RISK MANAGEMENT SOLUTIONS

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SGT_0166_Collateral_EN_Impose:Mise en page 1 27.2.2008 11:16 Page 1

COLLATERALMANAGEMENTAND BASEL IICOMPLIANCE

The Basel Committee has released adetailed set of requirements dealingwith bank reserve requirements andrisk-weighting in relation to internationalcommodity finance transactions.

Basel ll, the new version of theBasel Accord has now significantlychanged the regulations in the entiretrade finance industry.

The intention of the Accord is toencourage banks engaged in commodityfinancing transactions to adopt robustand comprehensive policies andprocedures for the inspection, control,and valuation of commodities, in orderto qualify as Advanced Internal RatingsBased transactions.

SGS is following closely the evaluationof the Basel Committee proposals in thecommodity finance sector, and has tailoredits Collateral Management Services toenable its clients to mini-mize the criticalLoss Given Default (LGD) component, inorder to achieve the lowest possible riskweighting in collateralized commodityfinancing transactions.

FOR FURTHER INFORMATION ANDCONTACT DETAILS, PLEASE GO TOWWW.SGS.COM

CONTACT:SOFT COMMODITIESJean-Christophe BEL: +41 22 739 93 03jean-christophe.bel@sgs.comBenoît SILIE: +41 22 739 97 08benoît.silie@sgs.comFax: +41 22 739 98 08

HARD COMMODITIESAlexandre HIRSCH: +41 22 739 93 54alexandre.hirsch@sgs.comAnna CATTANEO: +41 22 739 93 38anna.cattaneo@sgs.comFax: +41 22 739 98 08

WITH MORE THAN 50,000 EMPLOYEES, SGS PROVIDES A UNIQUE NETWORK COMPRISING OVER 1000BRANCHES AND LABORATORIES WORLDWIDE.

PRESENCE OF CM SERVICES:

ASIAChinaIndiaPhilippinesMalaysiaMyanmarSingapooreVietnam

EMEAAlbaniaCroatiaFranceUAEJordanKyrgyzstanPolandRussiaTurkeyUkraine

AFRICAAngolaAlgeriaBeninBissauCamerounCongoEgyptGambiaGhanaGuineaIvory CoastKenyaLiberiaMadagascarMaliMauritaniaMoroccoMozambiqueNigeria

SenegalSierra LeoneSouth AfricaTanzaniaTogoUgandaTunisia

AMERICAArgentinaBrasilChiliGuatemalaUruguayHaiti

SGT_0166_Collateral_EN_Impose:Mise en page 1 27.2.2008 11:16 Page 2

GLOBALCOMMODITYTRADE ANDFINANCE REQUIRESDESIGNED RISKMANAGEMENTSOLUTIONS FROMA RELIABLE PARTNER

Since the year 1878, SGS has been adependable provider of risk managementsolutions to participants in the internationaltrade of commodities throughout theworld. With the objective to reduce risks,specific products have been designed forproducers, refiners, commodity traders,distributors and financing banks. In theimmediate future, the operational andregulatory needs of participants in thesemarkets will require robust and reliablerisk management tools that are efficientlyprovided with unquestioned professionaland financial integrity. SGS is committedto fulfilling this need.

Throughout its network, SGS understandsthe local and global trade in commoditiesand has the resources to assure dependableinspection, monitoring and collateralmanagement services, providing controland custodial services throughout theflow of a commodity. Our uniquenetwork brings you, not only to each portor distribution center, but also to remotestorage and processing locationsthrough-out the world.

The objective of our services is to assurethat the financed commodity is physicallyavailable to banks and purchasers in thequantity and quality required.

GLOBALPROCEDURALUNIFORMITYAND UNIQUERISK MITIGATIONTHROUGH OURCOMMITMENTTO QUALITYMANAGEMENT

ISO CERTIFICATION SERVICESSGS Collateral Management andmanaging the quality of serviceprovision:

SGS has continually strived to meet therequirements of its clients worldwide.Since 1999, SGS Collateral ManagementService has developed its own systemfor managing the quality of serviceprovision, in order to guarantee its clientsrapid and efficient service.

