Delek Logistics Partners
Annual Report 2020

Plain-text annual report

Annual Report & Financial Statements 2020 DEKEL AGRI-VISION PLC CONSOLIDATED FINANCIAL STATEMENTS AS OF 31 DECEMBER 2020 EUROS IN THOUSANDS - 2 - INDEX Chairman's Statement Company Information Information on the Board of Directors Professional Advisers Directors’ Report Chairman’s Statement on Corporate Governance Statement of Directors’ Responsibilities Independent Auditors' Report Consolidated Statements of Financial Position Consolidated Statements of Comprehensive Income Consolidated Statements of Changes in Equity Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements - 3 - Page 4-8 9 10 11 12-15 16-22 23 24-25 26-27 28 29 30-31 32-64 CHAIRMAN’S STATEMENT 2020 was very much a year of two halves for Dekel Agri-Vision, its established palm oil operations and its soon to be producing cashew processing plant in Cote d’Ivoire: • Highly challenging first half due to the global pandemic and associated lockdowns • Strong second half pick-up in activity which partially made up for the ground lost in the first half and which has since gathered further momentum in 2021 Specifically, H1 2020 saw our Ayenouan crude palm oil (‘CPO’) operations contend with a near halving in global prices from US$850 per tonne in January to US$500-550 per tonne in April and May 2020, a price trajectory that was in line with other commodities following the onset of the pandemic. At the same time, construction activity at our Tiebissou cashew plant was held back due to delays in the manufacture and shipping of milling and infrastructure equipment in Italy and China, two countries that were severely impacted by the pandemic in the first half. H2 2020 witnessed a sharp rebound. Global CPO prices soared to the US$1,000 per tonne level they currently trade at today following a strong recovery in CPO demand, which has enabled us to report an improvement across all of Ayenouan’s key financial metrics for the full year compared to 2019. In addition, thanks to the progress made on the ground in the second half, the commissioning of the 10,000tpa mill at Tiebissou is expected in the coming weeks. Importantly, the strong finish to the year has laid the foundations for what promises to be a transformative 2021 for the Company. Once operations commence at Tiebissou, Dekel will have two projects producing two commodities and generating two independent revenue streams. Not only will this lead to the scaling up of our revenues and earnings, but also to the diversification of our end markets. The directors have sought to increase shareholder value by reducing risk through a combination of sustainably higher earnings and multiple end markets. With the commissioning of the cashew processing plant at Tiebissou within sight, we believe recent corporate transactions indicate that we are already starting to see a lowering in the Company’s risk profile: • Execution of transactions during the year and post period end, which resulted in the Company securing a controlling stake in the Tiebissou cashew project in exchange for Dekel shares that were issued at premia to the then market price • Completion of a £3.2m equity raise post period end that was oversubscribed • c.€15.2 million bond facility secured post period end which extends the maturity of Dekel’s debt profile and significantly strengthens the balance sheet - €5.9m was drawn down in January 2021 Taken together, it is clear that Dekel is entering a new phase in its history, in which a highly cash generative platform and a strong balance sheet promise to accelerate the implementation of our growth strategy. This remains focused on building a multi-project, multi-commodity agriculture company for the benefit of both shareholders and the local communities in which we operate. Ayenouan Palm Oil - 4 - Being a producer of crude palm oil, key performance drivers for our Ayenouan operations are global CPO prices, fresh fruit bunch (‘FFB’) deliveries / production levels, and extraction rates. The year under review saw significant improvements in two of these metrics: global CPO prices and extraction rates. The 22.6% increase in CPO prices to €602 per tonne and the jump in the extraction rate to 22.1% from 21.4% the previous year were more than enough to offset a 12.5% drop in FFB delivered to the mill and a 9.6% fall in volumes of CPO produced during the year. In turn, this has driven a material improvement in our full year financial performance at the revenue, EBITDA and net profit / loss levels compared to 2019, as detailed in the table below. The average realised price of €602 per tonne of CPO achieved during the year does not tell the whole story. Global CPO prices began and ended the year under review at over US$800 per tonne, a level rarely seen in the eight years since our 60,000tpa mill was commissioned in 2013. Had prices traded at or around this level throughout the year then, despite lower volumes of CPO produced at Ayenouan in 2020, it is likely we would be reporting results closer to those of 2017, a record year in terms of revenue generation and profitability with €30.2m revenues, €4.5m EBITDA and €1.6m net profits posted. During 2020 CPO prices were anything but stable,, dropping below €500 per tonne as the pandemic took hold and societies around the world went into lockdown, before rebounding equally dramatically in the second half of the year, as major importers in Asia replenished inventories. The above paragraph has not been included to illustrate a ‘what could have been’ scenario - rather a case of ‘what might be’. We are almost halfway through the current year and we have reported average realised prices of €794 per tonne for Q1 2021, €803 for April and €774 for May. Together with a material improvement in the peak harvest season, resulting in volumes of CPO produced increasing to 23,877 tonnes during the five months to 31 May 2021, compared to 21,539 tonnes in the equivalent five-month period in 2020, we believe we are on course to report another year of material revenue and profits growth at Ayenouan, one that could potentially challenge 2017’s record outcome. By way of illustration, in Q1 2017 16,398 tonnes of CPO were produced and average realised prices of €731 were achieved. The relevant figures for Q1 2021 are 15,327 tonnes of CPO produced and average realised prices of €794 per tonne. Much can happen between now and the end of the year but, as things stand, at the very least we are confident of another year of progress at Ayenouan. FY 2020 FY 2019 FY 2018 FY 2017 FY 2016 FFB collected (tonnes) 154,151 176,019 146,036 171,696 171,301 CPO production (tonnes) 34,002 37,649 33,077 38,736 