Share Name Share Symbol Market Type Share ISIN Share Description
Dekel Agri-vision Plc LSE:DKL London Ordinary Share CY0106502111 ORD EUR0.0003367 (DI)
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.0% 1.95 1.90 2.00 1.95 1.95 1.95 13,156 08:00:00
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Food Producers 18.8 -2.9 -0.9 - 8

Dekeloil Public Limited 2019 Interim Results and Shareholder Call

25/09/2019 7:01am

UK Regulatory (RNS & others)


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Dekeloil Public Limited

25 September 2019

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). Upon the publication of this announcement via a Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain.

DekelOil Public Limited / Index: AIM / Epic: DKL / Sector: Food Producers

25 September 2019

DekelOil Public Limited

('DekelOil' or the 'Company')

2019 Interim Results and Shareholder Call

DekelOil Public Limited, the West African focused agricultural company, is pleased to announce its interim results for the six months ended 30 June 2019.

The Company will be hosting a shareholder conference call at 11am UK time on 2 October 2019. The call will be hosted by Executive Director, Lincoln Moore and Deputy CEO Shai Kol, who will discuss the interim results and provide an update on activity across its portfolio of projects. Further information about the call can be found at the end of this announcement, as well as in the presentation, which will be uploaded to the DekelOil website prior to the conference call.

Building a West African focused multi-commodity, multi-project agriculture company with a portfolio of diverse revenue streams and end markets

Production - palm oil project, Ayenouan Côte d'Ivoire

-- 30.1% increase in Crude Palm Oil ('CPO') production to 28,934 tonnes compared to 22,242 tonnes in H1 2018

-- Record first half performance driven by 37.1% increase in Fresh Fruit Bunches ('FFB') delivered to mill to 131,917 tonnes (H1 2018: 96,195 tonnes), as yields recovered after 2018's poor peak harvest season and successful enhancement of the logistics network

   --    19.9% increase in CPO sales to 26,702 tonnes (H1 2018: 22,271 tonnes) 

-- Average realised sales price of EUR505 per tonne of CPO, a small premium to international benchmark prices which continued to trade at cyclical lows during the first half

-- Improving pricing outlook post period end with CPO prices reaching US$570 per tonne in September 2019 compared to a low in May 2019 of US$480

Development - cashew processing project at Tiebissou in Côte d'Ivoire

-- EUR1million project level investment secured with Concordia Corporation Ltd., a Hong Kong based private equity company at an implied EUR6 million pre-money valuation

-- DekelOil's interest in the project now 37.8%, plus an option to acquire an additional 17.0% interest

   --    Funding enabled commencement of construction phase at Tiebissou post period 

-- First production expected in 2020, at which point Tiebissou will become DekelOil's second producing asset and provide exposure to favourable structural drivers of global cashew market

Financial overview

-- 3.5% increase in revenue to EUR14.6m (H1 2018: EUR14.1m) as 30.1% increase in CPO production offset an 8.0% decrease in CPO prices

-- Gross margin percentage improved to 15.4% (H1 2018: 14.6%) as lower raw material costs due to increased availability of fruit was largely offset by 8.0% lower CPO prices and 1.1 percentage point decrease in the CPO extraction rate

   --    6.3% decrease in general administration expenses to EUR1.5m (H1 2018: EUR1.6m) 
   --    29.3% increase in EBITDA to EUR1.4m (H1 2018: EUR1.1m) 
   --    Net loss of EUR0.1m (H1 2018: net loss of EUR0.5m) 

-- From 30 June 2019 onwards, DekelOil's interest in the Tiebissou cashew project through its ownership of Pearlside Holdings Ltd will be consolidated into the Company accounts (see Note 4)

-- Post period EUR7.2million 10-year senior secured loan facility entered into with AgDevCo Limited ("AgDevCo"), a UK government-backed social impact investor in Africa's agriculture sector:

o EUR6.2 million replaces an existing NSIA Bank loan

o EUR1.0m for Environmental, Social and Governance ("ESG") activities and general working capital purposes

-- The AgDevCo loan's four-year capital repayment holiday estimated to generate EUR5.8 million cash savings, after taking into account interest rate differential and transaction fees

-- In addition to the loan facility, AgDevCo subscribed to EUR1.5 million in new ordinary shares in DekelOil

DekelOil Executive Director Lincoln Moore said, "Strong progress has been or is being made on numerous fronts including a rebound in first half palm oil production at Ayenouan, construction commencing at the cashew processing plant at Tiebissou and a EUR7.2 million loan facility and EUR1.5 million equity investment secured from leading social impact investor AgDevCo which has materially strengthened our Balance Sheet. This has been achieved despite operating within the framework of the lowest sustained palm oil prices we have seen since operations at our seed to oil project at Ayenouan commenced in 2014. Critically, in the last month we have seen palm oil prices begin to strengthen and we are optimistic palm oil prices will continue to rise over the next 6 to 12 months.

