting, which will take place by July-
August 2022.
At Akoudié, the first project to be completed
was to have the access road reshaped up to the
national main tarmac road. A ring road was then
constructed to ensure all cultivated land by the
Group cannot be encroached upon by outside
people. The land preparation itself has been
contracted out for the cleaning, subsoiling and
drainage of the area, during the driest period, to
make sure the land will be ready for planting in
the second semester of 2022.
PACKING STATIONS EU REGIONAL LOCAL TOTAL
CAPACITY
(TONNES/DAY)
2020 2021 2020 2021 2020 2021 2020 2021
Azaguié 1 30 4 444 4 856 709 744 365 630 5 518 6 230
Azaguié 2 40 7 075 6 358 1 372 1 154 701 1 034 9 148 8 546
Agboville 40 8 055 8 547 933 960 872 988 9 860 10 494
Motobé 40 7 565 8 257 1 006 1 324 655 1 234 9 226 10 815
Lumen 1
WILL RESUME OPERATIONS AS FROM JULY 2022
Lumen 2
WILL RESUME OPERATIONS AS FROM JULY 2022
Akoudié
WILL RESUME OPERATIONS AS FROM DECEMBER 2022
56
Horticulture
ORNAMENTAL PLANTS
UNITS
PINEAPPLE FLOWERS ORNAMENTAL FOLIAGE LOTUS
2020 2021 VARIANCE % 2020 2021 VARIANCE % 2020 2021 VARIANCE %
Azaguié 2 345 299 333 775 -3.3% 1 736 100 1 611 050 -7. 2% 80 610 130 465 61.8%
The horticulture activities are carried out in
Ivory Coast on 32 hectares of land adjacent to
the banana plantation site of Azaguié 2. For
many years, pineapple flowers and ornamental
foliage have been grown on the same cultivated
area. This year has seen a small decrease in the
hectarage, as nine hectares were transformed
into the banana plantations, and three hectares
were extended on wasteland which has been
rehabilitated.
The lotus flowers are grown on the dam lake of
the Agboville site.
57
SIPEF Company Report 2021 Operational activities
Rubber and tea
1
Agro Muko
Bengkulu
1
Melania (Tea Estate)
West Java
1
2
1
1
1
Melania (Rubber Estate)
1
Timbang Deli
2
Bandar Sumatra
1
North Sumatra
South Sumatra
INDONESIA
58 The connection to the world of sustainable tropical agriculture
59
SIPEF Company Report 2021 Operational activities
Rubber
In June 2020, it was decided to convert two
of the three rubber plantations, also suitable
for palm cultivation, into oil palm plantations
and immediately start the conversion process.
Besides the need for getting RSPO approval
beforehand, and applying all the New Planting
Procedures (NPP), the conversion also includes
the closure of the nurseries, the cessation
of replanting efforts and the maintenance
of the remaining areas. When planting is
allowed, it will, of course, include a plasma
development, which is a requirement imposed
by the governmental authorities on the oil palm
industry, related to the renewal of land use
rights licences (Hak Guna Usaha – HGU). The
restructuring will last for about three to four
years, during which time the rubber tapping will
continue to the maximum and be accompanied
by the gradual planting of oil palms. By 2029, the
switch to mature and cash-generating oil palm
plantations should be complete.
Estates
Rubber production remained problematic all
year long, mainly in Bandar Pinang estate (BPE).
The crop was indeed 34.8% below in 2021, a year
heavily aected by the Pestalotiopsis fungus.
The main reason is the reduced numbers of
tapped hectares caused by the early start of the
conversion, while early and prolonged wintering
also reduced the possibility for stimulation.
The low production is aecting the unit cost of
production, which has gone up compared to the
net selling price.
Preparing for the conversion is in progress,
with 465 hectares waiting to be planted with oil
palm, but RSPO assessments and HGU renewal
concerns make it continue as a rubber estate for
the time being.
60
The connection to the world of sustainable tropical agriculture
As the management of MASE Palembang was
handed over to Shamrock Group on 1 May 2021,
the figures of these activities were from that date
no longer integrated In the consolidation.
Mills
The Crumb Rubber Factory (CRF) in Agro Muko
was running below capacity all year long, a result
of the start of the conversion to rubber. Also due
to the sale of PT Melania, from May onwards
the cup lumps from MASE were no longer sent
to Agro Muko.
As the conversion from rubber to oil palm is
expected to be implemented from 2024 on,
calculations need to be made, based on the rubber
market prices, about when it will become more
beneficial to stop producing in the CRF, and just
tap and sell the cup lumps to a dedicated buyer.
There is no alternative for the factory, once
processing is stopped.
The operational performance of PT Timbang Deli
also remained frustratingly on the low side. Tolan
Tiga group was buying the latex produced by PT
Timbang Deli’s limited plantation activity to
manufacture it into ribbed smoked sheets (RSS).
In Agro Muko, nearly 500 hectares of rubber
plantations have already been felled and planted
with Mucuna cover crop. In the meantime, a
consultant carried out the environmental and
social impact assessments for RSPO compliance,
and the reports were submitted to the High
Conservation Value Resource Network (HCVRN)
organisation in October 2021.
The workforce has already been reduced by a
third, with some workers being relocated.
61
SIPEF Company Report 2021 Operational activities
Tea
The tea plantation in West Java covers 1 811
hectares. Since the economic life of tea bushes
is much longer than that of oil palms or rubber
trees, replanting does not happen until 50 years,
or sometimes more, after planting. The result is
that the area to be replanted annually is much
smaller than for other agricultural commodities,
and no replanting was done in 2021.
The agreement related to the sale of PT Melania
by PT Tolan Tiga Indonesia to Shamrock Group
was signed in May 2021. PT Tolan Tiga Indonesia
is currently working towards the HGU renewals
in order to complete definitively the sale.
Unlike the situation of MAS Palembang, Cibuni
estate continued to be eciently managed by PT
Melania. Shamrock Group is sending a visiting
agent to keep track of operations on a monthly
basis. The production has been continued and all
the leaf quality and final product specifications
have been preserved.
With respect to the HGU renewal applications,
which are likely to be completed by the end of
2022, and the related 20% plasma requirements,
the contracted smallholders are very engaged
in delivering tea leaves, corresponding so far to
14,1% of the annual production. These leaves are
processed separately into the ‘Melchi’ brand tea
sold separately from the ‘Melania’ brand, mainly
on the local market.
62
The connection to the world of sustainable tropical agriculture
Research and development
Verdant Bioscience Pte Ltd
Research and development to increase yields per
hectare remains very important for a sector that
is under pressure to produce ever more vegetable
oil, and always in a more sustainable manner, but
which has little or no access to additional land.
Therefore, the Group must focus on improving
the eciency of the areas already planted. In
that context, the Company's 38% participation
in Verdant Bioscience Pte Ltd (VBS), a company
founded in 2013, is of particular importance.
63
SIPEF Company Report 2021 Operational activities
To achieve this SIPEF collaborates with reliable
professional partners: Ackermans & van
Haaren (42%) a renowned Belgian Investment
Company; Dharma Satya Nusantara Tbk (10%),
an Indonesian listed plantation company; and
BioSing (10%), the VBS management.
Through VBS, SIPEF not only has access to new
varieties of high-yielding oil palms, but also to
the real potential to generate very meaningful
sustainability benefits worldwide. An increase
in yield per unit of area is seen as the only
real solution to the growing world demand
for vegetable oil, without increasing the area
of oil palm planted. This could eliminate the
risk of further loss of rainforest and biological
diversity. Such a yield increase would be unique
for a crop like oil palm with its global economic
importance.
VBS is one of the first Indonesian seed producers
to bring semi-clonal seeds to the market, based
on clones produced as female seed palms through
a tissue culture process. This production of
semi-cloned seeds enables VBS to produce, in
commercial quantities, selected elite crosses
under the brand name Verdant Select, which
have been thoroughly tested in both Papua New
Guinea and Indonesia.
Besides the semi-cloned seeds, VBS is focusing
a specific F
1
hybrid programme.
Through VBS, SIPEF not only
has access to new varieties of
high-yielding oil palms, but also
to the real potential to generate
very meaningful sustainability
benefits worldwide.
64 The connection to the world of sustainable tropical agriculture
It focuses on the development of high-yielding
F
1
hybrid oil palms and other supporting
technologies and innovation solutions, that
underpin the significant potential for yield and
productivity improvement in the global palm oil
sector. The seeds from a single selected F
1
hybrid
variety will have higher yields and be genetically
uniform. This genetic uniformity within each
F
1
hybrid variety allows management practices
(harvesting, nutrients applied and replanting
time) to be further optimised from which
the grower can lever great value. Despite the
challenges of operating during a pandemic, the F
1
hybrid programme has made good progress and
candidate F
1
hybrid crosses grown in the nursery
were field planted in 2021. Further testing of
new F
1
hybrid crosses will now continue each
year with female plants from dierent genetic
backgrounds. Successes were also achieved in
increasing the frequency of crosses with F
1
hybrid
palms from well-defined but diverse genetic
backgrounds. The first-generation ospring of
these homozygous parental plants (F
1
hybrid
crosses) have the potential to deliver greatly
improved yields.
As a major shareholder of VBS, SIPEF is testing
commercial varieties of candidate oil palms on
its Sumatran plantations. These trials include
selection not only based on higher yields, but also
on important commercial secondary traits such
as disease resistance, as well as selection of new
commercial material for specific environmental
conditions, e.g. rainfall amount and distribution,
or soil fertility, microbial diversity and moisture
holding capacity.
65
SIPEF Company Report 2021 Operational activities
VBS agronomists and crop protection staff
have continued to work with SIPEF plantation
management to make recommendations in order
to realise the potential of existing plantations,
mainly by increasing yields per hectare and
innovatively enriching the soil. Long-term
trials of both fertilisers and compost have been
carried out on representative soils in each SIPEF
region. In this way, the recommendations for
fertilisers and compost can be further refined
for the specific growing conditions, based on the
results of objective science, also with the aim of
improving the soil health.
VBS also works with the plantation management
of PT Tolan Tiga Indonesia on the development
of new insights and their future integration
into strategies. These developments include
the optimisation of plant growth, the regulation
of carbon in the soil, the maintenance of good
water balance, and also the control of pests and
diseases. In this way, the Group wants to prevent
commercial losses in oil palm, rubber and tea.
In addition, work is also being undertaken to
further optimise the good agricultural practices
that underpin the sustainable manner in which
SIPEF operates its plantations. In this respect,
preference is given to biological control of pests
and the minimum use of pesticides. With all
these developments, SIPEF aims to improve the
circularity and carbon positive impacts.
As a major shareholder of VBS,
SIPEF is testing commercial
varieties of candidate oil palms
on its Sumatran plantations.
66 The connection to the world of sustainable tropical agriculture
Other developments
SIPEF continues to focus on renewal and
innovations that further contribute to making
the Company more sustainable. This is important
for a company in the agricultural sector, in order
to continue producing sufficient and healthy
food. Therefore, SIPEF has examined how it can
eciently manage and reduce greenhouse gas
(GHG) emissions with targeted investments. First
of all, it is important to calculate a GHG inventory
that provides the necessary information for the
further progress of emissions reduction. In
2021, SIPEF focused on creating that inventory
using the internationally recognised 'Carbon
Footprint' ISO 14064 standard. The initial
findings of these calculations can be found in
the Sustainability Report, part 3 of this Annual
Report.
In 2022, SIPEF will focus on verifying the
application of this methodology by the various
business units of the Group and publish the
results at the end of the year. Thanks to this
inventory and the continued development
of its mitigation strategy, SIPEF could in the
future reduce GHG emissions in a recognised,
transparent and verifiable manner.
67
SIPEF Company Report 2021 Operational activities
This calculation has shown that in the palm oil
production process, including the fermentation
of wastewater in an open pond system, a natural
biological fermentation process (anaerobic), a
significant amount of methane (CH4) is emitted.
The methane can be captured and flared by
building a capture system. Currently, SIPEF
has already equipped five of its nine plants with
such a capture system. The Dendymarker mill is
the sixth mill where this kind of installation will
be set up. Due to covid-19, its construction was
delayed in 2021. The end of the works is planned
for 2025.
In addition, it is possible to convert the biogas
into electricity and heat with limited emissions.
This application is profitable if the generated
energy can be delivered to the grid at a green rate
when there is an internal shortage of biomass
or steam. In Bengkulu, a plant for electricity
generation from methane gases has been built.
Since the end of 2017, the Group has supplied
the energy that could not be used internally to
the public grid. This has made SIPEF a direct
supplier of green energy to the public sector for
the first time. However, this is only profitable if
the taris are good and if sucient volume is
purchased, which unfortunately is not currently
the case. However, SIPEF hopes that in the
future there will be renewed interest from the
government for green energy at the right price.
Furthermore, SIPEF also focuses on reusing land
and commodities as much as possible, with as
few residues as possible and reduced emissions.
In circular agriculture, the focus is on enriching
the soil. The reduction of GHG will increase
due to the reduced use of nitrogen fertilisers,
which are in themselves energy intensive. In
North Sumatra, SIPEF has been working for
several years with a state-of-the-art composting
facility, which absorbs the empty bunches and
wastewater from the Bukit Maradja palm oil
mill. In this way, the residual flows are used in
an emission-neutral process. In this process, the
compost produced is used to improve the soil
structure of the oldest plantations in the long
term and significantly reduce the use of chemical
fertilisers.
In North Sumatra, at the UMW mill, a biomass
pellet plant is being established, which will
convert excess biomass (empty fruit bunches)
into high-quality calorific pellets. The biomass
will be dried and converted under high pressure
and heat into these pellets. The residual steam
is produced sustainably and is available in large
quantities. The energy required for the process
also comes from a sustainable source (biogas and
steam). In this way, the entire chain is emission-
neutral. The pellets can then be used again to
generate green electricity. The project was
delayed in 2021 due to technical modifications
and the covid-19 pandemic. The project will be
completed in the second quarter of 2022.
SIPEF focuses on reusing land
and commodities as much as
possible, with as few residues as
possible and reduced emissions.
68 The connection to the world of sustainable tropical agriculture
Finally, SIPEF started an integral research
project in 2021 to further increase the quality
of oil produced. For good future prospects, the
production of high-quality oil is very important
for the sector, given the increasing quality
requirements for the fats and oil industry.
Therefore, SIPEF has started a project in
collaboration with a partner, whereby the quality
of the oil is increased by washing the crude palm
oil. In this process, the precursors that can form
3-MCPD (3-monochloropropane-1, 2-diol are
removed. 3-MCPD is a substance that can be
formed during the heating of high-fat products
at very high temperatures in the refining of
vegetable oils. Treating the crude oil in the first
production process at the mill lowers the risk of
formation of this substance, while increasing
the quality of the crude palm oil before it goes
for refining. This is an added value for both the
refining and the final product. The quality is
guaranteed from the beginning of the process.
The first research results show that good results
can be obtained in a test installation. SIPEF has
decided to scale up the project and provide a first
mill with a washing system in 2022.
SIPEF Company Report 2021
69
Risks and
uncertainties
In November 2021, the audit committee once
more analysed the various risks that face the
Group.
In this process the committee identified and
classified 76 risks: general, product, operational,
workforce, financial, commercial, legal and
political.
Subsequently, all of these risks were then
assessed, based on the likelihood that they would
occur and their potential impact on the Company,
and were mapped out. The audit committee
has adapted the classification of a number of
risks compared with the 2020 classification, in
response to the events in 2021.
Based on that analysis, only the principal risks
that are certain, virtually certain or likely to
occur in the SIPEF group, and that could have a
significant or moderate negative impact on the
financial situation, the operating results or the
liquidity of the Group leading to impairments of
assets, are stated below.
1. Principal risks
The following principal risks have been identified:
RISKS CERTAIN VIRTUALLY CERTAIN LIKELY
1 Risk connected with the spread of activities over a limited number
of countries and with limited product diversification
HIGH
2 Risk connected with expansion HIGH
3 Risk of dependence on a limited number of large customers HIGH
4 Risk connected with land property rights and rights of use HIGH
5 Risk of natural disasters (plantations – mills) HIGH
6 Risk of rising raw material-related input prices AVERAGE
7 Risk of not finding sucient sta in remote areas AVERAGE
8 Risk of wage rises AVERAGE
9 Climate risk AVERAGE
10 Future climate change AVERAGE
11 Risk of an unexpected fall in future short-term margins AVERAGE
12 Risk connected with the concern for sustainability in Europe
and increased RSPO restrictions
AVERAGE
POSSIBILITY
IMPACT
70 The connection to the world of sustainable tropical agriculture
2. Specific risks
Four specific risks have been selected from
the aforementioned principal risks. They are
discussed below, given their relevance to the
Group’s activities in the past financial year 2021.
A full description of the other principal risks is
published on the website at www.sipef.com/
investors/risks-and-uncertainties.
The risks connected with local regulations are
also examined; specifically, the risk of a tax
levy on every palm oil export out of Indonesia.
Although this is not one of the principal risks
the Group faces, it is discussed here due to its
topicality.
Risk connected with the spread of activities over a limited number of
countries and with the limited product diversification
DESCRIPTION RISK-MITIGATING MEASURES
The Group chiefly produces oil palm products in
Indonesia and Papua New Guinea, and bananas in Ivory
Coast.
The concentration of the activities in Indonesia, Papua
New Guinea and Ivory Coast is explained by history.
The Group accordingly remains a long-term investor in
industrial agriculture in these countries and also wishes
to increase its presence and production there, given that
it has been able to build up a position as a recognised and
renowned producer of sustainable agricultural products.
The Group naturally continues to closely monitor all
political, economic and legislative developments and
initiatives in these countries, in order to be able to
respond to them as well as possible.
The centre of gravity of SIPEF’s activities is in the
cultivation of oil palm products in Indonesia and Papua
New Guinea, which accounts for approximately 92% of
total turnover.
So, if problems of any nature occur in Indonesia, and to a
lesser extent in Papua New Guinea and Ivory Coast, that
obstruct the cultivation or production of these products,
this could have a significant negative impact on the results
and the financial situation of the Group.
SIPEF is of the opinion that it is better to concentrate on
a few high-yield products with good long-term prospects
than investing in more lower-yield products with
uncertain prospects. This explains why, in recent years,
SIPEF has decided to focus exclusively on the production
of oil palm products and, to a lesser extent, bananas that
guarantee a stable yield. SIPEF is convinced that palm
oil, as the most productive and ecient vegetable oil, will
remain an essential part of the balanced diet of a growing
>>>
71
SIPEF Company Report 2021 Risks and uncertainties
and increasingly prosperous global population. Palm
oil is capturing an ever-larger share of food and biofuel
markets worldwide, except in Europe. That is due, among
other things, to its ecient industrial processing and
its low-cost price compared with other vegetable oils.
Furthermore, the palm oil yield per hectare is five to ten
times higher than any other vegetable oil. This yield will
only continue to rise as eciency is improved, while the
area available as agricultural land will only continue to
fall. So, the long-term expectations for palm oil remain
generally very favourable.
Risk connected with land property and use rights
DESCRIPTION RISK-MITIGATING MEASURES
The retention of property rights and concession rights is
essential for the Group in order to safeguard and develop
production in the various countries. The Group activities
and results could therefore be seriously impacted if it
does not manage to retain these rights or, in the case
of concession agreements, renew them for a long term.
There is also a risk for the Group if the existing land use
rights are limited.
SIPEF has precisely mapped the various property rights
and concession rights. The Group also employs legal
experts with a solid knowledge of local laws and who
maintain a constructive relationship with the relevant
authorities. Constant monitoring of property rights and
concession rights ensures that SIPEF can follow the
correct and necessary procedures in a timely manner
to renew or extend them or even acquire new rights.
Furthermore, in recent years, the requirement was
introduced in Indonesia that 20% of the area covered
by an agreement on new concession rights or the renewal
of original concession rights must be registered in the
name of local smallholders. Pursuant to this, SIPEF has
entered into new agreements with these smallholders.
It will take a long time to integrate these smallholders
into SIPEF’s RSPO-certified supply chain by means of
specific programmes. A ‘local smallholder’ department
was set up at the Head Oce of the Indonesian activities
to give appropriate attention to directing and supporting
these processes.
72
The connection to the world of sustainable tropical agriculture
Climate risk
DESCRIPTION RISK-MITIGATING MEASURES
The volumes produced, the turnover and margins
generated are impacted by climate conditions, such as
precipitation, sunshine, temperature and humidity.
Unfavourable weather can disrupt the agricultural
activities and have a negative impact on agricultural
production. Severe weather, e.g. floods, droughts, severe
storms, could result in significant damage to property,
protracted interruptions to the activities, personal injury
and other damage to the operating activities of the Group.
The potential physical consequences of climate change
are uncertain and may dier depending on the region
and the product.
The Group endeavours to prepare as well as possible for
certain natural phenomena, in order to limit or even avoid
its consequences. It focuses in particular on the impact
of changes in precipitation, which can result in flooding
or droughts. A study has been done to monitor water
tables and the moisture content of the soils, to determine
its impact and to design, according to best management
practice, systems which will deal with water retention.
To maintain the right water levels in the estates and in
the landscape, water gates have been built to contain or
guide the water to an appropriate level. Of course, all
of this is done by following the best practices and the
existing regulations.
In addition, in the banana operations of the Group 70%
of irrigation water is stored in catchment basins during
the rainy season and can be used responsibly during the
dryer season.
Furthermore, across all Group activities special attention
is given to the maintenance of buer zones and riparian
areas around natural rivers within the estates or on
adjacent coastline.
These zones and areas are used to maintain good
vegetation, keep moisture levels high, control erosion
and protect the coastline. The Group has also invested
in fire prevention, fire risk monitoring and firefighting,
particularly in areas which are more prone to drought
and fires. In certain areas the soil needs to be drained
for the cultivation of oil palms. Following best practices
is very important in these areas to make sure the risk of
fire and flooding is reduced. The Group also conducts
drainage assessments to minimise these risks and to
maintain a good natural flow of water. SIPEF reports
and makes great eorts to control fires that occur in the
concessional areas it manages. Moreover, it monitors
areas outside the Group's plantations and engages with
stakeholders to prevent and stop fires when they occur.
73
SIPEF Company Report 2021 Risks and uncertainties
Risk connected with the concern for sustainability in Europe
and increased RSPO restrictions
DESCRIPTION RISK-MITIGATING MEASURES
The Group’s reputation is based on its RSPO certification.
Given the growing consumer concern for sustainability
and corporate social responsibility, the European Union
or the various authorities in the countries in which SIPEF
operates could impose tougher rules on companies.
It is uncertain whether the Group and the local producers
will always be able to comply with these certification
requirements. If the Group fails to meet the requirements,
it could lose its certification or the certification could
be suspended. Such loss or suspension could have an
adverse impact on the activities, reputation and financial
situation of the Group.
The Group oil palm plantations follow the RSPO
standards and are compliant with the RSPO Principles
and Criteria set. SIPEF also has its own Responsible
Plantations Policy following the No Deforestation, No
Peat and No Exploitation (NDPE) rules, and verification
and monitoring is in place. Full certification according to
RSPO for the new development areas is pending on the
issuing of the permanent Indonesian cultivation licence
(Hak Guna Usaha - HGU). Full High Conservation Value/
High Carbon Stock (HCV/HCS) and Sustainability Impact
Assessment (SIA) assessments have been completed in
the areas, which are ready to be certified when the HGU
will be obtained. The Company also continues to follow
the trends set by its customers and stakeholders, based on
their need for confirmation that sustainability standards
are fulfilled at all times.
Unfortunately, all sustainability eorts and positive
impacts of the Group have not always been understood
by the consumer market nor motivated buyers to
only buy sustainable, fully traceable palm oil. SIPEF
therefore continues to work on its engagement with
dierent stakeholders, including well established NGOs,
towards their understanding in which context oil palms
are cultivated, how sustainable palm oil is produced
and how it contributes to the social and environmental
objectives of the Sustainable Development Goals in
producing countries. Palm oil can also count on a
considerable number of customers in emerging markets,
especially in Indonesia, India and China. It is important
to consider a balanced approach and not single out one
particular vegetable oil. With that in mind, the Company
is convinced that the crude palm oil (CPO) market will
not be regulated out of existence. This is confirmed by
the steady growth in demand for palm oil and the ever-
greater share of the global market, notwithstanding the
increasing importance given to sustainability.
74
The connection to the world of sustainable tropical agriculture
Risk connected with local regulations, specifically a tax levy
on every palm oil export out of Indonesia
DESCRIPTION RISK-MITIGATING MEASURES
Currently, there is a progressive tax plus levy on every
palm oil export out of Indonesia. The price of sales to
Indonesian customers is also impacted by this levy, given
the local population is not prepared to pay more than the
net export price. These levies, therefore, have a major
direct and indirect impact on all palm oil produced by
SIPEF in Indonesia.
In December 2020, this tax and levy was increased
substantially, due to the application of a new export levy
matrix for palm products. The higher tax was passed
to finance the Indonesian government’s biodiesel
programme. That meant that the export levy and tax
increased significantly in 2021 compared with 2020, and
was on average USD 349 per tonne in 2021, compared with
USD 74 per tonne a year earlier. This equated to a rise of
USD 275 per tonne compared with the previous system.
The continuing rise in CPO prices in the course of the
first half of the year led to the easing of the export levy
mechanism on 2 July 2021. The levy and tax will be
calculated by the government on a monthly basis, based
on the applicable palm oil prices on the international
markets.
There is also a potential risk of unexpected taxation in
Papua New Guinea.
Given the uncertainty about the setting of the local
reference price for palm oil, the available palm oil volumes
in Indonesia will be put on the market on a monthly basis
and the expected volumes of the SIPEF plantations will
no longer be hedged by future contracts. However, the
opposite is true for Papua New Guinea, where future
contracts were signed in 2021. That said, given the
unstable political climate in that country, the board of
directors regularly sets a maximum term and volumes
for these sales, based on the prevailing economic and
political circumstances.
75
SIPEF Company Report 2021 Risks and uncertainties
Corporate
governance
statement
1. General
The ‘Corporate governance statement’ gives
special attention to factual information with
regard to good governance for a given financial
year. This chapter describes any changes that
were made to policy and the relevant events
regarding good governance during the past
financial year 2021 and the closing of the
financial year until the meeting of the board of
directors of 15 February 2022. The statement
also contains the remuneration report and
the diversity policy that SIPEF applies for the
composition of the board of directors and the
executive committee. For the application of the
‘comply or explain’ principle, the Company relies
on the Belgian Corporate Governance Code 2020
('Code') as the reference code.
(www.corporategovernancecommittee.be)
SIPEF has always formulated the Company’s
policy to be in line with the best practices of
good governance. In 2005, the board of directors
of SIPEF adopted the original version of the
Corporate Governance Charter (‘Charter’).
The Charter sets out the structure, powers and
functioning of the Company’s bodies as well as
the obligations of the members of the board of
directors and the various committees of the
Company. It also contains the rules of conduct
that apply to the persons discharging managerial
responsibilities and the sta of the Company, if
they conduct transactions relating to SIPEF’s
financial instruments. The Charter has been
regularly updated since 2005, in line with
changes to applicable regulations and the best
practices of good governance. It was last amended
on 11 August 2021. These last amendments mainly
concerned the appointment of a sixth member
of the executive committee and a change in the
shareholding of SIPEF. The amended version
of the Charter can be consulted on the website
(www.sipef.com).
The rules of the Charter have been supplemented
since 1 January 2020 by the provisions of the
Code of Conduct, which sets out the ethical
rules of conduct for the persons discharging
managerial responsibilities and sta of SIPEF.
76 The connection to the world of sustainable tropical agriculture
In 2021, the corporate governance of SIPEF
was once again influenced by covid-19. As was
the case in 2020, the safety of the Company's
shareholders, the directors, the members of the
executive committee and all other employees and
stakeholders of the SIPEF group took precedence.
Nevertheless, the Group's operations in Belgium,
as well as in Indonesia, Papua New Guinea and
Ivory Coast went smoothly via virtual meetings,
the strict observance of the necessary security
measures and the implementation of various
technologies that were constantly updated and
reinforced.
The board of directors and the committees
organised hybrid meetings, in which members
could participate physically or virtually.
The ordinary general meeting of 9 June 2021
took place for the second time behind closed
doors. In order to increase the involvement of
shareholders, it was decided to allow them to
participate virtually in the meeting, which was
also streamed live. All appropriate measures
were taken to ensure that the shareholders were
able to exercise their rights to vote and to ask
questions as fully as possible. In this way, the
remuneration policy was approved as well as
the remuneration report that included for the
first time the individual remuneration of the
members of the executive committee. That said,
management found it very regrettable that in
2021 again, it could not meet the shareholders
of the Company and speak in person to them at
this annual event.
77
SIPEF Company Report 2021
2. Board of directors
2.1 Composition at 31 December 2021
The board of directors consisted of 10 members
at 31 December 2021.
Furthermore, at 31 December 2021 the following
independent directors sat on the board of
directors:
Yu-Leng Khor
Sophie Lammerant-Velge
Nicholas Thompson
These directors fulfil all independence criteria
stated in principle 3 of the Code.
The Company’s shareholder structure is
characterised by the presence of two reference
shareholders, Ackermans & van Haaren and
Group Bracht, composed of Priscilla, Theodora
and Victoria Bracht, and their respective
companies (Cabra P, Cabra T and Cabra V), and
Cabra NV, which act in mutual consultation, on
the basis of a shareholder agreement that was
originally entered into in 2007 for a period of 15
years. In 2017, this agreement was amended and
renewed for a further period of 15 years.
In spite of this shareholder structure, no director
or group of directors has a dominant influence on
the functioning of the board of directors.
TERM
Baron Luc Bertrand, chairman 2020-2023
François Van Hoydonck, managing director 2019-2023
Tom Bamelis 2018-2022
Priscilla Bracht 2018-2022
Baron Jacques Delen 2021-2022
Antoine Friling 2019-2023
Gaëtan Hannecart 2020-2024
Yu-Leng Khor (from 9 June 2021) 2021-2025
Sophie Lammerant-Velge 2019-2023
Petra Meekers (until 9 June 2021) 2020-2021
Nicholas Thompson 2019-2023
The curricula vitae of the directors are available
on the Company website (www.sipef.com).
At least half of the members of the board are
non-executive directors, more precisely nine
of the ten.
Three of the ten directors are women. The
Company accordingly respects the legal gender
diversity quota of one third.
9 3 3
Non-executive
directors
Female
directors
Independent
directors
78
The connection to the world of sustainable tropical agriculture
Luc Bertrand
chairman
Tom Bamelis
Antoine Friling
Sophie
Lammerant-Velge
Nicholas Thompson
François Van Hoydonck
managing director
Priscilla Bracht Jacques Delen
Yu-Leng KhorGaëtan Hannecart
79
SIPEF Company Report 2021 Corporate governance statement
2.2 Diversity policy

The board can only deliberate and make decisions
efficiently when the number of members is
limited, and the appropriate diversity is present
on the board.
The Company applies various criteria when
appointing directors, including experience,
knowledge, training, age, gender and nationality.
The board also gives special attention to the
complementary competencies of its members,
which are often associated with the diverse
backgrounds of the directors.
The Company also endeavours to protect the
interests of all stakeholders through the presence
of independent directors.
SIPEF does not tolerate any form of discrimina-
tion.

The background and professional experience
of the members are very diversified within
the board. They extend over the agricultural,
financial, manufacturing and marketing
industries. Sustainability being a key aspect of
all activities of the SIPEF group, the Company
ensures that the board is able to call on the
requisite expertise in this domain from within
its ranks.
At 31 December 2021, three nationalities were
represented by the members of the board:
Belgian, British and Malaysian.
Women have sat on the SIPEF board of directors
for many years. Priscilla Bracht was the first
female director to be appointed in 2004. Sophie
Lammerant-Velge joined the board in 2011 and
in 2017 the number of female directors increased
to three, when Petra Meekers was co-opted to
replace Antoine de Spoelberch. In 2021, Petra
Meekers left the board of directors to join the
executive committee. She was replaced by a new
female director, Yu-Leng Khor. This way, in 2021
three of the ten directors were uninterruptedly
women.
SIPEF aspires to have a sufficient number of
independent directors on the board of directors.
At the end of 2021, three of the ten directors were
independent.
80
The connection to the world of sustainable tropical agriculture
2.3 Changes to the composition of the
board of directors
   
  2022
The directorships of Tom Bamelis, Priscilla
Bracht and Jacques Delen expire at the end of the
ordinary general meeting of 8 June 2022. Tom
Bamelis and Priscilla Bracht have each applied
for a new directorship of four years. The mandate
of Jacques Delen will not be renewed.
    
It will be proposed to the general meeting of
8 June 2022 to appoint Alexandre Delen as a
new director for a period of four years. His term
of oce will therefore expire at the end of the
general meeting in June 2026, which will decide
on the accounts for the 2025 financial year.
2.4 Directorships at listed companies at
31 December 2021
The Code limits to five the number of
directorships that a director is permitted to hold
in listed companies.
The following directors have directorships at
listed companies other than SIPEF:
Baron Luc Bertrand:
Ackermans & van Haaren
CFE
Baron Jacques Delen:
Ackermans & van Haaren
Gaëtan Hannecart:
Financière de Tubize
Yu-Leng Khor:
Rohas Tecnic Berhad
2.5 Meetings of the board in 2021 and
attendance record
The SIPEF board of directors met six times in
2021. The weighted average attendance was
98.3%. The individual attendance record at the
meetings was as follows:
ATTENDANCE
Baron Luc Bertrand, chairman 6/6
François Van Hoydonck, managing director 6/6
Tom Bamelis 6/6
Priscilla Bracht 6/6
Baron Jacques Delen 6/6
Antoine Friling 6/6
Gaëtan Hannecart 5/6
Yu-Leng Khor (from 9 June 2021)* 3/3
Sophie Lammerant-Velge 6/6
Petra Meekers (until 9 June 2021)** 3/3
Nicholas Thompson 6/6
* attendance calculated from the ordinary general meeting of 9 June 2021 and based
on the meetings during her directorship
**
a
ttendance calculated up to and including the day of the ordinary general meeting
of 9 June 2021 and based on the meetings during her directorship
The boards of directors of February and August
2021 established the annual and semi-annual
financial statements and dealt with the respective
press releases. The meeting in September 2021
deliberated on the Group strategy.
81
SIPEF Company Report 2021 Corporate governance statement
82 The connection to the world of sustainable tropical agriculture
As a rule, the development of the activities of the
various subsidiaries is checked at each meeting,
based on a report drawn up by the executive
committee. In addition, the board dealt with the
following specific subjects, among others, at its
various meetings:
t
he conditional sale of the Indonesian
company, PT Melania, which owns the Mas
rubber plantation and tea assets, to the
Indonesian Shamrock Group;
t
he purchase in Ivory Coast of the assets of
the Wanita banana plantations;
the Research & Development project for
the development of high-quality crude
palm oil with a low contaminant level;
the 10-year business plan;
t
he budgets relating to 2021 and 2022 for
the Group;
risks, internal audit and internal control
within the Group;
t
he benchmarking of remuneration
for directors and executive committee
members;
the bonus pool for the Group's management
and sta for the 2020 financial year and the
variable remuneration of the members of
the executive committee;
the remuneration of the directors and the
fixed remuneration for the members of the
executive committee for 2022;
t
he remuneration policy;
the Carbon Disclosure Project reporting;
various topics related to sustainability and,
among others, the materiality index, KPIs,
SDGs and GRI reporting;
the 2020 annual report, including the
remuneration report and deviations from
the Code;
t
he convening and organisation of the
ordinary general meeting of 9 June 2021;
the triennial evaluation of the board of
directors and its committees;
the update of the Charter;
t
he 2021 management option plan;
t
he application of the Code of Conduct and
the dialogue with shareholders.
2.6 Assessment
In accordance with the Code, every three years
the directors assess the scale, composition and
functioning of the board of directors and the
committees of the Company.
During the board of directors' meetings of
11 August and 23 September 2021, this triennial
evaluation took place. The current size and
composition of the board and its committees were
found to be appropriate and it was considered
that the essential qualifications are suciently
present.
The next evaluation of the composition and
functioning of the board and its committees will
take place in 2024.
Furthermore, the non-executive directors assess
the relationship between the board of directors
and the executive committee once a year, in
the absence of the managing director (article
2.8 of the Charter). This annual assessment of the
interaction was held on 10 February 2021. The
directors in question were of the opinion that
the relationship with the executive committee
is reliable and open, giving them a sound and
transparent view of the day-to-day operations
of the Group.
83
SIPEF Company Report 2021 Corporate governance statement
3. Executive committee
3.1 Composition at 31 December 2021
3.2 Members of the executive committee
At 31 December 2021, the executive management
comprised six people who act together as
the executive committee. The committee is
responsible for the daily management of the
Company and is chaired by the managing
director, François Van Hoydonck.
The board appoints the members of the executive
committee for an indefinite period of time. This
ensures continuity in the functioning of the
executive committee.
François Van Hoydonck
chairman
Robbert Kessels
Charles De Wulf
Petra Meekers Johan Nelis
Thomas Hildenbrand
COMPOSITION EXECUTIVE COMMITTEE AT 31 DECEMBER 2021
François Van Hoydonck, chairman managing director
Charles De Wulf estates department manager
Thomas Hildenbrand fruit department manager
Robbert Kessels chief commercial ocer
Petra Meekers (from 10 June 2021) chief operating ocer Asia-Pacific
Johan Nelis chief financial ocer
The curricula vitae of the members of the executive
committee are available on the Company website
(www.sipef.com).
84
The connection to the world of sustainable tropical agriculture
To anticipate future developments in the Group,
Petra Meekers joined the committee as of 10
June 2021, in her role as ‘chief operating ocer
Asia-Pacific’ (COO APAC). With the prospect of
this appointment, Petra Meekers resigned as a
director of SIPEF at the ordinary general meeting
of 9 June 2021.
The Company does not have any intentions to
make any further changes to the composition
of this committee in 2022.
3.3 Diversity policy

The diversity policy, on which basis the
composition of the board of directors is
determined, also applies to the executive
committee. A balanced and varied composition is
all the more important for the committee, which
must be composed of a limited number of people
with the knowledge and experience to be able to
handle all aspects of the Company’s activities.
When appointing the members, the Company is
primarily focused on the experience, knowledge
and training of the candidates to ensure sucient
complementary competence is present.
Age, gender and nationality are other criteria that
are considered. They guarantee a diverse way of
thinking and acting.
No form of discrimination is tolerated.

All members of the committee have their
own specific competence in various fields,
being agrarian management, sustainability,
commercial and administrative management,
finance, legal and IT. Where necessary, the
members have the required experience in
countries where SIPEF is active or in countries
in tropical and subtropical regions.
The ages of the members vary from early forties
to early sixties. The age limit is set at 65.
There are three dierent nationalities in the
committee: French, Dutch and Belgian.
SIPEF is completely open to the integration of
women at all levels of the Company. Women
hold key positions both in Belgium and abroad.
This was recently confirmed once again by the
appointment of Petra Meekers as a member of
the executive committee.
3.4 Meetings in 2021
As a rule, the executive committee meets every
Tuesday, subject to unforeseen circumstances,
and whenever required in the interests of the
Company.
The committee is responsible for the daily
management of the Group, including all actions
connected with the day-to-day operations of the
Company and the other companies of the Group,
as well as all actions that are not important
enough for the board of directors or too urgent
to justify the intervention of the board. It has the
appropriate operational freedom and resources
to duly perform its work.
85
SIPEF Company Report 2021 Corporate governance statement
In practice, the committee prepares all decisions
of the board and ensures all decisions taken are
implemented. In 2021, among other things,
the committee prepared the statutory and
consolidated accounts, as well as the quarterly
figures of the Group, and established the
short-term and long-term budgets, which were
submitted to the board for approval. It followed
the operational and financial developments of
the Group and made related presentations for
the board of directors. It formulated proposals
concerning the strategy to be followed. Among
other things, it prepared the sale of PT Melania as
well as the investment in the assets of the Wanita
banana plantations, and took the necessary
measures for their realisation.
It deliberated on the materiality index, KPIs,
SDGs and GRI reporting to be adopted by
the Company for the sustainability report. It
also studied the new national and European
legislative initiatives in the field of sustainability
and the consequences for the Company. It
submitted various drafts to the board of directors
for approval, amongst which those of the annual
report, including the remuneration report and
the sustainability report.
3.5 Assessment
The composition, operation and performance
of the executive committee are evaluated
twice a year by the remuneration committee.
Furthermore, the remuneration committee,
together with the managing director, evaluates
each year the contribution of each member of
the executive committee to the development of
the activities and the results of the Group. The
chairman of the committee does not participate
in the evaluation of his own performance.
The non-executive directors also give their
opinion on the interaction between the board of
directors and the executive committee annually,
in the absence of the managing director. Their
opinion on 10 February 2021 was that the
relationship of the board with the executive
committee is reliable and open, giving the
directors a sound and transparent view of the
day-to-day operations of the Group.
In addition, throughout the year, the board of
directors evaluates the executive committee
based on its work and preparations for the board.
86 The connection to the world of sustainable tropical agriculture
87
SIPEF Company Report 2021 Corporate governance statement
4.1 Audit committee
  31  2021,
   
 2021
The audit committee met four times in 2021. The
weighted average attendance was 100%.
In February and August, the committee’s
primary focus was on analysing the annual and
semi-annual financial statements and the press
release relating to these accounts. At each of
these meetings, the auditor presented the results
of the audit of these statements.
In addition, the following were also explained and
discussed during the various meetings:
the application of the goodwill impairment
test;
the accelerated depreciation of the
immature and mature rubber plantations
to be converted into oil palm plantations;
the analysis of the accounting treatment of
the 2020-2021 tax expenses (eective and
deferred tax);
t
he accounting treatment of the sale of the
95% PT Melania shares and the related
press release;
t
he impairment of the PT Dendymarker
plantings and of the long-term receivable
from smallholders;
t
he allocation of the purchase price of the
assets of the Wanita banana plantations;
the financial covenant regarding the long-
term loan and its evolution;
the update of the existing risks and their
classification;
the reports of the internal audit
committees of the Indonesian subsidiaries
and Hargy Oil Palms Ltd in Papua New
4. Committees of the board of directors
TERM ATTENDANCE
Tom Bamelis, chairman 2019-2022 4/4
Sophie Lammerant-Velge 2019-2023 4/4
Nicholas Thompson 2019-2023 4/4
At 31 December 2021, the audit committee had
three members, all non-executive directors.
Two members are independent directors. The
committee is chaired by Tom Bamelis.
The term in which members have a seat on the
committee coincides with the term of their
directorship.
All members of the audit committee have the
necessary accounting and auditing skills, and the
committee has collective expertise with regard
to the activities of SIPEF.
88
The connection to the world of sustainable tropical agriculture
Guinea;
the reasons for not organising an internal
audit at the Head Oce in Belgium;
t
he proposal to appoint a new Group
auditor as from the financial year 2021;
t
he evaluation of the relationship of the
statutory auditor with the management
and the financial department.
The auditor attended all the meetings of the
committee in 2021.
The internal auditors of the operational
subsidiaries did not attend the meetings of
the audit committee of the mother company.
The managing director and CFO held virtual
meetings with the local internal audit managers
in Indonesia and Papua New Guinea, in the
course of the financial year 2021.

The periodic assessment of the composition and
functioning of the board of directors also relates
to the committees of the board of directors.
4.2 Remuneration committee
  31  2021,
   
 2021
TERM ATTENDANCE
Antoine Friling, chairman 2019-2023 2/2
Yu-Leng Khor (from 9 June 2021)* 2021-2025 1/1
Sophie Lammerant-Velge 2019-2023 2/2
Petra Meekers (until 9 June 2021)** 2020-2021 1/1
* attendance calculated from the ordinary general meeting of 9 June 2021 and
based on the meetings during her mandate
* *
a
ttendance calculated up to and including the day of the ordinary general
meeting of 9 June 2021 and based on the meetings during her mandate
At 31 December 2021, the remuneration
committee is composed of three members, all
non-executive directors. The majority of the
committee, i.e. two of the three members, are
independent directors. The committee is chaired
by Antoine Friling.
The term in which members have a seat on the
committee coincides with the term of their
directorship. The committee has the required
expertise in remuneration policy.
The remuneration committee met twice in 2021.
The weighted average attendance was 100%.
In 2021, the remuneration committee considered
the following issues:
benchmarking of the compensation of
the Group's expatriates, managers and
directors;
determination of the Group's bonus pool;
individual assessment of management and
proposal of variable remuneration payable
in 2021;
89
SIPEF Company Report 2021 Corporate governance statement
remuneration policy and remuneration
report;
r
emuneration of directors and fixed
remuneration of the members of the
executive committee for 2022;
u
pdate of succession planning;
issue of share options in 2021 for the
Group's managers.
The managing director also attended the
meetings of the remuneration committee.
A representative of each of the reference
share-holders, Ackermans & van Haaren and
Group Bracht, was present at the February and
November meetings.

The periodic assessment of the composition and
functioning of the board of directors also relates
to the committees of the board of directors.
4.3 Nomination committee
  31  2021,
   
 2021
The SIPEF nomination committee is composed
of all the members of the board of directors.
The change to the composition of the nomination
committee is identical to the change to the
composition of the board of directors (see point
2.1.).
The board met twice in 2021 in its capacity of
nomination committee, on 10 February and
17 November. The weighted average attendance
was 100%.
The board of directors in its capacity as nomina-
tion committee, expressed its opinion on the
following issues:
the interaction between the board of
directors and the executive committee, in
the absence of the managing director;
t
he renewal of the mandate of directors
and appointment of a new independent
director;
the appointment of a new member of
the remuneration committee and of the
executive committee;
t
he appointment of a new auditor and
determination of his remuneration.
4.4 Assessment of the committees
of the board of directors
The board of directors regularly assesses its
own composition and functioning, as well as the
composition and functioning of its committees.
At the meetings of 11 August and 23 September
2021, in addition to the assessment of the board,
the composition and functioning of the board's
committees were discussed.
The current size and composition of the board
committees were found to be appropriate and it
was considered that the essential qualifications
are suciently present.
The next assessment of the board of directors and
its committees will take place in 2024.
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The connection to the world of sustainable tropical agriculture
5. Remuneration report
5.1 Introduction
The present remuneration report has been
prepared in accordance with article 3:6. §3 of
the Companies Code, as amended by the law of
28 April 2020, enacting into Belgian law the EU
directive encouraging long-term shareholder
engagement. It provides a comprehensive
overview of all aspects of the remuneration,
including all benefits in whatever form that
were awarded to the non-executive directors, the
managing director and the other members of the
executive committee during the financial year
2021. It contains a detailed presentation of the
remuneration of every member of the executive
committee, the collegiate body that is responsible
for daily management.
In 2021, a variable remuneration was again paid
to the executive management. Indeed, in 2020,
the recurring consolidated result, the basis for
calculating this remuneration, was no longer
negative, as it was in 2019. The performance
of the year 2020 formed the basis for the
determination of the variable remuneration paid
in 2021. It was characterised by some important
developments and transactions that are set out
under the section 'Significant events in 2020' (see
Company Report 2020 page 6). The significant
events in 2021 will be decisive for the variable
remuneration to be paid in 2022.
In 2021, there were no major changes to the
composition of the board of directors with an
impact on the remuneration of the members of
the board of directors. The number of members
of the executive committee, on the other hand,
was increased from five to six compared to the
previous financial year. Petra Meekers, who
until then had been a member of the board of
directors, joined the executive committee on
10 June 2021 in her capacity as ‘chief operating
ocer Asia-Pacific’.
This report has been prepared in accordance with
the remuneration policy approved by a majority
of 95.8% of votes at the ordinary general meeting
of 9 June 2021. This new policy, which broadly
reflects the old one, applies to remuneration
paid from 1 January 2021. The detailed text of
the remuneration policy is published on the
Company's website.
5.2 Total remuneration of the directors
The directors receive a fixed remuneration that
is not linked to the results. This remuneration
consists of the emoluments for the meetings of
the board of directors and, where applicable,
remuneration for membership of a given
committee.
In 2021, the directors received the following
remuneration:
IN EUR ON AN ANNUAL BASIS PER PERSON MEMBER CHAIRMAN
Board of directors 29 000 60 000
Audit committee 7 500 9 750
Remuneration committee 4 000 5 200
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SIPEF Company Report 2021 Corporate governance statement
The outgoing and incoming directors are
remunerated in accordance with the number of
months they served as director in the financial
year.
The non-executive directors do not receive any
variable remuneration or options. Neither is
part of their remuneration paid out in the form
of shares of the Company (see Company Report,
page 109). They benefit from director liability
insurance.
5.3 Total remuneration of the members of
the executive committee
The members of the executive committee,
consisting of the managing director and
other managers of the Company, receive fixed
remuneration, variable remuneration and,
possibly, share options.
The Company has not set any minimum number
of shares that must be held by the members of the
executive management (see Company Report,
page 109).
No shares were awarded to the members of the
executive committee in 2021.
BOARD OF
DIRECTORS
AUDIT
COMMITTEE
REMUNERATION
COMMITTEE TOTAL
IN KEUR 2020 2021 2020 2021 2020 2021 2020 2021
Baron Luc Bertrand 60.00 60.00 0.00 0.00 0.00 0.00 60.00 60.00
François Van Hoydonck 29.00 29.00 0.00 0.00 0.00 0.00 29.00 29.00
Tom Bamelis 29.00 29.00 9.75 9.75 0.00 0.00 38.75 38.75
Priscilla Bracht 29.00 29.00 0.00 0.00 0.00 0.00 29.00 29.00
Baron Jacques Delen 29.00 29.00 0.00 0.00 0.00 0.00 29.00 29.00
Antoine Friling 29.00 29.00 0.00 0.00 5.20 5.20 34.20 34.20
Regnier Haegelsteen (until 10 June 2020) 14.50 0.00 0.00 0.00 0.00 0.00 14.50 0.00
Gaëtan Hannecart (from 10 June 2020) 14.50 29.00 0.00 0.00 0.00 0.00 14.50 29.00
Yu-Leng Khor (from 9 June 2021) 0.00 14.50 0.00 0.00 0.00 2.00 0.00 16.50
Sophie Lammerant-Velge 29.00 29.00 7.50 7.50 4.00 4.00 40.50 40.50
Petra Meekers (until 9 June 2021) 29.00 14.50 0.00 0.00 4.00 2.00 33.00 16.50
Nicholas Thompson 29.00 29.00 7.50 7.50 0.00 0.00 36.50 36.50
TOTAL 321.00 321.00 24.75 24.75 13.20 13.20 358.95 358.95
92 The connection to the world of sustainable tropical agriculture
    