39,111 CPO Sales (tonnes) 34,008 37,713 32,692 38,373 39,498 Average CPO price tonne €602 €491 €542 €680 €575 Revenue (All products) €22.5m €20.9m €20.9m €30.2m €26.6m Gross Margin €2.3m €1.7m €1.7m €6.9m €6.6m - 5 - Gross Margin % 10.2% 8.1% 8.3% 22.8% 24.8% EBITDA EBITDA % NPAT NPAT % ESG €1.2m €0.2m (€0.2m) €4.5m €4.1m 5.3% 1% - 14.9% 15.4% (€2.2m) (€3.3m) (€3.3m) €1.6m €1.3m - - - 5.3% 4.9% Progress at Ayenouan this year will not be confined to operations and financials. Following major advances made in 2020 preparing for the Round Table for Sustainable Palm Oil ('RSPO') certification process, we believe we are on course to attain RSPO certification later this year. A pre-audit of the Company’s programmes and management systems by Oxford-based environmental consultancy Proforest , as well as an assessment of the processes and procedures to manage environmental and social risks and impacts at Ayenouan, has now been completed. We are currently reviewing the final recommendations of the report ahead of commencing the formal RSPO audit process later this year. Certification would see Ayenouan become one of the few operations in the region with the RSPO stamp of approval. It would also be a validation of our collaborative model which places local smallholders and communities at the centre of our operations: over 90% of the CPO we produce at Ayenouan originates from fruit harvested by local smallholders; while our state-of-the-art nursery supplies farmers with hundreds of thousands of young trees each year. We have always believed that strong ESG credentials and corporate profitability can go hand in hand, and we believe RSPO certification can demonstrate this. By providing third- party endorsement, RSPO certification will differentiate Dekel from non-ESG focused peers. This has the potential to increase deliveries of fruit grown in the region by local smallholders to Ayenouan for processing, which in turn could help increase CPO production at the project towards the mill’s nameplate 60,000tpa capacity. Furthermore, having RSPO certification has the potential to open up export markets for our CPO. Tiebissou cashew project Up until now, the financial results of Ayenouan and those of the group as a whole have mirrored each other, at least at the revenue and gross profit levels, as our palm oil operation has been the only one in our portfolio that has been in production. All this is set to change with the imminent commissioning of the 10,000tpa mill at our cashew processing project. Thanks to the progress made during the second half of 2020, we are set to commence production in the coming weeks and are also currently purchasing sufficient volumes of nuts from local co-operatives for processing in the second half. Tiebissou is therefore on track to contribute to Dekel’s financial performance in the current year before transforming Dekel’s financial profile in 2022, the first full year of production. We are confident that sufficient volumes of RCN will be secured to fully utilise the plant’s capacity because, unlike palm oil, Cote d’Ivoire is not only one of the world’s largest RCN producers but there is a major shortfall in cashew processing capacity in the country - just 15-20% of the c. 750,000MT of RCN grown each year is - 6 - processed domestically. Even after taking into account additional processing capacity that is due to come on stream in the years ahead, we believe RCN supply will continue to outstrip demand from local processing plants for some time to come. This demand / supply imbalance also has positive implications for the project’s margins which are expected to be higher than those of our palm oil operations at Ayenouan. With such favourable RCN demand / supply dynamics and higher margins on offer, we are keen to expand capacity at Tiebissou at the earliest opportunity and we have a roadmap in place to achieve this. The plant we are installing has a nameplate capacity of 15,000tpa, which provides us with the opportunity to ramp up production by 50% at no extra cost by increasing the number of shifts from two to three. We will look to do this within 12-24 months of the commissioning of the plant. From this point onwards we aim to increase the plant’s capacity to 30,000tpa which, based on today’s prices, could generate annual revenues of around €40 million. The imminent commissioning of the plant is therefore just the first of a series of growth steps at Tiebissou. That Tiebissou is on track to commence operations in the coming weeks is testament to the hard work of our team on the ground and those of our equipment suppliers in Italy and China in the face of severe disruption caused by the pandemic. The progress made in the second half of the year gave us the confidence to execute the series of transactions, both during the year under review and post period end, that has seen Dekel’s interest in the project increase to 70.7%. Other projects The development of our pipeline of projects was put on hold during the year in response to COVID-19. As the global situation improves, and once Tiebissou is up and running, we will look to advance these projects, one of which is centred around building a state-of-the-art processing plant for a third commodity. We also have a joint venture with established renewable energy company Green Enesys Holdings to develop a hybrid power project ('HCTPP') in Côte d'Ivoire. This project is at the feasibility study stage and is evaluating the construction of a HCTPP comprising a 30MW solar PV plant and a 5-6MW biomass plant using empty fruit bunches from Dekel's mill at Ayenouan as feedstock. Discussions with the government in Cote d’Ivoire are ongoing. Financial During the period under review, total revenues at Ayenouan were €22.5 million, a 7.7% increase on the previous year. The higher revenues were driven by a 22.6% increase in CPO prices achieved and a higher extraction rate which together more than offset lower year on year CPO production at the mill during the period (2020: 34,002 tonnes / 2019: 37,649 tonnes). The higher full year revenues generated a 500% increase in EBITDA to €1.2 million (excluding share based compensation). In response to the pandemic, management implemented a cost saving programme at both project and corporate levels, resulting in a 12.5% reduction in general administration expenses compared to 2019. In June 2020, Bloomfield Investment Corporation, the credit rating agent for West Africa, renewed the Company’s credit rating as investment grade unchanged: long term BBB- and short term A3. Outlook - 7 - Dekel has emerged from what was a highly challenging year in a strengthened position, both operationally and financially. In