"Not all the aforementioned milestones were reached in the regulatory six-month reporting schedule and so the full positive impact of these have not been reflected in our first half financial numbers. Despite this, we are encouraged by the increase in first half revenues and EBITDA to EUR14.6m and EUR1.4m respectively, which provides a stable platform for the continued development and delivery of our second production asset: the cashew processing facility at Tiebissou."

Conference Call

To participate in the conference call to be held at 11.00am UK time on 2 October 2019, please dial 0808 109 0701, (if you are calling from outside of the UK, please dial +44 (0) 20 3003 2701 and enter participant pin 3418484# when prompted to do so. Please note that all lines will be muted with the exception of Company management, however the Company invites shareholders to submit questions to its public relations adviser, St Brides Partners Ltd, ahead of the call via email. Questions should be sent to shareholderenquiries@stbridespartners.co.uk.

Additionally, to view the presentation which will be referred to throughout the call, please use the link below and log in as a participant; the password is: DekelOil

Link to Presentation Function: https://sbmf.webex.com/sbmf/onstage/g.php?MTID=e8c60f565eb7071b34847e732ee0470fd

If you have any problems accessing the call, please contact St Brides Partners Ltd on shareholderenquiries@stbridespartners.co.uk or call +44 (0) 20 7236 1177.

For further information please visit the Company's website at www.dekeloil.com or contact:

 
 DekelOil Public Limited 
  Youval Rasin 
  Shai Kol 
  Lincoln Moore                                                      +44 (0) 207 236 1177 
 Cantor Fitzgerald Europe (Nomad and 
  Joint Broker) 
  David Foreman (Corporate Finance) 
  Keith Dowsing (Equity Sales)                                       +44 (0) 207 894 7000 
                   VSA Capital (Joint Broker) 
              Andrew Monk (Corporate Broking) 
              Andrew Raca (Corporate Finance)                        +44 (0) 203 005 5000 
 Optiva Securities Limited (Broker) 
  Christian Dennis 
  Jeremy King                                                        +44 (0) 203 137 1903 
 St Brides Partners Ltd (Investor Relations) 
  Frank Buhagiar 
  Cosima Akerman                                                     +44 (0) 207 236 1177 
 

Chairman's Statement

Subject to shareholders approving the change in the Company's name to Dekel Agri-Vision at the General Meeting to be held on 10 October 2019, the 2019 half year report is set to be the Company's last as DekelOil. The name change is being proposed as it better reflects how DekelOil is being transformed from a single project palm oil business, into a multi-project, multi-commodity agriculture company focused on West Africa. The diversification has already commenced with ground works for the 10,000tpa cashew processing plant now underway. In addition, we continue to evaluate a number of new ventures to add to our growing portfolio of agriculture projects.

For now, Ayenouan remains DekelOil's sole producing project. In July 2019, we were pleased to report that CPO production at the state-of-the-art mill for the six months ended 30 June 2019 came in at a record 28,934 tonnes, pushing total CPO volumes produced by the mill over the past five years to over 200,000 tonnes. The record half-yearly production figure was largely driven by fresh fruit bunches (FFB's) harvested during the 2019 peak season returning to more typical levels, after a weak peak harvest in 2018. FFB delivered to the mill increased 37.1% to 131,917 tonnes in H1 2019 compared to 96,195 tonnes in H1 2018. The recovery in FFB volumes harvested and CPO produced by our mill are in line with historical precedent, which had informed the industry-wide held view that 2018's poor harvest was an outlier and that conditions would recover in 2019. However, we also believe the project's collaborative model, which is centred on working closely with and supporting local smallholders, as well as the successful enhancement of our logistics network, has also played a key role in enabling us to consolidate our market share of local fruit delivered to the mill over the half year period.

This year's peak harvest did not just result in higher volumes of fruit delivered to the mill but also led to a normalisation in raw material prices resulting in a gross margin of 15.4%, a 5.5% improvement on the 14.6% achieved in the first half of 2018. This was achieved despite an 8.0% decrease in CPO prices and 1.1 percentage point decrease in the CPO extraction rate in the corresponding period. As detailed in the table below, the recovery in production volumes has resulted in a year on year improvement in Ayenouan's half year financial results.