The managing director receives emoluments
for participating in the meetings of the board of
directors and additional fixed remuneration for
his executive duties.
2021
IN KEUR FVH CDW TH RK PM JN TOTAL %
Board remuneration 29 0 0 0 17 0 46 1.7%
Fixed remuneration 365 256 246 299 375 336 1 877 69.6%
Variable remuneration 88 41 43 38 0 62 272 10.1%
Pension contributions 256 46 47 0 0 46 395 14.7%
Other 15 9 15 28 31 8 106 3.9%
SUBTOTAL 753 352 351 365 423 452 2 696 100.0%
Capital gain vested share option
(at vesting date)*
32 11 11 11 0 11 74
TOTAL REMUNERATION 785 363 362 376 423 463 2 770
Subtotal 100% 100% 100% 100% 100% 100% 100%
Fixed 88% 88% 88% 90% 100% 86% 90%
Variable 12% 12% 12% 10% 0% 14% 10%
2020
IN KEUR FVH CDW TH RK PM JN TOTAL %
Board remuneration 29 0 0 0 0 0 29 1.5%
Fixed remuneration 370 254 246 298 0 303 1 471 74.8%
Variable remuneration 0 0 0 0 0 0 0 0.0%
Pension contributions 258 46 49 0 0 46 399 20.3%
Other 10 9 14 27 0 8 68 3.5%
SUBTOTAL 667 309 309 325 0 357 1 967 100.0%
Capital gain vested share option
(at vesting date)*
0 0 0 0 0 0 0
TOTAL REMUNERATION
667 309 309 325 0 357 1 967
Subtotal 100% 100% 100% 100% N/A 100% 100%
Fixed 100% 100% 100% 100% N/A 100% 100%
Variable 0% 0% 0% 0% N/A 0% 0%
* For more details on the respective option plans (respectively, SOP 2018 and SOP 2017), see page 97 and 98,
table: Breakdown of the SIPEF stock option plan (SOP).
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SIPEF Company Report 2021 Corporate governance statement
.  
The members of the executive committee
receive a fixed remuneration and benefit from
group insurance with fixed contributions. This
comprises a supplementary pension, as well as
disability and life insurance. In addition, the
Company has taken out hospitalisation insurance
and assistance insurance with global cover for
every member. Management also benefits from
a company car and meal vouchers. However,
the fixed remuneration of Petra Meekers,
who operates from Singapore, includes a fixed
monthly amount that, in addition to the fixed
remuneration, is provided for costs such as
pension, company car and accommodation
expenses. Also, Petra benefits from a disability,
life and health care insurance and receives an
allowance for the studies of her children (see
item ‘Other’).
.  
The total amount of the variable remuneration
paid to both the sta and the members of the
executive committee cannot be more than 2%
of the consolidated recurring result before tax,
share of the Group. The maximum amount of
the variable short-term remuneration in cash
of each member of the executive committee is
set at two times the fixed remuneration of this
member. Petra Meekers is not entitled to any
variable remuneration during the first two years
of her employment with SIPEF.
The ultimate individual amount of the variable
remuneration awarded to each of the members
is based on financial criteria that are set in a
discretionary manner by the board of directors,
at the proposal of the remuneration committee.
This committee makes a proposal based on the
various components of the profit of the financial
year and the contribution of each member of the
executive committee to its achievement. In doing
so, the remuneration committee is guided by the
financial and objectively measurable criteria,
set in advance and applied for a period of one
financial year.
The linking of the variable remuneration to
performance in one financial year – rather than
performance criteria over two or three financial
years as laid down by law – is justified by the
volatility of the results of the agro-industrial
activities, particularly the palm oil market, whose
performance is linked to the price of agricultural
raw materials.
It is therefore logical that the remuneration of
the sta and management, like the shareholder
dividend, changes with the volatility of the Group.
The Company strictly applies this reasoning
every year. This means that if the Group incurs
a loss in a given year, no variable remuneration
or dividend is paid the following year to the
members of the executive committee and the
shareholders respectively. This was the case
in 2020, when no variable remuneration and
dividend were paid due to the loss in 2019.
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The connection to the world of sustainable tropical agriculture
Setting the variable remuneration on the basis
of performance in one financial year does not
undermine the long-term vision of the executive
management. This vision is inextricably bound
up with the agro-industrial activities of the
SIPEF group, which can only be evaluated in
the long-term, as evidenced by the strategy and
business model of SIPEF (see Company Report,
page 13 and further).
Furthermore, the board of directors did not
award any special bonuses to any members for
specific accomplishments in 2021.
Besides the short-term variable remuneration,
the members of the executive committee receive
no long-term variable remuneration in cash.
. 
All members of the executive committee have
signed a clawback clause. This means that the
Company is entitled to demand variable net
remuneration is returned if it was awarded on
the basis of incorrect financial data.
The Company did not trigger this clawback clause
in 2021.
5.4 Consistency between remuneration and
remuneration policy and application of the
performance criteria
The total remuneration of the directors and
the members of the executive committee is
completely in line with the remuneration policy,
and is calculated and applied in a transparent
way.
The fixed remuneration of the members of the
board of directors and the executive committee is
benchmarked on an annual basis against market
practice and is, therefore, in line with the market.
The variable remuneration is linked to the annual
results of the Group, which depend directly on
the volatile prices of agricultural raw materials.
The Company notifies its shareholders,
management, employees and all other
stakeholders on a continual basis, and in a
proper and transparent way, about developments
with regard to the activities, sustainability,
performance and corporate governance of the
Group. Since 2020, this transparency has been
provided in even more detail in this report with
regard to the remuneration of the members of the
executive committee. Clear communication and
transparency are the cornerstones of satisfaction,
keep people motivated and contribute to good
long-term performance. This way, staff and
management remain motivated and dedicated to
achieving the long-term goals the Group has set.
95
SIPEF Company Report 2021 Corporate governance statement
5.5 Stock option plan
Share options have been oered to members of
the executive committee every financial year
since 2011. The share options offered in the
SIPEF share option plan have the following
characteristics:
T
ype: SIPEF share options (one option
gives the holder the right to one SIPEF
share);
T
ime of the oer: second half of
November;
E
xercise price: price based on the average
closing price of the share over the 30 days
p
receding the oer;
T
erm of the plan: 10 years;
E
xercise term: from 1 January of the
year following the third anniversary of the
grant, up to and including the end of the
tenth year after the date of the oer;
N
o performance criteria have been set for
the granting or exercise of share options.
Options granted to the members of the
executive committee in 2021.
On 18 November 2021, options were granted
by SIPEF to the members of the executive
committee. These options were accepted by the
beneficiaries as follows:
NUMBER
François Van Hoydonck 6 000
Charles De Wulf 2 000
Thomas Hildenbrand 2 000
Robbert Kessels 2 000
Johan Nelis 2 000
TOTAL 14 000
Another 4 000 options were granted to general
managers of the foreign subsidiaries.
The options granted in 2021 have the following
characteristics:
E
xercise price: EUR 58.31
Ex
piry date: 18 November 2031
Exercise period: at any time from
1 January 2025 up to and including
17 November 2031
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The connection to the world of sustainable tropical agriculture
BREAKDOWN OF THE SIPEF STOCK OPTION PLAN SOP VESTED NOT VESTED
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Oer 23/11/11 21/11/12 20/11/13 18/11/14 28/11/15 07/12/16 23/11/17 20/11/18 23/11/19 19/11/20 18/11/21
Vesting 31/12/14 31/12/15 31/12/16 31/12/17 31/12/18 31/12/19 31/12/20 31/12/21 31/12/22 31/12/23 31/12/24
Exercise period begin: 01/01/15 01/01/16 01/01/17 01/01/18 01/01/19 01/01/20 01/01/21 01/01/22 01/01/23 01/01/24 01/01/25
Exercise period end:* 22/11/21 20/11/22 19/11/23 17/11/24 27/11/25 06/12/26 22/11/27 19/11/28 22/11/29 18/11/30 17/11/31
Exercise price (in EUR) 56.99 59.14 55.50 54.71 49.15 53.09 62.87 51.58 45.61 44.59 58.31
Market price at vesting date
(in EUR)
47.68 52.77 60.49 62.80 48.80 54.80 43.20 56.90
FRANÇOIS VAN HOYDONCK VESTED NOT VESTED
SOP 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 TOTAL
Oered not yet vested 0 0 0 0 0 0 0 0 6 000 6 000 6 000 18 000
Vested before the end of 2021 6 000 6 000 6 000 6 000 6 000 6 000 6 000 6 000 0 0 0 48 000
Exercised in 2021 -6 000 0 0 0 0 0 0 0 0 0 0 -6 000
Expired in 2021 0 0 0 0 0 0 0 0 0 0 0 0
Total share options at the end of the year 0 6 000 6 000 6 000 6 000 6 000 6 000 6 000 6 000 6 000 6 000 60 000
Vested at exercise price (in EUR) 377 220 309 480
Vested at market price (in EUR) 259 200 341 400
Latent capital gain at vesting date (in EUR) 0 31 920
CHARLES DE WULF VESTED NOT VESTED
SOP 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 TOTAL
Oered not yet vested 0 0 0 0 0 0 0 0 2 000 2 000 2 000 6 000
Vested before the end of 2021 0 0 0 2 000 2 000 2 000 2 000 2 000 0 0 0 10 000
Exercised in 2021 0 0 0 0 0 0 0 0 0 0 0 0
Expired in 2021 0 0 0 0 0 0 0 0 0 0 0 0
Total share options at the end of the year 0 0 0 2 000 2 000 2 000 2 000 2 000 2 000 2 000 2 000 16 000
Vested at exercise price (in EUR) 125 740 103 160
Vested at market price (in EUR) 86 400 113 800
Latent capital gain at vesting date (in EUR) 0 10 640
Fluctuations in the financial year 2021
* latest exercise date
97
SIPEF Company Report 2021 Corporate governance statement
THOMAS HILDENBRAND VESTED NOT VESTED
SOP 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 TOTAL
Oered not yet vested 0 0 0 0 0 0 0 0 2 000 2 000 2 000 6 000
Vested before the end of 2021 2 000 2 000 2 000 2 000 2 000 2 000 2 000 2 000 0 0 0 16 000
Exercised in 2021 -2 000 0 0 0 0 0 0 0 0 0 0 -2 000
Expired in 2021 0 0 0 0 0 0 0 0 0 0 0 0
Total share options at the end of the year 0 2 000 2 000 2 000 2 000 2 000 2 000 2 000 2 000 2 000 2 000 20 000
Vested at exercise price (in EUR) 125 740 103 160
Vested at market price (in EUR) 86 400 113 800
Latent capital gain at vesting date (in EUR) 0 10 640
ROBBERT KESSELS VESTED NOT VESTED
SOP 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 TOTAL
Oered not yet vested 0 0 0 0 0 0 0 0 2 000 2 000 2 000 6 000
Vested before the end of 2021 0 0 2 000 2 000 2 000 2 000 2 000 2 000 0 0 0 12 000
Exercised in 2021 0 0 0 0 0 0 0 0 0 0 0 0
Expired in 2021 0 0 0 0 0 0 0 0 0 0 0 0
Total share options at the end of the year 0 0 2 000 2 000 2 000 2 000 2 000 2 000 2 000 2 000 2 000 18 000
Vested at exercise price (in EUR) 125 740 103 160
Vested at market price (in EUR) 86 400 113 800
Latent capital gain at vesting date (in EUR) 0 10 640
JOHAN NELIS VESTED NOT VESTED
SOP 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 TOTAL
Oered not yet vested 0 0 0 0 0 0 0 0 2 000 2 000 2 000 6 000
Vested before the end of 2021 2 000 2 000 2 000 2 000 2 000 2 000 2 000 2 000 0 0 0 16 000
Exercised in 2021 -2 000 0 0 0 0 0 0 0 0 0 0 -2 000
Expired in 2021 0 0 0 0 0 0 0 0 0 0 0 0
Total share options at the end of the year 0 2 000 2 000 2 000 2 000 2 000 2 000 2 000 2 000 2 000 2 000 20 000
Vested at exercise price (in EUR) 125 740 103 160
Vested at market price (in EUR) 86 400 113 800
Latent capital gain at vesting date (in EUR) 0 10 640
In 2021, three members of the executive
committee together exercised 10 000 options
of the 2011 stock option plan. The remaining
6 000 options of that plan, which were granted
to general managers of subsidiaries, were
also exercised by the beneficiaries before
22 November 2021, the expiry date.
In 2021, the members of the executive committee
exercised no other options than those mentioned
above and no options expired.
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The connection to the world of sustainable tropical agriculture
A YEARLY CHANGE IN REMUNERATION IN PERCENTAGE
2017 2018
VARIANCE
2019
VARIANCE
2020
VARIANCE
2021
VARIANCE
Total board remuneration
(1)
(in KEUR)
315 344 +9% 359 +4% 359 0% 359 0%
Total fixed remuneration excom
(2)
(in KEUR)
1 832 1 899 +4% 1 943 +2% 1 967 +1% 2 424 +23%
Total variable remuneration excom
(3)
(in KEUR)
682 1 168 +71% 416 -64% 0 -100% 272 N/A
B YEARLY CHANGE IN THE PERFORMANCE OF THE COMPANY
2017 2018
VARIANCE
2019
VARIANCE
2020
VARIANCE
2021
VARIANCE
CPO market price (in USD/tonne CIF Rotterdam) 715 598 -16% 566 -5% 715 +26% 1 195 +67%
Produced CPO volumes (in tonnes) 330 958 351 757 +6% 312 514 -11% 329 284 +5% 384 187 +17%
Result, share of the Group (recurring) (in KUSD) 64 481 22 713 -65% -8 004 -135% 14 122 N/A 82 746 +486%
C YEARLY CHANGE IN THE AVERAGE REMUNERATION OF THE EMPLOYEES
2017 2018
VARIANCE
2019
VARIANCE
2020
VARIANCE
2021
VARIANCE
Average fixed remuneration employees
SIPEF HQ
(4)
(in KEUR/month)
4 467 4 440 -1% 4 491 +1% 4 832 +8% 5 165 +7%
Average variable remuneration employees
SIPEF HQ
(5)
(in KEUR/year)
12 012 20 003 +67% 7 618 -62% 0 -100% 4 955 N/A
D RATIO HIGHEST/LOWEST REMUNERATION FTE
2017 2018 2019 2020 2021
Ratio total fixed remuneration highest member excom and lowest employee HQ
(6)
12.5 12.8 9.3 9.2 9.1
5.6 Deviations from the remuneration policy
in 2021
In 2021, remuneration was awarded to the
directors and the members of the executive
committee in compliance with the remuneration
policy, except for the departures mentioned
under 5.3. a. and b. These deviations are linked
to the stay of Petra Meekers in Singapore where
she is stationed for the operational management
of the Asia-Pacific subsidiaries of the Group.
5.7 Comparative information on changes to
the remuneration and the performance of
the Company over a period of 5 years;
ratio between highest and lowest
remuneration of SIPEF
(1) Remuneration as included under 5.2. Total remuneration of the directors
(2) Fixed remuneration as included under 5.3. Total remuneration of the members of the executive committee
(3) Variable remuneration as included under 5.3. Total remuneration of the members of the executive committee
(4) Average gross salary (full-time equivalent) in January of the respective year
(5)
A
verage variable remuneration (full-time equivalent) paid
(6) Total fixed cost highest individual remuneration of the executive committee/total fixed cost (full-time equivalent) lowest employee remuneration HQ
99
SIPEF Company Report 2021 Corporate governance statement
5.8 Information on the general meeting
votes on the remuneration policy and report
The new remuneration policy applied for
the first time to the financial year 2021. It
was approved with a majority of 95.8% of the
votes by the general meeting of 9 June 2021.
The same general meeting also approved the
remuneration report for the 2020 financial
year, which had been prepared in accordance
with the old remuneration policy. The current
remuneration report, drawn up on the basis of the
new remuneration policy, will also be submitted
for approval to the ordinary general meeting on
8 June 2022.
100
The connection to the world of sustainable tropical agriculture
6.1 External audit
The ordinary general meeting of 9 June 2021
noted the resignation of the auditor, Deloitte
Bedrijfsrevisoren CVBA, represented by
Kathleen De Brabander. This mandate, which
would normally expire at the end of the ordinary
general meeting of June 2023, was fully in line
with the European regulation on audit reform
of 16 April 2014. However, the Belgian legislator
interprets the transitional provisions of this
regulation regarding the external rotation of
auditors in a restrictive way. As a result, Deloitte
could only exercise its renewed mandate for the
financial year 2020 and had to interrupt it for
the two following financial years.
Subsequently, at the end of 2020, SIPEF
initiated a private tender procedure with a view
to appointing a new auditor in accordance with
European regulations. Based on the outcome
of this procedure, the general meeting of
9 June 2021 appointed EY Bedrijfsrevisoren
B
V, represented by Christoph Oris and Wim
Van Gasse, for a term of three years. The annual
remuneration was set at USD 93 000, excluding
indexation and VAT.
The auditor conducts the external audit on the
consolidated and individual financial statements
of SIPEF. He reports to the audit committee and
the board of directors twice a year.
The annual remuneration of the statutory auditor
for the financial year 2021 regarding the statutory
audit of the accounts and consolidated financial
statements of SIPEF amounts to KUSD 116.
The remuneration for non-audit services in 2021
came to KUSD 0.
The total cost of external control of the SIPEF
group paid to the EY network amounted to
KUSD 577. The fees paid for advice from the same
statutory auditor and related companies came
to KUSD 0. All details regarding the fees paid to
Deloitte can be found in Note 33 of the Financial
Statements.
6.2 Internal audit
An internal audit department has been set up at
the operating units in Indonesia and at Hargy Oil
Palms Ltd in Papua New Guinea, reporting four
times per year to the local audit committee that
assesses the internal audit reports.
The internal audit function at the Head Oce
in Belgium and in the other subsidiaries was
exercised in 2021 by the member of the executive
committee responsible, along with the managing
director and the chief financial ocer of SIPEF.
Given the limited size of these companies,
in 2021 the SIPEF audit committee did not
change its opinion that no separate internal
audit department should be set up at this time
for the Head Oce and these subsidiaries. The
committee did recommend in November 2020
that one of the Group controllers at the Head
Office should conduct an internal audit and
present a report on these few companies to the
SIPEF audit committee. This procedure was
strictly applied in 2021.
6. External and internal audit
101
SIPEF Company Report 2021 Corporate governance statement
7. Report in connection with internal control and
risk management systems
The SIPEF board of directors has also drawn up
a ‘Responsible Plantations Policy’ (www.sipef.
com/hq/sustainability/policies/responsible-
plantations-policy) and a ‘Responsible Purchase
Policy’ (www.sipef.com/hq/sustainability/
policies/responsible-purchasing-policy/),
which apply to all plantation activities and raw
materials. It reviews these lines of policy every
year to adapt them to the latest legal, social and
environmental standards.
To facilitate and encourage further growth,
SIPEF pursues in the day-to-day management
of its activities clear sustainable regulations
that are stricter than the legal requirements
of the countries in which the Company does
business. That undertaking is documented by
certificates and generally accepted standards:
see the Sustainability Report, page 18.
The internal control exercised by SIPEF monitors
compliance with all these procedures, guidelines
and rules to protect the assets, sta and activities
of the Group and optimise their management.
The corporate structure, corporate philosophy
and management style of the SIPEF group can
be generally described as ‘flat’. This is explained
by the limited number of decision channels in
the hierarchy. This and the low sta turnover
increase the social control in the Company.
The Group is split into a number of departments.
Each department has specific functions and
each person in that department has a specific
job description. The required level of education
and/or experience is established for each job and
duty. There is a well-defined policy of delegating
powers.
The SIPEF board of directors is responsible for
assessing the inherent risks of the Group and the
eectiveness of internal control.
SIPEF’s internal control systems were set up in
accordance with the Belgian legal requirements
for risk management and internal control, the
principles stated in the 2020 Belgian Corporate
Governance Code, and are organised on the basis
of the Committee of Sponsoring Organizations
of the Treadway Commission (COSO) model.
An analysis conducted at Group level forms the
basis of the internal control and risk management
system, an important pillar of which is the
reliability of the financial reporting and the
communication process.
7.1 Control environment
SIPEF is a Belgian-listed company specialising
in agro-industrial activities in tropical and
subtropical regions. The Group produces mainly
palm products in Indonesia and Papua New
Guinea and, on a smaller scale, bananas in the
Ivory Coast. The production of these products
is a very labour-intensive process.
To optimise the management of the plantations,
a lot of attention is given to the employees’
general knowledge and training in agricultural
and management methods. The Company
draws up manuals with standard operating
procedures containing practical guidelines and
appropriate management practices, to ensure
the implementation of the Group policy in
agriculture, technology and environment by the
various members of sta in dierent parts of the
world. The Group management ensures that all
employees are able to work in a safe and healthy
environment.
102
The connection to the world of sustainable tropical agriculture
Lastly, SIPEF monitors the strict application of
the rules set down in its Corporate Governance
Charter and the Code of Conduct to ensure that
the directors, all persons discharging managerial
responsibilities and the sta of the Group act
honestly and ethically, and in accordance with
the applicable rules and principles of good
governance.
7.2 Risk analysis and control activities
Every year, the board of directors approves
the strategic plan setting out the strategic,
operational, financial, tax and legal goals.
Certain risks can threaten the achievement of
these goals. These risks have been identified and
classified based on their potential importance,
the likelihood they will become reality and the
steps taken to deal with them. The risk actions
are split into the following categories: reduction,
transfer, avoidance and acceptance.
The Company has issued the appropriate
instructions and/or established the required
procedures to enable the identified risks to be
dealt with appropriately.
7.3 Information and communication
A set of internal and external operational
and financial reports ensures the appropriate
information can be made available at the
appropriate levels on a periodic basis (daily,
weekly, monthly, quarterly, every six months or
annually) so that the assigned responsibilities
can be duly taken.
7.4 Supervision and monitoring
It is the responsibility of every employee to report
potential failings in the internal control to the
appropriate person.
In addition, the internal audit departments at
the operating units in Indonesia and at Hargy Oil
Palms Ltd in Papua New Guinea, are responsible
for the constant supervision of the eectiveness
and compliance of the existing internal control
for their respective activities. They propose the
appropriate adjustments based on their findings.
A local audit committee discusses the reports of
the internal audit departments every quarter.
A summary of the most important findings is
submitted to the SIPEF audit committee every
year.
The responsible member of the executive
committee, together with the managing director
and the chief financial ocer of SIPEF, monitors
the internal control at small subsidiaries for
which a separate internal audit function has
not been created. Furthermore, one of the
Group controllers at the Head Oce conducts
an internal audit of the activities of these
subsidiaries and presents a report to the SIPEF
audit committee.
In addition, the financial statements of every
Group subsidiary are checked by an external
auditor at least every year. Any remarks ensuing
from this external audit are submitted to the
board of directors in the form of a management
letter. No major failures in the internal control
have been established in the past.
103
SIPEF Company Report 2021 Corporate governance statement
7.5 Internal control and risk management
systems related to financial reporting
The process for drawing up financial reports is
as follows:
The process is led by the corporate finance
department, which is under the direct
supervision of the chief financial ocer of
SIPEF.
A s
chedule is drawn up based on the
imposed (internal and external) deadlines.
This is given to every reporting entity and
the external auditor at the start of the year.
The external deadlines are also published
on the Company’s website.
T
he following reporting entities can be
identified:
. SIPEF in Belgium
. Jabelmalux SA in Luxembourg
.
t
he companies in Indonesia, including
PT Timbang Deli, taken as a whole, and
PT Melania
.
H
argy Oil Palms Ltd in Papua New
Guinea
. Plantations J. Eglin SA in Ivory Coast
.
V
erdant Bioscience Pte Ltd in Singapore
.
SIPEF Singapore Pte Ltd in Singapore
The financial department of each entity is
headed by a certified accountant.
T
he first step in the annual reporting cycle
is drawing up a budget for the following
year. This is done in the period September
to November and is submitted to the board
of directors for approval in November.
The strategic options in this budget also
fit in with the long-term plan strategy that
is updated and approved by the board of
directors annually.
S
ensitivity analyses for the strategic plan
and the annual budget are drawn up to be
able to make the right risk profile for the
decisions to be made.
T
he production figures and the cash
financial position of the previous month are
received and consolidated by the ‘corporate
finance’ department in the first week of
every month, before being submitted to
the managing director and the executive
committee.
T
he intergroup transactions are also
reconciled in this first week, before the
accounts are closed.
T
he monthly financial reporting comprises
an analysis of the volumes of initial stock,
production, sales and end stock; the
operational result and a summary of the
other items on the income statement, i.e.
financial result and tax, a balance sheet and
cash flow analysis.
T
he accounting policies used for the
monthly reporting are identical to those
used for the legal consolidation under IFRS.
T
he monthly figures are compared with the
budget and the same period a year earlier
for each reporting entity, and significant
dierences are investigated.
The corporate finance department
consolidates these (summary) operational
and financial figures (in functional
currency) on a monthly basis to the
reporting currency (USD), and checks once
again that they are consistent with the
budget or the previous period.
T
he consolidated monthly reporting is
submitted to the managing director and the
executive committee.
104
The connection to the world of sustainable tropical agriculture
The board of directors receives this
report on a periodic basis, i.e. 3, 6, 9 and
12 months, as preparation for the board
meeting. This report is accompanied by a
memorandum with a detailed description of
the operational and financial trends of the
preceding quarter.
In the event of exceptional events,
the board of directors is also notified
immediately.
A
n external audit controls the individual
financial statements and the technical
consolidation at the end of June and the
end of December, but only in December for
the smaller entities. The consolidated IFRS
figures are then submitted to the audit
committee.
Based on the advice of the audit committee,
the board of directors gives its opinion on
the correctness of the consolidated figures
before publishing the financial statements
on the market.
An interim management report is
published twice a year, after the first and
after the third quarter, stating the trends in
production volumes, global market prices
and any changes in the pipeline.
The corporate finance department
is responsible for monitoring any
amendments to IFRS reporting standards
and implementing these amendments in
the Group.
The monthly management reports and the legal
consolidation are done in an integrated system.
Appropriate care is also given to anti-virus and
security applications, uninterrupted backups
and steps to ensure the continuity of the service.
105
SIPEF Company Report 2021 Corporate governance statement
8. Rules of conduct concerning conflicts of interest
The Charter describes the policy with regard
to transactions between the Company or one
of its aliated companies and a member of the
board of directors or the executive committee,
or an associated person, that could entail a
conflict of interest, within the meaning of the
Companies Code or otherwise. It also states the
legal procedures that are laid down in articles
7:96 and 7:97 of the Companies Code.
In 2021, transactions giving rise to a conflict
of interests within the meaning of article 7:96
of the Companies Code were reported to the
board of directors of 10 February 2021 and
17 November 2021. The legal procedure provided
for by this article was applied to the related
decisions of the board. The Company auditor
was given the minutes of the meeting in which
these board decisions were made. Excerpts of the
minutes relating to the decisions in question are
reproduced in full below:
Excerpt of the minutes of 10 February 2021
“The Chairman of the Remuneration Committee,
Antoine Friling, summarises the proposals of the
Committee to the Directors as follows: …
- The individual evaluation of the members of
the Executive Committee was discussed in
length.
As this item concerns part of his remuneration,
François Van Hoydonck, Managing Director,
states that there is a conflict of interest on his
behalf. Article 7:96 of the Belgian Companies
Code is therefore applicable. He leaves the
meeting temporarily.
The Directors take notice of the evaluation
and the bonus proposed by the Remuneration
Committee for François Van Hoydonck
regarding 2020. They confirm the
recommendation issued by the Remuneration
Committee.
F
rançois Van Hoydonck enters the meeting
room.
...
T
he Committee has also continued the
discussion on succession planning in the
SIPEF group.
P
etra Meekers being concerned by this item,
states that there is a conflict of interest on her
behalf in the sense of article 7:96 of the Belgian
Companies Code and leaves the meeting.
From previous reports it is proven that the
Group is well prepared for the future at the
dierent levels of management in the various
countries, except for the replacement of the
President Director in Indonesia and the
Managing Director in Head Oce. It has been
proposed that Petra Meekers will join the
Group as CEO of SIPEF Singapore Pte Ltd
as from 1st April 2021 onwards. She will be
responsible for the operations in Indonesia and
PNG as Chief Operating Ocer Asia-Pacific
(COO APAC). A remuneration package with
a total cost of KEUR 622 has been advised for
approval. Petra is also recommended to join
the SIPEF Executive Committee as from 10th
June 2021.
Petra informed the company that in view of
her new executive functions in SIPEF, she will
resign from the Board of Directors at the next
AGM of 9 June 2021. Petra will follow a path
towards a potential nomination as Managing
Director of SIPEF by September 2024. There
will be well-defined stepstones for evaluation
and advice by the Remuneration Committee
to the Board of Directors as Nomination
Committee. The succession of the President
Director Indonesia will be considered as one of
the priorities in the next six months.
106
The connection to the world of sustainable tropical agriculture
The Board unanimously approves these
recommendations of the Remuneration
Committee.
Petra Meekers enters the meeting again.”
Excerpt of the minutes of 17 November 2021
“The Chairman of the Remuneration Committee,
Antoine Friling, summarises the advice of the
Committee to the Directors as follows: …
As the next items concern his individual
remuneration, François Van Hoydonck, Managing
Director, states that there is a conflict of interest on
his part, as referred to in article 7:96 of the Belgian
Company Code. François leaves the meeting.
-
T
he same benchmark study shows that the
overall fixed remuneration of the Managing
Director and the Executive Committee
members are in line with the market and
that no general adjustment is required. The
variable remunerations received in 2021
were substantially lower than the benchmark
average, but in line with the profitability
of the Company in 2020. It is however
recommended, in view of the developments
over the last few years, including the growth
of the size of the Company, in combination
with the debt reduction at times of low palm oil
prices, to increase the annual remuneration
of the Managing Director from KEUR 667
to KEUR 750 (cost to the Company) as from
2022 onwards.
- It is proposed that the yearly option scheme,
started in 2011, would be continued in
2021. The options would have the same
characteristics as those granted last year,
being an annual stock option plan on existing
SIPEF shares and in line with Belgian tax
legislation. The Committee proposes to grant
a total number of 20 000 share options to the
Managing Director, the extended Executive
Committee and the 2 Managers in charge
of the operations of SIPEF in Indonesia and
Ivory Coast. The Manager in charge of PNG is
not earmarked for the option program oered
in 2021, as being in a transition phase. One
option giving the beneficiary the right to buy
one SIPEF share, 20 000 options correspond
to an amount of approximately KEUR 1 120
(on the basis of a share price of approximately
EUR 56 per share); 6 000 options (KEUR
336) would be oered to the Managing
Director. As the yearly option scheme issued
in 2011 will expire on 23rd November 2021, it
is likely that the remaining 16 000 shares will
be exercised before the due date. It is further
recommended that the Company continuously
cover all outstanding options by a buyback
of SIPEF shares until expiry of the program
or the exercise of all options will have taken
place. It is assumed that by the end of 2021 a
total of 180 000 treasury shares will be needed
to cover all options, including the 2021 plan.
The Directors, in the absence of François Van
Hoydonck, approve these last proposals of the
Committee.
François Van Hoydonck enters the meeting again.”
There were no other conflicts of interest in 2021.
107
SIPEF Company Report 2021 Corporate governance statement
9. Policy concerning financial transactions
The board of directors has drawn up and set
down the rules of conduct that the directors,
employees and self-employed sta of SIPEF
must comply with in financial transactions
with Company stock and its policy to prevent
market abuse drafted and written down in
chapter 5 of the Charter.
10. Shareholder structure
The SIPEF shareholder structure is characterised
by the presence of two controlling shareholders,
Ackermans & van Haaren and Group Bracht
(comprising of Priscilla, Theodora and Victoria
Bracht and their respective companies (Cabra
P, Cabra T and Cabra V), and Cabra NV), which
act together in mutual consultation on the basis
of a shareholder agreement that was originally
entered into in 2007 for a period of 15 years. On
3 March 2017, this agreement was amended and
renewed for a further period of 15 years.
With a stable shareholding of SIPEF, the aim of
this shareholder agreement is to promote the
balanced development and profitable growth of
SIPEF and its subsidiaries. Among other things,
it contains voting arrangements in relation to the
appointment of directors and arrangements in
relation to the transfer of shares.
On 2 July 2020, SIPEF received notification of (i)
the fact that Cabra NV had decreased its SIPEF
voting rights under the 10% threshold and (ii)
the change to the composition of Group Bracht.
These changes to the shareholding of SIPEF were
the consequence of the partial split on 30 June
2020 of Cabra NV, due to the formation of three
new companies: Cabra P, Cabra T and Cabra V,
controlled by Priscilla Bracht, Theodora Bracht
and Victoria Bracht, respectively. In connection
with this partial split, 100 000 SIPEF shares
were contributed in each of the newly formed
companies. After this transaction, Cabra NV held
9.46% of the voting rights of SIPEF. The partial
split has no impact on the total number of SIPEF
shares that Group Bracht holds (12.31%) or on
the shareholder agreement entered into with
Ackermans & van Haaren, by virtue of which
the latter company exercises joint control of
SIPEF together with Group Bracht. Based on this
notification, Ackermans & van Haaren together
in consultation with Group Bracht holds 46.99%
of the votes, of which 34.68% are in the hands of
Ackermans & van Haaren and the rest are in the
possession of Group Bracht.
The relevant details of this transparency
statement have been published on the Company’s
website (www.sipef.com/hq/investors/share-
holders-information/shareholders-structure).
On that date, no other shareholder held more
than 5% of the votes of SIPEF.
108
The connection to the world of sustainable tropical agriculture
11. Agreement with the Belgian Corporate Governance
Code 2020 – ‘comply or explain’
SIPEF’s corporate governance deviates from a
limited number of recommendations of the Code:
1.
Remuneration of the non-executive directors:
deviation from the requirement that part of their
remuneration should be in the form of shares of
the Company that must be held until at least one
year after the end of the term of oce and at least
three years after their award (article 7.6 Code).
Reason:
This form of remuneration is imposed by the
Code to ensure the non-executive directors act
from the perspective of a long-term shareholder.
However, the non-executive directors must
represent the interests of all stakeholders rather
than simply the shareholders. Furthermore, the
activities and strategy of SIPEF are solely driven
by a long-term vision. The Company is therefore
of the opinion that it is unnecessary to extend
such a vision to the remuneration policy.
2.
Remuneration of the members of the executive
committee: no minimum threshold has been set
by the board of directors for shares that must be
held by the members of the executive committee
(article 7.9 Code).
Reason:
The Company imposes no minimum threshold
on the members of the executive committee,
as they are always driven by a long-term vision
that is inextricably bound up with the agro-
industrial activities of the Group. These can
only be evaluated in the long-term, as evidenced
by the strategy and business model of SIPEF.
Furthermore, the remuneration of the members
of the executive committee is already linked to
the performance of the Company by means of the
variable remuneration and the granting of share
options that are valid for a period of 10 years.
3.
The board of directors has not appointed a
secretary fulfilling the roles laid down by the
Code (article 3.19 Code).
Reason:
The roles laid down by article 3.20 of the Code
are fulfilled by the managing director, assisted
by the legal counsel of the Company.
4.
The board has not set up a nomination
committee. The full board of directors serves
as a nomination committee and only 30% of its
members are independent directors, rather than
the majority as required by the Code (article 4.19
Code).
Reason:
SIPEF is of the opinion that the whole board
of directors is better suited than a nomination
committee to prepare and organise the
composition and the succession planning of the
board and its committees. Furthermore, the
relatively limited size of the board – ten members
– does not hamper efficient deliberation and
decision-making.
109
SIPEF Company Report 2021 Corporate governance statement
2017 2018 2019 2020 2021
Average SIPEF share price Average crude palm oil price
40
50
60
70
80
600
900
1200
1500
30
300
SIPEF on the
stock market
Stock market listing
SIPEF shares have been listed on the Brussels
stock market since the establishment of SIPEF
in 1919.
Currently, the shares are listed on the continuous
market of Euronext Brussels (share code: SIP,
ISIN code: BE0003898187).
The graph above shows that, until roughly the
middle of 2020, SIPEF shares in EUR generally
followed the same trend as the crude palm oil
(CPO) prices. From the second half of 2020,
the share price of SIPEF in EUR has remained
relatively stable, while the prices of CPO have
risen from roughly USD 600 per tonne in June
2020 to USD 1 350 per tonne in December.
Even though it is dicult to explain the market
movements, this change in trend is probably
due to the change in export tax and export levy
policies in Indonesia, limiting the upside eect
of increasing CPO prices for the Indonesian
subsidiaries. In addition, the ESG profile of the
palm oil sector has evolved negatively in recent
years within the European Union, which may
also weigh on the SIPEF share price.
EVOLUTION OF THE SIPEF SHARE IN EUR COMPARED TO THE CRUDE PALM OIL PRICE IN USD
110 The connection to the world of sustainable tropical agriculture
Gross dividend (in EUR) Pay-out ratio (in%)
0.30
0.30
0.40
0.80
0.80
1.10
1.50
1.70
1.70
1.25
1.25
0.60
1.25
1.60
0.55
0
0.35
2.00
17%
23%
22%
24%
21%
25%
25%
25%
32%
32%
30%
31%
31%
30%
30%
30%
30%
30%
0.50
1.00
1.50
2.00
20%
25%
30%
35%
0.00 15%
20172004 2005 2006 2007 20092008 2010 2011 2012 2013 2014 2015 2016 2018 2019 2020 2021
Evolution of stock market data of the SIPEF share (in EUR)
Dividend policy
As from 2004, the pay-out ratio increased from
17% to about 30% in 2012. This percentage
remained stable over the 2012-2020 period,
except for 2019. In 2019, SIPEF recorded a loss so
that no dividend payment was proposed for 2020.
It is SIPEF's intention to continue with the policy
of paying out a dividend of approximately 30% of
the recurring profit from the previous financial
year and reinvesting the balance in the further
growth of the Company.
2021 2020 2019 2018 2017
Highest stock price of the year 60.80 56.70 54.80 65.00 69.84
Lowest stock price of the year 43.85 38.00 35.25 47.10 57.76
Closing stock price per 31/12 56.90 43.20 54.80 48.80 62.80
Market capitalisation per 31/12 (KEUR) 601 964 457 027 579 747 516 271 664 382
Number of shares per 31/12 10 579 328 10 579 328 10 579 328 10 579 328 10 579 328
Average number of shares traded per trading day 5 277 5 956 5 081 4 967 5 014
Average turnover per trading day (KEUR) 263 274 229 287 318
EVOLUTION OF THE DIVIDEND AND PAYOUT RATIO
111
SIPEF Company Report 2021 SIPEF on the stock market
Financial calendar
The periodical and occasional information
relating to the Company and to the Group will
be published before opening hours of the stock
exchange as follows:
Thursday 21 April 2022: interim report for the
first three months
Thursday 18 August 2022: half-year results
Thursday 20 October 2022: interim report for
the first nine months
February 2023: results of the financial year,
accompanied with comments on the activities
of the Group
Wednesday 7 June 2023: next ordinary
general meeting of shareholders will be held at
3:00 pm at Kasteel Calesberg, Calesbergdreef 5,
2900 Schoten
In accordance with the applicable legal require-
ments, each major event that could aect the
Company’s and the Group’s result is the subject
of a separate press release.
Financial service
The main paying agent is Bank Degroof
Petercam.
Corporate website
The website ( ww.sipef.com) plays an increasingly
important role in SIPEF financial communication.
Therefore, a substantial part of the corporate
website is reserved for investor relations.
As of the launch of the renewed SIPEF website
in October 2018, reference is made to the daily
stock price and the daily CPO price ( www.sipef.
com/hq/investors/daily-share-price-cpo-price ).
112 The connection to the world of sustainable tropical agriculture
Other information
about the Company
Term
The Company exists for an indefinite term.
Capital
 
SIPEF has been granted ocial approval from
the Federal Public Service (FPS) Economy, as
from 1 January 2016, to keep its accounts and
draw up its financial statements in US dollars,
the functional currency of SIPEF.
At 31 December 2021 the fully paid-up registered
capital was USD 44 733 752.04. It is represented
by 10 579 328 shares without nominal value.
All shares representing the capital have the same
rights.
Each share gives the right to one vote. SIPEF
has issued no other categories of shares, such
as shares without voting rights or preferential
shares.
 
The extraordinary general meeting of
10 June 2020 passed a resolution to extend
b
y five years the authorisation granted to the
board of directors to increase the capital of
USD 44 733 752.04 on one or more occasions,
according to the terms stipulated in the Articles
of Association.
That authorisation is valid for a period of five
years, from 2 July 2020, the date of publication
in the Appendices to the Belgisch Staatsblad, up
to and including 1 July 2025.
The extraordinary general meeting of 10 June
2020 decided that, if the Company receives an
announcement from the Financial Services
and Markets Authority (FSMA) that it has been
informed of a public bid to acquire the shares
of the Company, in accordance with article
7:202 §2, 2° of the Companies Code, the board
of directors can only use its authorisation
with regard to the authorised capital, if this
notification is made no later than three years
after the date of the extraordinary general
meeting that renewed the authorisation in
question, being from 10 June 2020 up to and
including 9 June 2023.
113
SIPEF Company Report 2021 Other information about the Company
At 31 December 2021 the fully authorised capital
was USD 44 733 752.04.
Based on this amount, no more than 10 579 328
new shares can be issued.
 
The extraordinary general meeting of 10 June
2020 renewed for a period of five years the
authorisation given to the board of directors, as a
result of which the board, with due consideration
for the legal provisions, may obtain a maximum
number of 2 115 865 own shares being 20% of
the issued capital, according to the modalities
specified in the Articles of Association.
That authorisation is valid for a period of five
years, from 2 July 2020, the date of publication
in the Appendices to the Belgisch Staatsblad, up
to and including 1 July 2025.
This extraordinary general meeting also
renewed the authorisation granted to the
board of directors to obtain own shares, if this
purchase is necessary to avoid an imminent
serious disadvantage for the Company. That
authorisation is valid for a period of three years,
from 2 July 2020, the date of publication in the
Appendices to the Belgisch Staatsblad, up to and
including 1 July 2023.
The purchase and sale of own shares in 2021 are
described in Note 22 of this Annual Report.
At 31 December 2021, SIPEF owns 178 000
treasury shares (1.68% of the total number of
outstanding shares) which are reserved for the
exercise of granted and not yet exercised options.
Documents available to the public
     
  
SIPEF has a website (www.sipef.com) where
shareholders can access all information on the
Company.
This website is regularly updated and contains
the information required under the Royal Decree
of 14 November 2007 on the obligations of issuers
of financial instruments admitted to trading on
a regulated market and the Companies Code.
Among other things, the website contains the
financial statements and annual reports, all
press releases published by the Company, and
all useful and necessary information on the
general meetings and the participation of the
shareholders in these meetings, particularly
the conditions provided by the articles of
association for the convening of the (ordinary
and extraordinary) general meetings of the
shareholders.
Lastly, the results of the votes and the minutes
of the general meetings are also published on
the website.
114
The connection to the world of sustainable tropical agriculture
   
