REG - Dekel Agri-Vision - 2022 Final Results and AGM
28/06/2023 07:00
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RNS Number : 1193E Dekel Agri-Vision PLC 28 June 2023
Dekel Agri-Vision Plc / Index: AIM / Epic: DKL / Sector: Food Producers
28 June 2023
Dekel Agri-Vision Plc ('Dekel' or the 'Company')
2022 Final Results and AGM
Dekel Agri-Vision Plc (AIM: DKL), the West African agribusiness company
focused on building a portfolio of sustainable and diversified projects, is
pleased to announce its audited results for the year ended 31 December 2022
(the 'Accounts'). The Company also gives notice that its Annual General
Meeting ('AGM') will be held at Hill Dickinson LLP, The Broadgate Tower, 20
Primrose Street, London EC2A 2EW on 27 July 2023 at 9.30am BST. The Notice of
AGM will be sent to shareholders and the Notice of AGM and Accounts will be
made available to download later today from the Company's website
www.dekelagrivision.com.
Financial Highlights
Palm Oil Operation
· Strong EBITDA of €4.6m delivered from the Ayenouan palm oil plant
in Côte d'Ivoire ('Palm Oil Operation') primarily driven by record Crude Palm
Oil ('CPO') and Palm Kernel Oil Pricing ('PKO') offsetting a historically low
Fresh Fruit Bunch ('FFB') harvesting year:
o 18.4% decrease in revenues to €30.5m (2020: €37.4m) - includes sale of
CPO, Palm Kernel Oil ('PKO'), Palm Kernel Cake ('PKC') and Nursery Plants
o Gross margin increased by 9.2% to 19.0% (2021: 17.4%)
o 2022 EBITDA of €4.6m (2021: €5.2m)
o Net profit after tax of €1.0m (2020: €1.0m)
Cashew Operation
· First year of cashew pilot production commenced and first year of
sales achieved of €0.7m
· Cashew Operation operating loss of €2.3m recorded for 2022 during
the commissioning process
· Significant improvement in financial results expected in 2023 as
commercial production ramps up
*Cashew Operation in commissioning phase during 2022
Year ended 31 December 2022 2021 % change
Palm Oil Operation
Revenue €30.5m €37.4m -18.4%
Gross Margin €5.8m €6.5m -10.8%
Gross Margin % 19.0% 17.4% 9.2%
G&A (€3.4m) (€3.5m) 2.9%
EBITDA €4.6m €5.2m -9.6%
Net profit / (loss) after tax €1.0m €1.0m 10.0%
Cashew Operation
Revenue €0.7m nil n/a
Net Loss* (€2.3m) (€0.4m)
Dekel Group Net profit / (loss) after tax (€1.3m) €0.6m
The summary of the Group Financial Performance for FY2022 is laid out further
below.
Operational Highlights - Palm Oil Operation
· 35.5% decrease in FY2022 CPO production compared to FY2021 driven
by an unprecedently low FFB harvest year.
· An improved CPO extraction rate of 22.1% was achieved in FY 2022
(FY 2021: 21.0%).
· 33.4% decrease in FY2022 CPO sales compared to FY2021 reflecting
the lower CPO production volumes.
· 18.1% increase in CPO prices to €1,025 per tonne in FY2022
compared to FY2021 (FY 2022: €868). This represents an annual Company
record sales price.
· 28.4% decrease in FY 2022 PKO sales compared to FY 2021 reflecting
lower production levels.
· Company record PKO price achieved in FY 2022 of €1,381 per
tonne.
Lincoln Moore, Dekel's Executive Director, said: "Achieving a strong EBITDA of
€4.6m from the Palm Oil Operation despite operating in the lowest high
season production period we have experienced was a credible outcome. With CPO
prices remaining higher than historical averages and a much stronger H1 2023
high season, the Palm Oil Operation is well positioned to deliver a strong H1
2023 financial performance."
"Following a lengthy commissioning process during 2022, the operating and
financial performance of the Cashew Operation is now poised to materially
improve in 2023."
"Given reasons to be optimistic about both the Palm Oil Operation and the
Cashew Operation, we are excited about our prospects to deliver a strong
financial performance in 2023."
This announcement contains inside information for the purposes of Article 7 of
the UK version of Regulation (EU) No 596/2014 which is part of UK law by
virtue of the European Union (Withdrawal) Act 2018, as amended ("MAR"). Upon
the publication of this announcement via a Regulatory Information Service,
this inside information is now considered to be in the public domain.
** ENDS **
For further information please visit the Company's website
www.dekelagrivision.com or contact:
Dekel Agri-Vision Plc +44 (0) 207 236 1177
Youval Rasin
Shai Kol
Lincoln Moore
WH Ireland Ltd (Nomad and Joint Broker) +44 (0) 20 7220 1666
James Joyce
Darshan Patel
Optiva Securities Limited (Joint Broker) +44 (0) 203 137 1903
Christian Dennis
Daniel Ingram
Notes:
Dekel Agri-Vision Plc is a multi-project, multi-commodity agriculture company
focused on West Africa. It has a portfolio of projects in Côte d'Ivoire at
various stages of development: a fully operational palm oil project in
Ayenouan where fruit produced by local smallholders is processed at the
Company's 60,000tpa capacity crude palm oil mill and a cashew processing
project in Tiebissou, which is currently transitioning to full commercial
production in 2023.
CHAIRMAN'S STATEMENT
Summary
The Palm Oil Operation experienced a surge in CPO prices during 2022, reaching
unprecedented levels. This significantly contributed to our financial
performance during a period of very low production due to an atypically weak
high season. Additionally, our mill operations performed well demonstrated by
the improved CPO extraction rate and effective operating cost management,
despite global inflation. These factors collectively established a solid
foundation that allowed the Palm Oil Operation to achieve a strong EBITDA of
€4.6m.
The Cashew Operation achieved notable progress during 2022 including first
production and first sales revenue, despite equipment delays resulting in a
much longer than expected commission phase and a net loss of €2.3m. With all
key equipment on site prior to year end, commercial production is now well
underway and we believe that the financial performance of the Cashew Operation
will significantly improve during 2023.
Palm Oil Operation
CPO production volumes started well in January 2022, however, the expected
high season, which typically peaks from February through May did not
materialize as usual. Consequently, this marked the weakest high season in the
Company's history. It is important to note that this decline in production was
experienced across the region. Nonetheless, local experts anticipated that
this variation is temporary, and we have seen a significant improvement in the
2023 high season so far.
We achieved record prices for CPO and PKO in 2022 as global inflationary
pressures post Covid-19 created supply constraints which was compounded by the
war in Ukraine which hampered the supply of sunflower oil, a substitution for
CPO. We saw some easing in the global supply constraints as the year
progressed and CPO prices softened to around $US1,000 towards the end of 2022,
still well above the long term CPO price average of around €800 per tonne.
We anticipate CPO prices may soften further as 2023 progresses although to
this point, CPO prices remain above historical averages and supportive of a
strong 2023 year of financial performance. Whilst seasonal and annual
variations in CPO prices are inevitable, we remain positive on the medium to
long term outlook for CPO prices given challengers bringing more supply to the
market and demand side robustness due to the necessity nature of vegetable
oils and therefore CPO, the largest consumed vegetable oil world-wide.
After a lengthy consultation period, the Roundtable on Sustainable Palm Oil
('RSPO') finally provided a clear pathway in H2 2022 of the information
required to complete the Company estates audit and we are now preparing the
works required with the objective of completing the audits of the Palm Oil
Mill and Company estates at the same time. The two key final reports
requested by RSPO for the estates audit were a LUCA (land use change analysis)
and HCV-HCS (High Conservation Value - High Carbon Stock) assessment. Both
reports were commissioned post period end in early 2023 and we expect to
receive these reports in early Q3 2023. With these reports completed we will
be able to engage RSPO auditors to complete the audit and we will update the
market as soon as this audit process has commenced.
Cashew Operation
The Cashew Operation achieved key milestones in 2022 including first
production and first sales. However, the ramp in production has been
hindered by supplier delays including the sorting and shelling equipment
delivery being well behind schedule from the Italian supplier. The Company
attempted to mitigate delays by taking over the logistics of shipment directly
rather than await consolidation in Italy by the Cashew operation vendor and
utilising substitute shelling equipment in order to continue the testing and
commissioning of the entire Cashew Operation. Now with all key equipment now
on site we commenced commercial production including the first quarterly
market reporting. We expect a material improvement in production in 2023 and
strong progression towards the Cashew Operation becoming a positive
contributor to group profitability after reporting a €2.3 million net loss
in 2022.
The Directors firmly believe that, given time, the Cashew Operation has the
potential to surpass the Palm Oil Operation in terms of profit contribution to
the Group. Our approach to the development of the Cashew project allows for
significant capacity expansion within a short period. With a nameplate
capacity of 15,000 tonnes per annum ('tpa'), the plant's production can be
increased by 50% at no additional cost by adding a third shift, thus reaching
a production capacity of 15,000tpa. Moreover, with a capital expenditure of
€5-6 million, the mill's capacity can be doubled to 30,000tpa, which the
Directors estimate could generate approximately €35-40 million in annual
revenues based on current prices.