 
                            H1 2019     H1 2018     H1 2017   H1 2016    H1 2015 
                                                    EUR19.6 
 Revenue                    EUR14.6m    EUR14.1m     m        EUR16.0m   EUR12.9m 
                           ----------  ----------  --------  ---------  --------- 
 EBITDA                     EUR1.4m     EUR1.1m     EUR3.7m   EUR3.1m    EUR2.3m 
                           ----------  ----------  --------  ---------  --------- 
 Net profit / (loss) 
  after tax                 (EUR0.1m)   (EUR0.5m)   EUR2.4m   EUR1.8m    (EUR93k) 
                           ----------  ----------  --------  ---------  --------- 
 FFB collected (tonnes)     131,917     96,195      117,706   123,157    90,879 
                           ----------  ----------  --------  ---------  --------- 
 CPO production (tonnes)    28,934      22,242      26,947    28,550     21,836 
                           ----------  ----------  --------  ---------  --------- 
 Average CPO price per 
  tonne                     EUR505      EUR549      EUR707    EUR542     EUR617 
                           ----------  ----------  --------  ---------  --------- 
 

The relevant figures for the Company's previous first half year periods demonstrate how 2018 stands out as an anomaly caused by the atypical combination of a poor peak harvest (reflected by the drop in FFB collected) and weak global CPO prices (reflected by further price weakness). H1 2014 has been omitted from the table as the mill at Ayenouan was commissioned in Q1 2014 with CPO production incrementally ramped up over the course of the first half. As the table shows, the recovery in the harvest was partially offset by a further 8.0% fall in global CPO prices in H1 2019 to EUR505 compared to H1 2018's EUR549. Should CPO prices recover to at least long-term averages of approximately EUR700 per tonne we would be confident of exceeding the record 2017 financial result.

Encouragingly, pricing levels in September 2019 rallied to around EUR570, a significant increase on May's EUR480 per tonne low. While too late to positively impact the Company's financial results for H1 2019, we are optimistic that prices have bottomed out. Decreasing international stock levels of CPO over the past year and new initiatives in south east Asia to increase biodiesel production, of which CPO is a key feed stock, give cause for optimism that CPO prices will continue to strengthen over the next 6 to 12 months. Notwithstanding this, 2018's challenging trading conditions demonstrate the rationale behind our strategy to build a portfolio of diverse revenue streams to insulate the Company against weak trading conditions in any one particular market. As set out below, progress is being made in this regard.

Post period end in July 2019, we were pleased to announce the commencement of ground works of an initial 10,000 tpa cashew processing plant at Tiebissou. Tiebissou is being developed in line with the collaborative model that we successfully deployed at our 100% owned palm oil project in Ayenouan. This is centred on constructing a state-of-the-art plant to process raw cashew nuts ('RCN') grown by local smallholders and co-operatives.

As was the case with Ayenouan, before ground was broken, a shortfall in regional cashew processing capacity was first identified in the area around Tiebissou before relationships with local co-operatives to supply RCN to the project were established. Despite being the world's top cashew producer, Côte d'Ivoire only processes 10-15% of RCNs grown in the country. The project at Tiebissou will therefore allow more of the value-add available via the processing of RCN to be retained in the country, while at the same time providing local smallholders with an outlet for their produce. DekelOil holds an initial 37.8% interest, together with an option to acquire an additional 17% in the project which is expected to become a major income generator for the Company in due course.

In addition to Ayenouan and Tiebissou, we also intend to develop our 24,000 ha Guitry project site. While we regard Guitry as a long-term project, post period end we announced the commencement of operations at a nursery site in Dabou which, due to its close proximity to Guitry, will enable us to build relationships with local farmers and cooperatives and at the same time, test market nursery sales in the area.

Financial

During the half year period under review, total revenues from the production of CPO at Ayenouan were EUR14.6m (H1 2018: EUR14.1m) which generated EBITDA of EUR1.4m (H1 2018: EUR1.1m) and a loss after tax of EUR0.1m (H1 2018: loss after tax EUR0.5m). As described above, the improved half year financials were driven by a normalisation in volumes of fruit harvested during the peak season compared to the previous year.