spite of the disruption caused by the pandemic, we have reported an improved set of full year financial results for our palm oil operations, we have advanced our large-scale cashew processing project, and we have secured a controlling interest in the same project ahead of the commencement of first production. The momentum behind the business continues to build in the current year: our palm oil operations are on course to post another improved set of financial results for the first half; the cashew purchasing programme has commenced in anticipation of the plant at Tiebissou commencing processing in the coming weeks; the post period end long term debt refinancing has extended the maturity of our debt profile and strengthened our balance sheet; and the planned completion of the RSPO certification process for our palm oil operations later this year will potentially highlight the attractiveness of our project and open up export routes. Takeaways from each of the above neatly sum up what we at Dekel Agri-Vision are focused on building: a highly cash generative agriculture group; a diversified portfolio of growing revenues streams; a strong balance sheet to support future growth; and a business with best-in-class ESG credentials among its peers. Finally, I would like to thank the Board, management, our employees and advisers for their support and hard work over the course of the year. It is because of their efforts that Dekel is in the strong position it is today and that shareholders can look forward to an exciting year ahead. Andrew Tillery Non-Executive Chairman Date: 23 June 2021 - 8 - COMPANY INFORMATION Directors Andrew James Tillery, Non-Executive Chairman Youval Rasin, Chief Executive Officer Yehoshua Shai Kol, Chief Financial Officer Lincoln John Moore, Executive Director Aristide Achybrou, Non-Executive Director (appointed 16 March 2020) Bernard Francois, Non-Executive Director (ceased 16 March 2020) Secretary Absolute Trust Nominees Ltd Registered Office 38 Agias Fylaxeos, Nicolas Court First Floor, Office 101 P.C. 3025 Company Registration HE 210981 Country of Incorporation Cyprus - 9 - INFORMATION ON THE BOARD OF DIRECTORS Andrew Tillery, Non-Executive Chairman Mr Tillery is an experienced project manager and investment executive with over 25 years’ operational management and private equity experience in Africa and other emerging markets. This includes eight years (1996-2003) as a CEO in Côte d'Ivoire, West Africa where he had responsibility for managing a group of oil palm operations and also founding a natural rubber business. Mr Tillery has an MA and MSc from Oxford University, an MBA from the University of Chicago and worked with CDC Group Plc (the UK Government development finance institution) from 1989 until 2004. Following this he spent several years in emerging markets investment management. He is currently on the board of a number of African agribusiness and adviser to several agribusiness investment funds in sub-Saharan Africa. Youval Rasin, Chief Executive Officer Mr Rasin is the co-founder of Dekel and has held senior management positions in various companies within the Rina Group, a family holding company with diverse interests including agriculture, mining and hotels in Africa and Europe. By profession, Mr Rasin is a qualified lawyer and has been active in Côte d’Ivoire since 2002, with 10 years’ experience in agro-industrial projects including 14 years in the palm oil industry with Dekel. Yehoshua Shai Kol, Deputy CEO and Chief Financial Officer Mr Kol is the co-founder of Dekel. By profession, Mr Kol is a Chartered Accountant, and has an MBA from Tel Aviv University. Mr Kol worked for 13 years in finance, with significant business & international exposure. Mr Kol is a former employee of KPMG Corporate Finance and Professional Practice. He was also the Financial Director for Europe, Middle East and Africa for an international software company, Director of Finance and Business Development for Yellow Pages Ltd in Israel, during which time he led fund raising and M&A. Lincoln John Moore, Executive Director For the past 12 years Mr Moore has been actively involved in establishing and developing oil palm projects in Liberia, Sierra Leone and Côte d’Ivoire. Mr Moore was the former Chief Financial Officer of Sierra Leone Agriculture Ltd until September 2011 and a co-founder and former director of Ragnar Capital Ltd. He has played key roles in raising funding and developing early stage oil palm projects in West Africa. Mr Moore is a Chartered Accountant and former senior manager in the restructuring division of Deloitte. Mr Moore is also a non executive director of London Standard listed, Tirupati Graphite plc. Aristide (“Aris”) C. Achy Brou, Non-Executive Director Over the last 20 years Aristide has held senior positions in the commodity and derivative trading divisions at Citadel, British Petroleum, JP Morgan and Goldman Sachs. A native of Côte d’Ivoire, Aristide and his family have been involved in rubber plantations and processing operations in the country for over 40 years. Aristide grew up in both France and Côte d’Ivoire and after graduating from the leading aerospace engineering school in France, he moved to the US where he obtained a Master of Science at MIT and received a PhD in Applied Statistics from Johns Hopkins University. Additionally, he holds an MBA from the Wharton Business School, with a focus on Finance and Operational Management of Corporations. - 10 - PROFESSIONAL ADVISERS Nominated Adviser and Lead Broker Joint Brokers Auditor Solicitors Arden Partners plc 125 Old Broad Street London EC2N 1AR Optiva Securities Limited 49 Berkeley Square, Mayfair London W1J 5AZ Kost Forer Gabbay & Kasierer (a member of Ernst & Young Global) 3 Aminadav St. Tel-Aviv 67067 Israel Hill Dickinson LLP The Broadgate Tower 20 Primrose Street London EC2A 2EW United Kingdom Depositary Computershare Investor Services PLC Registrars The Pavilions Bridgewater Road Bristol BS99 6ZZ United Kingdom Cymain Registrars Ltd 26 Vyronos Avenue 1096 Nicosia Cyprus - 11 - DIRECTORS REPORT The Directors present their annual report and the audited Financial Statements for the year ended 31 December 2020. Principal Activities Dekel Public Ltd. is a Cyprus based holding company which owns 100% per cent. of and is the operator of Dekel Cote d’Ivoire SA, an oil palm production company established in the Republic of Cote d’Ivoire. Dekel Public Ltd. also holds a 70.7% interest in Pearlside Holdings Ltd who through its 100% owned subsidiary Capro CI. is currently developing a cashew processing operation in the Republic of Cote d’Ivoire. Group Results The Group results are set out later in this report