Dekel Agri Vision : Interim Results to June 2022

Dekel Agri-Vision Plc / Index: AIM / Epic: DKL / Sector: Food Producers

Dekel Agri-Vision Plc ('Dekel', the 'Company' or the 'Group')

Interim Results and Investor Presentation

Dekel Agri-Vision Plc (AIM: DKL), the West African agribusiness company focused on building a portfolio of sustainable and diversified projects, is pleased is to announce its interim results for the six months ended 30 June 2022.

The Company will be hosting an investor presentation in the form of a Q&A session at 12.30 p.m. UK time on 28 September 2022. The call will be hosted by Lincoln Moore (Executive Director), Youval Rasin (CEO) and Shai Kol (Deputy CEO and CFO), 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.

Key Highlights

Palm Oil Operation

• Record EBITDA and record Net Profit after Tax delivered from the Ayenouan palm oil plant in Côte d'Ivoire (the 'Palm Oil Operation') primarily driven by record Crude Palm Oil ('CPO') and Palm Kernel Oil ('PKO') pricing and an improved extraction rate, offsetting much lower than typical high season production volumes:
  o H1 2022 revenue of €19.7m, a 9.2% decrease from €21.7m in H1 2021 - includes sales of CPO, Palm Kernel Oil ('PKO'), Palm Kernel Cake ('PKC') and Nursery Plants
  o H1 2022 gross margin of 25.4% compared to 22.6% in H1 2021

1. Record H1 EBITDA of €4.2m, an increase of 7.7% from €3.9m in H1 2021 o Record H1 net profit after tax of €2.5m, a 20% rise from €2.0m in H1 2021

Cashew Operation

• The Company's cashew processing plant at Tiebissou in Côte d'Ivoire (the 'Cashew Operation') recorded a net loss of €0.2m, a period in which operations are in the late stages of completing full commissioning. The Company will provide further updates in respect of the commissioning

process as appropriate.

*Cashew pilot production commenced in early January 2022 with full commissioning to be completed in early Q4 2022

Financial Highlights

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Year ended 31 December	2022	2021	% change
Palm Oil Operation
Revenue	€19.7m	€21.7m	(9.2%)
Gross Margin	€5.0m	€4.9m	2.0%
Gross Margin %	25.4%	22.6%	12.4%
G&A	(€1.5m)	(€1.7m)	(11.8%)
EBITDA	€4.2m	€3.9m	7.7%
Net profit / (loss) after tax	€2.5m	€2.0m	25.0%
Cashew Operation
Net Loss*	(€0.2m)	Nil
Dekel Group Net profit / (loss) after tax	€2.3m	€2.0m	15.0%

Operational Highlights - Palm Oil Operation

• CPO Production: 36.3% decrease in CPO production to 16,893 tonnes in H1 2022 compared to H1 2021
  o The typical high season, which normally takes place from February to May, was at historically low levels
  o CPO extraction rate in H1 2022 increased to 22.4% (H1 2021: 21.4%), partially offsetting 39% lower Fresh Fruit Bunch ('FFB') quantities compared to H1 2021
• CPO Sales: 31.4% fall in CPO sales to 16,996 tonnes in H1 2022 (H1 2021: 24,784 tonnes) largely due to the lower CPO production
• CPO Prices: 24.0% increase in average realised CPO prices to a record level of €1,013 per tonne in
  H1 2022 compared to H1 2021
  o International CPO prices have steadied but continue to trade at multi-year highs of above €1,000 per tonne
• PKO Production: H1 2022 PKO production 25.2% lower than H1 2021 due to lower FFB volumes
• PKO Prices: 83.6% higher average realised PKO prices in H1 2022 (€1,454) than H1 2021 (€792),

which is a record half-year average price achieved

Operational Highlights - Cashew Operation

• The Cashew Operation commenced pilot production in early 2022
• Delays in final key equipment items have stalled the ramp-up of production; however, with all key equipment now on site, we expect to see a material increase in operating capacity shortly and the Company will provide further updates as appropriate

Lincoln Moore, Dekel's Executive Director, said: "To deliver record EBITDA from the Palm Oil Operation despite the unprecedented low high season production period was an excellent outcome. With CPO prices continuing to trade at long term highs, the Company is well positioned to grow sales in H1 2023 should production volumes return to historical levels.

"The Cashew Operation is now closing in on the completion of full commissioning and is well placed to become a significant contributor to the Group in 2023. With reasons to be optimistic about the performance of both the Palm Oil Operation and the Cashew Operation, we are excited about the potential to grow the Company's sales and financial performance in the future."

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Conference Call

Dekel Agri-Vision Plc is pleased to announce that Lincoln Moore, Youval Rasin and Shai Kol will provide a live presentation in the form of a Q&A relating to interim results for the six months ended 30 June 2022 via the Investor Meet Company platform on 28 Sep 2022 at 12.30 p.m. BST.

The presentation is open to all existing and potential shareholders. Questions can be submitted via your Investor Meet Company dashboard up until 9.00 a.m. BST the day before the meeting or at any time during the live presentation.

Investors can sign up to Investor Meet Company for free and add to meet Dekel Agri-Vision Plc via:

https://www.investormeetcompany.com/dekel-agri-vision-plc/register-investor

Investors who already follow Dekel Agri-Vision Plc on the Investor Meet Company platform will automatically be invited.

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	[phone]
Youval Rasin
Shai Kol
Lincoln Moore
WH Ireland Ltd (Nomad and Joint Broker)	[phone]
James Joyce
Ben Good
Optiva Securities Limited (Joint Broker)	[phone]
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 commenced production in early January 2022.