The year on year improvement in our first half results was achieved despite global palm oil prices continuing to trade at cyclically low levels. Average CPO prices achieved during H1 2019 were EUR505, 8.0% lower than the EUR549 average price per tonne in H1 2018, and 28.6% below the EUR707 level seen in H1 2017. The challenging trading conditions of course affect all operators and DekelOil's marginal half year loss is among the lowest in the sector. As part of efforts to mitigate the impact of low global pricing levels, the Company secured CPO sales at a small premium to international benchmarks during the half year period and at the same time successfully implemented its strategy to acquire external kernels for processing. In addition, the Company's ongoing cost saving programme resulted in a 6.3% decrease in general administration expenses. Similarly, half year finance costs were lower than H1 2018, largely due to the absence of a one-off cost of approximately EUR150,000 relating to the February 2018 refinancing of short-term loans via a EUR4.3m drawdown from the Sogebourse credit rating back syndicated loan.

Post period end in July, we announced a further refinancing after securing a EUR7.2million 10-year senior secured loan facility with AgDevCo, a UK government-backed social impact investor in Africa's agriculture sector. EUR6.2 million of the AgDevCo loan facility will replace an existing NSIA Bank loan with the remaining EUR1.0 million earmarked for Environmental, Social and Governance ("ESG") activities and general working capital purposes. The ESG activities include an enhanced traceability programme and finalisation of the Roundtable for Sustainable Palm Oil ("RSPO") certification process that is currently underway at the Company's palm oil operations at Ayenouan. RSPO is recognised globally as a certification standard for sustainable palm oil and becoming a certified producer would therefore be a major milestone for the Company, which has been a member of RSPO since 2008.

The AgDevCo loan includes a four-year capital repayment holiday which we estimate will generate EUR5.8 million cash savings, after taking into account interest rate differential and transaction fees. In addition to the loan facility, AgDevCo subscribed to EUR1.5 million of new ordinary shares in DekelOil. The Company raised a further GBP0.77 million (before expenses) by the placing of 25,788,194 new ordinary shares in August 2019. A total of 69,723,361 new Ordinary Shares were issued via the AgDevCo equity investment and placing.

Outlook

Having had to pass AgDevCo's strict investment criteria and due diligence, we view the loan facility and equity investment from the social impact investor as an endorsement of not just what we have achieved in the past, but what we can achieve in the future. We are focused on rolling out our collaborative business model into other areas of the African agriculture sector. We are already doing this at Tiebissou where ground works are underway for an initial 10,000tpa cashew processing plant and also at Guitry where the foundations are being put in place to deliver a long term, large scale asset.

Our existing three projects do not represent the sum of our ambitions or the breadth and scope of the opportunities we see before us. With investors of the calibre of AgDevCo on our shareholder register, a significantly strengthened balance sheet following the post period refinancing and fundraise, and the normalisation of trading conditions at Ayenouan, we believe DekelOil is further advanced in its objective to become a leading West African focused agriculture company. As the AgDevCo loan and investment demonstrate, we are not alone in believing in our vision to generate value for shareholders, while at the same time serving the local communities in which we operate in and safeguarding the environment around us.

Finally, I would like to thank the Board, management team and all our employees, and advisers for their continued support and hard work. I look forward to working with them all closely during what promises to be an exciting period for the Company.

Andrew Tillery

Non-Executive Chairman

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

 
                                                    30 June   31 December 
                                                     2019        2018 
                                                   ---------  ----------- 
                                                   Unaudited      Audited 
                                                   ---------  ----------- 
                                                     Euros in thousands 
                                                   ---------------------- 
      ASSETS 
 CURRENT ASSETS: 
    Cash and cash equivalents                         931         262 
    Accounts and other receivables                    121         420 
    Inventory                                        2,230       1,543 
 
 Total current assets                                3,282       2,225 
                                                   ---------  ----------- 
 
 NON-CURRENT ASSETS: 
    Right-of-use assets                               75           - 
    Goodwill                                         1,160         - 
    Property and equipment, net                     32,492      31,172 
                                                   ---------  ----------- 
 
 Total non-current assets                           33,727      31,172 
                                                   ---------  ----------- 
 
 Total assets                                       37,009      33,397 
                                                   =========  =========== 
 
             LIABILITIES AND EQUITY 
 CURRENT LIABILITIES: 
    Short-term loans and current maturities 
     of long-term loans                              5,015       4,251 
    Trade payables                                   1,548        665 
    Advance payments from customers                  2,170       2,471 
    Other accounts payable and accrued expenses      1,249        596 
                                                   ---------  ----------- 
 
 Total current liabilities                           9,982       7,983 
                                                   ---------  ----------- 
 