     
The coordinated articles of association of the
Company can be inspected at the Registry of the
Commercial Court in Antwerp, at the Company’s
registered oce and on its website ( www.sipef.
com/hq/investors/shareholders-information/
corporate-governance).
The annual financial statements are deposited
with the National Bank of Belgium and can be
consulted on the website of SIPEF.
The resolutions concerning the appointment
and the removal of the members of the executive
bodies of the Company are published in the
Appendices to the Belgisch Staatsblad.
The financial notices of the Company are
published in the financial press. The other
documents available for public inspection can
be consulted at the Company’s registered oce.
The annual report of the Company is sent every
year to registered shareholders and to everyone
who has expressed a wish to receive the report. It
is available free of charge at the registered oce.
The annual reports of the three most recent
financial years and all other documents
mentioned in this paragraph can be consulted
on the Company’s website.
SIPEF Company Report 2021
115
Glossary
General
ACP -- The African, Caribbean and Pacific Group of States
organisation was created by the Georgetown Agreement
in 1975. It is composed of 79 states, which are bound to the
European Union via the EU Partnership Agreement. One
of the main objectives is the sustainable development of
its member states and their gradual integration into the
global economy.
CDM -- The Clean Development Mechanism allows a country with
an emission limitation or reduction commitment under the
Kyoto Protocol to implement an emission reduction project
in developing countries. Such projects can earn saleable
Certified Emission Reduction (CER) credits, each equivalent
to one tonne of CO2, which can be counted towards meeting
Kyoto targets. It is the first global, environmental investment
and credit scheme of its kind, providing a standardised
emissions offset instrument, CER. CDM is managed by
the UNFCCC (United Nations Framework Convention on
Climate Change).
CIF Rotterdam -- Cost, Insurance and Freight (CIF) is the selling
price to cover all costs including insurance and freight up
to the port of destination which is Rotterdam in this case.
The buyer will pay for the goods delivered in Rotterdam.
The CIF Rotterdam price is a worldwide reference in the
palm oil market.
CPO -- Crude Palm Oil is an edible oil which is extracted from
the pulp of the fruit of the oil palm.
CSPKO -- Certified Sustainable Palm Kernel Oil is palm kernel
oil produced by palm oil plantations, which have been
independently audited and certified against the Roundtable
on Sustainable Palm Oil (RSPO) standard.
CSPO -- Certified Sustainable Palm Oil is palm oil produced by
palm oil plantations, which have been independently audited
and certified against the RSPO standard.
CTC tea -- During the Cut, Tear and Curl tea process, the leaf is
not rolled. Instead, it goes through a CTC machine, which
results in a dierent tea from orthodox tea. It infuses more
quickly and makes stronger cups of black tea.
EFB -- Empty Fruit Bunches are the remains of the Fresh Fruit
Bunches (FFB) after the fruit has been removed for palm
oil pressing.
EMS -- An Environmental Management System is a set of
processes and practices that enables an organisation/
company to reduce its environmental impacts.
FFA -- Free Fatty Acids are found in palm oil, as in all oils. The
major FFA in palm oil are palmitic and oleic. Crude palm
oil quality and price are dependent on the FFA content at
time of shipping.
FFB -- Fresh Fruit Bunches are the palm fruits that grow in
bunches on the oil palm, the raw material to be transported
to a palm oil mill for processing. The mill process extracts
the palm oil from the flesh of each individual piece of fruit
on the bunch.
FOB Indonesia -- Free on Board is the selling price indicating
that the seller pays for the transportation of the goods to the
port of shipment, in this case Indonesia, plus loading costs.
The buyer pays, in addition to the goods, the cost of freight,
insurance, unloading and transportation from the port of
arrival to the final destination.
FPIC -- Free, Prior and Informed Consent (FPIC) is a specific right
that pertains to indigenous peoples and local communities,
and is recognised in the United Nations Declaration on the
Rights of Indigenous Peoples (UNDRIP). It allows indigenous
peoples and local communities with demonstrable user
rights over an area to give or withhold consent to a project
that may aect them or their territories.
GHG -- Greenhouse gases are the emissions into the Earth's
atmosphere of any of various gases, amongst others carbon
dioxide and methane, that contribute to the greenhouse
eect, leading to changes in temperature.
GLOBALG.A.P. -- Is a worldwide recognised farm certification
program that translates consumer requirements into Good
Agricultural Practices among multiple retailers and their
suppliers.
GRI -- The Global Reporting Initiative (GRI) is an independent
international organisation that has pioneered sustainability
reporting since 1997. GRI helps businesses and governments
worldwide understand and communicate their impact on
critical sustainability issues such as climate change, human
rights, governance and social well-being. This enables real
action to create social, environmental and economic benefits
for everyone.
116 The connection to the world of sustainable tropical agriculture
HCSA -- The High Carbon Stock Approach is a methodology that
distinguishes forest areas for protection from degraded
lands, with low carbon and biodiversity values that may
be developed.
The methodology was developed with the aim of ensuring
a widely accepted practical, transparent, robust and
scientifically credible approach to implement commitments
to halt deforestation in the tropics, while ensuring the rights
and livelihoods of local peoples are respected.
HCV -- The High Conservation Value (HCV) concept was
originally developed by the Forest Stewardship Council in
1999 for use in forest management certification. In 2005
the HCV Resource Network was established and the scope
was widened from 'HCV Forest' to 'HCV Area'. It is now a
keystone principle of sustainability standards for palm oil,
soy, sugar, biofuels and carbon, as well as being widely used
for landscape mapping, conservation and natural resource
planning and advocacy.
HCVA -- High Conservation Value Areas are designated on the
basis of high HCVs which are biological, ecological, social
or cultural values considered outstandingly significant at
the national, regional or global level.
HFCC -- High Forest Cover Countries (HFCC) are defined
as those having > 60% forest cover (based on recent,
trusted recognition of their Reduction of Emissions from
Deforestation and Forest Degradation (REDD+) and national
data); < 1% oil palm cover; a deforestation trajectory that is
historically low but increasing or constant; and a known
frontier area for oil palm or where major areas have been
allocated for development.
HFCL -- High Forest Cover Landscapes (HFCL) are landscapes
having > 80% forest cover. The High Carbon Forest
Landscape (HCFL) concept was developed by the High
Carbon Stock Approach (HCSA) and a specific section in
the HCSA Toolkit relating to HCFL is being developed in
conjunction with RSPO.
HGU -- "Hak Guna Usaha" is a cultivation licence issued by the
Indonesian Government.
IP -- Sustainable palm oil from a single identifiable certified
source is kept separately from ordinary palm oil throughout
the supply chain. A mill is deemed to be Identity Preserved
(IP) if the FFB processed by the mill are sourced from
plantations/estates that are certified against the RSPO
Principles and Criteria (RSPO P&C).
IPM -- Integrated Pest Management is an ecosystem approach
to crop production that combines dierent management
strategies and practices to grow healthy crops and minimise
the use of pesticides.
ISCC -- International Sustainability and Carbon Certification
is an independent certification scheme designed to
demonstrate that biomass and bioenergy, and other biomass-
based products used as ingredients by the feed, food and
chemical industries, comply with requirements related
to sustainability and GHG emissions. The scheme aims to
reduce GHG emissions; ensure that biomass is not produced
on land with high carbon stock or high biodiversity; ensure
the application of good agricultural practices related to
soil, water and air; and finally, ensure respect for human,
labour and land rights.
ISEAL -- The International Social and Environmental
Accreditation (ISEAL) is the global membership association
for credible sustainability standards. These sustainability
standards meet the Codes of Good Practice and promote
measurable change through open, rigorous and accessible
certification systems. They are supported by international
accreditation bodies, which are required to meet accepted
international best practice.
ISPO -- The Indonesian Sustainable Palm Oil system is a
policy adopted by the Ministry of Agriculture on behalf
of the Indonesian Government. The aims are to improve
the competitiveness of Indonesian palm oil in the global
market; reduce GHG; draw attention to environmental
issues and also lead the ISPO GHG Working Group. The
ISPO Commission and the GHG Working Group have worked
together to formulate the calculation guidelines for palm oil
plantations in Indonesia. These guidelines will be used as a
reference and be incorporated by the Government into the
latest ISPO standard.
117
SIPEF Company Report 2021 Glossary
Izin Lokasi -- This licence issued by the Indonesian Government
authorises a developer to compensate land from private
owners in a specific location for a defined project.
Mass Balance (MB) -- Sustainable palm oil from certified sources
is mixed with ordinary palm oil throughout the supply
chain. A mill is deemed to be Mass Balance (MB) if the mill
processes FFB from both RSPO certified and uncertified
plantations/estates. A mill may be taking delivery of FFB
from uncertified growers, in addition to those from its own
and third-party certified supply bases. In that scenario,
only the volume of oil palm products produced from the
processing of the certified FFB can claim MB.
NPP -- The New Planting Procedure (NPP) was introduced
with the aim of providing a framework for the responsible
development of new land for oil palm cultivation. The NPP
includes a set of assessments and verification activities
carried out by both growers and certification bodies before
any new oil palm development commences. The assessments
ensure that new oil palm plantings will not negatively
impact primary forest, High Conservation Value (HCV)
areas, High Carbon Stock (HCS), fragile and marginal soil,
or local peoples’ lands. A successful implementation of the
NPP ensures that all indicators of the RSPO Principles and
Criteria (P&C) 2013, Principle 7, are being implemented, and
are therefore in compliance when a new development starts.
PKO -- Palm Kernel Oil is an edible vegetable oil derived from
the kernel of the oil palm fruit.
Plasma -- Cooperative programs for plantation development
in Indonesia oblige oil palm plantation companies by law
to assist individual farmers to develop their agricultural
land and manage oil palm planted areas, called 'plasma'
areas. Their production is stated as ‘outgrowers’ in the Group
production figures.
POIG -- The Palm Oil Innovation Group (POIG) is a multi-
stakeholder initiative that strives to achieve the adoption
of responsible palm oil production practices by key players in
the supply chain, through developing and sharing a credible
and verifiable benchmark that builds upon the Roundtable
on Sustainable Palm Oil (RSPO), and creating and promoting
innovations. Founded in 2013, the initiative was developed in
partnership with leading NGOs as well as with progressive
palm oil producers.
POME -- Palm Oil Mill Euent is wastewater generated from
palm oil milling activities. With its high organic content,
POME is a source with great potential for biogas production
and/or composting.
Rainforest Alliance -- The Rainforest Alliance is an international
non-profit organisation working at the intersection of
business, agriculture and forestry to make responsible
business the new normal, and awarding certifications. It is
an alliance of companies, farmers, foresters, communities
and consumers committed to creating a world where people
and nature thrive in harmony.
RSPO -- The Roundtable on Sustainable Palm Oil is a non-profit
global certification scheme that unites stakeholders from
the palm oil industry: palm oil producers, processors or
traders, consumer goods manufacturers, retailers, banks/
investors, and environmental and social non-governmental
organisations (NGOs), to develop and implement global
standards for sustainable palm oil. A set of environmental
and social criteria has been developed, with which companies
must comply in order to produce Certified Sustainable Palm
Oil (CSPO). When properly applied, these criteria can help
to minimise the negative impacts of palm oil cultivation on
the environment and communities in palm oil producing
regions. The RSPO members have committed to produce,
source and/or use sustainable palm oil certified by the RSPO.
RSS -- Ribbed Smoked Sheets (commonly known as RSS 1 to 5)
are a natural rubber which comes directly from the latex
of rubber trees. The coagulated latex, rolled in sheets, is
graded on the basis of certain parameters, after having been
smoked, dried, and the packed in bales. The number 1 to 5
indicates the level of purity of the sheet. The RSS3 processed
in Indonesia is mainly used for tires and tubes.
SAN -- The Sustainable Agriculture Network (SAN) is a coalition
of non-profit conservation organisations in America,
Africa, Europe and Asia promoting the environmental and
social sustainability of agricultural activities through the
development of standards for best practices, certification and
training for rural farmers around the world. Their vision of
the world is one where agricultural activity contributes to
biodiversity conservation and sustainable livelihoods. Their
mission is to be a global network transforming agriculture
into a sustainable activity.
118 The connection to the world of sustainable tropical agriculture
SDGs -- Sustainable Development Goals (SDGs), also known as
the Global Goals, were adopted by all United Nations Member
States in 2015 as a universal call to action to end poverty,
protect the planet and ensure that all people enjoy peace
and prosperity by 2030. The 17 SDGs are integrated—that is,
they recognise that action in one area will aect outcomes in
others, and that development must balance social, economic
and environmental sustainability.
SIR -- Standard Indonesian Rubber. The dierent parameters
are specified with numbers and letters defining the
specifications content (dirt, ash, viscosity, etc.). According
to SNI (Indonesian National Standard) specifications, a SIR
10 means that it is a cleaner rubber with less impurities than
a SIR 20 and a SIR3CV60 presents a higher viscosity than
a SIR3CV50 rubber.
SOP -- Standard Operating Procedures: step-by-step instructions
compiled by an organisation or company on how a process
works, in order to help employees carry out routine
operations.
SPOTT -- The Sustainability Policy Transparency Toolkit
(SPOTT) is a free, online platform supporting sustainable
commodity production and trade. By tracking transparency,
SPOTT incentivises the implementation of corporate best
practice. SPOTT assesses commodity producers and traders
on their public disclosure regarding their organisation,
policies and practices related to environmental, social and
governance issues.
UNFCCC -- The United Nations Framework Convention
on Climate Change (UNFCCC) is an international
environmental treaty negotiated at the United Nations
Conference on Environment and Development (UNCED),
informally known as the Earth Summit, held in Rio de
Janeiro from 3 to 14 June 1992. The objective of the UNFCCC
is to stabilise greenhouse gas (GHG) concentrations in the
atmosphere at a level that will prevent dangerous human
interference with the climate system, in a time frame which
allows ecosystems to adapt naturally and enables sustainable
development.
119
SIPEF Company Report 2021 Glossary
Finance
IFRS Terminology
Associated companies -- Entities in which SIPEF has a significant
in-fluence and that are processed using the equity-method.
Biological assets - bearer plants -- The bearer plants (trees, tea
bushes, banana plants, ...) on which the biological produce
grows.
Biological assets - agricultural produce -- The harvested product
coming from biological assets - bearer plants.
CGU -- Cash generating unit or cash flow generating unit.
Earnings per share basic -- Net result for the period (Group share)
/ Average outstanding shares over the period.
Earnings per share diluted -- Net result for the period (Group
share)/ [Average number of outstanding shares over the
period - own shares + (number of possible new shares that
have to be issued within the framework of the existing
outstanding stock options plans x dilution effect of the
stock option plans)].
Joint ventures -- Entities that are controlled jointly. These
companies are consolidated following the equity method.
Net financial position -- Interest bearing financial debts at more
than one year + interest bearing financial debts within the
maximum of one year - cash and cash equivalents.
Subsidiaries -- Fully consolidated entities under SIPEF control.
Financial performance measures
EBIT -- Operating results + profit/loss from equity companies.
EBITDA -- EBIT + depreciation and additional impairments/
increases on assets.
Market capitalisation -- Closing price x total number of
outstanding share.
Working capital -- Inventories + trade receivables + other
receivables + recoverable taxes - trade payables - payables
taxes - other payables.
120 The connection to the world of sustainable tropical agriculture
121Glossary
Annex
Group production (in tonnes)
FRESH FRUIT BUNCHES PRODUCED YTD 2021 YTD 2020 % CHANGE
OWN
Indonesia 1 019 009 950 854 7.17%
Tolan Tiga group 297 229 298 757 -0.51%
Umbul Mas Wisesa group 224 429 206 984 8.43%
Agro Muko group 396 782 362 545 9.44%
South Sumatra group 100 568 82 567 21.80%
Papua New Guinea 366 849 269 616 36.06%
Hargy Oil Palms Ltd 366 849 269 616 36.06%
TOTAL OWN 1 385 858 1 220 470 13.55%
OUTGROWERS
Indonesia 40 848 28 652 42.57%
Tolan Tiga group 6 963 2 408 189.20%
Umbul Mas Wisesa group 752 1 925 -60.95%
Agro Muko group 18 277 16 386 11.54%
South Sumatra group 14 855 7 933 87.25%
Papua New Guinea 232 134 209 791 10.65%
Hargy Oil Palms Ltd 232 134 209 791 10.65%
TOTAL OUTGROUWERS 272 982 238 443 14.49%
TOTAL FRESH FRUIT BUNCHES PRODUCED 1 658 840 1 458 913 13.70%
FRESH FRUIT BUNCHES SOLD YTD 2021 YTD 2020 % CHANGE
Indonesia 55 116 52 969 4.05%
Tolan Tiga group 2 231 2 120900.92%
Umbul Mas Wisesa group 41 532 42 095 -1.34%
Agro Muko group 4 628 1 875 146.83%
South Sumatra group 6 726 8 996 -25.24%
TOTAL FRESH FRUIT BUNCHES SOLD 55 116 52 969 4.05%
122 The connection to the world of sustainable tropical agriculture
OIL EXTRACTION RATE YTD 2021 YTD 2020 % CHANGE
Indonesia 23.0% 22.8% 0.87%
Tolan Tiga group 22.7% 22.5% 0.89%
Umbul Mas Wisesa group 23.3% 23.1% 0.84%
Agro Muko group 23.1% 23.1% 0.07%
South Sumatra group 22.6% 21.5% 4.90%
Papua New Guinea 25.6% 24.6% 3.81%
Hargy Oil Palms Ltd 25.6% 24.6% 3.81%
TOTAL OIL EXTRACTION RATE 24.0% 23.4% 2.28%
FRESH FRUIT BUNCHES PROCESSED YTD 2021 YTD 2020 % CHANGE
Indonesia 1 004 740 926 537 8.44%
Tolan Tiga group 301 961 301 163 0.27%
Umbul Mas Wisesa group 183 649 166 814 10.09%
Agro Muko group 410 431 377 056 8.85%
South Sumatra group 108 698 81 504 33.37%
Papua New Guinea 598 983 479 407 24.94%
Hargy Oil Palms Ltd 598 983 479 407 24.94%
TOTAL FRESH FRUIT BUNCHES PROCESSED 1 603 723 1 405 944 14.07%
123
SIPEF Company Report 2021 Annex
PALM KERNELS YTD 2021 YTD 2020 % CHANGE
OWN
Indonesia 44 445 42 867 3.68%
Tolan Tiga group 16 135 16 255 -0.73%
Umbul Mas Wisesa group 7 412 6 754 9.75%
Agro Muko group 17 519 17 036 2.84%
South Sumatra group 3 378 2 822 19.69%
TOTAL OWN 44 445 42 867 3.68%
OUTGROWERS
Indonesia 1 498 1 162 28.93%
Tolan Tiga group 225 113 98.68%
Umbul Mas Wisesa group 10 22 -55.58%
Agro Muko group 777 720 7.95%
South Sumatra group 486 306 58.68%
TOTAL OUTGROWERS 1 498 1 162 28.93%
TOTAL PALM KERNELS 45 943 44 028 4.35%
PALM OIL YTD 2021 YTD 2020 % CHANGE
OWN
Indonesia 222 509 205 040 8.52%
Tolan Tiga group 67 550 67 310 0.36%
Umbul Mas Wisesa group 42 733 38 413 11.25%
Agro Muko group 90 895 83 545 8.80%
South Sumatra group 21 331 15 772 35.25%
Papua New Guinea 94 231 66 432 41.85%
Hargy Oil Palms Ltd 94 231 66 432 41.85%
TOTAL OWN 316 740 271 472 16.68%
OUTGROWERS
Indonesia 8 466 6 121 38.31%
Tolan Tiga group 1 094 549 99.29%
Umbul Mas Wisesa group 59 132 -54.93%
Agro Muko group 4 103 3 671 11.76%
South Sumatra group 3 209 1 769 81.43%
Papua New Guinea 58 972 51 691 14.09%
Hargy Oil Palms Ltd 58 972 51 691 14.09%
TOTAL OUTGROWERS 67 438 57 812 16.65%
TOTAL PALM OIL 384 178 329 284 16.67%
124 The connection to the world of sustainable tropical agriculture
PALM KERNEL OIL YTD 2021 YTD 2020 % CHANGE
Papua New Guinea 12 251 9 397 30.38%
Hargy Oil Palms Ltd - Own 7 437 5 294 40.47%
Hargy Oil Palms Ltd - Outgrowers 4 814 4 102 17. 35%
TOTAL PALM KERNEL OIL 12 251 9 397 30.38%
RUBBER YTD 2021 YTD 2020 % CHANGE
OWN
Indonesia 3 182 5 300 -39.96%
Tolan Tiga group 599 918 -34.78%
Melania* 1 186 2 695 -55.99%
Agro Muko 1 397 1 686 -17.16%
TOTAL OWN 3 182 5 300 39.96%
OUTGROWERS
Indonesia 645 711 -9.28%
Tolan Tiga group 645 711 -9.28%
TOTAL OUTGROWERS 645 711 9.28%
TOTAL RUBBER 3 827 6 011 36.33%
TEA YTD 2021 YTD 2020 % CHANGE
Indonesia 965 2 762 -65.06%
Melania - Own* 829 2 664 -68.88%
Melania - Outgrowers* 136 98 38.78%
TOTAL TEA 965 2 762 65.06%
BANANAS YTD 2021 YTD 2020 % CHANGE
Ivory Coast 32 200 31 158 3.34%
Azaguie 1 5 600 5 152 8.70%
Azaguie 2 7 512 8 447 -11.07%
Agboville 9 507 8 988 5.77%
Motobé 9 581 8 571 11.78%
TOTAL BANANAS 32 200 31 158 3.34%
* PT Melania rubber and tea productions are included for 4 months only because of the sale of PT Melania as of 30/04/2021.
125
SIPEF Company Report 2021 Annex
Planted area (in hectares)
Total planted area of consolidated companies excluding PT Timbang Deli.
2021 2020
MATURE IMMATURE PLANTED MATURE IMMATURE PLANTED
OIL PALMS 64 181 12 982 77 163 63 489 12 984 76 473
Indonesia 51 312 12 245 63 558 50 745 12 040 62 785
Tolan Tiga group 12 027 875 12 902 12 383 581 12 963
PT Tolan Tiga 7 322 493 7 816 7 452 375 7 827
PT Eastern Sumatra 2 631 280 2 911 2 716 205 2 921
PT Kerasaan 2 073 102 2 175 2 215 0 2 215
Umbul Mas Wisesa group 9 937 0 9 937 9 938 6 9 944
PT Umbul Mas Wisesa 7 056 0 7 056 7 063 0 7 063
PT Toton Usaha Mandiri 1 135 0 1 135 1 135 0 1 135
PT Citra Sawit Mandiri 1 746 0 1 746 1 740 6 1 746
Agro Muko group 19 154 1 979 21 133 18 891 2 196 21 087
PT Agro Muko 16 332 1 508 17 839 16 045 1 877 17 922
PT Mukomuko Agro Sejahtera 2 822 471 3 294 2 847 319 3 166
South Sumatra group 10 194 9 391 19 586 9 532 9 258 18 790
PT Agro Kati Lama 3 638 538 4 176 3 373 616 3 989
PT Agro Muara Rupit 3 294 2 355 5 649 2 377 3 082 5 459
PT Agro Rawas Ulu 1 816 728 2 543 1 546 906 2 452
PT Dendymarker Indah Lestari 1 447 5 770 7 217 2 236 4 654 6 890
Papua New Guinea 12 869 736 13 605 12 744 944 13 689
Hargy Oil Palms Ltd 12 869 736 13 605 12 744 944 13 689
RUBBER 1 954 0 1 954 4 142 674 4 816
Indonesia 1 954 0 1 954 4 142 674 4 816
Tolan Tiga group 696 0 696 2 778 674 3 452
PT Bandar Sumatra 696 0 696 767 0 767
PT Melania 0 0 0 2 011 674 2 685
Agro Muko group 1 258 0 1 258 1 363 0 1 363
PT Agro Muko 1 258 0 1 258 1 363 0 1 363
TEA 0 0 0 1 744 43 1 786
Indonesia 0 0 0 1 744 43 1 786
PT Melania 0 0 0 1 744 43 1 786
BANANAS 794 0 794 780 0 780
Ivory Coast 794 0 794 780 0 780
Plantations J. Eglin SA 794 0 794 780 0 780
PINEAPPLE FLOWERS 23 8 31 30 8 38
Ivory Coast 23 8 31 30 8 38
Plantations J. Eglin SA 23 8 31 30 8 38
TOTAL 66 952 12 989 79 942 70 184 13 709 83 893
126 The connection to the world of sustainable tropical agriculture
Planted area (in hectares)
Total planted area of consolidated companies (share of the Group) excluding PT Timbang Deli.
TOTAL
BENEFICIAL
INTEREST %
SHARE OF
THE GROUP
OIL PALMS 77 163 93.04% 71 790
Indonesia 63 558 91.55% 58 185
Tolan Tiga group 12 902 87.04% 11 230
PT Tolan Tiga 7 816 95.00% 7 425
PT Eastern Sumatra 2 911 90.25% 2 627
PT Kerasaan 2 175 54.15% 1 178
Umbul Mas Wisesa group 9 937 94.90% 9 430
PT Umbul Mas Wisesa 7 056 94.90% 6 696
PT Toton Usaha Mandiri 1 135 94.90% 1 077
PT Citra Sawit Mandiri 1 746 94.90% 1 657
Agro Muko group 21 133 89.55% 18 924
PT Agro Muko 17 839 90.25% 16 100
PT Mukomuko Agro Sejahtera 3 294 85.74% 2 824
South Sumatra group 19 586 94.97% 18 601
PT Agro Kati Lama 4 176 95.00% 3 968
PT Agro Muara Rupit 5 649 94.90% 5 361
PT Agro Rawas Ulu 2 543 95.00% 2 416
PT Dendymarker Indah Lestari 7 217 95.00% 6 856
Papua New Guinea 13 605 100.00% 13 605
Hargy Oil Palms Ltd 13 605 100.00% 13 605
RUBBER 1 954 90.25% 1 763
Indonesia 1 954 90.25% 1 763
Tolan Tiga group 696 90.25% 628
PT Bandar Sumatra 696 90.25% 628
PT Melania 0 0.00% 0
Agro Muko group 1 258 90.25% 1 135
PT Agro Muko 1 258 90.25% 1 135
TEA 0 0.00% 0
Indonesia 0 0.00% 0
PT Melania 0 0.00% 0
BANANAS 794 100.00% 794
Ivory Coast 794 100.00% 794
Plantations J. Eglin SA 794 100.00% 794
PINEAPPLE FLOWERS 31 100.00% 31
Ivory Coast 31 100.00% 31
Plantations J. Eglin SA 31 100.00% 31
TOTAL
79 942 93.04%
74 378
127
SIPEF Company Report 2021 Annex
Age profile (in hectares)
OIL PALMS
YEAR TOLAN TIGA
GROUP
UMBUL MAS
WISESA GROUP
AGRO MUKO
GROUP
SOUTH SUMATRA
GROUP
HARGY OIL
PALMS
TOTAL
2021 597 0 1 192 2 904 673 5 365
2020 0 0 118 3 241 135 3 494
2019 278 0 1 526 3 246 263 5 314
2018 303 0 1 067 2 761 547 4 676
2017 399 45 971 2 624 596 4 635
2016 328 185 397 2 302 219 3 431
2015 679 69 1 080 1 114 741 3 682
2014 709 0 1 011 686 1 387 3 793
2013 434 0 1 244 301 947 2 926
2012 745 202 1 505 117 1 628 4 198
2011 754 755 26 0 811 2 346
2010 625 1 525 387 0 619 3 156
2009 103 1 658 573 0 294 2 627
2008 397 1 954 332 0 239 2 921
2007 319 2 152 578 0 1 563 4 612
2006 619 365 1 063 0 928 2 975
2005 551 1 004 557 0 190 2 301
2004 133 0 759 0 159 1 051
2003 750 0 120 0 148 1 018
2002 470 0 63 0 330 863
2001 296 0 585 0 774 1 655
2000 302 0 1 129 263 243 1 936
1999 370 0 1 672 27 173 2 242
1998 426 0 1 522 0 0 1 948
1997 753 0 0 0 0 753
Before 1997 1 564 24 1 657 0 0 3 244
12 902 9 937 21 133 19 585 13 605 77 163
Average age 13.90 12.60 12.44 3.12 10.18 9.94
128 The connection to the world of sustainable tropical agriculture
Evolution of key data over 5 years
ACTIVITIES 2021 2020 2019 2018 2017
Total own production of consolidated
companies (in tonnes)
Palm oil 316 740 271 472 264 641 290 441 272 312
Rubber 3 182 5 300 5 495 6 930 6 964
Tea 829 2 644 2 331 2 422 2 402
Bananas 32 200 31 158 32 849 27 788 29 772
Average world market price (USD/tonne) Palm oil* 1 195 715 566 598 715
Rubber** 2 071 1 728 1 640 1 565 1 995
Tea** 2 112 2 004 2 226 2 579 2 804
Bananas*** 616 628 662 647 684
Own FFB production (in tonnes/ha) Indonesia 19.86 18.74 19.52 20.60 22.36
Papua New Guinea 28.51 21.16 20.79 28.25 27.21
Palm oil extraction rate (in %) Indonesia 22.99% 22.79% 23.23% 22.73% 22.80%
Papua New Guinea 25.58% 24.64% 23.35% 24.36% 24.64%
STOCK EXCHANGE SHARE PRICEIN EUR 2021 2020 2019 2018 2017
Maximum 60.80 56.70 54.80 65.00 69.84
Minimum 43.85 38.00 35.25 47.10 57.76
Closing 31/12 56.90 43.20 54.80 48.80 62.80
Stock Exchange capitalization at 31/12 (in KEUR) 601 964 457 027 579 747 516 271 664 382
* Oil World price data
**
W
orld bank commodity price data - updated database
*** CIRAD price data (in EUR)
(1) Operating fixed assets = biological assets - bearer plants, other property, plant & equipment and investment property
RESULTS IN KUSD 2021 2020 2019 2018 2017
Turnover 416 053 274 027 248 310 275 270 321 641
Gross profit 169 218 62 357 37 162 72 096 120 474
Operating result 139 416 30 778 4 940 50 065 169 585
Share of the group in the result 93 749 14 122 - 8 004 30 089 139 663
Cash flow from the operating activities after taxes 160 311 73 262 33 988 36 221 119 853
Free cash flow 112 270 21 299 - 27 751 - 12 912 - 16 512
BALANCE SHEET IN KUSD 2021 2020 2019 2018 2017
Operational fixed assets (1) 667 267 670 637 665 413 640 435 614 351
Shareholders' equity 727 329 638 688 628 686 644 509 634 636
Net financial assets (+) / obligations (-) - 49 192 - 151 165 - 164 623 - 121 443 - 83 697
Investments in intangible and operating fixed assets (1) 68 692 51 763 66 546 69 428 59 625
129
SIPEF Company Report 2021 Annex
DATA PER SHARE IN USD 2021 2020 2019 2018 2017
Number of shares 10 579 328 10 579 328 10 579 328 10 579 328 10 579 328
Number of own shares 178 000 160 000 160 000 143 300 124 000
Equity 69.93 61.30 60.34 61.76 60.70
Basic earnings per share (2) 9.00 1.36 -0.77 2.88 14.21
Cash flow from operating activities after taxes (2) 15.39 7.03 3.26 3.46 12.20
Free cash flow (2) 10.78 2.04 -2.66 -1.24 -1.68
(2) Denominator 2021 = weighted average number of shares issued (10 418 431 shares)
130 The connection to the world of sustainable tropical agriculture
PART 2 - FINANCIAL STATEMENTS
Annual
Report
2021
Contents
Comments on the consolidated financial statements � � � � � � 2
Consolidated balance sheet � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 8
Consolidated income statement � � � � � � � � � � � � � � � � � � � � � � � � � � 10
Statement of consolidated comprehensive income � � � � � � � �11
Consolidated cash flow statement � � � � � � � � � � � � � � � � � � � � � � � � 12
Statement of changes in consolidated equity� � � � � � � � � � � � � � �13
Notes � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �14
1 - Identification � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �14
2 - Statement of compliance� � � � � � � � � � � � � � � � � � � � � � � � � � � �14
3 - Accounting policies � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �14
4 - Use of accounting estimates and judgements� � � � � � � 20
5 - Group companies / consolidation scope� � � � � � � � � � � � 22
6 - Exchange rates� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 22
7 - Operational result and segment information� � � � � � � 23
8 - Goodwill and other intangible assets � � � � � � � � � � � � � � � 27
9 - Biological assets - bearer plants � � � � � � � � � � � � � � � � � � � � 30
10 - Other property, plant & equipment � � � � � � � � � � � � � � � �31
11 - Receivables > 1 year � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 34
12 - Inventories � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 34
13 - Biological assets � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 34
14 - Other current receivables and other
current payables � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 35
15 - Shareholders’ equity � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 35
16 - Non-controlling interests� � � � � � � � � � � � � � � � � � � � � � � � � 37
17 - Provisions � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 38
18 - Pension liabilities� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 38
19 - Net financial assets/(liabilities) � � � � � � � � � � � � � � � � � � � 40
20 - Other operating income/(charges) � � � � � � � � � � � � � � � 42
21 - Financial result � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 42
22 - Share based payment � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 42
23 - Income taxes � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 43
24 - Investments in associates and joint ventures � � � � � 45
25 - Change in net working capital � � � � � � � � � � � � � � � � � � � � 47
26 - Financial instruments � � � � � � � � � � � � � � � � � � � � � � � � � � � � 47
27 - Leasing � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 53
28 - Rights and commitments
not reflected in the balance sheet � � � � � � � � � � � � � � � � � 54
29 - Related party transactions� � � � � � � � � � � � � � � � � � � � � � � � 55
30 - Business combinations,
acquisitions and divestures � � � � � � � � � � � � � � � � � � � � � � � 55
31 - Earnings per share (basic and diluted) � � � � � � � � � � � � 57
32 - Events after the balance sheet date � � � � � � � � � � � � � � � 57
33 - Services provided by the auditor
and related fees � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 57
34 - Covid-19 � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 58
Statutory auditor’s report
on consolidated financial statements � � � � � � � � � � � � � � � � � � � � � 59
Parent company summarised statutory accounts � � � � � � � � � 66
Condensed balance sheet � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 67
Condensed income statement � � � � � � � � � � � � � � � � � � � � � � � � � � � � 68
Appropriation account � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 68
ESEF information � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 72
Responsible persons� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 73
For further information � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 74
1
SIPEF Financial statements 2021
Comments on the
consolidated financial
statements
The consolidated financial statements for the financial year 2021 are prepared in
accordance with the International Financial Reporting Standards (IFRS).
Balance sheet
With the exception of the strong decrease in the
net cash position due to the excellent free cash
flow, the main movements in the balance sheet
positions were related to the deconsolidation of
PT Melania� Note 30 summarises the impact on
the income statement of this transaction as well
as the impact on the various balance sheet items�
The reduction in biological assets – bearer plants
(KUSD 8 456) is the result of the deconsolidation
of PT Melania (KUSD 12 482) and the accelera-
ted depreciation in PT Dendymarker on earlier
than planned replanting (KUSD 4 229)� The other
fixed assets showed a slight increase due to the
accelerated execution of the investment budget
in the second semester, whereby the investments
exceeded the depreciations�
The amounts receivable after one year increased,
due to the granting of loans to the plasma smal-
lholders in South Sumatra for the financing of
their new plantings�
The assets held for sale of KUSD 13 520 (55% of
KUSD 24 582) represent the estimated net sales
value of the part of PT Melania that is still held
by the Group until all conditions for a final sale
are fulfilled�
The advances received after 1 year relate to the
sale of 40% of the shares of PT Melania� They
include the dierence between the amount recei-
ved (KUSD 19 000) and the sum of the value of
40% of the shares of PT Melania (KUSD 9 833)
that were transferred, and the amounts paid since
the transfer for the renewal of the concession
rights, pension payments and the financing of the
tea activities (KUSD 1 922)� Of the total remaining
advance of KUSD 7 245, KUSD 2 415 is expected
to be used within the year and KUSD 4 830 to be
used after more than one year�
2
The connection to the world of sustainable tropical agriculture
The net current assets, net of cash, experienced
four major movements, without any impact on
the overall structure of the balance sheet:
• an increase in stocks, biological assets and
trade receivables of KUSD 25 325;
• an increase in net tax liabilities of KUSD
24956. This is the result of insucient pre-
payments compared to the taxes to be paid
in accordance with the legislation in force
in Indonesia and Papua New Guinea;
• an increase in the advance payments recei-
ved of KUSD 8 450 and, more specifically,
on palm oil to be shipped;
• an increase in the other current liabilities
of KUSD 8 529, as a result of an increased
bonus provision.
IN KUSD 31/12/2021 31/12/2020
Inventories 48 017 29 648
Biological assets 9 168 6 763
Trade receivables 32 282 27 731
Other receivables 49 878 49 146
Current tax receivables 1 469 11 766
Derivatives 0 0
Other current assets 2 151 2 043
Trade payables -23 605 -21 384
Advances received -11 934 -1 071
Other payables -11 519 -8 805
Income taxes - 19 346 - 4 687
Derivatives - 2 066 - 793
Other current liabilities -12 749 -4 220
NET CURRENT ASSETS, NET OF CASH 61 746 86 137
3
SIPEF Financial statements 2021 Comments on the consolidated financial statements
IN KUSD 31/12/2021 31/12/2020
Other investments and deposits 38 0
Cash and cash equivalents 19 939 9 790
Financial liabilities > 1 year -36 000 -54 000
Leasing liabilities > 1 year -2 207 -2 285
Current portion of amounts payable > 1 year -18 000 -18 000
Financial liabilities -12 477 -86 128
Leasing liabilities < 1 year - 484 - 543
NET CASH POSITION -49 192 -151 165
The net financial debt decreased by KUSD 101 973 thanks to the positive free cash flow�
Result
Total revenue increased by 51�8% compared with
2020, up to USD 416 million� The revenue from
palm products increased by 60�9%, mainly due to
a combination of higher volumes and higher world
market prices for crude palm oil (CPO)� Rubber
revenue decreased by 9�1% despite a higher rea-
lised unit selling price, due to lower production
at PT Agro Muko and the loss of direct sales to
external clients by PT Melania, the company that
was deconsolidated in 2021� This deconsolidation
also resulted in the revenue from tea being almost
halved� The revenue in the banana segment,
expressed in the functional currency, the euro,
increased mainly due to a 3�6% rise in volumes
sold� As the bananas are traded in euro, the USD
revenue increased by 6�1%, due to the evolution
of the EUR/USD exchange rate�
The total cost of sales increased by KUSD 36 837�
Purchases of Fresh Fruit Bunches (FFB) from
third parties augmented by KUSD 34 462, due to
a rise in the purchased volumes and the increased
FFB purchase prices, which are related to CPO
prices�
The average ex works unit cost price for the oil
palm plantations experienced a slight increase
by 4�3%� In Indonesia, the high costs of the young
mature plantations weighed on the average cost
level, while in Papua New Guinea, the excellent
production of Hargy Oil Palms Ltd led to a decre-
ase in the unit cost price by 17�7%� The unit cost
price of the banana segment remained about the
same as in 2020� For the rubber segment, the
unit cost prices increased significantly (50�8%):
in preparation for the conversion from rubber
into palm, production decreased significantly and
the remaining net carrying value was depreciated
more quickly�
The changes in fair value concerned the valuation
of the hanging fruits (IAS 41R)�
The gross profit rose from KUSD 62 357 at the
end of 2020 to KUSD 169 218 at the end of 2021�
4
The connection to the world of sustainable tropical agriculture
The gross result of the palm segment (98�4% of
the total gross profit) increased by KUSD 106 816,
thanks to higher production and especially higher
net palm oil prices�
The average world market price for CPO for 2021
was USD 1 195 per tonne CIF Rotterdam� This is
67�1% higher than over the same period last year�
However, it should be noted that in Indonesia the
export levy and export tax increased significantly
compared to last year� For the entire year 2021,
the total impact of the export levy and export tax
is estimated at approximately USD 349 per tonne
compared with USD 74 per tonne last year�
The graph below shows Indonesia's export levy
and export tax per month�
In Papua New Guinea, the Group was able to fully
benefit from the increase in CPO prices�
Despite this export levy and export tax, the total
average ex-works sales price (gross sales price
lowered by the local and international transport
costs, and export levy and export tax) for CPO
increased� This evolved from USD 583 per ton-
ne for 2020 to USD 807 per tonne for 2021, an
increase of 38�4%�
The relatively strong recovery of sales prices for
rubber, since the second half of last year, could
not prevent a further increase in the negative
contribution of the rubber segment to the gross
margin� This is mainly due to the decreased
production volumes in the rubber estates of PT
Bandar Sumatra and PT Agro Muko�
Since 2021, the net result of the tea segment
represents exclusively the commissions that
SIPEF receives from the sale of tea volumes in
the market�
The profitability of the banana and horticulture
activities was confirmed with a gross margin of
KUSD 3 803�
The general and administrative expenses incre-
ased compared with last year, mainly due to the
increased bonus provision because of the better
results�
2020 2021
50
68
53
50
50
55
55
55
55
58
58
213
299
348
348
371
399
438
291
268
341
341
375
375
100
200
300
400
JAN FEB MAR APR JUNMAY JUL AUG SEP OCT NOV DEC
INDONESIA'S EXPORT LEVY AND EXPORT TAX PER MONTH
5
SIPEF Financial statements 2021 Comments on the consolidated financial statements
The other operating charges and income inclu-
ded an exceptional depreciation on earlier than
foreseen replanting in PT Dendymarker (KUSD
4 229)�
The recurring operating result amounted to
KUSD 127 776 against KUSD 30 778 last year�
The financial income mainly comprises the posi-
tive time eect of the discount of the receivable
from the sale of the SIPEF-CI oil palm plantation
in Ivory Coast at the end of 2016 (KUSD 748)� This
receivable was almost completely collected by the
end of 2021� In addition, interest income from the
growing receivables from plasma smallholders in
South Sumatra increased�
The financial charges were mainly related to long-
term and short-term financing� Of these, approxi-
mately half were hedged through an Interest Rate
Swap (IRS)�
The result before tax amounted to KUSD 124 997
compared with KUSD 28 064 in 2020�
The recurring tax expense of 28�9% was slight-
ly higher than the recurring theoretical tax
expense of 26%� This was mainly due to the
negative impact (KUSD 1 942) of a number of
non-deductible expenses, of which the most
important was the limitation of interest deduc-
tion in Indonesia (KUSD -825)�
The share of results of associated companies
and joint ventures (KUSD -1 091) included the
research activities that are centralised in PT
Timbang Deli and Verdant Bioscience Pte Ltd
(KUSD -1032), and four-month result of PT
Melania (KUSD -59)�
The recurring profit for the period amounted to
KUSD 87 832�
The recurring net result, share of the Group,
amounted to KUSD 82 746, almost six times
higher than the result of KUSD 14 122 in 2020�
On 30 April 2021, an agreement was signed with
Shamrock Group concerning the conditional sale
of PT Melania for USD 36 million� The total capi-
tal gain of KUSD 11 640 (share of the Group, KUSD
11 003) realised on this transaction is further
detailed in note 30�
The net result, share of the Group, amounted to
KUSD 93 749�
6
The connection to the world of sustainable tropical agriculture
Cash flow
In line with the increase of the operating result,
the cash flow from operating activities increased
from KUSD 73 669 in 2020 to KUSD 178 796 this
year�
The variation of the working capital of KUSD
-8523 mainly concerned the following elements:
• an increase in inventories (KUSD -22 211)
as a result of higher inventory volumes,
mainly of finished products, and a higher
unit cost price for CPO;
• an increase in trade receivables (KUSD
-4614);
• an increase in advances received on local
sales (KUSD 8 450);
• an increase in other payables and other
current liabilities including an increase in
bonus provision following the improved
result (KUSD 10 582).
The above-mentioned use of working capital con-
cerned the usual temporary movements�
In Indonesia and Papua New Guinea the Group
made advance payments of taxes in accordance
with local legislation� These were partly based
on the results of 2019 and partly on the results
of 2020 which were both lower than the results
of 2021� Therefore, the prepayments of taxes of
KUSD 9 962 were significantly below the taxes to
be paid of KUSD 34 722�
The acquisitions in intangible and tangible assets
(KUSD -68 692) related to the usual replace-
ment investments, but mainly to the expansi-
ons in South Sumatra (KUSD -33 180)� Due to
covid-19 related logistic and operational impedi-
ments, investments temporarily remained below
expectations�
During the year, additional loans (KUSD -9 578)
were also granted to the surrounding plasma
smallholders in South Sumatra�
The selling price of property, plant and equip-
ment (PP&E) and financial assets (KUSD 30 229)
mainly concerned funds received from three
transactions:
• the sale of PT Melania for KUSD 17 077 (see
note 30);
• the balance of the sale of SIPEF-CI in 2016
for KUSD 7 631;
• the sale of tangible fixed assets, mainly the
sale of young palm trees to the surrounding
plasma smallholders in South Sumatra in
Indonesia.
The free cash flow for the year amounted to KUSD
112 270 compared with KUSD 21 299 for the same
period last year�
The other financing activities (KUSD -102 084)
comprise the buy-back and sale transactions of
treasury shares (KUSD -1 161); the partial repay-
ments of long-term financing (KUSD -18000 for
the long-term loan and KUSD -78 for the leasing
debts); repayment of short-term financing
(KUSD -73 710); dividend payments to SIPEF
shareholders (KUSD -4 443); dividend payments
to non-controlling parties (KUSD -2 306); and
interest payments (KUSD -2 386)�
7
SIPEF Financial statements 2021 Comments on the consolidated financial statements
IN KUSD NOTE 2021 2020
Non-current assets 815 303 809 753
Intangible assets 8 348 473
Goodwill 8 104 782 104 782
Biological assets - bearer plants 9 307 371 315 826
Other property, plant & equipment 10 359 896 354 811
Investment property 0 0
Investments in associates and joint ventures 24 3 598 4 630
Financial assets 92 80
Other financial assets 92 80
Receivables > 1 year 25 666 16 101
Other receivables 11 25 666 16 101
Deferred tax assets 23 13 550 13 049
Current assets 176 462 136 888
Inventories 12 48 017 29 648
Biological assets 13 9 168 6 763
Trade and other receivables 82 161 76 877
Trade receivables 26 32 282 27 731
Other receivables 14 49 878 49 146
Current tax receivables 23 1 469 11 766
Investments 38 0
Other investments and deposits 19 38 0
Derivatives 26 0 0
Cash and cash equivalents 19 19 939 9 790
Other current assets 2 151 2 043
Assets held for sale 30 13 520 0
TOTAL ASSETS
991 765 946 641
Consolidated balance sheet
8 The connection to the world of sustainable tropical agriculture
IN KUSD NOTE 2021 2020
Total equity 766 183 674 550
Shareholders' equity 15 727 329 638 688
Issued capital 44 734 44 734
Share premium 107 970 107 970
Treasury shares (-) -11 521 -10 277
Reserves 596 813 507 299
Translation dierences -10 666 -11 038
Non-controlling interests 16 38 854 35 862
Non-current liabilities 113 402 126 460
Provisions > 1 year 1 125 1 354
Provisions 17 1 125 1 354
Deferred tax liabilities 23 46 950 44 010
Trade and other liabilities > 1 year 26 0 0
Financial liabilities > 1 year (incl. derivatives) 19 36 000 54 000
Leasing liabilities > 1 year 27 2 207 2 285
Pension liabilities 18 22 290 24 810
Advances received > 1 year 30 4 830 0
Current liabilities 112 180 145 631
Trade and other liabilities < 1 year 66 404 35 947
Trade payables 26 23 605 21 384
Advances received 26 11 934 1 071
Other payables 14 11 519 8 805
Income taxes 23 19 346 4 687
Financial liabilities < 1 year 30 961 104 671
Current portion of amounts payable after one year 19 18 000 18 000
Financial liabilities 19 12 477 86 128
Leasing liabilities < 1 year 27 484 543
Derivatives 26 2 066 793
Other current liabilities 12 749 4 220
Liabilities associated with assets held for sale 0 0
TOTAL EQUITY AND LIABILITIES
991 765 946 641
9
SIPEF Financial statements 2021
IN KUSD NOTE 2021 2020
Revenue 7 416 053 274 027
Cost of sales 7 -249 240 -212 403
Changes in fair value of biological assets 7 2 404 733
Gross profit 169 218 62 357
General and administrative expenses 7 -36 891 -31 573
Other operating income/(charges) 20 7 088 - 6
Operating result 139 416 30 778
Financial income 1 475 2 012
Financial charges -3 096 -5 103
Exchange dierences -1 157 378
Financial result 21 -2 779 -2 713
Profit before tax 136 637 28 065
Tax expense 23 -36 075 -10 828
Profit after tax 100 562 17 237
Share of results of associated companies and joint ventures 24 -1 091 -1 059
Result from continuing operations 99 471 16 178
Result from discontinued operations 0 0
Profit for the period 99 471 16 178
Attributable to:
- Non-controlling interests 16 5 722 2 055
- Equity holders of the parent 93 749 14 122
EARNINGS PER SHARE (IN USD) NOTE 2021 2020
FROM CONTINUING AND DISCONTINUED OPERATIONS
Basic earnings per share 31 9.00 1.36
Diluted earnings per share 31 8.99 1.36
FROM CONTINUING OPERATIONS
Basic earnings per share 31 9.00 1.36
Diluted earnings per share 31 8.99 1.36
Basic earnings per share excluding capital gain sale PT Melania 7.88 1.36
Consolidated income statement
10 The connection to the world of sustainable tropical agriculture
IN KUSD NOTE 2021 2020
Profit for the period 99 471 16 178
Other comprehensive income:
Items that may be reclassified to profit and loss in subsequent periods
- Exchange dierences on translating foreign operations 15 372 755
- Cash flow hedges - fair value result for the period 26 905 -1 922
- Income tax eect (cash flow hedges) 26 - 226 489
Items that will not be reclassified to profit and loss in subsequent periods
- Defined Benefit Plans - IAS 19R 18 - 631 -1 329
- Income tax eect 139 292
Total other comprehensive income for the year 559 -1 714
Other comprehensive income attributable to:
- Non-controlling interests 2 - 94
- Equity holders of the parent 557 -1 619
Total comprehensive income for the year 100 030 14 464
Total comprehensive income attributable to:
- Non-controlling interests 5 724 1 961
- Equity holders of the parent 94 306 12 503
Statement of consolidated comprehensive income
11
SIPEF Financial statements 2021
IN KUSD NOTE 2021 2020
OPERATING ACTIVITIES
Profit before tax 136 637 28 065
Adjusted for:
Depreciation 8,9,10 48 616 43 581
Movement in provisions 17, 18 2 452 197
Stock options 121 128
Unrealized exchange result 0 - 169
Changes in fair value of biological assets -2 404 - 733
Other non-cash results - 773 -1 266
Hedge reserves and financial derivatives 26 2 178 -1 171
Financial income and charges 2 369 4 330
Loss on receivables 0 - 249
Loss/(gain) on sale of investments 0 0
Result on disposal of property, plant and equipment 1 241 957
Result on disposal of financial assets 30 -11 640 0
Cash flow from operating activities before change in net working capital 25 178 796 73 669
Change in net working capital 25 -8 523 3 165
Variation in long term receivables* 0 0
Cash flow from operating activities after change in net working capital 170 273 76 834
Income taxes paid 23 -9 962 -3 572
Cash flow from operating activities 160 312 73 262
INVESTING ACTIVITIES
Acquisition intangible assets 8 - 40 - 49
Acquisition biological assets 9 -27 396 -26 971
Acquisition property, plant & equipment 10 -41 256 -24 743
Financing plasma advances* 11 -9 578 -4 479
Acquisition investment property 0 0
Acquisition subsidiaries 0 0
Dividends received from associated companies and joint ventures 0 0
Proceeds from sale of property, plant & equipment 5 521 2 401
Proceeds from sale of financial assets 30 24 708 1 878
Cash flow from investing activities -48 042 -51 963
Free cash flow 112 270 21 299
FINANCING ACTIVITIES
Capital increase 0 0
Equity transactions with non-controlling parties 0 -2 795
Increase of treasury shares 22 -2 194 0
Decrease of treasury shares 22 1 033 0
Decrease in long-term financial borrowings 19 -18 078 -9 228
Increase in long-term financial borrowings 19 0 0
Decrease short-term financial borrowings 19 -73 710 -5 092
Increase short-term financial borrowings 19 0 0
Last year's dividend paid during this book year -4 443 0
Dividends paid by subsidiaries to minorities 16 -2 306 - 716
Interest received – paid -2 386 -4 331
Cash flow from financing activities -102 084 -22 162
Net increase in investments, cash and cash equivalents 19 10 186 - 863
Investments and cash and cash equivalents (opening balance) 19 9 790 10 653
Eect of exchange rate fluctuations on cash and cash equivalents 19 0 0
Investments and cash and cash equivalents (closing balance) 19 19 977 9 790
Consolidated cash flow statement
* As from 2021, the financing of plasma advances has been included under investing activities instead of changes in net working capital. The 2020
comparative figures have been changed accordingly.
12 The connection to the world of sustainable tropical agriculture
IN KUSD
Issued
capital
SIPEF
Share
premium
SIPEF
Treasury
shares
Defined
benefit
plans
IAS19R
Reserves Translation
dierences
Share-
holder
equity
Non-
controlling
interests
Total
equity
JANUARY 1, 2021 44 734 107 970 -10 277 -4 539 511 838 -11 038 638 688 35 862 674 550
Result for the period 93 749 93 749 5 722 99 471
Other comprehensive income - 494 679 372 557 2 559
Total comprehensive income - 494 94 428 372 94 306 5 724 100 030
Last year's dividend paid -4 443 -4 443 -2 306 -6 749
Sale PT Melania - 426 - 426
Other (note 22) -1 244 23 -1 221 -1 221
DECEMBER 31, 2021 44 734 107 970 -11 521 -5 033 601 846 -10 666 727 329 38 854 766 183
JANUARY 1, 2020 44 734 107 970 -10 277 -3 598 501 650 -11 793 628 686 34 325 663 010
Result for the period 14 122 14 122 2 055 16 178
Other comprehensive income - 941 -1 433 755 -1 619 - 95 -1 714
Total comprehensive income - 941 12 689 755 12 503 1 960 14 464
Last year's dividend paid - 200 - 200
Equity transactions with non-controlling
parties -2 573 -2 573 - 223 -2 795
Other 72 72 72
DECEMBER 31, 2020 44 734 107 970 -10 277 -4 539 511 838 -11 038 638 688 35 862 674 550
Statement of changes in consolidated equity
13
SIPEF Financial statements 2021
Notes
1. IDENTIFICATION
SIPEF (the ‘company’) is a limited liability company
(‘naamloze vennootschap’ / ’société anonyme’) incorporated
in Belgium and registered at 2900 Schoten, Calesbergdreef 5.
The consolidated financial statements for the year ended 31
December 2021 comprise SIPEF and its subsidiaries
(together referred to as ‘SIPEF group’ or ‘the Group’).
Comparative figures are for the financial year 2020.
The consolidated financial statements have been established
by the Board of Directors on 15 February 2022. The
subsequent events were updated and approved for issue by
the directors on April 19, 2022. These financial statements will
be presented to the shareholders at the general meeting of
June 08, 2022. A list of the directors and the statutory auditor,
as well as a description of the principal activities of the Group,
are included in ‘Part 1 – Company report’ of this annual report.
2. STATEMENT OF COMPLIANCE
The consolidated financial statements have been prepared in
accordance with the International Financial Reporting
Standards (IFRS) which have been adopted by the European
Union as per 31 December 2021.
The following standards or interpretations are applicable for
the annual period beginning on 1 January 2021:
• Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and
IFRS 16 Interest Rate Benchmark Reform – Phase 2
• Amendment to IFRS 16 Leases: COVID-19-Related Rent
Concessions beyond 30 June 2021 (applicable for annual
periods beginning on or after 1 April 2021)
• Amendments to IFRS 4 Insurance Contracts – Extension
of the Temporary Exemption from Applying IFRS 9 to 1
January 2023 (applicable for annual periods beginning
on or after 1 January 2021)
These changes did not have a significant impact on the equity
or net result of the Group.
The Group did not elect for early application of the following
new standards and interpretations which were issued at the
date of approval of these financial statements but were not yet
effective on the balance sheet date:
• Amendments to IAS 16 Property, Plant and Equipment:
Proceeds before Intended Use (applicable for annual
periods beginning on or after 1 January 2022)
• Amendments to IAS 37 Provisions, Contingent Liabilities
and Contingent Assets: Onerous Contracts — Cost of
Fulfilling a Contract (applicable for annual periods
beginning on or after 1 January 2022)
• Amendments to IFRS 3 Business Combinations:
Reference to the Conceptual Framework (applicable for
annual periods beginning on or after 1 January 2022)
• Annual Improvements to IFRS Standards 2018–2020
(applicable for annual periods beginning on or after 1
January 2022)
• IFRS 17 Insurance Contracts (applicable for annual
periods beginning on or after 1 January 2023)
• Amendments to IAS 1 Presentation of Financial
Statements: Classification of Liabilities as Current or
Non-current (applicable for annual periods beginning on
or after 1 January 2023, but not yet endorsed in the EU)
• Amendments to IAS 1 Presentation of Financial
Statements and IFRS Practice Statement 2: Disclosure
of Accounting Policies (applicable for annual periods
beginning on or after 1 January 2023, but not yet
endorsed in the EU)
• Amendments to IAS 8 Accounting policies, Changes in
Accounting Estimates and Errors: Definition of
Accounting Estimates (applicable for annual periods
beginning on or after 1 January 2023, but not yet
endorsed in the EU)
• Amendments to IAS 12 Income Taxes: Deferred Tax
related to Assets and Liabilities arising from a Single
Transaction (applicable for annual periods beginning on
or after 1 January 2023, but not yet endorsed in the EU)
At this stage the Group does not expect first adoption of these
standards and interpretations to have any material impact on
the financial statements of the Group.
3. ACCOUNTING POLICIES
Basis of preparation
Starting in 2007 the consolidated financial statements are
presented in US dollar (until 2006 this was done in euro),
rounded off to the nearest thousand (KUSD). This modification
is the result of the changed policy with regard to the liquidity
and debt management since the end of 2006, whereby the
functional currency of the majority of the subsidiaries has been
changed from the local currency to the US dollar.
The consolidated financial statements are prepared on the
historical cost basis except that the following assets and
liabilities are stated at their fair value: investments in equity
instruments measured at FVOCI, financial derivative
instruments and biological produce.
The accounting policies have been consistently applied
throughout the Group and are consistent with those used in
the previous year.
14 The connection to the world of sustainable tropical agriculture
Business combinations
Business combinations are accounted for using the purchase
method. The cost of an acquisition is measured as the fair
value of the assets given, equity instruments issued and
liabilities incurred or assumed at the date of acquisition. Any
costs directly attributable to the acquisition are recognized in
profit or loss. The purchase consideration to acquire a
business, including contingent payments, is recorded at fair
value at the acquisition date, while subsequent adjustments to
the contingent payments resulting from events after the
acquisition date are recognized in profit or loss. The ‘full
goodwill’ option, which can be elected on a case by case
basis, allows SIPEF to measure the non-controlling interest
either at fair value or at its proportionate share of the
acquiree’s net assets. All acquisition-related costs, such as
consulting fees, are expensed.
If the initial accounting for a business combination is
incomplete by the end of the financial year in which the
combination occurs, SIPEF group reports provisional amounts
for the items for which the accounting is incomplete. Those
provisional amounts are adjusted during the measurement
period (see paragraph below), and/or additional assets and/or
liabilities are recognised to reflect new information obtained
about facts and circumstances that existed as of the
acquisition date that, if known, would have affected the
amounts recognised as of that date.
The measurement period is the period from the acquisition
date to the date SIPEF group obtains complete information
about facts and circumstances that existed as of the
acquisition date. The measurement period shall not exceed
one year from the acquisition date
Step acquisitions
Changes in the Group’s interests in subsidiaries that do not
result in a loss of control are accounted for as equity
transactions. The carrying amounts of the Group’s interest
and the non-controlling interests are adjusted to reflect the
changes in their relative interests in the subsidiaries. Any
difference between the amount by which the non-controlling
interests are adjusted and the fair value of the consideration
paid or received is recognized directly in equity and attributed
to owners of the company.
Where a business combination is achieved in stages, the
Group’s previously held interests in the acquired entity are
remeasured to fair value at the acquisition date (i.e. the date
the Group attains control) and the resulting gain or loss, if any,
is recognized in profit or loss. Amounts arising from interests
in the acquiree prior to the acquisition date that have
previously been recognized in other comprehensive income
are reclassified to profit or loss, where such treatment would
be appropriate if that interest were disposed of.
Consolidation principles
Subsidiaries
Subsidiaries are those enterprises controlled by the company.
An investor controls an investee if and only if the investor has
all of the following elements, in accordance with IFRS 10:
• Power over the investee, i.e. the investor has existing
rights that give it the ability to direct the relevant activities;
• Exposure, or rights, to variable returns from its
involvement with the investee;
• The ability to use its power over the investee to affect the
amount of the investor’s returns.
The financial statements of subsidiaries are included in the
consolidated financial statements from the date that control
effectively commences until the date that control effectively
ceases (or a date nearby).
Associates
Associates are those enterprises in which the Group has
significant influence, but not control, over the financial and
operating policies. The consolidated financial statements
include the Group's share of the total recognized gains and
losses of associates on an equity accounting basis, from the
date that significant influence effectively commences until the
date that significant influence effectively ceases (or a date
nearby). When the Group’s share of losses exceeds the
carrying amount of the associate, the carrying amount is
reduced to nil and recognition of further losses is discontinued
except to the extent that the Group has incurred obligations in
respect of the associate.
Joint ventures
Joint ventures are those enterprises over whose activities the
Group has joint control, established by contractual agreement.
The consolidated financial statements include the Group's
share of the total recognized gains and losses of joint ventures
on an equity accounting basis, from the date that significant
influence effectively commences until the date that significant
influence effectively ceases (or a date nearby).
When the Group’s share of losses exceeds the carrying
amount of the associate, the carrying amount is reduced to nil
and recognition of further losses is discontinued except to the
extent that the Group has incurred obligations in respect of the
joint ventures.
Transactions eliminated on consolidation
All intra-group balances and transactions, and any unrealized
gains arising on intra-group transactions, are eliminated for
companies included using the full consolidation method in
preparing the consolidated financial statements.
Unrealized losses are eliminated in the same way as
unrealized gains except that they are only eliminated to the
extent that there is no evidence of impairment.
Foreign currency
Foreign currency transactions
In the individual Group companies, transactions in foreign
currencies are translated at the exchange rate ruling at the
date of the transaction. Monetary assets and liabilities
denominated in foreign currencies are translated at the
exchange rate ruling at the balance sheet date. Foreign
exchange differences arising on translation are recognized in
the income statement. Non-monetary assets and liabilities
denominated in foreign currencies are translated at the foreign
exchange rate ruling at the date of the transaction.
15
SIPEF Financial statements 2021
Financial statements of foreign operations
Functional currency: items included in financial statements of
each entity in the Group are measured using the currency that
best reflects the economic substance of the underlying events
and circumstances relevant to that entity (the functional
currency). Starting from 2007 the consolidated financial
statements are presented in USD, this is the functional
currency of the majority of the Group companies.
To consolidate the Group and each of its subsidiaries, the
financial statements of the individual entities are translated as
follows:
• Assets and liabilities at the closing rate;
• Income statements at the average exchange rate for the
year;
• The components of shareholders’ equity at the historical
exchange rate.
Exchange differences arising from the translation of the net
investment in foreign subsidiaries, joint ventures and
associated entities at the year-end exchange rate are
recorded as part of the shareholders’ equity under “translation
differences”. When a foreign entity is sold, such exchange
differences are recognized in the income statement as part of
the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition
of a foreign entity are treated as local currency assets and
liabilities of the foreign entity and are translated at the closing
rate.
Biological assets
SIPEF group only recognizes a biological asset or growing
agricultural produce (“agricultural produce”) when it controls
the asset as a result of past events, when it is probable that
future economic benefits associated with the asset will flow to
SIPEF group and when the fair value or cost of the asset can
be measured reliably.
In accordance with the amendments to IAS 16 and IAS 41,
bearer plants are stated at cost less accumulated depreciation
and any accumulated impairment losses. Depreciation is
calculated using the straight-line method based on the
estimated useful life (20 to 25 years).
The growing agricultural produce of palm oil is defined as the
oil contained in the palm fruit, so that the fair value of this
distinct asset can be estimated reliably.
The growing biological produce of tea is defined as the leaves
that are ready to be plucked and processed, even if not yet
fully grown, so that the fair value of this distinct asset can be
estimated reliably.
SIPEF group has opted to measure growing biological
produce of rubber at fair value at the point of harvest in
accordance with IAS 41.32 and not to measure it at fair value
as it grows less costs to sell in accordance with IAS 41.10c as
we are of the opinion that all parameters used in any
alternative fair value measurement (future productions,
determination of the start of the life cycle, cost allocation,…)
are clearly unreliable. As a consequence, all alternative fair
value measurements are also considered clearly unreliable.
The growing biological produce of bananas is measured at fair
value as it grows less costs to sell, taking into account that all
the parameters for the fair value calculation are available and
reliable.
A gain or loss arising on initial recognition of a biological asset
at fair value less estimated point of sale costs and from the
change in fair value less estimated point of sale costs of a
biological asset is included in net profit or loss in the period in
which it arises.
Goodwill
Goodwill represents the excess of the cost of the business
combination over the Group’s interest in the net fair value of
the identifiable assets, liabilities and contingent liabilities
acquired in a business combination. Goodwill is not amortized
but reviewed for impairment at least annually. For the purpose
of testing goodwill for impairment, goodwill is allocated to
operating companies which is the lowest level at which the
goodwill is monitored for internal management purposes (i.e.
cash flow generating unit). Any impairment is immediately
recognized in the income statement and is not subsequently
reversed.
Negative goodwill represents the excess of the Group’s
interest in the fair value of the net identifiable assets acquired
over the cost of acquisition. Negative goodwill is immediately
recognized in the income statement.
Intangible assets
Intangible assets include computer software and various
licenses. Intangible assets are capitalized and amortized
using the straight-line method over their useful life.
Property, plant and equipment
Property, plant and equipment, including investment property,
are stated at cost less accumulated depreciation and any
accumulated impairment losses. Borrowing costs attributable
to the construction or production of qualifying assets are
capitalized. Expenses for the repair of property, plant and
equipment are usually charged against income when incurred.
Property held for sale, if any, is stated at the lower of
amortized cost and fair value less selling charges.
Depreciation is calculated using the straight-line method
based on the estimated useful lives of the related assets:
Buildings 5 to 30 years
Infrastructure 5 to 25 years
Installations and machinery 5 to 30 years
Vehicles 3 to 20 years
Office equipment and furniture 5 to 10 years
Other property, plant and equipment 2 to 20 years
Land is not amortized.
The Group presents the cost of land rights as a part of
property, plant & equipment, consistently with practices in the
industry and with relevant guidance in that respect. In addition,
The Group closely monitors the situation of each land title in
terms of renewal and only depreciates its land rights if there is
an indication that the land title might not be renewed.
16 The connection to the world of sustainable tropical agriculture
Leases
Assets, representing the right to use the underlying leased
asset, are capitalized as property, plant and equipment at
cost, comprising the amount of the initial measurement of
lease liability, any lease payments made at or before the
commencement date less any lease incentives received, any
initial direct costs and restoration costs. The corresponding
lease liabilities, representing the net present value of the lease
payments, are recognized as long-term or current liabilities
depending on the period in which they are due. Leased assets
and liabilities are recognized for all leases with a term of more
than 12 months, unless the underlying asset is of low value.
The lease payments are discounted using the lessee’s
incremental borrowing rate, being the rate that the lessee
would have to pay to borrow the funds necessary to obtain an
asset of similar value in a similar economic environment with
similar terms and conditions. The interest rate implicit in the
lease could not be determined.
Lease interest is charged to the income statement as an
interest expense.
Leased assets are depreciated, using straight-line
depreciation over the lease term, including the period of
renewable options, in case it is probable that the option will be
exercised.
Lessee accounting
Due to the nature of the Group’s business whereby the
operations are primarily taking place in relatively remote
areas, the Group owns most of the assets used. Therefore,
there is only a limited amount of leases which qualify for lease
accounting. The three main categories consist of:
Office rental
Office rentals are currently accounted for as operational
leases. Analysis shows that these meet the definition of a
lease and as such a right-of-use asset and corresponding
lease liability will need to be accounted for under the new
standard. Considering that most of the office rentals are
long-term leases, the main areas management actions are
required:
- Determining the lease term;
- Calculating the incremental borrowing rate.
Company cars
Company cars in Belgium meet the definition of a lease and
therefore the same approach as office rentals will be applied.
Papua-New-Guinea land rights
In the Group’s subsidiary Hargy Oil Palms Ltd in Papua-New-
Guinea, a part of the land rights include a fixed annual rental
payment for the usufruct of the land, as well as a variable
royalty depending on the production levels of the year
measured in tons FFB. The annual fixed rental payment meets
the definition of a lease, whereby the lease term of asset has
been determined as the average lifespan of an oil palm (25
years).
Lessor accounting
The Group has no contracts that could lead to lessor
accounting.
Impairment of assets
Property, plant and equipment and other non-current assets
are reviewed for impairment losses whenever events or
changes in circumstances indicate that the carrying amount
may be higher than the recoverable amount. An impairment
loss is recognized for the amount by which the carrying
amount of the asset exceeds its recoverable amount, which is
the higher of an asset’s net selling price and its value in use.
For the purpose of assessing impairment, assets are grouped
at the lowest levels for which there are separately identifiable
cash flows. If impairment is no longer justified in future periods
due to a recovery in assets’ fair value or value in use, the
impairment reserve is reversed.
Financial instruments
Classification and measurement of financial instruments
Financial assets and financial liabilities are recognised when
a Group entity becomes a party to the contractual provisions
of the instrument.
Financial assets and financial liabilities are initially measured
at fair value. Transaction costs that are directly attributable to
the acquisition or issue of financial assets and financial
liabilities (other than financial assets and financial liabilities at
fair value through profit or loss) are added to or deducted from
the fair value of the financial assets or financial liabilities, as
appropriate, on initial recognition. Transaction costs directly
attributable to the acquisition of financial assets or financial
liabilities at fair value through profit or loss are recognised
immediately in profit or loss.
The financial assets include the investments in equity
instruments designated at fair value through other
comprehensive income, loans to related parties, receivables
including trade receivables and other receivables, derivative
financial instruments, financial assets at fair value through
profit or loss, cash and cash equivalents. The acquisitions and
sales of financial assets are recognised at the transaction
date.
Financial assets – debt instruments
All recognised financial assets are subsequently measured in
their entirety at either amortised cost or fair value, depending
on the classification of the financial assets. Debt instruments
that meet the following conditions are subsequently measured
at amortised cost:
• The financial asset is held within a business model whose
objective is to hold financial assets in order to collect
contractual cash flows; and
• The contractual terms of the financial asset give rise on
specified dates to cash flows that are solely payments of
principal and interest on the principal amount
outstanding.
Debt instruments include:
• Receivables that are measured at amortised cost
• Trade receivables measured at amortised cost
• Cash and cash equivalents
17
SIPEF Financial statements 2021
Financial assets – investments in equity instruments
On initial recognition, the Group made an irrevocable election
(on an instrument-by-instrument basis) to designate
investments in equity instruments as at FVTOCI. Investments
in equity instruments at FVTOCI are initially measured at fair
value plus transaction costs. Subsequently, they are
measured at fair value with gains and losses arising from
changes in fair value recognised in other comprehensive
income and accumulated in the investment’s revaluation
reserve. The cumulative gain or loss will not be reclassified to
profit or loss on disposal of the equity investments, instead,
they will be transferred to retained earnings.
Because of the lack of sufficient recent information available
to measure fair value, management has assessed that cost is
an appropriate estimate of fair value for those unquoted equity
investments.
Amortised cost and effective interest method
The effective interest method is a method of calculating the
amortised cost of a debt instrument and of allocating interest
income over the relevant period.
For financial instruments other than purchased or originated
credit-impaired financial assets, the effective interest rate is
the rate that exactly discounts estimated future cash receipts
(including all fees and points paid or received that form an
integral part of the effective interest rate, transaction costs
and other premiums or discounts) excluding expected credit
losses, through the expected life of the debt instrument, or,
where appropriate, a shorter period, to the gross carrying
amount of the debt instrument on initial recognition.
The amortised cost of a financial asset is the amount at
which the financial asset is measured at initial recognition
minus the principal repayments, plus the cumulative
amortization using the effective interest method of any
difference between that initial amount and the maturity
amount, adjusted for any loss allowance. On the other hand,
the gross carrying amount of a financial asset is the
amortised cost of a financial asset before adjusting for any
loss allowance.
Derivatives
The Group uses financial derivative instruments primarily to
manage its exposure to interest rate and foreign currency risks
arising from operational, financing and investment activities.
The Group applies hedge accounting under IFRS 9 –
"Financial Instruments".
Derivative instruments are valued at fair value at initial
recognition. The changes in fair value are reported in the
income statement unless these instruments are part of
hedging transactions, in which event the timing of the
recognition in profit or loss depends on the nature of the hedge
relationship. The Group designates certain derivatives as
hedging instruments in respect interest rate risk in cash flow
hedges. Derivatives related to the foreign currency risk are not
documented in a hedging relationship.
At the inception of the hedge relationship, the Group
documents the relationship between the hedging instrument
and the hedged item along with its risk management
objectives and its strategy for undertaking various hedge
transactions.
Furthermore, at the inception of the hedge and on an ongoing
basis, the Group documents whether the hedging instrument
is effective in offsetting changes in fair values or cash flows of
the hedged item attributable to the hedged risk, which is when
the hedging relationships meet all the following hedge
effectiveness requirements:
• There is an economic relationship between the hedged
item and the hedging instrument;
• The effect of credit risk does not dominate the value
changes that result from that economic relationship; and
• The hedge ratio of the hedging relationship is the same
as that resulting from the quantity of the hedged item that
the Group actually hedges and the quantity of the
hedging instrument that the entity actually uses to hedge
that quantity of hedged item.
If a hedging relationship ceases to meet the hedge
effectiveness requirement relating to the hedge ratio but the
risk management objective for that designated hedging
relationship remains the same, the Group adjusts the hedge
ratio of the hedging relationship (i. e. rebalances the hedge)
so that it meets the qualifying criteria again.
The value fluctuations of a derivative financial instrument that
complies with the strict conditions for recognition as a cash
flow hedge are recorded in other comprehensive income for
the effective part. The ineffective part is recorded directly in
the profit and loss account. The hedging results are recorded
out of other comprehensive income into the profit and loss
account at the moment the hedged transaction influences the
result.
A derivative with a positive fair value is recorded as a financial
asset, while a derivative with a negative fair value is recorded
as a financial liability. A derivate is presented as current or
non-current depending on the expected expiration date of the
financial instrument.
Impairment of financial assets
In relation to the impairment of financial assets an expected
credit loss model is applied. The expected credit loss model
requires the Group to account for expected credit losses and
changes in those expected credit losses at each reporting
date to reflect changes in credit risk since initial recognition of
the financial assets. Specifically, the following assets are
included in the scope for impairment assessment for the
Group: 1) trade receivables; 2) non-current receivables and
loans to related parties; 3) cash and cash equivalents.
IFRS 9 requires the Group to record expected credit losses on
all of its debt securities, loans and trade receivables, either on
a 12-month or lifetime basis. The Group has applied the
simplified approach and records lifetime expected losses on
all trade receivables.
IFRS 9 requires the Group to measure the loss allowance for
a financial instrument at an amount equal to the lifetime
expected credit losses if the credit risk on that financial
instrument has increased significantly since initial recognition.
On the other hand, if the credit risk on a financial instrument
has not increased significantly since initial recognition, the
Group is required to measure the loss allowance for that
financial instrument at an amount equal to 12month expected
credit losses.
18 The connection to the world of sustainable tropical agriculture
For long term receivables IFRS 9 provides a choice to
measure expected credit losses applying lifetime or a general
(3 stages of expected credit loss assessment) expected credit
losses model. The Group selected the general model. All bank
balances are assessed for expected credit losses as well.
Derecognition of financial assets
The Group derecognises a financial asset only when the
contractual rights to the cash flows from the asset expire or
when it transfers the financial asset and substantially all the
risks and rewards of ownership of the asset to another party.
If the Group neither transfers nor retains substantially all the
risks and rewards of ownership and continues to control the
transferred asset, the Group recognises its retained interest in
the asset and an associated liability for amounts it may have
to pay. If the Group retains substantially all the risks and
rewards of ownership of a transferred financial asset, the
Group continues to recognise the financial asset and also
recognises a collateralised borrowing for the proceeds
received.
On derecognition of a financial asset measured at amortised
cost, the difference between a) the asset’s carrying amount
and b) the sum of the consideration received and receivable
is recognised in profit or loss. In addition, on derecognition of
an investment in equity instrument which the Group has
elected on initial recognition to measure at FVTOCI, the
cumulative gain or loss previously accumulated in the
investments revaluation reserve is not reclassified to profit or
loss.
Financial liabilities
All financial liabilities of the Group are subsequently measured
at amortised cost using the effective interest method.
The Group derecognises financial liabilities when, and only
when, the Group’s obligations are discharged, cancelled or
they expire. The difference between the carrying amount of
the financial liability derecognised and the consideration paid
and payable, including any non-cash assets transferred or
liabilities assumed, is recognised in profit or loss.
Receivables and payables
The Group initially measures an amount receivable and
payable at fair value. For the amount receivables, the
transaction price is deemed to be equal to the fair value.
Subsequently, these amount receivables are carried at
amortized cost using the effective interest method less any
allowance for expected credit losses. For amounts payable,
the transaction price is deemed to be equal to the fair value.
Subsequently, these amount payable are carried at amortized
cost using the effective interest method. Amounts receivable
and payable in a currency other than the functional currency
of the subsidiary are translated at the prevailing Group
exchange rates on the balance sheet date.
Cash and cash equivalents
Cash and cash equivalents are measured at their amortised
value and include cash and deposits with an original maturity
of three months or less. Negative cash balances are recorded
as liabilities.
Interest-bearing borrowings
Interest-bearing borrowings are measured at amortised cost
price. Borrowings are initially recognized as proceeds
received, net of transaction costs. Any difference between
cost and redemption value is recognized in the income
statement using the effective interest method.
Inventories
Inventories are valued at the lower of cost or net realizable
value.
The stock finished products including biological assets are
valued by adding production cost to the fair value of the
biological asset concerned.
Inventories are written down on a case-by-case basis if the
estimated net realizable value declines below the carrying
amount of the inventories. Net realizable value is the
estimated selling price less the estimated costs necessary to
make the sale. When the reason for a write-down of the
inventories has ceased to exist, the write-down is reversed.
Assets held for sale
The Group classifies non-current assets and disposal groups
as held for sale if their carrying amounts will be recovered
principally through a sale transaction rather than through
continuing use. Non-current assets and disposal groups
classified as assets held for sale are measured at the lower of
their carrying amount and fair value less costs to sell. Costs to
sell are the incremental costs directly attributable to the
disposal of an asset (disposal group-, excluding finance costs
and income tax expenses).
The criteria for held for sale classification is regarded as met
only when the sale is highly probable, and the asset or
disposal group is available for immediate sale in its present
condition. Actions required to complete the sale should
indicate that it is unlikely that significant changes to the sale
will be made or that the decision to sell will be withdrawn.
Management must be committed to the plant to sell the asset
and the sale expected to be completed within one year from
the date of the classification.
PP&E and intangible assets are not depreciated or amortised
once classified as held for sale. Assets and liabilities classified
as held for sale are presented separately as current items in
the statement of financial position.
Discontinued operations are excluded from the results of
continuing operations and are presented as a single amount
as profit or loss after tax from discontinued operations in the
consolidated income statement.
Shareholders’ equity
Dividends of the parent company payable on ordinary shares
are only recognized as a liability in the period in which they
are approved.
Costs incurred with respect to the issuance of equity
instruments are recorded as a deduction in equity.
Non-controlling interest
Non-controlling interests include a proportion of the fair value
of identifiable assets and liabilities recognized upon
acquisition of a subsidiary, together with the appropriate
proportion of subsequent profits and losses.
In the income statement the minority share in the company’s
profit or loss is separated from the consolidated result of the
Group.
19
SIPEF Financial statements 2021
Treasury shares
Own equity instruments that are reacquired (treasury shares)
are recognised at cost and deducted from equity. No gain or
loss is recognised in profit or loss on the purchase, sale, issue
or cancellation of the Group’s own equity instruments. Any
difference between the carrying amount and the
consideration, if reissued, is recognised in the share premium.
Provisions
Provisions are recognized when the Group has a present legal
or constructive obligation as a result of past events, when it is
probable that an outflow of resources will be required to settle
the obligation and when a reliable estimate of the amount can
be made.
Pensions and other post-employment benefits
Group companies have various pension schemes in
accordance with the local conditions and practices in the
countries they operate in.
1. Defined benefit plans
The defined benefit plans are generally un-funded but fully
provisioned for using the ‘projected unit credit’- method. This
provision represents the present value of the defined benefit
obligation. The actuarial gains and losses are recognized in
the Other Comprehensive Income.
2. Defined contribution plans
The Group pays contributions to publicly or privately
administered insurance plans. Since the Group is obliged to
make additional payments if the average return on the
employer’s contribution and on the employees’ contributions
is not attained, those plans should be treated as “defined
benefit plans” in accordance with IAS 19.
Employee benefits in equity instruments
Stock option plans exist within the SIPEF group, giving
employees the right to buy SIPEF shares at a predefined
price. This price is determined at the time when the options
are granted and it is based on the market price or the intrinsic
value.
The performance of the beneficiary is measured (at the
moment of granting) on the basis of the fair value of the
granted options and warrants and recognized in profit and loss
when the services are rendered during the vesting period.
Revenue recognition
The SIPEF group’s core activity is the sale of goods. SIPEF
group recognises revenue at the moment the control over the
asset is transferred to the customer. The goods sold are
transported by ship and recognized as revenue as soon as the
goods are loaded onto the ship. Revenue recognition occurs
at the moment when the goods are loaded onto the ship.
Revenue is recorded at this point in time for all contracts within
the SIPEF group. The payment terms depend on the delivery
terms of the contract and can vary between prepayment, cash
against documents and 45 days after handover of the bill of
lading. Deliveries are at a fixed price. For each contract there
is only one performance obligation which needs to be fulfilled:
the delivery of the goods.
The Group has no material incremental costs of obtaining a
contract which would fulfil the capitalization criteria as defined
by IFRS 15.
Cost of sales
Cost of sales includes all costs associated with harvest,
transformation and transport. Purchases are recognized net
of cash discounts and other supplier discounts and
allowances.
General and administrative expenses
General and administrative expenses include expenses of the
marketing and financial department and general management
expenses.
Income taxes
Income tax on the profit or loss for the year comprises current
and deferred tax. Income tax is recognized in the income
statement except to the extent that it relates to items
recognized directly to equity, in which case it is recognized in
equity.
Current tax is the expected tax payable on the taxable income
for the year, using tax rates enacted or substantially enacted
at the balance sheet date, and any adjustment to tax payable
in respect of previous years.
Deferred tax liabilities and assets are recognized for
temporary differences between the carrying amount in the
balance sheet and the tax bases of assets and liabilities and
are subsequently adjusted to reflect changes in tax rates
expected to be in effect when the temporary differences
reverse. Deferred tax assets are included in the consolidated
accounts only to the extent that their realization is probable in
the foreseeable future.
4. USE OF ACCOUNTING ESTIMATES AND
JUDGEMENTS
The preparation of the consolidated financial statements in
conformity with IFRS requires the Group to use accounting
estimates and judgements and make assumptions that may
affect the reported amounts of assets and liabilities at the date
of the balance sheets and reported amounts of revenue and
expense during the reporting periods. Actual results could
differ from those estimates.
Below we present an update of the most important
judgements applicable in the annual report:
• Judging that land rights will not be amortized unless there
is an indication that the land title might not be renewed:
A total of 2 500 hectares of land rights in PT Agro Muko
expired in 2020. All documentation for the renewal of the
land rights that expire in 2020 was delivered on time to
the relevant authorities. The authorities are in the process
of reviewing and approving them. There is no indication
that these land rights will not be renewed.
The main areas in which estimates are used during 2021 are:
• Deferred tax assets
• Impairment of assets (goodwill impairment)
• Determination of the estimated costs related to the sale
of PT Melania.
The key estimates used in the calculation of deferred tax
assets and impairment of assets (goodwill impairment) testing
rely on making an estimate on commodity prices over a longer
period. By nature, the commodity prices used in such
20 The connection to the world of sustainable tropical agriculture
estimates are volatile and will therefore in reality be different
from the estimated amounts. There is no unique independent
variable on which a relevant sensitivity can be done on the
calculation of the deferred tax assets. We refer to note 8 for
the goodwill impairment testing.
The determination of the net selling price of PT Melania
includes an estimate of the costs related to the sale as agreed
in the Sale and purchase agreement (“SPA”). The main
estimates made include:
• The timing and the cost of renewing the permanent
concession rights (HGU)
• The compensation for the accumulated social rights of
the employed personnel, who will presumably be taken
over almost entirely by Shamrock Group.
21
SIPEF Financial statements 2021
5. GROUP COMPANIES / CONSOLIDATION SCOPE
The ultimate parent of the Group, SIPEF, Schoten/Belgium, is the parent company of the following significant subsidiaries:
Location
% of control
% of interest
Consolidated companies (full consolidation)
PT Tolan Tiga Indonesia
Medan / Indonesia
95.00
95.00
PT Eastern Sumatra Indonesia
Medan / Indonesia
95.00
90.25
PT Kerasaan Indonesia
Medan / Indonesia
57.00
54.15
PT Bandar Sumatra Indonesia
Medan / Indonesia
95.00
90.25
PT Mukomuko Agro Sejahtera
Medan / Indonesia
95.00
85.74
PT Umbul Mas Wisesa
Medan / Indonesia
95.00
94.90
PT Citra Sawit Mandiri
Medan / Indonesia
95.00
94.90
PT Toton Usaha Mandiri
Medan / Indonesia
95.00
94.90
PT Agro Rawas Ulu
Medan / Indonesia
95.00
95.00
PT Agro Kati Lama
Medan / Indonesia
95.00
95.00
PT Agro Muara Rupit
Medan / Indonesia
95.00
94.90
Hargy Oil Palms Ltd
Bialla / Papua N.G.
100.00
100.00
Plantations J. Eglin SA
Azaguié / Ivory Coast
100.00
100.00
Jabelmalux SA
Luxembourg / G.D. Luxemburg
99.89
99.89
Sipef Singapore
Singapore / Republic of Singapore
100.00
100.00
PT Agro Muko
Medan / Indonesia
95.00
90.25
PT Dendymarker Indah Lestari
Medan / Indonesia
100.00
95.00
Associates and joint ventures (equity method)
Verdant Bioscience Pte Ltd
Singapore / Republic of Singapore
38.00
38.00
PT Melania Indonesia
Medan / Indonesia
55.00
52.25
PT Timbang Deli Indonesia
Medan / Indonesia
38.00
36.10
Companies not included
Horikiki Development Cy Ltd
Honiara / Solomon Islands
90.80
90.80
SIPEF has signed a sale and purchase agreement with Shamrock Group (SG) on the sale of 100% of the share capital of its
Indonesian subsidiary, PT Melania. Upon signing of the SPA, SIPEF has lost full control of PT Melania. Subsequently, PT Melania
has been accounted for as a joint venture held for sale as from 30 April 2021. The assets and liabilities of PT Melania have been
measured at fair value, equaling the net selling price of KUSD 23 353.
As of 30 April 2021, the results of PT Melania are no longer included in the consolidated profit and loss of the SIPEF group as PT
Melania is classified as a joint venture held for sale.
Despite the possession of the majority of voting rights, the Group has no control over the non-consolidated company Horikiki
Development Cy Ltd because it is established in inaccessible regions. Even so there is no value in Horikiki.
All companies included in the consolidation are also included in the sustainability report of the Group.
There are no restrictions to realise assets and settle liabilities of subsidiaries.
6. EXCHANGE RATES
As a result of a revised liquidity- and debt management as from the end of 2006 the functional currency in the majority of the
subsidiaries has been changed to US dollar as from January 1, 2007. The following subsidiary has a different functional currency:
Plantations J. Eglin SA EUR
The exchange rates below have been used to convert the balance sheets and the results of these entities into US dollar (this is the
currency in which the Group presents its results).
Closing rate
Average rate
2021
2020
2019
2021
2020
2019
EUR
0.8816
0.8154
0.8916
0.8480
0.8727
0.8941
In KUSD
2021
2020
Gross margin per product
Palm
166 562
59 886
Rubber
-2 608
-1 814
Tea
134
- 788
Bananas and plants
3 803
4 390
Corporate
1 328
682
Total gross margin
169 218
62 357
General and administrative expenses
-36 891
-31 573
Other operating income/(charges)
-4 552
- 6
Financial income/(charges)
-2 369
-4 458
Discounting Sipef-CI
748
1 368
Exchange differences
-1 157
378
Result before tax
124 997
28 065
Tax expense
-36 075
-10 828
Effective tax rate
-28.9%
-38.6%
Result after tax
88 923
17 237
Share of results of associated companies
-1 091
-1 059
Result for the period before sale of PT Melania
87 832
16 178
Gain on sale PT Melania
11 640
0
Result for the period
99 471
16 178
22 The connection to the world of sustainable tropical agriculture
Closing rate
Average rate
2021
2020
2019
2021
2020
2019
EUR
0.8816
0.8154
0.8916
0.8480
0.8727
0.8941
7. OPERATIONAL RESULT AND SEGMENT INFORMATION
SIPEF's activities can be classified into segments based on the type of product. SIPEF has the following segments:
• Palm: Includes all palm products, including palm oil, palm kernels and palm kernel oil, both in Indonesia and Papua New Guinea.
• Rubber: Includes all different types of rubber produced in Indonesia and sold by the SIPEF group:
- Ribbed Smoked Sheets (RSS)
- Standard Indonesia Rubber (SIR)
- Scraps and Lumps
• Tea: Includes the “cut, tear, curl” (CTC) tea produced by SIPEF in Indonesia.
• Bananas and horticulture: Includes all sales of bananas and horticulture originating from Ivory Coast.
• Corporate: Mainly includes management fees received from non-group companies, commissions charged on sea freight and other
commissions which are not covered by the sales contract.
The overview of segments below is based on the SIPEF group’s internal management reporting. The executive committee is the chief
operating decision maker. The most important differences with IFRS consolidation are:
• Instead of revenue the gross margin per segment is used as the starting point.
• The capital gain on the sale of PT Melania was not included in the “other operating income/(charges)” but is included on a separate
line.
In KUSD
2021
2020
Gross margin per product
Palm
166 562
59 886
Rubber
-2 608
-1 814
Tea
134
- 788
Bananas and plants
3 803
4 390
Corporate
1 328
682
Total gross margin
169 218
62 357
General and administrative expenses
-36 891
-31 573
Other operating income/(charges)
-4 552
- 6
Financial income/(charges)
-2 369
-4 458
Discounting Sipef-CI
748
1 368
Exchange differences
-1 157
378
Result before tax
124 997
28 065
Tax expense
-36 075
-10 828
Effective tax rate
-28.9%
-38.6%
Result after tax
88 923
17 237
Share of results of associated companies
-1 091
-1 059
Result for the period before sale of PT Melania
87 832
16 178
Gain on sale PT Melania
11 640
0
Result for the period
99 471
16 178
Below we present the segment information per product and per geographical region in accordance with the IFRS profit and loss
accounts. The segment result is revenue minus expense that is directly attributable to the segment and the relevant portion of income
and expense that can be allocated on a reasonable basis to the segment.
23
SIPEF Financial statements 2021
Gross profit by product
2021 - KUSD Revenue Cost of sales
Changes in the
fair value
Gross profit % of total
Palm
380 862
-216 913
2 613
166 562
98.4
Rubber
8 059
-10 667
0
-2 608
-1.5
Tea
2 719
-2 574
- 11
134
0.1
Bananas and horticulture
23 085
-19 085
- 197
3 803
2.2
Corporate
1 328
0
0
1 328
0.8
Total
416 053
-249 239
2 404
169 218
100.0
2020 - KUSD Revenue Cost of sales
Changes in the
fair value
Gross profit % of total
Palm
236 707
-177 137
176
59 746
95.8
Rubber
8 866
-10 680
0
-1 814
-2.9
Tea
5 858
-6 611
- 35
- 788
-1.3
Bananas and horticulture
21 774
-17 976
592
4 390
7.0
Corporate
823
0
0
823
1.3
Total
274 027
-212 403
733
62 357
100.0
Total revenue increased by 51.8% compared with 2020 up to USD 416 million.
Palm oil revenue increased by 60.9% primarily due to a combination of higher production volumes and a higher world market price
for crude palm oil (CPO).
Rubber revenue decreased by 9.1% despite a higher realised unit selling price, due to lower production at PT Agro Muko and the loss
of direct sales to external clients by PT Melania, the company that was deconsolidated in 2021.This deconsolidation also resulted in
the revenue from tea being almost halved.
The revenue in the banana segment, expressed in the functional currency, the euro, increased mainly due to a 3.6% rise in volumes
sold. As the bananas are traded in euro, the USD revenue increased by 6.1%, due to the evolution of the EUR/USD exchange rate.
Purchases of Fresh Fruit Bunches (FFB) from third parties augmented by KUSD 34 462, due to a rise in the purchased volumes and
the increased FFB purchase prices, which are related to CPO prices.
The average ex works unit cost price for the oil palm plantations experienced a slight increase by 4.3%. In Indonesia, the high costs
of the young mature plantations weighed on the average cost level, while in Papua New Guinea, the excellent production of Hargy
Oil Palms Ltd led to a decrease in the unit cost price by 17.7%. The unit cost price of the banana segment remained about the same
as in 2020. For the rubber segment, the unit cost prices increased significantly (50.8%): in preparation for the conversion from rubber
into palm, production decreased significantly and the remaining net carrying value was depreciated more quickly. Additionally an
estimated total of MUSD 6.8 of rubber biological assets will be depreciated over the period 2022-2026.
The changes in fair value related to the impact on the measurement of hanging fruits at their fair value (IAS 41R).
The gross profit rose from KUSD 62 357 at the end of 2020 to KUSD 169 218 at the end of 2021.
The gross profit of the palm segment (98.4% of the total gross profit) increased by KUSD 106 816, thanks to higher production and
especially higher net palm oil prices. The average world market price for CPO for 2021 was USD 1 195 per tonne CIF Rotterdam.
This is 67.1% higher than over the same period last year. However, it should be noted that in Indonesia the export levy and export
tax increased significantly compared to last year. For the entire year 2021, the total impact of the export levy and export tax is
estimated at approximately USD 349 per tonne compared with USD 74 per tonne last year.
The relatively strong recovery of sales prices for rubber, since the second half of last year, could not prevent a further increase in the
negative contribution of the rubber segment to the gross margin. This is mainly due to the decreased production volumes in the rubber
estates of PT Bandar Sumatra and PT Agro Muko.
Since 2021, the net result of the tea segment represents exclusively the commissions that SIPEF receives from the sale of tea volumes
in the market.
2021 - KUSD
Revenue
Cost of sales
Other income
Changes in
the fair value
Gross profit
% of total
Indonesia
215 361
-130 497
900
1 392
87 156
51.5
Papua New Guinea
167 920
-91 298
0
1 209
77 831
46.0
Ivory Coast
31 444
-27 445
0
- 197
3 803
2.2
Europe
428
0
0
0
428
0.3
Total
415 153
-249 240
900
2 404
169 218
100.0
2020 - KUSD
Revenue
Cost of sales
Other income
Changes in
the fair value
Gross profit
% of total
Indonesia
160 337
-119 228
444
- 421
41 132
66.0
Papua New Guinea
89 279
-73 829
0
562
16 012
24.7
Ivory Coast
23 144
-19 346
0
592
4 390
7.0
Europe
822
0
0
0
822
1.3
Total
273 583
-212 403
444
733
62 357
100.0
In KUSD
2021
2020
Estate charges
150 127
134 547
Processing charges
33 003
30 894
FFB/CPO/latex purchases
60 143
26 297
Stock movement
-20 333
-3 462
Changes in fair value
2 404
733
Sales charges
21 492
22 661
Cost of sales
246 835
211 670
General and administrative expenses
36 891
31 573
Total cost of sales and general and administrative expenses
283 726
243 243
24 The connection to the world of sustainable tropical agriculture
The profitability of the banana and horticulture activities was confirmed with a gross margin of KUSD 3 803.
The segment "corporate" comprises the management fees received from non-group entities, additional commissions on sea freights
and any other commissions that are not included in the sales contracts.
Gross profit by geographical segment
2021 - KUSD Revenue Cost of sales Other income
Changes in
the fair value
Gross profit % of total
Indonesia
215 361
-130 497
900
1 392
87 156
51.5
Papua New Guinea
167 920
-91 298
0
1 209
77 831
46.0
Ivory Coast
31 444
-27 445
0
- 197
3 803
2.2
Europe
428
0
0
0
428
0.3
Total
415 153
-249 240
900
2 404
169 218
100.0
2020 - KUSD Revenue Cost of sales Other income
Changes in
the fair value
Gross profit % of total
Indonesia
160 337
-119 228
444
- 421
41 132
66.0
Papua New Guinea
89 279
-73 829
0
562
16 012
24.7
Ivory Coast
23 144
-19 346
0
592
4 390
7.0
Europe
822
0
0
0
822
1.3
Total
273 583
-212 403
444
733
62 357
100.0
Total cost of sales can be split up in the following categories:
1. Estate charges - includes all charges relating to the field work to produce the base agricultural products (i.e. fresh fruit bunches,
latex, tea leaves, bananas, horticulture);
2. Processing charges - includes all charges relating to the processing of the base agricultural products to the finished agricultural
commodities (i.e. palm oil, rubber, tea, ...);
3. FFB/CPO/latex purchases - includes all purchases from third parties (smallholders) or associates and joint ventures.
4. Stock movement - includes the variance in stock and changes in fair value;
5. Changes in fair value includes the changes in the fair value of the biological assets of palm oil, bananas and tea;
6. Sales charges - includes all direct costs attributable to the sales of the year (i.e. transport charges, palm oil export tax/levy, ...);
7. General and administrative expenses – includes all costs related to the overall organisation (i.e. general management, financial
department, marketing, internal audit, sustainability, etc.).
In KUSD
2021
2020
Estate charges
150 127
134 547
Processing charges
33 003
30 894
FFB/CPO/latex purchases
60 143
26 297
Stock movement
-20 333
-3 462
Changes in fair value
2 404
733
Sales charges
21 492
22 661
Cost of sales
246 835
211 670
General and administrative expenses
36 891
31 573
Total cost of sales and general and administrative expenses
283 726
243 243
Estate charges have increased compared to last year due to:
• a general increase in costs due to inflation;
• the additional mature hectares in the Musi Rawas region, whereby estate and general field charges are now increasing annually;
• higher FFB productions in 2021
The processing charges increased slightly compared to prior year due to a higher number of FFB’s being processed.
25
SIPEF Financial statements 2021
FFB / CPO / latex purchases have increased with more than 125% compared to prior year. The increase is a consequence of higher
CPO prices in 2021 which results in a higher FFB price, an increase in purchased quantities within the framework of the plasma law
and the recovery of smallholder productions in Papua New Guinea which resulted in a higher supply of third party FFB’s.
Stock movement has increased primarily due to the increased stock of palm products at year-end, combined with an increased value
of the stock palm products following the high world market prices at year-end.
Sales charges have remained relatively stable despite increased export tax and export levies in Indonesia during 2021. This is due
to an increase of the Group’s local sales in Indonesia compared to 2020. On these local sales no export tax and levy is applicable.
However in practice a comparable amount is deducted immediately from the selling price for local Indonesian sales, resulting in a
comparable net selling price.
Total depreciation in the estate and processing charges amounts to KUSD 40 222. A total of KUSD 3 482 of depreciation charges is
recorded in the "General and administrative" expenses and 4 912 KUSD in "other operating income/charges". The depreciations in
the “other operating income/charges” relate for roughly KUSD 4 229 to the accelerated depreciation of the oil palms in PT
Dendymarker. In note 20 the “other operating income/charges” are presented in more detail.
The general and administrative expenses increased compared with last year, mainly due to the increased bonus provision because
of the better results.
Revenue by location of the debtors
In KUSD 2021 2020
Indonesia
205 284 133 264
The Netherlands 152 297 85 340
France 9 408 14 839
Malaysia 8 460 1 377
Switzerland 7 822 44
Belgium 6 360 4 009
United Kingdom 5 677 2 459
Singapore 5 627 20 507
United States 3 726 4 001
Ivory coast 3 602 2 273
Spain 2 634 117
Ireland 1 671 2 003
China 1 557 1 065
Germany 928 877
Poland 485 26
United Arab. Emirates 195 0
Afghanistan 116 824
Pakistan 111 914
Other 93 88
Total
416 053
274 027
The revenue of the Group is realised against a relatively small number of first-class buyers: per product about 90% of the turnover is
realized with a maximum of 10 clients. For additional information we refer to note 26 – financial instruments.
2021
In KUSD
Indonesia
PNG
Ivory Coast
Europe
Others
Total
Intangible assets
0
0
0
348
0
348
Goodwill
104 782
0
0
0
0
104 782
Biological assets
226 144
80 950
277
0
0
307 371
Other property, plant & equipment
253 032
98 848
7 311
704
0
359 896
Investment property
0
0
0
0
0
0
Investments in associates and joint
ventures
- 749
0
0
0
4 347
3 598
Other financial assets
46
0
31
15
0
92
Receivables > 1 year
25 666
0
0
0
0
25 666
Deferred tax assets
10 995
0
319
2 237
0
13 550
Total non-current assets
619 916
179 798
7 938
3 304
4 347
815 303
% of total
76.03%
22.05%
0.97%
0.41%
0.53%
100.00%
2020
In KUSD
Indonesia
PNG
Ivory Coast
Europe
Others
Total
Intangible assets
0
0
0
473
0
473
Goodwill
104 782
0
0
0
0
104 782
Biological assets
231 602
83 952
273
0
0
315 826
Other property, plant & equipment
248 665
101 487
3 992
668
0
354 811
Investment property
0
0
0
0
0
0
Investments in associates and joint ventures
- 282
0
0
0
4 912
4 630
Other financial assets
46
0
19
15
0
80
Receivables > 1 year
16 092
0
0
9
0
16 101
Deferred tax assets
10 447
0
363
2 240
0
13 049
Total non-current assets
611 352
185 438
4 645
3 406
4 912
809 753
% of total
75.50%
22.90%
0.57%
0.42%
0.61%
100.00%
2021
2020
In KUSD
Goodwill
Intangible
assets
Goodwill
Intangible
assets
Gross carrying amount at January 1
104 782
787
104 782
1 078
Acquisitions
0
40
0
49
Sales and disposals
0
- 60
0
- 340
Transfers
0
0
0
0
Translation differences
0
0
0
0
Gross carrying amount at December 31
104 782
767
104 782
787
Accumulated amortization and impairment losses at
January 1
0
- 314
0
- 561
Depreciations
0
- 165
0
- 93
Sales and disposals
0
60
0
340
Transfers
0
0
0
0
Remeasurement
0
0
0
0
Accumulated amortization and impairment losses at
December 31
0
- 419
0
- 314
Net carrying amount January 1
104 782
473
104 782
517
Net carrying amount December 31
104 782
348
104 782
473
26 The connection to the world of sustainable tropical agriculture
Segment information – geographical
2021
In KUSD
Indonesia
PNG
Ivory Coast
Europe
Others
Total
Intangible assets
0
0
0
348
0
348
Goodwill
104 782
0
0
0
0
104 782
Biological assets
226 144
80 950
277
0
0
307 371
Other property, plant & equipment
253 032
98 848
7 311
704
0
359 896
Investment property
0
0
0
0
0
0
Investments in associates and joint
ventures
- 749
0
0
0
4 347
3 598
Other financial assets
46
0
31
15
0
92
Receivables > 1 year
25 666
0
0
0
0
25 666
Deferred tax assets
10 995
0
319
2 237
0
13 550
Total non-current assets
619 916
179 798
7 938
3 304
4 347
815 303
% of total
76.03%
22.05%
0.97%
0.41%
0.53%
100.00%
2020
In KUSD
Indonesia
PNG
Ivory Coast
Europe
Others
Total
Intangible assets
0
0
0
473
0
473
Goodwill
104 782
0
0
0
0
104 782
Biological assets
231 602
83 952
273
0
0
315 826
Other property, plant & equipment
248 665
101 487
3 992
668
0
354 811
Investment property
0
0
0
0
0
0
Investments in associates and joint ventures
- 282
0
0
0
4 912
4 630
Other financial assets
46
0
19
15
0
80
Receivables > 1 year
16 092
0
0
9
0
16 101
Deferred tax assets
10 447
0
363
2 240
0
13 049
Total non-current assets
611 352
185 438
4 645
3 406
4 912
809 753
% of total
75.50%
22.90%
0.57%
0.42%
0.61%
100.00%
8. GOODWILL AND OTHER INTANGIBLE ASSETS
2021
2020
In KUSD Goodwill
Intangible
assets
Goodwill
Intangible
assets
Gross carrying amount at January 1
104 782
787
104 782
1 078
Acquisitions
0
40
0
49
Sales and disposals
0
- 60
0
- 340
Transfers
0
0
0
0
Translation differences
0
0
0
0
Gross carrying amount at December 31
104 782
767
104 782
787
Accumulated amortization and impairment losses at
January 1
0
- 314
0
- 561
Depreciations
0
- 165
0
- 93
Sales and disposals
0
60
0
340
Transfers
0
0
0
0
Remeasurement
0
0
0
0
Accumulated amortization and impairment losses at
December 31
0
- 419
0
- 314
Net carrying amount January 1
104 782
473
104 782
517
Net carrying amount December 31
104 782
348
104 782
473
27
SIPEF Financial statements 2021
Goodwill impairment analysis
Goodwill is the positive difference between the acquisition price of a subsidiary, associated company or joint venture and the share
of the Group in the fair value of the identifiable assets and liabilities of the acquired entity on the acquisition date. Under standard
IFRS 3 – Business Combinations, goodwill is not amortized, but rather tested for impairment.
Goodwill and intangible fixed assets are tested annually by management to see whether they have been exposed to impairment in
accordance with the accounting policies in note 3 (regardless of whether there are indications of impairment).
To be able to assess the necessity of an impairment, the goodwill is allocated to a cash-generating unit (CGU). A cash-generating
unit is the smallest identifiable group that generates cash that is to a large degree independent of the inflow of cash from other assets
or groups of assets. This cash-generating unit is analysed on each balance sheet date to determine whether the carrying value of the
goodwill can be fully recovered. If the realizable value of the cash-generating unit is lower in the long term than the carrying value, an
impairment is recognized on the income statement in the amount of this difference.
In the SIPEF model, the cash-generating unit is compared with the total underlying asset related to the palm oil segment as of 31
December 2021. This consists of the following items:
Assets (in KUSD)*
2021
Biological assets – bearer plants
305 432
Other fixed assets
350 219
Goodwill
104 782
Current assets – current liabilities
13 438
Total
773 872
* Assets include only the entities with palm oil activities
The SIPEF group has defined the “cash-generating unit” as the operational palm oil segment. It consists of all cash flows from the
palm oil activities of all plantations in Indonesia and Papua New Guinea. The cash flows from the sale of rubber, tea and bananas are
not included here, as the goodwill has been allocated exclusively to the whole of the palm oil segment.
The recoverable value of the cash-generating units to which goodwill is allocated was determined by means of a calculation using a
discounted cash flow model (DCF model). The starting point is the operational plans of the Group, which look a decade ahead (to
2031) and have been approved by the Board of Directors. In this model, the macro-economic parameters, such as palm oil price and
inflation, are deemed constant for each year. The constant palm oil price used in the model (USD 755/ton) is management's best
estimate of the long-term palm oil price expressed as CIF Rotterdam. The negative impact of the altered export tax and export levy
schemes in Indonesia have been included in the future cash flows.
The average palm oil price used in the goodwill impairment amounts to USD 755/ton whereas the spot price per 31 December 2021
amount to USD 1 305/ton.
In the model, the growth of sales is the same as the normal improvement of the production volumes due to the maturity of the palm
trees of the various subsidiaries. Any improvement in the future EBITDA margins in the model is a normal consequence of the same
improvement in production volumes.
The current model was established with a weighted average cost of capital (after tax) of 8.19% and an average tax rate of 22%-30%.
The terminal value in the discounted cash flow model is based on perpetual growth of 2% in accordance with the Gordon growth
model. In the model we use a sensitivity analysis for various palm oil prices and various weighted average costs of capital (WACC):
Palm oil price (CIF Rotterdam)
Scenario 1
USD 705/ton CIF Rotterdam
Scenario 2 (base case)
USD 755/ton CIF Rotterdam
Scenario 3
USD 805/ton CIF Rotterdam
WACC
Scenario 1
7.19%
Scenario 2 (base case)
8.19%
Scenario 3
9.19%
PO / WACC
7.19%
8.19%
9.19%
USD 705/ton CIF Rotterdam
Scenario 1
Scenario 4
Scenario 7
USD 755/ton CIF Rotterdam
Scenario 2
Scenario 5 (base case)
Scenario 8
USD 805/ton CIF Rotterdam
Scenario 3
Scenario 6
Scenario 9
PO / WACC
7.01%
8.01%
9.01%
USD 663/ton CIF Rotterdam
Scenario 1
Scenario 4
Scenario 7
USD 713/ton CIF Rotterdam
Scenario 2
Scenario 5 (base case)
Scenario 8
USD 763/ton CIF Rotterdam
Scenario 3
Scenario 6
Scenario 9
WACC/PO price (in KUSD)
7.19%
8.19%
9.19%
USD 705/ton CIF Rotterdam
931 010
751 748
623 023
USD 755/ton CIF Rotterdam
1 662 152
1 366 300
1 153 492
USD 805/ton CIF Rotterdam
2 046 183
1 689 049
1 432 036
Value of underlying assets*
773 872
773 872
773 872
Headroom (in KUSD)
7.19%
8.19%
9.19%
USD 705/ton CIF Rotterdam
157 138
-22 124
-150 850
USD 755/ton CIF Rotterdam
888 279
592 428
379 620
USD 805/ton CIF Rotterdam
1 272 311
915 177
658 163
Breakeven price
7.19%
8.19%
9.19%
USD/ton
633 $/ton
659 $/ton
684 $/ton
28 The connection to the world of sustainable tropical agriculture
Summary assumptions of 2021:
PO / WACC
7.19%
8.19%
9.19%
USD 705/ton CIF Rotterdam
Scenario 1
Scenario 4
Scenario 7
USD 755/ton CIF Rotterdam
Scenario 2
Scenario 5 (base case)
Scenario 8
USD 805/ton CIF Rotterdam
Scenario 3
Scenario 6
Scenario 9
Summary assumptions of 2020:
PO / WACC
7.01%
8.01%
9.01%
USD 663/ton CIF Rotterdam
Scenario 1
Scenario 4
Scenario 7
USD 713/ton CIF Rotterdam
Scenario 2
Scenario 5 (base case)
Scenario 8
USD 763/ton CIF Rotterdam
Scenario 3
Scenario 6
Scenario 9
For the sensitivity analysis, the price was increased and decreased by USD 50/ton. The WACC was increased and decreased with
one percent. A sensitivity matrix is shown below for the total discounted cash flow for various palm oil prices and various weighted
average costs of capital (WACC).
Sensitivity matrix
WACC/PO price (in KUSD)
7.19%
8.19%
9.19%
USD 705/ton CIF Rotterdam
931 010
751 748
623 023
USD 755/ton CIF Rotterdam
1 662 152
1 366 300
1 153 492
USD 805/ton CIF Rotterdam
2 046 183
1 689 049
1 432 036
Value of underlying assets*
773 872
773 872
773 872
* Concerns the underlying assets related to the palm oil segment
The headroom is the difference between the total discounted cash flows and the value of the underlying asset:
Headroom (in KUSD)
7.19%
8.19%
9.19%
USD 705/ton CIF Rotterdam
157 138
-22 124
-150 850
USD 755/ton CIF Rotterdam
888 279
592 428
379 620
USD 805/ton CIF Rotterdam
1 272 311
915 177
658 163
Green = base scenario
We also calculate the breakeven palm oil price based on the various WACCs.
Breakeven price
7.19%
8.19%
9.19%
USD/ton
633 $/ton
659 $/ton
684 $/ton
Management is of the opinion that the assumptions used in the calculation of the value in use as described above give the best
estimates of future development. The sensitivity analysis shows that goodwill is in most of the cases fully recoverable. As a result,
management is of the opinion that there is no indication of any impairment. Future sales prices continue to be difficult to predict over
a long period of time and will be continuously monitored in the future.
29
SIPEF Financial statements 2021
9. BIOLOGICAL ASSETS – BEARER PLANTS
Movement schedule biological assets - bearer plants
The balance sheet movements in biological assets – bearer plants can be summarized as follows:
In KUSD
2021
2020
Gross carrying amount at January 1
429 192
407 810
Change in consolidation scope
- 17 474
0
Acquisitions
27 396
26 971
Sales and disposals
- 22 594
- 4 261
Transfers
80
- 1 454
Other
0
0
Translation differences
- 114
128
Gross carrying amount at December 31
416 487
429 192
Accumulated depreciation and impairment losses at January 1
- 113 365
- 101 467
Change in consolidation scope
4 924
0
Depreciation
- 21 462
- 15 120
Sales and disposals
20 694
3 326
Transfers
0
0
Other
0
0
Translation differences
92
- 104
Accumulated depreciation and impairment losses at December 31
- 109 116
- 113 365
Net carrying amount January 1
315 827
306 343
Net carrying amount December 31
307 371
315 826
2021
In KUSD
Land,
buildings and
infrastructure
Installations
and
machinery
Vehicles
Office
equipment
, furniture
and others
Leasing
In
progress
Land
rights
Total
Gross carrying
amount at January 1
188 549
190 336
72 629
34 138
3 304
16 492
125 533
630 983
Change in
consolidation scope
- 7 491
- 6 134
- 1 322
- 834
0
- 1 131
- 197
- 17 109
Acquisitions
13 846
4 833
3 987
1 544
247
10 448
6 351
41 256
Sales and disposals
- 859
- 1 199
- 3 017
- 90
0
- 4 142
- 259
- 9 566
Transfers
7 722
237
505
186
0
- 8 729
0
- 80
Other
- 12
12
0
0
0
0
0
0
Translation differences
- 922
- 231
- 160
- 78
0
- 144
- 17
- 1 550
Gross carrying
amount at December
31
200 834
187 855
72 622
34 867
3 551
12 794
131 411
643 933
Accumulated
depreciation and
impairment losses at
January 1
- 81 098
- 114 635
- 56 458
- 20 431
- 547
0
- 3 002
- 276 172
Change in
consolidation scope
5 854
5 390
1 193
541
0
0
181
13 159
Depreciation
- 7 846
- 10 635
- 5 473
- 2 454
- 416
0
- 29
- 26 852
Sales and disposals
725
1 142
2 770
84
0
0
0
4 721
Transfers
1
0
0
0
0
0
0
1
Other
0
0
0
0
0
0
0
0
Translation differences
713
196
112
68
0
0
16
1 105
Accumulated
depreciation and
impairment losses at
December 31
- 81 651
- 118 542
- 57 856
- 22 192
- 963
0
- 2 834
- 284 038
Net carrying amount
January 1
107 451
75 701
16 171
13 707
2 757
16 492
122 531
354 810
Net carrying amount
December 31
119 183
69 313
14 766
12 675
2 588
12 794
128 577
359 896
30 The connection to the world of sustainable tropical agriculture
10. OTHER PROPERTY, PLANT AND EQUIPMENT
2021
In KUSD
Land,
buildings and
infrastructure
Installations
and
machinery
Vehicles
Office
equipment
, furniture
and others
Leasing
In
progress
Land
rights
Total
Gross carrying
amount at January 1
188 549
190 336
72 629
34 138
3 304
16 492
125 533
630 983
Change in
consolidation scope
- 7 491
- 6 134
- 1 322
- 834
0
- 1 131
- 197
- 17 109
Acquisitions
13 846
4 833
3 987
1 544
247
10 448
6 351
41 256
Sales and disposals
- 859
- 1 199
- 3 017
- 90
0
- 4 142
- 259
- 9 566
Transfers
7 722
237
505
186
0
- 8 729
0
- 80
Other
- 12
12
0
0
0
0
0
0
Translation differences
- 922
- 231
- 160
- 78
0
- 144
- 17
- 1 550
Gross carrying
amount at December
31
200 834
187 855
72 622
34 867
3 551
12 794
131 411
643 933
Accumulated
depreciation and
impairment losses at
January 1
- 81 098
- 114 635
- 56 458
- 20 431
- 547
0
- 3 002
- 276 172
Change in
consolidation scope
5 854
5 390
1 193
541
0
0
181
13 159
Depreciation
- 7 846
- 10 635
- 5 473
- 2 454
- 416
0
- 29
- 26 852
Sales and disposals
725
1 142
2 770
84
0
0
0
4 721
Transfers
1
0
0
0
0
0
0
1
Other
0
0
0
0
0
0
0
0
Translation differences
713
196
112
68
0
0
16
1 105
Accumulated
depreciation and
impairment losses at
December 31
- 81 651
- 118 542
- 57 856
- 22 192
- 963
0
- 2 834
- 284 038
Net carrying amount
January 1
107 451
75 701
16 171
13 707
2 757
16 492
122 531
354 810
Net carrying amount
December 31
119 183
69 313
14 766
12 675
2 588
12 794
128 577
359 896
31
SIPEF Financial statements 2021
2020
In KUSD
Land,
buildings and
infrastructure
Installations
and
machinery
Vehicles
Office
equipment,
furniture
and others
In
progress
Land
rights
Total
Leasing
Gross carrying amount
at January 1
180 654
186 614
69 811
32 711
3 253
16 696
122 422
612 163
Change in consolidation
scope
0
0
0
0
0
0
0
0
Acquisitions
6 675
2 990
4 009
668
122
5 655
5 586
25 705
Sales and disposals
- 778
- 1 065
- 1 716
- 322
0
- 3 514
0
- 7 395
Transfers
985
1 525
361
994
0
- 2 411
0
1 454
Other
- 11
11
0
0
- 71
60
- 2 495
- 2 506
Translation differences
1 024
261
164
87
0
6
20
1 562
Gross carrying amount
at December 31
188 549
190 336
72 629
34 138
3 304
16 492
125 533
630 983
Accumulated
depreciation and
impairment losses at
January 1
- 73 094
- 104 561
- 52 061
- 17 584
- 358
0
- 5 434
- 253 092
Change in consolidation
scope
0
0
0
0
0
0
0
0
Depreciation
- 7 767
- 10 884
- 5 768
- 2 953
- 386
0
- 45
- 27 804
Sales and disposals
628
1 029
1 495
180
0
0
0
3 332
Transfers
1
0
0
0
0
0
0
1
Other
- 87
0
0
0
197
0
2 495
2 605
Translation differences
- 779
- 220
- 124
- 74
0
0
- 18
- 1 215
Accumulated
depreciation and
impairment losses at
December 31
- 81 098
- 114 635
- 56 458
- 20 431
- 547
0
- 3 002
- 276 172
Net carrying amount
January 1
107 560
82 053
17 750
15 127
2 895
16 696
116 988
359 071
Net carrying amount
December 31
107 451
75 701
16 171
13 707
2 757
16 492
122 531
354 811
The acquisitions included, in addition to the standard replacement capital expenditure, investments for the improvement of the logistics
and infrastructure of the plantations and the palm oil extraction mills.
Below is a table with the proprietary rights on which the plantations of the SIPEF group are established:
Hectares
Type
Maturity
Crop
PT Tolan Tiga Indonesia
6 042
Concession
2023
Oil palm
PT Tolan Tiga Indonesia
2 437
Concession
2024
Oil palm
PT Eastern Sumatra Indonesia
3 178
Concession
2023
Oil palm
PT Kerasaan Indonesia
2 362
Concession
2023
Oil palm
PT Bandar Sumatra Indonesia
1 413
Concession
2024
Rubber
PT Melania Indonesia
5 140
Concession
2023
Rubber and Tea
PT Toton Usaha Mandiri
1 199
Concession
2046
Oil palm
PT Agro Muko
2 256
Concession
2044
Oil palm
PT Agro Muko
2 500
Concession
2020*
Oil palm
PT Agro Muko
315
Concession
2031
Oil palm
PT Agro Muko
1 410
Concession
2028
Oil palm
PT Agro Muko
2 903
Concession
2028
Oil palm
PT Agro Muko
5 150
Concession
2044
Oil palm
PT Agro Muko
2 287
Concession
2044
Oil palm
PT Agro Muko
2 185
Concession
2022
Oil palm
PT Agro Muko
1 515
Concession
2022
Rubber
PT Agro Muko
2 100
Concession
2022
Oil palm
PT Agro Muko
232
Concession
2056
Oil palm
PT Umbul Mas Wisea
4 397
Concession
2048
Oil palm
PT Umbul Mas Wisea
2 071
Concession
2048
Oil palm
PT Umbul Mas Wisea
679
Concession
2049
Oil palm
PT Umbul Mas Wisea
462
Concession
2049
Oil palm
PT Umbul Mas Wisea
155
Concession
2049
Oil palm
PT Dendymarker Indah Lestari
13 705
Concession
2028
Oil palm
PT Mukomuko Agro Sejahtera
1 705
Concession
2053
Oil palm
PT Mukomuko Agro Sejahtera (STGE)
1 770
Concession
2024
Oil palm
PT Timbang Deli Indonesia
972
Concession
2023
Rubber and oil palm
Hargy Oil Palms Limited
128
Concession
2075
Oil palm
Hargy Oil Palms Limited
2 967
Concession
2076
Oil palm
Hargy Oil Palms Limited
17
Concession
2077
Oil palm
Hargy Oil Palms Limited
6 460
Concession
2082
Oil palm
Hargy Oil Palms Limited
2 900
Concession
2101
Oil palm
Hargy Oil Palms Limited
170
Concession
2102
Oil palm
Hargy Oil Palms Limited
695
Concession
2106
Oil palm
Hargy Oil Palms Limited
18
Concession
2113
Oil palm
Hargy Oil Palms Limited
246
Concession
2117
Oil palm
Plantations J. Eglin SA
1 021
Freehold
n/a
bananas and horticulture
Plantations J. Eglin SA
743
Provisional concession
n/a
bananas and horticulture
Total
85 905
PT Mukomuko Agro Sejahtera
623
In negotiation
-
Oil palm
PT Mukomuko Agro Sejahtera (BKDE)
1 513
In negotiation
-
Oil palm
PT Citra Sawit Mandiri
1 814
In negotiation
-
Oil palm
PT Agro Rawas Ulu
5 712
In negotiation
-
Oil palm
PT Agro Kati Lama
7 568
In negotiation
-
Oil palm
PT Agro Kati Lama
3 091
In negotiation
-
Oil palm
PT Agro Muara Rupit
4 811
In negotiation
-
Oil palm
PT Agro Muara Rupit
7 498
In negotiation
-
Oil palm
PT Agro Muara Rupit
1 303
In negotiation
-
Oil palm
PT Agro Muara Rupit
4 201
In negotiation
-
Oil palm
Total
38 134
32 The connection to the world of sustainable tropical agriculture
Hectares
Type
Maturity
Crop
PT Tolan Tiga Indonesia
6 042
Concession
2023
Oil palm
PT Tolan Tiga Indonesia
2 437
Concession
2024
Oil palm
PT Eastern Sumatra Indonesia
3 178
Concession
2023
Oil palm
PT Kerasaan Indonesia
2 362
Concession
2023
Oil palm
PT Bandar Sumatra Indonesia
1 413
Concession
2024
Rubber
PT Melania Indonesia
5 140
Concession
2023
Rubber and Tea
PT Toton Usaha Mandiri
1 199
Concession
2046
Oil palm
PT Agro Muko
2 256
Concession
2044
Oil palm
PT Agro Muko
2 500
Concession
2020*
Oil palm
PT Agro Muko
315
Concession
2031
Oil palm
PT Agro Muko
1 410
Concession
2028
Oil palm
PT Agro Muko
2 903
Concession
2028
Oil palm
PT Agro Muko
5 150
Concession
2044
Oil palm
PT Agro Muko
2 287
Concession
2044
Oil palm
PT Agro Muko
2 185
Concession
2022
Oil palm
PT Agro Muko
1 515
Concession
2022
Rubber
PT Agro Muko
2 100
Concession
2022
Oil palm
PT Agro Muko
232
Concession
2056
Oil palm
PT Umbul Mas Wisea
4 397
Concession
2048
Oil palm
PT Umbul Mas Wisea
2 071
Concession
2048
Oil palm
PT Umbul Mas Wisea
679
Concession
2049
Oil palm
PT Umbul Mas Wisea
462
Concession
2049
Oil palm
PT Umbul Mas Wisea
155
Concession
2049
Oil palm
PT Dendymarker Indah Lestari
13 705
Concession
2028
Oil palm
PT Mukomuko Agro Sejahtera
1 705
Concession
2053
Oil palm
PT Mukomuko Agro Sejahtera (STGE)
1 770
Concession
2024
Oil palm
PT Timbang Deli Indonesia
972
Concession
2023
Rubber and oil palm
Hargy Oil Palms Limited
128
Concession
2075
Oil palm
Hargy Oil Palms Limited
2 967
Concession
2076
Oil palm
Hargy Oil Palms Limited
17
Concession
2077
Oil palm
Hargy Oil Palms Limited
6 460
Concession
2082
Oil palm
Hargy Oil Palms Limited
2 900
Concession
2101
Oil palm
Hargy Oil Palms Limited
170
Concession
2102
Oil palm
Hargy Oil Palms Limited
695
Concession
2106
Oil palm
Hargy Oil Palms Limited
18
Concession
2113
Oil palm
Hargy Oil Palms Limited
246
Concession
2117
Oil palm
Plantations J. Eglin SA
1 021
Freehold
n/a
bananas and horticulture
Plantations J. Eglin SA
743
Provisional concession
n/a
bananas and horticulture
Total
85 905
PT Mukomuko Agro Sejahtera
623
In negotiation
-
Oil palm
PT Mukomuko Agro Sejahtera (BKDE)
1 513
In negotiation
-
Oil palm
PT Citra Sawit Mandiri
1 814
In negotiation
-
Oil palm
PT Agro Rawas Ulu
5 712
In negotiation
-
Oil palm
PT Agro Kati Lama
7 568
In negotiation
-
Oil palm
PT Agro Kati Lama
3 091
In negotiation
-
Oil palm
PT Agro Muara Rupit
4 811
In negotiation
-
Oil palm
PT Agro Muara Rupit
7 498
In negotiation
-
Oil palm
PT Agro Muara Rupit
1 303
In negotiation
-
Oil palm
PT Agro Muara Rupit
4 201
In negotiation
-
Oil palm
Total
38 134
* All documentation for the renewal of the land rights which matured in 2020 has been delivered in time to the relevant authorities. The authorities are in the
process of reviewing and approving. There is no indication that these land rights will not be renewed
.
In addition, our subsidiary Hargy Oil Palms Ltd has a total of 4 166 hectares of planted area on subleased land.
33
SIPEF Financial statements 2021
11. RECEIVABLES > 1 YEAR
In KUSD
2021
2020
Receivables > 1 year
25 666
16 101
The receivables > 1 year as per 31 December 2021 mainly consist out of plasma receivables in Indonesia.
In KUSD
2021
2020
Plasma receivable
25 666
16 092
Other
0
9
Total
25 666
16 101
Plasma receivables represent a loan granted to the smallholders for the accumulated costs to develop plasma plantations which are
currently being financed by the Group. When the plasma plantations start to mature, the plasma farmers are obliged to sell their
harvests to the Group and a portion of the resulting proceeds will be used to repay the loans.
The plasma receivables will be gradually repaid from the moment the plasma holders become a going concern plantation whereby
proceeds of the FFB sales will be partly used to repay the loan.
The Group has calculated the expected credit loss in accordance with IFRS 9 and has done an impairment test on the outstanding
plasma receivables which showed no basis for impairment based on the long-term repayment plans.
The repayment of the plasma loans will be determined largely by the plasma fruit production and world palm oil prices over the next
years and is also dependant on the terms and conditions of the plasma scheme. Therefore it is not possible to predict the exact timing
of repayment. The Group currently has a total short term plasma receivable of KUSD 1 032 – included in the current other
receivables - and a long term plasma receivable of KUSD 25 666.
12. INVENTORIES
Analysis of inventories:
In KUSD
2021
2020
Raw materials and supplies
21 508
17 658
Finished goods
26 509
11 990
Total
48 017
29 648
The remaining stock of raw materials and supplies has increased with KUSD 3 850 in comparison to prior year. This is mainly due to
timing differences in purchases.
The increase in finished goods is caused by an increase in CPO/PK stock per year-end and the higher CPO prices which results in a
higher stock value.
13. BIOLOGICAL ASSETS
The total biological assets at the end of the year is presented below:
In KUSD
2021
2020
Biological assets
9 168
6 763
The growing agricultural produce of palm oil is defined as the oil contained in the palm fruit. When the palm fruit contains oil, then this
distinct asset is recognised and the fair value is estimated based on:
• The estimated quantity of oil that is available in the palm fruit;
• The estimated sales price of palm oil at the time of closing;
• The estimated cost to harvest and process the palm fruit;
• The estimated sales charges (transport, export tax, …).
Different scientific studies have shown that the oil in the palm oil fruit develops exponentially in approximately 4 weeks. The estimated
quantity of oil in the palm oil fruit is therefore determined based on the harvest of the 4 weeks after the time of closing. In the calculation
of the estimated quantity of available oil, the weighted importance of the harvest decreases step-by-step per week, in order to
approximate the quantity of oil at the time of closing as well as possible. The fair value of the biological assets calculated at the closing
value on the 31st of December 2021 is based on level 2 data input.
Impact of the estimated quantity of available oil
-10%
Carrying amount
+10%
Carrying value of the biological assets - palm oil
5 675
6 306
6 937
Gross Impact income statement (before tax)
- 631
631
Impact of the estimated quantity of available bananas
-10%
Carrying amount
+10%
Carrying value of the biological assets - bananas
2 575
2 861
3 147
Gross Impact income statement (before tax)
- 286
286
2021
2020
Difference
Number of shares
10 579 328
10 579 328
0
In KUSD
2021
2020
Difference
Capital
44 734
44 734
0
Share premium
107 970
107 970
0
Total
152 704
152 704
0
34 The connection to the world of sustainable tropical agriculture
At 31 December 2021 the total biological assets of palm oil amounted to KUSD 6 306 compared to KUSD 3 668 at 31 December
2020.
Impact of the estimated quantity of available oil
-10%
Carrying amount
+10%
Carrying value of the biological assets - palm oil
5 675
6 306
6 937
Gross Impact income statement (before tax)
- 631
631
The estimated sales price and the estimated costs and charges are the actual sales prices and costs at the time of closing. The results
from the change of the fair value of the palm fruit are included in ‘changes in fair value of biological assets’.
The biological assets at the end of December also contain the growing biological produce of bananas of our subsidiary Plantations J.
Eglin SA. The growing agricultural produce of bananas is defined as the banana bunches which will be harvested in 3 months,
weighted at their pro-rata for each remaining harvesting month. At 3 months before harvest, a reliable flower count is done, which is
used to determine the estimated growing biological produce. The net selling price to value the growing biological produces is
determined as the current market prices reduced by the remaining costs to sell the biological produce. The balance of 2021 amounted
to KUSD 2 861 (2020 KUSD 3 058) and has decreased due to the less favourable production outlook in first quarter compared to last
year.
Impact of the estimated quantity of available bananas
-10%
Carrying amount
+10%
Carrying value of the biological assets - bananas
2 575
2 861
3 147
Gross Impact income statement (before tax)
- 286
286
14. OTHER CURRENT RECEIVABLES AND OTHER CURRENT PAYABLES
The ‘other receivables’ have remained relatively stable at KUSD 49 878 in 2021 compared to KUSD 49 146 in 2020. The other
receivables mainly consist of VAT receivables in the various entities, but also include a current account with Verdant Bioscience PTE
Ltd (KUSD 8 588 in 2021 and KUSD 7 800 in 2020) and the smallholder receivables in Hargy Oil Palms Ltd. In 2020 this section also
contained a receivable of KUSD 6 929 following the sale of Sipef-CI. This receivable was entirely received by the SIPEF group during
2021.
The remaining increase in ‘other receivables’ is explained by an increase in the GST receivable (VAT receivable) in Hargy Oil Palms
Ltd (+ KUSD 1 952), in our Indonesian subsidiaries, primarily the South Sumatra Group due to the continuing expansion
(+ KUSD 2 002). Additionally there is an increase in PT Tolan Tiga of KUSD 5 211 relating to the current account towards PT Melania
which is no longer fully eliminated after PT Melania’s classification as a joint-venture held for sale. The remaining increase consist of
various smaller items in our different subsidiaries.
The Group has calculated the expected credit loss in accordance with IFRS 9 and determined it to be immaterial.
The ‘other payables’ (KUSD 11 519 in 2021 and KUSD 8 805 in 2020) mainly concern social obligations (salaries to be paid, provisions
for holiday pay and bonus) and have increased slightly in comparison to prior year, primarily due to an increased bonus provision
following the better results of the SIPEF group in 2021.
15. SHAREHOLDERS’ EQUITY
Capital stock and share premium
The issued capital of the company as at December 31, 2021 amounts to KUSD 44 734, represented by 10 579 328 fully paid ordinary
shares without nominal value.
2021
2020
Difference
Number of shares
10 579 328
10 579 328
0
In KUSD
2021
2020
Difference
Capital
44 734
44 734
0
Share premium
107 970
107 970
0
Total
152 704
152 704
0
35
SIPEF Financial statements 2021
2021
2020
2021
2020
KUSD
KUSD
KEUR
KEUR
Treasury shares - opening balance
10 277
10 277
8 389
8 389
Acquisition treasury shares
1 244
0
1 101
0
Treasury shares - ending balance
11 521
10 277
9 490
8 389
Since the start of the share buy-back program on 22 September 2011, SIPEF has bought back 178 000 shares for a total amount of
KEUR 9 490, corresponding to 1.6825% of the total shares outstanding, as cover for a share option plan for the management.
Authorised capital
The extraordinary general meeting of shareholders on June 10, 2020 authorised the board of directors to increase the capital in one
or more operations by an amount of KUSD 44 734 over a period of 5 years after the publication of the renewal.
Shareholder structure
The company has received following shareholders declarations:
Acting in concert
Number of
shares
Date*** Denominator %
Ackermans & Van Haaren NV*
3 894 234
31/12/2021
10 579 328
36.810
Cabra NV**
1 001 032
31/12/2021
10 579 328
9.462
Cabra P**
100 000
31/12/2021
10 579 328
0.945
Cabra T**
100 000
31/12/2021
10 579 328
0.945
Cabra V**
100 000
31/12/2021
10 579 328
0.945
Theodora Bracht**
2 000
31/12/2021
10 579 328
0.019
Priscilla Bracht**
0
31/12/2021
10 579 328
0.000
Victoria Bracht**
0
31/12/2021
10 579 328
0.000
Total votes acting in concert
5 197 266
49.126
*Including 178 000 own shares
** Group Bracht
*** Not the same date as the date of notifying
Translation differences
Translation differences consists of all the differences related to the translation of the financial statements of our subsidiaries for which
the functional currency is different from the presentation currency of the Group (USD). The deviation from last year is due to the
movement of the USD versus the EUR (KUSD -719) and the change in consolidation scope due to the sale of PT Melania
(KUSD 1 091).
In KUSD
2021
2020
Opening balance at January 1
-11 038
-11 793
Movement, full consolidation
- 719
755
Movement, change in consolidation scope
1 091
0
Ending balance at December 31
-10 666
-11 038
Dividends
On February 15, 2022 a dividend of KEUR 21 159 (EUR 2.00 gross per ordinary share) has been recommended by the board of
directors but has not yet been approved by the general meeting of shareholders of SIPEF and is therefore not provided for in the
financial statements as at December 31, 2021.
Capital management
The capital structure of the Group is based on the financial strategy as defined by the board of directors. Summarized, this strategy
consists of an expansion policy while respecting a very limited debt ratio. The management puts forward yearly the plan for approval
by the board of directors.
2021
2020
In KUSD
% Non-
controlling
interests
Share of
the equity
Share of
the profit
of the
year
% Non-
controlling
interests
Share of
the equity
Share of
the profit
of the
year
PT Tolan Tiga Indonesia
5.00
20 610
1 344
5.00
18 134
551
PT Eastern Sumatra Indonesia
9.75
6 105
509
9.75
5 600
418
PT Kerasaan Indonesia
45.85
6 004
1 774
45.85
5 704
1 296
PT Bandar Sumatra Indonesia
9.75
1 139
- 125
9.75
1 254
- 122
PT Melania Indonesia
2.75
235
- 3
9.75
2 648
- 258
PT Mukomuko Agro Sejahtera
14.26
- 343
20
14.26
- 362
15
PT Umbul Mas Wisesa
5.10
- 537
248
5.10
- 782
- 12
PT Citra Sawit Mandiri
5.10
- 201
63
5.10
- 263
- 5
PT Toton Usaha Mandiri
5.10
156
97
5.10
60
36
PT Agro Rawas Ulu
5.00
- 194
- 22
5.00
- 166
- 103
PT Agro Kati Lama
5.00
- 700
- 24
5.00
- 654
- 361
PT Agro Muara Rupit
5.10
- 264
- 126
5.10
- 134
- 131
PT Agro Muko
9.75
9 259
2 391
9.75
6 806
911
PT Dendymarker Indah Lestari
5.00
-2 358
- 425
9.75
-1 924
- 178
Jabelmalux SA
0.11
- 59
0
0.11
- 59
0
Total
38 854
5 722
35 862
2 055
36 The connection to the world of sustainable tropical agriculture
Chain of control
1. Chain of control above Ackermans & Van Haaren NV
I. Ackermans & Van Haaren NV is directly controlled by Scaldis Invest NV, a company incorporated under Belgian law.
II. Scaldis Invest NV is directly controlled by Belfimas NV, a company incorporated under Belgian law.
III. Belfimas NV is directly controlled by Celfloor SA, a company incorporated under Luxembourg law.
IV. Celfloor SA is directly controlled by Apodia International Holding BV, a company incorporated under Dutch law.
V. Apodia International Holding BV is directly controlled by Palamount SA, a company incorporated under Luxembourg law.
VI. Palamount SA is directly controlled by Stichting administratiekantoor “Het Torentje”, incorporated under Dutch law.
VII. Stichting Administratiekantoor “Het Torentje” is the ultimate controlling shareholder.
2. Chain of control above Cabra NV
Priscilla Bracht, Theodora Bracht and Victoria Bracht exercise joint control over Cabra NV.
3. Chain of control above Cabra P NV, Cabra T NV and Cabra V NV
Cabra P NV, Cabra T NV and Cabra V NV are controlled by, respectively, Priscilla Bracht, Theodora Bracht and Victoria Bracht.
4. Chain of control above SIPEF
Ackermans & van Haaren NV and Bracht Group jointly exercise control over SIPEF.
16. NON-CONTROLLING INTERESTS
According to previous Indonesian law, no foreign investor was allowed to own more than 95% of the shares of a plantation company.
Therefore, most of the Indonesian subsidiaries have at least a 5% non-controlling interest. The non-controlling interests of our
Indonesian subsidiaries mainly consist of one Indonesian pension fund. Following an alteration in the law in 2020, foreign investors
are now allowed to own 100% of the shares of a plantation company.
The table below presents the non-controlling interests per company, as well as their share of the equity and the profit of the year.
2021
2020
In KUSD
% Non-
controlling
interests
Share of
the equity
Share of
the profit
of the
year
% Non-
controlling
interests
Share of
the equity
Share of
the profit
of the
year
PT Tolan Tiga Indonesia
5.00
20 610
1 344
5.00
18 134
551
PT Eastern Sumatra Indonesia
9.75
6 105
509
9.75
5 600
418
PT Kerasaan Indonesia
45.85
6 004
1 774
45.85
5 704
1 296
PT Bandar Sumatra Indonesia
9.75
1 139
- 125
9.75
1 254
- 122
PT Melania Indonesia
2.75
235
- 3
9.75
2 648
- 258
PT Mukomuko Agro Sejahtera
14.26
- 343
20
14.26
- 362
15
PT Umbul Mas Wisesa
5.10
- 537
248
5.10
- 782
- 12
PT Citra Sawit Mandiri
5.10
- 201
63
5.10
- 263
- 5
PT Toton Usaha Mandiri
5.10
156
97
5.10
60
36
PT Agro Rawas Ulu
5.00
- 194
- 22
5.00
- 166
- 103
PT Agro Kati Lama
5.00
- 700
- 24
5.00
- 654
- 361
PT Agro Muara Rupit
5.10
- 264
- 126
5.10
- 134
- 131
PT Agro Muko
9.75
9 259
2 391
9.75
6 806
911
PT Dendymarker Indah Lestari
5.00
-2 358
- 425
9.75
-1 924
- 178
Jabelmalux SA
0.11
- 59
0
0.11
- 59
0
Total
38 854
5 722
35 862
2 055
The non-controlling interest's share of the property, plant and equipment (including biological assets - bearer plants) amounts to
KUSD 35 091 in 2021 (2020: KUSD 35 980).
37
SIPEF Financial statements 2021
The movements of the year can be summarized as follows:
In KUSD
2021
2020
At the end of the preceding period
35 862
34 325
Profit for the period attributable to non-controlling interests
5 722
2 055
Defined Benefit Plans - IAS19R
2
- 95
Distributed dividends
-2 306
- 200
Equity transactions with non-controlling parties
0
- 223
Other
- 426
0
At the end of the period
38 854
35 862
The distributed dividends to non-controlling interests consist of:
In KUSD
2021
2020
PT Kerasaan Indonesia
1 376
0
PT Melania Indonesia
930
0
PT Eastern Sumatra Indonesia
0
200
Total
2 306
200
The dividends from PT Kerasaan and PT Melania have been declared and paid in 2021.
There are no limitations to the transfer of funds. The non-controlling interests have no rights to use the assets of the Group or to repay
the liabilities of the subsidiaries. The non-controlling interests do not have significant protective rights. There are no restrictions to
realise assets and settle liabilities of subsidiaries.
17. PROVISIONS
In KUSD
2021
2020
Provisions
1 125
1 354
The provisions are entirely related to a VAT dispute in Indonesia (KUSD 1 125). During 2021 there have only been a limited amount
of court cases which were settled. It is difficult to make an estimate of the settlement time of the dispute.
18. PENSION LIABILITIES
Defined benefit plans
Pension liabilities mainly represent defined benefit plans in Indonesia. These pension plans, set up in order to pay a lump sum amount
at the time of retirement, are not financed with a third party. The total number of employees affected by the pension plan amounts to
8 569. The pension plan is payable to an employee at the age of 55 or after 30 years of seniority, whichever comes first.
Since the pension plan is adjusted by future salary increases and discount rates, the pension plan is exposed to Indonesia's future
salary expectations, as well as Indonesia's inflation and interest rate risk. Furthermore, the pension plan is payable in Indonesian
Rupiah, exposing it to a currency risk. We refer to note 26 for further details concerning the currency risk of the Group. As the pension
plan is unfunded, there is no risk relating to a return on plan assets.
The following reconciliation summarizes the variation of total pension liabilities between 2020 and 2021:
In KUSD 2020
Pension
cost
Payment Exchange
Translation
difference
Change
consolidation
scope
Other 2021
Indonesia
24 039
5 085
-1 688
- 214
-5 724
21 498
Ivory Coast
772
143
- 20
0
- 61
- 42
792
Total
24 810
5 228
-1 708
- 214
- 61
-5 724
- 42
22 290
The change in Consolidation scope relates to the sale of PT Melania. The sale is explained in more detail in note 30.
2021
2020
Discount rate
7.50%
7.75%
Future salary increase
5.00%
5.25%
Assumed retirement age
55 years or 30 years of
seniority
55 years or 30 years of
seniority
In KUSD
2021
2020
Opening
24 039
22 408
Service cost
3 060
2 260
Interest cost
1 386
1 865
Benefits paid
-1 688
-3 426
Actuarial gains and losses
638
1 323
Exchange differences
- 214
- 409
Change consolidation scope
-5 724
0
Other
0
18
Closing
21 498
24 039
In KUSD
2021
2020
Experience adjustments
638
1 312
Changes in assumptions used
0
11
Total actuarial gains and losses
638
1 323
In KUSD
2021
2020
Pension liabilities
21 498
24 039
In KUSD
2021
2020
Service cost
3 060
2 260
Interest cost
1 386
1 865
Pension cost
4 446
4 125
Actuarial gains and losses recorded in Other Comprehensive Income
638
1 323
Total pension cost
5 085
5 448
38 The connection to the world of sustainable tropical agriculture
The following assumptions are used in the pension calculation of Indonesia:
2021
2020
Discount rate
7.50%
7.75%
Future salary increase
5.00%
5.25%
Assumed retirement age
55 years or 30 years of
seniority
55 years or 30 years of
seniority
Pension liabilities in Indonesia have changed as follows:
In KUSD
2021
2020
Opening
24 039
22 408
Service cost
3 060
2 260
Interest cost
1 386
1 865
Benefits paid
-1 688
-3 426
Actuarial gains and losses
638
1 323
Exchange differences
- 214
- 409
Change consolidation scope
-5 724
0
Other
0
18
Closing
21 498
24 039
Actuarial gains and losses consist of the following components:
In KUSD
2021
2020
Experience adjustments
638
1 312
Changes in assumptions used
0
11
Total actuarial gains and losses
638
1 323
The actuarial gains and losses included in the above table contain the largest part of the total actuarial gains and losses included in
the other comprehensive income (KUSD -631). The remaining difference (KUSD -7) consists of the actuarial gains and losses of the
equity consolidated companies (PT Timbang Deli).
The amounts recognised in the balance sheet are as follows:
In KUSD
2021
2020
Pension liabilities
21 498
24 039
The amounts relating to the pension cost of Indonesia are as follows:
In KUSD
2021
2020
Service cost
3 060
2 260
Interest cost
1 386
1 865
Pension cost
4 446
4 125
Actuarial gains and losses recorded in Other Comprehensive Income
638
1 323
Total pension cost
5 085
5 448
These costs are included under the headings cost of sales and general and administrative expenses of the income statement.
Estimated benefit payments in 2022 are KUSD 2 061.
Sensitivity of the variation of the discount rate and of the future salary increase
Values as appearing in the balance sheet are sensitive to changes in the actual discount rate compared to the discount rate used.
The same applies to changes in the actual future salary increase compared to the future salary increase used in the calculation. For
our Indonesian entities, simulations were made to calculate the impact of a 1% increase or decrease of both parameters on the
pension provision, resulting in the following effects:
39
SIPEF Financial statements 2021
Impact of the change in discount rate:
In KUSD
+1%
Carrying amount
-1%
Pension liability of the Indonesian subsidiaries
19 578
21 498
23 693
Gross impact on the comprehensive income
1 921
-2 195
Impact of the change in future salary increase:
In KUSD
+1%
Carrying amount
-1%
Pension liability of the Indonesian subsidiaries
23 821
21 498
19 440
Gross impact on the comprehensive income
-2 323
2 058
The pension liability in Indonesia consists of KUSD 21 498 from fully consolidated subsidiaries.
Defined contribution plans
The Group pays contributions to publicly or privately administered insurance plans. Since the Group is obliged to make additional
payments if the average return on the employer’s contribution and on the employees’ contributions is not attained, those plans should
be treated as “defined benefit plans” in accordance with IAS 19.
The liability is based on an analysis of the plans and the limited difference between the legally guaranteed minimum returns and the
interest guaranteed by the insurance company, the Group has concluded that the application of the PUC method would have an
immaterial impact. The total accumulated reserves amount to KUSD 2 343 by the end of December 2021 (2020: KUSD 2 353)
compared to the total minimum guaranteed reserves of KUSD 1 753 at 31 December 2021 (2020: KUSD 2 140).
Contributions paid regarding the defined contribution plans amount to KUSD 530 (KUSD 508 in 2020). SIPEF NV is not responsible
for the minimum guaranteed return on the contributions paid for the members of the executive committee (KUSD 470).
19. NET FINANCIAL ASSETS/(LIABILITIES)
Net financial assets/(liabilities) (Non-GAAP measure) can be analysed as follows:
In KUSD
2021
2020
Short-term obligations - credit institutions
-12 477
-86 128
Financial liabilities > 1 year (incl. derivatives)
-36 000
-54 000
Current portion of amounts payable after one year
-18 000
-18 000
Investments and deposits
38
0
Cash and cash equivalents
19 939
9 790
Lease liability
-2 691
-2 828
Net financial assets/(liabilities)
-49 192
-151 165
Analysis of net financial assets/(liabilities) 2021 per currency:
In KUSD
EUR
USD
Others
Total
Short-term financial obligations
-12 477
-18 000
0
-30 477
Investments and deposits
38
0
0
38
Cash and cash equivalents
751
18 628
559
19 939
Financial liabilities > 1 year
0
-36 000
0
-36 000
Lease liability
- 399
-2 292
0
-2 691
Total 2021
-12 088
-37 664
559
-49 192
Total 2020
-23 223
-128 798
855
-151 165
The short-term financial obligations relate to the commercial papers for a total amount of KUSD 12 477. This financial obligation has
been completely hedged at an average rate of 1 EUR = 1.1869 USD.
The financial liabilities with an original maturity of more than one year include an 85.5 million USD loan of which 31.5 million USD has
already been repaid between 2019 - 2021. It concerns a long-term loan that was taken out with a banking consortium with a first-class
rating for creditworthiness. It concerns an unsecured loan with a term of 5 years. The interest rate is composed as the USD 3M
interest rate + a margin of 1.20% to 2.50%, depending on the debt/EBITDA ratio. The variable interest rate was hedged at a fixed
interest rate of 1.3933% through an "Interest Rate Swap".
Covenant ratio
2021
2020
Operating result
139 416
30 778
Exceptional items
-11 640
0
Recurring operating result
127 776
30 778
Depreciation and result on sale FA
49 857
44 539
REBITDA
177 632
75 317
(-) minorities recurring
-5 086
-2 055
REBITDA group share
172 546
73 262
Net Senior Leverage
0.29
2.06
In KUSD
2021
2020
Net financial position at the beginning of the period
-151 165
-164 623
Decrease in long-term borrowings
18 078
9 228
Decrease in short-term financial obligations
73 710
5 092
Net movement in cash and cash equivalents
10 186
- 863
Net financial assets/(liabilities) at the end of the period
-49 192
-151 165
In KUSD
2021
2020
Financial liabilities at the beginning of the period
160 956
175 276
Decrease in long-term borrowings
-17 941
-9 000
Decrease in short-term financial obligations
-73 710
-5 111
Increase leasing liabilities - non cash
466
340
Decrease leasing liabilities - cash
- 603
- 549
Financial liabilities at the end of the period
69 168
160 956
40 The connection to the world of sustainable tropical agriculture
It should be noted that SIPEF has made use of the possibility of postponing capital repayments to cope with the impact of covid-19.
As a result, the repayments at the end of June 2020 (KUSD 4 500) has been postponed until June 2024, and the repayment at the
end of September 2020 (KUSD 4 500) has been postponed until September 2024.
There is one financial requirement applicable to the loan covenant which states that the net financial debt may not exceed 2.5 times
the REBITDA of the year. This financial covenant is tested every half-year. The EBITDA of the group consists of the operating results
+ profit/loss from equity companies + depreciation and additional impairments/increases on assets. The REBITDA consists of the
same calculation, but excluding the one-off, non-recurring effects. The Group does not breach borrowing limits or covenants (where
applicable) on its borrowing facilities per December 31, 2021. The financial covenant ratio will remain at 2.50 at 30 June 2022 and 31
December 2022. Due to the significant volatility of the palm oil prices and the impact on the result and EBITDA of the Group, this
covenant is continuously monitored. It is not expected that this covenant will be breached in 2022.
Covenant ratio
2021
2020
Operating result
139 416
30 778
Exceptional items
-11 640
0
Recurring operating result
127 776
30 778
Depreciation and result on sale FA
49 857
44 539
REBITDA
177 632
75 317
(-) minorities recurring
-5 086
-2 055
REBITDA group share
172 546
73 262
Net Senior Leverage
0.29
2.06
Reconciliation of the net financial assets/(liabilities) and cash flow:
In KUSD
2021
2020
Net financial position at the beginning of the period
-151 165
-164 623
Decrease in long-term borrowings
18 078
9 228
Decrease in short-term financial obligations
73 710
5 092
Net movement in cash and cash equivalents
10 186
- 863
Net financial assets/(liabilities) at the end of the period
-49 192
-151 165
Reconciliation of the total financial liabilities:
In KUSD
2021
2020
Financial liabilities at the beginning of the period
160 956
175 276
Decrease in long-term borrowings
-17 941
-9 000
Decrease in short-term financial obligations
-73 710
-5 111
Increase leasing liabilities - non cash
466
340
Decrease leasing liabilities - cash
- 603
- 549
Financial liabilities at the end of the period
69 168
160 956
41
SIPEF Financial statements 2021
20. OTHER OPERATING INCOME/(CHARGES)
The other operating income/(charges) can be detailed as follows:
2021
2020
In KUSD
Equity
holders of
the parent
Non-
controlling
interests
Total
Equity
holders of
the parent
Non-
controlling
interests
Total
VAT claim Indonesia
53
6
59
163
18
181
Accelerated depreciation immature
rubber assets
0
0
0
- 610
- 66
- 676
Accelerated depreciation oil palms PT
Dendymarker
-4 018
- 211
-4 229
0
0
0
Capital gain sale PT Melania
11 003
637
11 640
0
0
0
Other income/(charges)
- 291
- 90
- 381
604
- 114
489
Other operating income/(charges)
6 748
341
7 088
157
- 162
- 6
The other income/charges mainly consist out of the accelerated depreciation of the oil palms in PT Dendymarker (KUSD - 4 229), a
capital gain on the sale of PT Melania (KUSD 11 640), the movement in the provision for the Indonesian VAT claim (KUSD 59), a
stock adjustments for obsolete stock, and warehouse sales to smallholders in Papua New Guinea.
21. FINANCIAL RESULT
The financial income concerns the interests received on current accounts with non-consolidated companies and on temporary excess
cash, as well as the income resulting from the discounting of the receivables > 1 year. The financial charges concern the interests on
long term and short-term borrowings as well as bank charges and other financial costs.
In KUSD
2021
2020
Interests received
727
644
Discounting of receivables > 1 year
748
1 368
Financial charges
-3 096
-5 103
Exchange result
1 021
- 728
Financial result derivatives
-2 178
1 106
Financial result
-2 779
-2 713
22. SHARE BASED PAYMENT
Grant date
Opening
balance
Number of
options
granted
Number of
options
exercised
Number of
options
expired
Ending
Balance
2011
16 000
-16 000
0
2012
14 000
14 000
2013
16 000
16 000
2014
18 000
18 000
2015
18 000
18 000
2016
18 000
18 000
2017
18 000
18 000
2018
20 000
20 000
2019
20 000
20 000
2020
18 000
18 000
2021
0
18 000
18 000
Balance
176 000
18 000
-16 000
0
178 000
SIPEF's stock option plan, which was approved in November 2011, is intended to provide long term motivation for the members of
the executive committee and general directors of the foreign subsidiaries whose activities are essential to the success of the Group.
The options give them the right to acquire a corresponding number of SIPEF shares.
Grant date
Share price
(in EUR)
Dividend
yield
Volatility
Interest rate
Estimated
expected
lifetime
Black & Scholes
Value (in EUR)
2012
58.50
2.50%
37.55
0.90%
5.00
15.07
2013
57.70
2.50%
29.69
1.36%
5.00
12.72
2014
47.68
2.50%
24.83
0.15%
5.00
5.34
2015
52.77
2.50%
22.29
0.07%
5.00
8.03
2016
60.49
3.00%
19.40
-0.37%
5.00
8.38
2017
62.80
3.00%
18.88
-0.12%
5.00
5.57
2018
48.80
3.00%
18.60
-0.03%
5.00
3.54
2019
54.80
3.00%
19.56
-0.32%
5.00
8.12
2020
43.20
3.00%
23.35
-0.66%
5.00
4.57
2021
56.90
3.00%
24.14
-0.33%
5.00
6.74
Number of shares
Average
purchase price
(in EUR)
Total purchase
price (in KEUR)
Total purchase
price (in KUSD)
Opening balance 31/12/2020
160 000
52.43
8 389
10 277
Acquisition of treasury shares
34 000
57.06
1 940
2 194
Disposal of treasury shares
-16 000
52.44
- 839
- 950
Ending balance 31/12/2021
178 000
53.31
9 490
11 521
In KUSD
2021
2020
Profit before tax
136 637
28 065
Tax at the applicable local rates
-35 039
-6 545
Average applicable tax rate
-23.32%
-23.32%
Non-taxable capital gain on sale of PT Melania
2 561
0
Permanent differences
-1 907
-1 915
Losses of the year for which no DTA is recognised
- 178
-1 762
Impairment losses recognised on DTA recognised in previous years
-2 560
-2 401
Reversal of impairment losses on DTA recognised in previous years
2 432
1 034
Impact of the change in tax-% in Indonesia on the deferred taxes
0
685
Corrections prior year
-1 384
76
Tax expense
-36 075
-10 828
Average effective tax rate
-26.40%
-38.58%
42 The connection to the world of sustainable tropical agriculture
The remuneration committee is responsible for monitoring this plan and selecting the beneficiaries. The options are provided free of
charge and their exercise period is 10 years.
IFRS 2 has been applied to the stock options. The total value of the outstanding options 2011 - 2021 (valued at the fair value at the
moment of granting), amounts to KUSD 1 594 and is calculated on the basis of an adjusted Black & Scholes model of which the main
characteristics are as follows:
Grant date
Share price
(in EUR)
Dividend
yield
Volatility Interest rate
Estimated
expected
lifetime
Black & Scholes
Value (in EUR)
2012
58.50
2.50%
37.55
0.90%
5.00
15.07
2013
57.70
2.50%
29.69
1.36%
5.00
12.72
2014
47.68
2.50%
24.83
0.15%
5.00
5.34
2015
52.77
2.50%
22.29
0.07%
5.00
8.03
2016
60.49
3.00%
19.40
-0.37%
5.00
8.38
2017
62.80
3.00%
18.88
-0.12%
5.00
5.57
2018
48.80
3.00%
18.60
-0.03%
5.00
3.54
2019
54.80
3.00%
19.56
-0.32%
5.00
8.12
2020
43.20
3.00%
23.35
-0.66%
5.00
4.57
2021
56.90
3.00%
24.14
-0.33%
5.00
6.74
In 2021, 18 000 new stock options were granted with an exercise price of EUR 58.31 per share. The fair value when granted was
fixed at KUSD 138 and is recorded in the profit and loss accounts over the vesting period of 3 years (2022-2024). The total cost of
the stock options included in the income statement is KUSD 121 in 2021 (2020: KUSD 128).
To cover the outstanding option liability, SIPEF has a total of 178 000 treasury shares in portfolio.
Number of shares
Average
purchase price
(in EUR)
Total purchase
price (in KEUR)
Total purchase
price (in KUSD)
Opening balance 31/12/2020
160 000
52.43
8 389
10 277
Acquisition of treasury shares
34 000
57.06
1 940
2 194
Disposal of treasury shares
-16 000
52.44
- 839
- 950
Ending balance 31/12/2021
178 000
53.31
9 490
11 521
The extraordinary general meeting of shareholders on June 10, 2020 authorised the board of directors to purchase own shares of
SIPEF if deemed necessary over a period of 5 years after the publication of the renewal.
23. INCOME TAXES
The reconciliation between the tax expenses and tax at local applicable tax rates is as follows:
In KUSD
2021
2020
Profit before tax
136 637
28 065
Tax at the applicable local rates
-35 039
-6 545
Average applicable tax rate
-23.32%
-23.32%
Non-taxable capital gain on sale of PT Melania
2 561
0
Permanent differences
-1 907
-1 915
Losses of the year for which no DTA is recognised
- 178
-1 762
Impairment losses recognised on DTA recognised in previous years
-2 560
-2 401
Reversal of impairment losses on DTA recognised in previous years
2 432
1 034
Impact of the change in tax-% in Indonesia on the deferred taxes
0
685
Corrections prior year
-1 384
76
Tax expense
-36 075
-10 828
Average effective tax rate
-26.40%
-38.58%
We received from the Indonesian tax authorities the formal approval, that starting from financial year 2014 our Indonesian affiliates
are allowed to lodge their tax declaration in USD. From the tax authorities in Papua New Guinea the SIPEF group got permission to
prepare the tax declaration based on USD accounts from 2015 onwards. For SIPEF NV and Jabelmalux SA a similar authorisation
has been obtained with effect from the financial year 2016.
43
SIPEF Financial statements 2021
Deferred tax liabilities and assets are offset per taxable entity which leads to the following split between deferred tax assets and
deferred tax liabilities:
In KUSD
2021
2020
Deferred tax assets
13 550
13 049
Deferred tax liabilities
-46 950
-44 010
Net deferred taxes
-33 400
-30 961
The movements in net deferred taxes (assets - liabilities) are:
In KUSD
2021
2020
Opening balance
-30 961
-31 714
Variation (- expense) / (+ income) through income statement
-1 352
- 58
Tax impact of IAS 19R through comprehensive income
139
291
Tax impact hedge accounting via OCI
- 226
489
Change in consolidation scope
- 973
0
Other
- 27
31
Closing balance
-33 400
-30 961
Deferred taxes in the income statement are the result of:
In KUSD
2021
2020
Addition/(utilization) of tax losses brought forward
1 779
-2 585
Origin/(reversal) of temporary differences - IAS 41 revaluation
-3 149
380
Origin/(reversal) of temporary differences - fixed assets
-2 875
3 228
Origin/(reversal) of temporary differences - pension provision
561
- 528
Origin/(reversal) of temporary differences - other
2 332
- 553
Total
-1 352
- 58
Total deferred tax assets are not entirely recognized in the balance sheet. The breakdown of total recognized and unrecognized
deferred taxes is as follows:
2021
In KUSD
Total
Not recorded
Recorded
Biological assets
-1 716
0
-1 716
Property, plant and equipment, including bearer plants
-44 446
0
-44 446
Inventories
-5 721
0
-5 721
Pension provision
4 730
0
4 730
Tax losses
15 074
4 848
10 226
Others
3 527
0
3 527
Total
-28 552
4 848
-33 400
The majority of the unrecognized deferred tax assets at the end of 2021 are located at the companies of the South Sumatra group
(KUSD 4 107) and the Tolan Tiga group rubber activities (KUSD 720). The set-up of and the adjustments to the deferred tax assets
are based on the most recently available long-term business plans.
The total tax losses (recognized and unrecognized) have the following maturity structure:
2021
In KUSD
Total
Not recorded
Recorded
1 year
5 917
5 336
581
2 years
9 253
2 956
6 297
3 years
9 318
3 033
6 285
4 years
21 730
9 812
11 918
5 years
13 505
806
12 699
Unlimited
7 757
82
7 675
Total
67 480
22 025
45 455
In Indonesia and Papua New Guinea the Group made advance payments of taxes in accordance with local legislation. These were
partly based on the results of 2019 and partly on the results of 2020 which were both lower than the results of 2021. Therefore, the
prepayments of taxes of KUSD 9 962 were significantly below the taxes to be paid of KUSD 34 722.
In KUSD
2021
2020
Taxes to receive
1 469
11 766
Taxes to pay
-19 346
-4 687
Net taxes to receive/(to pay)
-17 877
7 079
In KUSD
2021
2020
Net taxes to receive/(to pay) at the beginning of the period
7 079
14 307
Change consolidation scope
- 211
0
Transfer
15
- 32
Taxes to pay
-34 722
-10 768
Paid taxes
9 962
3 572
Net taxes to receive/(to pay) at the end of the period
-17 877
7 079
Taxes paid as presented in the consolidated cash flow statement are detailed as follows:
In KUSD
2021
2020
Tax expense
-36 075
-10 828
Deferred tax
1 353
60
Current taxes
-34 722
-10 768
Variation prepaid taxes
10 101
3 021
Variation payable taxes
14 658
4 175
Paid taxes
-9 962
-3 572
There are no material unrecorded uncertain tax positions within the SIPEF group.
24. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
The SIPEF group has the following percentage of control and percentage of interest in the associates and joint ventures:
Entity
Location
% of control
% of interest
Verdant Bioscience Pte Ltd
Singapore / Republic of Singapore
38.00
38.00
PT Timbang Deli Indonesia
Medan / Indonesia
38.00
36.10
An associate is an entity over which the Group has significant influence. A joint venture is a joint arrangement whereby the parties
that have joint control of the arrangement have rights to the net assets of the arrangement. The Group has no joint ventures.
The investments in associates and joint ventures consist of Verdant Bioscience Singapore and PT Timbang Deli, both active in tropical
agriculture.
Verdant Bioscience Pte Ltd (VBS) is a company located in Singapore. As of 1 January 2014, the Group holds a 38% interest in VBS.
The company is a cooperation between Ackermans & Van Haaren (42%), SIPEF NV (38%), PT Dharma Satya Nusantara (10%) and
Biosing Pte (10%) with the objective of conducting research into and developing high-yielding seeds with a view to commercializing
them.
The Group holds a 36.10% participation in PT Timbang Deli, a company located on the island of Sumatra in Indonesia. PT Timbang
Deli is active in growing rubber. Following the Share Swap agreement with Verdant Bioscience Pte Ltd the SIPEF group contributed
95% of the total number of shares of PT Timbang Deli to Verdant Bioscience Pte Ltd.
During the first four months of 2021, PT Melania has been included in the consolidation as a joint-venture before being classified as
an asset held for sale. Even though At 31 December 2021, the assets of PT Melania are not included in the ‘investments in associates
and joint ventures’, the ‘share of results of associated companies and joint ventures’ does include 4 months of results of PT Melania.
44 The connection to the world of sustainable tropical agriculture
In KUSD
2021
2020
Taxes to receive
1 469
11 766
Taxes to pay
-19 346
-4 687
Net taxes to receive/(to pay)
-17 877
7 079
In KUSD
2021
2020
Net taxes to receive/(to pay) at the beginning of the period
7 079
14 307
Change consolidation scope
- 211
0
Transfer
15
- 32
Taxes to pay
-34 722
-10 768
Paid taxes
9 962
3 572
Net taxes to receive/(to pay) at the end of the period
-17 877
7 079
Taxes paid as presented in the consolidated cash flow statement are detailed as follows:
In KUSD
2021
2020
Tax expense
-36 075
-10 828
Deferred tax
1 353
60
Current taxes
-34 722
-10 768
Variation prepaid taxes
10 101
3 021
Variation payable taxes
14 658
4 175
Paid taxes
-9 962
-3 572
There are no material unrecorded uncertain tax positions within the SIPEF group.
24. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
The SIPEF group has the following percentage of control and percentage of interest in the associates and joint ventures:
Entity
Location
% of control
% of interest
Verdant Bioscience Pte Ltd
Singapore / Republic of Singapore
38.00
38.00
PT Timbang Deli Indonesia
Medan / Indonesia
38.00
36.10
An associate is an entity over which the Group has significant influence. A joint venture is a joint arrangement whereby the parties
that have joint control of the arrangement have rights to the net assets of the arrangement. The Group has no joint ventures.
The investments in associates and joint ventures consist of Verdant Bioscience Singapore and PT Timbang Deli, both active in tropical
agriculture.
Verdant Bioscience Pte Ltd (VBS) is a company located in Singapore. As of 1 January 2014, the Group holds a 38% interest in VBS.
The company is a cooperation between Ackermans & Van Haaren (42%), SIPEF NV (38%), PT Dharma Satya Nusantara (10%) and
Biosing Pte (10%) with the objective of conducting research into and developing high-yielding seeds with a view to commercializing
them.
The Group holds a 36.10% participation in PT Timbang Deli, a company located on the island of Sumatra in Indonesia. PT Timbang
Deli is active in growing rubber. Following the Share Swap agreement with Verdant Bioscience Pte Ltd the SIPEF group contributed
95% of the total number of shares of PT Timbang Deli to Verdant Bioscience Pte Ltd.
During the first four months of 2021, PT Melania has been included in the consolidation as a joint-venture before being classified as
an asset held for sale. Even though At 31 December 2021, the assets of PT Melania are not included in the ‘investments in associates
and joint ventures’, the ‘share of results of associated companies and joint ventures’ does include 4 months of results of PT Melania.
45
SIPEF Financial statements 2021
The total section "investments in associates and joint ventures" can be summarized as follows:
In KUSD
2021
2020
Verdant Bioscience Pte Ltd
4 347
4 912
PT Timbang Deli Indonesia
- 749
- 282
Total
3 598
4 630
During the first four months of 2021, PT Melania has been included in the consolidation as a joint-venture before being classified as
an asset held for sale. The total section "Share of results of associated companies and joint ventures" can be summarized as follows:
In KUSD
2021
2020
Verdant Bioscience Pte Ltd
- 565
- 475
PT Timbang Deli Indonesia
- 467
- 584
PT Melania Indonesia
- 59
0
Total result
-1 091
-1 059
Below we present the condensed statements of financial position of the associated companies and joint ventures. These are prepared
in accordance with IFRS and are before intercompany eliminations and excluding goodwill.
Verdant Bioscience Pte Ltd
PT Timbang Deli
In KUSD
2021
2020
2021
2020
Biological assets
0
0
3 772
3 994
Other non-current assets
23 876
23 701
6 727
7 125
Current assets
14 077
13 846
1 276
1 008
Cash and cash equivalents
129
81
225
170
Total assets
38 083
37 627
12 000
12 297
Non-current liabilities
- 14
- 14
1 271
1 309
Long term financial debts
0
0
0
0
Current liabilities
20 497
18 556
15 039
14 004
Short term financial debts
0
0
0
0
Equity
17 599
19 084
-4 311
-3 016
Total equity and liabilities
38 083
37 627
12 000
12 297
Below we present the condensed income statements of the associated companies and joint ventures. These are prepared in
accordance with IFRS and are before intercompany eliminations and excluding goodwill.
Verdant Bioscience Pte Ltd
PT Timbang Deli
In KUSD
2021
2020
2021
2020
Inclusion in the consolidation:
38.00%
38.00%
36.10%
36.10%
Revenue
0
0
3 319
1 319
Depreciation
10
8
920
955
Interest income
33
47
3
3
Interest charges
0
0
- 33
- 46
Net result
-1 486
-1 251
-1 295
-1 617
Share in the consolidation
- 565
- 475
- 467
- 584
Total share of the group
- 565
- 475
- 467
- 584
Total share minorities
0
0
0
0
Total
- 565
- 475
- 467
- 584
Verdant Bioscience Pte Ltd
PT Timbang Deli
In KUSD
2021
2020
2021
2020
Equity without goodwill
17 599
19 085
-4 311
-3 016
Share of the group
6 687
7 252
-1 556
-1 089
Goodwill
0
0
807
807
Equity elimination PT Timbang Deli
-2 340
-2 340
0
0
Total
4 347
4 912
- 749
- 282
46 The connection to the world of sustainable tropical agriculture
Reconciliation of the associated companies and joint ventures
The below tables are prepared in accordance based on the IFRS financial statements as included in the consolidation, in accordance
with the accounting policies of the SIPEF group, before goodwill allocation.
Verdant Bioscience Pte Ltd
PT Timbang Deli
In KUSD
2021
2020
2021
2020
Equity without goodwill
17 599
19 085
-4 311
-3 016
Share of the group
6 687
7 252
-1 556
-1 089
Goodwill
0
0
807
807
Equity elimination PT Timbang Deli
-2 340
-2 340
0
0
Total
4 347
4 912
- 749
- 282
Dividends received from associated companies and joint ventures
During the year no dividends were received from associated companies and joint ventures.
There are no restrictions on the transfers of funds to the Group.
25. CHANGE IN NET WORKING CAPITAL
In line with the increase of the operating result, the cash flow from operating activities increased from KUSD 73 669 in 2020 to KUSD
178 796 this year.
The variation of the working capital of KUSD -8 523 mainly concerned the following elements:
• an increase in inventories (KUSD -22 211) as a result of higher inventory volumes, mainly of finished products, and a higher
unit cost price for CPO;
• an increase in trade receivables (KUSD -4 614);
• an increase in advances received on local sales (KUSD 8 450);
• an increase in other payables and other current liabilities including an increase in bonus provision following the improved
result (KUSD 10 582).
The above-mentioned use of working capital concerned the usual temporary movements.
26. FINANCIAL INSTRUMENTS
Exposure to fluctuations in the market price of core products, currencies, interest rates and credit risk arises in the normal course of
the Group’s business. Financial derivative instruments are used to a limited extend to reduce the exposure to fluctuations in foreign
exchange rates and interest rates.
Fluctuations in the market price of core products
Structural risk
SIPEF group is exposed to structural price risks of their core products. The risk is primarily related to palm oil and palm kernel oil and
to a lesser extent to rubber. A change of the palm oil price of USD 10 CIF per ton has an impact of about KUSD 3 147 (without
considering the impact of the current export tax and export levies in Indonesia) on result after tax. This risk is assumed to be a
business risk.
Transactional risk
The Group faces transactional price risks on products sold. The transactional risk is the risk that the price of products purchased from
third parties fluctuates between the time the price is fixed with a customer and the time the transaction is settled. This risk is assumed
to be a business risk.
Currency risk
Most of the subsidiaries are using the US dollar as functional currency. The Group’s currency risk can be split into three distinct
categories: structural, transactional and translational:
Structural risk
Most of the Group’s revenues are denominated in USD, while all the operations are located outside the USD zone (particularly in
Indonesia, Papua New Guinea, Ivory Coast and Europe). Any change in the USD against the local currency will therefore have a
considerable impact on the operating result of the company. Most of these risks are considered to be a business risk.
47
SIPEF Financial statements 2021
Transactional risk
The Group is also subject to transactional risks in respect of currencies, i.e. the risk of currency exchange rates fluctuating between
the time the price is fixed with a customer, supplier or financial institution and the time the transaction is settled. This risk, with the
exception of naturally covered positions, is not covered since most receivables and payables have a short settlement term.
The pension liabilities in Indonesia are important long-term liabilities that are fully payable in IDR. A devaluation or revaluation of 10%
of the IDR versus the USD has the following effect on the income statement:
In KUSD
IDR Dev 10%
Book value
IDR Rev 10%
Pension liabilities in Indonesia
19 777
21 755
24 172
Gross impact income statement
1 978
-2 417
The pension liability in Indonesia consists of KUSD 21 498 from fully consolidated subsidiaries and of KUSD 257 from equity
consolidated companies (PT Timbang Deli).
The long term receivables on the Indonesian plasma holders are important long term assets that are fully payable in IDR. A devaluation
or revaluation of 10% of the IDR versus the USD has the following effect on the income statement:
In KUSD
IDR Dev 10%
Book value
IDR Rev 10%
Plasma receivables
23 333
25 666
28 518
Gross impact income statement
-2 333
2 852
On February 15, 2022 the board of directors has proposed the payment of a dividend of KEUR 21 159 (EUR 2.00 gross per ordinary
share). In line with the Group’s liquidity and currency policy the exchange risk was covered in 3 forward exchange contracts for the
sale of KUSD 25 191 for KEUR 21 600 (average exchange rate of 1.1662) before year-end.
Sensitivity analysis
With regard to the cover of the dividend for the end of the year a devaluation or revaluation of 10% of the EUR versus the USD has
the following effect on the profit and loss account:
In KUSD
EUR Dev 10%
Closing rate
EUR Rev 10%
Dividend
22 274
24 501
27 223
Gross Impact income statement
-2 227
2 722
Translational risk
The SIPEF group is an international company and has operations which do not use the USD as their reporting currency. When such
results are consolidated into the Group’s accounts the translated amount is exposed to variations in the value of such local results
are consolidated into the Group’s accounts the translated amount is exposed to variations in the value of such local currencies against
the USD. SIPEF group does not hedge against such risk (see accounting policies).
As from 1st of January 2007 onwards the functional currency of most of our activities is the same as the presentation currency, this
risk has been largely restricted.
Interest rate risk
The Group’s exposure to changes in interest rates relates to the Group’s financial debt obligations. At the end of December 2021, the
Group’s net financial assets/(liabilities) amounted to KUSD -49 192 (2020: KUSD -151 165), of which KUSD 30 961 short term financial
liabilities (2020: KUSD 104 671) and KUSD 19 977 net short-term cash and cash equivalents (2020: KUSD 9 791).
The financial liabilities > 1 year (incl. derivatives) amount to KUSD 38 207 (2020: KUSD 56 285).
Considering that all short-term debts are of a current nature with variable interest rates, we believe a 0.5% change in interest rate will
not have a material impact.
Considering that the long-term financial debt is primarily based on a variable interest rate, the risk exists that with an increase of the
interest rate, the financing cost will increase. This interest risk is hedged by the use of an interest rate swap (IRS). The goal of this
interest rate swap is to decrease the volatility (and with it the interest rate risk) as much as possible
Available funds are invested in short term deposits.
In KUSD
2021
2020
Receivables from the sale of palm oil/rubber/tea
30 609
26 315
Receivables from the sale of bananas and plants
1 673
1 416
Total
32 282
27 731
In KUSD
2021
2020
Not yet due
941
812
Due < 30 days
523
604
Due between 30 and 60 days
180
0
Due between 60 and 90 days
0
0
Due > 90 days
29
0
Total
1 673
1 416
48 The connection to the world of sustainable tropical agriculture
Credit risk
Credit risk is the risk that one party will fail to discharge an obligation and cause the other party to incur a loss. This credit risk can be
split into a commercial and a financial credit risk. With regard to the commercial credit risk management has established a credit
policy and the exposure to this credit risk is monitored on a continuous basis.
In practice a difference is made between:
In KUSD
2021
2020
Receivables from the sale of palm oil/rubber/tea
30 609
26 315
Receivables from the sale of bananas and plants
1 673
1 416
Total
32 282
27 731
The credit risk for the first category is rather limited as these sales are for the most part immediately paid against presentation of
documents. Moreover, it concerns a relatively small number of first-class buyers: per product about 90% of the turnover is realized
with a maximum of 10 clients. For palm oil there are two clients who each represent over 30% of the total sales. For tea there are two
clients which represents over 30% of total sales. For rubber there are two clients which represent over 30% of total revenues. Contrary
to the first category the credit risk for the receivables from the sales of bananas and horticulture is higher.
For both categories there is a weekly monitoring of the open balances due and a proactive system of reminders. Impairments are
applied as soon as total or partial payments are seen as unlikely. The elements that are taken into account for these appraisals are
the lengths of the delay in payment and the creditworthiness of the client.
The receivables from the sales of bananas and horticulture have the following due date schedule:
In KUSD
2021
2020
Not yet due
941
812
Due < 30 days
523
604
Due between 30 and 60 days
180
0
Due between 60 and 90 days
0
0
Due > 90 days
29
0
Total
1 673
1 416
During 2021 and 2020, no material impairment on receivables was recorded in the income statement.
The Group applied the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance
for all trade receivables based on historical losses. The Group analysed the impact of IFRS 9 and concluded there is no material
impact on the bad debt reserve booked. The Group also assessed whether the historic pattern would change materially in the future
and expects no significant impact.
Liquidity risk
A material and structural shortage in our cash flow would damage both our creditworthiness as well as the trust of investors and would
restrict the capacity of the Group to attract fresh capital. The operational cash flow provides the means to finance the financial
obligations and to increase shareholder value. The Group manages the liquidity risk by evaluating the short term and long-term cash
flows. The SIPEF group maintains an access to the capital market through short- and long-term debt programs.
49
SIPEF Financial statements 2021
The following table gives the contractually determined (not-discounted) cash flows resulting from liabilities at balance sheet date:
2021 - In KUSD
Carrying
amount
Contractual
cash flows
Less
than 1
year
1-2 years
2-3
years
3-4
years
More
than 5
years
Financial obligations > 1 year (incl.
derivatives)
36 000
-37 239
- 618
-18 510
-18 111
0
0
Leasing liabilities > 1 year
2 207
-4 250
- 177
- 489
- 464
- 449
-2 671
Advances received > 1 year
4 830
-4 830
0
-4 830
0
0
0
Trade & other liabilities < 1 year
Trade payables
23 605
-23 605
-23 605
0
0
0
0
Advances received
11 934
-11 934
-11 934
0
0
0
0
Financial liabilities < 1 year
Current portion of amounts
payable after one year
18 000
-18 471
-18 471
0
0
0
0
Financial liabilities
12 477
-12 597
-12 597
0
0
0
0
Leasing liabilities < 1 year
484
- 523
- 523
Derivatives
2 066
-2 066
-2 066
0
0
0
0
Other current liabilities
0
0
0
0
0
0
0
Total liabilities
111 604
-115 516
-69 992
-23 829
-18 575
- 449
-2 671
2020 - In KUSD
Carrying
amount
Contractual
cash flows
Less
than 1
year
1-2 years
2-3
years
3-4
years
More
than 5
years
Financial obligations > 1 year (incl.
derivatives)
54 000
-58 053
-1 664
-19 480
-18 737
-18 173
0
Leasing liabilities > 1 year
2 285
-4 553
- 180
- 488
- 438
- 414
-3 033
Advances received > 1 year
0
0
0
0
0
0
0
Trade & other liabilities < 1 year
Trade payables
21 384
-21 384
-21 384
0
0
0
0
Advances received
1 071
-1 071
-1 071
0
0
0
0
Financial liabilities < 1 year
Current portion of amounts
payable after one year
18 000
-18 701
-18 701
0
0
0
0
Financial liabilities
86 128
-86 254
-86 254
0
0
0
0
Leasing liabilities < 1 year
543
- 589
- 589
Derivatives
793
- 793
- 793
0
0
0
0
Other current liabilities
0
0
0
0
0
0
0
Total liabilities
181 375
-186 255
-129 866
-19 479
-18 737
-18 173
0
In order to limit the financial credit risk SIPEF has spread its more important activities over a small number of banking groups with a
first-class rating for creditworthiness. The current maximum credit lines available amount to KUSD 178 686 (2020: KUSD 206 328).
In 2021, same as in previous years, there were no infringements on the conditions stated in the credit agreements nor were there any
shortcomings in repayments. It should be noted that SIPEF has made use of the possibility of postponing capital repayments to cope
with the impact of covid-19. As a result, the repayments at the end of June 2020 (KUSD 4 500) have been postponed until June 2024,
and the repayment at the end of September 2020 (KUSD 4 500) has also been postponed until September 2024.
In KUSD
2021
2020
Interest rate swaps
- 797
-1 703
Forward exchange transactions
-1 269
910
Fair value (+ = asset; - = liability)
-2 066
- 793
50 The connection to the world of sustainable tropical agriculture
Financial instruments measured at fair value in the statement of financial position
Companies within the Group may use financial instruments for risk management purposes. Specifically, these are instruments
principally intended to manage the risks associated with fluctuating interest and exchange rates. The counterparties in the related
transactions are exclusively first-ranked banks.
Derivative instruments are measured at fair value at initial recognition. The changes in fair value are reported in the income statement
unless these instruments are part of hedging transactions.
Fair values of derivatives are:
In KUSD
2021
2020
Interest rate swaps
- 797
-1 703
Forward exchange transactions
-1 269
910
Fair value (+ = asset; - = liability)
-2 066
- 793
In accordance with IFRS 13 financial instruments are grouped into 3 levels based on the degree to which the fair value is observable:
• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the
measurement date;
• Level 2 inputs are inputs other than quoted prices included within level 1 that are observable for the asset or liability either directly
or indirectly;
• Level 3 inputs are unobservable inputs for the asset or liability.
The fair value of the forward exchange contracts and interest rate swap calculated at the closing value on the 31st of December 2021
were also incorporated in level 2. The notional amount from the forward exchange contracts amounts to KUSD 13 056.
The forward exchange contracts are not documented in a hedging relationship and accordingly, all changes in fair value are recorded
in the financial result. The Group has documented the interest rate swaps (IRS) in a hedging relationship. The terms of the IRS and
the hedged debt match 100%. Therefore, no effectiveness test based on a ratio of changes in fair value of the hedging instrument
against that of the hedged debt is required. An IRS with matching contractual terms would have limited inefficiency.
The IRS has a notional amount of KUSD 54 000. The carrying amount is recorded on the derivatives (liabilities) for an amount of
KUSD -797, the deferred tax assets for an amount of KUSD 199 and the other comprehensive income in the equity for an amount of
KUSD -598.
Financial instruments per category
The following table presents the financial instruments per category as per end 2021 and end 2020:
51
SIPEF Financial statements 2021
2021 - In KUSD
Carrying
amount
IFRS 9
category
Fair value
Fair value
hierarchy
Financial assets
Other investments
92
AC
92
Level 2
Receivables > 1 year
Other receivables
25 666
AC
25 666
Level 2
Total non-current financial assets
25 758
25 758
Trade and other receivables
Trade receivables
32 282
AC
32 282
Level 2
Other receivables
49 878
AC
49 878
Level 2
Investments
Other investments and deposits
38
AC
38
Level 2
Cash and cash equivalents
19 939
AC
19 939
Level 2
Derivatives
0
FVTPL
0
Level 2
Derivatives
0
Hedging
0
Level 2
Total current financial assets
102 137
102 137
Trade and other obligations > 1 year
0
AC
0
Level 2
Financial obligations > 1 year (incl. derivatives)
36 000
AC
36 000
Level 2
Leasing liabilities > 1 year
2 207
AC
2 207
Level 2
Advances received > 1 year
4 830
AC
4 830
Level 2
Total non-current financial liabilities
43 037
43 037
Trade & other obligations < 1 year
Trade payables
23 605
AC
23 605
Level 2
Other payables
11 519
AC
11 519
Level 2
Advances received
11 934
AC
11 934
Level 2
Financial obligations < 1 year
Current portion of amounts payable after one
year
18 000
AC
18 000
Level 2
Financial obligations
12 477
AC
12 477
Level 2
Leasing liabilities < 1 year
484
AC
484
Level 2
Derivatives
1 269
FVTPL
1 269
Level 2
Derivatives
797
Hedge
accounting
797
Level 2
Total current financial liabilities
80 085
80 085
2020 - In KUSD
Carrying
amount
IFRS 9
category
Fair value
Fair value
hierarchy
Financial assets
Other investments
80
AC
80
Level 2
Receivables > 1 year
Other receivables
16 101
AC
16 101
Level 2
Total non-current financial assets
16 180
16 180
Trade and other receivables
Trade receivables
27 731
AC
27 731
Level 2
Other receivables
49 146
AC
49 146
Level 2
Investments
0
Other investments and deposits
0
AC
0
Level 2
Cash and cash equivalents
9 790
AC
9 790
Level 2
Derivatives
0
FVTPL
0
Level 2
Derivatives
0
Hedge
accounting
0
Level 2
Total current financial assets
37 521
37 521
Trade and other obligations > 1 year
0
AC
0
Level 2
Financial obligations > 1 year (incl. derivatives)
54 000
AC
54 000
Level 2
Leasing liabilities > 1 year
2 285
AC
2 285
Level 2
Total non-current financial liabilities
56 285
56 285
Trade & other obligations < 1 year
Trade payables
21 384
AC
21 384
Level 2
Other payables
8 805
AC
8 805
Level 2
Advances received
1 071
AC
1 071
Level 2
Financial obligations < 1 year
Current portion of amounts payable after one
year
18 000
AC
18 000
Level 2
Financial obligations
86 128
AC
86 128
Level 2
Leasing liabilities < 1 year
543
AC
543
Level 2
Derivatives
- 910
FVTPL
- 910
Level 2
Derivatives
1 703
Hedge
accounting
1 703
Level 2
Total current financial liabilities
136 724
136 724
52 The connection to the world of sustainable tropical agriculture
2020 - In KUSD
Carrying
amount
IFRS 9
category
Fair value
Fair value
hierarchy
Financial assets
Other investments
80
AC
80
Level 2
Receivables > 1 year
Other receivables
16 101
AC
16 101
Level 2
Total non-current financial assets
16 180
16 180
Trade and other receivables
Trade receivables
27 731
AC
27 731
Level 2
Other receivables
49 146
AC
49 146
Level 2
Investments
0
Other investments and deposits
0
AC
0
Level 2
Cash and cash equivalents
9 790
AC
9 790
Level 2
Derivatives
0
FVTPL
0
Level 2
Derivatives
0
Hedge
accounting
0
Level 2
Total current financial assets
37 521
37 521
Trade and other obligations > 1 year
0
AC
0
Level 2
Financial obligations > 1 year (incl. derivatives)
54 000
AC
54 000
Level 2
Leasing liabilities > 1 year
2 285
AC
2 285
Level 2
Total non-current financial liabilities
56 285
56 285
Trade & other obligations < 1 year
Trade payables
21 384
AC
21 384
Level 2
Other payables
8 805
AC
8 805
Level 2
Advances received
1 071
AC
1 071
Level 2
Financial obligations < 1 year
Current portion of amounts payable after one
year
18 000
AC
18 000
Level 2
Financial obligations
86 128
AC
86 128
Level 2
Leasing liabilities < 1 year
543
AC
543
Level 2
Derivatives
- 910
FVTPL
- 910
Level 2
Derivatives
1 703
Hedge
accounting
1 703
Level 2
Total current financial liabilities
136 724
136 724
27. Leasing
The Group leases office space, land rights and vehicles under a number of lease agreements with a lease term of one year or more.
The rent of the office buildings concerns the monthly rental payments for the offices in Indonesia. The rent of the offices and ancillary
parking space in Belgium has not been included in the leases due to the short-term exemption. For the land rights the subject of the
lease concerns the usufruct of certain land wherefore a fixed annual rental amount is paid. The remaining land rights in PNG have a
duration of 99 years for which no rental amount is paid. These assets will be depreciated over a period of 25 years in line with the
lifespan of an oil palm. The vehicles concern the limited number of car leases within the Group.
53
SIPEF Financial statements 2021
The future operating lease commitments under these non-cancellable leases are due as follows:
In KUSD
2021
2020
Current lease liabilities
484
543
Non-current lease liabilities
2 207
2 285
Total lease liability as at 31 December
2 691
2 828
The movement during the year of the lease liability can be summarised as follows:
In KUSD
2021
2020
Lease commitments disclosed as at 1 January
2 828
3 037
Acquisitions
246
129
Financial costs/(income)
220
237
Lease repayments
- 604
- 549
Exchange result
1
- 26
Lease liability recognised as at 31 December
2 691
2 828
The right-of-use assets can be classified as follows:
Movement (in KUSD)
2021
2020
Total right-of-use assets as at 1 January
2.757
2 895
Acquisition
246
122
Depreciation
-417
- 387
Other
0
127
Total right-of-use assets as at 31 December
2 587
2 757
Land rights
Office rent
Car rent
Total
Total right-of-use assets as at 31 December 2020
958
1 493
306
2 757
Total right-of-use assets as at 31 December 2021
893
1 281
413
2 587
The total depreciation of the right-of-use assets until 31 December 2021 amounts to KUSD 417 and the financial charges to KUSD
216. Of the depreciation, KUSD 66 was recorded in the cost of sales of the palm segment of Papua New Guinea and KUSD 351
KUSD in the "general and administrative expenses".
28. RIGHTS AND COMMITMENTS NOT REFLECTED IN THE BALANCE SHEET
Guarantees
No guarantees have been issued by third parties as security for the company’s account and one guarantee has been issued to a third
party for the account of subsidiaries during 2021. A corporate guarantee has been given as part of the share purchase agreement of
Verdant Bioscience Singapore Pte. Ltd. for a total amount of KUSD 6 165 to cover the outstanding liability that Verdant Bioscience
Singapore Pte. Ltd. has to its previous shareholder Sime Darby Berhad. This liability is due in two equal yearly instalments between
May 2022 and May 2023.
In connection to the same share purchase agreement, Verdant Bioscience Singapore Pte. Ltd. has received a bank guarantee for a
total amount of KUSD 1 185 from the new shareholder PT Dharma Satya Nusantara which will be used to provide a loan to Verdant
Bioscience Singapore Pte. Ltd. to repay part (10/52) of the above outstanding liability.
Significant litigation
Nihil
Forward sales
The commitments for the delivery of goods (palm products, rubber, tea, bananas and horticulture) after the year end fall within the
normal delivery period of about 3 months from date of sale. Those sales are not considered as forward sales.
In KUSD
2021
2020
Directors' fees
411
401
Fixed fees
2 213
1 686
Variable fees
321
0
Post-employment benefits
465
456
Other
126
79
Market value vested stock option (on vesting date)
88
0
Total
3 637
2 632
Verdant Bioscience Pte Ltd
PT Timbang Deli
2021
2020
2021
2020
Total sales during the financial year
0
0
0
0
Total purchases during the financial year
0
0
2 265
1 318
Total receivables as per 31 December 2021
8 330
7 800
14
56
Total payables as per 31 December 2021
300
300
263
408
54 The connection to the world of sustainable tropical agriculture
29. RELATED PARTY TRANSACTIONS
Transactions with directors and members of the executive committee
Key management personnel are defined as the directors and the Group’s management committee. The table below shows an
overview of total remuneration received:
In KUSD
2021
2020
Directors' fees
411
401
Fixed fees
2 213
1 686
Variable fees
321
0
Post-employment benefits
465
456
Other
126
79
Market value vested stock option (on vesting date)
88
0
Total
3 637
2 632
The amounts are paid in EUR. The amount paid in 2021 amounts to KEUR 3 084 (2020: KEUR 2 297). The increase of KEUR 787 is
a consequence of a higher variable fee paid in 2021 compared to 2020 and an additional member in the executive committee.
Starting from the financial year 2007 fixed fees shall be paid to the members of the board of directors, the audit committee and the
remuneration committee.
Related party transactions are considered immaterial, except for the rental agreement since 1985 between Cabra NV and SIPEF
covering the offices and ancillary parking space at Castle Calesberg in Schoten. The annual rent, adjusted for inflation, amounts to
KUSD 208 (2020 KUSD 196) and KUSD 84 (2020 KUSD 80) is invoiced for SIPEF’s share of maintenance of the buildings, parking
space and park area.
SIPEF's relations with board members and management committee members are covered in detail in the “Corporate Governance
statement” section.
Other related party transactions
Transactions with related companies are mainly trade transactions and are priced at arms’ length. The revenue and expenses related
to these transactions are immaterial to the consolidated financial statements as a whole.
Transactions with group companies
Balances and transactions between the Group and its subsidiaries which are related parties of the Group have been eliminated in the
consolidation and are not disclosed in this note. Details of transactions between the Group and other related parties are disclosed
below.
The following table represents the total of the transactions that have occurred during the financial year between the Group and the
joint venture PT Timbang Deli and Verdant Bioscience Pte Ltd at 100%:
Verdant Bioscience Pte Ltd
PT Timbang Deli
2021
2020
2021
2020
Total sales during the financial year
0
0
0
0
Total purchases during the financial year
0
0
2 265
1 318
Total receivables as per 31 December 2021
8 330
7 800
14
56
Total payables as per 31 December 2021
300
300
263
408
30. Business combinations, acquisitions and divestures
Sale of PT Melania
SIPEF has signed a sale and purchase agreement with Shamrock Group (SG) on the sale of 100% of the share capital of its
Indonesian subsidiary, PT Melania. SG is an Indonesian group that runs several rubber plantations and factories, and specialises in
the production and sale of latex gloves. SIPEF controls 95% of PT Melania through its Indonesian 95% subsidiary, PT Tolan Tiga,
the remaining 5% being owned by an Indonesian pension fund.
As a reminder, PT Melania owns half of the Group’s Indonesian rubber operations in Sumatra and the entire tea operations in Java.
Initially, 40% of the shares were sold for a payment of USD 19 million. After this first stage the Shamrock Group has taken over the
management of the rubber activities. The second tranche of 60% of the shares (of which 55% are held by SIPEF) will be transferred
no later than 2024 for USD 17 million, after the renewal of the permanent concession rights (HGU) for the whole of the rubber and
tea business. The gross transaction price for 100% of the shares is USD 36 million.
55
SIPEF Financial statements 2021
The final net sale price and any capital gain on the sale of PT Melania will depend largely on the timing and the cost of renewing the
permanent concession rights (HGU) and on the compensation for the accumulated social rights of the employed personnel, who will
presumably be taken over almost entirely. The gain on the sale of PT Melania may be adjusted going forward depending on revision
of the estimate of these costs in the future.
SIPEF has made a best estimate of the costs related to the sale of PT Melania. Below we present the calculation of the net selling
price.
In KUSD
Selling price
Total amount to be received
36 000
Estimated costs related to the sale
-11 418
Net selling price (100% of the shares)
24 582
Net selling price for 95%
23 353
Of which
40% of the shares
9 833
55% of the shares
13 520
Upon signing of the SPA, SIPEF has lost full control of PT Melania. Subsequently, PT Melania has been accounted for as a joint
venture held for sale on 30 April 2021. The assets and liabilities of PT Melania have been measured at fair value, equaling the net
selling price of KUSD 23 353.
The results of PT Melania have been included in the share of results of associated companies and joint ventures for the first four
months of 2021. As from 30 April 2021, the results of PT Melania are no longer included in the consolidated profit and loss of the
SIPEF group as PT Melania is classified as a joint venture held for sale.
The classification as a joint venture held for sale, including subsequent remeasurement at fair value, and sale of 40% of the shares
of PT Melania has the following impact on the balance sheet and profit and loss accounts of the SIPEF group:
In KUSD
30/04/2021
Sale of 40%
Payments during 2021
Total impact
Assets
Non-current assets
-17 319
-17 319
Assets held for sale
23 353
-9 833
13 520
Current assets
- 170
- 170
Cash and cash equivalents
- 1
19 000
-1 922
17 077
Total assets
5 864
9 167
-1 922
13 109
Liabilities
Currency translation adjustments
1 091
1 091
Minorities
- 559
- 559
Non-current liabilities
-5 833
-5 833
Non-current liabilities - advances received
4 830
4 830
Current liabilities - advances received
4 337
-1 922
2 415
Current liabilities
- 475
- 475
Total liabilities
-5 776
9 167
-1 922
1 469
Profit and loss
Other operating income/(charges)
11 640
11 640
Of which:
Share of the group
11 003
11 003
Minorities
637
637
Total
11 640
0
0
11 640
Upon classification as joint venture as held for sale, a capital gain of KUSD 11 640 is realised, being the difference between the net
selling price for 95% of the shares (KUSD 23 353) and the value of the net assets of PT Melania in the consolidated financial
statements of the SIPEF group (KUSD 11 713).
The sale of 40% of the shares of PT Melania for KUSD 19 000 has been recorded as a sale of 40% the value of the assets held for
sale (KUSD 9 833) and as advances received (KUSD 9 167). Since the transfer of shares, there was a deduction for the amounts
From continuing operations
2021
2020
Basic earnings per share
Basic earnings per share - calculation (USD)
9.00
1.36
Basic earnings per share is calculated as follows:
Numerator: net result for the period attributable to ordinary shareholders (KUSD)
93 749
14 122
Denominator: the weighted average number of ordinary shares outstanding
10 418 431
10 419 328
The weighted average number of ordinary shares outstanding is calculated as follows:
Number of ordinary shares outstanding at January 1
10 419 328
10 419 328
Effect of shares issued / share buyback programs
- 897
0
Effect of the capital increase
0
0
The weighted average number of ordinary shares outstanding at December 31
10 418 431
10 419 328
Diluted earnings per share
Diluted earnings per share - calculation (USD)
8.99
1.36
The diluted earnings per share is calculated as follows:
Numerator: net result for the period attributable to ordinary shareholders (KUSD)
93 749
14 122
Denominator: the weighted average number of dilutive ordinary shares outstanding
10 422 490
10 420 091
The weighted average number of dilutive ordinary shares outstanding is calculated as follows:
The weighted average number of ordinary shares outstanding at December 31
10 418 431
10 419 328
Effect of stock options on issue
4 059
763
The weighted average number of dilutive ordinary shares outstanding at December 31
10 422 490
10 420 091
56 The connection to the world of sustainable tropical agriculture
paid for the renewal of the concession rights, pension payments and the financing of the tea activities (KUSD 1 922). Of the total
remaining advance of KUSD 7 245, KUSD 2 415 is expected to be used within the year and KUSD 4 830 to be used after more than
one year.
Total cash received (KUSD 17 077) is included in the cash flow as part of the proceeds from sales of financial assets (KUSD 24 708).
The remaining amount on the proceeds from sales of financial assets (KUSD 7 631) relates to the final payment received for the sale
of the shares of Sipef-CI.
31. EARNINGS PER SHARE (BASIC AND DILUTED)
From continuing operations
2021
2020
Basic earnings per share
Basic earnings per share - calculation (USD)
9.00
1.36
Basic earnings per share is calculated as follows:
Numerator: net result for the period attributable to ordinary shareholders (KUSD)
93 749
14 122
Denominator: the weighted average number of ordinary shares outstanding
10 418 431
10 419 328
The weighted average number of ordinary shares outstanding is calculated as follows:
Number of ordinary shares outstanding at January 1
10 419 328
10 419 328
Effect of shares issued / share buyback programs
- 897
0
Effect of the capital increase
0
0
The weighted average number of ordinary shares outstanding at December 31
10 418 431
10 419 328
Diluted earnings per share
Diluted earnings per share - calculation (USD)
8.99
1.36
The diluted earnings per share is calculated as follows:
Numerator: net result for the period attributable to ordinary shareholders (KUSD)
93 749
14 122
Denominator: the weighted average number of dilutive ordinary shares outstanding
10 422 490
10 420 091
The weighted average number of dilutive ordinary shares outstanding is calculated as follows:
The weighted average number of ordinary shares outstanding at December 31
10 418 431
10 419 328
Effect of stock options on issue
4 059
763
The weighted average number of dilutive ordinary shares outstanding at December 31
10 422 490
10 420 091
32. EVENTS AFTER THE BALANCE SHEET DATE
The war between Russia and Ukraine that started on 24 February 2022 radically changed the geopolitical landscape. This war is
having a tremendous effect on (agricultural) commodities. Ukraine is the world’s largest sunflower seed producer, as well as the top
sunflower oil exporter. It was also expected to rank No. 3 in rapeseed and wheat exports this season. The ports are closed and hardly
any products are being exported. As a result, many prices of staple food commodities have rallied strongly, further fuelling food price
inflation.
Normally, the planting season for the new crops commences late March to early April; however, this will be strongly impacted for as
long as the war continues. The duration of this war will determine its short- and medium-term impacts on agricultural commodities,
although it is almost a certainty that there will be shortages for the time being. Agricultural commodity prices will stay strong for the
foreseeable future.
In light of this war, the Group confirms that it has no activities with parties in Ukraine, Russia or Belarus, nor are there assets receivable
relating to these regions at 31 December 2021. The Group does not do business with any parties included on the sanctions list at the
date of publishing.
33. SERVICES PROVIDED BY THE AUDITOR AND RELATED FEES
The statutory auditor of the SIPEF group is EY Bedrijfsrevisoren BV represented by Wim Van Gasse and Christoph Oris.
The fees for the annual report of SIPEF were approved by the general meeting after review and approval of the audit committee and
by the board of directors. These fees correspond to an amount of KUSD 118 (against KUSD 95 last year for Deloitte). For the Group,
EY has provided services for KUSD 577 in 2021 (against KUSD 419 the year before for Deloitte), of which KUSD 0 (2020: KUSD 20
for Deloitte) are for non-audit services.
57
SIPEF Financial statements 2021
34. Covid-19
SIPEF continued its comprehensive programme to vaccinate against covid-19 its employees and their dependents free of charge. In
Indonesia, where around 47% of the national population had been fully vaccinated, SIPEF made the most progress: 92% of the SIPEF
employees and dependents had been double-vaccinated against covid-19 by November 2021. A booster programme will begin in
2022.
In Ivory Coast, 45% of employees had been double-vaccinated and 15% had received a single dose. Due to limited vaccine availability
the programme could not be continued and the number of vaccinated employees therefore remained the same in the last quarter of
2021. Nevertheless, with only 8.2% of the national population in Ivory Coast having been fully vaccinated, SIPEF believes its
programme made a positive contribution. The Group will continue its programme in 2022, when more supply becomes available.
In Papua New Guinea, SIPEF has focused on providing clear information and establishing supporting policies. More time will be
needed to allow vaccine confidence to grow in order to increase the vaccination rate, which is currently below 10% of the targeted
number. Lack of confidence may also partly explain the low vaccination rate at a national level, with only 2.5% of the country having
been fully vaccinated as at December 2021.
58 The connection to the world of sustainable tropical agriculture
Besloten vennootschap
Société à responsabilité limitée
RPR Brussel
- RPM Bruxelles - BTW-TVA BE0446.334.711-IBAN N° BE71 2100 9059 0069
*handelend in naam van een vennootschap:/agissant au nom d'une société
A member firm of Ernst & Young Global Limited
EY Bedrijfsrevisoren
EY Réviseurs d’Entreprises
Borsbeeksebrug 26
B - 2600 Antwerpen (Berchem)
Tel: +32 (0) 3 270 12 00
ey.com
Independent auditor’s report to the general meeting of SIPEF NV for the
year ended 31 December 2021
As required by law and the Company’s articles of association, we report to you as statutory auditor of
SIPEF NV (the “Company”) and its subsidiaries (together the “Group”). This report includes our opinion
on the consolidated balance sheet as at 31 December 2021, the consolidated income statement, the
statement of consolidated comprehensive income, the consolidated cash flow statement and statement
of changes in consolidated equity for the year ended 31 December 2021 and the disclosures (all
elements together the “Consolidated Financial Statements”) as well as our report on other legal and
regulatory requirements. These two reports are considered one report and are inseparable.
We have been appointed as statutory auditor by the shareholders’ meeting of 9 June 2021, in
accordance with the proposition by the Board of Directors following recommendation of the Audit
Committee. Our mandate expires at the shareholders’ meeting that will deliberate on the Consolidated
Financial Statements for the year ending 31 December 2023. We performed the audit of the
Consolidated Financial Statements of the Group for one year.
Report on the audit of the Consolidated Financial Statements
Unqualified opinion
We have audited the Consolidated Financial
Statements of SIPEF NV, that comprise of the
consolidated balance sheet on 31 December
2021, the consolidated income statement, the
statement of consolidated comprehensive income
and the consolidated cash flow statement of the
year and the disclosures, which show a
consolidated balance sheet total of USD 991.765
thousand and of which the consolidated income
statement shows a profit for the year of
USD 99.471 thousand.
In our opinion, the Consolidated Financial
Statements give a true and fair view of the
consolidated net equity and financial position as
at 31 December 2021, and of its consolidated
results for the year then ended, prepared in
accordance with the International Financial
Reporting Standards as adopted by the European
Union (“IFRS”) and with applicable legal and
regulatory requirements in Belgium.
Basis for the unqualified opinion
We conducted our audit in accordance with
International Standards on Auditing (“ISAs”). Our
responsibilities under those standards are further
described in the “Our responsibilities for the audit
of the Consolidated Financial Statements” section
of our report.
We have complied with all ethical requirements
that are relevant to our audit of the Consolidated
Financial Statements in Belgium, including those
with respect to independence.
We have obtained from the Board of Directors
and the officials of the Company the explanations
and information necessary for the performance of
our audit and we believe that the audit evidence
we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Other matters
The consolidated financial statements of Sipef NV
for the year ended 31 December 2020, were
audited by another auditor who expressed an
unqualified opinion on those statements on 19
April 2021.
Key audit matters
Key audit matters are those matters that, in our
professional judgment, were of most significance
in our audit of the Consolidated Financial
Statements of the current reporting period.
These matters were addressed in the context of
our audit of the Consolidated Financial
Statements as a whole and in forming our opinion
thereon, and consequently we do not provide a
separate opinion on these matters.
Statutory auditor’s report on consolidated financial statements
59
SIPEF Financial statements 2021
Audit report dated 27 April 2022 on the Consolidated Financial Statements
of SIPEF NV as of and
for the year ended 31 December 2021 (continued)
2
Impairment assessment of goodwill
Description of the key audit matter
The goodwill amounts to USD 104.782 thousand
as at 31 December 2021, and relates to the palm
oil segment in Indonesia and Papua New Guinea.
Goodwill must be tested for impairment on at
least an annual basis. The determination of
recoverable amount requires judgement from
management in both identifying and then valuing
the relevant single Cash Generating Units.
As disclosed in note [8] – Goodwill and Other
intangible assets of the Consolidated Financial
Statements, the recoverable value was
determined by using a discounted cash flow model
to determine the value in use. The cash flow
model estimates the relevant cash flows expected
to be generated in the future, and discounted to
the present value using a discount rate
approximating the weighted average cost of
capital. This estimation requires the management
to use of a number of variables and market
conditions such as future prices and volume
growth rates, the timing of future operating
expenditure, and the discount and long term
growth rates. As a consequence the determination
of the recoverable value is subjective in nature
due to judgements to be made by management of
future performance of the palm oil segment.
The key assumptions used in determining the
estimated value in use are the expected long term
crude palm oil price and the weighted average
cost of capital. Changes in certain assumptions
used in the model can lead to significant changes
in the assessment of the recoverable amount. of.
This matter has been considered as a key audit
matter due to the level of judgment required in
these estimates.
Summary of the procedures performed
• We obtained an understanding of
management’s review process of the discounted
cash flow model used and the approval by the
board of the underlying business plan.
• We assessed the determination of the CGU’s
based on our understanding of the nature of the
Company and their operations, and assessed
whether this is consistent with the internal
reporting of the business;
• We evaluated the appropriateness of the
discounted cash flow model used in determining
the value in use of the CGU, as well as assessing
the weighted cost of capital rate used;
• We compared the cash flow forecasts to
approved budgets and other relevant market and
economic information, as well as testing the
underlying calculations;
• We evaluated management’s key
assumptions used in the impairment calculations;
• We assessed the analysis made by
management in respect of sensitivity of the value
in use to changes in the assumptions used within
the model;
• We independently performed sensitivity
analyses around the key assumptions used in the
discounted cash flow model and we assessed the
robustness of the budgeting process by
management and we verified if the future cash
flows were based on the approved business plan
by the board;
• We reviewed the adequacy of the
disclosures in the note [8] – Goodwill and Other
intangible assets of the Consolidated Financial
Statements concerning those key assumptions.
Recoverability of the deferred tax assets
Description of the key audit matter
The deferred tax assets recognized amount to
USD 10.226 thousand as at 31 December 2021
on unutilized cumulative tax losses carried
forward. The recognition of deferred tax assets
entails a significant level of judgement by the
Board in assessing the quantification, probability
and sufficiency of future taxable profits against
which they may be offset and future reversals of
existing taxable temporary differences. Due to
the judgement required of the Board in
interpreting the criteria set forth in local tax
legislations in force and the risk that may arise
from a different interpretation of such
legislations, as well as the uncertainty associated
with recovering the amounts recognized as
deferred tax assets and the expected recovery
period, we consider this to be a key audit matter.
Summary of the procedures performed
• We obtained an understanding of the
internal controls associated with the process of
estimating the recoverability of the deferred tax
assets;
60 The connection to the world of sustainable tropical agriculture
Audit report dated 27 April 2022 on the Consolidated Financial Statements
of SIPEF NV as of and
for the year ended 31 December 2021 (continued)
2
Impairment assessment of goodwill
Description of the key audit matter
The goodwill amounts to USD 104.782 thousand
as at 31 December 2021, and relates to the palm
oil segment in Indonesia and Papua New Guinea.
Goodwill must be tested for impairment on at
least an annual basis. The determination of
recoverable amount requires judgement from
management in both identifying and then valuing
the relevant single Cash Generating Units.
As disclosed in note [8] – Goodwill and Other
intangible assets of the Consolidated Financial
Statements, the recoverable value was
determined by using a discounted cash flow model
to determine the value in use. The cash flow
model estimates the relevant cash flows expected
to be generated in the future, and discounted to
the present value using a discount rate
approximating the weighted average cost of
capital. This estimation requires the management
to use of a number of variables and market
conditions such as future prices and volume
growth rates, the timing of future operating
expenditure, and the discount and long term
growth rates. As a consequence the determination
of the recoverable value is subjective in nature
due to judgements to be made by management of
future performance of the palm oil segment.
The key assumptions used in determining the
estimated value in use are the expected long term
crude palm oil price and the weighted average
cost of capital. Changes in certain assumptions
used in the model can lead to significant changes
in the assessment of the recoverable amount. of.
This matter has been considered as a key audit
matter due to the level of judgment required in
these estimates.
Summary of the procedures performed
• We obtained an understanding of
management’s review process of the discounted
cash flow model used and the approval by the
board of the underlying business plan.
• We assessed the determination of the CGU’s
based on our understanding of the nature of the
Company and their operations, and assessed
whether this is consistent with the internal
reporting of the business;
• We evaluated the appropriateness of the
discounted cash flow model used in determining
the value in use of the CGU, as well as assessing
the weighted cost of capital rate used;
• We compared the cash flow forecasts to
approved budgets and other relevant market and
economic information, as well as testing the
underlying calculations;
• We evaluated management’s key
assumptions used in the impairment calculations;
• We assessed the analysis made by
management in respect of sensitivity of the value
in use to changes in the assumptions used within
the model;
• We independently performed sensitivity
analyses around the key assumptions used in the
discounted cash flow model and we assessed the
robustness of the budgeting process by
management and we verified if the future cash
flows were based on the approved business plan
by the board;
• We reviewed the adequacy of the
disclosures in the note [8] – Goodwill and Other
intangible assets of the Consolidated Financial
Statements concerning those key assumptions.
Recoverability of the deferred tax assets
Description of the key audit matter
The deferred tax assets recognized amount to
USD 10.226 thousand as at 31 December 2021
on unutilized cumulative tax losses carried
forward. The recognition of deferred tax assets
entails a significant level of judgement by the
Board in assessing the quantification, probability
and sufficiency of future taxable profits against
which they may be offset and future reversals of
existing taxable temporary differences. Due to
the judgement required of the Board in
interpreting the criteria set forth in local tax
legislations in force and the risk that may arise
from a different interpretation of such
legislations, as well as the uncertainty associated
with recovering the amounts recognized as
deferred tax assets and the expected recovery
period, we consider this to be a key audit matter.
Summary of the procedures performed
• We obtained an understanding of the
internal controls associated with the process of
estimating the recoverability of the deferred tax
assets;
Audit report dated 27 April 2022 on the Consolidated Financial Statements
of SIPEF NV as of and
for the year ended 31 December 2021 (continued)
3
• We assessed the reasonableness of the
criteria and the main assumptions considered by
management in estimating the future taxable
profits necessary for offset;
• We involved local tax experts in Indonesia
and Papua New Guinea to understand potential
impacts of local tax regulations on the criteria
used by management to determine the
recoverability of the deferred tax assets;
• We compared the profit and loss forecasts
used as a basis for recognizing tax losses with the
actual results obtained and evaluated the
reasonableness of the time period in which
management expects to offset these assets;
• We agreed the profit and loss forecasts
used as a basis for recognizing tax losses with the
approved budgets;
• We assessed whether the information
disclosed in note [23] – Income taxes of the
Consolidated Financial Statements on the
recoverability of the aforementioned deferred tax
assets meets the requirements of the applicable
financial reporting framework.
Gain on sale transaction PT Melania
Description of the key audit matter
As disclosed in note 30 of the Consolidated
Financial Statements, PT Melania is
deconsolidated due to the loss of control at the
end of April 2021, when SIPEF and the Shamrock
Group entered into a conditional sale and
purchase agreement of the shares of PT Melania.
As a result, PT Melania has been accounted for as
a joint venture held for sale since 30 April 2021.
The assets and liabilities of PT Melania have been
measured at fair value, equaling the net selling
price of USD 23.353 thousand of which 55% is
still retained in the balance sheet as assets held
for sale per 31 December 2021 or USD 13.520
thousand.
The sale and purchase agreement includes several
key terms and conditions around future expenses
still to be covered by SIPEF to fulfill conditions
precedent. Significant judgments and estimates
had to be made by management to determine
those expected future costs included in the
measurement of the fair value of the assets held
for sale. The final net sale price and any capital
gain on the sale of PT Melania depends largely on
the cost and timing of renewing the permanent
land rights and on the compensation for the
accumulated social rights of the employed
personnel. The gain on the sale of PT Melania may
need to be adjusted after 31 December 2021 and
going forward depending on revision of the
estimate of these costs in the future.
Summary of the procedures performed
• We have read the sales agreement to gain
an understanding of the key terms and conditions
of the transaction;
• We evaluated whether the proper
accounting treatment was applied for the
transaction (recognition of the gain, presentation
as held for sale at year-end);
• We assessed the estimation of the net
selling price as calculated by the management
including assessment of the significant
judgements and estimates made by management
in evaluating certain key terms and conditions
such as certain expenses still to be covered by
SIPEF to fulfill the conditions precedent;
• We assessed the appropriateness of the
financial information disclosed in the note 30 to
the Consolidated Financial Statements concerning
this transaction.
Responsibilities of the Board of Directors
for the preparation of the Consolidated
Financial Statements
The Board of Directors is responsible for the
preparation of the Consolidated Financial
Statements that give a true and fair view in
accordance with IFRS and with applicable legal
and regulatory requirements in Belgium and for
such internal controls relevant to the preparation
of the Consolidated Financial Statements that are
free from material misstatement, whether due to
fraud or error.
As part of the preparation of Consolidated
Financial Statements, the Board of Directors is
responsible for assessing the Company’s ability to
continue as a going concern, and provide, if
applicable, information on matters impacting
going concern, The Board of Directors should
prepare the financial statements using the going
concern basis of accounting, unless the Board of
Directors either intends to liquidate the Company
or to cease business operations, or has no realistic
alternative but to do so.
61
SIPEF Financial statements 2021
Audit report dated 27 April 2022 on the Consolidated Financial Statements
of SIPEF NV as of and
for the year ended 31 December 2021 (continued)
4
Our responsibilities for the audit of the
Consolidated Financial Statements
Our objectives are to obtain reasonable assurance
whether the Consolidated Financial Statements
are free from material misstatement, whether due
to fraud or error, and to express an opinion on
these Consolidated Financial Statements based on
our audit. Reasonable assurance is a high level of
assurance, but not a guarantee that an audit
conducted in accordance with the ISAs will always
detect a material misstatement when it exists.
Misstatements can arise from fraud or error and
considered material if, individually or in the
aggregate, they could reasonably be expected to
influence the economic decisions of users taken
on the basis of these Consolidated Financial
Statements.
In performing our audit, we comply with the legal,
regulatory and normative framework that applies
to the audit of the Consolidated Financial
Statements in Belgium. However, a statutory
audit does not provide assurance about the future
viability of the Company and the Group, nor
about the efficiency or effectiveness with which
the board of directors has taken or will undertake
the Company's and the Group’s business
operations. Our responsibilities with regards to
the going concern assumption used by the board
of directors are described below.
As part of an audit in accordance with ISAs, we
exercise professional judgment and we maintain
professional skepticism throughout the audit. We
also perform the following tasks:
• identification and assessment of the risks of
material misstatement of the Consolidated
Financial Statements, whether due to fraud or
error, the planning and execution of audit
procedures to respond to these risks and
obtain audit evidence which is sufficient and
appropriate to provide a basis for our opinion.
The risk of not detecting material
misstatements resulting from fraud is higher
than when such misstatements result from
errors, since fraud may involve collusion,
forgery, intentional omissions,
misrepresentations, or the override of
internal control;
• obtaining insight in the system of internal
controls that are relevant for the audit and
with the objective to design audit procedures
that are appropriate in the circumstances, but
not for the purpose of expressing an opinion
on the effectiveness of the Company’s
internal control;
• evaluating the selected and applied
accounting policies, and evaluating the
reasonability of the accounting estimates and
related disclosures made by the Board of
Directors as well as the underlying
information given by the Board of Directors;
• conclude on the appropriateness of the Board
of Directors’ use of the going-concern basis of
accounting, and based on the audit evidence
obtained, whether or not a material
uncertainty exists related to events or
conditions that may cast significant doubt on
the Company’s or Group’s ability to continue
as a going concern. If we conclude that a
material uncertainty exists, we are required to
draw attention in our auditor’s report to the
related disclosures in the Consolidated
Financial Statements or, if such disclosures
are inadequate, to modify our opinion. Our
conclusions are based on audit evidence
obtained up to the date of the auditor’s
report. However, future events or conditions
may cause the Company to cease to continue
as a going-concern;
• evaluating the overall presentation, structure
and content of the Consolidated Financial
Statements, and evaluating whether the
Consolidated Financial Statements reflect a
true and fair view of the underlying
transactions and events.
We communicate with the Audit Committee within
the Board of Directors regarding, among other
matters, the planned scope and timing of the
audit and significant audit findings, including any
significant deficiencies in internal control that we
identify during our audit.
Because we are ultimately responsible for the
opinion, we are also responsible for directing,
supervising and performing the audits of the
subsidiaries. In this respect we have determined
the nature and extent of the audit procedures to
be carried out for group entities.
We provide the Audit Committee within the Board
of Directors with a statement that we have
complied with relevant ethical requirements
regarding independence, and to communicate
62 The connection to the world of sustainable tropical agriculture
Audit report dated 27 April 2022 on the Consolidated Financial Statements
of SIPEF NV as of and
for the year ended 31 December 2021 (continued)
4
Our responsibilities for the audit of the
Consolidated Financial Statements
Our objectives are to obtain reasonable assurance
whether the Consolidated Financial Statements
are free from material misstatement, whether due
to fraud or error, and to express an opinion on
these Consolidated Financial Statements based on
our audit. Reasonable assurance is a high level of
assurance, but not a guarantee that an audit
conducted in accordance with the ISAs will always
detect a material misstatement when it exists.
Misstatements can arise from fraud or error and
considered material if, individually or in the
aggregate, they could reasonably be expected to
influence the economic decisions of users taken
on the basis of these Consolidated Financial
Statements.
In performing our audit, we comply with the legal,
regulatory and normative framework that applies
to the audit of the Consolidated Financial
Statements in Belgium. However, a statutory
audit does not provide assurance about the future
viability of the Company and the Group, nor
about the efficiency or effectiveness with which
the board of directors has taken or will undertake
the Company's and the Group’s business
operations. Our responsibilities with regards to
the going concern assumption used by the board
of directors are described below.
As part of an audit in accordance with ISAs, we
exercise professional judgment and we maintain
professional skepticism throughout the audit. We
also perform the following tasks:
• identification and assessment of the risks of
material misstatement of the Consolidated
Financial Statements, whether due to fraud or
error, the planning and execution of audit
procedures to respond to these risks and
obtain audit evidence which is sufficient and
appropriate to provide a basis for our opinion.
The risk of not detecting material
misstatements resulting from fraud is higher
than when such misstatements result from
errors, since fraud may involve collusion,
forgery, intentional omissions,
misrepresentations, or the override of
internal control;
• obtaining insight in the system of internal
controls that are relevant for the audit and
with the objective to design audit procedures
that are appropriate in the circumstances, but
not for the purpose of expressing an opinion
on the effectiveness of the Company’s
internal control;
• evaluating the selected and applied
accounting policies, and evaluating the
reasonability of the accounting estimates and
related disclosures made by the Board of
Directors as well as the underlying
information given by the Board of Directors;
• conclude on the appropriateness of the Board
of Directors’ use of the going-concern basis of
accounting, and based on the audit evidence
obtained, whether or not a material
uncertainty exists related to events or
conditions that may cast significant doubt on
the Company’s or Group’s ability to continue
as a going concern. If we conclude that a
material uncertainty exists, we are required to
draw attention in our auditor’s report to the
related disclosures in the Consolidated
Financial Statements or, if such disclosures
are inadequate, to modify our opinion. Our
conclusions are based on audit evidence
obtained up to the date of the auditor’s
report. However, future events or conditions
may cause the Company to cease to continue
as a going-concern;
• evaluating the overall presentation, structure
and content of the Consolidated Financial
Statements, and evaluating whether the
Consolidated Financial Statements reflect a
true and fair view of the underlying
transactions and events.
We communicate with the Audit Committee within
the Board of Directors regarding, among other
matters, the planned scope and timing of the
audit and significant audit findings, including any
significant deficiencies in internal control that we
identify during our audit.
Because we are ultimately responsible for the
opinion, we are also responsible for directing,
supervising and performing the audits of the
subsidiaries. In this respect we have determined
the nature and extent of the audit procedures to
be carried out for group entities.
We provide the Audit Committee within the Board
of Directors with a statement that we have
complied with relevant ethical requirements
regarding independence, and to communicate
Audit report dated 27 April 2022 on the Consolidated Financial Statements
of SIPEF NV as of and
for the year ended 31 December 2021 (continued)
5
with them all relationships and other matters that
may reasonably be thought to bear on our
independence, and where applicable, related
safeguards.
From the matters communicated with the Audit
Committee within the Board of Directors, we
determine those matters that were of most
significance in the audit of the Consolidated
Financial Statements of the current period and
are therefore the key audit matters. We describe
these matters in our report, unless the law or
regulations prohibit this.
Report on other legal and regulatory requirements
Responsibilities of the Board of Directors
The Board of Directors is responsible for the
preparation and the content of the Board of
Directors’ report on the Consolidated Financial
Statements.
Responsibilities of the auditor
In the context of our mandate and in accordance
with the additional standard to the ISAs applicable
in Belgium, it is our responsibility to verify, in all
material respects, the Board of Directors’ report
on the Consolidated Financial Statements, the
non-financial information attached to the Board
of Directors’ report, as well as to report on these
matters.
Aspects relating to Board of Directors’
report
In our opinion, after carrying out specific
procedures on the Board of Directors’ report, the
Board of Directors’ report is consistent with the
Consolidated Financial Statements and has been
prepared in accordance with article 3:32 of the
Code of companies and associations.
In the context of our audit of the Consolidated
Financial Statements, we are also responsible to
consider whether, based on the information that
we became aware of during the performance of
our audit, the Board of Directors’ report contains
any material inconsistencies or contains
information that is inaccurate or otherwise
misleading. In light of the work performed, there
are no material inconsistencies to be reported.
The non–financial information required by article
3:32, § 2, of the Code of companies and
associations has been included in the Board of
Directors’ report on the Consolidated Financial
Statements. The Company has prepared this non-
financial information based on GRI Standards
(“GRI”). However, we do not comment on whether
this non-financial information has been prepared,
in all material respects, in accordance with GRI.
Independence matters
Our audit firm and our network have not
performed any services that are not compatible
with the audit of the Consolidated Financial
Statements and have remained independent of
the Company during the course of our mandate.
No additional services, that are compatible with
the audit of the Consolidated Financial
Statements as referred to in Article 3:65 of the
Code of companies and associations and for which
fees are due, have been carried out.
European single electronic format
(“ESEF”)
In accordance with the standard on the audit of
the conformity of the financial statements with
the European single electronic format
(hereinafter "ESEF"), we have carried out the
audit of the compliance of the ESEF format with
the regulatory technical standards set by the
European Delegated Regulation No 2019/815 of
17 December 2018 (hereinafter: "Delegated
Regulation").
The board of directors is responsible for the
preparation, in accordance with the ESEF
requirements, of the consolidated financial
statements in the form of an electronic file in
ESEF format (hereinafter 'the digital consolidated
financial statements') included in the annual
financial report available on the portal of the
FSMA (https://www.fsma.be/en/data-portal).
It is our responsibility to obtain sufficient and
appropriate supporting evidence to conclude that
the format and markup language of the digital
consolidated financial statements comply in all
material respects with the ESEF requirements
under the Delegated Regulation.
63
SIPEF Financial statements 2021
Audit report dated 27 April 2022 on the Consolidated Financial Statements
of SIPEF NV as of and
for the year ended 31 December 2021 (continued)
6
Based on the work performed by us, we conclude
that the format and tagging of information in the
digital consolidated financial statements of SIPEF
NV per 31 December 2021 included in the annual
financial report available on the portal of the
FSMA (https://www.fsma.be/en/data-portal) are,
in all material respects, in accordance with the
ESEF requirements under the Delegated
Regulation.
Other communications.
• This report is consistent with our
supplementary declaration to the Audit
Committee as specified in article 11 of the
regulation (EU) nr. 537/2014.
Antwerp, 27 April 2022
EY Bedrijfsrevisoren BV
Statutory auditor
Represented by
Christoph Oris * Wim Van Gasse*
Partner Partner
*Acting on behalf of a BV/SRL
22CO0091
64 The connection to the world of sustainable tropical agriculture
Audit report dated 27 April 2022 on the Consolidated Financial Statements
of SIPEF NV as of and
for the year ended 31 December 2021 (continued)
6
Based on the work performed by us, we conclude
that the format and tagging of information in the
digital consolidated financial statements of SIPEF
NV per 31 December 2021 included in the annual
financial report available on the portal of the
FSMA (https://www.fsma.be/en/data-portal) are,
in all material respects, in accordance with the
ESEF requirements under the Delegated
Regulation.
Other communications.
• This report is consistent with our
supplementary declaration to the Audit
Committee as specified in article 11 of the
regulation (EU) nr. 537/2014.
Antwerp, 27 April 2022
EY Bedrijfsrevisoren BV
Statutory auditor
Represented by
Christoph Oris * Wim Van Gasse*
Partner Partner
*Acting on behalf of a BV/SRL
22CO0091
65
SIPEF Financial statements 2021
Parent company summarised statutory accounts
The annual accounts of SIPEF are given below in summarized form. In accordance with the Belgian Code on Companies, the annual
accounts of SIPEF, together with the management report and the auditor’s report will be deposited with the National Bank of Belgium.
These documents may also be obtained on request from:
SIPEF, Calesbergdreef 5, B-2900 Schoten
Only the consolidated annual financial statements as set forth in the preceding pages present a true and fair view of the financial
position and performance of the SIPEF-group.
The statutory auditor’s report is unqualified and certifies that the annual accounts of SIPEF NV give a true and fair view of the
company's net equity and financial position as of 31 December 2021 and of its results for the year then ended, in accordance with the
financial reporting framework applicable in Belgium.
The balance sheet total of the company as per 31 December 2021 amounts to KUSD 398 951 compared to KUSD 464 111 in previous
year.
The ‘financial assets – receivables from affiliated companies’ decreased with KUSD -101 700, and at the same time the ‘amounts
receivable within one year’ increased by KUSD 34 075. The ‘receivables from affiliated companies’ have decreased mainly due to the
transfer of KUSD 121 752 to the ‘amounts receivable within one year’. This is offset by an additional funding of KUSD 20 051 to
SIPEF’s Indonesian subsidiaries for expansion. The amount receivable within one year have increased only by KUSD 34 075 because
of the repayments by the subsidiaries of SIPEF following their increased result and cash flow.
On the liabilities side the decrease in creditors (both long term and short term) relate to the repayment of both long term and short
term financial loans following the cash received by SIPEF from its subsidiaries repayments.
The equity of SIPEF before profit appropriation amounts to KUSD 295 218, which corresponds to 27.91 USD per share.
The individual results of SIPEF are large determined by dividends and capital gains/losses. As SIPEF does not directly hold all of the
Group’s participating interest, the consolidated result of the Group is a more accurate reflection of the underlying economic
development.
The statutory profit for the year 2021 amounts to KUSD 34 749 compared to a profit of KUSD 2 222 in the previous year.
On February 15, 2022, a dividend of KEUR 21 159 (EUR 2.00 gross per ordinary share) has been recommended by the board of
directors. After deduction of the withholding tax (30%), the net dividend will amount to EUR 1.40 per share. Since the treasury shares
are not entitled to a dividend in accordance with Article 7:217 §3 of the Code of Companies and Associations, the total dividend
amount depends on the number of treasury shares for account of SIPEF, on June 9, 2022 at 11.59 pm CET (i.e. the day be-fore the
ex-date). The board of directors proposes to be authorised accordingly to enter the final total dividend amount (and the resulting
change) in the statutory financial statements. The maximum proposed total amount is KEUR 21 159. If the annual general meeting
approves this dividend proposal, the dividend will be payable from July 6, 2022.
Taking into account the number of treasury shares held on the date of establishment of the annual report, the Board of Directors
proposes to allocate the result (in KUSD) as follows:
• Profit carried forward from previous year: KUSD 92 445
• Profit of the year: KUSD 34 749
• Total available for appropriation: KUSD 127 194
• Addition to the legal reserve: KUSD 0
• Addition to the other reserves: KUSD - 477
• Dividend: KUSD -23 596
• Result to be carried forward: KUSD 103 121
66 The connection to the world of sustainable tropical agriculture
Condensed balance sheet
(after appropriation)
In KUSD
2021
2020
Assets
Fixed assets
279 081
387 529
Formation expenses
0
0
Intangible assets
348
473
Tangible assets
291
362
Financial assets
278 442
386 694
Current assets
119 870
76 582
Amounts receivable after more than one year
0
9
Stocks and contracts in progress
618
411
Amounts receivable within one year
98 184
64 109
Investments
10 802
8 477
Cash at bank and in hand
9 931
3 223
Other current assets
334
353
Total assets
398 951
464 111
Liabilities
Equity
271 621
260 469
Capital
44 734
44 734
Share premium account
107 970
107 970
Reserves
15 796
15 320
Profit/ (loss) carried forward
103 121
92 445
Provisions and deferred taxation
0
0
Provisions for liabilities and charges
0
0
Creditors
127 330
203 642
Amounts payable after more than one year
36 000
54 000
Amounts payable within one year
91 330
149 608
Accrued charges and deferred income
0
35
Total liabilities
398 951
464 111
67
SIPEF Financial statements 2021
Condensed income statement
In KUSD
2021
2020
Operating income
221 962
150 279
Operating charges
- 219 388
- 149 026
Operating result
2 575
1 253
Financial income
33 958
6 363
Financial charges
- 963
- 5 081
Financial result
32 995
1 282
Result for the period before taxes
35 570
2 535
Income taxes
- 820
- 313
Result for the period
34 749
2 222
Appropriation account
In KUSD
2021
2020
Profit/ (loss) to be appropriated
127 194
97 797
Profit / (loss) for the period available for appropriation
34 749
2 222
Profit / (loss) brought forward
92 445
95 575
Appropriation account
127 194
97 797
Transfers to legal reserve
0
0
Transfers to other reserves
477
879
Result to be carried forward
103 121
92 445
Dividends
23 596
4 472
Remuneration to directors
0
0
68 The connection to the world of sustainable tropical agriculture
ESEF information
ESEF INFORMATION
Homepage of reporting entity
www.sipef.com
LEI code of reporting entity 549300NN3PC8KDD43S24
Name of reporting entity or other means of identification
SIPEF
Domicile of entity
Belgium
Legal form of entity
Naamloze vennootschap
Country of incorporation
Belgium
Address of entity's registered oce
Calesbergdreef 5, 2900 Schoten, Belgium
Principal place of business
Indonesia, Papua New Guinea and Ivory Coast
Description of nature of entity's operations and principal activities
Tropical agriculture
Name of parent entity
SIPEF
Name of ultimate parent of group
SIPEF
Explanation of change in name of reporting entity or other
means of identification from end of preceding reporting period
No change in name of reporting entity
Length of life of limited life entity
Period covered by financial statements
72 The connection to the world of sustainable tropical agriculture
PART 3 - SUSTAINABILITY REPORT
Annual
Report
2021
Contents
About this report ................................................. 2
Managing director statement.....................................4
About SIPEF .....................................................8
Approach to sustainability....................................... 13
Targets and achievements .......................................32
Responsible production and processing .........................38
-- Productivity and quality ........................
.
40
-- Sus
tainability certification progress .............47
-- Climate chang
e ..................................
50
-- No Defores
tation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
-- P
eatlands ........................................
66
-- Biodiv
ersity and conservation . . . . . . . . . . . . . . . . . . . 67
-- Bes
t Management Practices .....................72
-- Respecting human and labour rights ............
.
80
-- Respecting community rights
...................
90
-- Community dev
elopment .......................93
Responsible sourcing and smallholder production...............
96
-- Smallholder engag
ement ........................98
-- Smallholder certification
.......................
105
-- Managing risks in SIPEF
’s supply base .........
106
Responsible business and transparenc
y ........................
108
-- Corporate governance ..........................110
-- Anti-bribery and anti-corrup
tion ................
111
-- EU tax
onomy: Consolidated disclosures
--
pursuant to Art. 8 Taxonomy Regulation ....... 114
Annex .......................................................... 118
Responsible persons ...........................................143
For further information ........................................144
1
SIPEF Sustainability Report 2021
About
this report
SIPEF publishes an Annual Report made up
of three parts: a Company Report (part 1), a
Financial Statement (part 2), and a Sustainability
Report (part 3). The Sustainability Report focus-
es on the environmental, social and governance
performance of the Group, including SIPEF’s sus-
tainability commitments, progress and next steps.
Report scope
The 2021 SIPEF Sustainability Report covers
information and data on the Group’s sustainabil-
ity performance for the financial year 1 January
to 31 December 2021.
The report’s scope includes all the operational
and management activities within the Group:
oil palm, bananas, tea and rubber operations in
Indonesia, Papua New Guinea and Ivory Coast.
1
The main focus of the report is on the Group’s
SIPEF is a Belgian company dedicated to the production of traceable, sustainable and
high-quality agricultural products. Sustainability is at the core of SIPEF’s business model
and the Group has made a top-down commitment to ensuring its activities make a
positive contribution to the environment, society and local economies.
1 Only SIPEF’s horticultural activities have been excluded, as these account for less than 1% of the Group’s revenue.
primary business, oil palm production and palm
products. Another key focus area is on SIPEF’s
second largest business, its banana production.
During 2021, SIPEF commenced its transition
away from the production of tea and rubber.
This is reflected in the scope of this report, with
reduced information and performance data on
SIPEF’s tea and rubber activities. More informa-
tion on this transition is available in part 1 of the
Annual Report (Company Report).
Report framework and content
The report has been prepared taking into account
the GRI Standards. The content and performance
data covered have been expanded from previous
years to align with the requirements of the stand-
ards, as well as the latest materiality assessment
conducted for the SIPEF group (see page 15 for
details). The report also outlines the Group’s
contributions to the United Nations Sustainable
Development Goals (see pages 31 and 122).
2
The connection to the world of sustainable tropical agriculture
Within the wider framework of SIPEF’s Annual
Report 2021, this report (part 3) includes the
non-financial information required by the EU
Non-Financial Reporting Directive, which was
transposed into Belgian law in 2017.
In accordance with the requirements of the
European Commission’s Taxonomy Regulation,
2
SIPEF has assessed the taxonomy-eligibility of
its economic activities for the reporting period
2021 ('Climate change mitigation' and 'Climate
change adaptation').
More details on the EU taxonomy and assessment
results can be found on page 114.
Assurance
SIPEF has not engaged third-party assurance for
the content of this report. However, a significant
portion of the information and data related to the
Group’s environmental and social performance
has been reviewed through certification audits
undertaken to comply with standards such as
the Roundtable on Sustainable Palm Oil (RSPO)
and Rainforest Alliance. The Group is work-
ing towards assurance of future Sustainability
Reports.
This is the sixth Sustainability Report that has
been issued by the Group since 2014. The last
report was published as part 3 of SIPEF’s 2020
Annual Report.
SIPEF’s Annual Reports are made available on
the company website at: www.sipef.com/hq/
investors/annual-reports/
2 European Commission. (Retrieved February 2022). EU taxonomy for sustainable activities. https://ec.europa.eu/info/business-economy-euro/
banking-and-finance/sustainable-finance/eu-taxonomy-sustainable-activities_en
3
SIPEF Sustainability Report 2021 About this report
Managing director
statement
Dear colleagues, partners and stakeholders,
I am pleased to present the SIPEF Sustainability
Report for the financial year 2021, which pro-
vides an overview of the progress the Group has
made in 2021. Reflecting on SIPEF’s sustainability
journey since the last report, I am reminded of
the Company’s purpose: to create value for all of
its stakeholders and be the preferred supplier of
traceable, sustainable, high-quality agricultural
products. It is this purpose that guides SIPEF,
as the Company navigates between remaining
competitive and profitable, and forging the path-
ways to greater economic, environmental and
social prosperity. It is also what drives the Group’s
decisions and actions in a world that continues
to face significant challenges.
In 2021, one of the greatest challenges faced by
us all was the ongoing covid-19 pandemic. The
Group continued its comprehensive programme
of oering the covid-19 vaccination free of charge
to all its employees and their dependents. In each
operation, eorts were made to dedicate signifi-
cant resources to mitigating the risks, including
developing standard operating procedures (SOPs)
to ensure that employees, as well as surrounding
communities, were protected. These actions also
helped to ensure business continuity, including
for the many smallholders in the Group’s supply
chain, who continued to receive an income for
their produce.
As I reflect on this and other challenges – from
climate change to the need for greater trans-
parency in global supply chains – I am certain that
the palm oil industry has a significant role to play
in the global sustainability agenda. Demand for
vegetable oils is forecast to increase significantly
in the years to come, and certified sustainable
palm oil is the best choice to meet that demand,
while reducing pressure on land and creating sus-
tainable livelihoods. Oil palm accounts for just 9%
of the land used to grow vegetable oil crops, yet it
produces 36% of the world’s vegetable oil supply.
Per hectare, it can provide two to eight times more
oil than crops like sunflower, rapeseed, soybean
or corn. Innovative agricultural practices can
lead to even greater productivity. Moreover, the
palm oil industry provides a living for millions
of people and contributes to development in the
rural areas where oil palm is grown. SIPEF is an
upstream player focused on controlled, sustain-
able growth, and I am proud of its commitment
to the production of sustainable palm oil and its
contribution to a more sustainable world.
SIPEF has been evolving and growing its business
sustainably for decades, embracing technological
change and innovation, and focusing on a trans-
parent and long-term, sustainable value chain.
Building on this experience, the Company took
great strides forward in its sustainability activi-
ties in 2021. As SIPEF creates value and returns
for its shareholders, it has set the objective of
contributing to the United Nations Sustainable
Development Goals (SDGs) and driving positive
4 The connection to the world of sustainable tropical agriculture
impacts aligned towards SIPEF’s purpose and
customer expectations. The Group’s material-
ity assessment process has been significantly
strengthened with a new component, to enhance
engagement with stakeholders and align with
the evolving priorities of the wider business and
multi-stakeholder landscapes. This has resulted
in a complete review of the Group’s material sus-
tainability topics. 2022 will be an important year
for review and reflection, particularly with regard
to the Group’s policy framework, sustainability
strategy, and alignment towards environmental,
social and governance requirements, and wider
stakeholder expectations.
I was pleased to once again see SIPEF’s achieve-
ments recognised by several high-profile bench-
marking organisations in 2021. The Group was
ranked fourth out of 350 companies by Forest
500 and ninth out of 100 palm oil companies by
SIPEF was ranked fourth
out of 350 companies by
Forest 500 and ninth out
of 100 palm oil companies
by the Sustainability
Policy Transparency
Toolkit.
5
SIPEF Sustainability Report 2021 Managing director statement
the Sustainability Policy Transparency Toolkit
(SPOTT). SIPEF also maintained its indus-
try-leading commitment to sustainability certi-
fication, achieving 100% compliance with RSPO
criteria for palm oil and 100% Rainforest Alliance
certification for bananas.
Traceability is a fundamental principle of sustain-
ability, and this continued to be one of SIPEF’s
greatest strengths in 2021. All commodities are
fully traceable to their production location, either
an estate managed by SIPEF or a supplier small
-
holder plot. In 2021, the Group’s interactive map-
ping application, Geo SIPEF, was updated with
new features. Users can locate all SIPEF palm
oil mills, kernel crushing plants, rubber and tea
factories, and their respective supply bases, and
they can now also switch on layers that show land
conversion and fire hotspots.
Responsible production and processing
For SIPEF, sustainability starts with responsi-
ble production and processing at its own estates.
Policies and Best Management Practices (BMPs)
are implemented for a comprehensive set of top-
ics: from human rights and labour standards,
health and safety, and community rights, to pre-
vention of deforestation, protection of biodiver-
sity, and regenerative practices, among others.
Reducing greenhouse gas (GHG) emissions is a
top priority. In 2021, the focus was on establishing
a uniform methodology based on ISO 14064 to
measure the Group’s footprint, as the baseline
for a mitigation strategy to be set in 2022. This
builds on several years of measuring the histori-
cal GHG emissions of SIPEF’s RSPO certified oil
palm plantations, using the RSPO GHG calculator.
Many initiatives are already under way to reduce
the Group’s footprint, for instance by implement-
ing measures to capture the methane gas pro-
duced by the waste from palm oil production,
and by developing initiatives to convert waste
into cost-eective industrial biomass. Nature
conservation is another focus area, which includes
a project to protect more than 12 000 hectares
of forest bordering the Kerinci Seblat National
Park in Indonesia.
Agriculture is a people-centric business, and
SIPEF focuses on valuing its 21 233 employ-
ees worldwide, by supporting their livelihoods,
safeguarding their well-being and strengthen-
ing labour and human rights practices. In 2021,
the Group worked with an independent external
consultant, LINKS, to review its social framework
and human resource policies, and their imple-
mentation. SIPEF also strives to ensure that local
SIPEF maintained its industry-
leading commitment to sustainability
certification, achieving 100%
compliance with RSPO criteria
for palm oil and 100% Rainforest
Alliance certification for bananas.
6 The connection to the world of sustainable tropical agriculture
communities benefit from its activities. In addi-
tion to providing employment, SIPEF has set up
schools, and built roads, health centres, bridges
and places of worship.
Responsible sourcing and smallholder
production
Smallholders produce around 40% of the world’s
palm oil and SIPEF works with over 10000 small-
holders worldwide. The Group operates several
programmes with an emphasis on improving
livelihoods through increased yields, improved
production quality and access to international
markets, as well as reducing the impact of pro-
duction on natural ecosystems. An important
focus area in 2021 has been to continue support-
ing smallholders to achieve and maintain RSPO
certification.
Responsible business and transparency
SIPEF has a strong corporate governance struc-
ture in place, and continued to strengthen its
approach in 2021. The policy and regulatory
framework for business governance, transpar-
ency and sustainability also continued to evolve
in 2021, for instance with the mandatory due dil-
igence rules for the import of products including
palm oil into the European Union (EU), and the
introduction of reporting eligibility to the EU
taxonomy for sustainable activities. SIPEF wel-
comes these eorts to bring sustainability further
into the mainstream, and strives to anticipate
and align with all requirements, both globally
and within the EU.
Reducing greenhouse gas (GHG)
emissions is a top priority. In 2021,
the focus was on establishing a
uniform methodology based on
ISO 14064 to measure the Group’s
footprint, as the baseline for a
mitigation strategy to be set in 2022.
The world continues to face great challenges
in 2022 and beyond, but I am heartened by the
growing focus on climate action, human rights
and nature-positive solutions. Sustainability is
a journey, and all businesses must constantly
evolve to ensure their values, purpose and strat-
egy continue to focus on the material impacts
of their activities. While our strengths and our
history of successfully tackling complex problems
give us confidence, we cannot do it alone. We are
truly stronger together, and I want to thank all of
SIPEF’s employees, communities and partners for
taking part in this work. I encourage you to read
our full report to discover more about what we
have achieved — and hope to achieve — together.
7
SIPEF Sustainability Report 2021 Managing director statement
Palm oil: 384 178 tonnes
Bananas: 32 200 tonnes
Rubber: 3 827 tonnes*
Tea: 965 tonnes*
92%
5%
2%
Indonesia: 65 512 ha
Papua New Guinea: 13 605 ha
Ivory Coast: 825 ha
82%
1%
17%
1%
79 942 ha
Total planted area
**
**
**
**
About SIPEF
SCALE OF SIPEF'S OPERATIONS
* Including only four months of rubber and tea production of PT Melania
** Of the revenue of the SIPEF group
8
The connection to the world of sustainable tropical agriculture
SIPEF is a Belgian public limited agribusiness
company listed on Euronext Brussels. It operates
agro-industrial activities in the production of
sustainable oil palm products, including fresh
fruit bunches (FFB), crude palm oil (CPO), palm
kernels (PK), and crude palm kernel oil (CPKO).
The Group also produces sustainable bananas,
natural rubber, tea and horticultural products.
SIPEF has a multinational workforce of 21 233
people (full-time equivalent—FTE), the majority
of whom are employed or contracted through
SIPEF’s subsidiaries. The Group manages a total
of 79 942 hectares of own production area across
its global operations.
Palm products are SIPEF’s primary business
focus, accounting for 92% of the Group’s total
revenue. Banana production is the second largest
activity, making up 5% of total revenue.
SIPEF’s business strategy is built on controlled
growth as an upstream player, and a crucial part
of its mission is to be the preferred supplier of
traceable, sustainable, high-quality agricultural
products.
Europe
UK
Indonesia
West Africa
Markets served:
SIPEF's operations are focused in Indonesia, Papua New
Guinea and Ivory Coast, with the Group Headquarters in
Schoten, Belgium. Since 2021, SIPEF has also been
operating in Singapore through SIPEF Singapore Pte Ltd.
Indonesia
Papua New Guinea
Ivory Coast
Global operations:
Indonesia
30
Oil palm
plantations
6
Palm
oil mills
6
Oil palm
plantations
3
Palm
oil mills
2
Kernel crushing
plants (integrated
with mills)
Papua New Guinea
3
Rubber
estates
3
Rubber
factories
1
Tea
estate
1
Tea
factory
Ivory Coast
5
Banana
estates
7
Banana packing
stations
GLOBAL PRESENCE
: SIPEF’s subsidiary Plantations J. Eglin also manages
production areas for pineapple flowers, lotus flowers and foliage
(Dracaena) at its banana estates in Azaguié. These products are
packed for export at a separate packing station.
9
SIPEF Sustainability Report 2021 About SIPEF
Operations and value chains
SIPEF is devoted to sustainable agriculture and
sells almost all its products in physical and trace-
able sustainable supply chains.
The following section provides a brief over-
view of its operations and activities linked with
each commodity. A full overview of the Group’s
activities, business model and financial perfor-
mance in 2021 can be found in the Annual Report
part 1 (Company Report) and part 2 (Financial
Statement).
Palm products
The Group manages more than 77 000 hectares
across its 36 oil palm estates, as well as 21 010
hectares of smallholder plantations. The total
planted area comprises 98 173 hectares.
Under its subsidiary PT Tolan Tiga Indonesia,
SIPEF produces palm oil and palm kernels at
six mills in North Sumatra, Bengkulu, and South
Sumatra. These mills process fresh fruit bunches
(FFB) from 30 of the company's own estates and
2 278 smallholders.
The Group’s subsidiary in Papua New Guinea,
Hargy Oil Palms Ltd (HOPL), produces palm oil
and palm kernel oil at three mills and two kernel
crushing plants in New Britain. A little over 60%
of HOPL’s supply base consists of FFB from its
own plantations, with 39% consisting of crops
produced by the 3 635 associated smallholders
engaging with the company.
SIPEF’s palm products are either sold to refin-
ers on the European market or to refiners in
Indonesia, which mainly export to Europe.
Sustainability is important for SIPEF’s customers,
who want to purchase fully traceable and certified
palm products.
77 163 ha
Total planted area
(own plantations)
FFB
1 658 840
tonnes
1 385 858 tonnes
produced by SIPEF's
own plantations
CPO / PK / CPKO
442 372
tonnes
384 178 tonnes CPO
45 943 tonnes PK
12 251 tonnes CPKO
12 982 ha
Immature area planted
64 181 ha
Mature area planted
Production volumes 2021
Smallholders
16.5%
Own plantations
83.5%
PK
10.4%
CPKO
2.8%
CPO
86.8%
PALM PRODUCTION 2021
10
The connection to the world of sustainable tropical agriculture
SIPEF
employees
Shipping (Traders)
Storage of palm oil,
also in tanks at
the port
Retailers
Consumers
BiofuelCosmetics
industry
Chemical
industry
Detergent
industry
Food
industry
Distribution network
Extraction
mill
SIPEF plantations
& smallholder
plantations
High quality, fully traceable, certified palm products
SIPEF customers: refiners
OVERVIEW OF PALM OIL VALUE CHAIN
11
SIPEF Sustainability Report 2021 About SIPEF
Bananas
SIPEF’s subsidiary Plantations J. Eglin SA is a
major player in banana production in Ivory Coast,
the most important banana producing and export-
ing country in Africa. As of 31 December 2021,
the company manages an area of 1 764 hectares
located on the periphery of Abidjan.
In 2021, the company expanded its operations
to include two additional banana estates and
three packing stations. These additions were a
result of the company’s acquisition of the assets
of the Wanita banana plantation in Ivory Coast.
Plantations J. Eglin now manages a total of five
estates, equipped with seven packing stations.
Plantations J. Eglin annually produces around
32000 tonnes of green bananas on a planted
area of nearly 800 hectares, mainly exporting
its bananas to the European market. Through
the new acquisition, production is expected to
increase by almost 80% over a three-year period
to about 57 000 tonnes of export bananas.
794 ha
Total planted area
32 200 tonnes
of green bananas
Rubber and Tea
As of 31 December 2021, SIPEF owns three rub-
ber estates in Indonesia, as well as three rubber
factories producing three dierent grades. SIPEF
also manages the production and marketing of
high-quality black ‘Cut, Tear and Curl’ (CTC)
tea on a unique estate in West Java, Indonesia,
which still harvests primarily using skilled hand
plucking.
In 2020, SIPEF announced its intentions to phase
out of rubber and to convert two of its rubber
plantations into oil palm. The conversion will
be in alignment with the RSPO New Planting
Procedure (NPP) to ensure that re-development
does not contribute to deforestation and that
Free, Prior and Informed Consent (FPIC) has
been provided by local communities.
In 2021, PT Melania, which accounts for all
of SIPEF’s tea and half of its rubber, was sub-
ject to a conditional sale to Shamrock Group,
an Indonesian compan
y that owns and man-
ages several rubber plantations and factories. As
such, the rubber activities of PT Melania have
been managed by the Shamrock Group since 30
April 2021. The tea activities remain under the
management of SIPEF until the closing of the
sale is completed.
A full overview and explanation of changes to
operations can be found in the Annual Report
part 1 (Company Report).
BANANA PRODUCTION 2021
12 The connection to the world of sustainable tropical agriculture
Approach to
sustainability
Sustainability is at the core of SIPEF’s business
model and the Group has made a top-down com-
mitment to ensuring its business activities make
a positive contribution to the environment, soci-
ety and local economies. This includes managing
plantations and operations in an environmentally
and socially responsible manner, as well as creat-
ing employment and development opportunities
in the rural and remote areas in which it operates.
SIPEF’s approach to sustainability includes the
following principles and approaches:
Incorporating the
three pillars of sus-
tainability: environmental, social and
economic
Se
tting strong sustainability policies and
commitments
Striving for the bes
t sustainability stan-
dards and agricultural practices
Enabling traceability back to production
location
Ensuring op
timum productivity and sus-
tainable land use
In
vesting in innovation and continuous
improvement
Good corporate governance, collabora-
tion with key stakeholders and transpa-
rent reporting
13
SIPEF Sustainability Report 2021 Approach to sustainability
Three pillars of
sustainability
SIPEF’s overarching approach to sustainability
reflects the three pillars of sustainable develop-
ment: environmental, social and economic. These
pillars underpin the Group’s core values, which
are to engage in environmental stewardship, to be
a good employer and neighbour, and to conduct
profitable and responsible business.
At the heart of this approach is SIPEF’s overar-
ching goal to create value.
This approach is further defined by the dierent
levels of SIPEF’s business activities: responsi-
ble production and processing (SIPEF’s own
estates and operations), responsible sourcing
and smallholder production (SIPEF’s engage-
ment with suppliers), and responsible business
and transparency (SIPEF as a business entity).
The degree to which certain issues apply, and the
policies and measures employed to manage them,
are dependent on whether the sustainability risks
occur in SIPEF’s own operations, in its supply
chain, or for SIPEF as a business.
SIPEF’s approach is also guided by an understand-
ing that the environmental, social and economic
issues relevant to its business and supply chain
are inextricably linked. The Group recognises
the interconnected nature of these issues and
manages its activities accordingly.
Environmental
Social
Engaging in
environmental
stewardship
Economic &
governance
Conducting
profitable and
responsible
business
Being a good
employer and
neighbour
CREATING
VALUE
SIPEF’S APPROACH TO SUSTAINABILITY
14 The connection to the world of sustainable tropical agriculture
Material topics identified in 2021
SIPEF has followed the GRI materiality principle
to ensure the Group’s sustainability approach and
reporting continues to address the environmen-
tal, social, economic and governance issues that
are most important for its business and stake-
holders. During 2021, SIPEF conducted a review
of its material topics, and made improvements to
its materiality assessment process.
Based on the assessment, 22 material topics were
identified. The twelve priority topics were those
that were ranked the highest by both SIPEF and
its external stakeholders, as well as those con-
sidered to be critical to the Group’s sustainabil-
ity strategy. The remaining ten issues have been
classified as important topics. These are primarily
emerging issues considered to be important by
stakeholders that will be monitored more closely
in future, or areas where SIPEF already has a good
management system in place.
SIPEF’s sustainability reporting and KPIs have
been aligned in 2021 with the new selection of
material topics. An overview of the final topics
is provided on the next page, mapped against the
three pillars, priority level, and the dierent levels
of SIPEF’s business.
The Group’s approach with respect to managing
the risks and impacts linked with each of the top-
ics it has identified to be material, are described
in the sustainability performance chapters of
this report: Responsible production and pro-
cessing (pages 38-95), Responsible sourcing
and smallholder production (pages 96-107), and
Responsible business and transparency (pages
108-117).
A full description of SIPEF’s 2021 materiality
assessment process is available in the Annex (page
118-121).
15
SIPEF Sustainability Report 2021 Approach to sustainability
MATERIAL TOPICS IDENTIFIED BY SIPEF IN 2021
DIMENSIONS RESPONSIBLE
PRODUCTION AND
PROCESSING
RESPONSIBLE
SOURCING AND SMALL
HOLDER PRODUCTION
RISKS, MANAGEMENT APPROACH
AND PROGRESS COVERAGE IN REPORT
Cross-cutting
topics
Sustainability Standards and Certification
Sustainability standards and certification
pag
e 18-21
Sustainability certification progress pages 47-49
Traceability
Traceability pages 22-23
Climate Change
Climate change
pag
es 50-55
Productivity and Quality
Productivity and sustainable land use
pag
e 24
Productivity and quality
pag
es 40-47
R&D and Innovation
Innovation
pag
e 25
Research & Development: Verdant Bioscience page 45-47
Food safety
Productivity and quality page 43-44
Environmental
topics
Deforestation
No Deforestation pages 56-65
Peatlands
Peatlands page 66
Fire Prevention and Management
Fire prevention and management pages 63-64
Biodiversity
Biodiversity and conservation
pag
es 67-71
Ecosystem Conservation
and Restoration
No Deforestation pages 56-65
Biodiversity and conservation
pag
es 67-71
Fertiliser and Pesticide Use
Best Management Practices pages 72-79
Water Management
Best Management Practices pages 72-79
Regenerative Practices
Best Management Practices pages 72-79
Social
topics
Human Rights and Labour Standards
Respecting human and labour rights
pag
es 80-89
Smallholder Engagement
Responsible sourcing and smallholder production
pag
es 96-107
Health and Safety
Health and safety
pag
es 88-89
Diversity and Inclusion
Respecting human and labour rights
pages 80-89
Diversity and inclusion
pag
e 87
Community Rights
Respecting community rights
pag
es 90-92
Community Development
Community development
pag
es 93-95
DIMENSIONS RESPONSIBLE BUSINESS AND TRANSPARENCY RISKS, MANAGEMENT APPROACH
AND PROGRESS COVERAGE IN REPORT
Economic &
Governance
topics
Transparency
Responsible business and transparency
pag
es 109-117
Anti-Bribery and Anti-Corruption
Anti-bribery and anti-corruption
pag
es 111-113
Priority material topic
Important material topic
16 The connection to the world of sustainable tropical agriculture
Sustainability policies
For SIPEF, sustainability starts with responsible
production, first and foremost within SIPEF’s
own plantations and operations, but also in the
production areas of its suppliers, all of which are
smallholders. The Group’s sustainability strategy
is implemented through two core internal poli-
cies: the Responsible Plantations Policy (RPP)
and the Responsible Purchasing Policy (RPuP).
In addition to the RPP and RPuP, the Group
upholds several supporting policies aimed at spe-
cific issues such as human rights, child labour and
grievances. In the course of 2022, SIPEF plans
to undertake a systematic review of all of its sus-
tainability policies to align and integrate them
as necessary.
All policies are accessible on SIPEF’s website
at: www.sipef.com/hq/sustainability/policies/
responsible-plantations-policy/
Responsible Plantations Policy
The SIPEF Responsible Plantations Policy (RPP)
covers the Group’s key environmental, social and
economic commitments and principles for sus-
tainable production and processing.
First developed in 2014, the RPP brings togeth-
er and is supported by all group-wide and local
policies. It applies to all plantations managed by
SIPEF, regardless of ownership share, as well as
all activities of smallholders that deliver products
to SIPEF mills and factories.
The RPP commits SIPEF to the sustainable
production of fully certified and traceable prod-
ucts, and sets out SIPEF’s commitments to no
deforestation, no new plantings on peat and no
exploitation (NDPE). It defines the guidelines for
the Group’s management of new developments,
as well as continuous improvement in the man-
agement of existing plantations. This includes
requiring that Best Management Practices
(BMPs) are adopted as soon as they are available,
in order to optimise land use while mitigating and
eliminating any negative impacts.
The policy has generally been reviewed annu-
ally. However, due to a more considerable revi-
sion being planned for 2022, the policy was not
amended in 2021.
Responsible Purchasing Policy
The SIPEF Responsible Purchasing Policy (RPuP)
guides the Group’s responsible sourcing require-
ments for engaging with third-party suppliers.
The policy was formalised on 21 September 2020
but has been applied in practice for several years.
SIPEF’s third-party suppliers are all smallhold-
ers with whom the Group has a Memorandum
of Understanding (MoU) and whose production
location is known and mapped. Under the RPuP,
SIPEF is committed to sourcing only from small-
holders that are either already RSPO certified or
that have the potential to become certified within
the Group’s RSPO Time Bound Plan.
The RPuP sets out criteria for working with small-
holders on their journey towards certification. It
also provides the framework for the procedures
utilised to select, monitor and, if necessary, not
include smallholders in the Company’s supply
base. In alignment with SIPEF’s policies, these
local procedures are based on requirements
linked to human rights, labour and environmental
issues.
More information on these procedures can be
found in the section on managing risk in SIPEF’s
supply base (see pages 106-107), and on the
Traceability and Risk Management page of the
SIPEF website.
17
SIPEF Sustainability Report 2021 Approach to sustainability
Sustainability standards
and certification
Alongside internal policies, credible third-party
certification is an important aspect of SIPEF’s
sustainability approach. The Group applies the
highest benchmarked international standards
and, where possible, goes beyond. This helps to
demonstrate SIPEF’s progress towards a set of
verifiable criteria and contributes to traceability
back to production location.
Certification is not a silver bullet for sustainabil-
ity, but it is a critical building block that informs
and supports the overall implementation of
SIPEF’s sustainability approach.
Palm Oil
    