Other Projects
While we have future expansion plans, including the processing of a third
commodity and clean energy initiatives, these projects are currently on hold
as we prioritize the ramp up of the Cashew Operation, which we believe will
play a pivotal role in enhancing the Group's financial performance in 2023 and
beyond.
Group Financial Performance
A summary of the Group financial performance for FY2022, in addition to the
comparatives for the previous 5 years, is outlined in the table below.
FY2022 FY2021 FY 2020 FY 2019 FY 2018 FY 2017
FFB collected (tonnes) 116,733 190,020 154,151 176,019 146,036 171,696
CPO production (tonnes) 25,751 39,953 34,002 37,649 33,077 38,736
CPO sales (tonnes) 26,016 39,092 34,008 37,713 32,692 38,373
Average CPO price per tonne €1,025 €868 €602 €491 €542 €680
Total Revenue (all products) €31.2m €37.4m €22.5m €20.9m €20.9m €30.2m
Gross Margin €5.1m €6.5m €2.3m €1.7m €1.7m €6.9m
Gross Margin % 16.7% 17.4% 10.2% 8.1% 8.3% 22.8%
Overheads €3.9m €3.8m €2.8m €3.2m €3.2m €3.6m
EBITDA €2.7m €4.8m €1.2m €0.2m (€0.2m) €4.5m
EBITDA % 9.3% 12.8% 5.3% 1.0% - 14.9%
Net Profit / (Loss) After Tax (€1.3m) €0.6m (€2.2m) (€3.3m) (€3.3m) €1.6m
Net Profit / (Loss) After Tax % - 1.6% - - - 5.3%
Total Assets €54.7m €51.7m €43.3m €33.6m €33.4m €33.9m
Total Liabilities €39.4m €35.5m €30.8m €20.8m €21.8m €19.2m
Total Equity €15.3m €16.3m €12.5m €12.8m €11.6m €14.7m
Palm Oil Operation
· Strong EBITDA of €4.6m delivered from the Ayenouan palm oil plant
in Côte d'Ivoire ('Palm Oil Operation') primarily driven by record Crude Palm
Oil ('CPO') and Palm Kernel Oil Pricing ('PKO') offsetting a historically low
Fresh Fruit Bunch ('FFB') harvesting year:
o 18.4% decrease in revenues to €30.5m (2020: €37.4m) - includes sale of
CPO, Palm Kernel Oil ('PKO'), Palm Kernel Cake ('PKC') and Nursery Plants
o Gross margin increased by 9.2% to 19.0% (2021: 17.4%)
o 2022 EBITDA of €4.6m (2021: €5.2m)
o Net profit after tax of €1.1m (2020: €1.0m)
Cashew Operation
· First year of cashew pilot production commenced and first year of
sales achieved of €0.7m
· Cashew Operation operating loss of €2.3m recorded for 2022 during
the commissioning process
· Significant improvement in financial results expected in 2023 as
commercial production ramps up
Outlook
Looking ahead, with the Palm Oil Operation currently experience a rebound in
production quantities and prices continuing to remain high the short term
outlook for this operation is positive. In addition, with the Cashew
operation is now transitioning towards a consistent and growing financial
contributor to the Group's performance, we remain on track to deliver a record
financial performance in 2023.
I extend my gratitude to the Board, Management, employees, and advisors for
their support and hard work throughout the year.
Andrew Tillery
Non-Executive Chairman
Date: 27
June 2023
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
31 December
2022 2021
Note Euros in thousands
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 2,240 1,595
Trade receivables 1,568 1,487
Inventory 4 3,158 3,240
Bank deposits - restricted 10 679 595
Other accounts receivable 5 950 365
Total current assets 8,595 7,282
NON-CURRENT ASSETS:
Bank deposits - restricted 10 850 501
Property and equipment, net 7 45,235 43,892
Total non-current assets 46,085 44,393
Total assets 54,680 51,675
The accompanying notes are an integral part of the consolidated financial
statements.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
31 December
2022 2021
Note Euros in thousands
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Short-term loans and current maturities of long-term loans 10b 5,671 5,431
Trade payables 1,359 1,374
Advances from customers 346 108
Loan from non-controlling interest 6 - 915
Other accounts payable 8 3,852 2,646
Total current liabilities 11,228 10,474
NON-CURRENT LIABILITIES:
Long-term lease liabilities 9 128 169
Accrued severance pay, net 127 135
Loan from shareholder 6 630 -
Long-term loans 10 27,241 24,562
Total non-current liabilities 28,126 24,866
Total liabilities 39,354 35,340
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY 11
Share capital 177 170
Additional paid-in capital 40,736 39,985
Accumulated deficit (18,804) (17,971)
Capital reserve 2,532 2,532
Capital reserve from transactions with non-controlling interests (9,315) (8,710)
15,326 16,006
Non-controlling interests - 329
Total equity 15,326 16,335
Total liabilities and equity 54,680 51,675
The accompanying notes are an integral part of the consolidated financial
statements.
June 27, 2023
Date of approval of the Youval Rasin Yehoshua Shai Kol Lincoln John Moore
financial statements Director and Chief Executive Officer Director and Chief Finance Officer Executive Director
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Year ended
31 December
2022 2021
Note Euros in thousands
(Except per share amounts)
Revenues 12 31,205 37,391
Cost of revenues 15a 26,185 30,880
Gross profit 5,020 6,511
General and administrative expenses 15b 3,845 3,869
Operating profit 1,175 2,642
Other income 103 -
Finance cost 15c (2,475) (1,726)
Profit (loss) before taxes on income (1,197) 916
Taxes on income 14 141 275
Net income (loss) and total comprehensive income (loss) (1,338) 641
Attributable to: (833) 757
Equity holders of the Company
Non-controlling interests (505) (116)
Net income (loss) and total comprehensive income (loss) (1,338) 641
Net earnings (loss) per share attributable to equity holders of the Company:
Basic and diluted net earnings (loss) per share 16 0.00 0.00
The accompanying notes are an integral part of the consolidated financial
statements.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Attributable to equity holders of the Company
Share Additional paid-in Accumulated deficit Capital reserve Capital reserve from transactions with non-controlling interests Total Non-controlling interests Total Equity
capital capital
Euros in thousands
Balance as of 1 January, 2021 142 35,570 (18,728) 2,532 (7,754) 11,762 700 12,462
Net income (loss) and total comprehensive income (loss) - - 757 - - 757 (116) 641
Issue of shares (Note 10) 26 3,719 - 3,745 - 3,745
Non-controlling interests arising from initially consolidated subsidiary 2 401 - - (956) (553) (255) (808)
Share-based compensation - 295 - - 295 - 295
Balance as of 31 December 2021 170 39,985 (17,971) 2,532 (8,710) 16,006 329 16,335
Net loss and total comprehensive loss - - (833) - - (833) (505) (1,338)
Issue of shares for services provided (Note 11) - 44 - - 44 - 44
Issue of shares upon acquisition of non-controlling interests (Note 6) 7 707 - - (605) 109 176 285
Balance as of 31 December 2022 177 40,736 (18,804) 2,532 (9,315) 15,326 - 15,326
The accompanying notes are an integral part of the consolidated financial
statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended
31 December
2022 2021
Euros in thousands
Cash flows from operating activities:
Net income (loss) (1,338) 641
Adjustments to reconcile net income (loss) to net cash provided by (used in)
operating activities:
Adjustments to the profit or loss items:
Depreciation 1,554 1,888
Share-based compensation - 295
Accrued interest on long-term loans and non-current liabilities 1,421 1,188
Change in employee benefit liabilities, net (8) (103)
Gain from sale of property and equipment (103) -
Changes in asset and liability items:
Decrease (increase) in inventories 82 (1,957)
Increase in other accounts receivable (531) (1,296)
Increase in trade payables 28 498
Increase (decrease) in advances from customers 238 (1,863)
Increase in other accounts payable 1,206 859
3,887 (491)
Cash paid during the year for: (135) (264)
Income taxes
Interest (1,848) (1,188)
(1,983) (1,452)
Net cash provided by (used in) operating activities 566 (1,302)
The accompanying notes are an integral part of the consolidated financial
statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended
31 December
2022 2021
Euros in thousands
Cash flows from investing activities:
Investment in bank deposits (433) (814)
Sale of property and equipment 206 -
Purchase of property and equipment (2,566) (4,568)
Net cash used in investing activities (2,793) (5,382)
Cash flows from financing activities:
Issue of shares (offering net of expenses) - 3,726
Cash paid on acquisition of non-controlling interests - (806)
Long-term lease, net (41) (23)
Loan to subsidiary by non-controlling interests - 915
Receipt (repayments) of short-term loans, net (1,668) 605
Receipt of long-term loans 10,577 5,997
Repayment of long-term loans (5,995) (2,338)
Net cash provided by financing activities 2,873 8,077
Increase in cash and cash equivalents 645 1,393
Cash and cash equivalents at beginning of year 1,595 202
Cash and cash equivalents at end of year 2,240 1,595
Supplemental disclosure of non-cash activities:
Issuance of shares in consideration for non-controlling interest in Pearlside 714 403
The accompanying notes are an integral part of the consolidated financial
information.