and are stated in thousands Euros. The Group made operating net loss after tax of €2.2 million (2019 - €3.3 million). The Directors do not recommend the payment of a dividend (2019 - nil). Review of the Business A review of the business for the year is set out in the Chairman’s Statement. Key Performance Indicators The Group implemented the following key performance indicators during 2020: Key Performance Indicator Budget Actual FFB Received CPO Extraction Rate CPO Produced Future Developments 180,000 tn 154,151 tn 22.5% 40.500 tn 22.1% 34,002 tn Future Developments are outlined in the Outlook section of the Chairman’s Statement. Going Concern - 12 - The Directors have prepared cash flow forecasts and budgets that show that, for a period of at least twelve months from the date of signing these Financial Statements, the Group expects to have sufficient resources to continue its business. Accordingly, the Directors believe that it is appropriate to prepare the Financial Statements on a going concern basis. See Note 1 for further details. Events After the Reporting Period Events after the Reporting Period are outlined in Note 18 to the Financial Statements. Directors Remuneration Details of Directors’ Remuneration are set out in the table below. Executive Directors Youval Rasin -2020* -2019 Shai Kol -2020* -2019 Lincoln Moore -2020* -2019 Non Executive Directors Andrew Tillery -2020* -2019 Aristide Achybrou -2020 -2019 Bernard Francois (resigned 16 March 2020 -2020 Salaries and Fees €'000 Benefits Bonuses €'000 €'000 Total €'000 154 223 31 - 185 29 - 252 115 30 145 166 28 - 191 54 - - 54 102 - - 102 7 - - 40 - - 7 40 19 - - 19 n/a n/a n/a n/a 7 - - - 7 -2019 27 - - 27 Note 1: Board members partly deferred salaries during 2020 to support the company through the Covid-19 pandemic and ensure all operating staff could be maintained on full salaries - 13 - Directors Shares and Options Details of Directors’ interests as at 23 June 2020 in share options and warrants are set out in the table below: Director Andrew Tillery Youval Rasin Yehoshua Shai Kol Lincoln John Moore Aristide Achy Brou Number of Ordinary Shares Number of Vested Options Number of Unvested Options 600,000 - 1,200,000 68,406,705 5.666.667 2,888,333 28,221,861 5.666.667 2,888,333 5,549,791 5.666.667 2,888,333 - 22,715,601 - Substantial Shareholding As at 23 June 2020, the Company had been notified of the following substantial shareholdings in the ordinary share capital: Directors Youval Rasin Shai Kol Aristide Achy Brou Lincoln Moore Over 3% 68,406,705 28,221,861 22,715,601 5,549,791 12.77% 5.27% 4.24% 1.03% Miton Group plc 50,147,629 9.36% AgDevCo Ltd 41,188,990 7.69% Biopalm Energy Limited 35,455,111 6.62% Yossi Inbar 15,825,548 2.95% - 14 - Corporate Governance Audit and Remuneration Committees have been established and in each case comprise Andrew Tillery, Aristide Achybrou and Lincoln Moore. The role of the Remuneration Committee is to review the performance of the executive Directors and to set the scale and structure of their remuneration, including bonus arrangements. The Remuneration Committee also administers and establishes performance targets for the Group’s employee share schemes and executive incentive schemes for key management. In exercising this role, the terms of reference of the Remuneration Committee require it to comply with the Code of Best Practice published in the Combined Code. The Audit Committee is responsible for making recommendations to the Board on the appointment of the auditors and the audit fee, and receives and reviews reports from management and the Company’s auditors on the internal control systems in use throughout the Group and its accounting policies. Suppliers’ Payment Policy It is the Group's policy to agree appropriate terms and conditions for its transactions with suppliers by means ranging from standard terms and conditions to individually negotiated contracts and to pay suppliers according to agreed terms and conditions, provided that the supplier meets those terms and conditions. The Group does not have a standard or code dealing specifically with the payment of suppliers. Trade payables at the year end all relate to sundry administrative overheads and disclosure of the number of days purchases represented by year end payables is therefore not meaningful. Directors' Indemnities In accordance with the Companies (Audit Investigations and Community Enterprise) Act 2004, which came into force on 6 April 2005, the Company has indemnified the Directors against liability to third parties, and undertaken to pay Directors' legal costs as incurred, provided that they are reimbursed to the Company if the individual is convicted. By Order of the Board Lincoln Moore, Executive Director Date: 23 June 2021 - 15 - CHAIRMAN’S STATEMENT ON CORPORATE GOVERNANCE Introduction The Board of directors of the Company recognises the importance of sound corporate governance and applies The Quoted Companies Alliance Corporate Governance Code (2018) (the ‘QCA Code’), which they believe is the most appropriate recognised governance code for a company with shares admitted to trading on the AIM market of the London Stock Exchange. The QCA Code provides the Company with the framework to help ensure that a strong level of governance is maintained, enabling the Company to embed the governance culture that exists within the organisation as part of building a successful and sustainable business for all its stakeholders. The QCA Code has ten principles of corporate governance that the Company has committed to apply within the foundations of the business. Full details can be found on the company’s website: www.dekelagrivision.com. We have outlined below a short explanation of how the Company applies each of the principles at the time of preparation of this report. The Company will continually reassess and strengthen its polices and associated execution of the aforementioned policies. Principle One Establish a strategy and business model which promote long-term value for shareholders Dekel is a large-scale palm oil producer that works in close partnership with the communities and authorities in its areas of operation. The establishment of such partnerships enables Dekel to pursue its strategy of building sustainable, inclusive and environmentally sensitive palm oil production centres in the Ivory Coast and, in time, across West Africa. Full details are provided on the Company’s website. At the core of our immediate strategy is working to increase our market share of the quantity of FFB from our small holder suppliers and increase the market size of FFB from small holders in our region. To increase market share we apply