The Roundtable on Sustainable Palm Oil (RSPO)
is the leading sustainability standard and certi-
fication for palm oil. The RSPO has developed a
set of environmental and social criteria (RSPO
Principles & Criteria) for the sustainable produc-
tion of palm oil. Since 2018, this has included a
prohibition on all forms of deforestation.
SIPEF’s first RSPO certifications were awarded in
Papua New Guinea in 2009 for Hargy Oil Palms
Ltd, which included approximately 3 635 small-
holders that were supplying the Company’s mills.
By 2017, all SIPEF mills in Papua New Guinea and
Indonesia had been RSPO certified.
SIPEF is striving for 100% RSPO certification of
its palm oil operations and aims to include 100%
certified smallholders in its supply chain by 2026.
Details on the certification progress of SIPEF’s
operations are provided on pages 47-49.
18
The connection to the world of sustainable tropical agriculture
OTHER CERTIFICATIONS AND STANDARDS
Indonesia introduced a national certification standard in 2011 for sustainable
palm oil production, the Indonesian Sustainable Palm Oil (ISPO) standard.
The standard is mandatory for all plantations and palm oil mills in Indonesia.
All six of SIPEF’s mills in Indonesia are certified in accordance with the ISPO
Standard.
The International Organization for Standardization (ISO) standards are
the most recognised set of global technical, industrial and commercial standards
for good practices, applicable to all processes and commodities.
SIPEF’s environmental management system in Papua New Guinea has been ISO
14001 certified since 2014. All of SIPEF’s companies in Indonesia have achieved
the quality management system certification ISO 9001 as of 2019.
More information: www.iso.org/standards.html
The International Sustainability and Carbon Certification (ISCC) standard
certifies compliance with the European Renewable Energy Directive (RED).
The adoption of methane capture at SIPEF’s palm oil mills enables the reduction
of the emissions of greenhouse gases (GHG) during the production of crude palm
oil. Currently, four of the Group’s six palm oil mills in Indonesia are certified
according to the ISCC.
More information: www.iscc-system.org/
Under the Clean Development Mechanism (CDM), emission-reduction
projects in developing countries can earn certified emission reduction credits.
SIPEF currently has four of its nine mills running CDM projects based on the
reduction of GHG emissions through methane capture facilities, flaring or
biogas generation.
More information: cdm.unfccc.int/
19
SIPEF Sustainability Report 2021 Approach to sustainability
Bananas
 