NOTE 1:- GENERAL
a. Dekel Agri-Vision PLC ("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"), as well as constructing a Raw
Cashew Nut ("RCN") processing plant, which is currently in the initial
production phase. The Company's registered office is in Limassol, Cyprus.
b. CS DekelOil Siva Ltd. ("DekelOil Siva"), a company incorporated
in Cyprus, is a wholly owned subsidiary of the Company. DekelOil CI SA, a
subsidiary in Cote d'Ivoire currently held 99.85% by DekelOil Siva, is engaged
in developing and cultivating palm oil plantations for the purpose of
producing and marketing CPO. DekelOil CI SA constructed and is currently
operating its palm oil mill.
c. Pearlside Holdings Ltd. ("Pearlside"), a company incorporated
in Cyprus, is a subsidiary of the Company since December 2020. The Company
holds 100% interest since December 2022 (previously 70.7% interest since
February 2021). Pearlside has a wholly owned subsidiary in Cote d'Ivoire,
Capro CI SA ("Capro"). Capro is currently engaged in the initial production
phase of its RCN processing plant in Cote d'Ivoire near the village of Tiabisu
(see also Note 11).
d. DekelOil Consulting Ltd. a company located in Israel and a
wholly owned subsidiary of DekelOil Siva, is engaged in providing services to
the Company and its subsidiaries.
e. Cash flow from operations and working capital deficiency:
In 2022 the Company generated a positive cash flow from
operation of approx €0.5 million compared to a negative cash flow of €1.3
million in 2021. Palm Oil activity continued to be strong and continued to
generate positive operating cash flow, which was offset by the negative
operating cash flow from the RCN activity which is in its commissioning phase.
The Group working capital deficiency continued to decrease to €2.6
million at 31 December 2022 from €3.2 million as of 31 December 2021. In
addition, expenditures for the completion of the RCN processing plant of
Pearlside have been almost entirely paid and have now entered the production
phase with operational capacity in the process of increasing materially over
the coming months. As a result, the RCN operation is expected to produce
additional operating cash flow for the Group in the latter half of 2023 and
beyond. The Group has prepared detailed forecasted cash flows through the end
of 2024, which indicate that the Group should have positive cash flows from
its operations. However, the operations of the Group are subject to various
market conditions, including quantity and quality of fruit harvests and market
prices, that are not under the Group's control that could have an adverse
effect on the Group's future cash flows.
Based on the above, the Company's management believes it will have sufficient
funds necessary to continue its operations and to meet its obligations as they
become due for at least a period of twelve months from the date of approval of
the financial statements.
NOTE 1:- GENERAL (Cont.)
f. Effects of inflation and increase in interest rate:
Following the global macroeconomic developments in 2022, there was an increase
in rates of inflation in worldwide. As part of the measures taken to restrain
inflationary price increases, central banks around the world, including the
Bank of Israel, began raising their benchmark interest rates. All of the
Company's loans bear fixed interest rates (except a negligible amount of
€147 thousands), and accordingly the increase in interest rates has not had
a material effect on the consolidated financial statements.
g. Definitions:
The Group - DEKEL AGRI-VISION PLC and its subsidiaries.
The Company - DEKEL AGRI-VISION PLC.
Subsidiaries - Companies that are controlled by the Company- CS DekelOil Siva Ltd, DekelOil
CI SA, DekelOil Consulting Ltd, and commencing from December 2020 - Pearlside
Holdings, Capro CI SA.
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES
The following accounting policies have been applied consistently in the
financial statements for all periods presented, unless otherwise stated.
a. Basis of presentation of the financial statements:
These financial statements have been prepared in accordance with International
Financial Reporting Standards as adopted by the European Union ("IFRS").
The financial statements have been prepared on a cost basis.
The Company has elected to present profit or loss items using the function of
expense method.
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.):
b. Consolidated financial statements:
The consolidated financial statements comprise the financial statements of
companies that are controlled by the Company (subsidiaries). Control is
achieved when the Company is exposed, or has rights, to variable returns from
its involvement with the investee and has the ability to affect those returns
through its power over the investee. Potential voting rights are considered
when assessing whether an entity has control. The consolidation of the
financial statements commences on the date on which control is obtained and
ends when such control ceases.
The financial statements of the Company and of the subsidiaries are prepared
as of the same dates and periods. The consolidated financial statements are
prepared using uniform accounting policies by all companies in the Group.
Significant intragroup balances and transactions and gains or losses resulting
from intragroup transactions are eliminated in full in the consolidated
financial statements.
Non-controlling interests in subsidiaries represent the equity in subsidiaries
not attributable, directly or indirectly, to a parent. Non-controlling
interests are presented in equity separately from the equity attributable to
the equity holders of the Company. Profit or loss and components of other
comprehensive income are attributed to the Company and to non-controlling
interests. Losses are attributed to non-controlling interests even if they
result in a negative balance of non-controlling interests in the consolidated
statement of financial position.
A change in the ownership interest of a subsidiary, without a change of
control, is accounted for as a change in equity by adjusting the carrying
amount of the non-controlling interests with a corresponding adjustment of the
equity attributable to equity holders of the Company less / plus the
consideration paid or received.
c. Business combinations and goodwill:
Business combinations are accounted for by applying the acquisition method.
The cost of the acquisition is measured at the fair value of the consideration
transferred on the acquisition date with the addition of non-controlling
interests in the acquiree. In each business combination, the Company chooses
whether to measure the non-controlling interests in the acquiree based on
their fair value on the acquisition date or at their proportionate share in
the fair value of the acquiree's net identifiable assets.
Direct acquisition costs are carried to the statement of profit or loss as
incurred.
In a business combination achieved in stages, equity interests in the acquiree
that had been held by the acquirer prior to obtaining control are measured at
the acquisition date fair value while recognizing a gain or loss resulting
from the revaluation of the prior investment on the date of achieving control.
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.):
c. Business combinations and
goodwill (Cont.):
Contingent consideration is recognized at fair value on the acquisition date
and classified as a financial asset or liability in accordance with IAS 39.
Subsequent changes in the fair value of the contingent consideration are
recognized in profit or loss. If the contingent consideration is classified as
an equity instrument, it is measured at fair value on the acquisition date
without subsequent remeasurement.
d. Functional currency, presentation currency and foreign
currency:
1. Functional currency and presentation currency:
The local currency used in Cote d'Ivoire is the West African CFA Franc
("FCFA"), which has a fixed exchange rate with the Euro (Euro 1 = FCFA
655.957). A substantial portion of the Group's revenues and expenses is
incurred in or linked to the Euro. The Group obtains debt financing mostly in
FCFA linked to Euros and the funds of the Group are held in FCFA. Therefore,
the Company's management has determined that the Euro is the currency of the
primary economic environment of the Company and its subsidiaries, and thus its
functional currency. The presentation currency is Euro.
2. Transactions, assets and liabilities in foreign currency:
Transactions denominated in foreign currency are recorded upon initial
recognition at the exchange rate at the date of the transaction. After initial
recognition, monetary assets and liabilities denominated in foreign currency
are translated at each reporting date into the functional currency at the
exchange rate at that date. Exchange rate differences, other than those
capitalized to qualifying assets or accounted for as hedging transactions in
equity, are recognized in profit or loss. Non-monetary assets and liabilities
denominated in foreign currency and measured at cost are translated at the
exchange rate at the date of the transaction. Non-monetary assets and
liabilities denominated in foreign currency and measured at fair value are
translated into the functional currency using the exchange rate prevailing at
the date when the fair value was determined.
e. Cash equivalents:
Cash equivalents are considered as highly liquid investments, including
unrestricted short-term bank deposits with an original maturity of three
months or less from the date of acquisition.
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.):
f. Financial instruments:
1. Financial assets:
Financial assets are measured upon initial recognition at fair value plus
transaction costs that are directly attributable to the acquisition of the
financial assets, except for financial assets measured at fair value through
profit or loss in respect of which transaction costs are recorded in profit or
loss.
The Company classifies and measures debt instruments in the financial
statements based on the following criteria:
- The Company's business model for managing financial assets;
and
- The contractual cash flow terms of the financial asset.
a) Debt instruments are measured at amortized cost when:
The Company's business model is to hold the financial assets in order to
collect their contractual cash flows, and the contractual terms of the
financial assets give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding. After
initial recognition, the instruments in this category are measured according
to their terms at amortized cost using the effective interest rate method,
less any provision for impairment.