best practise supplier payment systems and assist our small holders with logistics. This is evident in the 6 logistic centres we have established (last year 5) to ease the transportation burden on small holders delivering FFB to our Mill. We are also working to implement both a sustainable fertiliser programme with our small holder farmers and a health care programme. We are also working hard to apply best in practise environmental processes in our existing operations. An example of this is our effluent treatment plant operation which we understand is the only fully compliant system operating in our country of operations. We are also a fully committed member of the Round Table for Sustainable Palm Oil and we are well advanced to full certification. The falls in CPO prices through 2018 to 2020 (which has currently corrected to materially higher prices, highlighted a need to further diversify our operations. We are currently in the process of rectifying this and - 16 - in Q3 2021 we will apply our small holder business model to the cashew industry via the completion of construction of a cashew processing facility which will provide further diversity to our sales from 2021 onwards. Dekel will continue to assess opportunities to diversify its commodity base and in time, the countries it operates to deliver long term sustainable and diversified revenue streams. Principle Two Seek to understand and meet shareholder needs and expectations The Board is committed to maintaining good communication and having constructive dialogue with its shareholders in order to communicate Dekel’s strategy and progress and to understand the needs and expectations of shareholders. In 2020 this included increasing our use of social media, regular podcasts to explain key announcements and at least twice yearly shareholder dial in calls to communicate with our shareholders. See the Dekel website for further details. Principle Three Take into account wider stakeholder and social responsibilities and their implications for long-term success The Group’s operations in Côte d’Ivoire to date have created over 300 new jobs and it is expected the once operations commence at our cashew processing facility in Q3 2021 it will create at least an additional 300 new jobs. It is also expected that our market entry as a reliable sales partner for palm oil and cashew small holders will continue to encourage the improvement of existing oil farm yields, enhance farmers’ income, revitalise the Co-operatives and accelerate the development of social infrastructure in the local community. Dekel Côte d’Ivoire’s activity affects the lives of more than 6,000 families directly and indirectly. Dekel Côte d’Ivoire has completed an Environmental and Social Impact Assessment (“ESIA”) which is in line with the International Finance Corporation (“IFC”) requirements and Ivorian law. Dekel Côte d’Ivoire is committed to adopt and operate in accordance with the recommendations provided by the ESIA. The aim of the ESIA report was to satisfy both legal and institutional obligations under the Ivorian environmental protection laws (Arrêté no 00972 du 14 Novembre 2007 relatif á l’ application du décret no 96 894 du 8 Novembre 1996), and also comply with the IFC standards on the environment. Dekel Côte d’Ivoire is a member of the Roundtable of Sustainable Palm Oil (“RSPO”). The RSPO was established in 2004 to promote the production and use of sustainable palm oil. The RSPO is an association created by organisations carrying out activities in and around the entire supply chain for palm oil to promote the growth and use of sustainable palm oil. The Directors are committed to compliance with its code of conduct where applicable and are well advanced towards full RSPO certification. - 17 - During the current Covid-19 pandemic we adhered to the prevailing advice and guidance of the relevant government authorities in order to help ensure the wellbeing of all its staff and the local communities in which Dekel operates in. Principle Four Embed effective risk management, considering both opportunities and threats, throughout the organization The Board is responsible for ensuring that procedures are in place and being implemented effectively to identify, evaluate and manage the significant risks faced by the Company. A list of the key operational and business risks is outlined on the Dekel website. In terms of internal processes, the Company operates pursuant to internally created processes and procedures, ensures all key strategy decisions are reviewed and approved by the Board and operates board committees for both the Audit Committee and Remuneration Committee. Principle Five Maintain the Board as a well-functioning, balanced team led by the Chair All of the Directors are subject to election by shareholders at the first Annual General Meeting after their appointment to the Board and will continue to seek re-election at least once every three years. To date in the current financial year, the Directors have a 100% record of attendance at meetings. Directors meet formally and informally both in person and by telephone. The Board is responsible to the shareholders for the proper management of the Group. The Boards undertakes the following meeting process: - meets at least twice per year - full attendance was observed - monthly review of operational and financial results Andrew Tillery and Aristide Achybrou are considered to be Independent Directors (applying the principles on independence set out in Section B.1.1. of the UK Corporate Governance Code published by the Financial Reporting Council). The Company also recognise that from time to time board changes are appropriate to bring new a fresh review of operations and strategy. In 2020 Aristide Achybrou replaced Bernard Francois as part of this strategy. Principle Six Ensure that between them, the directors have the necessary up-to-date experience, skills and capabilities - 18 - Our multi-disciplinary management team of executives, entrepreneurs and agronomists can call upon more than 30 years of experience in the international agro-industry. Team members have driven the planning, implementation and management of large-scale agricultural and agri-industrial projects across several continents. The Board considers that all of the Directors and Non-executive Directors are of sufficient competence and calibre to add strength and objectivity to its activities, and bring considerable experience in scientific, operational and financial development of food products and companies. The Board regularly reviews the composition of the Board to ensure that it has the necessary breadth and depth of skills to support the ongoing