The Rainforest Alliance is an international
non-profit organisation working at the inter-
section of business, agriculture and forests to
make responsible business the new normal. The
Rainforest Alliance’s Sustainable Agriculture
Standard is considered one of the leading stand-
ards in the sector and covers environmental,
social and economic topics.
SIPEF’s banana production has been fully Rain-
forest Alliance certified since 2016.
More information about the standard can be
found on the Rainforest Alliance website:
www.rainforest-alliance.org/tag/2020-
certification-program
Rubber and Tea
SIPEF’s rubber operations have historically been
Rainforest Alliance certified. The Rainforest
Alliance stopped certifying rubber and all cer-
tifications expired in mid-2021. SIPEF previ-
ously announced that it intended to transition
to FSC (Forest Stewardship Council) certifica-
tion for rubber, but will not pursue this due to
its announced intention to phase out of rubber
production.
SIPEF’s tea production has also historically been
Rainforest Alliance certified and will continue its
certification journey under the management of
SIPEF until the sale of PT Melania is completed.
A full overview of sustainability certifications
held by SIPEF’s tea operations is available in the
2020 SIPEF Sustainability Report.
20
The connection to the world of sustainable tropical agriculture
OTHER CERTIFICATIONS AND STANDARDS
GLOBALG.A.P. is a set of standards focused on good agricultural practices
including food safety and traceability, environment (including biodiversity),
workers’ health, safety and welfare, and animal welfare.
All SIPEF banana estates under Plantations J. Eglin in Ivory Coast have been
certified since 2006. In August 2017, during the recertification of the banana
activities, the horticulture activities were also included in response to strong
customer demand.
More information: www.globalgap.org
Fairtrade certification is based on a partnership between producers and con-
sumers, with the goal of improving lives and reducing poverty through ethical
trade practices.
All of SIPEF’s banana estates are Fairtrade certified. Motobé of Plantations J.
Eglin in Ivory Coast has been certified since 2019. The two other estates, Agboville
and Azaguié, were first certified in 2020.
More information: www.fairtrade.net/product/bananas
Sedex is one of the world’s leading ethical trade service providers, acting to
improve working conditions in global supply chains.
Plantations J. Eglin joined Sedex as a supplier in 2008. The company achieved
its most recent certification renewal in 2021, having successfully completed the
Sedex Members Ethical Trade Audit (SMETA).
More information: www.sedex.com
21
SIPEF Sustainability Report 2021 Approach to sustainability
Traceability
Traceability is a fundamental principle for sus-
tainability in agricultural commodity supply
chains. It enables customers and consumers to
ascertain that the products they buy are indeed
sourced from certified estates and smallholders,
and therefore contribute to environmental, social
and economic sustainability.
SIPEF is a leader in traceability, with all commodi-
ties it sells being fully traceable to their produc-
tion location, either an estate managed by SIPEF
or a supplier smallholder plot.
Traceability of certified products
Most of the sustainability certification pro-
grammes adhered to by SIPEF require chain of
custody certification for processing and trading
certified materials. This regulates the degree to
which certified products are traceable back to
their origins as they move through the supply
chain.
SIPEF is 100% compliant with the criteria for
processing RSPO certified oil palm products. All of
SIPEF’s mills are RSPO Identity Preserved, with
the exception of the Dendymarker Palm Oil Mill
in Indonesia, which is RSPO Mass Balance due
to a large proportion of its supply base currently
being in the process of RSPO certification.
22
The connection to the world of sustainable tropical agriculture
The Group’s two kernel crushing plants under
Hargy Oil Palms Ltd in Papua New Guinea are
RSPO Segregated. This is because both plants
are processing kernels from more than one mill,
as one of the three mills does not have its own
kernel crushing facility. However, all three mills
are certified Identity Preserved and have their
supply bases fully mapped.
SIPEF’s palm oil mills only source from its own
plantations or from smallholders whose produc-
tion locations are known and mapped. As such,
while some of the Group’s palm oil supply base
is not yet certified, and some of the Group’s pro-
duction facilities are RSPO Segregated or Mass
Balance, all of it is traceable.
All of the bananas produced and sold by Planta-
tions J. Eglin are fully certified and traceable,
and the company can disclose the origin of any
shipment to its customers and to stakeholders.
Geo SIPEF
As part of its commitment to transparency and to
a fully certified sustainable and traceable supply
base, SIPEF has developed an interactive mapping
application called ‘Geo SIPEF’. This tool allows
the user to locate all SIPEF palm oil mills, kernel
crushing plants, rubber and tea factories, and
their respective supply bases. Additional informa-
tion is provided on each entity including certifica-
tion status (links to sustainability certificates) and
production capacity. Layers can also be applied
to the maps to visualise estate, smallholder and
conservation area boundaries.
New features were added in 2021, including the
ability to switch on layers that show land conver-
sion (potential deforestation) and fire hotspots
recorded through SIPEF’s monitoring activities.
SIPEF’s banana operations will be included in the
mapping application in 2023.
Geo SIPEF can be accessed at www.geosipef.com.
23
SIPEF Sustainability Report 2021 Approach to sustainability
Productivity and
sustainable land use
Ecient production and respect for the limited
availability of agricultural land are crucial for
SIPEF’s success as a business, now and especially
in the future. While SIPEF is striving for ecien-
cy in all crops, optimising yields in the production
of oil palm is particularly important.
Oil palm is an extremely productive crop, requir-
ing just one-fifth of the land area to produce a
tonne of oil compared with its closest compet-
itor. The Group therefore strongly believes that
certified sustainable palm oil has a crucial role
to play in meeting growing demand for vegetable
oils, while protecting the environment and the
livelihoods of communities.
SIPEF is committed to implementing best agri-
cultural practices that will increase its yields and
minimise its environmental impact. The Group
is also committed to investing in research and
innovative solutions that will further strengthen
the potential for optimising land use.
Details of SIPEF’s approach to enhancing pro-
ductivity can be found on page 40.
24
The connection to the world of sustainable tropical agriculture
Innovation
SIPEF has made significant investments in inno-
vation to enhance productivity, quality and cir-
cularity. This includes research on maximising
yields, new regenerative and nature-positive
agricultural techniques and methods, and techno-
logical advancements focused on reducing GHG
emissions and creating value out of by-products.
In 2021, SIPEF has continued to invest in hybrid
palm varieties through its research and develop-
ment joint venture, Verdant Bioscience Pte Ltd
(VBS). It has also worked to advance its project
at its Umbul Mas Wisesa mill focused on the con-
version of processing by-products from fresh fruit
bunches into biopellets for use as a renewable
alternative to fossil fuels.
Progress updates for 2021 on the work carried out
by VBS and on SIPEF’s biopellets project have
been provided in the performance chapters of
this report (pages 45 and 54).
Corporate and sustainability governance
SIPEF has established policies, procedures and
supporting structures that ensure good corpo
-
rate and sustainability governance at all levels,
including the Company’s subsidiaries.
This section provides a brief overview of SIPEF’s
sustainability governance structure and approach
to analysing and managing sustainability risk.
An o
verview of SIPEF’s corporate gover-
nance policies and an update on the Group’s
most relevant activities linked with res-
ponsible business conduct are provided on
pages 110-113 of this report.
A more detailed account of SIPEF’s ap-
proach to corporate governance is provided
in the Corporate Governance Statement
on page 76 of the Annual Report part 1
(Company Report).
25
SIPEF Sustainability Report 2021 Approach to sustainability
Papua New Guinea
Executive committee
chaired by the
general manager
Ivory Coast
Executive committee
chaired by the
general manager
Indonesia
Executive committee
chaired by the
president director
SIPEF BOARD
OF DIRECTORS
SIPEF EXECUTIVE COMMITTEE
Chaired by the managing director
GLOBAL SUSTAINABILITY TEAM
• Chief operating ocer Asia-Pacific*
• SIPEF sustainability director
• CSR sustainability analyst*
REGIONAL SUSTAINABILITY
TEAMS
Sustainability team
Indonesia
• Team North Sumatra
• Team Bengkulu
• Team South Sumatra
* new position in 2021
Sustainability team
Papua New Guinea
Sustainability team
Ivory Coast
SIPEF BOARD OF DIRECTORS
Ultimate responsibility for sustainability lies at board level, with Priscilla Bracht having a
particular interest in this issue. The full board reviews progress made by SIPEF based on
sustainability rankings and ratings, certification progress, and internal risk assessments and
reporting. A sustainability briefing paper is provided to the board of directors at least twice a
year and the board discusses material ESG topics during its strategic board meeting once a
year.
SIPEF EXECUTIVE COMMITTEE
The board is guided by SIPEF’s executive committee on the implementation and progress
of the Group’s sustainability strategy. Sustainability is led from the executive committee
level by Petra Meekers, who was appointed as chief operating ocer Asia-Pacific (COO
APAC) in June 2021. With a strong background in sustainability, the appointment has
significantly strengthened ESG leadership within the Group.
SIPEF GLOBAL SUSTAINABILITY TEAM
The global sustainability team was set up in 2021 with the purpose of ensuring that SIPEF’s
sustainability strategy, policies and communications remain aligned with the evolving expec-
tations and requirements of key stakeholders. This includes coordinating internal and exter-
nal reporting on the Group’s sustainability performance. The team is overseen by SIPEF’s
COO APAC, and is guided by the SIPEF sustainability director and assisted by a CSR sustaina-
bility analyst who joined SIPEF in May 2021.
REGIONAL SUSTAINABILITY TEAMS
Three teams are in charge of the implementation of SIPEF’s sustainability strategy and
policies at subsidiary level: the sustainability teams of Indonesia, Papua New Guinea and
Ivory Coast.
• The Indonesian team is composed of 16 experts and is spread across four locations: the
Medan Head Oce, North Sumatra, Bengkulu and Musi Rawas (South Sumatra).
• The team in Papua New Guinea consists of a sustainability head of department and five
experts focused on dierent areas of sustainability at Hargy Oil Palms Ltd (HOPL). The
head of department is also a member of HOPL’s executive committee.
• The team in Ivory Coast currently consists of two experts.
The SIPEF sustainability director oversees the teams in Indonesia, Papua New Guinea and
Ivory Coast, and reports directly to the in-country president director (Indonesia) and general
managers (Papua New Guinea and Ivory Coast), as well as to SIPEF’s COO APAC.
SIPEF sustainability director
Sustainability Governance
SIPEF’s sustainability governance structure is
designed to appropriately manage the implemen-
tation and constant evolution of its sustainability
commitments. A high-level overview of how sus-
tainability governance is embedded, from board
level to subsidiary level, is outlined below.
26
The connection to the world of sustainable tropical agriculture
Papua New Guinea
Executive committee
chaired by the
general manager
Ivory Coast
Executive committee
chaired by the
general manager
Indonesia
Executive committee
chaired by the
president director
SIPEF BOARD
OF DIRECTORS
SIPEF EXECUTIVE COMMITTEE
Chaired by the managing director
GLOBAL SUSTAINABILITY TEAM
• Chief operating ocer Asia-Pacific*
• SIPEF sustainability director
• CSR sustainability analyst*
REGIONAL SUSTAINABILITY
TEAMS
Sustainability team
Indonesia
• Team North Sumatra
• Team Bengkulu
• Team South Sumatra
* new position in 2021
Sustainability team
Papua New Guinea
Sustainability team
Ivory Coast
SIPEF BOARD OF DIRECTORS
Ultimate responsibility for sustainability lies at board level, with Priscilla Bracht having a
particular interest in this issue. The full board reviews progress made by SIPEF based on
sustainability rankings and ratings, certification progress, and internal risk assessments and
reporting. A sustainability briefing paper is provided to the board of directors at least twice a
year and the board discusses material ESG topics during its strategic board meeting once a
year.
SIPEF EXECUTIVE COMMITTEE
The board is guided by SIPEF’s executive committee on the implementation and progress
of the Group’s sustainability strategy. Sustainability is led from the executive committee
level by Petra Meekers, who was appointed as chief operating ocer Asia-Pacific (COO
APAC) in June 2021. With a strong background in sustainability, the appointment has
significantly strengthened ESG leadership within the Group.
SIPEF GLOBAL SUSTAINABILITY TEAM
The global sustainability team was set up in 2021 with the purpose of ensuring that SIPEF’s
sustainability strategy, policies and communications remain aligned with the evolving expec-
tations and requirements of key stakeholders. This includes coordinating internal and exter-
nal reporting on the Group’s sustainability performance. The team is overseen by SIPEF’s
COO APAC, and is guided by the SIPEF sustainability director and assisted by a CSR sustaina-
bility analyst who joined SIPEF in May 2021.
REGIONAL SUSTAINABILITY TEAMS
Three teams are in charge of the implementation of SIPEF’s sustainability strategy and
policies at subsidiary level: the sustainability teams of Indonesia, Papua New Guinea and
Ivory Coast.
• The Indonesian team is composed of 16 experts and is spread across four locations: the
Medan Head Oce, North Sumatra, Bengkulu and Musi Rawas (South Sumatra).
• The team in Papua New Guinea consists of a sustainability head of department and five
experts focused on dierent areas of sustainability at Hargy Oil Palms Ltd (HOPL). The
head of department is also a member of HOPL’s executive committee.
• The team in Ivory Coast currently consists of two experts.
The SIPEF sustainability director oversees the teams in Indonesia, Papua New Guinea and
Ivory Coast, and reports directly to the in-country president director (Indonesia) and general
managers (Papua New Guinea and Ivory Coast), as well as to SIPEF’s COO APAC.
SIPEF sustainability director
27
SIPEF Sustainability Report 2021 Approach to sustainability
Sustainability risk assessment
and management
The regular assessment of environmental, social
and governance (ESG) risks plays an important
role in the development and implementation of
a long-term sustainability strategy. The SIPEF
audit committee undertakes a risk analysis for
the Group each year, evaluating the key potential
business and sustainability risks for the Company.
For the 2021 assessment, risks identified include
those connected with climate change, conces-
sion rights, and the increased expectations and
requirements linked with sustainability certifi-
cation and oil palm production. A more detailed
analysis can be found on page 70 in the Annual
Report part 1 (Company Report).
All ESG risks that have been identified by SIPEF
in 2021 have been highlighted throughout the per-
formance chapters of this report (pages 38-117).
In the course of 2022, a more extensive sustain-
ability-focused risk analysis is planned as part of
the upcoming review of SIPEF’s sustainability
strategy.
28
The connection to the world of sustainable tropical agriculture
Multi-stakeholder partnerships
and collaboration
  