 NON-CURRENT LIABILITIES: 
    Lease liabilities                                 119         94 
    Accrued severance pay, net                        48          32 
    Long-term loans                                 11,914      13,712 
 
 Total non-current liabilities                      12,081      13,838 
                                                   ---------  ----------- 
 
 Total liabilities                                  22,063      21,821 
                                                   ---------  ----------- 
 
 EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF 
  THE COMPANY                                       13,514      11,576 
                                                   ---------  ----------- 
 
 Non-controlling interest                            1,432         - 
                                                   ---------  ----------- 
 
 Total equity                                       14,946      11,576 
                                                   --------- 
 
 Total liabilities and equity                       37,009      33,397 
                                                   =========  =========== 
 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 
                                               Six months    Six months 
                                                  ended         ended       Year ended 
                                                 30 June       30 June      31 December 
                                                  2019          2018          2018 
                                              ------------  ------------  ------------- 
                                               Unaudited     Unaudited          Audited 
                                              ------------  ------------  ------------- 
                                                         Euros in thousands 
                                                 (except share and per share amounts) 
 
 Revenues                                        14,607           14,125         20,885 
 Cost of revenues                               (12,356)        (12,059)       (19,152) 
                                              ------------  ------------  ------------- 
 
 Gross profit                                    2,251             2,066          1,733 
 
 General and administrative expenses            (1,528)          (1,631)        (3,235) 
                                              ------------  ------------  ------------- 
 
Operating profit (loss)                           723                435        (1,502) 
 
 Other income                                      33                  -              - 
 Finance cost                                    (826)             (939)        (1,738) 
                                              ------------  ------------ 
 
 Income (loss) before taxes on income             (70)             (504)        (3,240) 
 Taxes on income                                  (20)              (22)           (43) 
                                              ------------  ------------  ------------- 
 
 Net income (loss) and total comprehensive 
  income (loss) (*)                               (90)             (526)        (3,283) 
                                              ============  ============  ============= 
 
 Basic and diluted net earnings 
  (loss) per share                                  (0.00)        (0.00)         (0.01) 
                                              ============  ============  ============= 
 
 Weighted average number of shares 
  used in computing basic and diluted 
  net earnings (loss) per share               353,341,082   298,654,815    299,119,461 
                                              ============  ============  ============= 
 

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

 
                               Attributable to equity holders of the Company 
                    ------------------------------------------------------------------- 
 
                                                               Capital reserve 
                                                                    from 
                                                                transactions                  Non - 
                             Additional                             with                   controlling 
                     Share    paid-in    Accumulated  Capital  non-controlling               interest       Total 
                    capital   capital      deficit    reserve     interests      Total                     Equity 
                    -------  ----------  -----------  -------  ---------------  -------   -------------   -------- 
                                                          Euros in thousands 
 
 Balance as of 1 
  January 
  2018 (audited)         99      29,669      (9,880)   2,532           (7,754)   14,666               -      - 
 
 Net loss and 
  total 
  comprehensive 
  loss                    -           -        (526)     -                   -    (526)               -      - 
 
 Issuance of 
  shares                 *)          16            -     -                   -       16               -      - 
 
 Share-based 
  compensation            -          92            -     -                   -       92               -      - 
 
 Balance as of 30 
  June 2018 
  (unaudited)            99      29,777     (10,406)   2,532           (7,754)   14,248               -      - 
 
 Net loss and 
  total 
  comprehensive 
  loss                    -           -      (2,757)     -                   -  (2,757)               -      - 
 
 Issuance of 
  shares                 *)          17            -     -                   -       17               -      - 
 
 Exercise of                                                                                          -      - 
 options                 *)           -            -     -                   -       *) 
 
 Share-based 
  compensation            -          68            -     -                   -       68               -      - 
 
 Balance as of 31 
  December 
  2018 (audited)         99      29,862     (13,163)   2,532           (7,754)   11,576               -     11,576 
 
 
 
 
 
 
 
 
                               Attributable to equity holders of the Company 
                    ------------------------------------------------------------------- 
 
                                                               Capital reserve 
                                                                          from 
                                                                  transactions                    Non - 
                             Additional                                   with              controlling 
                      Share     paid-in  Accumulated  Capital  non-controlling                 interest     Total 
                    capital     capital      deficit  reserve        interests    Total                    Equity 
                    -------  ----------  -----------  -------  ---------------  -------   -------------   -------- 
                                                           Euros in thousands 
                    ------------------------------------------------------------------------------------------------ 
 Net loss and 
  total 
  comprehensive 
  loss                    -           -         (90)     -                   -     (90)               -     (90) 
 