On the date of initial recognition, the Company may irrevocably designate a
debt instrument as measured at fair value through profit or loss if doing so
eliminates or significantly reduces a measurement or recognition
inconsistency, such as when a related financial liability is also measured at
fair value through profit or loss.
b) Equity instruments and other financial assets held for trading:
Investments in equity instruments do not meet the above criteria and
accordingly are measured at fair value through profit or loss.
Other financial assets held for trading, including derivatives, are measured
at fair value through profit or loss unless they are designated as effective
hedging instruments.
Dividends from investments in equity instruments are recognized in profit or
loss when the right to receive the dividends is established.
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.):
f. Financial instruments (Cont.):
2. Impairment of financial assets:
The Company evaluates at the end of each reporting period the loss allowance
for financial debt instruments which are not measured at fair value through
profit or loss.
The Company has short-term financial assets such as trade receivables in
respect of which the Company applies a simplified approach and measures the
loss allowance in an amount equal to the lifetime expected credit losses. An
impairment loss on debt instruments measured at amortized cost is recognized
in profit or loss with a corresponding loss allowance that is offset from the
carrying amount of the financial asset.
As of 31 December 2021, there were no past-due trade receivables.
3. Financial liabilities:
a) Financial liabilities measured at amortized cost:
Financial liabilities are initially recognized at fair value less transaction
costs that are directly attributable to the issue of the financial liability.
After initial recognition, the Company measures all financial liabilities at
amortized cost using the effective interest rate method.
4. Derecognition of financial instruments:
a) Financial assets:
A financial asset is derecognized when the contractual rights to the cash
flows from the financial asset expire.
b) Financial liabilities:
A financial liability is derecognized when it is extinguished, that is when
the obligation is discharged or cancelled or expires.
g. Borrowing costs:
The Group capitalizes borrowing costs that are attributable to the
acquisition, construction, or production of qualifying assets which
necessarily take a substantial period of time to get ready for their intended
use or sale.
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.):
g. Borrowing costs (Cont.):
The capitalization of borrowing costs commences when expenditures for the
asset are incurred, the activities to prepare the asset are in progress and
borrowing costs are incurred and ceases when substantially all the activities
to prepare the qualifying asset for its intended use or sale are complete. The
amount of borrowing costs capitalized in a reporting period includes specific
borrowing costs and general borrowing costs based on a weighted capitalization
rate.
h. Leases:
The Company accounts for a contract as a lease when the contract terms convey
the right to control the use of an identified asset for a period of time in
exchange for consideration.
The Group as a lessee:
For leases in which the Company is the lessee, the Company recognizes on the
commencement date of the lease a right-of-use asset and a lease liability,
excluding leases whose term is up to 12 months and leases for which the
underlying asset is of low value. For these excluded leases, the Company has
elected to recognize the lease payments as an expense in profit or loss on a
straight-line basis over the lease term. In measuring the lease liability, the
Company has elected to apply the practical expedient in the Standard and does
not separate the lease components from the non-lease components (such as
management and maintenance services, etc.) included in a single contract.
On the commencement date, the lease liability includes all unpaid lease
payments discounted at the interest rate implicit in the lease, if that rate
can be readily determined, or otherwise using the Group's incremental
borrowing rate. After the commencement date, the Group measures the lease
liability using the effective interest rate method.
On the commencement date, the right-of-use asset is recognized in an amount
equal to the lease liability plus lease payments already made on or before the
commencement date and initial direct costs incurred. The right-of-use asset is
measured applying the cost model and depreciated over the shorter of its
useful life or the lease term.
Following are the periods of depreciation of the right-of-use assets by class
of underlying asset:
Years
Land 99
Motor vehicles 5
The Group tests for impairment of the right-of-use asset whenever there are
indications of impairment pursuant to the provisions of IAS 36.
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.):
i. Biological assets:
Biological assets of the Company are fresh fruit bunches (FFB) that grow on
palm oil trees. The period of biological transformation of FFB from blossom to
harvest and then conversion to inventory and sale is relatively short (about 2
months). Accordingly, any changes in fair value at each reporting date are
generally immaterial.
j. Property and equipment:
Property and equipment are stated at cost, net of accumulated depreciation.
Palm oil trees before maturity are measured at accumulated cost, and
depreciation commences upon reaching maturity.
Depreciation is calculated by the straight-line method over the estimated
useful lives of the assets at the following annual rates:
%
Extraction mill 2.5
Palm oil plantations 3.33
Computers and peripheral equipment 33
Equipment and furniture 15 - 20
Motor vehicles 25
Agriculture equipment 15
The useful life, depreciation method and residual value of an asset are
reviewed at least each year-end and any changes are accounted for
prospectively as a change in accounting estimate. Depreciation of an asset
ceases at the earlier of the date that the asset is classified as held for
sale and the date that the asset is derecognized.
k. Impairment of non-financial assets:
The Company evaluates the need to record an impairment of non-financial assets
whenever events or changes in circumstances indicate that the carrying amount
is not recoverable.
If the carrying amount of non-financial assets exceeds their recoverable
amount, the assets are reduced to their recoverable amount. The recoverable
amount is the higher of fair value less costs of sale and value in use. In
measuring value in use, the expected future cash flows are discounted using a
pre-tax discount rate that reflects the risks specific to the asset. The
recoverable amount of an asset that does not generate independent cash flows
is determined for the cash-generating unit to which the asset belongs.
Impairment losses are recognized in profit or loss.
An impairment loss of an asset, other than goodwill, is reversed only if there
have been changes in the estimates used to determine the asset's recoverable
amount since the last impairment loss was recognized. Reversal of an
impairment loss, as above, shall not be increased above the lower of the
carrying amount that would have been determined (net of depreciation or
amortization) had no impairment loss been recognized for the asset in prior
years and its recoverable amount. The reversal of impairment loss of an asset
presented at cost is recognized in profit or loss.
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.):
l. Revenue recognition:
Revenue from contracts with customers is recognized when the control over the
services is transferred to the customer. The transaction price is the amount
of the consideration that is expected to be received based on the contract
terms.
In determining the amount of revenue from contracts with customers, the
Company evaluates whether it is a principal or an agent in the arrangement.
The Company is a principal when the Company controls the promised goods or
services before transferring them to the customer. In these circumstances, the
Company recognizes revenue for the gross amount of the consideration. When the
Company is an agent, it recognizes revenue for the net amount of the
consideration, after deducting the amount due to the principal.
Revenue from the sale of goods:
Revenue from sale of goods is recognized in profit or loss at the point in
time when the control of the goods is transferred to the customer, generally
upon delivery of the goods to the customer.
Contract balances:
Amounts received from customers in advance of performance by the Company are
recorded as contract liabilities/advance payments from customers and
recognized as revenue in profit or loss when the work is performed. For all
years presented in these financial statements, such advances were recognized
as revenues in the year subsequent to their receipt.
m. Inventories:
Inventories are measured at the lower of cost and net realizable value. The
cost of inventories comprises costs of purchase and costs incurred in bringing
the inventories to their present location and condition. Net realizable value
is the estimated selling price in the ordinary course of business less
estimated costs of completion and estimated costs necessary to make the sale.
The Company periodically evaluates the condition and age of inventories and
makes provisions for slow moving inventories accordingly.
Cost of finished goods inventories is determined on the basis of average costs
including materials, labor and other direct and indirect manufacturing costs
based on normal capacity.
n. Earnings (loss) per share:
Earnings (loss) per share are calculated by dividing the net income
attributable to equity holders of the Company by the weighted number of
Ordinary shares outstanding during the period.
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.):
o. Earnings (loss) per share:
Potential Ordinary shares are included in the computation of diluted earnings
per share when their conversion decreases earnings per share from continuing
operations. Potential Ordinary shares that are converted during the period are
included in diluted earnings per share only until the conversion date and from
that date in basic earnings per share. The Company's share of earnings of
investees is included based on its share of earnings per share of the
investees multiplied by the number of shares held by the Company.
p. Provisions:
A provision in accordance with IAS 37 is recognized when the Group has a
present obligation (legal or constructive) as a result of a past event, it is
probable that an outflow of resources embodying economic benefits will be
required to settle the obligation and a reliable estimate can be made of the
amount of the obligation. When the Group expects part or all of the expense to
be reimbursed, for example under an insurance contract, the reimbursement is
recognized as a separate asset but only when the reimbursement is virtually
certain. The expense is recognized in profit or loss net of any reimbursement.
q. Fair value measurement:
Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at
the measurement date.
Fair value measurement is based on the assumption that the transaction will
take place in the asset's or the liability's principal market, or in the
absence of a principal market, in the most advantageous market.
The fair value of an asset or a liability is measured using the assumptions
that market participants would use when pricing the asset or liability,
assuming that market participants act in their economic best interest.
Fair value measurement of a non-financial asset takes into account a market
participant's ability to generate economic benefits by using the asset in its
highest and best use or by selling it to another market participant that would
use the asset in its highest and best use.