  ()
SIPEF has been a member of RSPO since 2005.
It continues to actively contribute to RSPO’s
operations by holding a seat on the Board of
Governors on behalf of the ‘Rest-of-the-World’
growers, which includes Papua New Guinea
and the Solomon Islands. Furthermore, SIPEF
is a co-chair member of the Jurisdictional
Working Group, and an active member of the
Biodiversity and High Conservation Values
Working Group, the Peat Working Group and
the No Deforestation Joint Steering Group.
www.rspo.org
  
   ()
SIPEF is a founding member of BASP, whose
main role is to promote the use of certified
sustainable palm oil, primarily in the Belgian
market, and to a lesser extent in the European
market at large. SIPEF plays an active role as
a member of the board.
www.duurzamepalmolie.be
   ():
SIPEF is a member of the Tropical Forest
Alliance.
Engaging with specialists
and experts

SIPEF has engaged Earthqualizer to assess the
compliance of all its own oil palm estates and
smallholders within its supply base against its
commitments to no deforestation and no new
plantings on peat.

   
SIPEF follows the requirements of the RSPO
New Planting Procedure (NPP) before under-
taking any new development or conversion of
land. This involves an assessment of the poten-
tial impact on both the environment and local
communities. SIPEF works with a variety of
technical consultancies and experts to carry
out these assessments, all of which are licensed
assessors under the High Conservation
Value Network’s Assessor Licensing Scheme.
hcvnetwork.org
Stakeholder engagement and collaboration
Sustainability depends on deep collaboration
between dierent sectors and actors. The Group
places great importance on stakeholder engage-
ment and collaboration in order to implement its
sustainability strategy.
SIPEF is helping to lead the journey to sustain-
able land use through regular cooperation with
its customers, shareholders, social and environ-
mental NGOs, researchers and experts, technical
consultancies, local communities, smallholders
and other willing stakeholders. Together with
them, the Company can develop and promote the
adoption of responsible and sustainable standards
and practices for the agricultural sector.
29
SIPEF Sustainability Report 2021 Approach to sustainability
9th
Out of 100 palm
oil companies
4th
Out of 350
companies
Benchmark scores in 2021

Ranked 9th out of 100 palm oil companies in
2021; score 83.9%, a score increase of 3.4%
from 2020
Developed by the Zoological Society of London
(ZSL), the Sustainability Policy Transparency
Toolkit (SPOTT) scores palm oil, tropical
forestry, and natural rubber companies annually
against over 100 sector-specific ESG indicators to
benchmark their progress over time.
www.
spott.org/palm-oil
 500
Ranked 4th out of 350 companies in 2021;
score 73%, a 2% increase from 2020
Forest 500 identifies and ranks the most influen-
tial companies and financial institutions in forest
risk commodity supply chains.
ht
tps://forest500
.
org/rankings/companies
 -    
CDP runs the global disclosure system for inves
-
tors, companies, cities, states and regions to man-
age their environmental impacts.
SIPEF submitted Forests and Climate Change
disclosures to CDP for the first time in 2021, and
will continue to do so moving forward. SIPEF’s
CDP scores will be published from 2022 onwards.
www.cdp.net/en
FOREST 500
SPOTT
30 The connection to the world of sustainable tropical agriculture
Supporting the United Nations
Sustainable Development Goals
The United Nations Sustainable Development
Goals (SDGs) were adopted in 2015 as an urgent
call for action for all countries worldwide. They
recognise that ending poverty must go hand-in-
hand with strategies that improve health and
education, reduce inequality, and spur economic
growth – all while tackling climate change and
working to preserve oceans and forests.
Businesses have a crucial role to play in meeting
the SDGs, and SIPEF is committed to playing its
part by producing sustainable agricultural com-
modities. Certified palm oil is the most sustaina-
ble way to meet global demand for vegetable oils,
as it is produced with respect for the environment
and local communities and requires significantly
less land than the alternatives.
In 2021, SIPEF reviewed the contribution and
alignment of its activities and sustainability key
performance indicators (KPIs) to the SDGs and
their respective targets.
An overview of SIPEF’s contribution to the SDGs
at target level is available in the Annex on page
122.
For more information on the SDGs:
https://sdgs.un.org/goals
SIPEF PRIMARILY CONTRIBUTES TO 10 OF THE 17 SDGs:
31
SIPEF Sustainability Report 2021 Approach to sustainability
Targets and
achievements
SIPEF carried out a high level review of its sus-
tainability targets in 2021, as part of a wider
initiative by the Group to evaluate its material
topics and expand reporting on its sustainabil-
ity performance. Some new targets have been
set, and a number of existing targets adjusted for
clarification purposes. In 2022, SIPEF plans to
conduct a more in-depth assessment of its targets
to ensure sucient ambition and to align with the
outcomes of an upcoming review of the Group’s
sustainability strategy.
COMMITMENT TARGETS STATUS RELEVANT MATERIAL TOPICS
HISTORICAL ACHIEVEMENTS 2018  2020
Achieve RSPO
certification
for Umbul Mas
Wisesa (UMW)
smallholders
100% certified by 2019 Achieved in 2018 • Sustainability
Standards and
Certification
• Smallholder
Engagement
Roll out ISO 9001
certification for
all operating units
in Indonesia
100% certified by 2019 Achieved in 2019 • Sustainability
Standards and
Certification
Increase firefight-
ing operations
in key areas in
Indonesia
Operations in all high-
risk/fire prone areas
Achieved in 2020 • Fire Prevention
and Management
Achieve Fairtrade
certification for
all banana estates
100% certified by 2021 Achieved in 2020 • Sustainability
Standards and
Certification
32
The connection to the world of sustainable tropical agriculture
COMMITMENT TARGETS STATUS RELEVANT MATERIAL TOPICS
TARGETS AND PROGRESS IN 2021
Calculate carbon
footprint of the
Group according
to ISO 14064
methodology
Group footprint
calculated by 2020
Achieved in 2021
Delayed in 2020 due to covid-19
•
Climate Chang
e
Utilise all Empty
Fruit Bunches
(EFB) from UMW
operations for
conversion into
biopellets
Complete construction
of biomass pellet facili-
ty at UMW by 2020
Achieved in 2020
Facility construction completed
in December 2020
•
R&D and
Inno
vation
• Regenerative
Practices
100% conversion of
wastefibre into biopel-
lets by 2021
Delayed
Due to covid-19 and technical
adjustments full commissioning
is delayed until Q1 2022
No deforestation
identified within
High Conservation
Value (HCV)/
High Carbon Stock
(HCS) areas in
Company man-
aged and small-
holder supplier
production areas
Deforestation monitor-
ing system operational
by 2021
Achieved in 2021
Global Forest Watch monitoring
started in 2020 and has been
fully operational since 2021
Verification process has started
with partner Earthqualizer to
verify incidents and is ongoing
• Deforestation
Zero hectares of tree
cover loss identified
within Company man-
aged areas* (Ongoing)
Not achieved
indonesia
Around 15 hectares of tree
cover loss, primarily due to
unauthorised clearing by local
communities
papua new guinea
Around 24 hectares of tree cover
loss due to clearing by local com-
munities within supplier areas
Zero hectares of tree
cover loss identified
within Company
concession areas*
(Ongoing)
Not achieved
indonesia
Around 102 hectares of tree cov-
er loss on land outside of SIPEF’s
management control
33
SIPEF Sustainability Report 2021 Targets and achievements
COMMITMENT TARGETS STATUS RELEVANT MATERIAL TOPICS
Reduce number
of fires in total
production area
Zero incidence of fires
in Company managed
areas* (Ongoing)
Not achieved
papua new guinea
Two arson incidents by external
parties that aected around
1.3 hectares at the Pandi and
Barema estates
•
Fire Prev
ention
and Management
Zero incidence of fires
in Company concession
areas* (Ongoing)
Not achieved
indonesia
One arson incident that aected
3 hectares of land not under
SIPEF’s management control in
Musi Rawas
Fire fighting in adja-
cent areas (Ongoing)
Achieved in 2021
indonesia
Eight fires extinguished in land
area adjacent to management
area
Improve water
use management
at SIPEF’s palm
oil mills
Water usage intensity
< one cubic metre of
water per tonne of FFB
(Ongoing)
Not achieved
Six out of nine mills achieved the
target in 2021
• Water
Management
Incidence of BOD, COD
and TSS* maintained
below legal limits
at point of release
(Ongoing)
Not achieved
Eight out of nine mills achieved
the target in 2021
No work-related
fatalities
Zero incidence of
work-related fatalities
(Ongoing)
Not achieved
One fatality in 2021
•
H
ealth and Safety
34
The connection to the world of sustainable tropical agriculture
COMMITMENT TARGETS STATUS RELEVANT MATERIAL TOPICS
UPCOMING COMMITMENTS AND TARGETS 2022  2030
Reduce carbon
footprint of
SIPEF Group
GHG emissions reduc-
tion targets to be set in
2022
On track
Carbon footprint has been calcu-
lated for baseline and reduction
plan and targets will be set in
2022
• Climate Change
Achieve RSPO
certification
for Musi Rawas
estates
100% certified by 2026 On track
Pending the approval and
issuance of the concession rights
agreements (Hak Guna Usaha
– HGU) by the Indonesian
Government
• Sustainability
Standards and
Certification
Achieve RSPO
certification for
smallholders at
PT Dendymarker
Indah Lestari as
areas come into
production
100% certified by 2026 On track • Smallholder
Engagement
Improve manage-
ment of HCV and
HCS areas within
HGU boundaries
Ranger/Restoration
teams established for
all regions by 2026
On track
Ranger teams to be established
in line with issuance of HGU and
RSPO certification
• Deforestation
• Ecosystem
Conservation and
Restoration
All previous standalone
assessments updated to
integrated HCV-HCS
assessments by 2025
On track
Review and enhance
habitat management
plans by 2025
On track
Establish small-
holder groups for
relevant opera-
tional units
20% smallholders with
MoU for all operational
units prior to renewing
HGU
On track
Progress will depend on HGU
renewal schedule
•
Smallholder
Engagement
35
SIPEF Sustainability Report 2021 Targets and achievements
COMMITMENT TARGETS STATUS RELEVANT MATERIAL TOPICS
Make advance-
ments in SIPEF
Biodiversity
Indonesia (SBI)
programme on
conservation,
management and
monitoring
Restore 85 hectares of
degraded land within
SBI by 2024
On track • Ecosystem
Conservation and
Restoration
• Biodiversity
• Deforestation
• Regenerative
Practices
Engage with 60 farmers
on regenerative agricul-
tural methods within
SBI by 2024
On track
Review and improve
biodiversity moni-
toring methodology
(Ongoing)
On track
Protect coastal
shorelines and
prevent flooding
Restore 14 hectares of
coastal areas by 2024
On track
indonesia
Around 8 hectares of coastal
buer will be restored at SIPEF’s
Agromuko operations
papua new guinea
A mangrove nursery is being
established across 6
.
5 hectares
of degraded coastal buer area
at Hargy Oil Palms Ltd's Kiba
plantation
• Ecosystem
Conservation and
Restoration
•
Climate Chang
e
Annual monitor-
ing of Responsible
Plantations Policy
implementation
One external verifica-
tion on implementa-
tion conducted per year
(Ongoing)
On track • Transparency
No deforestation
and no new planting
on peat verified by
Earthqualizer by 2023
On track •
Deforestation
•
Peatlands
*:
- Some targets have been removed since the publication of SIPEF’s 2020 Annual Report, as these are longer relevant, or will be revised in 2022.
- Company managed areas are areas where SIPEF has full management control. Company concession areas are areas within SIPEF’s concession boundaries that also include
land that is not under SIPEF’s management control.
- BOD = biological oxygen demand; COD = chemical oxygen demand; TSS = total suspended solids
36 The connection to the world of sustainable tropical agriculture
37
SIPEF Sustainability Report 2021 Targets and achievements
38 The connection to the world of sustainable tropical agriculture
Responsible
production
and processing
Agriculture is critical for food and nutrition
security, and is inextricably linked with the wel-
fare of people and the environment. Over recent
decades the global food system has contributed
to economic development, and food production
has risen steadily. However, the system has also
placed immense pressure on natural resources,
the health of critical ecosystems and the climate.
Sustainability leadership within the agricultur-
al sector is becoming ever more important and
sustainable land use, climate change and human
rights are rising rapidly to the top of the global
agenda. As a Company dedicated to sustainabil-
ity in the industries in which it operates, SIPEF
believes it can play an important role in demon-
strating that the production of traceable, sus-
tainable and high-quality agricultural products
is possible.
For SIPEF, sustainability starts with responsible
production and processing at its own estates and
operations. That means putting into practice the
commitments it has set out in its Responsible
Plantations Policy and other supporting sustain-
ability policies. This includes its commitments to
no deforestation, no new developments on peat,
and no exploitation, as well as to reducing green-
house gas emissions. At implementation level,
this translates to adopting systems and working
methods focused on the optimisation of land use
and resources, environmental stewardship and
socially responsible practices.
The following sections outline SIPEF’s progress
in these areas, including how the Group address-
es the relevant environmental and social issues
and risks that it has identified as material for its
business.
Sustainability leadership within the
agricultural sector is becoming ever
more important and sustainable
land use, climate change and human
rights are rising rapidly to the top of
the global agenda.
39
SIPEF Sustainability Report 2021 Responsible production and processing
Productivity and quality
Land scarcity is one of today’s most important
sustainability issues. The world’s population is
predicted to reach 9.7 billion by 2050,
3
with signif-
icant growth projected for developing countries.
At the same time, the amount of available arable
land is decreasing, due to soil degradation caused
by human-induced erosion and pollution, land
use competition, and the surging global demand
for food. In the coming decades, this will be com-
pounded by the acute physical risks linked with
climate change, and future policy development
that may further restrict the land available for
agriculture.
While SIPEF endeavours to optimise land use in
the production of all of its crops, boosting yields
and ecient land use in its oil palm production is
especially critical. Palm oil continues to be one of
the primary commodities of debate in discussions
around deforestation and the impact of agricul
-
ture on people and the planet. On the other hand,
it remains the most ecient source of edible veg-
etable oil, providing 36% of the world supply on
just 9% of the land.
4
More than 300 million hectares of land is already
used for the cultivation of vegetable oils world-
wide, up from just over 111 million in 1961.
5
With
the demand for vegetable oils forecast to increase
by 46% by 2050,
6
certified sustainable palm oil
will be essential to meet growing demand while
using less land.
SIPEF is committed to implementing best prac-
tices that aim to improve soil fertility, optimise
inputs and recycle by-products, and further
increase product quality and the tonnage of prod-
uct per planted hectare (see pages 72-79). The
Group is also committed to investing in research
and development (R&D) and innovation that will
enable progress towards these objectives, as well
as enhance the quality of planting materials and
resilience of future crops (see page 45).
3 United Nations Department of Economic and Social Aairs. (2019). World Population Prospects 2019 Highlights.
https://population.un.org/wpp/Publications/Files/WPP2019_Highlights.pdf
4 Ritchie, H. and Roser, M. (Retrieved January 2022). Palm Oil. Our World in Data. https://ourworldindata.org/palm-oil
5 Our World in Data. (Retrieved March 2022). Land Use for Vegetable Oil Crops, World.
https://ourworldindata.org/grapher/land-use-for-vegetable-oil-crops?country=~OWID_WRL
6 Meijaard, Erik. (2020). The Environmental Impacts of Palm Oil in Context. Nature Plants.
https://research.wur.nl/en/publications/the-environmental-impacts-of-palm-oil-in-context
40 The connection to the world of sustainable tropical agriculture
PALM OIL VERSUS OTHER VEGETABLE OILS
OIL PALM SOY RAPESEED
Species richness
Oil yield per one hectare
1.9 - 4.8 tonnes 0.4 - 0.8 tonnes
Land required for one tonne of oil
2.0 ha 1.25 ha0.26 ha
0.7 - 1.8 tonnes
World oil production (million tonnes)
84.8 52.7 27.4
278472 227
Oil palm is an extremely productive perennial crop
that can produce 2-8 times more oil per hectare than
other annual crops like soybean, rapeseed, sunflower
and corn.
7
This is in part due to the crop’s natural
characteristics, but is also a result of the extensive
research and development that has been dedicated to
achieving higher eciencies in oil palm production.
Oil palm also has higher indexes of biodiversity
within its production areas than other vegetable oil
crops, and requires less inputs such as fertiliser and
pesticides.
Adapted from: www.wur.nl/en/news-wur/Show/New-light-on-the-sustainability-of-palm-oil.htm
7 Wageningen University & Research. (2020, December 7). New Light on the Sustainability of Palm Oil.
www.wur.nl/en/news-wur/Show/New-light-on-the-sustainability-of-palm-oil.htm
41
SIPEF Sustainability Report 2021 Responsible production and processing
Palm oil production 2021
Palm oil and fresh fruit bunch (FFB) produc-
tion are both key focus areas for SIPEF given
the importance of maximising output through
eective and sustainable management practices
on current production areas.
In 2021, SIPEF’s total palm oil production reached
384178 tonnes, an increase of 16.7% on 2020.
This growth rate applied to both production on
the Group’s own plantations and purchases from
local smallholders. Oil extraction rates (OER)
also increased from 2020, up from 23.4% to 24%.
The increases were the result of very favourable
weather conditions in 2021, which were condu-
cive to palm growth and fruit development in
Indonesia and Papua New Guinea.
OIL EXTRACTION RATES
2019 2020 2021
Indonesia 23.33%* 22.79%* 22.99%
Papua New Guinea 23.33% 24.63% 25.58%
GROUP 23.26%* 23.42%* 23.96%
BANANA PRODUCTION TONNES
2019 2020 2021
32 849 31 158 32 200
Improvements in productivity in 2021 are also
linked with other factors that had impacts
on yields in previous years. These include the
drought in Indonesia, and the volcanic eruptions
in Papua New Guinea, which led to lower yields
in 2019.
It is expected that the volume of palm oil pro-
duced should exceed 400 000 tonnes for the first
time in 2022.
* : Data for Indonesia and Group for 2019 and 2020 have been
restated.
Banana production 2021
SIPEF’s banana production in Ivory Coast
increased by 3.3% on the 2020 total, without any
increase in harvested area. A new plantation was
developed in Ivory Coast with 28 hectares plant-
ed in the fourth quarter, expected to lead to an
increase in production of 18% in 2022.
A full overview of SIPEF’s production figures and
performance in 2021 can be found in the Annual
Report part 1 (Company Report).
Improving product quality
SIPEF strives to maintain the highest standards
in the quality of its products, ensuring that they
comply with health and safety regulations, as well
as the requirements of its customers.
Ensuring good quality starts in the fields, with
quality seedlings for oil palm and clones for rub-
ber and tea, as well as viable tissue culture for
bananas. Planting is timed to ensure that plants
can establish their root system before a dry
period
. Fertile soil is crucial: it must contain
enough well-decomposed organic matter and
be clear of weeds. Cover crops are planted in the
fields to prevent soil erosion without overshad-
owing the seedlings. Careful upkeep of the fields
ensures that weeds and pests are controlled, and
the application of the right fertilisers supports
growth. Finally, good harvesting standards are
critical to produce a high-quality product.
42
The connection to the world of sustainable tropical agriculture
    
  
Quality control is an important focus area in the
production of palm oil products, given the grow-
ing demand for high-end, controlled ingredients.
This is also in view of the increasing number of
consumer countries that are becoming concerned
about additives and specific types of contaminants
in vegetable oils.
High quality palm oil contains a low quantity
of free fatty acids (FFA), and SIPEF maintains
the FFA content of its crude palm oil (CPO) and
crude palm kernel oil (CPKO) below 5%. High FFA
content can impede downstream processing and
can have implications for the food safety of palm
oil products intended for consumption.
FFA content can increase when oil palm FFB are
damaged during harvesting, handling or trans-
port. High lipase activity leads to rapid oil acid-
ification in bruised ripe fruits. To ensure FFA
content stays low, SIPEF ensures proper man-
agement of handling, storage and transportation
practices. FFB are delivered to mills as quickly as
possible and controls are undertaken for overripe
fruits and bruising.
AVERAGE PERCENTAGE OF FFA IN SIPEF’S PALM OIL PRODUCTION
PALM OIL MILLS INDONESIA 2018 2019 2020 2021
PLPOM 2.65% 2.97% 3.14% 3.42%
BMPOM 3.14% 3.06% 3.13% 3.13%
UMWPOM 3.62% 3.98% 3.31% 3.65%
MMPOM 3.46% 3.55% 2.97% 3.32%
BTPOM 3.86% 3.47% 3.40% 4.00%
DMPOM 3.71% 3.65% 3.57% 3.40%
PALM OIL MILLS PAPUA NEW GUINEA
HPOM 3.68% 4.03% 3.03% 2.71%
NPOM 4.30% 3.98% 3.70% 3.06%
BPOM 4.23% 4.26% 3.18% 3.64%
43
SIPEF Sustainability Report 2021 Responsible production and processing
FOOD SAFETY: MITIGATING THE RISK OF 3MCPD CONTAMINANTS
The last few years have seen rising concern
by food safety authorities about the pres-
ence of common probable food contami-
nants in edible vegetable oils. One of the
biggest concerns relates to 3-monochlo-
ropropane-1,2-diol (3-MCPD), a chemical
that has been associated with health risks
when consumed at unsafe levels. 3-MCPD
can be found in all refined vegetable oils.
In 2021, SIPEF partnered with experts
to launch a project exploring methods
to mitigate the risk of 3-MCPD contami-
nants. 3-MCPD forms from chloride traces
in crude palm oil (CPO) when heated at
temperatures of more than 200 degrees
Celsius during the refining process.
SIPEF is an upstream player but, through
the project, is looking at ways to reduce
the use of chloride in the field and its mill-
ing activities, in order to mitigate the risk
of 3-MCPD formation in the mid-stream
activities of its customers. This includes
controlling the sources of chloride that
could impact the initial processing steps
in the factory.
The first trials are showing good results,
and SIPEF will focus on scaling the project
up over the coming years, including build-
ing the first washing installation in collab-
oration with its partner on the project.
44
The connection to the world of sustainable tropical agriculture
Research & Development: Verdant Bioscience
SIPEF recognises the significant potential for
R&D and innovation in improving productivi-
ty and quality in the production of oil palm and
palm products. Increasing oil yields per hectare
remains a crucial focus area for the palm oil indus-
try, which is under pressure to produce more veg-
etable oil sustainably, but with little or no access
to additional land. In that context, the Company's
38% participation in Verdant Bioscience Pte Ltd
(VBS), an R&D company founded in 2013, is of
particular importance.
Through VBS, SIPEF is investing in the develop-
ment of high-yielding F1 hybrid oil palms, other
supporting technologies and innovative solu-
tions that underpin the significant potential for
yield and productivity improvement in the global
palm oil sector. The seeds from a single selected
F1 hybrid variety will have higher yields and be
genetically uniform. This genetic uniformity
within each F1 hybrid variety allows management
practices (harvesting, nutrient application and
replanting time) to be further optimised, from
which growers can leverage great value.
By investing and working with VBS, SIPEF not
only has access to new varieties of high-yielding
oil palms, but also to the real potential to generate
very meaningful sustainability benefits world-
wide. Increasing yield per unit of area without
increasing the area of oil palm planted could
eliminate the risk of further loss of rainforest
and biological diversity.
45
SIPEF Sustainability Report 2021 Responsible production and processing
Despite the challenges of operating during a
pandemic, the F1 hybrid programme has made
good progress, and candidate F1 hybrid crosses
grown in the nursery were planted in the field in
2021. Further testing of new F1 hybrid crosses
will now continue each year with female plants
from dierent genetic backgrounds. Successes
were also achieved in increasing the frequency of
crosses with F1 hybrid palms from well-defined
but diverse genetic backgrounds. The first-gen-
eration ospring of these homozygous parental
plants (F1 hybrid crosses) have the potential to
deliver greatly improved yields.
As a major shareholder of VBS, SIPEF is testing
commercial varieties of candidate oil palms on
its Sumatran plantations. These trials include
selection, not only based on higher yields, but also
on important commercial secondary traits such
as disease resistance, as well as selection of new
commercial material for specific environmental
conditions, e.g. rainfall amount and distribution,
soil fertility, microbial diversity and moisture
holding capacity.
VBS agronomists and crop protection sta have
continued to work with SIPEF plantation man-
agement to make recommendations in order to
realise the potential of existing plantations, main-
ly by increasing productivity, but also through
innovations that focus on enriching soil health.
Long-term trials of both fertilisers and compost
have been carried out on representative soils in
each of the regions where SIPEF has oil palm
operations.
VBS also works with the plantation management
of PT Tolan Tiga Indonesia on the development
of new insights and their future integration into
strategies. These developments include the opti-
misation of plant growth, the regulation of car-
bon in the soil, the maintenance of good water
balance, and the control of pests and diseases.
Through these developments, the Group wants
to prevent commercial losses in oil palm, rubber
and tea.
VBS ENGAGES IN RESEARCH AND DEVELOPMENT ACTIVITIES IN THREE MAIN AREAS:
Plant breeding, genetics*
and biotechnology, including
the development of new or
improved crop varieties
Improvements in agronomic
practices, most notably
through the optimisation of
palm nutrition
Crop protection and resil-
ience, including enhancing
r
esistance to increasing
threats from pests and diseas-
es, and resilience in changing
growing conditions
* : The scope does not include genetic modification
46 The connection to the world of sustainable tropical agriculture
SUSTAINABILITY CERTIFICATION HIGHLIGHTS IN 2021
In addition, work is also being undertaken to fur-
ther optimise the good agricultural practices that
underpin the sustainable manner in which SIPEF
operates its plantations. Preference is given to the
biological control of pests and the minimal use of
pesticides. With these developments, SIPEF also
aims to reduce its carbon footprint and increase
the potential for carbon storage in the soils in its
production areas.
More information can be found in the Annual
Report part 1 (Company Report), pages 63 and
further.
Sustainability
certification progress
Sustainability certification is a versatile tool that
can be used continuously throughout a company’s
growth, and it remains fundamental for SIPEF
in implementing its sustainability strategy. The
commitment to managing operations in a sustain-
able manner is an ongoing, transformative pro
-
cess, and certification helps to guide this journey.
It supports the implementation of good practices
and continuous improvement, and provides a
framework for transparency and accountability.
Throughout 2021, SIPEF continued to maintain
and progress its compliance with leading sustain-
ability standards.
PALM OIL
SIPEF produced a total of 363 479 tonnes of crude palm
oil (CPO) and 73 604 tonnes of palm kernels (PK), cer-
tified in accordance with the sustainability standards of
the Roundtable on Sustainable Palm Oil (RSPO).
Eight mills are RSPO Certified Identity Preserved, one
mill is RSPO Certified Mass Balance.
SIPEF’s six mills in Indonesia are all ISPO certified.
BANANAS
All bananas produced during the reporting period were
certified against the Sustainable Agriculture Standard of
the Rainforest Alliance. SIPEF’s banana production has
further continued to adhere to the GLOBALG.A.P. and
Fairtrade standards.
TEA
All tea produced during the reporting period was certi-
fied against the Sustainable Agriculture Standard of the
Rainforest Alliance.
95% of palm
products RSPO
certified
100% Rainforest
Alliance certified
100% Rainforest
Alliance certified
47
SIPEF Sustainability Report 2021 Responsible production and processing
RSPO certification
As of 31 December 2021, 69% of the area under
SIPEF’s own estates is RSPO certified. This is
equivalent to a total area of 80 099 hectares.
During the reporting period, SIPEF’s supply base
produced 1 555 758 tonnes of certified FFB, which
resulted in a volume of 363 479 tonnes of certified
sustainable palm oil (CSPO) and 73 604 tonnes of
certified sustainable palm kernels (CSPK).
SIPEF’s nine mills and two kernel crushing plants
have maintained their RSPO certification during
the reporting period. Eight mills are RSPO cer-
tified Identity Preserved, with only one mill in
Indonesia (Dendymarker - DIL) certified Mass
Balance, due to part of its supply base not being
certified yet. This includes supply from a group of
smallholders, and the first production from new
developments at Musi Rawas that have followed
the RSPO New Planting Procedure (NPP), but
are awaiting the issuance of a concessions rights
agreement (Hak Guna Usaha – HGU). As such,
5% of SIPEF’s total production of CPO was not
certified in 2021.
The certification of the new developments will
progress once the issuance of the final conces-
sion rights agreements are approved by the
Indonesian Government. This process takes
time, as it requires the majority of the land within
the HGU to have been acquired. Following the
principles of Free, Prior and Informed Consent
(FPIC), the process can take many years. Pending
the approvals, the aim is to have part of the new
developments at Musi Rawas certified by 2023,
with the full scope to be achieved by 2026.
SIPEF’s progress on smallholder certification is
reported in the Responsible sourcing and small-
holder production chapter (see page 96).
SIPEF’s overall progress towards RSPO certifi-
cation is also updated annually through its RSPO
Annual Communication of Progress (ACOP)
report, available at: rspo.org/members/acop
CSPO AND CSPK PRODUCTION 2019  2021
201 992
41 751
102 835
21 784
199 877
42 076
210 276
42 801
153 203
30 803
118 123
24 706
2019 2020 2021
Indonesia Papua New Guinea Indonesia Papua New Guinea Indonesia Papua New Guinea
48
The connection to the world of sustainable tropical agriculture
ENVIRONMENTAL MANAGEMENT SYSTEM CERTIFICATION
SIPEF'S APPROACH TO EMS CERTIFICATION
SIPEF has an environmental policy focused on safe-
guarding the environment and reducing the Group’s
environmental impacts. To implement this across its
diverse set of operations, the Group’s Environmental
Management System (EMS) has been designed to
be adaptable to its dierent commodities and loca-
tions, while also ensuring that environmental risks
are evaluated and addressed in a systematic manner.
For all of SIPEF’s operations, the following EMS
principles and components apply:
I
dentifying, evaluating and mitigating environ-
mental risks
Measuring and tracking environmental
performance
Legal compliance, including with local en
viron-
mental laws
F
ramework for monitoring and continuous
improvement
Framework for compliance with leading, credi-
ble sustainability standards and certification
SIPEF’s approach to EMS certification varies by commodity and country of operation to ensure the best
management approach is employed and customised to the needs and requirements in each local context.
The Group has maintained its ISO 14001, ISO 9001 and GlobalG.A.P. certifications for the respective locations
during the reporting period.
INDONESIA
SIPEF’s operations in Indo-
nesia engage an approach that
combines RSPO certification
with the quality management
system (QMS) certification
ISO 9001.
PAPUA NEW
GUINEA
SIPEF’s EMS at its palm oil
operations in Papua New
Guinea is certified in accord-
ance with the ISO 14001
standard.
IVORY COAST
In Ivory Coast, SIPEF’s banana
operations are GLOBALG.A.P.
and Rainforest Alliance certi-
fied, and are regularly audited
against the quality manage-
ment system and environmen-
tal performance requirements
of these standards.
49
SIPEF Sustainability Report 2021 Responsible production and processing
Climate change
Climate change is causing severe impacts world-
wide, and there are serious risks for the food and
agriculture sectors. Climate change can disrupt
food availability, reduce access to food and aect
food quality, leading to a negative impact on
food security at global, regional and local levels.
Projected increases in temperatures, changes in
precipitation patterns, changes in extreme weath
-
er events and reductions in water availability may
all result in reduced agricultural productivity.
The agricultural sector itself is also a contributor
to climate change. Together, agriculture, forestry
and land use account for around 18% of global
greenhouse gas (GHG) emissions.
8
Although
reducing GHG emissions from agriculture
remains challenging, there is significant mitiga-
tion potential. In palm production, for example,
improved integration of innovative techniques
into growing and processing methods, such as
capturing methane from the wastewater ponds,
the ecient use of fertilisers, and increases in oil
yield per hectare, can all play a role.
In recognition of the gro
wing impacts and risks,
SIPEF is working to expand the scope of its sus-
tainability strategy to more holistically address
issues linked with climate change. An important
step taken in this regard is the calculation of
SIPEF’s carbon footprint at Group level, which
was completed in 2021.
During the reporting period, SIPEF also contin-
ued to engage in the climate action initiatives the
Group has in place under its current approach,
including:
A compos
ting facility for palm oil residues
M
ethane capture facilities and biogas plants
that generate renewable electricity
A biomass pellet facility
Biodiv
ersity, conservation and reforestati-
on programmes in Indonesia, Papua New
Guinea and Ivory Coast
8 Ritchie, H. and Roser, M. (Retrieved February 2022). Emissions by Sector. Our World in Data. https://ourworldindata.org/emissions-by-
sector#agriculture-forestry-and-land-use-18-4
50 The connection to the world of sustainable tropical agriculture
Carbon footprint
In 2019, SIPEF started to calculate its carbon
footprint at Group level, using the ISO 14064
standard. This methodology is aligned with widely
used industry standards, and enables SIPEF to
calculate its annual net GHG emissions for the
full scope of its operations. Accurately measuring
current GHG sources and sinks will provide a
baseline against which to set future targets and
monitor progress. It will also help SIPEF to deter-
mine its decarbonisation priorities, allocate the
appropriate resources, and identify the actions
that can be taken to mitigate and adapt to climate
change impacts.
As of 2021, the first steps have been completed
with the selection of the methodology and the
review of the data. In 2022, SIPEF will be working
with an external verifier on its calculations and
working towards assurance. SIPEF also aims to
shape its carbon strategy in 2022, and set both
short, medium and long-term goals on GHG emis
-
sion reductions.
The results presented in this section include the
estimated net annual emissions for the Group’s
Scope 1 and Scope 2 activities for 2019-2021, and
account for emissions from upstream production,
downstream processing and transport to the point
of sale for palm oil, rubber, tea and bananas with-
in SIPEF’s operations in Indonesia, Papua New
Guinea and Ivory Coast.
It should be noted that the GHG emissions data
presented in this report cannot be compared with
the results obtained using the RSPO PalmGHG
Calculator. The PalmGHG tool is closely aligned
to the ISO 14044 life cycle assessment (LCA)
methodology, and the results cannot be compared
directly, due to key methodological dierences
between the two models.
TOTAL GROUP NET EMISSIONS 2021 SCOPES 1 & 2tCO
2
e)
YEAR SCOPE 1 SCOPE 2 TOTAL
2019 409 166 4 632 413 798
2020 527 069 8 860 535 929
2021 616 937 11 418 628 355
It should also be noted that, due to covid-19, the
verification and validation of the data following
the ISO 14064 methodology was not possible in
2021, and the data presented in this section is
therefore still an estimate. A limited verification
will be done by a certification body in 2022.
     
The total net emissions of the Group for
2019 were calculated at 413798 tCO
2
e. This
covered the Group’s production of 312514
tonnes of crude palm oil (CPO), 6 326 ton-
nes of rubber, 2331 tonnes of tea and 32849
tonnes of bananas in 2019.
The to
tal net emissions for the Group for
2020 were calculated at 535929 tCO
2
e. This
covered the Group’s production of 329284
tonnes of CPO, 6 011 tonnes of rubber, 2 762
tonnes of tea and 31158 tonnes of bananas
in 2020.
The to
tal net emissions for the Group for
2021 were calculated at 628355 tCO
2
e. This
covered the Group’s production of 384178
tonnes of CPO, 3 826 tonnes of rubber,
2664 tonnes of tea and 32200 tonnes of
bananas in 2021.
51
SIPEF Sustainability Report 2021 Responsible production and processing
The majority of emissions for the Group fall under
the category of Scope 1, the emissions from Group
owned or controlled sources, rather than Scope
2, the indirect emissions from the generation of
purchased electricity, steam, heating and cooling
consumed by the Group.
SIPEF is planning to broaden its calculation to
include Scope 3 emissions. This category covers
indirect emissions from within the Group’s value
chain, for instance from smallholders, osite
material transport, workers commuting, business
travel and other sources. Further data validation
and verification, as well as engagement with third
parties, will be necessary to make this possible.
Palm oil is by far the largest contributor to the
Group carbon footprint (96%), due to the large
scale of operations. The greatest contribution per
country is from Indonesia, again due to the larger
hectarage and scale of the Group’s operations in
the region.
The increase in emissions in the years leading up
to 2021 is mostly attributable to the expansion of
oil palm plantations in Musi Rawas, as well as the
increase in production of CPO, which is directly
proportional to the increase in palm oil mill eu-
ent (POME). Over the period of 2019 to 2021 there
was a 29% increase in hectares of land cleared of
rubber and mixed rubber/agroforestry for the
purpose of conversion to oil palm. This resulted
in emissions from the cleared biomass as well as
a proportional decrease in CO
2
sequestration in
those areas. At the same time there was also a 23%
increase in CPO production from 2019 to 2020.
   
The ISO 14064 carbon calculation methodology
takes into account both carbon emissions, which
release GHGs into the atmosphere, and carbon
sinks, which contribute to the sequestration of
atmospheric carbon. The crops grown by SIPEF
(palm, banana, tea and rubber) act as carbon sinks.
Sources of emissions from the Group’s activities,
ranked in order of significance, are: historic and
current land use change, POME, nitrogenous
fertilisers, fertiliser, fuel in other transport, and
mill diesel usage. Land use conversion and POME
are the main contributors to the gross emissions.
The emissions from the clearing of mixed pre-
vious land use (rubber/agroforestry) were com-
pensated by carbon sequestration in the planta-
tions. Still, a reduction in sequestration occurred
between 2019 and 2021, due to the conversion of
rubber to palm, the replanting of palm, and the
conversion of scrub land into palm.
The calculation on sequestration includes conser-
vation areas within the boundaries of the estates,
as well as High Conservation Value (HCV) and
High Carbon Stock (HCS) areas within Company
concessions. The SIPEF Biodiversity Indonesia
(SBI) conservation area (12 672 hectares) is not
included as a sink, as the ISO 14064 methodology
only takes into account operational emissions
and sinks. If SBI is taken into account, it would
represent an estimated 116 445 tonnes of CO
2
e
per annum as a sink.
52
The connection to the world of sustainable tropical agriculture
    
In palm oil production, POME is a significant
source of GHG emissions. Emissions from POME
primarily result from the anaerobic digestion of
the organic material in the euent that generates
methane as a by-product. The emissions resulting
from POME can be mitigated by further rolling
out the methane capture technologies already
operating in the Group. Using these technologies,
parts of the conventional pond-based treatment
systems are covered and the methane captured is
flared, or burnt in a biogas installation.
Methane is a powerful GHG. The global warming
potential per mole of methane is 25 times that of
carbon dioxide, which makes it one of the most
eective areas for SIPEF to focus on for reduction.
Methane also has a high calorific value, so it can be
used to generate electricity if captured and stored.
Electricity generated by burning methane is, in
turn, much cleaner than the energy produced by
burning coal or diesel, which are the most com-
mon sources of energy in the countries where
SIPEF operates. The Group’s methane capture
facilities fitted with biogas plants in Indonesia
generated 6 039 602 kWh of electricity in 2021,
all of which was used for powering its mills or for
general use by nearby communities.
In Indonesia, four mills already have functioning
methane capture facilities. In Papua New Guinea,
one mill, Barema, has a methane capture tank.
However, due to technical issues, the tanking sys
-
tem was not fully operational from 2019 through
to 2021. This impacted the emissions linked with
POME in Papua New Guinea during this time-
frame. To mitigate the impact of methane Hargy
Oil Palms Ltd (HOPL) has set out a mitigation
programme to establish methane capture facili-
ties for all its mills, to be completed by 2030.
 