This system, which is modified on anon-going basis to take the latest marketrequirements into account, is used bothin the main office and in the various SGSoffices located throughout the world.This means that our clients will havetheir transactions handled in the sameway and be issued with the samedocuments subject to local legalspecifications regarding documentation.

This harmonisation of documents andthe rules and practices of SGS CollateralManagement is not only due to ourcompany’s on-going concern to ensurethat clients receive the same servicewhichever SGS office they contact, butalso, and above all, to control the risks ofeach transaction by establishing strictrules and procedures and informing allthe offices in the world of them.

This system is complemented by regularaudits which enable us to make surethat working methods are constantlyharmonised, and which limit the risksinherent in each transaction.

Moreover, a company like SGS,which ensures that the highest qualitystandards are adhered to throughout theworld on a daily basis in fields which areas complex as they are varied, is dutybound to scrupulously respect theaforementioned standards. For thisreason, SGS is amongst the 600,000establishments worldwide which havebeen certified ISO 9001, 2000 compliant,having had the correspondingcertification and audit undertaken by anindependent body.

MANAGEMENT

CUSTOMER

HUMAN RESOURCES

QUALITY SERVICEMANAGEMENT

INITIAL CLIENT INQUIRYENDING

OPERATIONS STUDY OF FEASIBILITY

SETUP

DELIVERY OF GOODSSECURIZATION OF GOODS

RECEIPT OF GOODS

Focused on client needs, this system defines,for each key step of the transaction, the wayof conducting any intervention on our part.

SGT_0166_Collateral_EN_Impose:Mise en page 1 27.2.2008 11:16 Page 4

RISK MANAGEMENTSOLUTIONS IN THETRADE FINANCEINDUSTRY TAILOREDTO INDIVIDUALTRANSACTIONS

The foundation of all physical commodityand export pre-payment financingtransactions is the assured availabilityof the commodities in the quality andquantity required to repay advances.Depending on the circumstances ofthe individual transaction, one or more ofthe following risk management solutionsare recommended:

SGS COLLATERALMANAGEMENT SERVICES CMASGS acts as the custodian of thecommodities and takes continuous, andexclusive possession of them from thetime the securization is requested, untilthe commodities are sold or exported.

The commodities will be held eitherin a SGS warehouse, in an independentwarehouse contracted by SGS, or in theplant or warehouse owned by the producerand leased to SGS.

The objective of Collateral ManagementServices is to assure the availability andphysical control of the commodities, andto enable the bank or purchaser to acquireclear legal title to the commodities asowner or pledgee, by virtue of thepossession of the commodities.

Depending on the local laws, SGS willissue documents of title (warrants/CD) ornon-negotiable receipts to the commoditiesunder its exclusive possession and control.It can further assist the bank or purchaserto obtain local legal opinions confirmingthe legal validity of its status as pledgee orowner of the commodities held by SGS asits custodial agent.

SGS MONITORINGSERVICES SMAWhere the financing party does notrequire strong control over the Good bya third party, but rather wants to ensuretraceability of the Good along the supplychain, SGS can provide either continuousmonitoring services, or periodic spotinspection services to witness themovement, care and condition of thecommodities. In case of damage ormisapplication of the commodities, theparties concerned are enabled to takeprompt remedial action. Certification ofquantity and quality by SGS can alsoassist in the collection of insurance claimsin the event of any loss or damage to thecommodities due to fire, flood, theft, orother accidental cause.

SGS DOCUMENTTRUSTEE SERVICESCommodities under monitoring are oftenfast moving operations involving multiplestorage, processing, and transport points,in each case accompanied by the issuanceand release of storage and transportdocuments. In order to assure thecontinual validity of the bank's or trader'slegal claims to the commodities, thesedocuments should be issued to theprincipal, or be in negotiable form. Thisresults in high administrational costs, andis often impractical if the documents arerequired to be presented locally to allowfor the movement and transportation ofthe commodities.

In such cases, SGS can serve asthe Document Trustee for the purposeof holding the documents in localsafekeeping, and assuring that thedocuments are timely presented forauthorized movements until thecommodities are exported.