The Group uses valuation techniques that are appropriate in the circumstances
and for which sufficient data are available to measure fair value, maximizing
the use of relevant observable inputs and minimizing the use of unobservable
inputs.
All assets and liabilities measured at fair value or for which fair value is
disclosed are categorized into levels within the fair value hierarchy based on
the lowest level input that is significant to the entire fair value
measurement:
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.):
q. Fair
value measurement (Cont.):
Level 1 - quoted prices (unadjusted) in active markets for identical assets or
liabilities.
Level 2 - inputs other than quoted prices included within Level 1 that are observable
either directly or indirectly.
Level 3 - inputs that are not based on observable market data (valuation techniques
which use inputs that are not based on observable market data).
r. Share-based payment transactions:
The Company's employees / other service providers are entitled to remuneration
in the form of equity-settled share-based payment transactions and certain
employees / other service providers are entitled to remuneration in the form
of cash-settled share-based payment transactions that are measured based on
the increase in the Company's share price.
Equity-settled transactions:
The cost of equity-settled transactions with employees is measured by
reference to the fair value of the equity instruments at the date on which
they are granted. The fair value is determined using an acceptable option
model.
The cost of equity-settled transactions is recognized, together with a
corresponding increase in equity, over the period in which the performance
and/or service conditions are fulfilled, ending on the date on which the
relevant employees become fully entitled to the award ("the vesting date").
The cumulative expense recognized for equity-settled transactions at each
reporting date until the vesting date reflects the extent to which the vesting
period has expired and the Company's best estimate of the number of equity
instruments that will ultimately vest.
s. Taxes on income:
Current or deferred taxes are recognized in profit or loss, except to the
extent that they relate to items which are recognized in other comprehensive
income or equity.
1. Current taxes:
The current tax liability is measured using the tax rates and tax laws that
have been enacted or substantively enacted by the end of reporting period as
well as adjustments required in connection with the tax liability in respect
of previous years.
2. Deferred taxes:
Deferred taxes are computed in respect of temporary differences between the
carrying amounts in the financial statements and the amounts attributed for
tax purposes.
Deferred taxes are measured at the tax rate that is expected to apply when the
asset is realized or the liability is settled, based on tax laws that have
been enacted or substantively enacted by the reporting date.
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.):
s. Taxes on income (Cont.)
Deferred tax assets are reviewed at each reporting date and reduced to the
extent that it is not probable that they will be utilized. Temporary
differences for which deferred tax assets had not been recognized are reviewed
at each reporting date and a respective deferred tax asset is recognized to
the extent that their utilization is probable.
Taxes that would apply in the event of the disposal of investments in
investees have not been taken into account in computing deferred taxes, as
long as the disposal of the investments in investees is not probable in the
foreseeable future.
Also, deferred taxes that would apply in the event of distribution of earnings
by investees as dividends have not been taken into account in computing
deferred taxes, since the distribution of dividends does not involve an
additional tax liability or since it is the Company's policy not to initiate
distribution of dividends from a subsidiary that would trigger an additional
tax liability.
t. Significant accounting estimates and assumptions used in the
preparation of the financial statements:
The preparation of the financial statements requires management to make
estimates and assumptions that have an effect on the application of the
accounting policies and on the reported amounts of assets, liabilities,
revenues and expenses. Changes in accounting estimates are reported in the
period of the change in estimate.
u. Changes in accounting policies - initial application of new
financial reporting and accounting standards and amendments to existing
financial reporting and accounting standards:
Amendment to IAS 16, "Property, Plant and Equipment":
In May 2020, the IASB issued an amendment to IAS 16, "Property, Plant and
Equipment" ("the Amendment"). The Amendment prohibits a company from deducting
from the cost of property, plant and equipment ("PP&E") consideration
received from the sales of items produced while the company is preparing the
asset for its intended use. Instead, the company should recognize such
consideration and related costs in profit or loss.
The Amendment is effective for annual reporting periods beginning on or after
1 January 2022. The Amendment is applied retrospectively, but only to items
of PP&E made available for use on or after the beginning of the earliest
period presented in the financial statements in which the company first
applies the Amendment.
The cumulative effect of initially applying the Amendment is recognized as an
adjustment to the opening balance of retained earnings (or other component of
equity, as applicable) at the beginning of the earliest period presented.
The application of the Amendment did not have a material impact on the
Company's financial statements.
NOTE 3:- DISCLOSURE OF NEW STANDARDS IN THE PERIOD PRIOR TO THEIR
ADOPTION
a. Amendment to IAS 1, "Presentation of Financial Statements":
In January 2020, the IASB issued an amendment to IAS 1, "Presentation of
Financial Statements" regarding the criteria for determining the
classification of liabilities as current or non-current ("the Original
Amendment"). In October 2022, the IASB issued a subsequent amendment ("the
Subsequent Amendment").
According to the Subsequent Amendment:
Only covenants with which an entity must comply on or before the reporting
date will affect a liability's classification as current or non-current.
An entity should provide disclosure when a liability arising from a loan
agreement is classified as non-current and the entity's right to defer
settlement is contingent on compliance with future covenants within twelve
months from the reporting date. This disclosure is required to include
information about the covenants and the related liabilities. The disclosures
must include information about the nature of the future covenants and when
compliance is applicable, as well as the carrying amount of the related
liabilities. The purpose of this information is to allow users to understand
the nature of the future covenants and to assess the risk that a liability
classified as non-current could become repayable within twelve months.
Furthermore, if facts and circumstances indicate that an entity may have
difficulty in complying with such covenants, those facts and circumstances
should be disclosed.
According to the Original Amendment, the conversion option of a liability
affects the classification of the entire liability as current or non-current
unless the conversion component is an equity instrument.
The Original Amendment and Subsequent Amendment are both effective for annual
periods beginning on or after 1 January 2024 and must be applied
retrospectively. Early application is permitted.
The Company is evaluating the possible impact of the Amendment on its current
loan agreements.
b. Amendment to IAS 8, "Accounting Policies, Changes to Accounting
Estimates and Errors":
In February 2021, the IASB issued an amendment to IAS 8, "Accounting Policies,
Changes to Accounting Estimates and Errors" ("the Amendment"), in which it
introduces a new definition of "accounting estimates".
Accounting estimates are defined as "monetary amounts in financial statements
that are subject to measurement uncertainty". The Amendment clarifies the
distinction between changes in accounting estimates and changes in accounting
policies and the correction of errors.
The Amendment is to be applied prospectively for annual reporting periods
beginning on or after 1 January 2023 and is applicable to changes in
accounting policies and changes in accounting estimates that occur on or after
the start of that period. Early application is permitted.
NOTE 3:- DISCLOSURE OF NEW STANDARDS IN THE PERIOD PRIOR TO THEIR
ADOPTION (Cont.)
c. Amendment to IAS 12, "Income Taxes":
In May 2021, the IASB issued an amendment to IAS 12, "Income Taxes" ("IAS
12"), which narrows the scope of the initial recognition exception under IAS
12.15 and IAS 12.24 ("the Amendment").
According to the recognition guidelines of deferred tax assets and
liabilities, IAS 12 excludes recognition of deferred tax assets and
liabilities in respect of certain temporary differences arising from the
initial recognition of certain transactions. This exception is referred to as
the "initial recognition exception". The Amendment narrows the scope of the
initial recognition exception and clarifies that it does not apply to the
recognition of deferred tax assets and liabilities arising from transactions
that are not a business combination and that give rise to equal taxable and
deductible temporary differences, even if they meet the other criteria of the
initial recognition exception.
The Amendment applies for annual reporting periods beginning on or after 1
January , 2023, with earlier application permitted. In relation to leases and
decommissioning obligations, the Amendment is to be applied commencing from
the earliest reporting period presented in the financial statements in which
the Amendment is initially applied. The cumulative effect of the initial
application of the Amendment should be recognized as an adjustment to the
opening balance of retained earnings (or another component of equity, as
appropriate) at that date.
The Company estimates that the initial application of the Amendment is not
expected to have a material impact on its financial statements.
d. Amendment to IAS 1 - Disclosure of Accounting Policies:
In February 2021, the IASB issued an amendment to IAS 1, "Presentation of
Financial Statements" ("the Amendment"), which replaces the requirement to
disclose 'significant' accounting policies with a requirement to disclose
'material' accounting policies. One of the main reasons for the Amendment is
the absence of a definition of the term 'significant' in IFRS whereas the term
'material' is defined in several standards and particularly in IAS 1.
The Amendment is applicable for annual periods beginning on or after 1 January
2023. Early application is permitted.
The Company is evaluating the effects of the Amendment on its financial
statements.