development of the Company. The Board ensures its knowledge is kept up to date on key issues and developments pertaining to the Company, its operational environment and to the Directors’ responsibilities as members of the Board. During the course of the year, Directors receive updates from various external advisers on a number of industry and corporate governance matters. Audit and Remuneration Committees have been established and in each case comprise Andrew Tillery, Lincoln Moore and Aristide Achybrou. The audit and remuneration committees comprise a majority of non executives and that they are chaired by non executives. The role of the Remuneration Committee is to review the performance of the executive Directors and to set the scale and structure of their remuneration, including bonus arrangements. The Remuneration Committee also administers and establishes performance targets for the Group’s employee share schemes and executive incentive schemes for key management. In exercising this role, the terms of reference of the Remuneration Committee require it to comply with the Code of Best Practice published in the Combined Code. The Audit Committee is responsible for making recommendations to the Board on the appointment of the auditors and the audit fee, and receives and reviews reports from management and the Company’s auditors on the internal control systems in use throughout the Group and its accounting policies. The Director biographies and details are set out earlier in this report and further information for directors’ is summarised in the table below. Name Role Time Dekel Shareholder Andrew Tillery Non Executive Chairman 2 days per month Youval Rasin Chief Executive Office Full time Yehohua Shai Kol Deputy CEO and Chief Full time Financial Officer Lincoln Moore Executive Director Full time Non Executive Director 2 days per month Aristide Achybrou Principle Seven No Yes Yes Yes Yes Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement - 19 - Internal evaluation of the Board, the Committees and individual Directors is undertaken on an annual basis in the form of peer appraisal and discussions to determine the effectiveness and performance against targets and objectives, as well as the Directors' continued independence. As a part of the appraisal the appropriateness and opportunity for continuing professional development whether formal or informal is discussed and assessed. The Board may ultilise the results of the evaluation process when considering the adequacy of the composition of the Board and for succession planning. Succession planning is formally considered by the Board on an annual basis in conjunction with the appraisal process. See principal 5 for 2020 board change implemented. Principle Eight Promote a corporate culture that is based on ethical values and behaviours The Board recognises that their decisions regarding strategy and risk will impact the corporate culture of the Company as a whole which in turn will impact Company’s performance. The Directors are very aware that the tone and culture set by the Board will greatly impact all aspects of the Company as a whole and the way that consultants or other representatives behave. The Board seeks to maintain the highest standards of integrity and probity in the conduct of the Group’s operations. These values are enshrined in the written policies and working practices adopted by all employees in the Group. An open culture is encouraged within the Group, with regular communications to staff regarding progress and staff feedback regularly sought. The Executives regularly monitors the Group’s cultural environment and seeks to address any concerns than may arise, escalating these to Board level as necessary. The Group is committed to providing a safe environment for its staff and all other parties for which the Group has a legal or moral responsibility in this area. The Group’s health and safety policies and procedures encompass all aspects of the Group’s day-to-day operations. Issues of bribery and corruption are taken seriously. The Company has a zero-tolerance approach to bribery and corruption and has an anti-bribery and corruption policy in place to protect the Company, its employees and those third parties to which the business engages with. The policy is provided to staff upon joining the business and training is provided to ensure that all employees within the business are aware of the importance of preventing bribery and corruption. Each employment contract specifies that the employee will comply with the policies. There were no issues to note during the 2020 financial year. Principle Nine Maintain governance structures and processes that are fit for purpose and support good decision-making - 20 - by the Board Ultimate authority for all aspects of the Company's activities rests with the Board, the respective responsibilities of the Chairman and Non-Executive Directors arising as a consequence of delegation by the Board. The Board has adopted appropriate delegations of authority which set out matters which are reserved for the Board. The Chairman is responsible for the effectiveness of the Board as well as primary contact with shareholders. The Board has overall responsibility for promoting the success of the Group. The Executive Directors have day-to-day responsibility for the operational management of the Group’s activities. The Non-executive Directors are responsible for bringing independent and objective judgment to Board decisions. There is a clear separation of the roles of Chief Executive Officer and Non-executive Chairman. The Chairman is responsible for overseeing the running of the Board, ensuring that no individual or group dominates the Board’s decision-making and ensuring the Non-executive Directors are properly briefed on matters. The Chairman has overall responsibility for corporate governance matters in the Group and chairs the Nominations and Corporate Governance Committee. The Chief Executive Officer has the responsibility for implementing the strategy of the Board and managing the day-to-day business activities of the Group. The Company Secretary is responsible for ensuring that Board procedures are followed and applicable rules and regulations are complied with. The Board has established an Audit Committee and Remuneration Committee with formally delegated duties and responsibilities. Audit Committee The Audit Committee comprises three Directors, Andrew Tillery, Lincoln Moore and Aristide Achybrou, and is chaired by Andrew Tillery. The Audit Committee will meet at the time of preparation of the annual and interim accounts of the Company at such other times as the chairman of the Audit Committee