 Issuance of 
  shares for 
  acquisition 
  of Pearlside           18       1,874            -     -                   -    1,892               -    1,892 
 Exercise of                                                                                          -      *) 
 options                 *)           -            -     -                   -       *) 
 
 Non-controlling 
  interests 
  arising from 
  initially 
  consolidated 
  company                 -           -            -     -                   -        -           1,432    1,432 
 
 Share-based 
  compensation            -          77            -     -                   -       77               -      77 
 
 Balance as of 30 
  June 2019 
  (unaudited)           117      31,813     (13,194)   2,532           (7,754)   13,514           1,432    14,946 
                    =======  ==========  ===========  =======  ===============  =======   =============   ======== 
 
 

CONSOLIDATED STATEMENTS OF CASH FLOWS

 
                                                     Six months  Six months   Year ended 
                                                        ended       ended     31 December 
                                                       30 June     30 June 
                                                        2019        2018         2018 
                                                     ----------  ----------  ------------ 
                                                     Unaudited   Unaudited        Audited 
                                                     ----------  ----------  ------------ 
 
 
 Cash flows from operating activities: 
 
 Net loss                                               (90)       (526)          (3,283) 
                                                     ----------  ----------  ------------ 
 
 Adjustments to reconcile net income (loss) 
  to net cash provided by (used in) in operating 
  activities: 
 
 Adjustments to the profit or loss items: 
   Depreciation                                           655         631           1,318 
   Share-based compensation                                77          92             160 
   Accrued interest on long-term loans and 
    non-current liabilities                               780         644           1,265 
   Change in employee benefit liabilities, 
    net                                                    16         (2)             (5) 
 Changes in asset and liability items: 
   Increase in inventories                               (687)        (8)           (174) 
   Decrease (increase) in accounts and other 
    receivable                                            326        (607)          (103) 
   Increase in trade payables                             863         437             506 
   Increase (decrease) in advances from customers        (301)        393           1,898 
   Increase in Right-of-use lease                          30          -                - 
   Increase (decrease) in accrued expenses 
    and other accounts payable                            419        (383)          (333) 
 
                                                         2,088       1,197          4,532 
                                                     ----------  ----------  ------------ 
 
 Cash received (paid) during the period 
  for: 
    Taxes                                                  -          (29)              - 
    Interest                                             (511)       (669)        (1,286) 
                                                     ----------  ----------  ------------ 
 
                                                         (511)       (698)        (1,286) 
                                                     ----------  ----------  ------------ 
 
 Net cash provided by (used in) operating 
  activities                                             1,577        (27)           (37) 
                                                     ----------  ----------  ------------ 
 

CONSOLIDATED STATEMENTS OF CASH FLOWS

 
                                           Six months  Six months 
                                              ended       ended      Year ended 
                                             30 June     30 June     31 December 
                                              2019        2018         2018 
                                           ----------  ----------  ------------- 
                                           Unaudited   Unaudited         Audited 
                                           ----------  ----------  ------------- 
                                                    Euros in thousands 
Cash flows from investing activities: 
 
   Cash acquired upon acquisition 
   of subsidiary                              780          -             - 
 Investment in Pearlside                     (144)         -             - 
 Purchase of property and equipment          (235)       (794)        (1,041) 
 
 Net cash provided by (used in) 
  investing activities                        401        (794)        (1,041) 
                                           ----------  ----------  ------------- 
 
 Cash flows from financing activities: 
 
 Long-term lease, net                         (5)          61           48 
 Receipt of short-term loans                  209          -            662 
 Receipt of long-term loans                    -         4,366         4,976 
 Repayment of long-term loans               (1,513)     (3,398)       (5,121) 
                                                                   ------------- 
 
 Net cash provided by (used in) 
  financing activities                      (1,309)      1,029          565 
                                           ----------  ----------  ------------- 
 
 Increase (decrease) in cash and 
  cash equivalents                            669         208          (513) 
 Cash and cash equivalents at beginning 
  of period                                   262         775           775 
                                           ----------  ----------  ------------- 
 
 Cash and cash equivalents at end 
  of period                                   931         984           262 
                                           ==========  ==========  ============= 
 
Supplemental disclosure of non-cash 
 financing activities: 
 
 Issuance of shares for services               15          16            - 
                                           ==========  ==========  ============= 
 