NOTE 4:- INVENTORY
31 December
2022 2021
Euros in thousands
Raw cashew nuts 1,248 1,381
Spare parts, tools & materials 986 771
Kernel cashew nuts 350 -
Palm oil mill final products 334 902
Plants 240 186
3,158 3,240
NOTE 5:- OTHER ACCOUNTS RECEIVABLE
31 December
2022 2021
Euros in thousands
Advance payment to suppliers and prepaid expenses 904 319
Loans to employees 38 29
Government authorities (VAT) 5 10
Prepaid expenses and other receivables 3 7
950 365
NOTE 6:- INVESTMENT IN PEARLSIDE HOLDINGS LTD
As described in Note 1c, Pearlside Holdings Ltd ("Pearlside") is a subsidiary
of the Company. As of 1 January 2021, the Company had a 54% equity interest in
Pearlside.
On 8 February 2021, the Company signed an agreement to purchase an additional
16.7% of Pearlside for a total value of £1.062 million (€1.2 million), of
which £354,000 (€403 thousand) was settled via the
issue of 7,080,000 new Ordinary shares at 5 pence per share (see Note 11),
and the remaining £708,000 (€806 thousand) was settled in cash. Following
this acquisition, the Company held 70.7% of Pearlside. The difference between
the total consideration and the carrying amount of the non-controlling
interests, in the amount of € 956 thousand, was recorded as a charge to
"capital reserve from transactions with non-controlling interests" in equity.
During 2021 the shareholders of Pearlside invested additional funds as a loan
to Pearlside, in order to finance the construction and activity of Pearlside.
The portion of the loan provided by the non-controlling interests amounted to
€915 thousand. The loan bears no interest and is to be repaid only from
available funds of Pearlside. The loan was presented as a current liability
in the consolidated statement of financial position as of 31 December 2021.
On 30 December 2022, the Company signed an agreement to purchase the remaining
29.3% held by the non-controlling interests by way of issuing 19,968,701
Ordinary shares of the Company. Based on the market price of the Company's
shares on the date of the purchase, the total fair value of the shares amounts
to €714 thousand.
Following this acquisition, the Company holds 100% of Pearlside.
Concurrently, it was agreed that the loan in the amount of €915 thousand
provided by the non-controlling interests, would only be repaid from the
available cash flow from Pearlside, as to be determined in the sole discretion
of the board of directors of Pearlside. The Company believes that no
repayments of the loan will be made prior to 1 January 2024, and accordingly,
the loan has been classified as a non-current loan from a shareholder. As the
loan bears no interest, the fair value of the loan in the amount of €630
thousand was calculated based on the present value of estimated future
repayments discounted using the prevailing market rate of interest (7.75%) for
a similar type of loan.
Of the total fair value of the shares issued in the amount of €714 thousand,
€ 285 thousand is attributed to the difference (discount) between the
nominal amount of the loan from the shareholder and the fair value of the
loan. The aggregation of remaining portion of the fair value (€ 429
thousand) and the negative carrying amount (€ 176 thousand) of the
non-controlling interests, in the amount of € 605 thousand, has been
recorded as a charge to "capital reserve from transactions with
non-controlling interests" in equity.
NOTE 7:- PROPERTY AND EQUIPMENT, NET
Composition and movement:
Computers Equipment and Motor vehicles Agriculture equipment Extraction mill Palm oil plantations Cashew processing mill under construction and land Total
and peripheral equipment furniture and land
Cost:
Balance as of 1 January, 2021 282 106 1,552 490 26,281 7,632 12,133 48,476
Additions during the year 87 453 723 - 247 - 3,079 4,589
Disposals during the year - - (149) - - - - (149)
Balance as of 1 January, 2022 369 559 2,126 490 26,528 7,632 15,212 52,916
Additions during the year 22 302 482 292 105 - 1,797 3,000
Disposals during the year - - (352) - (57) - - (409)
Balance as of 31 December, 2022 391 861 2,256 782 26,576 7,632 17,009 55,507
Accumulated depreciation:
Balance as of 1 January 2021 177 99 958 409 4,569 1,015 - 7,227
Depreciation 31 15 220 26 861 789 - 1,942
Disposals during the year - - (145) - - - - (145)
Balance as of 31 December 2021 208 114 1,033 435 5,430 1,804 - 9,024
Depreciation 55 88 281 68 737 320 5 1,554
Disposals during the year - - (306) - - - - (306)
Balance as of 31 December 2022 263 202 1,008 503 6,167 2,124 5 10,272
Depreciated cost at 31 December 2022 128 659 1,249 278 20,409 5,508 17,004 45,235
Depreciated cost at 31 December 2021 161 445 1,093 55 21,098 5,828 15,212 43,892
Substantially all property and equipment are located in Coite d'Ivoire.
NOTE 8:- OTHER ACCOUNTS PAYABLE
31 December
2022 2021
Euros in thousands
Employees and payroll accruals 1,015 917
VAT payable 467 405
Other accounts payable and accrued expenses 2,370 1,324
3,852 2,646
NOTE 9:- RIGHT-OF-USE ASSETS AND LEASE LIABILITIES
On 24 June 2008, DekelOil CI SA signed a lease agreement for 42 hectares near
the village of Ayenouan, Cote d'Ivoire. The agreement is with the village of
Adao and the people occupying the land in Ayenouan. The lease is for 90 years
and the payment for the lease is FCFA 3,000,000 (app. € 4,573) per annum.
A subsidiary signed a lease agreement with the government authorities for 6
hectares near the village of Tiabissuo, Cote d'Ivoire. The agreement is for a
lease of 99 years with an annual lease payment of 6 million FCFA (app.
€ 9,146)
The right-of-use assets in respect of the above leases are included in
Property and Equipment (Note 7). The balance of the lease liabilities at 31
December 2022 amounted to € 128 (2021 - €169).
NOTE 10:- LOANS
a. Long-term loans:
Interest rate as of 31 December 31 December
Currency 2022 2022 2021
Euros in thousands
-
SOGEBOURSE (c.1) In FCFA 8.4% 2,750 4,568
SIB (c.2) In FCFA 6.85% 124 256
AgDevCo (c.3) In Euro 7% 3,600 7,200
BGFI (c.4) In FCFA 7.5% 711 941
BIDC (c.5) In FCFA 7.25% 4,573 4,053
NSIA (c.6) In FCFA 8.5% 2,287 2,287
NSIA (c.7) In FCFA 7.75% 762 133
BGFI (c.8) In FCFA 7.75% 1,441 1,524
HUDSON (c.9) In FCFA 7.5% 15,138 5,991
Poalim (c.10) In NIS 4.2% 76 -
Mizrachi (c.10) In NIS 4.2% 72 -
Total loans 31,534 26,953
Less - current maturities (4,293) (2,391)
27,241 24,562
NOTE 10:- LOANS (Cont.)
b. Short-term loans and current maturities:
31 December
2022 2021
Euros in thousands
Bank credit line (c.11) 1,378 1,888
Short-term loan from bank - 1,152
Current maturities - per a. above 4,293 2,391
5,671 5,431
c. 1. In September 2016 DekelOil CI SA signed a
long-term financing facility agreement with a consortium of institutional
investors arranged by SOGEBOURSE for a long-term loan of up to FCFA 10 billion
(approximately €15.2 million). Of this amount, FCFA 5.5 billion
(approximately €8.4 million) was utilized to refinance the West Africa
Development Bank ("BOAD") loan The loan is repayable over 7 years in
fourteen semi annual payments. And bears interest at a rate of 6.85% per
annum.
On 22 October 2016 SOGEBOURSE transferred the funds and the BOAD loan was
repaid in full.
On 1 February 2018 the DekelOil CI SA drew down a second tranche of FCFA 2.8
billion (€4.34 million) from its FCFA 10 billion (€15.2 million)
long-term Syndicated Loan Facility with Sogebourse CI. On the same terms as
the first tranche. Part of the funds were used to repay a short-term loan in
the amount of €1,524 thousand and a long-term loan in the amount of €497
thousand.
2. In October 2018 DekelOil CI SA signed a loan agreement with
Societe Ivorienne de Banque ("SIB") for FCFA 400 million (approximately €610
thousand). The loan is for 5 years and bears interest at a rate of 8.2% per
annum. One of the boilers in the CPO extraction mill serves as a security for
the loan.
3. In July 2019 DekelOil CI SA signed an agreement with AgDevCo
Limited ("AgDevCo"), a leading African agriculture sector impact investor for
a €7.2 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, variable and
based on 12-month Euro Short Term Rate published by the European Central
Bank (which replaced the Euro Libor used previously) plus a pre-defined
spread, and collared with a minimum rate of 6% per annum and a maximum rate of
9% per annum. In August 2022 DekelOil CI SA repaid €3.6 million out of the
€7.2 million. Following this repayment, it was agreed that the interest will
be fixed at 7% per annum, and that the remaining loan will be paid in 4 equal
annual instalments starting in July 2024. It was also agreed that all
financial covenants were canceled. The fixed assets of DekelOil CI SA serves
as a security for this loan.
NOTE 10:- LOANS (Cont.)
4. On 7 July 2020 DekelOil CI SA signed a loan agreement with
Banque Gabonaise Francaise International ("BGFI") for FCFA 800 million
(approximately €1,220 thousand). The loan is for 5 years and bears interest
at a rate of 7.25% per annum.