In 2018, the European Union set its vision to be cli-
mate-neutral by 2050
.
9
Subsequently, many polit-
ical bodies and businesses have followed suit, with
an increasing number of institutions and com-
panies calculating climate risk, setting net-zero
targets and developing climate action plans.
The calculation of the SIPEF group carbon foot-
print enables the establishment of a baseline,
which is essential for setting GHG emissions
reduction targets. As a critical next step, a GHG
emissions reduction strategy is in development,
building on the various existing measures SIPEF
has implemented in recent years. Further infor-
mation on initiatives and target setting will be
made available in SIPEF’s upcoming Carbon
Report, to be released in 2022.
The calculation of the SIPEF group
carbon footprint will enable the
establishment of a baseline, which is
essential for setting GHG emissions
reduction targets.
9 European Commission. (Retrieved February 2022). Climate Action. 2050 Long-Term Strategy.
https://ec.europa.eu/clima/eu-action/climate-strategies-targets/2050-long-term-strategy_en
53
SIPEF Sustainability Report 2021 Responsible production and processing
BIOPELLETS: A RENEWABLE ALTERNATIVE TO FOSSIL FUELS
To mitigate climate change, it is cru-
cial to reduce reliance on fossil fuels.
Around two-thirds of global GHG emis-
sions stem from the burning of fossil
fuels for energy, utilised for heating,
electricity, transport and industry.
SIPEF continues to strive for a reduction
in its overall energy consumption by increas-
ing operational eciencies, as well as initiatives that
generate or utilise renewable energy.
SIPEF initiated its biopellets project in response
to the results of a study conducted by the Group on
renewable alternatives to fossil fuels. Biopellets are
a carbon-neutral solid fuel that can directly replace
coal or other types of biomass.
The project is taking place at SIPEF’s
Umbul Mas Wisesa (UMW) palm oil
mill, where a biomass pellet facility was
constructed in 2020. The facility is able
to convert empty fruit bunches (EFB),
a by-product of the milling process, into
high-quality calorific pellets using a heat-
ing process called torrefaction.
The project started in 2019, but the initial equipment
installed in 2020 was found not to be suitable for the
length of the fibres of the shredded EFB. Repairs and
modifications to the plant are under way, and the
facility is expected to be fully operational in 2022.
MANGROVE RESTORATION: REINFORCING NATURAL PROTECTION AGAINST RISING SEA LEVELS
While most of SIPEF’s previous and current initia-
tives have been geared towards climate change miti-
gation, SIPEF has also started to expand its strategy
to incorporate opportunities for building resilience
against the impacts of climate change.
In June 2021, HOPL in Papua New Guinea initiated a
new project focused on rehabilitating mangrove for-
ests. These coastal forests provide a natural defence
against storm surges, coastal erosion and coastal
flooding. They are also crucial for livelihoods and
food security for local communities, and serve as a
breeding ground for marine biodiversity, including
fish, crabs, shrimps, birds and reptiles.
Mangrove planting and rehabilitation is one of the
most eective and least costly methods of coastal
defence against rising sea levels. The project focuses
on the development of a mangrove nursery at the
Kiba plantation at HOPL’s Navo operations, in order
to re-establish the coastal buer where it had been
degraded over an area of 6.5 hectares. The rehabili-
tation eorts are part of a wider plan for replanting
oil palms in an area located next to the designated
coastal buer zone. Various types of mangrove trees
will slowly be introduced over the course of five years.
HOPL will continue to explore the potential of man-
grove rehabilitation as an adaptation solution for
protecting the coastal areas where it operates from
the impacts of climate change. The company is closely
monitoring the results to learn from the project, make
improvements and replicate it if successful.
54
The connection to the world of sustainable tropical agriculture
55
SIPEF Sustainability Report 2021 Responsible production and processing
New developments: New developments do
not take place on High Conservation Value
(HCV) areas, High Carbon Stock (HCS)
forests, peatland, fragile or marginal soils.
The rights of local communities must also
be respected, including their rights to any
land being developed. The Group follows
the RSPO New Planting Procedure (NPP)
prior to any new developments in its own
operations.
Defores
tation monitoring: SIPEF
monitors its concessions in Indonesia and
Papua New Guinea for any land use change
and potential illegal deforestation activi-
ties. Monitoring also covers areas managed
under third-party suppliers.
Land use chang
e verification: SIPEF
works with external technical experts and
partners to supplement its monitoring
systems with the verification of any land use
change in the areas under the Company’s
management in Indonesia and Papua New
Guinea.
No Deforestation
Natural forests store huge amounts of carbon and
host the vast majority of the world's terrestrial
species. They are also important for the liveli-
hoods of millions of people, including indigenous
and local communities.
Deforestation removes carbon stocks from for-
ests and releases them into the atmosphere. The
climatic impacts of forest loss can vary considera-
bly, depending on the specific features of aected
areas. Emissions from land use change can be
substantial when mature forest is being impacted.
Deforestation also contributes to biodiversity loss
and can have damaging impacts on soils, including
erosion and desertification.
Collective and coordinated eorts by govern-
ments and businesses will be key to eliminating
deforestation and to reaching global emissions
targets linked with land use.
Since November 2014, SIPEF has upheld a
group-level commitment to No Deforestation, as
part of its wider commitment to No Deforestation,
No Peat, and No Exploitation (NDPE). While this
policy applies to all of its crops, extra attention is
placed on its oil palm operations.
SIPEF’s approach to eectively implementing its
No Deforestation policy includes the following
components and measures:
56 The connection to the world of sustainable tropical agriculture
Remediation and compensation: SIPEF
is committed to the RSPO Remediation and
Compensation Procedure (RaCP) for its
own oil palm operations. The RaCP focuses
on assessing historical plantation develop-
ment, undertaken since November 2005,
that has not undergone HCV assessments.
If HCV area loss is confirmed through the
procedure, a conservation programme must
be developed to compensate for the loss.
Fire prevention and management:
SIPEF has a strict no burning policy, which
is applicable to its own estates and to sup-
pliers. The Company also has a fire risk alert
monitoring system, as well as firefighting
procedures in place in case of any incidents
of fire.
57
SIPEF Sustainability Report 2021 Responsible production and processing
SHIFTING TRENDS: DEFORESTATION POLICY AND REGULATORY MEASURES
With the world accelerating its transition to a low
carbon economy, policy makers are strengthening
commitments and taking strict regulatory measures
aimed at preventing deforestation.
At the 26th annual United Nations Climate Change
Conference (COP26) in Glasgow, more than 100
countries pledged to halt and reverse deforestation
by 2030. As a major consumer of tropical agricultural
commodities, the European Union has also recent-
ly proposed a regulation that sets mandatory due
diligence rules aimed at preventing the import of
commodities linked to deforestation.
10
Six commod-
ities – beef, wood, palm oil, soya, coee and cocoa
– and some of their derived products are included
in the scope.
In 2018, the Indonesian government placed a tem-
porary moratorium on new permits for oil palm
plantations, which ended in September 2021. The
moratorium came into force in part to prevent
forest fires and land conflicts. Together with other
factors, including the increased number of compa-
nies covered by No Deforestation, No Peat, and No
Exploitation (NDPE) policies, this has played a role in
Indonesia’s deforestation rate hitting historic lows in
2020 and 2021. It is worth noting that deforestation,
specifically attributed to the development of oil palm
plantations, has also fallen to its lowest level since
2017 in Indonesia, Malaysia and Papua New Guinea.
11
The complexity of implementing No Deforestation
principles at a wider landscape level remains very
much dependent on informed sustainable land use
planning and strategies, which involve local landown-
ers and policy makers. The eorts needed to ensure
a just transition for smallholders are significant,
and will require investment, dialogue and a sense
of urgency from governments and businesses alike.
10 European Commission. (2021, November 17). Questions and Answers on New Rules for Deforestation-Free Products.
https://ec.europa.eu/commission/presscorner/detail/en/qanda_21_5919
11 Chain Reaction Research. (2022, March 7). The Chain: Deforestation Driven by Oil Palm Falls to a Four-Year Low.
https://chainreactionresearch.com/the-chain-deforestation-driven-by-oil-palm-falls-to-a-four-year-low/
58 The connection to the world of sustainable tropical agriculture
New developments
SIPEF adheres to the requirements of the RSPO
NPP for any new developments in its oil palm
operations.
The NPP requires all new development plans
to undergo an integrated High Carbon Stock
Approach (HCSA) and HCV Assessment, in line
with current relevant standards and prior to
any land development. The process includes a
peer review of the HCV/HCS assessments, all
of which are available on the HCV Network and
HCSA websites.
The procedure also requires companies to engage
with community stakeholders and follow the pro-
cess of Free, Prior and Informed Consent (FPIC),
as well as to conduct social and environmental
impact assessments, greenhouse gas (GHG)
assessments, soil suitability studies and land use
change analysis.
Non-oil palm new developments follow similar
procedures, as well as any relevant requirements
under the Rainforest Alliance standard.
   2021
In 2021, three NPP assessments were carried
out in anticipation of the planned conversion of
two rubber plantations to oil palm, as well as the
acquisition of one existing oil palm estate. These
NPPs cover 5 839 hectares of new development
area.
Deforestation monitoring
SIPEF’s deforestation monitoring programme
primarily utilises the Global Forest Watch (GFW)
platform as a remote sensing tool to monitor
its concessions for tree cover loss and land use
change, including illegal land conversion and
deforestation.
The programme has been significantly expand-
ed since 2020, and now covers the full scope of
SIPEF’s own operations in Indonesia and Papua
New Guinea, and their supplier areas.
59
SIPEF Sustainability Report 2021 Responsible production and processing
CAUSE OF INCIDENT EVALUATED
If the incident is verified to have occurred, the cause of the incident is
evaluated. This includes whether the incident was human-induced or
due to natural causes, such as stream bank erosion, natural tree mortality
or wind damage. Non-natural causes can include, but are not limited to,
encroachment for subsistence farming, deforestation for timber or fire-
wood, or conversion for the purposes of commercial farming or forestry.
SIPEF’S PROCESS FOR MONITORING DEFORESTATION USING GFW
GFW ALERT RECEIVED
When an alert is received via the Global Forest Watch (GFW) platform,
field teams first investigate the site to verify whether there has in fact been
an incident of tree cover loss. The majority of alerts being received turn
out to be false positives, which result from interpretation errors due to
the technical parameters within the GFW monitoring system.
VERIFICATION OF MANAGEMENT CONTROL
Verification is carried out to determine whether SIPEF has manage-
ment control over the land where the incident has occurred, namely if it
was purchased by SIPEF or not. As per FPIC requirements, landowners
are given the option not to sell, and when this happens SIPEF does not
have control over these areas of land, even if they are located within the
Company’s concession areas.
ACTIONS TAKEN
All illegal deforestation activities are reported to the police, illegal settlers
or land users evicted, and areas restored with natural vegetation as soon
as possible. In alert cases where SIPEF does not have management con-
trol, SIPEF will inform and engage with communities on its sustainable
land use policies.
60 The connection to the world of sustainable tropical agriculture
   2021
In 2021, a total of 577 alerts were received through
GFW monitoring of tree cover loss within SIPEF’s
concession areas in Indonesia. Upon investiga-
tion, 168 incidents were confirmed to be actual
tree cover loss, of which 89% were found to be
caused by land clearing by local communities.
Around 88% of the incidents took place in Musi
Rawas (South Sumatra) on land occupied by
communities that is currently not under SIPEF’s
management control.
In Papua New Guinea a total of 29 alerts were
received for Hargy Oil Palms Ltd (HOPL) supplier
areas, all of which were confirmed to be actual tree
cover loss. The cause of 17 of the incidents was
found to be a result of unauthorised clearing for
food gardening by local communities, while the
causes for the remaining 12 are still undergoing
investigation.
GLOBAL FOREST WATCH TREE COVER LOSS MONITORING DATA 2021
WITHIN OWN CONCESSIONS WITHIN SUPPLIER AREAS
COUNTRY /
PROVINCE
GFW
ALERTS
VERIFIED
INCIDENTS
OF TREE
COVER LOSS
VERIFIED
AREA OF
TREE COVER
LOSS HA
GFW
ALERTS
VERIFIED
INCIDENTS
OF TREE
COVER LOSS
VERIFIED
AREA OF
TREE COVER
LOSS HA
INDONESIA 577 168 117 N/A N/A N/A
North Sumatra 18 0 0 N/A N/A N/A
Bengkulu 197 20 6 N/A N/A N/A
South Sumatra 362 148 111 N/A N/A N/A
PAPUA NEW GUINEA
0 0 0 29 29 24
TOTAL 577 168 117 29 29 24
:
•
GF
W tree cover loss monitoring does not cover supplier areas in Indonesia. These areas are monitored via the land use change verification
component of SIPEF’s deforestation monitoring approach.
• Verified area of tree cover loss in Papua New Guinea covers only 17 incidents, as the verification of areas of tree cover loss for the remaining
incidents is still underway.
61
SIPEF Sustainability Report 2021 Responsible production and processing
Land use change analysis
and verification
SIPEF has engaged Earthqualizer Foundation
(EQ) to monitor all of its estates and suppliers
against its NDP commitment. The engagement
relies on a review of historic and real-time analy
-
sis of satellite imagery to detect any change in land
cover that contravenes the NDP commitment.
Past incidents are verified through a Recovery
Liability Assessment, which also includes the
documentation of causes and the development
of corrective actions to be implemented so as to
recover any confirmed liability. EQ will provide
NDP monitoring reports based on verified data
and assist SIPEF in engaging with interested
stakeholders. It is planned to link these reports
to the current content on SIPEF’s interactive
mapping application, Geo SIPEF.
62
The connection to the world of sustainable tropical agriculture
Fire prevention and management
SIPEF does not permit the use of fire for land
preparation in its own operations and in the man-
aged areas of its suppliers. The use of fire for clear-
ing land is against the laws of the countries where
the Group operates. It also damages the long-term
fertility of soils and can cause disruption to agri-
cultural business activities. Most importantly,
fires have a negative impact on people’s health,
damage forests and other critical ecosystems,
and contribute to the release of GHG emissions.
With drought conditions becoming more prev-
alent due to climate change, fire risk monitoring
and firefighting remain critical to SIPEF’s fire
prevention and management approach. Water
management in peatlands is also very important
to avoid the risk of creating hotspots for fires, and
SIPEF pays special attention to fire prevention
in these areas.
63
SIPEF Sustainability Report 2021 Responsible production and processing
’    ,
  
SIPEF monitors and manages fire risk via manned
fire towers at its estates, communication and
training for the Group’s field sta, and the inves-
tigation of all directly observed fires and potential
fires or hotspots. Fire hotspots are monitored by
satellite within and up to 100 meters outside its
concession areas, as well as in the areas of its sup-
pliers, using the Fire Information for Resource
Management System (FIRMS).
A strict reporting system is in place to document
all fires on the estates. Automated hotspot alerts
based on satellite imagery are generated on a con-
tinuous basis, and each alert is investigated. The
fire risk status is updated daily and communicated
to all levels of sta. Fire risk status signs are also
placed at numerous sites on SIPEF’s estates, so
that the employees and their families are kept
informed of any potential or verified fires.
In accordance with the law and with the principles
and criteria of RSPO, the Group has trained fire-
fighters, dedicated resources and vehicles fitted
with water tanks and high-pressure water pumps.
When fire risk is considered high, firefighters are
deployed, including outside of the estates to fight
fires in the nearby villages, if necessary.
All verified fires are immediately extinguished,
and an internal report is compiled, which is then
filed with the police. In the case of oil palm oper
-
ations, these reports are also filed with the RSPO.
     2021
In 2021, SIPEF’s fire monitoring system identified
35 hotspots within its own concession areas in
Indonesia, of which one was verified to be an actu-
al fire
. The fire aected an area of three hectares at
PT Dendymarker Indah Lestari's Sei Liam estate
in Musi Rawas, and was found to be linked to land
use activities by communities in areas currently
not under SIPEF’s management control.
In Papua New Guinea two hotspots were iden-
tified within HOPL’s own concession area, and
were both verified as actual fires. Eight hotspots
were identified within HOPL’s supplier areas, of
which only one turned out to be an actual fire. The
fires were primarily linked with food gardening
activities by local communities, and the total area
aected was around three hectares.
NUMBER OF HOTSPOTS VS. CONFIRMED FIRES WITHIN
CONCESSIONS AND SUPPLIER AREAS 20202021
107
35
1
5
000
1
0 0 0
8
1
0
2 2
Indonesia Indonesia
2020
2021
Papua New Guinea Papua New Guinea
Hotspots within concessions
Actual fires within concessions
Hotspots within supplier areas
Actual fires within supplier areas
64
The connection to the world of sustainable tropical agriculture
REFORESTATION PROGRAMME IN IVORY COAST
Ivory Coast has lost more than 85% of its forested
area since 1960, mostly as a result of agricultural
expansion linked with cocoa farming.
12
In recog-
nition of the severity of this issue SIPEF’s banana
company, Plantations J. Eglin, is working to make a
contribution to restoration through its reforestation
programme.
Following a study in 2010 focused on the integrated
management of flora and fauna on its production
sites, the company developed a reforestation plan
for low-lying areas not suited to banana cultivation,
primarily on the sites of Azaguié and Agboville. Over
the years, the programme has gradually expanded to
an area of around 126 hectares, corresponding to 7%
of the company’s estate.
Around 158 000 gmelina (Gmelina arborea), teak
(Tectona grandis) and acacia mangium (Acacia man-
gium) trees were planted between 2010 and 2021.
The vast majority of trees planted were gmelina trees
(78%), as they are better suited to the low-lying land
found in the estates than teak trees (22%), which
thrive better on hillsides. In the first year of the pro-
gramme, around 11 110 teak trees were lost at the
site in Agboville due to excessive water in low-lying
areas. These were replaced by gmelina trees in the
following year.
In 2021, 950 acacia mangium trees were planted for
the first time, broadening the diversity of species
included in the programme.
Although the programme’s ambition is primarily to
have a positive environmental impact, the company
has also been exploring the potential for the sus-
tainable use of wood that could be generated from
thinning. Thinning is already being carried out as
part of the programme’s maintenance activities, and
entails the selective removal of small-diameter and
superfluous trees to improve the growth rate and
health of the remaining trees. However, an assess-
ment undertaken by a local company in 2021 revealed
that many of the trees selected for thinning would
not be suitable for commercial purposes.
Moving forward, Plantations J. Eglin will continue to
focus on maintaining the hectares already planted,
and will evaluate the possibility of expanding the
programme in the future.
: The total area planted diers to the current area under the programme, due to the partial loss of the teak planted area in Agboville in 2010 (ten
hectares), and illegal forest conversion in some of the plot areas in Azaguié (six hectares).
Azaguié
Agboville
46 ha
96 ha
Total area
planted
142 ha
Gmelina
Teak
Acacia Mangium
22% 78%0%
Trees
planted
158064
TOTAL PLANTED AREA UNDER REFORESTATION
PROGRAMME 20102021
SPECIES OF TREES PLANTED UNDER
REFORESTATION PROGRAMME 20102021
12 Mighty Earth. (2021, February 18). Mighty Earth’s Cocoa Accountability Map 3.0 Reveals 47,000 Hectares of Deforestation in Prominent Cocoa-Growing Regions of West Africa.
https://www.mightyearth.org/2021/02/18/mighty-earths-cocoa-accountability-map-3-0-reveals-47000-hectares-of-deforestation-in-prominent-cocoa-growing-regions-of-
west-africa/
65
SIPEF Sustainability Report 2021 Responsible production and processing
Peatlands
Peatlands are a type of wetland formed over thou-
sands of years from partially decayed vegetation.
They occur in almost every country, and fall under
the classification of organic soils. Globally, dif-
ferent definitions have been applied, which can
vary based on the percentage of organic matter
and the minimum thickness of organic layers of
peat being classified.
In their natural state, peatlands are carbon sinks.
They also host unique biodiversity, regulate water
flows, and serve as water purifiers and reserves.
Over time, significant areas of peatland have
been used for agriculture. As of 2015, industrial
plantations covered 4.3 million hectares (27%) of
peatlands in Peninsular Malaysia, Sumatra, and
Borneo.
13
Indonesia and Malaysia collectively
have more than 24 million hectares of peatland.
14
Since 2014, SIPEF has strictly prohibited any
new development on peat, regardless of depth,
across all of its own and its suppliers’ operations.
In Indonesia, SIPEF owns several estates with
historically developed peat, and applies best man-
agement practices as defined by the RSPO and
local regulations.
All estates with areas classified as peatland are
inventoried, documented and reported to the
RSPO to enable the monitoring and promotion
of peat best management practices. SIPEF also
works with its smallholders to ensure that any
areas planted on peat follow the same practices.
Peatland management and conservation
The RSPO Best Management Practices are
designed to mitigate the challenges associated
with cultivating oil palm on historically devel-
oped peat. SIPEF applies these best practices and
identifies areas for conservation and restoration.
To make peatland suitable for oil palm cultiva-
tion it must be drained, which leaves these areas
susceptible to fires, peat soil subsidence, floods
and productivity loss. Implementing good water
management can help to prevent and mitigate
these risks, while also reducing the release of GHG
emissions. For any operations on peat, SIPEF
regulates water levels and maintains a high water
table, in compliance with RSPO requirements.
Following the RSPO Principles & Criteria (P&C)
(2018), SIPEF conducts drainability assess-
ments in accordance with the RSPO Drainability
Assessment (DA) Procedure. The procedure was
developed in 2019 to support oil palm companies
in adjusting their peatland management process-
es, in order to reduce subsidence rates and the
risks of flooding.
To date, three drainability assessments have been
submitted and are awaiting approval by the RSPO.
The assessments were conducted at three estates
and cover around 13 698 hectares, which are in
the process of classification.
SIPEF will continue to monitor the implemen-
tation of its management approach for estates
with developed peat and, where possible, identify
any further opportunities for conservation or
restoration.
13 Miettinen et al (2016). Land cover distribution in the peatlands of Peninsular Malaysia, Sumatra and Borneo in 2015 with changes since 1990.
Global Ecology and Conservation 6 (2016) 67-78.
14 RSPO. (2017, October 30). The Challenges of Growing Oil Palm on Peatlands. https://rspo.org/news-and-events/news/the-challenges-of-growing-
oil-palm-on-peatlands.
66 The connection to the world of sustainable tropical agriculture
Biodiversity and conservation
Biodiversity is declining at a critical rate. The
main drivers of biodiversity loss and the degrada-
tion of terrestrial ecosystems are human-induced:
land use change, nutrient loading and pollution,
overexploitation of natural resources and climate
change.
Biodiversity has always been important for the
agricultural sector. Natural processes and living
organisms are crucial for growing food, yet using
land for agriculture often leads to changes in the
surrounding environment. Prime farmland —
land with good soil and water access — is a limited
resource.
Unfortunately, population growth and the sector’s
continually expanding footprint place sensitive
and important natural areas such as forests at
risk of conversion.
SIPEF’s subsidiaries are located in ecologically
distinctive and biodiverse regions. The Group
recognises its unique position and the role it can
play in mitigating further biodiversity loss by
decoupling deforestation and agricultural expan-
sion, and by contributing to the safeguarding of
important ecosystems in the landscapes where
it operates.
The Company’s management approach for biodi-
versity and conservation consists of the following
commitments and actions:
Pro
tection and restoration
of areas identified for con-
servation within SIPEF’s
concessions
Conservation areas are identi
-
fied through HCV and HCSA as-
sessments prior to development, car-
ried out by licensed assessors under the
HCV Network’s Assessor Licensing Scheme
(ALS). Habitat management plans are deve-
loped for these areas. SIPEF is also commit-
ted to restoring any areas under the Group’s
management control that have been impac-
ted by fires.
Biodiversity monitoring and
no hunting policy
SIPEF is commit
ted to monito-
ring biodiversity in all set-asi-
de areas under its management
control, and to implementing its
no hunting policy on its own estates and
in the cultivated areas of its third-party
suppliers.
Supporting landscape and
biodiversity programmes
and initiatives
Through the SIPEF Foundation,
the Group finances and supports
two long-term biodiversity projects
in Indonesia. Both are based in West
Sumatra near SIPEF’s Agromuko estates.
One is focused on the protection of 12 672
hectares of natural forests, and the other is
a sea turtle conservation programme.
67
SIPEF Sustainability Report 2021 Responsible production and processing
Conservation areas
As of 31 December, SIPEF is managing a total
of 9 219 hectares of conservation area across its
concessions in Indonesia, Papua New Guinea and
Ivory Coast. This includes HCV and HCS areas,
as well as riparian and buffer zones, that fall
under SIPEF’s management control.
15
Around
5510 hectares have been identified at SIPEF’s
oil palm operations in Indonesia, and 3 483 hec-
tares are set-asides at SIPEF’s estates in Papua
New Guinea.
To date, a total of 24 HCV, HCSA and integrat-
ed HCV-HCSA assessments have been carried
out and submitted for approval to the relevant
reviewer organisations (HCV Network or HCSA).
All approved assessments are made available on
the HCV Network and HCSA websites.
All conservation areas under SIPEF’s manage-
ment control are clearly delineated, actively
protected and continuously monitored. SIPEF
engages with neighbouring communities so that
they are aware of the locations, importance and
benefits of the HCV and HCS areas, and so that
the communities have the opportunity to become
actively involved in protecting them. Social HCV
areas remain accessible to communities.
16
Biodiversity monitoring
An important component of SIPEF’s habitat
management plans is biodiversity monitoring.
Biodiversity monitoring is carried out with a com-
bination of camera trap surveys and rangers that
patrol the conservation areas.
The conservation areas within SIPEF’s planta-
tions in West Sumatra are of particularly high
quality. Monitoring eorts have captured apex
predators such as the Sumatran tiger (Panthera
tigris sondaica), leopard cats as well as other large
mammals such as the sun bear (Helarctos malay-
anus), tapirs (Tapirus indicus) and a variety of
monkeys. The regular presence of these mam-
mals is a good indication of ecological viability,
integrity and connectivity within the landscape.
15 Conservation areas identified for the oil palm estates at PT Dendymarker Indah Lestari are excluded from the scope of reporting, as the final
lease agreements have not yet been approved by the Indonesian Government. These areas currently fall outside of SIPEF’s management control.
16 Refers to ‘HCV 5: Community Needs’ and ‘HCV 6: Cultural Values’. For more information: https://hcvnetwork.org/hcv-approach/
68 The connection to the world of sustainable tropical agriculture
17 The Biodiversity Finance Initiative. (Retrieved March 2022). Indonesia. https://www.biofin.org/indonesia.
SIPEF BIODIVERSITY INDONESIA
Indonesia is home to the largest expanse of rainforest
in all of Asia, and hosts 17% of the world’s wildlife.
17
SIPEF contributes to protecting this crucial land-
scape with the SIPEF Biodiversity Indonesia (SBI)
project.
The SBI project is a conservation programme manag-
ing a 12 672-hectare area of forest that acts as a buer
to the Kerinci Seblat National Park. It is one of just
16 projects in Indonesia that have been granted an
ecosystem restoration concession for a term of 60
years. Twenty-five people work at the SBI local oce
in Mukomuko, from experienced rangers to young
graduates, who mostly come from the surrounding
villages. The project focuses on the protection and
monitoring of biodiversity, reforestation of degraded
areas, and engagement with communities.
Biodiversity monitoring has identified an extremely
rich range of megafauna in the area. Species include
the critically endangered Sumatran tiger (Panthera
tigris sondaica), the Asian giant tortoise (Manouria
emys), and the Sunda pangolin (Manis javanica), as
well as endangered and vulnerable species such as
the Sumatran clouded leopard (Neofelis diardi diar-
di), the sun bear (Helarctos malayanus), the tapir
(Tapirus indicus), the Sumatran muntjac (Muntiacus
montanus) and the great argus (Argusianus argus).
Two rare species have also been spotted: an Asian
golden cat (Catopuma temminckii) and dhole dogs
(Cuon alpinus). Monitoring is carried out with 136
camera traps set up throughout the area, and through
visual surveying by the rangers.
In 2016, a reforestation and enrichment programme
was initiated by SBI with the aim of reforesting the
degraded areas that are identified via satellite image-
ry and field checks. To date, nearly 171 hectares of
degraded area have been restored, and around 45258
trees have been planted.
SBI is also helping to develop alternative incomes
for farmers that have historically used parts of the
conservation area to maintain their livelihoods. The
initiative makes use of agroforestry methods to create
sustainable livelihoods that are compatible with the
conservation objectives of the programme. Through
the project, SBI is currently supporting around 309
agroforestry growers who receive technical support
and seedlings to develop tree crops that can provide
them with an income, without causing environmental
damage to the surrounding habitat.
Another aspect of the project is the regular patrols
that are carried out by project sta to address the
ongoing threats of illegal felling of trees, illegal plant-
ing of oil palms and poaching. Oil palms growing
illegally in the forest are identified and felled. The
majority, 1 438, were removed in 2017, but between
60-90 oil palms continue to be felled each year,
demonstrating the need for ongoing monitoring and
community engagement.
69
SIPEF Sustainability Report 2021 Responsible production and processing
TURTLE CONSERVATION PROJECT AT AIR HITAM CONSERVATION PARK
EGGS COLLECTED AND TURTLES RELEASED 20182021
YEARS OLIVE RIDLEY SEA TURTLE
(Lepidochelys olivacea)
LEATHERBACK TURTLE
(Dermochelys coriacea)
GREEN SEA TURTLE
(Chelonia mydas)
EGGS
COLLECTED
TURTLES
RELEASED
EGGS
COLLECTED
TURTLES
RELEASED
EGGS
COLLECTED
TURTLES
RELEASED
2019 4 873 2 734 76 0 0 0
2020 3 934 2 203 0 0 384 248
2021 3 944 2 648 318 230 0 0
Turtles always return to the beach where they were
born, but beach erosion and changing conditions
are reducing the space available for nesting in many
areas.
SIPEF’s turtle conservation project is helping to pro-
tect turtles on a five-kilometre-long stretch of beach
at Air Hitam Conservation Park in Sumatra.
Local authorities and residents of two villages work
together as field operators to monitor the beach. If
turtle eggs are found they are collected to safeguard
them from scavenging lizards, and are hatched in
controlled conditions before they are released. This
important work helps to ensure as many baby turtles
as possible make it back into the sea. Over time, the
goal is to increase the number of turtles returning to
the beaches to lay eggs.
Since 2007, the project has successfully enabled the
collection of 34 682 eggs and the release of 20 206
turtles. In 2021 4 262 eggs were collected and 2 878
turtles released.
The majority are olive ridley sea turtles (Lepidochelys
olivacea), but other species include the leatherback
sea turtle (Dermochelys coriacea), and in previous
years, the green sea turtle (Chelonia mydas). In 2018,
eggs from the leatherback sea turtle were collected
for the first time in seven years.
The project was launched in 2007, and is managed by
the SIPEF Foundation since 2010, in collaboration
with the National Resource and Conservation Oce
of Bengkulu Environment and Forestry Department.
It is one of the very few protection projects in
Sumatra to be implemented by the local population.
70 The connection to the world of sustainable tropical agriculture
71
SIPEF Sustainability Report 2021 Responsible production and processing
Best Management Practices
SIPEF strives to minimise the impacts of its
activities on the climate, as well as on the envi-
ronment surrounding its operations. Essential
to its approach for managing these impacts are
the Best Management Practices (BMPs) that the
Group implements across its operations.
These practices have been developed over the
course of a century of active agriculture in the
tropics, two decades of compliance with credible
certification standards, and an ingrained corpo-
rate culture that stimulates innovation and con-
tinuous improvement.
Wherever possible, the Group also engages in
regenerative and circular practices. These prac-
tices are focused on making use of by-products
and waste from its production and processing
activities, and on implementing nature-based
solutions.
SIPEF’S BEST MANAGEMENT PRACTICES FOCUS ON:
• Sustainable land preparation and management
•
M
inimising the use of agrichemicals
•
P
reserving soil fertility and health
• Using fewer resources to produce higher volumes of
product
•
M
inimising waste and pollution
72 The connection to the world of sustainable tropical agriculture
Integrated Pest Management
Pest management is crucial for protecting
crops and maximising yields. SIPEF engages in
Integrated Pest Management (IPM) for both its
oil palm and banana production.
IPM is an eective and environmentally sensi-
tive approach to pest management that relies
on a combination of common-sense practices.
It integrates a broad set of techniques and meth-
ods to control pests and diseases. The approach
starts with identifying pests and monitoring their
prevalence, taking into account knowledge of pest
biology, life cycles, and the stages of pest damage.
Action is then taken to maintain pests below eco-
nomically damaging levels.
Monitoring
Threshold
Evaluation
and decisions
Biological
control
Soil
preparation
Meteorological
forecasting
Record
keeping
Chemical
control
INTEGRATED
PEST MANAGEMENT
INTEGRATED PEST MANAGEMENT
73
SIPEF Sustainability Report 2021 Responsible production and processing
An important component of IPM involves pre-
venting and supressing pests by using pest-re-
sistant varieties, preparing land appropriately,
and maintaining sanitation, hygiene and nutri-
tion. This minimises disease carry over, propa-
gation, and the susceptibility of crops to pests
and disease. For example, the common fungus
Ganoderma mycelium can be suppressed by
chipping palm trunks and leaving the chippings
exposed to sunlight, enabling the ultraviolet radi-
ation to kill the fungus.
Other examples include:
Disc harro
wing chips into mineral soil to
limit the breeding habitat of the rhinoceros
beetle (Oryctes rhinoceros)
Planting nitrog
en fixing cover crops to pro-
vide extra soil nitrogen and reduce noxious
weeds
Applying emp
ty fruit bunches (EFB) and
formulated fertiliser to the varieties of palm
hybrids that best suit the sites for healthier
and more naturally resistant palms
SIPEF also utilises numerous dierent methods
of natural or biological pest control. This includes
establishing beneficial plants that will foster pop-
ulations of natural enemies, releasing natural pest
enemies such as parasitoids, e.g. Eocanthecona
furcellata, or providing conditions for natural
predators, such as nesting sites for owls or rap-
tor perches in replanting areas. More advanced
forms of biological control include trapping and
infecting male Orcytes with a virus and releasing
them to curb populations of Orcytes.
Research and development of alternative meth-
ods of pest control are being conducted by both
Verdant Bioscience Pte Ltd and the Papua New
Guinea Oil Palm Research Association.
Pesticide use
Pesticides are used as a last resort when other
methods, such as those previously mentioned,
are not able to prevent outbreaks of pests and
diseases above the economic threshold. All active
ingredients in use are reviewed annually for safety
and ecacy.
Pesticides that are categorised as World Health
Organisation (WHO) Class 1A or 1B, or that
are listed by the Stockholm or Rotterdam
Conventions, are not used unless in exceptional
circumstances, as validated by a due diligence
process, or when authorised by government
authorities for pest outbreaks. All of the Group’s
tea, rubber and banana estates are certified to the
Rainforest Alliance Standard, and do not apply
any of the pesticides on its list of prohibited pesti-
cides. The active ingredient, paraquat, was phased
out of all SIPEF operations in July 2016.
SIPEF also focuses on avoiding the development
of resistance to pesticides. The various active
ingredients used are changed regularly, so that
low concentrations of pesticides can continue
to have maximum eect.
All workers, permanent or otherwise, involved
with pesticides are trained and equipped with
Personal Protective Equipment (PPE), and their
health is monitored through regular medical
checkups.
IPM PRACTICES AT INDONESIAN ESTATES IN 2021
Total number of barn owl boxes present on estates 403
Number of occupied barn owl boxes 207
Number of individual beneficial insects released in 2021 365 344
Number of plots of beneficial plants planted in 2021 14 251
Number of plots of beneficial plants maintained (to date) 23 415
74 The connection to the world of sustainable tropical agriculture
Enhancing soil health and fertility
Plants cannot grow without healthy soil, and
SIPEF implements a broad range of BMPs to
protect and enhance the fertility of its production
areas. Soil health starts with soil conservation
practices focused on minimising soil erosion,
maintaining or improving soil structure, reduc-
ing rainwater runo and nutrient loss, conserving
moisture and increasing water infiltration.
At SIPEF’s palm oil operations, all land prepara-
tions start with detailed topographic maps gen-
erated using digital elevation data, and obtained
utilising the latest satellite imagery and drone
technology. These maps are used to assess the
planted areas and ensure that the appropri-
ate BMPs are implemented for soil health and
conservation.
To prevent soil erosion, SIPEF utilises preventa-
tive measures like legume cover crops and follows
best practices including installing stop bunds (silt
traps), silt trenches, bunds and slope protection
like vetiver grass. This prevents sediments enter-
ing the waterways. By applying compost and other
biomass to the soil, soil exposure is reduced, thus
contributing to soil health and conservation.
An important aspect of maintaining and enhanc-
ing soil health is the use of mineral fertilisers.
Used correctly, mineral fertilisers can dramat-
ically increase yield. SIPEF therefore focuses
on finding a balance between the application of
mineral and organic fertilisers, while maintain-
ing the soil’s structure. Annual leaf samples and
periodic soil samples are analysed for nutrient
levels to determine the recommended applica-
tion of fertiliser, in order to minimise fertiliser
use while maintaining or improving productivity
per hectare. This practice is also extended to the
smallholders working with SIPEF.
Fertilisers represent one of the most significant
costs of operations, and their use must be assessed
in relation to overall soil conservation practic-
es. To drive down the use of mineral fertilisers,
organic matter is returned to the fields wherever
possible.
SIPEF has also invested in a composting system
at its Bukit Maradja operations, which processes
100% of the plantation’s EFB and wastewater into
organic fertiliser with a high nutrient content.
75
SIPEF Sustainability Report 2021 Responsible production and processing
ENGAGING IN CIRCULAR PRACTICES: REUSING AND RECYCLING BYPRODUCTS FROM PALM OIL PRODUCTION
USES FOR BYPRODUCTS FROM SIPEF’S OIL PALM PRODUCTION CYCLE
Creating value sits at the heart of SIPEF’s
approach to sustainability, and the Group’s
business strategy. This principle is also applied
at the operational level, where SIPEF strives
to reuse and recycle the by-products from its
production and processing activities.
While the focus of external stakeholders
has always been on the primary product,
palm oil, there are many other by-products
resulting from the oil palm production cycle.
These by-products can often be used as input
resources for production, for instance as fer-
tiliser or fuel, or to generate electricity.
The best use for each by-product is determined
by reviewing the dierent recycling pathways
and the details of each location, such as soil
conditions and cost of transportation, in order
to assess the economic performance of the
conversion.
Pruned palm fronds and old palm trunks
• All pruned palm fronds are left in rows next to the palms to compost.
• During replanting, when trees are replaced, old palm trunks are chipped
and mulched back into the soil as an amendment.
Empty Fruit Bunches
• Where possible, empty fruit bunches (EFB), a by-product from pro-
cessing at the Group’s palm oil mills, are applied to the fields to return
the remaining nutrients and organic matter content back to the soil.
• Composted EFB can be beneficial for certain soils, and can in some
cases be mixed with mill euent to create organic fertiliser. The
composting system at SIPEF’s Bukit Maradja operations is made up
of eight ventilated bunkers and processes 100% of the plantation’s
EFB and POME into organic fertiliser with a high nutrient content.
• Other mill by-products can be used in the composting system, such as
boiler ash and the deposits from the decanting systems. Maintaining
aerobic conditions at a constant level is important to ensure that no
methane is produced during the composting process.
• SIPEF’s biomass pellet facility at SIPEF’s Umbul Mas Wisesa operations
is able to convert EFB into high-quality calorific pellets using a heating
process, called torrefaction.
76 The connection to the world of sustainable tropical agriculture
ENGAGING IN CIRCULAR PRACTICES: REUSING AND RECYCLING BYPRODUCTS FROM PALM OIL PRODUCTION
USES FOR BYPRODUCTS FROM SIPEF’S OIL PALM PRODUCTION CYCLE
While the above are the main current uses for by-products, there are several other uses
being explored, tested and practised within the industry. Ongoing innovation and research
and development will continue to help unlock a wealth of value from what was previously
considered waste.
Palm Oil Mill Euent
• Wastewater from mills, better known as Palm Oil Mill Euent (POME),
is used as a source of methane generated through anaerobic digestion,
which extracts a significant amount of its organic matter content, or
applied to the fields for aerobic digestion and re-absorption into the
palms.
Palm nut mesocarp, endocarp and endosperm
• The palm nut mesocarp, the source of crude palm oil (CPO), contains
significant amounts of fibre, all of which is burned in the mill boilers
to generate electricity through steam turbines. 80% of SIPEF’s mills
run on this form of renewable electricity.
• The palm nut endocarp, the source of palm kernel shell, is sold to
third parties as a biofuel. The calorific value of palm kernel is 18 836
KJ/kg. With 3 300 tonnes sold from Indonesia alone, this equates to
over 62 million MJ.
• The palm nut endosperm, the source of palm kernel oil (PKO), is
also used after the oil is extracted. This product is called palm kernel
expeller, and is used as a component in animal feed.
77
SIPEF Sustainability Report 2021 Responsible production and processing
Indonesia Papua New Guinea
400 000
600 000
800 000
1 000 000
813 708
906 866
954 258
785 027
604 144
785 027
2019 2020 2021
200 000
WATER USE PALM OIL MILLS M
3
WATER USE AT BANANA OPERATIONS
CUBIC METRES M
3
2019 2020 2021
Plantations water use 3601692 4012 702 3901 644
Banana packing stations water use 231 400 211 674 218 112
CUBIC METRES M
3
 / TONNE BANANAS
Banana packing plants water usage intensity 116.7 135.6 128.3
Water management
Water is a precious resource and SIPEF imple-
ments numerous BMPs to ensure it is managed
as carefully as possible. The Group’s approach
focuses on preserving the availability and qual-
ity of water resources for the surrounding com-
munities and environment, as well as for its own
business. SIPEF does this by reusing water as
much as possible to keep water consumption at a
minimum. Pollution of surface and ground water
is mitigated through good soil conservation prac-
tices, the establishment of riparian zones and
wastewater treatment.
SIPEF measures and aims to optimise water
use in all of its operations. However, none of the
Group’s oil palm production areas are irrigated,
and the operations in Indonesia and Papua New
Guinea mainly use water for processing. The
scope of data presented in this section therefore
focuses on water management at SIPEF’s palm
oil mills, banana plantations and banana packing
stations.
  
Since 2017, SIPEF has invested in improving
water usage across palm oil operations, with an
annual target of less than one cubic metre of water
per tonne of FFB for processing. Six out of nine
mills achieved this target in the reporting period.
Bananas remain the Group’s most water-intensive
product, primarily due to the use of irrigation.
Almost 70% of the irrigation water used at the
banana plantation in Ivory Coast is stored in dams
during the rainy season, then reused and pumped
during the dry season a few months later. The
remaining amount comes from rivers alongside
the farms.
Water for the banana packing stations is sup-
plied from wells, due to health and food safety
requirements. The water used is recycled after the
packing process by using decantation tanks, then
stored in the dams for irrigation in the future.
78
The connection to the world of sustainable tropical agriculture
BOD OF TREATED PALM OIL MILL EFFLUENT BY DESTINATION MG/L
INDONESIA DESTINATION 2019 2020 2021
PLPOM Land application 929 856 426
BMPOM Composting 1 239 1 545 1 235
UMWPOM Discharge into water body 24 32 20
MMPOM Discharge into water body 87 90 66
BTPOM Discharge into water body 83 78 57
DMPOM Discharge into water body 98 99 98
PAPUA NEW GUINEA DESTINATION 2019 2020 2021
HPOM Discharge into water body 71 78 109
NPOM Land application 359 121 186
BPOM Land application 100 449 212
  
  
Pollution of waterways is prevented using the soil
conservation measures described in the section
on enhancing soil fertility. All of SIPEF’s crops
are perennial, so there is rarely bare soil between
the planted crops and leguminous cover crops
are used where necessary. Maintaining riparian
buer zones is also important for absorbing runo
before it enters waterways. These buer zones
are made up of natural vegetation and vary in
width (depending on stream or river width), in
alignment with local regulations, sustainability
certification requirements and BMPs.
Wastewater from palm oil mills (POME) is either
used as a liquid fertiliser for land application or
discharged into water bodies. This discharge is
carefully monitored for compliance with local
regulations and to ensure there are no negative
impacts.
The most commonly used indicator of euent
quality is biochemical oxygen demand (BOD).
BOD is a measure of the amount of oxygen the
aerobic bacteria consume as a result of the organic
matter content within the euent. A high BOD
indicates that the euent is rich in nutrients
and can foster the growth of bacteria, thereby
increasing the consumption of dissolved oxygen
within the euent.
BOD levels are regulated by law, and SIPEF uses
its engineering controls and water treatment sys-
tems to ensure the levels stay within the required
limits. When effluent will be discharged into
natural water courses it is important to keep the
BOD as low as possible, so that the euent does
not contribute to the eutrophication or oxygen
starvation of aquatic ecosystems.
The limit for discharge of BOD into a natural
water body is 100 mg per litre. When the euent
is used as a fertiliser and applied to the land, a
higher BOD is favourable, as it indicates a higher
nutrient load. In this case, the limit is 5 000 mg
per litre.
SIPEF also uses other indicators, such as chemical
oxygen demand (COD) and total suspended solids
(TSS), to measure the quality of wastewater being
discharged or used for land application (see page
136 in the Annex).
79
SIPEF Sustainability Report 2021 Responsible production and processing
Respecting human
and labour rights
The agricultural sector is responsible for the live-
lihoods of millions of people worldwide. The sec-
tor has also contributed to a number of additional
positive social impacts, such as development in
the rural areas where tropical commodities are
grown. At the same time, the sector is vulnerable
to significant social risks linked with human rights
and exploitation.
SIPEF acknowledges that sustainable agriculture
cannot be achieved without respect for human
rights. Human rights are inherent to all human
beings, regardless of race, sex, nationality, eth-
nicity, language, religion or any other status. The
Group believes in being a responsible employer
and a good neighbour, and is dedicated to having
a positive social impact in these roles.
As an employer, SIPEF aims to treat all employees
fairly, with respect for human rights, and in line
with local laws and international frameworks
such as the International Labour Organization’s
(ILO) Declaration on Fundamental Principles and
Rights at Work and the United Nations’ Universal
Declaration of Human Rights.
80
The connection to the world of sustainable tropical agriculture
Policies: Human rights
and no exploitation
SIPEF’s commitments to human rights are
stated in its Human Rights Policy, Responsible
Plantations Policy and Responsible Purchasing
Policy. Specific policies are also in place to address
child labour, forced or tracked labour, freedom
of association, occupational health and safe-
ty, equal employment opportunity and sexual
harassment.
Collectively, SIPEF’s policies are built around
the following core principles and commitments:
No exploitation: SIPEF does not tolerate
child labour, forced labour or human traf-
ficking. The minimum working age on all of
SIPEF’s estates and operations is 18. These
policies apply equally to SIPEF, its contrac-
tors and third-party suppliers.
Fair labour practices: SIPEF is com-
mitted to fair labour practices as per the
ILO Conventions on Free and Fair Labour
Principles, and as verified through its RSPO
compliance. Third-party suppliers and
contractors are required to prove that pay
and employment conditions for workers or
contract workers always at least meet legal
or industry minimum standards.
Diversity and inclusion: SIPEF provides
equal opportunities for all and does not
tolerate discrimination. SIPEF’s suppliers
are also required to prohibit any form of
discrimination, including gender-related
discrimination with regards to employment
or pay.
Health and safety: SIPEF is commit-
ted to providing a safe and healthy work
environment for all employees. Third-party
suppliers must also ensure that the working
environments under their control are safe
and without undue risk to health.
Compliance is ensured through the Group’s man-
agement systems, and verified by both internal
and external audits. Any cases of the violation of
human rights, where substantiated, will result in
disciplinary action up to and including dismissal,
and may also lead to legal action.
SIPEF also has an eective grievance mechanism
in place, through which employees can report any
form of child labour, forced labour or human traf-
ficking. The Group is receptive to all grievances
raised by stakeholders, internal and external, and
handles complaints impartially.
Further information on SIPEF’s Grievance Policy
and mechanism can be found in the chapter on
Responsible Business and Transparency on page
113, and on the Company website: www.sipef.
com/hq/sustainability/grievances-sipef-group
81
SIPEF Sustainability Report 2021 Responsible production and processing
Belgium
Indonesia
Papua New Guinea
Ivory Coast
Singapore
1 583
4 628
1
14 998
23
SIPEF’s workforce
SIPEF’s workforce is made up of 21 233 people,
including management, full-time employees, and
temporary workers in Belgium, Indonesia, Papua
New Guinea, Ivory Coast and Singapore.
EMPLOYEES AT GROUP LEVEL
GROUP EMPLOYEES 2019 2020 2021
Male 16 116 16 553 15 749
Female 5 395 5 081 5 484
TOTAL EMPLOYEES
21 511 21 634 21 233
EMPLOYEES BY COUNTRY 2021
PT Tolan Tiga in Indonesia employs the majority
(71%), followed by Hargy Oil Palms Ltd in Papua
New Guinea (22%), and Plantations J. Eglin (8%).
Around 26% of SIPEF’s employees are women.
Fair labour practices
SIPEF applies fair labour practices in all of its
operations. Employment contracts are clear, in
the local language and, at a minimum, in com-
pliance with local laws. All employees have the
right to one day of rest per six days worked. All
employees, workers and their families have access
to health care through insurance and privately
managed clinics.
SIPEF meets all local regulations for wages and
is compliant with the decent living wage calcula-
tions audited by the various certification stand-
ards to which the Group adheres. This includes
workers on piece rate/quotas, for which the wage
calculation is based on achievable quotas dur-
ing regular working hours. In the absence of a
locally relevant benchmark, the Group is working
towards alignment with the definitions of the
Global Living Wage Coalition (GLWC) following
the certification standards’ processes.
   
 
SIPEF respects the rights to freedom of associa-
tion and collective bargaining. There are dierent
arrangements in each country, depending on local
government regulations. As of 31 December, 78%
of SIPEF’s employees are covered by collective
bargaining agreements. In the absence of a proper
collective bargaining agreement or association,
workers are free to join unions or organise accord-
ing to country legislation. The Company has a
process in place to engage with union representa-
tives and enable access to Company management
through channels of dialogue and engagement.
82
The connection to the world of sustainable tropical agriculture
A LIVING WAGE IS DEFINED BY THE GLWC AS FOLLOWS:
 
SIPEF complies with the requirements of the
RSPO, Rainforest Alliance and Fairtrade stand-
ards on living wages. Each of these standards uses
the GLWC’s definition and sets its own require-
ments on how and when the living wage must
be paid.
The RSPO Principles and Criteria (P&C)
2018 include requirements on providing a
decent living wage. The RSPO is working
on defining a benchmark for the oil palm
sector for each country under the national
interpretations.
The Rainforest Alliance Sustainable
Agricultural Standard requires that certi-
fied members work towards a living wage.
The Fairtrade standard has put into eect
a Fairtrade Base Wage for banana planta-
tions as of July 2021. This is currently set
at 70% of the take-home pay needed for a
living wage, as established by the GLWC.
By 2023, pay must reach 100% of the living
wage benchmark.
18 The Global Living Wage Coalition. (Retrieved March 2022). What is a Living Wage? www.globallivingwage.org/about/what-is-a-living-wage/
The remuneration received for a standard workweek
by a worker in a particular place is sucient to
aord a decent standard of living for the worker and
her or his family. Elements of a decent standard of li-
ving include food, water, housing, education, health
care, transportation, clothing, and other essential
needs including provision for unexpected events.
18
The GLWC publishes benchmarks that define the level
of a living wage per region and per commodity. These
benchmarks are developed by independent research-
ers and take into account the cost of living in a specific
region. The living wage is often significantly higher than
the legal minimum wage.
A benchmark has already been published for Ivory Coast,
and Plantations J. Eglin is working to align wages for all
of its employees with this benchmark.
83
SIPEF Sustainability Report 2021 Responsible production and processing
 , 
  
Most of SIPEF’s employees and their families
live within its operations. The Company provides
them with housing, clean water and medical ser-
vices, and ensures access to education for their
children.
SIPEF’s plantations in Indonesia have also oered
free childcare since 2017, to support working fam-
ilies and to give women equal opportunities in
the workplace.
EMPLOYEE HOUSING, CLINICS, SCHOOLS AND
CHILDCARE FACILITIES AS OF DECEMBER 2021
8 436
Houses
39
Clinics
44
Schools
15
Day care facilities
84 The connection to the world of sustainable tropical agriculture
In Indonesia, all workers are covered under BPJS
Kesehatan (Badan Penyelenggara Jaminan Sosial
Kesehatan), the country’s national health insur-
ance programme. In 2021, SIPEF has focused
significant eorts on ensuring that all temporary
workers are also registered and covered accord-
ingly, and verifying that regulations are followed
by all parties. As of December 2021, 36 040 people
(employees, temporary workers and family mem-
bers) were registered as BPJSK participants at PT
Tolan Tiga Indonesia.
SIPEF is further committed to contributing to
providing access to aordable food for its employ-
ees. In Indonesia, the Company supplies perma-
nent workers and their families with up to 46 kg
of rice per household every month, and supports
access to aordable products at the stores within
the estates.
In Ivory Coast, all workers, employees and super-
visors are provided a fixed monthly subsidy for
the purchase of rice.
85
SIPEF Sustainability Report 2021 Responsible production and processing
ADDRESSING GRIEVANCES
In 2020, a grievance was filed with the RSPO relat-
ed to one of SIPEF’s estates in South Sumatra, PT
Agro Kati Lama (PT AKL). The grievance related to
allegations about the rights, working conditions and
safety of temporary workers employed by third-party
contractors.
South Sumatra is a region with a complex social set-
ting where there is a great demand for work from local
communities. Temporary work is common and legally
recognised. SIPEF’s policy is to transition towards a
more permanent work force, but until this transition
can be completed, the Group engages with third-party
contractors that provide temporary labour from the
surrounding communities.
SIPEF has taken the allegations very seriously and
has implemented a multi-pronged strategy to address
the immediate complaints, while reviewing the pol-
icies and systems it has in place.
In the short term, PT AKL assisted in the payment
and other responsibilities that needed to be per-
formed by the contractors. This included conduct-
ing the administration of payroll, issuing pay-slips,
enlisting temporary workers in social security pro-
grammes, facilitating the payment of social security
contributions and ensuring all workers are issued
personal protective equipment (PPE).
To investigate the issue further, SIPEF engaged
Linkar Komunitas Sawit (LINKS) to conduct an
independent review at PT AKL. LINKS is a social
and developmental NGO that works to support
multi-stakeholder eorts for social sustainability
management in the oil palm sector in Indonesia. The
review included 205 stakeholder interviews carried
out independently to ensure unbiased participation.
A report and an Action Plan have been shared with
all parties.
At the same time, SIPEF assessed its own internal
procedures against the issues brought by the com-
plainant, and is looking at the overall process and
implementation. This has led to the roll out of new
employee training across Indonesia, focusing on
Company procedures and implementation practices,
and occupational health and safety (OHS) manage-
ment. Audits were carried out by regional sustaina-
bility teams to verify the eectiveness of this training,
and these audits will continue annually from now on.
Throughout the process, dialogue with the complain-
ant has continued through a process mediated by
the RSPO. Due to covid-19, several online meetings
were held with a mediator in 2021. The objective is
to work collectively on site with all parties involved
aiming at the resolution of this case. It is expected
that the case will be resolved in 2022, at which point
it will be classified as a 'post-conflict monitoring'
case by the RSPO.
The Action Plan developed lists several actions,
including the design of a programme that will contrib-
ute to improving livelihoods for local communities.
Progress against the Action Plan will be monitored
by LINKS through biannual visits.
86
The connection to the world of sustainable tropical agriculture
Diversity and inclusion
SIPEF is committed to a non-discriminatory
workplace and complies with all relevant anti-dis-
crimination and equal employment laws and
regulations of the countries where it operates.
The Group promotes equal rights for men and
women, including supporting women in applying
for training programmes that lead towards roles
in management.
In Indonesia, for example, there is a long-running
cadet programme designed to take in recent col-
lege graduates and fast-track them into SIPEF’s
middle management career path. SIPEF believes
the initiative can have a positive impact on a pro-
fession that is traditionally male-dominated,
and the Company actively encourages women
to participate.
The intake of female cadets has increased signif-
icantly since the start of the initiative. In 2014,
the first female cadets successfully completed
the programme, and represented 12% of the total
number of graduates. By comparison, female
cadets made up 28% of the total number of suc-
cessful graduates in 2021.
87
SIPEF Sustainability Report 2021 Responsible production and processing
Health and safety
SIPEF ensures its employees are provided with
a safe and healthy work environment. To pre-
vent accidents, the Group invests in continuous
training, the provision of appropriate PPE, and
rigorous internal supervision and control systems.
All risks are regularly analysed and assessed, and
any occupational accidents are investigated to
prevent them from being repeated.
Particular attention is given to the handling of
chemicals such as pesticides. Workers are given
special training, supervision and PPE. Pregnant
and breastfeeding women do not work with chem-
icals. All SIPEF employees have access to annual
medical examinations, and these examinations
take place more frequently for those who handle
chemicals.
Each operating unit (OU) has a qualified person
in charge of OHS who is responsible for imple-
menting a Safety Management Plan. Each OU
also has its own health, safety and environment
committee, which meets on a monthly basis, and
is made up of representatives from those who
work or live within the area. Participants can
put forward comments and complaints at the
monthly meetings regarding health, safety and
environmental issues.
Company doctors independently record the lost
time injury frequency rate (LTIFR) for each unit.
Regular meetings are held at the estate level to
discuss any lost time injury (LTI) incidents and
how they can be prevented in the future.
In 2021, the OHS systems of all operating units
have been standardised in line with the OHS
45001 and the Australian Standard. Under the
Occupational Health and Safety Administration
(OHSA) standard used for reporting, the LTIFR
is calculated as the number of LTI plus fatalities,
divided by the number of hours worked, multi
-
plied by a factor of 1 000 000.
SIPEF regrets to report that there was one fatal
employee accident in Indonesia in 2021. In
October 2021, a SIPEF employee was harvest-
ing near power lines at the Bunga Tanjung estate
in Bengkulu. The sickle hit the power lines, and
the employee passed away at the polyclinic. An
accident investigation has been completed and
measures have been implemented to prevent a
similar incident from happening in the future.
Ongoing awareness-raising is conducted to rein-
force existing procedures that ensure the safety
of all of SIPEF’s workers.
LOST TIME INJURY FREQUENCY RATE BY COUNTRY
PER 1 000 000 HOURS WORKED
COUNTRY 2019 2020 2021
Indonesia 3.27* 2.86* 2.43
Papua New Guinea 27.96 23.76 22.67
Ivory Coast 14.50 21.44 16.38
*: Lost time injury frequency rate data for Indonesia for 2019 and 2020 have been restated.
88 The connection to the world of sustainable tropical agriculture
COVID19 VACCINATION PROGRAMME
In 2021, SIPEF continued to advance its comprehen-
sive programme to provide free access to covid-19
vaccinations for its employees and their dependents.
In Indonesia, where around 42% of the national pop-
ulation had been fully vaccinated, SIPEF made the
most progress: 92% of targeted SIPEF employees
and dependents had been double vaccinated against
covid-19 by December 2021. A booster programme
will begin in 2022.
In Ivory Coast, 45% of employees had been dou-
ble-vaccinated and 15% had received a single dose by
the end of the third quarter of 2021. Limited vaccine
availability restricted the programme from expanding
further, and the number of vaccinated individuals
therefore remained the same in the last quarter.
Nevertheless, SIPEF’s vaccination programme is
having a positive impact, as just 8.2% of the national
population in Ivory Coast had been fully vaccinat-
ed by December 2021. The Group will continue to
advance its vaccination programme in 2022 when
more supply becomes available.
In Papua New Guinea, SIPEF has focused on provid-
ing clear information and establishing supporting
policies in order to increase vaccine uptake among
employees and their dependents. More time will be
needed to allow vaccine confidence to grow in order
to increase the vaccination rate, which is currently
below 10% of the targeted number. Hesitancy towards
vaccination may also partly explain the low uptake at
a national level, with only 2.5% of the country having
been fully vaccinated by December 2021.
89
SIPEF Sustainability Report 2021 Responsible production and processing
Respecting community rights
Agriculture plays a vital role in rural communities
worldwide by contributing to poverty alleviation,
providing employment opportunities and ena-
bling development in rural areas. However, it can
also be disruptive and have negative impacts if it
is not managed sustainably.
Industrial agriculture remains essential to meet-
ing the demands of a growing population, but it
also depends on the availability of significant
areas of land. Without appropriate communi-
ty engagement and consent processes in place,
agricultural development can lead to conflict
with local communities linked with the loss of
customary land use rights, and food security and
inequality. A sustainable approach is also critical
for ensuring that activities do not cause the deg-
radation of natural resources and ecosystems on
which communities depend.
SIPEF makes it a priority to be a good neighbour
and believes it is important to support and devel-
op long-term relationships with the local com-
munities surrounding its operations. The Group
is committed to upholding indigenous and local
communities' legal and customary land tenure
rights, as well as their rights to resources, terri-
tories, livelihoods and food security.
SIPEF also strives to ensure that local commu-
nities can benefit from its activities. As well as
providing employment, SIPEF provides and
maintains schools, roads, health centres, bridges
and places of worship.
90
The connection to the world of sustainable tropical agriculture
Community engagement
The development and maintenance of long-stand-
ing, harmonious relationships inside and outside
of estates is an essential part of managing the
operations of the SIPEF group. SIPEF regularly
and proactively engages with local communi-
ties and other key stakeholders. Social Impact
Assessments (SIA) are carried out for new devel-
opments and as part of the Group’s compliance
with sustainability standards and certification
programmes. Surveys are also conducted annually
to gain an understanding of stakeholder percep-
tions of the Group. Results are reviewed using a
risk management matrix, and evaluated through
a continuous improvement cycle.
,    
A thorough Free, Prior and Informed Consent
(FPIC) process is absolutely critical to the long-
term success of any new operation. All SIPEF
plantations and those of its suppliers must adhere
to FPIC principles, as defined by the RSPO and
the Rainforest Alliance, and as detailed in SIPEF’s
Responsible Plantations Policy. This includes,
for example, the communities’ right to say no
to any new development, the right to legal rep-
resentation of choice, and the right to compensa-
tion where existing operations have had a proven
negative impact. The process of obtaining FPIC
can take many years, but it contributes to building
a long-lasting working relationship with local
communities.
The concept of FPIC does not end with the trans-
fer of land use rights. An ongoing stakeholder
engagement process tracks the impact on commu-
nities, in line with the SA8000 social accountabil-
ity methodology. These engagements are audited
annually for representativeness, transparency
and other criteria.
COMMUNITY SURVEYS AND SOCIAL IMPACT ASSESSMENTS
In 2020 and 2021, two independent SIAs were car-
ried out to precede the conversion of Bandar Pinang
and Sei Jerinjing estates from rubber to oil palm. The
SIAs formed part of a suite of independent studies that
are required as part of the RSPO requirements for new
plantings.
Social surveys were undertaken in each of the villages
surrounding these estates, focused on evaluating the
potential impact of oil palm development in the area. The
survey results included the concerns of these commu-
nities, which were incorporated in an integrated social
and environmental management and monitoring plan,
designed to minimise the impacts of the conversion and
guide a well-integrated transition. The SIA also includ-
ed participatory mapping of High Conservation Values
(HCVs) within the proposed conversion areas, for which
special management and monitoring requirements are
to be implemented.
   
