DKL Dekel Agri-vision Plc

NOTE 1:-   GENERAL

 

a.       These financial statements have been prepared in a condensed format as of 30 June 2024, and for the six months then ended ("interim consolidated financial statements"). These financial statements should be read in conjunction with the Company's annual financial statements as of 31 December 2023 and for the year then ended and accompanying notes ("annual consolidated financial statements").

 

b.      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.

 

c.       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.

 

d.      Pearlside Holdings Ltd. ("Pearlside") a company incorporated in Cyprus, is a wholly-owned subsidiary of the Company. 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 Tiebissou.

 

e.       DekelOil Consulting Ltd. a company located in Israel and a wholly-owned subsidiary of DekelOil Siva and is engaged in providing services to the Company and its subsidiaries.

 

 

 

 

 

NOTE 1:-   GENERAL (Cont.)

 

f.       Cash flow from operations and working capital deficiency.

 

As of 30 June 2024, the Group has a working capital deficiency of €7.9 million (€8.7 million as of 31 December 2023). The group generated a positive cash flow from operation of €1.9 million (€1.3 million for the six-month ended 30 June 2023). The Palm Oil operation is performing well, recording profit before tax of €3.1 million (including depreciation of €0.7 millions) for the 6 months ending 30 June 2024 (see also note 3 operating segments). This profit was offset mainly by a loss at the cashew segment to a total loss for the period of €0.7 millions (including depreciation of €2 millions).  Cashew Operation is gradually increasing daily production and is forecast to deliver positive operating cash flows in the coming months. The Group has prepared detailed forecasted cash flows through the end of 2025, which indicate that the Group should have positive cash flows from its Group 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 2:-   SIGNIFICANT ACCOUNTING POLICIES

 

a.       Basis of preparation of the interim consolidated financial statements:

 

The interim consolidated financial statements have been prepared in accordance with IAS 34, "Interim Financial Reporting".

 

The significant accounting policies applied in the preparation of the interim consolidated financial statements are consistent with those followed in the preparation of the annual consolidated financial statements for the year ended 31 December 2022, except as described in c. below.

 

b.      Fair value of financial instruments:

 

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

 

 

 

 

NOTE 2:-   SIGNIFICANT ACCOUNTING POLICIES (Cont.)

 

c.       Initial adoption of amendments to existing financial reporting and accounting standards:

 

1.     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.

 

The application of the Amendment did not have a material impact on the Company's interim financial statements.

 

2.     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 is effective for annual reporting periods beginning on or after 1 January 2023. In relation to leases and decommissioning obligations, the Amendment is 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 is recognized as an adjustment to the opening balance of retained earnings (or another component of equity, as appropriate) at that date.

 

The application of the Amendment did not have a material impact on the Company's interim financial statements.

 

 

NOTE 2:-   SIGNIFICANT ACCOUNTING POLICIES (Cont.)

 

3.     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 effective for annual periods beginning on or after 1 January 2023.

 

The above Amendment did not have an effect on the Company's interim consolidated financial statements. However, the Company is evaluating whether the Amendment will affect the disclosures of accounting policies in the Company's annual consolidated financial statements.

 

 

NOTE 3: -            INITIAL APPLICATION OF AMENDMENTS TO FINANCIAL REPORTING STANDARDS

 

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 financial covenants with which an entity must comply on or before the reporting date will affect a liability's classification as current or non-current.

 

·    In respect of a liability for which compliance with financial covenants is to be evaluated within twelve months from the reporting date, disclosure is required to enable users of the financial statements to assess the risks related to that liability. The Subsequent Amendment requires disclosure of the carrying amount of the liability, information about the financial covenants, and the facts and circumstances at the end of the reporting period that could result in the conclusion that the entity may have difficulty in complying with the financial covenants.

 

         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 applied retrospectively for annual periods beginning on January 1, 2024.

 

 

NOTE 3: -            INITIAL APPLICATION OF AMENDMENTS TO FINANCIAL REPORTING STANDARDS

 

         The Amendments did not have a material impact on the Company's interim consolidated financial statements.

 

 

b.      Disclosure of new Standards in the period prior to adoption:

 

         IFRS 18, "Presentation and Disclosure in Financial Statements":

 

         In April 2024, the International Accounting Standards Board ("the IASB") issued IFRS 18, "Presentation and Disclosure in Financial Statements" ("IFRS 18") which replaces IAS 1, "Presentation of Financial Statements".

 

         IFRS 18 is aimed at improving comparability and transparency of communication in financial statements.

 

         IFRS 18 retains certain existing requirements of IAS 1 and introduces new requirements on presentation within the statement of profit or loss, including specified totals and subtotals. It also requires disclosure of management-defined

 

         performance measures and includes new requirements for aggregation and disaggregation of financial information.

 

         IFRS 18 does not modify the recognition and measurement provisions of items in the financial statements. However, since items within the statement of profit or loss must be classified into one of five categories (operating, investing, financing, taxes on income and discontinued operations), it may change the entity's operating profit. Moreover, the publication of IFRS 18 resulted in consequential narrow scope amendments to other accounting standards, including IAS 7, "Statement of Cash Flows", and IAS 34, "Interim Financial Reporting".

 

         IFRS 18 is effective for annual reporting periods beginning on or after January 1, 2027, and is to be applied retrospectively. Early adoption is permitted but will need to be disclosed.

 

         The Company is evaluating the effects of IFRS 18, including the effects of the consequential amendments to other accounting standards, on its consolidated financial statements.

 

 

 

 

 

NOTE 4:-   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 Dekel Oil Siva Ltd and its subsidiary and the RCN processing plant in commissioning stage is incorporated under Pearlside Holdings Ltd and its subsidiary.

 

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.

 

 

b.      Reporting operating segments:

 

 

 

 

 

NOTE 4:-   OPERATING SEGMENTS (Cont.)

 

 

 

 

 

 

 

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