SGS PRICE VALUATION SERVICESRegardless of the type of riskmanagement services employed, thebank or purchaser will require frequentreports of the quantity, quality, type,location and value of the commodities instorage, processing, or transport. Timelyand comprehensive inspection reportsare critical to the monitoring of theborrowing base, and the ability to call foradditional collateral as needed in theevent of; changes in market value,change due to the inherent vice of acommodity or losses in general. SGSis able to value said commodities bychecking quantity and quality on a weeklyor other agreed basis and compare themin accordance with local published indices,or other market related data acceptableto the financer.

ACCESSORY SGS SERVICESSGS is the world's largest commodityinspection company with 650 offices andover 50,000 employees in 140 countries,including virtually every major port andcommodity producing region around theglobe. Clients of SGS Risk ManagementServices have the benefit of 350 commoditytesting laboratories, and skilled inspectorsto verify commodity quality and values,compliance of the commodities withinternational standards and contractspecification, compliance with processingand packaging, and compliance withexport and import requirements. In short,SGS is an outstanding and reliable source oflocal industry knowledge and commodityknow–how for banks providing financialservices to producing countries. Whetheroil, agricultural or mineral commodities,SGS can provide prompt and cost effectiverisk management solutions to complex tradeand quality/quantity related requirements.

SGT_0166_Collateral_EN_Impose:Mise en page 1 27.2.2008 11:16 Page 3

RISK MANAGEMENTSOLUTIONS IN THETRADE FINANCEINDUSTRY TAILOREDTO INDIVIDUALTRANSACTIONS

The foundation of all physical commodityand export pre-payment financingtransactions is the assured availabilityof the commodities in the quality andquantity required to repay advances.Depending on the circumstances ofthe individual transaction, one or more ofthe following risk management solutionsare recommended:

SGS COLLATERALMANAGEMENT SERVICES CMASGS acts as the custodian of thecommodities and takes continuous, andexclusive possession of them from thetime the securization is requested, untilthe commodities are sold or exported.

The commodities will be held eitherin a SGS warehouse, in an independentwarehouse contracted by SGS, or in theplant or warehouse owned by the producerand leased to SGS.

The objective of Collateral ManagementServices is to assure the availability andphysical control of the commodities, andto enable the bank or purchaser to acquireclear legal title to the commodities asowner or pledgee, by virtue of thepossession of the commodities.

Depending on the local laws, SGS willissue documents of title (warrants/CD) ornon-negotiable receipts to the commoditiesunder its exclusive possession and control.It can further assist the bank or purchaserto obtain local legal opinions confirmingthe legal validity of its status as pledgee orowner of the commodities held by SGS asits custodial agent.

SGS MONITORINGSERVICES SMAWhere the financing party does notrequire strong control over the Good bya third party, but rather wants to ensuretraceability of the Good along the supplychain, SGS can provide either continuousmonitoring services, or periodic spotinspection services to witness themovement, care and condition of thecommodities. In case of damage ormisapplication of the commodities, theparties concerned are enabled to takeprompt remedial action. Certification ofquantity and quality by SGS can alsoassist in the collection of insurance claimsin the event of any loss or damage to thecommodities due to fire, flood, theft, orother accidental cause.

SGS DOCUMENTTRUSTEE SERVICESCommodities under monitoring are oftenfast moving operations involving multiplestorage, processing, and transport points,in each case accompanied by the issuanceand release of storage and transportdocuments. In order to assure thecontinual validity of the bank's or trader'slegal claims to the commodities, thesedocuments should be issued to theprincipal, or be in negotiable form. Thisresults in high administrational costs, andis often impractical if the documents arerequired to be presented locally to allowfor the movement and transportation ofthe commodities.

In such cases, SGS can serve asthe Document Trustee for the purposeof holding the documents in localsafekeeping, and assuring that thedocuments are timely presented forauthorized movements until thecommodities are exported.