shall deem necessary. The Audit Committee receives and reviews reports from management of the Company’s auditors relating to the interim and annual accounts and keeps under review the accounting and internal controls which the Company has in place. Remuneration Committee The Remuneration Committee comprises three Directors, Andrew Tillery, Lincoln Moore and Aristide Achybrou, and is chaired by Andrew Tillery. The Remuneration Committee will meet at such times as the chairman of the Remuneration Committee or the Board deem necessary. The Remuneration Committee will determine and review (in consultation with the Board) the terms and conditions of service of the executive directors and non-executive directors. The Remuneration Committee will also review the terms and conditions of any proposed share incentive plans, to be approved by the Board and the Company’s shareholders. In setting remuneration packages, the Committee ensured that individual compensation levels, and total - 21 - board compensation, were comparable with those of other AIM-listed companies where appropriate. Further details are set out in the Director’s Report and notes to the accounts. Principle Ten Communicate how the Group is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders The Company places a high priority on regular communications with its various stakeholder groups and aims to ensure that all communications concerning the Group’s activities are clear, fair and accurate. Full details of how the Company maintains a dialogue with shareholders and other stakeholders is set out on the Company’s website and Principal 2 above. Andrew Tillery Non-Executive Chairman Date: 23 June 2021 - 22 - STATEMENT OF DIRECTORS’ RESPONSIBILITIES The Directors are responsible for preparing the Annual Report and the Financial Statements in accordance with applicable law and regulations. Company law requires the Directors to prepare Financial Statements for each financial year. Under that law the Directors have elected to prepare the Group Financial Statements under IFRS. The Financial Statements are required by law to give a true and fair view of the state of affairs of the Group and company and of the profit or loss of the Group for that period. In preparing these Financial Statements, the Directors are required to: • select suitable accounting policies and then apply them consistently; • make judgements and estimates that are reasonable and prudent; • state whether applicable accounting standards have been followed, subject to any material departure disclosed and explained in the Financial Statements; and • prepare the Financial Statements on the going concern basis, unless it is inappropriate to presume that the Group will continue in business. The Directors are responsible for keeping adequate accounting records which disclose with reasonable accuracy at any time the financial position of the Group and to enable them to ensure that the Financial Statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. In so far as each of the Directors are aware: • • there is no relevant audit information of which the Group's auditors are unaware; and the Directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditors are aware of that information. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the company's website. - 23 - Kost Forer Gabbay & Kasierer 144 Menachem Begin Road, Building A, Tel-Aviv 6492102, Israel Tel: +972-3-6232525 Fax: +972-3-5622555 ey.com INDEPENDENT AUDITORS' REPORT To the Shareholders of DEKEL AGRI-VISION PLC. We have audited the accompanying consolidated financial statements of DEKEL AGRI-VISION PLC. and its subsidiaries ("the Group"), which comprise the consolidated statements of financial position as of 31 December 2020 and 2019, and the consolidated statements of comprehensive income, changes in equity and cash flows for each of the years then ended, and the related notes to the consolidated financial statements, which, as described in Note 2 to the consolidated financial statements, have been prepared on the basis of International Financial Reporting Standards as adopted by the European Union. Management's Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the European Union; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. - 24 - Opinion In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Group as of 31 December 2020 and 2019, and the results of its operations and its cash flows for the each of the years then ended in accordance with International Financial Reporting Standards as adopted by the European Union. Tel-Aviv, Israel 23 June 2021 - 25 - CONSOLIDATED STATEMENTS OF FINANCIAL POSITION DEKEL AGRI-VISION PLC. ASSETS CURRENT ASSETS: Cash and cash equivalents Inventory Accounts and other receivables Total current assets NON-CURRENT ASSETS: Deposits in banks Property and equipment, net Investment in an associate Total non-current assets Total assets 31 December 2020 2019 Note Euros in thousands 4 6 5 202 1,283 292 1,777 282 41,249 - 41,531 43,308 273 917 69 1,259 - 30,308 1,998 32,306 33,565 The accompanying notes are an integral part of the consolidated financial statements. - 26 - DEKEL AGRI-VISION PLC. CONSOLIDATED STATEMENTS OF FINANCIAL POSITION 31 December 2020 2019 Note Euros in thousands EQUITY AND LIABILITIES CURRENT LIABILITIES: Short-term loans and current maturities of long-term loans Trade payables Advance payments from customers Other accounts payable and accrued expenses Total current liabilities NON-CURRENT LIABILITIES: Long-term lease liabilities Accrued severance pay, net Long-term loans Total non-current liabilities Total liabilities 9 7 8 9 EQUITY ATRIBUTED TO EQUITY HOLDERS OF THE COMPANY 10 Share capital Additional paid-in capital Accumulated deficit Capital reserve Capital reserve from transactions with non-controlling interests Non-controlling interests Total equity Total liabilities and equity 5,676 893 1,971 1,824 10,364 192 238 20,052 20,482 30,846 142 35,569 3,829 680 1,169 1,016 6,694 90 33 13,963 14,086 20,780 141 34,368 (18,728) (16,502) 2,532 (7,754) 2,532 (7,754) 11,762 12,785 700 12,462 43,194 - 12,785 33,565 The accompanying notes are an integral part of the consolidated financial statements. 