Dekel Agri-Vision Plc (LON:DKL), the West African agribusiness company focused on building a portfolio of sustainable and diversified projects, has announced its audited results for the year ended 31 December 2022. 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.”
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, Dekel Agri-Vision Date: 27 June 2023