SGS PRICE VALUATION SERVICESRegardless of the type of riskmanagement services employed, thebank or purchaser will require frequentreports of the quantity, quality, type,location and value of the commodities instorage, processing, or transport. Timelyand comprehensive inspection reportsare critical to the monitoring of theborrowing base, and the ability to call foradditional collateral as needed in theevent of; changes in market value,change due to the inherent vice of acommodity or losses in general. SGSis able to value said commodities bychecking quantity and quality on a weeklyor other agreed basis and compare themin accordance with local published indices,or other market related data acceptableto the financer.

ACCESSORY SGS SERVICESSGS is the world's largest commodityinspection company with 650 offices andover 50,000 employees in 140 countries,including virtually every major port andcommodity producing region around theglobe. Clients of SGS Risk ManagementServices have the benefit of 350 commoditytesting laboratories, and skilled inspectorsto verify commodity quality and values,compliance of the commodities withinternational standards and contractspecification, compliance with processingand packaging, and compliance withexport and import requirements. In short,SGS is an outstanding and reliable source oflocal industry knowledge and commodityknow–how for banks providing financialservices to producing countries. Whetheroil, agricultural or mineral commodities,SGS can provide prompt and cost effectiverisk management solutions to complex tradeand quality/quantity related requirements.

SGT_0166_Collateral_EN_Impose:Mise en page 1 27.2.2008 11:16 Page 3

GLOBALCOMMODITYTRADE ANDFINANCE REQUIRESDESIGNED RISKMANAGEMENTSOLUTIONS FROMA RELIABLE PARTNER

Since the year 1878, SGS has been adependable provider of risk managementsolutions to participants in the internationaltrade of commodities throughout theworld. With the objective to reduce risks,specific products have been designed forproducers, refiners, commodity traders,distributors and financing banks. In theimmediate future, the operational andregulatory needs of participants in thesemarkets will require robust and reliablerisk management tools that are efficientlyprovided with unquestioned professionaland financial integrity. SGS is committedto fulfilling this need.

Throughout its network, SGS understandsthe local and global trade in commoditiesand has the resources to assure dependableinspection, monitoring and collateralmanagement services, providing controland custodial services throughout theflow of a commodity. Our uniquenetwork brings you, not only to each portor distribution center, but also to remotestorage and processing locationsthrough-out the world.

The objective of our services is to assurethat the financed commodity is physicallyavailable to banks and purchasers in thequantity and quality required.

GLOBALPROCEDURALUNIFORMITYAND UNIQUERISK MITIGATIONTHROUGH OURCOMMITMENTTO QUALITYMANAGEMENT

ISO CERTIFICATION SERVICESSGS Collateral Management andmanaging the quality of serviceprovision:

SGS has continually strived to meet therequirements of its clients worldwide.Since 1999, SGS Collateral ManagementService has developed its own systemfor managing the quality of serviceprovision, in order to guarantee its clientsrapid and efficient service.

This system, which is modified on anon-going basis to take the latest marketrequirements into account, is used bothin the main office and in the various SGSoffices located throughout the world.This means that our clients will havetheir transactions handled in the sameway and be issued with the samedocuments subject to local legalspecifications regarding documentation.

This harmonisation of documents andthe rules and practices of SGS CollateralManagement is not only due to ourcompany’s on-going concern to ensurethat clients receive the same servicewhichever SGS office they contact, butalso, and above all, to control the risks ofeach transaction by establishing strictrules and procedures and informing allthe offices in the world of them.

This system is complemented by regularaudits which enable us to make surethat working methods are constantlyharmonised, and which limit the risksinherent in each transaction.

Moreover, a company like SGS,which ensures that the highest qualitystandards are adhered to throughout theworld on a daily basis in fields which areas complex as they are varied, is dutybound to scrupulously respect theaforementioned standards. For thisreason, SGS is amongst the 600,000establishments worldwide which havebeen certified ISO 9001, 2000 compliant,having had the correspondingcertification and audit undertaken by anindependent body.

MANAGEMENT

CUSTOMER

HUMAN RESOURCES

QUALITY SERVICEMANAGEMENT

INITIAL CLIENT INQUIRYENDING

OPERATIONS STUDY OF FEASIBILITY

SETUP

DELIVERY OF GOODSSECURIZATION OF GOODS

RECEIPT OF GOODS

Focused on client needs, this system defines,for each key step of the transaction, the wayof conducting any intervention on our part.