 
Land conflicts are addressed through SIPEF’s
conflict resolution mechanism, which is embed-
ded in the Group’s Grievance Procedures.
Conflict resolution processes are implemented in
any cases of land conflict that arise. These pro-
cesses must be agreed upon by all parties to the
conflict. SIPEF’s conflict resolution mechanism
and approach also ensure that all parties have the
right to the legal representation of their choice.
There is a documented system in place for any
negotiations concerning compensation for loss
of legal, customary or user rights. This system
enables indigenous peoples, local communities
and other stakeholders to express their views
through their own representative institutions.
91
SIPEF Sustainability Report 2021 Responsible production and processing
Where there are or have been disputes, all par-
ties are provided with proof of legal acquisition
of title, as well as evidence that mutually agreed
compensation has been paid to all people who
held legal, customary or user rights at the time
of acquisition. Evidence is also made available
to show whether compensation was accepted
following a documented process of FPIC.
Details of any grievances related to land conflicts
are available on the SIPEF Grievance Dashboard.
92 The connection to the world of sustainable tropical agriculture
Community development
SIPEF invests significant resources in the provi-
sion of opportunities and services that support
community development. Each operating unit
(OU) has a budget that can be used to respond
to local community needs. Plantation managers
have open and constructive talks with local stake-
holders to decide how funding can best be spent.
Over the years, the Group has continued to con-
struct and maintain schools, clinics, roads and
other types of infrastructure. All facilities are
fully accessible to employees, workers and their
families, most of whom are also members of local
communities. Many of the educational and med-
ical facilities are also accessible to other commu-
nity members.
Communities within the vicinity of the Group’s
operations are mostly engaged in farming, includ-
ing oil palm. SIPEF supports their activities when
possible and appropriate. In Indonesia, for exam-
ple, SIPEF supplies planting material and land
management services to families through its vil-
lage smallholder programme (Kebun Masyarakat
Desa), and guarantees access to the market on
favourable terms.
Education
Free transport to state schools is arranged for the
children of all Group employees, where relevant.
In remote areas where there are no state schools,
SIPEF establishes and operates its own schools.
As of December 2021, SIPEF is operating a total
of 44 kindergartens, primary and secondary
schools in Indonesia, Papua New Guinea and
Ivory Coast, 95% of which are accessible to com-
munity children.
In a joint project with the P
apua New
Guinea Incentive Fund, Hargy Oil Palms
Ltd (HOPL) has built an additional school
complex in one of the most remote areas
of West New Britain, where more than 200
primary school children are now receiving
education.
P
T Tolan Tiga Indonesia operates around
38 kindergartens, primary and secondary
school facilities. On several occasions, the
company has also subsidised teacher sala-
ries and granted land to the local authori-
ties so that schools can be enlarged.
In Ivory Coast, Plantations J. Eglin has
invested in supporting the education of
communities by building and equipping 4
primary and nursery schools, and construc-
ting housing for the teaching sta of these
schools.
SCHOOLS ESTABLISHED BY SIPEF
Facilities accessible to employee children 44
Facilities accessible to community children 42
Total number of facilities/buildings 44
93
SIPEF Sustainability Report 2021 Responsible production and processing
Medical care
SIPEF pays particular attention to the provision
of medical care. SIPEF’s Indonesia operations
provide 23 polyclinics, which employ over 50
healthcare workers, including doctors, nurses
and midwives.
In Ivory Coast and Papua New Guinea, medical
care is paid for in full by the Company, which
works with its own doctors and nurses at local
clinics and care centres set up on the plantations.
All facilities in both locations are accessible to
both employees and community members. During
2021, SIPEF’s Papua New Guinea operations
treated over 100 000 patients, who were seen
by 25 healthcare employees within 13 Company
clinics.
Infrastructure
Maintenance of public roads is crucial to the
smooth operation of SIPEF’s estates, but also
brings many benefits to local communities. In
Papua New Guinea and Indonesia, the Group
works with local government to maintain public
roads surrounding its areas of operation.
At some estates in Indonesia, SIPEF also consults
with communities on where to build new roads
on the outskirts of its concessions. Some of the
estate roads are also open to the public during the
day. This cooperation greatly reduces the risk of
accidents inside the estates, while giving more
freedom of movement to communities.
SIPEF also promotes the opening of local stores
by employees’ cooperatives. The Company subsi-
dises the transport of goods or provides the capital
needed for worker cooperatives, where required.
In Indonesia, employees’ cooperatives have set up
successful mini-markets on most plantations. In
Papua New Guinea, the Group often works with
local operators who receive medium to long-term
operating concessions. The Company monitors
prices to maintain the aordability of basic goods.
MATERNITY WARD RENOVATION IN PAPUA NEW GUINEA
Over the course of 2019-2021, HOPL led on a project to
significantly improve maternity care at the Bialla Health
Centre, which provides medical services to the commu-
nity. The Bialla Health Centre operates in a community
of approximately 50 000 people in West New Britain,
Papua New Guinea.
An existing building has been repurposed into a fully
functional maternity ward that provides a safe and acces-
sible facility for women to give birth. The project was
funded by donors and carried out in cooperation with the
West New Britain Provincial Health Authorities. HOPL
supported the project by providing building materials
and manpower to improve the existing building structure,
as well as bedding and other required materials.
94
The connection to the world of sustainable tropical agriculture
95
SIPEF Sustainability Report 2021 Responsible production and processing
96 The connection to the world of sustainable tropical agriculture
Responsible
sourcing and
smallholder
production
Smallholder farmers play a vital role in global
food systems, producing around one-third of the
world’s food supply. They also account for around
40% of global oil palm cultivation.
Oil palm smallholders face a variety of challenges
in their journey towards more sustainable pro-
duction. They tend to have markedly lower yields
and far fewer resources at their disposal than
commercial plantations, including financial sup-
port, tools, fertiliser and planting materials. They
also often lack access to knowledge of or training
on applying sustainable agricultural practices.
Without sucient incentives to leave certain are-
as intact, the risk of smallholder expansion into
forests, peatlands and other critical ecosystems
is also increasing.
19
This section outlines SIPEF’s approach to engag-
ing with smallholders and managing associated
risks in its supply base. Updates have also been
provided on the implementation of SIPEF’s
Responsible Purchasing Policy (RPuP), focusing
on smallholder certification progress.
Smallholder farmers play a vital role
in global food systems, producing
around one-third of the world’s food
supply. They also account for around
40% of global oil palm cultivation.
19 The Sustainable Palm Oil Choice. (2021, April). What causes
deforestation in Indonesia, the world’s largest palm oil producer?
www.sustainablepalmoilchoice.eu/deforestation-causes-in-
indonesia-palm-oil/.
97
SIPEF Sustainability Report 2021 Responsible sourcing and smallholder production
Smallholder engagement
Supporting and engaging with smallholders
can help to address poverty and have a positive
impact on livelihoods through increased yields,
improved production quality, higher incomes
and access to international markets. At the same
time, it can contribute to reducing the impacts of
agricultural production on natural ecosystems,
helping to achieve the sustainability goals and
zero deforestation commitments set out by sus-
tainability leaders in the industry.
As of 31 December 2021, SIPEF collaborates with
a total of 10004 oil palm, rubber and tea small-
holders in Indonesia and Papua New Guinea.
As the vast majority (9 148) of the smallhold-
ers SIPEF works with produce oil palm, the
Company’s approach is primarily geared towards
oil palm production. SIPEF’s oil palm smallhold-
er supply base covers a production area of over
20 000 hectares. A total of 16% of the fresh fruit
bunches (FFB) processed at SIPEF’s mills is pro-
duced by smallholders.
OIL PALM SMALLHOLDERS BY COUNTRY SCHEME VS. INDEPENDENT OIL PALM SMALLHOLDERS
SIPEF has established a number of smallholder
oil palm programmes and services focused on
inclusivity, Best Management Practices (BMPs),
certification and lowering cost barriers. These
programmes and services are tailored to location
and smallholder type, and contribute to enabling
the smallholders to participate in sustainable
industries and to benefit from the Group’s techni-
cal expertise. Emphasis is placed on achieving and
maintaining RSPO certification, and increasing
yields and production eciency.
The Group engages with dierent types of small-
holders through its subsidiaries, Hargy Oil Palms
Ltd (HOPL) in Papua New Guinea and PT Tolan
Tiga Indonesia:
All smallholders working with HOPL are
associated smallholders, in alignment with
previous RSPO smallholder classification
definitions. Based on the current RSPO
smallholder classification, these smallhol-
ders are certified as scheme smallholders.
In Indonesia, PT Tolan Tiga manages smal-
lholder estates under its company-managed
programme, as well as its village small-
holder programme. Both types follow the
RSPO definition for scheme smallholders.
3 635
Papua New Guinea
40%
5 513
Indonesia
60%
3 266
Independent
Smallholders
36%
5 882
Scheme
Smallholders
64%
3 635
Papua New Guinea
40%
98
The connection to the world of sustainable tropical agriculture
The smallholders in Indonesia who manage
their own production areas and have the
option to sell to SIPEF are associated buy/
sell smallholders. The smallholders that
SIPEF supports with certified seed sup-
ply are associated seedling smallholders.
Following RSPO definitions, both types
are classified as independent smallholders,
and their crop is currently not included in
SIPEF’s physical supply chain.
Further information on how SIPEF works with
smallholders can also be found on the Group’s
website: www.sipef.com/hq/sustainability/
smallholders/
99
SIPEF Sustainability Report 2021 Responsible sourcing and smallholder production
Papua New Guinea
SIPEF’s oil palm plantation in Papua New
Guinea, HOPL, works with 3 635 associated oil
palm smallholders, managing a production area
of 14890 hectares. This represents more than
50% of the company’s planted area. In 2021, these
smallholders produced around 39% of the FFB
processed in HOPL’s three mills.
Associated smallholders working with HOPL are
in principle independent, as they own the land
they farm and take full ownership of the choice
of crop and management decisions. However, due
to their geographic location, they can only sell to
mills within their vicinity, and therefore have a
standing arrangement with HOPL. As such, they
are classified for certification purposes as scheme
smallholders.
An overview of HOPL’s smallholder pro-
gramme is provided in the following section
and on the compan
y’s website: www.sipef.
com/sipef-papua-new-guinea/sustainability/
smallholders/
’ 
 
HOPL works with smallholders both directly
and through the Local Planning Committee,
which is made up of representatives from the Oil
Palm Industry Corporation (OPIC), the Bialla
Oil Palm Growers Association (BOPGA), the Oil
Palm Research Association (OPRA), the East
Nakanai Local Level Government (ENLLG), and
the company.
OPIC provides extension services and OPRA pro-
vides research and development services relevant
to smallholders. The central role of both organ-
isations is to increase smallholder productivity,
promote improved farm management techniques,
provide advice and education regarding oil palm
production methods, and enhance the well-being
of smallholders. Services include research on inte-
grated pest management, pest and disease control,
outreach and awareness, and projects related to
livelihoods and community development.
100
The connection to the world of sustainable tropical agriculture
HOPL’S ASSOCIATED SMALLHOLDER PROGRAMME
HOPL
Hargy Oil Palms Ltd
Local Planning
Committee
OPIC OPRA
Hargy Oil Palms Ltd
Oil Palm Industry Corporation
Bialla Oil P
alm Growers
Association
Oil P
alm Research Association
Eas
t Nakanai Local Level
Government
DIRECT SUPPORT:
Smallholder crop collection
Road and bridge maintenance
for crop collection
Interest free loans for tools,
fertiliser, seedlings
Manag
ement, procurement and
supply of fertiliser
Management of pest control
teams for project areas
Oil Palm Industry
Corporation
Oil Palm Research
Association
OPIC AND OPRA
SUPPORT:
Research and development
Agronomic services
Training and education
Community development
projects
For more information on OPRA and OPIC:
www.agriculture.gov.pg/commodity-boards-a/oil-palm-industry-corporation
www.pngopra.org
101
SIPEF Sustainability Report 2021 Responsible sourcing and smallholder production
ANNUAL INVESTMENT PGK IN CAPACITY BUILDING AND
RESEARCH FOR SMALLHOLDERS IN PAPUA NEW GUINEA
One of the main goals of the associated small-
holder programme at HOPL is to support small-
holders in sustaining their current planted area,
while achieving a production rate of 20 tonnes
per hectare by 2025. Production trends in the
last three years indicate that HOPL’s associat
-
ed smallholders are making progress towards
achieving this goal, although it is predicted that
replanting will become a pressing issue in the
coming years. With the number of smallholder
blocks increasing, and palm oil production being a
primary source of income, replanting is not being
done on time.
Since 2017, HOPL has increased its direct involve-
ment in the extension services provided to small-
holders. Together, HOPL and its associated
smallholders invested a total of PGK 1967613
in capacity building and research in 2021.
HOPL SMALLHOLDER FIELD DAYS
As part of its commitment to supporting smallhold-
ers, HOPL regularly hosts smallholder field days.
These events bring together smallholder growers,
relevant HOPL departments and a variety of external
organisations, including those focused on extension
services and research and development, like OPIC
and OPRA. They focus on training, raising awareness
and networking, with the objective of assisting small-
holders with increasing their productivity, sustaining
their livelihoods, and improving their compliance
with RSPO certification and HOPL’s policies.
The last field day was held in July 2021. Sessions were
held on a variety of topics, including: productivity,
fertiliser application, pest management, smallholder
crop transportation, RSPO certification compliance,
and grievance management. Financial institutions
were also invited to present on savings and banking
services.
In addition to field days, HOPL hosts meetings and
conducts numerous trainings throughout the year, to
ensure its associated smallholders continue to stay
up-to-date with the latest developments and BMPs.
A total of 253 smallholder meetings and trainings
were organised in 2021.
HOPL FFB YIELD 2019  2021 FFB TONNES/HA
28.5
21.2
20.9
16.5
15.0
13.4
Own plantations
FFB yield
Associated
smallholder
FFB yield
10
20
30
2019 2020 2021
Investment
by HOPL
Investment
by smallholders
741 116
839 162
169 970
1 270 970
1 226 497
1 254 666
500 000
1 000 000
1 500 000
2 000 000
2019 2020 2021
102
The connection to the world of sustainable tropical agriculture
Indonesia
PT Tolan Tiga Indonesia currently works with a
total of 6 369 oil palm, rubber and tea smallhold-
ers. For oil palm production, the company works
with 5 513 smallholders through four dierent
programmes.
PT TOLAN TIGA INDONESIA SMALLHOLDER PROGRAMMES
Company managed smallholders
• 1 943 smallholder members
• Planted area: 4 643 hectares
The company managed programme
follows a model traditionally set by the
government-originated plasma schemes in
Indonesia. Under this programme, PT Tolan
Tiga is in full control of all aspects of the
management and production of the crops.
Associated buy/sell smallholders
• 2 438 smallholder members
• Planted area: 5 667 hectares
Under the associated buy/sell programme,
farmers typically manage their own small-
er parcels of land. They are not locked into
any formal company partnerships and are
technically free agents to sell their FFB to
whomever they choose. However, they
are encouraged to sell their FFB to the
company, which agrees to the purchase
on the basis of a transparent and published
formula.
Village smallholders
(Kebun Masyarakat Desa)
• 304 smallholder members
• Planted area: 686 hectares
The village smallholders programme is
another type of plasma smallholder pro-
gramme. Through the Agro Muko opera-
tion the company works with surrounding
villages to develop small oil palm blocks,
which are either fully or partially managed
by PT Tolan Tiga Indonesia’s plantations.
Associated seedling smallholders
• 828 smallholder members
• Planted area: 2 312 hectares
Associated seedling smallholders both
own and have full management control
of their production plots. PT Tolan Tiga
Indonesia is engaging with these small-
holders as part of its commitment to
increase the number of smallholders in
its supply chain. With the wide diversi-
ty of smallholder activities and systems
across Indonesia, the complexity of the
arrangements will mean these smallhold-
ers can choose to not be physically linked
to the supply chain, and their integration
will take time.
4643 ha
686 ha
5667 ha
2312 ha
More information on how PT Tolan Tiga Indonesia works with smallholders can be found on the company’s
website: www.sipef.com/sipef-indonesia/sustainability/smallholders/
103
SIPEF Sustainability Report 2021 Responsible sourcing and smallholder production
VILLAGE SMALLHOLDERS  KEBUN MASYARAKAT DESA KMD
PT Tolan Tiga’s Village smallholder programme is
focused on the villages surrounding its Agro Muko
operations. Under this programme, small oil palm
blocks are developed called Kebun Masyaraket Desa
(KMD), or villagers’ estates, which are either fully
or partially managed by PT Tolan Tiga Indonesia’s
plantations. The programme consists of 304 small-
holders and is fully RSPO certified.
PT Tolan Tiga Indonesia pre-finances the develop-
ment of the plots and later buys the production at
market prices, with an agreed-upon deduction to pay
o the low interest loan. This brings in significant
additional revenue to the village cooperatives, which
is often used for communal facilities and develop-
ments. Monthly accounts are communicated to the
community cooperatives, and the amounts paid by
PT Tolan Tiga Indonesia are published in the local
newspapers.
The
scheme is extremely popular, and even villages
far from the Group’s estates volunteer to join.
104
The connection to the world of sustainable tropical agriculture
Smallholder certification
As of 31 December, around 80% of SIPEF’s total
oil palm smallholder production area is RSPO
certified. This represents 4 297 smallholders, on
16 243 hectares of production area. Around 17%
of the Group’s total certified FFB is produced by
smallholders.
Papua New Guinea
All of the smallholders working with HOPL and
supplying its three mills are certified for com-
pliance with the RSPO. They first received their
certification at the same time as HOPL’s own
plantations in 2009, and have remained com-
mitted to its preservation. This was the second
group of smallholders to be certified on such a
scale globally.
A premium sharing structure is in place with the
smallholders, which is linked to the sale of cer-
tified products. Certified smallholders receive a
sustainability premium from HOPL, based on
their FFB contributions to the mills.
Indonesia
In Indonesia, nearly 30% of the smallholders
supplying FFB to SIPEF's mills are certified,
representing a production area of 1 353 hectares.
When taking into consideration the full scope of
smallholders SIPEF is working with, including
those not supplying SIPEF’s mills, around 12%
are RSPO certified.
A key challenge with regard to achieving 100%
certification is linked to the Indonesian regulation
that requires an equivalent of 20% of any new
concession rights agreement (Hak Guna Usaha
– HGU) areas to be allocated for smallholders. In
particular, the regulation was amended in 2017
to also include all renewals of HGU concessions.
RSPO CERTIFIED FFB PRODUCTION OF SMALLHOLDERS
AND OWN PLANTATIONS TONNES
1 297 632
Own plantations
83%
258 126
Smallholders
17%
1 555 758
Total certified FFB
AVERAGE PREMIUM PAID BY HOPL TO SMALLHOLDERS
PGK / TONNE FFB
2019 12.6
2020 12.43*
2021 13.07
* : Average premium paid for 2020 is a restatement from previous reports.
To ensure compliance, SIPEF has added and
engaged new smallholders, and is working with
them on their integration into the Company’s
certified supply base. In the meantime, crops from
these smallholders are processed separately by
third-party mills, in order to maintain the fully-
certified status of SIPEF’s own mills.
105
SIPEF Sustainability Report 2021 Responsible sourcing and smallholder production
Managing risks in SIPEF’s supply base
SIPEF’s third-party suppliers must comply with
SIPEF’s RPuP, which frames the Group’s con-
ditions for working with smallholders on their
journey towards certification.
Together with the Responsible Plantations Policy,
the RPuP forms the basis for the criteria and pro-
cedures to select and monitor smallholders in
SIPEF’s supply base. These criteria and proce-
dures are specifically adapted to the local con-
texts of Indonesia and Papua New Guinea, the two
locations where SIPEF works with third-party
suppliers.
20
Selection criteria
SIPEF engages in a screening process to deter-
mine whether the land and practices of any new
smallholders, with whom the Group is planning to
engage, are compliant with SIPEF’s policies. The
process is also used to evaluate the smallholders’
potential for future RSPO certification.
Plo
t locations: location must be known
and mapped. No planting on peat, on steep
slopes, within a riparian zone, or within 100
metres of an area designated for forestry
use or within 500 metres of a protected
area.
Other criteria:
proof of legal authorisation
of land use, membership of an association,
compliance with SIPEF policies on human
rights, fair labour and no exploitation.
If these criteria are met, SIPEF can enter into
a Memorandum of Understanding (MoU) with
the smallholders.
PT Tolan Tiga Indonesia works with a checklist
to be completed by the smallholders as part of the
screening process, as well as for monitoring com-
pliance during internal audits. The checklist also
helps smallholders understand the policies and
commitments involved in their engagement with
the company. Smallholders evaluated as eligible
must also sign an MoU, which includes a commit-
ment to critical and continuous improvement
criteria, through their representative association.
HOPL also works with a checklist,
but primar-
ily for monitoring the compliance of its exist-
ing smallholders. The company is currently not
adding any new growers to its programme due
to the requirements of the RSPO New Planting
Procedure (NPP). A request has been submitted
by smallholders to the RSPO and the High Carbon
Stock Approach (HCSA) to review existing farm-
ers, who operate land based on shifting agricul-
tural practices.
The internal audit checklists can be found
on SIPEF’s Company website at: www
.
sipef
.com/hq/sustainability/traceability-
and-risk-management/
New developments
Under the company-managed programme in
Indonesia, the existing production areas are man-
aged entirely by PT Tolan Tiga Indonesia and fall
under the internal control system the compa-
ny has in place for its own operations. Any new
smallholder development under this programme
will go through the RSPO NPP. This ensures that
there is compliance with all of the key criteria
including assessing soil suitability, integrated
20 Overviews of the compliance and risk management approaches for suppliers by country of operation are available at: www.sipef.com/hq/
sustainability/traceability-and-risk-management/
106 The connection to the world of sustainable tropical agriculture
High Conservation Value (HCV)/High Carbon
Stock (HCS), land use change, social impact and
greenhouse gas (GHG) assessments.
Unlike the company-managed smallholders in
Indonesia, smallholders in Papua New Guinea
manage their own farms. The smallholders them-
selves therefore have to comply with SIPEF’s pol-
icies and the RSPO Principles & Criteria (P&C).
HOPL also requires that any new smallholder
developments undergo the NPP. However, there
have been no new plantings due to the complexity
of land use in Papua New Guinea, in connection
with the NPP requirements.
Monitoring compliance
PT Tolan Tiga Indonesia monitors its smallhold-
ers for compliance through regular outreach, sup-
port and assessments. Assessments are carried
out utilising the same screening checklists used
when starting engagement with new smallholders.
The objective of the outreach activities is to raise
awareness of the policies and graduate growers
into the scope of the certified supply base, once
they are ready for RSPO certification.
In Papua New Guinea, HOPL provides associ-
ated smallholders with regular training, and
conducts block inspections and internal audits.
These smallholders are also audited annually by
an RSPO Certification Body, utilising a sampling
intensity formula.
The block inspections evaluate the smallhold-
er’s implementation of BMPs, and are conduct-
ed by extension ocers who are part of HOPL’s
Smallholder Agricultural Advisory Services
(SHAAS) team. The internal audits evaluate
smallholder compliance with RSPO require
-
ments, and are carried out by the Sustainability
department as part of HOPL’s internal audit
plan. These audits also cover social indicators
relevant to smallholders following the National
Interpretation of the P&C in Papua New
Guinea, including no child labour and grievance
management.
Results of the audits and inspections are com-
municated to growers by the SHAAS team, which
also supports the smallholders in addressing any
issues of non-compliance identified.
Managing breaches
When a breach of policies or regulations is found,
SIPEF prioritises maintaining engagement and
providing the opportunity for smallholders to
take remedial action. This is important to drive
improvement, which SIPEF has found to be much
more eective than exclusion.
Non-compliances are evaluated on a case-by-case
basis to understand their origins and subsequent-
ly determine the appropriate actions to be taken.
If breaches are found, the crop is segregated from
the certified supply chain.
107
SIPEF Sustainability Report 2021 Responsible sourcing and smallholder production
108 The connection to the world of sustainable tropical agriculture
Responsible
business and
transparency
SIPEF believes that business can be a force for
good. The private sector has the innovative poten-
tial to find solutions to the world’s toughest chal-
lenges, and to make a significant contribution to
sustainable development. The Group operates
with the highest regard for ethical principles, and
continues to prioritise transparency towards its
stakeholders on how it conducts its business.
In addition to the intrinsic importance of respon-
sible business practices, SIPEF is aware of the
legal, financial, reputational and operational risks
associated with any instances of poor practice.
The Company is committed to fostering a cul-
ture of ethical conduct amongst its employees,
in alignment with all relevant laws and internal
policies. SIPEF has also set up the appropriate
systems and channels for employees and other
stakeholders to communicate their concerns and
provide feedback, or report any misconduct.
During 2021, SIPEF continued to strengthen its
commitments and approach to corporate and
sustainability governance. Recent years have also
seen the introduction of new regulatory require-
ments on transparency and sustainability report
-
ing. SIPEF strives to align with and anticipate
these evolving requirements, both globally and
within the European Union.
SIPEF believes that business can
be a force for good. The Group
operates with the highest regard for
ethical principles, and continues to
prioritise transparency towards its
stakeholders on how it conducts its
business.
109
SIPEF Sustainability Report 2021 Responsible business and transparency
Corporate governance
SIPEF has a strong corporate governance struc-
ture in place with several policies addressing
critical topics, such as responsible and ethical
behaviour, privacy, bribery and corruption, and
whistleblowing. These policies collectively set
out the Group’s commitments to ethical business
conduct and corporate governance best practice.
The Charter describes the most important elements of SIPEF’s corporate gov-
ernance, including the governance structure of the Company.
Corporate
Governance
Charter
Ethics
Policy
The Ethics Policy specifies SIPEF’s commitment to transparency, anti-bribery
and anti-corruption, compliance with all relevant international and national laws,
and the prohibition of using the Group’s facilities or working hours to conduct
personal business.
Code of
Conduct
Adopted by the Board in 2019, the Code of Conduct sets out the principles of
conduct in terms of responsible and ethical behaviour for all sta, including
consultants and contracting parties of SIPEF.
Whistleblowing
Policies
SIPEF’s Group level policy and procedures on whistleblowing are outlined in the
Code of Conduct. The Group’s subsidiary PT Tolan Tiga Indonesia also has a local
level whistleblowing policy in place, which has been published on its website in
both English and Bahasa Indonesia.
Grievance
Policy
The Grievance Policy outlines SIPEF’s commitments associated with handling
internal and external grievances. It states that the employees of the Group,
and any other stakeholders, can report grievances freely and without fear of
negative consequences. SIPEF’s commitment to handling grievances through
transparent and unbiased mechanisms is also included in the Group’s Responsible
Plantations Policy.
General
Privacy Policy
SIPEF’s Privacy Policy has been eective since 25 May 2018. The policy defines how
SIPEF uses, stores and protects personal data. It is aligned with the requirements
applicable in the European Union under the General Data Protection Regulation
(EU Regulation 2016/679).
The above policies and documents are available on SIPEF's company website:
www.sipef.com/hq/investors/shareholders-information/corporate-governance
www.sipef.com/hq/sustainability/sipef-corporate-policies
110
The connection to the world of sustainable tropical agriculture
Anti-bribery and anti-corruption
SIPEF understands the importance of creating
a fair environment for business, free from the
distorting, anti-competitive eects of bribery and
other forms of corruption. The Company is aware
of the seriousness of potential consequences for
the Group in terms of legal, financial, reputational
and operational impacts.
Financial penalties can amount to thousands
or millions of euros. Negative media coverage
can seriously harm the reputation of the Group
and have a potential impact on the stock price of
SIPEF. Moreover, operations can be halted for a
few hours, days, months or even fully stopped, for
example if a land permit is revoked.
The Group has robust policies, mechanisms and
measures in place to address any risks associated
with corruption in the industry and locations in
which the Group operates. Internal sanctions, up
to dismissal, are issued for breaching Company
regulations. The worst cases are reported to the
relevant authorities, and the Company cooperates
fully in cases of prosecution. Internal procedures
and internal audit programmes are continuously
under review to prevent and detect internal and
external fraud.
111
SIPEF Sustainability Report 2021 Responsible business and transparency
Ethics Policy
SIPEF’s Ethics Policy was first drawn up in 2017,
and applies to SIPEF and its suppliers.
The Policy focuses on the following principles
and commitments:
Compliance: all relevant international
and national laws will be upheld.
Transparency: shareholders and
stakeholders will be provided with all
non-confidential information.
Zero tolerance towards bribery and
corruption: facilitation payments are
actively avoided, and gifts may only be
given with prior approval from senior
management.
Zero tolerance of child labour
, slavery or
forced labour.
Prohibition of management and employees
using the Group’s facilities or working
hours to conduct personal business.
Code of Conduct
Anti-bribery and anti-corruption have an impor-
tant place in SIPEF’s Code of Conduct. The Code
sets out the principles of conduct in terms of
responsible and ethical behaviour for the employ-
ees and management of SIPEF. It serves as a min-
imum set of guidelines, and is supported by other
more specialised policies on specific topics, such
as SIPEF’s Ethics Policy.
112
The connection to the world of sustainable tropical agriculture
The Code covers various topics and issues linked
with ethical conduct, including: attitude at work,
relations with clients and suppliers, conflicts of
interest and insider trading, use of corporate
funds, bribery and improper payments, discrimi-
nation and equal treatment, whistleblowing, and
data protection and privacy.
As required by the Belgian Code and the
Corporate Governance Charter, the board of
directors of SIPEF monitors compliance with
the Code of Conduct once a year. SIPEF has also
introduced a code of conduct in all of the coun-
tries where it is active.
Whistleblowing procedures
Employees who have concerns about suspect-
ed misconduct are encouraged to come forward
without fear of punishment or unfair treat-
ment. All reported concerns are handled with
the utmost confidentiality and the name of the
whistleblower is not disclosed without consent.
SIPEF and the subsidiaries of SIPEF are required
to make sure that any concern reported is prop-
erly followed up and investigated, if appropri-
ate, and that the necessary corrective actions are
taken.
Training on policies
Since 2017, the Group has provided training for
its employees, with the target of ensuring that
employees at every level of the business under-
stand the relevance and importance of the Group’s
anti-corruption policies.
Grievance mechanism
SIPEF’s grievance mechanism ensures all stake-
holders, internal and external, can be confident
that their grievances will be heard and handled
impartially, and will not be met with reprisal. A
Group policy on grievances has been implement-
ed and communicated to the entire workforce, as
well as to other stakeholders.
All grievances are addressed in a transparent
and timely manner, directly between the com-
plainants and the respective operation. A specific
system is in place for cases involving sexual har-
assment, with an emphasis on preserving privacy
and ensuring fair proceedings.
Grievances received from NGOs, or grievances
considered to be significant, are communicated
on the Grievance Dashboard of the SIPEF com-
pany website, including information about the
status of each case, and whether and how cases
have been resolved.
The Grievance Dashboard can be accessed
at: www.sipef.com/hq/sustainability/
grievances-dashboard-active-andor-progressing
113
SIPEF Sustainability Report 2021 Responsible business and transparency
EU taxonomy: Consolidated disclosures
pursuant to Art. 8 Taxonomy Regulation
The EU taxonomy is a classification system for
environmentally sustainable economic activities,
developed by the European Commission to help
scale up sustainable investment and implement
the European Green Deal.
21
The Taxonomy Regulation is a key component of
the European Commission's action plan to redi-
rect capital flows towards sustainable projects and
activities. It represents an important step towards
achieving carbon neutrality by 2050 in line with
EU goals, as it establishes clear definitions and
criteria for what is considered to be ‘sustainable’.
This includes definitions and criteria for the envi-
ronmental objectives ‘Climate change mitigation’
and ‘Climate change adaptation’.
As a non-financial parent undertaking, SIPEF has
assessed the Taxonomy-eligibility of its econom-
ic activities for the reporting period 2021. The
following section presents the proportion of the
Group’s turnover, capital expenditure (Capex)
and operating expenditure (Opex) associated
with Taxonomy-eligible economic activities
related to the first two environmental objectives
(climate change mitigation and climate change
adaptation), in accordance with Art. 8 Taxonomy
Regulation and Art. 10 (2) of the Art. 8 Delegated
Act.
SIPEF’s core business activities:
Taxonomy-non-eligible
SIPEF has assessed all Taxonomy-eligible eco-
nomic activities listed in the Climate Delegated
Act based on the Company’s activities as an
agro-industrial group. The Climate Delegated Act
focuses on economic activities and sectors that
have the most potential to achieve the objectives
of climate change mitigation
22
and climate change
adaptation. The sectors covered include energy,
selected manufacturing activities, transport and
buildings.
SIPEF’s assessment of Taxonomy-eligibility
focused on economic activities defined as the
provision of goods or services on a market, thus
(potentially) generating revenues. In this context
SIPEF, as an agro-industrial group, defines the
growing of oil palm, rubber, tea and bananas, and
the production of palm oil, palm kernels, palm
kernel oil, rubber and tea as the core of its busi-
ness activities.
THE TAXONOMY REGULATION ESTABLISHES SIX
ENVIRONMENTAL OBJECTIVES:
Climate change mitigation
Climate chang
e adaptation
The sus
tainable use and protection of water and
marine resources
The transition to a circular economy
P
ollution prevention and control
The protection and restoration of biodiversity and
ecosystems
For more information: ec.europa.eu/info/business-econ-
omy-euro/banking-and-finance/sustainable-finance/
eu-taxonomy-sustainable-activities_en
21 European Commission. (Retrieved December 2021). EU taxonomy for sustainable activities. https://ec.europa.eu/info/business-economy-euro/
banking-and-finance/sustainable-finance/eu-taxonomy-sustainable-activities_en
22 Climate mitigation refers primarily to the need to avoid producing greenhouse gas emissions, the reduction of greenhouse gas emissions or to
increase greenhouse gas removals and long-term carbon storage.
114 The connection to the world of sustainable tropical agriculture
After a thorough evaluation involving all relevant
departments and teams, it was concluded that
SIPEF’s core economic activities are not covered
by the Climate Delegated Act and as such, are
Taxonomy-non-eligible.
As stipulated in the Climate Delegated Act adopt-
ed in June 2021, the criteria for agriculture have
been temporarily excluded from the Delegated
Regulation, pending further progress on the nego-
tiations underway on the Common Agricultural
Policy (CAP). SIPEF therefore expects to be able
to report at least some of its core business activ-
ities as Taxonomy-eligible under the objectives
of climate change mitigation and climate change
adaptation in the future.
SIPEF discloses this information on a voluntary
basis, as the Group believes that this information
is helpful for users of its consolidated non-finan-
cial statement to gain a better understanding of
its business activities.
Although SIPEF’s core activities are not currently
covered by the Climate Delegated Act, and not
Taxonomy-eligible, the Group remains committed
to reducing greenhouse gas emissions linked with
its business activities, and to managing the risks
and impacts associated with climate change. An
overview of the Group’s existing initiatives with
respect to climate change mitigation and adapta-
tion has been provided on page 50 of this report.
Key Performance Indicators
The key performance indicators (KPIs) includ-
ed in the assessment are the turnover KPI, the
Capex KPI and the Opex KPI. For the report-
ing period 2021, it is required that these KPIs
are disclosed in relation to Taxonomy-eligible
economic activities and Taxonomy-non-eligible
economic activities, pursuant to Art. 10 (2) of the
Art. 8 Delegated Act.
SIPEF’s turnover is Taxonomy-non-eligible
because the Group’s economic activities are,
to date, not covered by the Climate Delegated
Act. Subsequently, the capital and operating
expenditure related with these activities are also
Taxonomy-non-eligible (see table below for totals
of each KPI).
PROPORTION OF TAXONOMYELIGIBLE AND TAXONOMYNONELIGIBLE
ECONOMIC ACTIVITIES IN TOTAL TURNOVER, CAPEX AND OPEX
TOTAL KUSD PROPORTION OF TAXONOMY
ELIGIBLE ECONOMIC ACTIVITIES %
PROPORTION OF TAXONOMYNON
ELIGIBLE ECONOMIC ACTIVITIES %
Turnover 416 053 0% 100%
Capital expenditure (Capex) 68 692 0% 100%
Operating expenditure (Opex) 33 391 0% 100%
115
SIPEF Sustainability Report 2021 Responsible business and transparency
Accounting policies
The assessment of the Taxonomy-eligibility and
Taxonomy-non-eligibility of SIPEF’s Turnover,
Capex and Opex was carried out in accordance
with the specifications and definitions set out in
Annex I of the Art. 8 Delegated Act. The account-
ing policies utilised in this process are described
as follows:
 
The proportion of Taxonomy-eligible economic
activities in the Group’s total turnover has been
calculated as the part of net turnover derived from
products and services associated with Taxonomy-
eligible economic activities (numerator) divided
by the net turnover (denominator). The denomi-
nator of the turnover KPI is based on the Group’s
consolidated net turnover in accordance with
IAS 1.82(a). For further details on the Group’s
accounting policies regarding the Group’s consol-
idated net turnover, cf. page 20 of Annual Report
part 2 (Financial Statements).
With regard to the numerator, SIPEF has not
identified any Taxonomy-eligible activities as
explained above.
Reconciliation
The Group’s consolidated net turnover can be rec-
onciled to the consolidated financial statements,
cf. income statement on page 10 of Annual Report
part 2 (Financial Statements – ‘Revenue’).
 
The Capex KPI is defined as Taxonomy-eligible
Capex (numerator) divided by the Group’s total
Capex (denominator). Regarding the numerator,
an explanation is provided below.
Total Capex consists of additions to tangible
and intangible fixed assets during the financial
year, before depreciation, amortisation and any
re-measurements, including those resulting from
revaluations and impairments, as well as exclud-
ing changes in fair value. It includes additions
to fixed assets (IAS 16), intangible assets (IAS
38) and right-of-use assets (IFRS 16). Additions
resulting from business combinations are also
included (but this is not applicable in 2021).
Goodwill is not included in Capex as it is not
defined as an intangible asset in accordance with
IAS 38. For further details on the accounting pol-
icies regarding the Group’s Capex, cf. page 16 of
Annual Report part 2 (Financial Statements).
Reconciliation
The Group’s total Capex can be reconciled to the
consolidated financial statements, cf. page 12 of
Annual Report part 2 (Financial Statements –
‘consolidated cash flow’) as the total of acquisi-
tion of intangible assets, acquisition of biologi-
cal assets and acquisition of property, plant and
equipment.
116
The connection to the world of sustainable tropical agriculture
 
The Opex KPI is defined as Taxonomy-eligible
Opex (numerator) divided by the total Opex
(denominator). Regarding the numerator, an
explanation is provided below.
Total Opex consists of direct non-capitalised costs
that relate to research and development, building
renovation measures, short-term lease, mainte-
nance and repair, and any other direct expendi-
tures relating to the day-to-day servicing of assets
of property, plant and equipment. This includes:
Research and development expenditure,
which is not applicable to the SIPEF group.
Although the SIPEF group does have
research and development expenditures
concentrated in its minority subsidiaries
Verdant Bioscience Singapore and PT
Timbang Deli, these are included in the
consolidation as equity consolidated com-
panies, which are not included for the Opex
calculation.
The volume of non-capitalised leases, which
was determined in accordance with IFRS 16
and includes expenses for short-term leases
and low-value leases, cf. page 53 of Annual
Report part 2 (Financial Statements).
Maintenance and repair and o
ther direct
expenditures relating to the day-to-day
servicing of assets of property, plant and
equipment and biological assets (bearer
plants). These were determined based on
the maintenance and repair costs allocated
to the respective assets. The maintenance of
the biological assets - bearer plants contains
all costs related to keeping the biological
assets (bearer plants) in a good productive
state. Primary examples of this include all
expenses linked with fertiliser application,
pruning, pest and disease control.
The related cos
t items can be found in
various line items in the Group’s income
statement, including cost of sales (mainte-
nance of operational PP&E and biological
assets – bearer plants) and general and
administrative expenses (such as mainte-
nance of IT-systems), if applicable.
In general, this includes labour costs, costs
for services, and material costs for daily ser-
vicing as well as for regular and unplanned
maintenance and repair measures. These
costs are directly allocated to PP&E.
As the SIPEF group has not identified Taxonomy-
eligible economic activities, the Group does not
record Capex/Opex related to assets or processes
that are associated with Taxonomy-eligible eco-
nomic activities in the numerator of the Capex
KPI and the Opex.
117
SIPEF Sustainability Report 2021 Responsible business and transparency
OVERVIEW OF MATERIALITY ASSESSMENT PROCESS IN 2021
STAKEHOLDER IDENTIFICATION
A list of around 40 key internal and external stakeholders
was developed, and the approach and level of engagement
determined.
1
DESK RESEARCH
AND GAP ANALYSES
Desk research was carried out to
evaluate the ESG issues most relevant
to SIPEF's business and stakeholders.
This included a review of:
• Issues and trends in the media and
upcoming regulatory changes;
• Sustainability reports, policies and
other resources from idenfitied
stakeholders;
• Gap analyses against reporting
frameworks, ESG rating criteria
and benchmarks such as the
Sustainability Policy Transparency
Toolkit (SPOTT), CDP and
Sustainalytics.
2
TOPIC IDENTIFICATION AND CONSOLIDATION
SIPEF's existing list of material topics was reviewed based
on the desk research and gap analyses.
An internal workshop was held to refine or update existing
topics and incorporate any new topics by clustering
identified sub-topics into categories.
During this process additional criteria were taken into
consideration, such as whether the impact of each topic
could reasonably be assessed (quantitatively or
qualitatively).
3
TOPIC PRIORITISATION - INTERNAL AND
EXTERNAL STAKEHOLDER ENGAGEMENT
Selected internal and external stakeholders took part in a
materiality survey to rank the importance level of each
material topic from one to five.
4
VALIDATION
The validation process ensured that the topics chosen fully
reflected SIPEF's priorities.
A workshop was conducted with the Executive Committee to
discuss the results of the assessment, including the stakehold-
er engagement surveys, and final adjustments were made.
5
Annex
Materiality Assessment
in 2021
The materiality assessment is the foundation
of a strong ESG strategy, and SIPEF has placed
significant focus on reviewing its material topics
in 2021. This included improving SIPEF’s materi-
ality assessment process, which has evolved from
previous years to take into account wider internal
and external stakeholder views.
118
The connection to the world of sustainable tropical agriculture
STAKEHOLDER IDENTIFICATION
A list of around 40 key internal and external stakeholders
was developed, and the approach and level of engagement
determined.
1
DESK RESEARCH
AND GAP ANALYSES
Desk research was carried out to
evaluate the ESG issues most relevant
to SIPEF's business and stakeholders.
This included a review of:
• Issues and trends in the media and
upcoming regulatory changes;
• Sustainability reports, policies and
other resources from idenfitied
stakeholders;
• Gap analyses against reporting
frameworks, ESG rating criteria
and benchmarks such as the
Sustainability Policy Transparency
Toolkit (SPOTT), CDP and
Sustainalytics.
2
TOPIC IDENTIFICATION AND CONSOLIDATION
SIPEF's existing list of material topics was reviewed based
on the desk research and gap analyses.
An internal workshop was held to refine or update existing
topics and incorporate any new topics by clustering
identified sub-topics into categories.
During this process additional criteria were taken into
consideration, such as whether the impact of each topic
could reasonably be assessed (quantitatively or
qualitatively).
3
TOPIC PRIORITISATION - INTERNAL AND
EXTERNAL STAKEHOLDER ENGAGEMENT
Selected internal and external stakeholders took part in a
materiality survey to rank the importance level of each
material topic from one to five.
4
VALIDATION
The validation process ensured that the topics chosen fully
reflected SIPEF's priorities.
A workshop was conducted with the Executive Committee to
discuss the results of the assessment, including the stakehold-
er engagement surveys, and final adjustments were made.
5
119
SIPEF Sustainability Report 2021 Annex
Stakeholder Engagement
A broader stakeholder engagement process was
an important addition to the materiality assess-
ment in 2021. A survey was carried to consult
15 internal and 16 external stakeholders from
SIPEF’s employee and customer bases, inves
-
tors and financial institutions, as well as experts,
NGOs, and multi-stakeholder initiatives.
External stakeholders were asked to rate the
importance of each topic from one to five from
the perspective of their own organisations. The
internal survey incorporated the concept of ‘dou-
ble materiality’, inviting participants to assess
the 22 material topics from one to five across two
dimensions. The first dimension was the level of
SIPEF’s ESG impact linked with each topic, and
the second was the level of potential impact of
the issues on SIPEF's business.
The average scores for both internal and external
stakeholders were used to classify the topics into
sub-groups of ‘Priority’ and ‘Important’ topics.
The threshold for the priority category was set at
topics that scored an average of four and above.
To validate the results, the scores were plotted
into materiality matrices. The first plotted inter-
nal stakeholder scores across the two dimensions
of double materiality, and the second plotted the
level of importance for each topic for internal
versus external stakeholders. The matrices were
used to analyse the dierent stakeholder views
and make any final necessary adjustments to the
priority levels assigned in the material topics list.
2021 Material Topics
The highest rated topics for both internal and
external stakeholders were similar to those eval-
uated to be of high importance in 2020: Human
Rights and Labour Standards, Traceability,
Deforestation and Smallholder Engagement.
With the growing global focus on climate action,
Climate Change was a newly added topic that
was also classified as a priority issue. Replacing
the 2020 topic GHG Emissions, it expands the
scope to include both climate change mitigation
and adaptation.
Notably, none of the topics had an average score
that ranked below three, meaning all the topics
were considered important for the majority of
the stakeholders consulted.
The final selection of material topics have been
presented in a simplified format for 2021, classi-
fied according to two levels of priority. This can
be found on page 16.
120
The connection to the world of sustainable tropical agriculture
OVERVIEW OF CHANGES TO MATERIAL TOPICS IN 2021
TOPICS RETAINED
FROM 2020
• Deforestation
• Traceability
• Health and Safety
• Biodiversity
• Water Management
• Fertiliser and Pesticide Use
• Community Development
• Anti-bribery and Anti-corruption
UPDATED
TOPICS
• Human Rights and Labour Standards
(Formerly: Fair Labour Practices)
• Peatlands
(Formerly: Peat Management)
• Smallholder Engagement
(Formerly: Smallholder Inclusion)
• Productivity and Quality
(Formerly: Productivity)
• Sustainability Standards and Certification
(Formerly: Certifications)
• Fire Prevention and Management
(Formerly: Wildfire)
TOPICS REMOVED IN 2021
• GHG Emissions – expanded to ‘Climate Change’
to ensure coverage of both climate change mitigation
and adaptation issues
• Protection of Species – included as a sub-topic
under ‘Biodiversity’ and ‘Ecosystem Conservation
and Restoration’
• Grievance Mechanism – included as a sub-topic
under ‘Transparency’ and ‘Community Rights’
• FPIC/Land Use – included as a sub-topic
under ‘Community Rights’
+
NEW TOPICS
• Climate Change
• Community Rights
• Transparency
• R&D and Innovation
• Ecosystem Conservation and
Restoration
• Regenerative Practices
• Diversity and Inclusion
• Food Safety
+
-
:
Blue = Priority topics
Orange = Important topics
121
SIPEF Sustainability Report 2021 Annex
United Nations Sustainable Development Goals (SDGs)
SDG GOAL SDG TARGET
RELEVANT
MATERIAL TOPICS SIPEF’S ACTIVITIES
SDG 1: No
Poverty
1.4 - By 2030, ensure that all
men and women, in particular
the poor and the vulnerable,
have equal rights to economic
resources, as well as access to
basic services, ownership and
control over land and other
forms of property, inheritance,
natural resources, appropriate
new technology and financial
services, including microfinance
Community
Rights
Community
Development
SIPEF ensures that prior to any
new developments, Free, Prior
and Informed Consent (FPIC)
has been provided by local com-
munities. Wherever possible, the
Company also provides commu-
nity members with opportunities
to benefit from its activities,
including through employment
and development opportunities
in the rural and remote areas in
which the Group operates.
Most of SIPEF’s employees and
their families live within its
operations, and the Group pro-
vides them with housing, clean
water and medical services.
122
The connection to the world of sustainable tropical agriculture
SDG GOAL SDG TARGET
RELEVANT
MATERIAL TOPICS SIPEF’S ACTIVITIES
SDG 2: Zero
Hunger
2.3 - By 2030, double the agricul-
tural productivity and incomes
of small-scale food producers,
in particular women, indige-
nous peoples, family farmers,
pastoralists and fishers, includ-
ing through secure and equal
access to land, other productive
resources and inputs, knowledge,
financial services, markets and
opportunities for value addition
and non-farm employment
Smallholder
Engagement
Productivity
and Quality
SIPEF has established small-
holder oil palm programmes
and services focused on enabling
smallholders to participate in
sustainable industries and to
benefit from SIPEF’s technical
expertise. Emphasis is placed on
achieving and maintaining RSPO
certification and increasing
yields and production eciency.
SIPEF's services include: agro-
nomic advice, training and the
provision of quality seedlings.
2.4 - By 2030, ensure sustainable
food production systems and
implement resilient agricultural
practices that increase pro-
ductivity and production, that
help maintain ecosystems, that
strengthen capacity for adapta-
tion to climate change, extreme
weather, drought, flooding and
other disasters and that pro-
gressively improve land and soil
quality
Productivity
and Quality
Fertiliser and
Pesticide Use
R&D and
Innovation
Regenerative
Practices
SIPEF implements Best
Management and regenerative
practices, and nature-based
solutions. These practices focus
on improving soil fertility,
optimising inputs, recycling
by-products, and increasing
product quality and productivity.
The Group is also committed to
investing in R&D and innovation
that will enable progress towards
these objectives, as well as
enhance the quality of planting
materials and resilience of future
crops.
SDG 3: Good
Health and
Well-being
3.8 - Achieve universal health
coverage, including financial
risk protection, access to quality
essential health-care services
and access to safe, eective,
quality and aordable essential
medicines and vaccines for all
Human Rights
and Labour
Standards
Community
Development
Health and
Safety
SIPEF is operating 39 polyclinics
in Indonesia, Papua New Guinea
and Ivory Coast. In Ivory Coast
and Papua New Guinea, medical
care is paid for in full by SIPEF.
All facilities in both locations are
accessible to both employees and
community members.
123
SIPEF Sustainability Report 2021 Annex
SDG GOAL SDG TARGET
RELEVANT
MATERIAL TOPICS SIPEF’S ACTIVITIES
SDG 4:
Quality
Education
4.1 - By 2030, ensure that all girls
and boys complete free, equi-
table and quality primary and
secondary education leading to
relevant and eective learning
outcomes
Community
Development
SIPEF has established 44
kindergartens, primary and
secondary schools in Indonesia,
Papua New Guinea and Ivory
Coast. All facilities are accessible
to employee children and 95%
are also accessible to children
from surrounding communities.
SIPEF also provides free day
care for employee children in
Indonesia.
4.2 - By 2030, ensure that all girls
and boys have access to quality
early childhood development,
care and pre-primary education
so that they are ready for prima-
ry education
SDG 6: Clean
Water and
Sanitation
6.3 - By 2030, improve water
quality by reducing pollution,
eliminating dumping and min-
imizing release of hazardous
chemicals and materials, halving
the proportion of untreated
wastewater and substantially
increasing recycling and safe
reuse globally
Water
Management
SIPEF mitigates pollution of sur-
face and ground water through
good soil conservation practices,
the establishment of riparian
zones and wastewater treatment.
6.4 - By 2030, substantially
increase water-use eciency
across all sectors and ensure sus-
tainable withdrawals and supply
of freshwater to address water
scarcity and substantially reduce
the number of people suering
from water scarcity
Water
Management
SIPEF optimises water use
across operations, including
reusing water as much possible
to keep water consumption
at a minimum. Almost 70% of
the irrigation water used at the
banana plantation in Ivory Coast
is stored in dams during the
rainy season, then reused and
pumped during the dry season a
few months later.
124
The connection to the world of sustainable tropical agriculture
SDG GOAL SDG TARGET
RELEVANT
MATERIAL TOPICS SIPEF’S ACTIVITIES
SDG 7:
Aordable
and Clean
Energy
7.2 - By 2030, increase substan-
tially the share of renewable
energy in the global energy mix
Climate
Change
Generation of electricity from
renewable energy sources,
including from steam turbines
and methane capture facili-
ties fitted with biogas plants at
SIPEF’s palm oil operations. In
2021 SIPEF generated 44 311 658
kWh of electricity from renew-
able energy sources, all of which
was used for powering its palm
oil mills or for general use by
nearby communities.
125
SIPEF Sustainability Report 2021 Annex
SDG GOAL SDG TARGET
RELEVANT
MATERIAL TOPICS SIPEF’S ACTIVITIES
SDG 8:
Decent
Work and
Economic
Growth
8.5 - By 2030, achieve full and
productive employment and
decent work for all women and
men, including for young people
and persons with disabilities, and
equal pay for work of equal value
Human Rights
and Labour
Standards
SIPEF meets all local regulations
for wages and is compliant with
the decent living wage calcu-
lations audited by the various
certification standards to which
the Group adheres. This includes
workers on piece rate/quotas,
for which the wage calculation
is based on achievable quotas
during regular working hours.
The Group is working towards
alignment with the definitions of
the Global Living Wage Coalition
(GLWC) following the certifica-
tion standards’ processes.
8.8 - Protect labour rights and
promote safe and secure working
environments for all workers,
including migrant workers, in
particular women migrants, and
those in precarious employment
Health and
Safety
SIPEF ensures its employees and
workers are provided with a safe
and healthy work environment.
To prevent accidents, the Group
invests in continuous training,
the provision of appropriate
PPE, and rigorous internal
supervision and control systems.
All risks are regularly analysed
and assessed, and any occupa-
tional accidents are investigated
to prevent them from being
repeated.
126
The connection to the world of sustainable tropical agriculture
SDG GOAL SDG TARGET
RELEVANT
MATERIAL TOPICS SIPEF’S ACTIVITIES
SDG 12:
Responsible
Consumption
and
Production
12.2 - By 2030, achieve the
sustainable management and
ecient use of natural resources
Productivity
and Quality
Sustainability
Standards and
Certification
Credible third-party certification
is an important aspect of SIPEF’s
sustainability approach. The
Group applies the highest bench-
marked international stand-
ards, including the RSPO and
Rainforest Alliance standards.
The Group also implements Best
Management, regenerative and
circular practices. This includes
practices focused on improving
reusing by-products and waste,
and implementing nature-based
solutions where possible.
SIPEF engages in Integrated
Pest Management (IPM) for both
its oil palm and banana produc-
tion. Pesticides are used as a
last resort when IPM and other
methods are not able to prevent
outbreaks of pests and diseases
above the economic threshold.
12.4 - By 2020, achieve the
environmentally sound man-
agement of chemicals and all
wastes throughout their life
cycle, in accordance with agreed
international frameworks, and
significantly reduce their release
to air, water and soil in order to
minimize their adverse impacts
on human health and the
environment
Fertiliser and
Pesticide Use
127
SIPEF Sustainability Report 2021 Annex
SDG GOAL SDG TARGET
RELEVANT
MATERIAL TOPICS SIPEF’S ACTIVITIES
SDG 13:
Climate
Action
13.1 - Strengthen resilience and
adaptive capacity to climate-re-
lated hazards and natural disas-
ters in all countries
Climate
Change
Fire
Prevention and
Management
SIPEF is engaging in the follow-
ing climate change adaptation
initiatives under its current
approach:
• No new planting on peatlands
and implementation of best
management practices on
existing plantings on peatland
• SIPEF has a fire risk alert
monitoring system, as well as
comprehensive firefighting
procedures in place
• Strengthening natural defenc-
es against storm surges, coast-
al erosion and coastal flooding
through the rehabilitation of
coastal buers
13.2 - Integrate climate change
measures into national policies,
strategies and planning
Climate
Change
SIPEF is engaging in the follow-
ing climate change mitigation
initiatives under its current
approach:
• A composting facility for palm
oil residues
• Methane capture facilities and
biogas plants that generate
renewable electricity
• A biomass pellet facility
• Biodiversity, conservation and
reforestation programmes in
Indonesia, Papua New Guinea
and Ivory Coast
128
The connection to the world of sustainable tropical agriculture
SDG GOAL SDG TARGET
RELEVANT
MATERIAL TOPICS SIPEF’S ACTIVITIES
SDG 15: Life
on Land
15.1 - By 2020, ensure the
conservation, restoration and
sustainable use of terrestrial and
inland freshwater ecosystems
and their services, in particular
forests, wetlands, mountains and
drylands, in line with obligations
under international agreements
Deforestation
Ecosystem
Conservation
and
Restoration
Peatlands
Conservation areas are identified
and protected within the areas of
SIPEF’s concessions where the
Group has management control.
The Group is committed to No
Deforestation and no new plant-
ings on peatland, and HCV and
HCSA assessments are carried
out prior to any new develop-
ments. SIPEF is also committed
to monitoring biodiversity in all
set-aside areas within its conces-
sions, and to implementing its no
hunting policy on its own estates
and in the cultivated areas of its
third-party suppliers.
Through the SIPEF Foundation,
the Group finances and supports
two long-term biodiversity
projects in Indonesia. Both are
based in West Sumatra near
SIPEF’s Agromuko estates. One
is focused on the protection of
12672 hectares of natural for-
ests, and the other is a sea turtle
conservation programme. In
addition, Plantations J. Eglin In
Ivory Coast manages a reforesta-
tion programme covering an area
of 126 hectares.
15.2 - By 2020, promote the
implementation of sustainable
management of all types of for-
ests, halt deforestation, restore
degraded forests and substan-
tially increase aorestation and
reforestation globally
Ecosystem
Conservation
and
Restoration
Deforestation
15.3 - By 2030, combat deserti-
fication, restore degraded land
and soil, including land aected
by desertification, drought and
floods, and strive to achieve a
land degradation-neutral world
Deforestation
15.5 - Take urgent and significant
action to reduce the degradation
of natural habitats, halt the loss
of biodiversity and, by 2020, pro-
tect and prevent the extinction
of threatened species
Biodiversity
Ecosystem
Conservation
and
Restoration
129
SIPEF Sustainability Report 2021 Annex
Base Data
About SIPEF
Planted area
Responsible production and processing
  
Production volumes
OIL PALM OPERATIONS HECTARES 2019 2020 2021
SIPEF GROUP
Planted area – own plantations 73 977 76 473 77 163
Mature 59 531 63 489 64 181
Immature 14 446 12 984 12 982
INDONESIA
Planted area – own plantations 60 270 62 785 63 558
PAPUA NEW GUINEA
Planted area – own plantations 13 707 13 689 13 605
OIL PALM OPERATIONS TONNES 2019 2020 2021
SIPEF GROUP
Total FFB production 1 384 671 1 458 913 1 658 840
FFB production – own plantations 1 175 434 1 220 469 1 385 858
FFB production – smallholders 209 237 238 443 272 982
INDONESIA
Total FFB production 944 281 979 506 1 059 857
FFB production – own plantations 919 919 950 853 1 019 009
FFB production – smallholders 24 362 28 652 40 848
PAPUA NEW GUINEA
Total FFB production 440 390 479 407 598 983
FFB production – own plantations 255 515 269 616 366 849
FFB production – smallholders 184 875 209 791 232 134
BANANA OPERATIONS HECTARES 2019 2020 2021
IVORY COAST
Planted area – own plantations 796 780 794
130 The connection to the world of sustainable tropical agriculture
Oil Extraction Rates
Average percentage of free fatty acids in SIPEF’s palm oil production
PALM OIL MILL OPERATIONS 2018 2019 2020 2021
Indonesia 22.73%* 23.33%* 22.79%* 22.99%
Papua New Guinea 24.34% 23.33% 24.63% 25.58%
GROUP 23.36%* 23.26%* 23.42%* 23.96%
PALM OIL MILLS 2018 2019 2020 2021
INDONESIA
PLPOM 2.65% 2.97% 3.14% 3.42%
BMPOM 3.14% 3.06% 3.13% 3.13%
UMWPOM 3.62% 3.98% 3.31% 3.65%
MMPOM 3.46% 3.55% 2.97% 3.32%
BTPOM 3.86% 3.47% 3.40% 4.00%
DMPOM 3.71% 3.65% 3.57% 3.40%
PAPUA NEW GUINEA
HPOM 3.68% 4.03% 3.03% 2.71%
NPOM 4.30% 3.98% 3.70% 3.06%
BPOM 4.23% 4.26% 3.18% 3.64%
BANANA OPERATIONS TONNES 2019 2020 2021
IVORY COAST
Total banana production 32 849 31 158 32 200
* : Data for Indonesia and Group for 2018, 2019 and 2020 have been restated.
Production volumes
131
SIPEF Sustainability Report 2021 Annex
   
Number of certificates
CERTIFICATIONS 2018 2019 2020 2021
RSPO: Roundtable on Sustainable Palm Oil 8* 8* 8* 8
ISCC: International Sustainability and Carbon Certification 5 4 4 4
ISPO: Indonesian Sustainable Palm Oil 5 6* 6* 7
ISO 14001:2015 1 1 1 1
ISO 9001:2015 1 1 1 1
GLOBALG.A.P. 1 1 1 1
Rainforest Alliance 5 5 5 5*
Fairtrade 1 1 1
Sedex 1 1 1 1
FSSC 22000-4.1 1 1 1
Halal Assurance System 1 1 1
TOTAL 27* 30 30*
31
* :
•
RSPO certificate data from 20
18, 2019 and 2020 have been restated to accurately reflect that HOPL certificates are multi-site.
•
ISPO certificate data from 20
19 and 2020 have been restated. ISPO certificates are issued by company name and are not reflective of number of
mills certified.
•
The three certificates for SIPEF
’s rubber estates are only valid until July 2021, due to Rainforest Alliance having discontinued certification for
rubber.
RSPO certified area of oil palm operations
OIL PALM OPERATIONS HECTARES 2019 2020 2021
SIPEF GROUP
Total RSPO certified area 96 975 95 139 96 342
RSPO certified area – own plantations 81 909 80 073 80 099
RSPO certified area – smallholders 15 066 15 066 16 243
INDONESIA
RSPO certified area 62 613 60 791 60 992
RSPO certified area – own plantations 61 440 59 618 59 639
RSPO certified area – smallholders 1 173 1 173 1 353
PAPUA NEW GUINEA
RSPO certified area 34 362 34 348 35 350
RSPO certified area – own plantations 20 469 20 455 20 460
RSPO certified area – smallholders 13 893 13 893 14 890
132 The connection to the world of sustainable tropical agriculture
RSPO certified production volumes of oil palm operations
RSPO certification progress palm oil mill operations
OIL PALM OPERATIONS TONNES 2019 2020 2021
SIPEF GROUP
Total RSPO certified FFB 1 323 079 1 381 092 1 555 758
RSPO certified FFB – own plantations 1 121 244 1 150 582 1 297 632
RSPO certified FFB – smallholders 201 835 230 510 258 126
INDONESIA
RSPO certified FFB 882 689 901 685 956 775
RSPO certified FFB – own plantations 865 729 880 966 930 783
RSPO certified FFB – smallholders 16 960 20 719 25 992
PAPUA NEW GUINEA
RSPO certified FFB 440 390 479 407 598 983
RSPO certified FFB – own plantations 255 515 269 616 366 849
RSPO certified FFB – smallholders 184 875 209 791 232 134
PALM OIL MILL OPERATIONS 2019 2020 2021
INDONESIA NUMBER OF MILLS
RSPO certified mills – Identity Preserved 5 5 5
RSPO certified mills – Mass Balance 1 1 1
ISPO certified mills 6 6 6
INDONESIA TONNES
CSPO production 201 992 199 877 210 276
CSPK production 41 751 42 076 42 801
PAPUA NEW GUINEA NUMBER OF MILLS
RSPO certified mills – Identity Preserved 3 3 3
PAPUA NEW GUINEA TONNES
CSPO production 102 835 118 123 153 203
CSPK production 21 784 24 706 30 803
133
SIPEF Sustainability Report 2021 Annex
 
Total Group net emissions per year (Scopes 1 & 2)
YEAR SCOPE 1 SCOPE 2 TOTAL
tCO
2
e
2019 409 166 4 632 413 798
2020 527 069 8 860 535 929
2021 616 937 11 418 628 355
COUNTRY BIOGAS FACILITIES STEAM TURBINES TOTAL
Kilowatt hours
Indonesia 6 039 602 21 090 622 27 130 224
Papua New Guinea N/A 17 181 434 17 181 434
TOTAL 6 039 602 38 272 056 44 311 658
COUNTRY / PROVINCE WITHIN OWN CONCESSIONS WITHIN SUPPLIER AREAS
GFW
ALERTS
VERIFIED
INCIDENTS
OF TREE
COVER LOSS
VERIFIED
AREA OF
TREE COVER
LOSS HA
GFW
ALERTS
VERIFIED
INCIDENTS
OF TREE
COVER LOSS
VERIFIED
AREA OF
TREE COVER
LOSS HA
Indonesia 577 168 117 N/A N/A N/A
North Sumatra 18 0 0 N/A N/A N/A
Bengkulu 197 20 6 N/A N/A N/A
South Sumatra 362 148 111 N/A N/A N/A
Papua New Guinea 0 0 0 29 29 24
TOTAL 577 168 117 29 29 24
: Verification and validation of the data following the ISO 14064 methodology was not possible in 2021. Data presented are therefore an
estimate.
Energy generated from renewable sources in 2021
Global Forest Watch tree cover loss monitoring data 2021
134
The connection to the world of sustainable tropical agriculture
COUNTRY HECTARES) 2019 2020 2021
Indonesia 5 575 5 217 5 510
Papua New Guinea 3 426 3 426 3 483
Ivory Coast 128 128 226
GROUP 9 129 8 771 9 219
PALM OIL MILLS 2019 2020 2021
CUBIC METRES
Indonesia 813 708 906 866 954 258
Papua New Guinea 785 027 604 144 785 027
BANANA OPERATIONS 2019 2020 2021
CUBIC METRES
Plantations 3 601 692 4 012 702 3 901 644
Banana packing stations 231 400 211 674 218 112
CUBIC METRES / TONNE BANANAS
Banana packing stations water usage intensity 116.7 135.6 128.3
COUNTRY / PROVINCE WITHIN OWN CONCESSIONS WITHIN SUPPLIER AREAS
HOTSPOTS ACTUAL FIRES HOTSPOTS ACTUAL FIRES
2020 2021 2020 2021 2020 2021 2020 2021
Indonesia 107* 35 5 1 0 0 0 0
North Sumatra 72 5 0 0 0 0 0 0
Bengkulu 10 9 0 0 0 0 0 0
South Sumatra 25* 21 5 1 0 0 0 0
Papua New Guinea 0 2 0 2 1 8 0 1
TOTAL 107*
37
5
3
1
8
0
1
* : Data on number of hotspots within concessions in 2020 for Indonesia have been restated.
Conservation area within concessions by country
Palm oil mills and banana operations water use
Number of hotspots vs. confirmed fires within concessions and supplier areas 2020-2021
135
SIPEF Sustainability Report 2021 Annex
PALM OIL MILLS 2019 2020 2021
CUBIC METRES / TONNE FFB
Indonesia
PLPOM 0.61 0.68 0.68
BMPOM 0.88 0.89 0.92
UMWPOM 0.90 1.62 1.40
MMPOM 1.24 0.91 0.95
BTPOM 0.70 0.69 0.66
DMPOM 1.02 1.14 1.06
Papua New Guinea
HPOM 1.08 0.95 0.95
NPOM 1.00 1.20 1.13
BPOM 1.64 1.56 1.70
PALM OIL MILLS DESTINATION
BIOLOGICAL
OXYGEN
DEMAND
CHEMICAL
OXYGEN
DEMAND
TOTAL
SUSPENDED
SOLIDS
MILIGRAMMES / LITRE
Indonesia
PLPOM Land application 426 781 N/A
BMPOM Composting 1 235 2 544 N/A
UMWPOM Discharge into water body 20 44 4
MMPOM Discharge into water body 66 194 50
BTPOM Discharge into water body 57 254 33
DMPOM Discharge into water body 98 349 76
Papua New Guinea
HPOM Discharge into water body 109 1 774 2 299
NPOM Land application 186 4 726 12 865
BPOM Land application 212 5 386 10 998
Palm oil mill water usage intensity
Quality indicators of treated palm oil mill effluent by destination in 2021
136
The connection to the world of sustainable tropical agriculture
Employees by country
Lost time injury frequency rate by country (per 1 000 000 hours worked)
   
Employees at Group level
GROUP EMPLOYEES 2019 2020 2021
Male 16 116 16 553 15 749
Female 5 395 5 081 5 484
TOTAL EMPLOYEES 21 511 21 634 21 233
COUNTRY 2019 2020 2021
Belgium 23 24 23
Indonesia 15 420 15 622 14 998
Papua New Guinea 4 692 4 575 4 628
Ivory Coast 1 376 1 413 1 583
Singapore N/A N/A 1
COUNTRY 2019 2020 2021
Indonesia 3.27* 2.86* 2.43
Papua New Guinea 27.96 23.76 22.67
Ivory Coast 14.50 21.44 16.38
COUNTRY 2019 2020 2021
Indonesia 0 2 1
Papua New Guinea 1 0 0
Ivory Coast 0 0 0
* : Lost time injury frequency rate data for Indonesia for 2019 and 2020 have been restated.
Number of fatalities as a result of work-related injury
137
SIPEF Sustainability Report 2021 Annex
Number of houses provided to employees
Number of schools operational in 2021
Number of clinics operational in 2021
HOUSES PROVIDED BY SIPEF 2019 2020 2021
Indonesia 4 897 5 114 5 365
Papua New Guinea 2 290 2 269 2 305
Ivory Coast 675 783 766
TOTAL NUMBER OF HOUSES 7 826
8 166 8 436
SCHOOLS ESTABLISHED BY SIPEF 2019 2020 2021
Indonesia 35* 38* 38
Papua New Guinea 2 2 2
Ivory Coast 4 4 4
TOTAL NUMBER OF SCHOOLS 41
44 44
CLINICS PROVIDED BY SIPEF 2019 2020 2021
Indonesia 22* 23* 23
Papua New Guinea 13 13 13
Ivory Coast 3 3 3
TOTAL NUMBER OF CLINICS 38 39 39
* : Data for number of schools in Indonesia for 2019 and 2020 have been restated.
* : Data for number of clinics in Indonesia for 2019 and 2020 have been restated.
138 The connection to the world of sustainable tropical agriculture
Annual investment in capacity building and research for smallholders in Papua New Guinea
CROP NUMBER OF SMALLHOLDERS SMALLHOLDER PLANTED AREA HA
Oil palm 9 148 28 126
Tea 489 470
Rubber 367 650
ALL CROPS 10 004 29 246
SMALLHOLDER PROGRAMMES
NUMBER OF
SMALLHOLDERS
PLANTED
AREA HA
FFB VOLUME
PRODUCED TONNES
SIPEF GROUP
Scheme smallholders 5 882 20 219 265 258
Independent smallholders 3 266 7 979 2 970
GROUP TOTAL 9 148 28 198 268 228
INDONESIA
Company managed programme 1 943 4 643 23 738
Village smallholder programme (Kebun Masyarakat Desa) 304 686 9 386
Associated buy/sell programme 2 438 5 667 2 970*
Associated seedling programme 828 2 312 N/A*
INDONESIA TOTAL 5 513 13 308 36 095
PAPUA NEW GUINEA
Associated smallholder programme 3 635 14 890 232 134
PAPUA NEW GUINEA TOTAL 3 635 14 890 232 134
ANNUAL INVESTMENT PGK 2019 2020 2021
Investment by HOPL 169 970 839 162 741 116
Investment by smallholders 1 254 666 1 270 970 1 226 497
TOTAL AMOUNT INVESTED 1 424 636 2 110 132 1 967 613
* : FFB production volume from the associated seedling programme and the majority of FFB production volume from the associated buy/sell
programme are currently not included in SIPEF’s supply base.
Responsible sourcing and smallholder production
Smallholders by crop in 2021
Oil Palm smallholder programmes by country in 2021
139
SIPEF Sustainability Report 2021 Annex
OIL PALM SMALLHOLDERS 2019 2020 2021
SIPEF GROUP
Number of RSPO certified smallholders 4 312 4 309 4 297
RSPO certified smallholder area (ha) 15 066 15 066 16 243
RSPO certified smallholder FFB volume (tonnes) 201 835 230 510 258 126
INDONESIA
Number of RSPO certified smallholders 665 663 662
RSPO certified smallholder area (ha) 1 173 1 173 1 353
RSPO certified smallholder FFB volume (tonnes) 16 960 20 719 25 992
PAPUA NEW GUINEA
Number of RSPO certified smallholders 3 647 3 646 3 635
RSPO certified smallholder area (ha) 13 893 13 893 14 890
RSPO certified smallholder FFB volume (tonnes) 184 875 209 791 232 134
RSPO certified smallholders, areas and production volumes
Responsible business and transparency
Proportion of Taxonomy-eligible and Taxonomy-non-eligible
economic activities in total turnover, Capex and Opex
TAXONOMYELIGIBILITY TOTAL KUSD
PROPORTION OF
TAXONOMYELIGIBLE
ECONOMIC ACTIVITIES %
PROPORTION OF
TAXONOMYNONELIGIBLE
ECONOMIC ACTIVITIES %
Turnover 416 053 0% 100%
Capital expenditure (Capex) 68 692 0% 100%
Operating expenditure (Opex) 33 391 0% 100%
140 The connection to the world of sustainable tropical agriculture
Responsible persons
    
François Van Hoydonck
managing director
Johan Nelis
chief financial ocer
    
    
   
Baron Luc Bertrand, chairman and François Van Hoydonck,
managing director declare that, to their knowledge:
- the consolidated financial statements for the financial year
ended on 31 December 2021 were drawn up in accordan-
ce with the ‘International Financial Reporting Standards’
(IFRS) and provide an accurate picture of the consolidated
financial position and the consolidated results of the SIPEF
group and its subsidiary companies that are included in the
consolidation.
-
the financial report pro
vides an accurate overview of the
main events and transactions with aliated parties, which
occurred during the financial year 2021 and their eects on
the financial position, as well as a description of the main
risks and uncertainties for the SIPEF group.
 
EY Bedrijfsrevisoren BV
Represented by
Christoph Oris and Wim Van Gasse,
Borsbeeksebrug 26
2600 Antwerpen (Berchem)
Belgium
143
SIPEF Sustainability Report 2021
For further information

Kasteel Calesberg
Calesbergdreef 5
2900 Schoten
Belgium
RPR: Antwerpen
VAT: BE 0404 491 285
Website: www.sipef.com
For more information about SIPEF:
Tel.: +32 3 641 97 00
Dit jaarv
erslag is ook verkrijgbaar in het Nederlands.
Translation: this annual report is available in Dutch and English.
The Dutch version is the original; the other language version
is a free translation. We have made every reasonable eort to
avoid any discrepancies between the dierent language versions.
However, should such discrepancies exist, the Dutch version will
take precedence.
The ocial Annual Report of the SIPEF group in ESEF-format
can be found on the SIPEF-website, under the section “investors”.
All other formats are considered to be unocial versions of the
Annual Report.
Concept and realisation: Focus advertising
Photography:
Portraits of the chairman, the members of the board of directors
and the members of the executive committee © Wim Daneels
- images of employees, estates and products © Jez O’Hare
Photography, © Adrian Tan Photography, © Marc Adou and ©
Robert Weber.
Printed in Belgium by: Inni Group
144 The connection to the world of sustainable tropical agriculture
www.sipef.com
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