5. On 16 March 2016 Capro CI SA signed a loan agreement with the
Bank of Investment and Development of CEDEAO ("EBID") according to which EBID
agreed to grant Capro CI SA a facility of 3,000 million FCFA (€ 4,573
thousand). During 2022 Capro CI SA made the last withdrawal under this loan
agreement ayth the amount of €520.
The EBID loan shall bear interest at a rate of 8.5% per annum. The loan has a
tenure of seven years and shall be repaid in 20 quarterly installments over
five years, commencing after a grace period on principal payments of two
years. Principal payments start in January 2022. According to the loan
agreement as a security for this loan there is a lien over the equipment of
Capro CI SA and an amount of €97 thousand has been deposited in a bank by
Capro CI SA (non-current bank deposits).
6. In 2018 Capro CI SA signed a loan agreement with NSIA bank,
Togo ("NSIA Togo") according to which NSIA Togo agreed to grant Capro CI SA a
facility of 1,500 million FCFA (€ 2,278 thousand).
NSIA Togo loan shall bear interest at a rate of 7.25%% per annum. The loan has
a tenure of seven years and shall be repaid in 20 quarterly installments over
five years, commencing after a grace period on principal payments of two years
from the first withdrawal made on 20 February 2020. As a security for this
loan there is a lien over the equipment of Capro CI SA and an amount of
€49 thousand has been deposited in a bank by Capro CI SA (non-current bank
deposits).
7. On 30 March 2020 Capro CI SA signed a loan agreement with NSIA
bank Cote d'Ivoire ("NSIA") according to which NSIA agreed to grant Capro CI
SA a facility of 500 million FCFA (€ 762 thousand).
NSIA loan shall bear interest at a rate of 7.25% per annum. The loan is for
two years with one year grace period on principal payments. The loan was fully
repaid in 2022.
In August 2022 Capro CI SA signed a new loan agreement with NSIA for the same
amount. The loan will bear interest at a rate of 7.75%. The loan is for two
years with one year grace period on principal payments.
8. On 3 February 2020 Capro CI SA signed a loan agreement with
Banque Gabonaise Francaise International ("BGFI") for FCFA 1,000 million
(approximately €1,542 thousand). The loan shall bear interest at a rate of
7.5% per annum. The loan has a tenure of seven years and shall be repaid in
monthly installments over five years, commencing after a grace period on
principal payments of two years from the first withdrawal made in September
2020. According to the loan agreement as a security for this loan an amount of
€114 thousand has been deposited in a bank by Capro CI SA (non-current bank
deposits).
NOTE 10:- LOANS (Cont.)
9. On 25 January 2021 DekelOil CI SA signed an agreement with
Hudson for issuance of a long-term bond of up to 10,000 million FCFA )€15.2
million(. The first tranche of 3,930 million FCFA (€ 6 million) was received
on 27 January 2021, and the second tranche of 6 billion FCFA )€9.1 million)
was received on 24 July 2022. The bond is for 7 years with a 3-year grace for
principal repayments. The first tranche of the bond bears annual interest of
7.75% and the second tranche of the bond bears annual interest of 7.25%.
According to the agreement DekelOil CI SA accumulates the funds for each
payment prior to each payment by a monthly payment to be made for that purpose
to a designated deposit account. In addition, a fixed amount has been
deposited in a separate bank account. As of 31 December, 2022, the current
deposit amounts to €649 thousand (2021 - € 283 thousand) and the
non-current deposit amounts to €588 thousand (€239 thousand),
respectively.
10. In August and in October 2022 a subsidiary of the Company signed
two loan agreements for two vehicles in the amount of €148 thousand
(denominated in NIS). The loan is for 5 years with annual interest of 4.2%
which is linked to the prime interest rate in Israel.
11. The Company has a line of credit of €3 million from various
banks in Cote d'Ivoire. The lines of credit are revolving annually and bear an
annual interest rate of 7.75%
NOTE 11:- EQUITY
a. Composition of share capital:
31 December 31 December
2022 2021 2022 2021
Authorized Issued and outstanding
Number of shares
Ordinary shares of € 0.0003367 par value each 1,000,000,000 1,000,000,000 557,373,476 535,863,569
Each Ordinary share confers upon its holder voting rights, the right to
receive cash and share dividends, and the right to share in excess assets upon
liquidation of the Company.
Commencing from December 2019, pursuant to his remuneration contract, the
General Manager of the company's subsidiary, shall be issued 400,000 Ordinary
Shares per year at par value over the next 3 years, vesting on a monthly
basis. The fair value of the Ordinary shares to be issued at the date of grant
amounts to € 34 thousand. As of 31 December 2022, all 1,200,000 Ordinary
shares are fully vested. 800,000 Ordinary shares were issued to the General
Manager in 2022.
On 29 January 2021, the Company raised equity totaling to £3.3 million
(€3.7 million, (net of £0.23 million (€0.26 million) fund raising costs)
through the placing of 70,000,000 new Ordinary Shares at an issue price of 5
pence per share.
On 8 February 2021, the Company signed an agreement to purchase an additional
16.7% of Pearlside for a total consideration of £1.062 million (€1.2
million), of which £354,000 (€403 thousand) was settled via the
issue of 7,080,000 new Ordinary shares at 5 pence per share - see Note 6.
In 2021 (January and September) the Company issued 1,656,029 ordinary shares
to certain brokers in consideration for services provided. The fair value of
the shares issued amounting to € 64 thousand was recorded in general and
administrative expenses.
In 2022 the Company issued 645,037 ordinary shares to certain brokers and
suppliers in consideration for services provided and issued 496,169 ordinary
shares to a director as a remuneration for his services. The fair value of the
shares issued amounting to € 44 thousand was recorded in general and
administrative expenses.
See Note 6 for details of issuance of 19,968,701 Ordinary shares valued at
€714 thousand (based on the market price of the shares) upon acquisition of
non-controlling interest in Pearlside.
NOTE 11:- EQUITY (Cont.)
b. Share option plan:
As of 31 December 2022 and 2021 there are 35,522,314 options outstanding to
purchase Ordinary shares at a weighted average exercise price of €0.033.
There are 5,866,667 options outstanding with a weighted average exercise price
of €0.023 that may only be exercised if at any point following the date of
grant, the 30-day Volume Weighted Average Price of the Ordinary Shares
achieves a price per share equal to or exceeding 6.0 pence. This condition has
not been met as of 31 December 2022.
Accordingly, as of 31 December 2022 and 2021 there are 29,655,647 options that
are exercisable at a weighted average exercise price of €0.035.
During 2022 and 2021, no options were granted, exercised, forfeited or
expired.
c. Capital reserve:
The capital reserve comprises the contribution to equity of the Company by the
controlling shareholders.
NOTE 12:- REVENUES
a. Substantially all the revenues are derived from the sales of
Palm Oil, Palm Kernel Oil and Palm Kernel Cake in Cote d'Ivoire, see also Note
19.
b. Major customers:
Year ended 31 December
2022 2021
Euros in thousands
Revenues from major customers which each account for 10% or more of total
revenues reported in the financial statements:
Customer A - 9,403 23,925
Customer B - 8,811 5,241
NOTE 13:- FAIR VALUE MEASUREMENT
The fair value of accounts and other receivables, loans, and trade and other
payables approximates their carrying amount due to their short-term
maturities. The fair value of long-term loans with a carrying amount of
€32,164 thousands and €26,953 thousands (including current maturities) as
of 31 December, 2022 and 2021, respectively, approximates their fair value
(level 3 of the fair value hierarchy).
NOTE 14:- INCOME TAXES
a. Tax rates applicable to the income of the Company and its
subsidiaries:
The Company and its subsidiaries, CS DekelOil Siva Ltd and Pearlside Holdings
Ltd, were incorporated in Cyprus and are taxed according to Cyprus tax laws.
The statutory tax rate is 12.5%.
The carryforward losses (which may be carried forward indefinitely) of the
Company are approximately €31 thousand, of CS DekelOil Siva Ltd are
approximately €20 thousand, and of Pearlside are approximately
€12 thousand.
The subsidiary, DekelOil CI SA, was incorporated in Cote d'Ivoire and is taxed
according to Cote d'Ivoire tax laws. Based on its investment plan, DekelOil CI
SA received a full tax exemption from local income tax, "Tax on Industrial and
Commercial profits," for the thirteen years starting 1 January 2014, 50% tax
exemption for the fourteenth year and 25% tax exemption for the fifteenth
year.
The tax exemptions were conditional upon meeting the terms of the investment
plan, which the Group has met.
The subsidiary, Capro CI SA, was incorporated in Cote d'Ivoire and is taxed
according to Cote d'Ivoire tax laws. Based on its investment plan, Capro CI SA
received a full tax exemption from local income tax, "Tax on Industrial and
Commercial profits," for the thirteen years starting from commencement of
production, 50% tax exemption for the fourteenth year and 25% tax exemption
for the fifteenth year.