SGT_0166_Collateral_EN_Impose:Mise en page 1 27.2.2008 11:16 Page 4

COLLATERALMANAGEMENTAND BASEL IICOMPLIANCE

The Basel Committee has released adetailed set of requirements dealingwith bank reserve requirements andrisk-weighting in relation to internationalcommodity finance transactions.

Basel ll, the new version of theBasel Accord has now significantlychanged the regulations in the entiretrade finance industry.

The intention of the Accord is toencourage banks engaged in commodityfinancing transactions to adopt robustand comprehensive policies andprocedures for the inspection, control,and valuation of commodities, in orderto qualify as Advanced Internal RatingsBased transactions.

SGS is following closely the evaluationof the Basel Committee proposals in thecommodity finance sector, and has tailoredits Collateral Management Services toenable its clients to mini-mize the criticalLoss Given Default (LGD) component, inorder to achieve the lowest possible riskweighting in collateralized commodityfinancing transactions.

FOR FURTHER INFORMATION ANDCONTACT DETAILS, PLEASE GO TOWWW.SGS.COM

CONTACT:SOFT COMMODITIESJean-Christophe BEL: +41 22 739 93 03jean-christophe.bel@sgs.comBenoît SILIE: +41 22 739 97 08benoît.silie@sgs.comFax: +41 22 739 98 08

HARD COMMODITIESAlexandre HIRSCH: +41 22 739 93 54alexandre.hirsch@sgs.comAnna CATTANEO: +41 22 739 93 38anna.cattaneo@sgs.comFax: +41 22 739 98 08

WITH MORE THAN 50,000 EMPLOYEES, SGS PROVIDES A UNIQUE NETWORK COMPRISING OVER 1000BRANCHES AND LABORATORIES WORLDWIDE.

PRESENCE OF CM SERVICES:

ASIAChinaIndiaPhilippinesMalaysiaMyanmarSingapooreVietnam

EMEAAlbaniaCroatiaFranceUAEJordanKyrgyzstanPolandRussiaTurkeyUkraine

AFRICAAngolaAlgeriaBeninBissauCamerounCongoEgyptGambiaGhanaGuineaIvory CoastKenyaLiberiaMadagascarMaliMauritaniaMoroccoMozambiqueNigeria

SenegalSierra LeoneSouth AfricaTanzaniaTogoUgandaTunisia

AMERICAArgentinaBrasilChiliGuatemalaUruguayHaiti

SGT_0166_Collateral_EN_Impose:Mise en page 1 27.2.2008 11:16 Page 2

PRESENCE OF CM SERVICES:

ASIAChinaIndiaIndonesiaPhilippinesMalaysiaMyanmarSingapooreVietnam

EMEAAlbaniaCroatiaFranceUAEJordanKyrgyzstanPolandRussia

TurkeyUkraine

AFRICAAngolaAlgeriaBeninBissauCamerounCongoEgyptGambiaGhanaGuineaIvory CoastKenyaLiberiaMadagascarMali

MauritaniaMoroccoMozambiqueNigeriaSenegalSierra LeoneSouth AfricaTanzaniaTogoUgandaTunisia

AMERICAArgentinaBrasilGuatemalaUruguayHaiti

FOR FURTHER INFORMATION AND CONTACT DETAILS, PLEASE GO TO WWW.SGS.COM

CONTACT: SOFT COMMODITIESJean-Christophe BEL: +41 22 739 93 03jean-christophe.bel@sgs.comClaude RIEdo: +41 22 739 97 08claude.riedo@sgs.comFax: +41 22 739 98 08

HARD COMMODITIESAlexandre HIRSCH: +41 22 739 93 54alexandre.hirsch@sgs.comFax: +41 22 739 98 08

WITH 59,000 EMPLOYEES, SGS PROVIDES A UNIQUE NETWORK COMPRISING OVER 1000 BRANCHES AND LABORATORIES WORLDWIDE.

WWW.SGS.COM

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