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CHAIRMAN'S STATEMENT

H1 2022 saw CPO prices reach record highs which greatly assisted the H1 2022 financial outcomes during an unusually low high season production period. In addition, strong mill operational performance which saw a material improvement in CPO extraction rates and well controlled overhead costs, despite global inflation, contributed to the solid platform to enable the Palm Oil Operation to deliver a record net profit after tax.

The Cashew Operation took significant strides during H1 2022 to full production despite post Covid-19 supply chain disruptions impacting our supplier delivery timetables. With all key equipment now on site and the final commissioning phase well advanced, we believe we have passed the most challenging stage of delivering the Cashew Operation towards its full capacity and we are well placed to deliver our objective of processing 10,000tn of Raw Cashew Nuts ('RCN') in 2023.

Palm Oil Operation

January 2022 production volumes started reasonably well following on from a record production period in H2 2021. However, the typical high season which peaks from February through May did not eventuate as normal leading to, by far, the weakest production high season the Company has seen since the Palm Oil Operation commenced in 2014. This low production was experienced region-wide; however, there is expectation among local experts that the variation is short-term and we should see a rebound in volumes. As we head towards the back end of September, we are seeing some improvements in volumes but it is difficult to accurately predict short-term volume variations. What we can do is focus on things we can control and we are currently undertaking a full review of our milling operations to ensure we are ready when volumes increase, so that the Company can take advantage of a supportive pricing environment.

Record CPO and PKO prices were achieved in H1 2022 and prices currently remain close to all-time highs. Medium-term, we continue to be bullish on CPO prices and, should short-term prices remain in the €900- 1,000tn range and volumes normalise to historical levels, the Directors believe the Palm Oil Operation performance can exceed the outcomes of H1 2021 and H1 2022.

Cashew Operation

The Cashew Operation has a stated objective to process 10,000tn of RCN in 2023. The Directors' view remains unchanged in that the Cashew Operation could in time potentially exceed the Palm Oil Operation in terms of profit contribution to the Group. The Cashew project is being developed in such a way that capacity can be increased significantly in short order. With a nameplate capacity of 15,000 tonnes per annum ('tpa'), production at the plant can be ramped up by 50% at no extra cost by simply increasing the number of shifts from two to three per day. From 15,000tpa and at a capex cost of €5-6 million, the mill's capacity can be doubled to 30,000tpa, which the Directors estimate could generate revenues in the region of approximately €40 million per annum based on current prices.

Other Projects

Whilst we have further expansion plans, including the processing of a third commodity in addition to clean energy aspirations, these projects are on hold as we focus on the execution of the Cashew Operation which we believe will play a key role in enhancing the Group's financial outcomes in 2023.

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Group Financial

A summary of the financial performance for H1 2022, in addition to the comparatives for the previous 5 years, is outlined in the table below.

	H1 2022	H1 2021	H1 2020	H1 2019	H1 2018	H1 2017
CPO production (tonnes)	16,893	26,515	23,882	28,934	22,242	26,947
Average CPO price per tonne	€1,013	€817	€602	€505	€549	€707
Total Revenue (all products)	€19.7m	€21.7m	€15.4m	€14.6m	€14.1m	€19.6m
Gross Margin	€5.0m	€4.9m	€2.6m	€2.3m	€2.1m	€5.0m
Gross Margin %	25.4%	22.6%	16.9%	15.8%	14.9%	25.5%
Overheads	(€1.7m)	(€1.7m)	(€1.4m)	(€1.5m)	(€1.6m)	(€1.8m)
EBITDA	€4.0m	€3.9m	€1.9m	€1.4m	€1.1m	€3.7m
Net Profit / (Loss) After Tax	€2.3m	€2.0m	€0.5m	(€0.1m)	(€0.5m)	€2.4m

Dekel achieved record H1 2022 EBITDA of €4.0m and net profit after tax of €2.3m. This was driven by record CPO and PKO prices and a 1 percentage point improvement in CPO extraction rates to 22.4%. This drove an improvement in the H1 2022 Gross Margin percentage to 25.4% (H1 2022: 22.6%). H1 2022 overheads were well controlled during a period of ongoing inflation, remaining flat at €1.7m (H1 2021: €1.7m).

H1 Operating Cashflow of €4.8m (H1 2021 €2.4m outflow) was reflective of the solid operating performance of the Palm Oil Operation. Given the Cashew Operation has not completed full commissioning, ongoing capital expenditure and the capitalisation of the commissioning costs resulted in a €2.6m outflow and a further €2.3m was utilised for loan repayments. The final drawdown of approximately €9.2m from the Company's existing approximately €15.2m seven-year bond facility has further strengthened Dekel's cash position and provided key working capital to support the ramp up of the Cashew Operation. Our consistently stated two to three year strategy remains unchanged in terms of "utilising the principal grace periods of the bond facility to ensure we are well funded internally while we build our cash base from the material uplift in operating cash flow expected as the Palm Oil Operation and Cashew Operation work in tandem. Dekel will then have optionality to either pay down debt or access lower cost financing to fund future growth plans and, at the appropriate time, look to recommence a dividend programme, thereby providing shareholders with a yield as well as capital growth."

Outlook

The Company has been able to deliver a record H1 2022 financial performance whilst weathering the challenges of unprecedented low volumes in the Palm Oil Operation and delays with ramp up in the capacity of the Cashew Operation. Whilst it will be challenging to replicate in the second half of the year the record Palm Oil Operation results achieved in H1 2022 based on current volumes, we have an excellent platform

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