 Issuance of shares for acquisition 
  of Pearlside                               1,892         -             - 
                                           ==========  ==========  ============= 
 

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

   NOTE 1:-     GENERAL 

a. DekelOil Public Limited ("the Company") is a public limited company incorporated in Cyprus on 24 October 2007. The Company's Ordinary shares are admitted for trading on the AIM, a market operated by the London Stock Exchange. The Company is engaged through its subsidiaries in developing and cultivating palm oil plantations in Cote d'Ivoire for the purpose of producing and marketing Crude Palm Oil ("CPO"). The Company's registered office is in Limassol, Cyprus.

b. As of 30 June 2019, the Company has a deficiency in working capital of approximately EUR 6.7 million. Since commencement of production and sale of palm oil in 2014, the Company has generated positive cash flows from its operations until 2017. In 2018 due to unusually low fruit yields across Cote d'Ivoire and a decrease in the market price of crude palm oil, the Company's cash flows generated from operations were nil. During the first six months of 2019 fruit yields have recovered to normal levels and efficiency measures implemented to date have reduced costs of production, resulting in a positive cash flow from the Company's operation of EUR1.6 million. This is despite the continued decrease in crude palm oil market price during the first six month of 2019. Company management expects the positive cash flow to increase when crude palm oil market price will recover to more normal levels. However, there is no certainty that the Company will be able to meet management's projections as to the increase in cash flows from operations. Furthermore, the operations of the Company are subject to various market conditions that are not under the Company's control that could have an adverse effect on the Company's cash flows.

Based on the Company's current resources (see also Note 5) and its projected cash flows from its operations, Company management believes that it will have sufficient funds necessary to finance its operations and meet its obligations as they come due at least for the next twelve months from the date of the financial statements.

.

   NOTE 2:-     SIGNIFICANT ACCOUNTING POLICIES 
   a.         Basis of preparation: 

The interim condensed financial statements as of 30 June 2019 and for the six months then ended have been prepared in accordance with IAS 34, "Interim Financial Reporting", as adopted by the European Union.

The interim condensed financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Company's annual financial statements as of 31 December 2018 and the accompanying notes.

   b.         Accounting policies: 

The accounting policies adopted in the preparation of the interim condensed financial statements are consistent with those followed in the preparation of the Company's annual financial statements for the year ended 31 December 2018, except as described in Note 3.

   c.         Fair value of financial instruments: 

The carrying amounts of the Company's financial instruments approximate their fair value.

   NOTE 3:-     INITIAL ADOPTION  OF NEW FINANCIAL AND REPORTING STANDARDS 

a. Initial adoption of IFRS 16, Leases:

In January 2016, the IASB issued IFRS 16, "Leases" ("the new Standard") which supersedes IAS 17, "Leases". According to the new Standard, a lease is a contract, or part of a contract, that conveys the right to use an asset for a period of time in exchange for consideration.

According to the new Standard, lessees are required to recognize all leases in the statement of financial position (except for low-value leases and short-term leases).

Lessees will recognize a liability for lease payments and a corresponding right-of-use asset, similar to the accounting treatment of finance leases according to IAS 17. Lessees will also recognize interest and depreciation expenses separately.

The effects of the initial adoption of the new Standard in these financial statements as of 1 January 2019 was immaterial.

b. IFRIC 23, "Uncertainty over Income Tax Treatments":

In June 2017, the IASB issued IFRIC 23, "Uncertainty over Income Tax Treatments" ("the Interpretation"). The Interpretation clarifies the accounting for recognition and measurement of assets or liabilities in accordance with the provisions of IAS 12, "Income Taxes", in situations of uncertainty involving income taxes. The Interpretation provides guidance on considering whether some tax treatments should be considered collectively, examination by the tax authorities, measurement of the effects of uncertainty involving income taxes on the financial statements and accounting for changes in facts and circumstances in respect of the uncertainty.

The effects of the initial adoption of the Interpretation in these financial statements as of 1 January 2019 was immaterial.

   NOTE 4:-     SIGNIFICANT EVENTS DURING THE PERIOD 

On 20 December 2018 the Company entered into an agreement to purchase a 43.8% interest in Pearlside Holding Ltd ("Pearlside") by way of issuing 52,612,613 Ordinary shares of the Company. Pearlside, through its wholly-owned subsidiary, is in the initial stages of development and construction of a raw cashew nut processing plant in Cote d'Ivoire. The closing of this purchase transaction occurred on 7 January 2019. Based on the market price of the Company's shares on the date of the purchase, the cost of the investment in Pearlside amounted to approximately EUR1.9 million. Of the total Ordinary shares issued, 36,156,157 Ordinary shares were issued to related parties of the Company. As of June 2019, the holdings in Pearlside were accounted for as an investment in an associate using the equity method.