The tax exemptions were conditional upon meeting the terms of the investment
plan, which the Group is expecting to meet.
The subsidiary DekelOil Consulting Ltd was incorporated in Israel and is taxed
according to Israeli tax laws.
b. Tax assessments:
The Company's subsidiaries, DekelOil CI SA and Capro CI SA received a final
tax assessment through 2020 and 2019 respectivly.
As of 31 December 2022, the Company and all its other subsidiaries had not yet
received final tax assessments. For DekelOil Consulting LTD the tax assessment
prior to 2014 is deemed to be final.
c. The tax expense during the year ended 31 December, 2022,
relates to tax of the Company's subsidiaries DekelOil CI SA and DekelOil
Consulting Ltd.
NOTE 15:- SUPPLEMENTARY INFORMATION TO THE STATEMENT OF COMPREHENSIVE
INCOME
Year ended
31 December
2022 2021
Euros in thousands
a. Cost of revenues:
Cost of fruit 19,072 23,064
Maintenance and other operating costs 3,092 3,251
Salaries and related benefits 1,788 1,937
Depreciation 1,304 1,684
Cultivation and nursery costs 717 588
Vehicles 212 356
26,185 30,880
b. General and administrative expenses:
Salaries and related benefits 1,741 1,610
Subcontractors 515 452
Legal, accounting, and professional fees 274 378
Depreciation 250 204
Office expenses 182 160
Travel expenses 167 84
Vehicle maintenance 148 118
Insurance 111 168
Brokerage and nominated advisor fees 56 99
Share-based compensation - 271
Other 401 325
3,845 3,869
c. Finance cost:
Interest on loans (*) 1,675 1,438
Bank fees 638 400
Exchange rate differences 162 (112)
2,475 1,726
*) Net of interest capitalized of €434 thousand (2021 - €827
thousand).
NOTE 16:- INCOME (LOSS) PER SHARE
The following reflects the income (loss) and share data used in the basic and
diluted earnings per share computations:
Year ended 31 December
2022 2021
Euros in thousands
Net income (loss) attributable to equity holders of the Company (833) 757
Weighted average number of Ordinary shares used for computation of: 537,209,718 528,368,244
Basic earnings (loss) per share
Diluted earnings (loss) per share 537,209,718 529,217,521
In 2022, share options are excluded from the calculation of diluted loss per
share as their effect is antidilutive.
NOTE 17:- BALANCES AND TRANSACTIONS WITH RELATED PARTIES
Year ended
31 December
2022 2021
Euros in thousands
a. Balances:
Current: 286 452
Other accounts payable
Non-current: 630 -
Loan from shareholder (see Note 6)
b. Compensation of key management personnel of the Company:
Short-term employee benefits 820 801
Share-based compensation - 224
c. Significant agreements with related parties:
1. In February 2008, DekelOil Consulting Limited ("Consulting")
signed an employment agreement with a shareholder, who is a director of the
Company, the CEO of the Company and the chairman of the Board of Directors of
DekelOil CI SA. Under the employment agreement, the CEO is entitled to a
monthly salary of € 20,000 per month. The agreement is terminable by the
Company with 24 months' notice. The total annual salary, social benefits,
bonuses and management fee paid to the CEO during 2022 and 2021 was
approximately €239 thousand and €217 thousand, respectively.
2. In March 2008, DekelOil Consulting Limited signed an employment
agreement with a shareholder, who is a director of the Company, its Deputy CEO
and Chief Financial Officer. The agreement was amended on 11 July 2014, by the
board of the subsidiary to reflect the same salary terms as those of the CEO
described in c (1) above. The total annual salary and social benefits paid
to the employee during 2022 and 2021 was approximately €239 thousand and
€217 thousand, respectively.
NOTE 18:- FINANCIAL INSTRUMENTS
a. Classification of financial liabilities:
The financial liabilities in the statement of financial position are
classified by groups of financial instruments pursuant to IFRS 9:
31 December
2022 2021
Euros in thousands
Financial liabilities measured at amortized cost:
Trade and other payables 5,211 4,022
Short-term loans 1,378 3,040
Long-term lease liabilities 128 169
Loan from shareholder 630 -
Loan from non-controlling interest - 915
Long-term loans (including current maturities) 31,534 26,947
Total 38,881 35,093
b. Financial risks factors:
The Group's activities expose it to market risk (foreign exchange risk).
Foreign exchange risk:
The Company is exposed to foreign exchange risk resulting from the exposure to
different currencies, mainly, NIS and GBP. Since the FCFA is fixed to the
Euro, the Group is not exposed to foreign exchange risk in respect of the
FCFA. As of December 31, 2022, the foreign exchange risk is immaterial.
Liquidity risk:
The table below summarizes the maturity profile of the Group's financial
liabilities based on contractual undiscounted payments (including interest
payments):
31 December 2022
Less than one year 1 to 2 years 2 to 3 3 to 4 years 4 to 5 years > 5 years Total
years
Euros in thousands
Long-term loans (1) 6,519 6,942 6,487 7,931 5,423 3,262 36,564
Loan from shareholder - - - - - 915 915
Short-term loan 1,378 - - - - - 1,378
Trade payables and other accounts payable 5,211 - - - - - 5,211
Long-term lease liabilities 44 44 44 44 34 1,350 1,559
13,152 6,986 6,531 7,975 5,457 5,527 45,627
NOTE 18:- FINANCIAL INSTRUMENTS (Cont.)
31 December 2021
Less than one year 1 to 2 years 2 to 3 3 to 4 years 4 to 5 years > 5 years Total
years
Euros in thousands
Long-term loans (1) 4,117 3,269 4,563 4,447 4,225 10,937 31,558
Loan from non-controlling interest 915 - - - - - 915
Short-term loan 3,040 - - - - - 3,040
Trade payables and other accounts payable 4,022 - - - - - 4,022
Long-term lease liabilities 30 15 15 15 15 1,365 1,455
12,124 3,284 4,578 4,462 4,240 12,302 40,990
Movement in financial liabilities:
Short term loans Long term loans (1) Lease liabilities Loan from non-controlling interest (2) Total
Balance as of 1 January 2021 2,437 23,291 192 - 23,557
Receipt of short-term loan 3,040 - - 915 3,955
Repayment of long-term lease - - (23) - (23)
Repayment of loans (2,437) (2,339) - - (4,776)
Receipt of long-term loans - 5,991 - - 5,991
Balance as of 31 December 2021 3,040 26,943 169 915 28,704
Receipt of short-term loan 1,378 - - - 1,378
Receipt of long-term loan (4,591) (4,591)
Repayment of long-term lease (41) (41)
Repayment of loans (3,040) - - (3,040)
Loan discount (2) 285 285
Receipt of long-term loans
Balance as of 31 December 2022 1,378 31,534 128 630 33,670
1) Including current maturities and accrued interest.
2) 2022 - loan from shareholder, see Note 6.
NOTE 19:- OPERATING SEGMENTS
a. General:
The operating segments are identified based on information that is reviewed by
the Company's management to make decisions about resources to be allocated and
assess its performance. Accordingly, for management purposes, the Group is
organized into two operating segments based on the two business units the
Group has. The two business units are incorporated under two separate
subsidiaries of the Company, the CPO production unit is incorporated under CS
DekelOil Siva Ltd and its subsidiary and the RCN processing plant in
commissioning stage is incorporated under Pearlside Holdings Ltd and its
subsidiary (see Note 1).
NOTE 19:- OPERATING SEGMENTS (Cont.)
Segment performance (segment income (loss)) and the segment assets and
liabilities are derived from the financial statements of each separate group
of entities as described above. Unallocated items are mainly the Group's
headquarter costs, and taxes on income.
b. Reporting operating segments:
Crude Palm Oil Raw Cashew Nut Unallocated Total
Euros in thousands
Year ended 31 December 2022:
Revenues-External customers 30,459 746 - 31,205
Segment operating profit (loss) 3,727 (1,430) (1,122) 1,175
Finance cost (2,182) (265) (28) (2,475)
Other income 103 - - 103
Profit (loss) before taxes on income 1,648 (1,695) (1,150) (1,197)
Depreciation and amortization 1,383 146 25 1,554
Year ended 31 December 2021:
Revenues-External customers 37,391 - - 37,391
Segment operating profit (loss) 3,830 (391) (797) 2,642
Finance cost (1,805) (5) 84 (1,726)
Profit before taxes on income 2,844 (396) (1,532) 916
Depreciation and amortization 1,861 - 27 1,888
Crude Palm Oil Raw Cashew Nut Unallocated Total
Euros in thousands
As of 31 December 2022:
Segment assets 36,389 18,291 - 54,680
Segment liabilities 28,427 10,927 - 39,354
As of 31 December 2021:
Segment assets 35,368 16,307 - 51,675
Segment liabilities 24,397 10,943 - 35,340
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