In addition, the Company has an option to purchase an additional 20.5% of Pearlside which may be exercised at any time following the date on which Pearlside is due to publish its audited annual accounts for the year ending 31 December 2020 until the date falling 6 months after Pearlside issues its audited annual accounts for the year ending 31 December 2021.

The exercise price will be calculated by reference to the higher of (i) 4.5times EBITDA of Pearlside in its last published audited annual accounts prior to exercise of the option and (ii) the valuation of EUR 18 million for the entire issued share capital of Pearlside.

If Pearlside has not achieved an EBITDA of EUR 4 million for the year 2020, DekelOil may acquire the shares of Pearlside under option based on an EUR 18 million valuation of Pearlside, at any time until the 2021 annual accounts are published at which point the valuation will be reset at the higher of 4.5 times EBITDA or EUR 18 million for 100% of Pearlside's equity. If the exercise price is determined by reference to the EBITDA of Pearlside, and the EBITDA is EUR 7 million or more, the EBITDA applied will be capped at EUR 7 million.

On 25 May 2019 Pearlside signed an equity investment agreement with an investor pursuant to which the subscriber invested EUR1 million in consideration for shares representing approximately a 15% ownership interest in Pearlside. At the same time, the Company elected to receive repayment of a EUR320 thousand short-term bridge loan provided to Pearlside in 2019 by receiving EUR238 thousand in cash (which was received subsequent to the end of the reporting period) and converting EUR82 thousand into new shares of Pearlside. Following these equity issuances, the Company has a 37.8% ownership interest in Pearlside and an option to purchase an additional 17% of Pearlside.

The investment agreement includes agreements over the management of Pearlside under which the Company obtained control over Pearlside as of the agreement date. The fair value of Pearlside as of the date control was obtained in May 2019 was not materially different than the fair value of Pearlside at the date of the Company's original investment at equity in January 2019.

The fair value of the identifiable assets and liabilities of Pearlside on the acquisition date:

 
                                                   Fair 
                                                   value 
                                             ----------------- 
                                             Euro in thousands 
                                             ----------------- 
Assets 
Cash and cash equivalents                                  779 
Receivables                                                 23 
Property, plant and equipment                            1,757 
                                                         2,559 
Liabilities 
Payables                                                 (256) 
                                             ----------------- 
 
Total identifiable net asset                             2,303 
 
  Non-controlling interests                            (1,432) 
Goodwill arising on acquisition                          1,127 
                                             ----------------- 
 
Total purchase consideration                             1,998 
                                             ================= 
 
Consideration is comprised of: 
 Investment in Pearlside at equity                       1,916 
Conversion of loan to shares of Pearlside                   82 
                                             ----------------- 
Total                                                    1,998 
                                             ================= 
 
 
 

The goodwill arising on acquisition is attributed to the expected benefits from the activity of Pearlside.

From the date control was obtained in May 2019 until the end of the reporting period, Pearlside had no revenues and the net loss from operations was immaterial. Had control and consolidation of Pearlside been obtained at the beginning of 2019, the effect on profit or loss would have been immaterial.

Pearlside has signed various agreements for the design and construction of its processing plant and related infrastructure. The total commitments amount to approximately EUR9 million. Pearlside has also signed loan facility agreements in the amount of EUR6.8 million to provide financing for the construction of the processing plant. The closing of these agreements is dependent on compliance with various conditions.

NOTE 5:-SUBSEQUENT EVENTS

In July the Company signed an agreement with AgDevCo Limited ("AgDevCo"), a leading African agriculture sector impact investor for a EUR7.2 million loan for a term of 10 years, (4 years of principal grace and 6 years of repayment), with a gross interest rate of 7.5% per annum. The funds from the loan are to be used as follows

-- EUR6.2 million to replace existing NSIA Bank loan

-- EUR1.0m for Environmental, Social and Governance ("ESG") activities and general working capital purposes

In addition, on August 8(th) the Company raised a total amount of approximately EUR2.5 million through the issuance of 69,723,361 Ordinary shares, of which EUR1.5 million was invested by Agdevco.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

IR SEDEFLFUSEEU

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September 25, 2019 02:01 ET (06:01 GMT)

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