23 June 2021 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 - 27 - CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME DEKEL AGRI-VISION PLC. Year ended 31 December 2020 2019 Euros in thousands (except share and per share amounts) 22,546 20,207 2,339 2,761 (422) 1,582 167 20,947 19,252 1,695 3,158 (1,463) 1,829 - Note 11 14a 14b 14c (2,171) (3,292) 13 55 47 (2,226) (3,339) Revenues Cost of revenues Gross profit General and administrative Operating loss Finance cost Share of loss of associate Loss before taxes on income Taxes on income Loss and total comprehensive loss Attributable to: Equity holders of the Company Non-controlling interests Loss and total comprehensive loss Loss per share attributable to equity holders of the Company Basic and diluted loss per share 2,226 - 2,226 - ( 0.01 ) 3,339 - 3,339 - (0.01) Weighted average number of shares used in computing basic and diluted loss per share 428,930,844 379,838,186 The accompanying notes are an integral part of the consolidated financial statements. - 28 - DEKEL AGRI-VISION PLC. CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY Attributable to equity holders of the Company Additional paid-in capital Accumulated deficit Capital reserve Share capital Euros in thousands Capital reserve from transactions with non- controlling interests Total Non-controlling interests Total Equity Balance as of 1 January, 2019 99 29,862 (13,163) 2,532 (7,754) 11,576 Loss and total comprehensive loss Issuance of shares (Note 10) Exercise of options (Note 10) Share-based compensation - 42 *) - - 4,186 - 320 (3,339) - - - - - - - - - - - (3,339) 4,228 *) 320 Balance as of 31 December 2019 141 34,368 (16,502) 2,532 (7,754) 12,785 Loss and total comprehensive loss Issuance of shares (Note 10) Non-controlling interests arising from initially consolidated subsidiary Share-based compensation - 1 - - - (2,226) 907 - 295 - - - - - - - - - - - (2,226) 908 - 295 Balance as of 31 December 2020 142 35,570 (18,728) 2,532 (7,754) (11,762) *) Represents an amount lower than €1. The accompanying notes are an integral part of the consolidated financial statements. - 29 - - - - - - - - - 700 - 700 - - - - - 12,785 (2,226) 908 700 295 (12,462) CONSOLIDATED STATEMENTS OF CASH FLOWS Cash flows from operating activities: Loss Adjustments to reconcile loss to net cash used in operating activities: Adjustments to the profit or loss items: Depreciation Share-based compensation Accrued interest on long-term loans and non-current liabilities Change in employee benefit liabilities, net Share of loss of associate Changes in asset and liability items: Decrease (increase) in inventories Decrease (increase) in accounts and other receivables Decrease in short-term deposits Increase in trade payables Increase (decrease) in advance from customers Increase in accrued expenses and other accounts payable Cash paid during the year for: Income taxes Interest Net cash provided by (used in) operating activities DEKEL AGRI-VISION PLC. Year ended 31 December 2020 2019 Euros in thousands (2,226) (3,339) 1,369 295 1,141 205 167 (366) (39) (18) 83 802 325 3,964 (9) (1,296) (1,305) 433 1,357 320 1,306 1 - 626 351 - 16 (1,302) 420 3,095 - (1,053) (1,053) (1,297) The accompanying notes are an integral part of the consolidated financial statements. - 30 - CONSOLIDATED STATEMENTS OF CASH FLOWS Cash flows from investing activities: Increase in cash upon initial consolidation of subsidiary (a) Loan to associate Purchase of property and equipment Net cash used in investing activities Cash flows from financing activities: Issue of shares (offering net proceeds) Long-term lease, net Receipt of short-term loans, net Receipt of long-term loans Repayment of long-term loans Net cash provided by financing activities Increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year Supplemental disclosure of non-cash activities: DEKEL AGRI-VISION PLC. Year ended 31 December 2020 2019 Euros in thousands 89 (378) (118) (407) - (12) 945 1,220 (2,250) (97) (71) 273 202 - - (435) (435) 2,231 (4) 682 7,200 (8,366) 1,743 11 262 273 Issuance of shares in consideration for investment in Pearlside 884 1,998 (a) Acquisition of initially consolidated subsidiary: The subsidiaries' assets and liabilities at date of acquisition: Deficiency in working capital (excluding cash and cash equivalents) Deposits Property, plant and equipment Right of use asset Long-term debt Non-controlling interests Issuance of shares for acquisition Investment in company accounted for at equity 462 (264) (12,191) 114 8,174 700 884 2,210 89 - - - - - - - - - The accompanying notes are an integral part of the consolidated financial information. - 31 - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1:- GENERAL DEKEL AGRI-VISION PLC. a. b. c. 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"). The Company's registered office is in Limassol, Cyprus. 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 first palm oil mill. Pearlside Holdings Ltd. (“Pearlside”) a company incorporated in Cyprus, is a 54%-owned subsidiary of the Company since December 2020 (formerly a 43.8% owned associate). The assets and liabilities of Pearlside are included for the first time by the Company in the consolidated statement of financial position at 31 December 2020. Pearlside has a wholly- owned subsidiary in Cote d’Ivoire, Capro CI SA (“Capro”). Capro is currently constructing a Raw Cashew Nut (RCN) processing plant in Cote d’Ivoire near the village of Tiabisu (see also Note 5 and Note 18).. 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 During the last three year the Company has operated in challenging economic conditions. In 2018 due to unusually low fruit yields across Cote d'Ivoire and a decrease in the market price of palm oil, the Group's cash flows generated from operations were nil. In 2019 the fruit yields recovered to normal levels but the market price of palm oil continued to be at cyclical low levels resulting in a negative cash flow from operations of approximately €1.3 million. There was a recovery in market prices at the beginning of 2020 which was reversed with the outbreak of the COVID -19 pandemic, and the subsequent sharp decrease of commodity prices. Despite this, the Group generated positive cash flow from operations of approximately €0.4 million in 2020. CPO prices have continued to increase during the first few months of 2021, and through the date of approval of these financial statements, the Group is continuing to generate positive cash flow from operations. The Group has prepared detailed forecasted cash flows through the end of 2022 based on estimates of commodity prices expected to be in effect during that period, which forecasts indicate that the Group should continue to 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. As of 31 December 2020, the Group has a deficiency in working capital of approximately 32 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DEKEL AGRI-VISION PLC. € 8.6 million. In December 2020, the Company was in advanced stages of debt refinancing and an equity raise that were completed in early 2021 (see Note 18 “Subsequent events”). These transactions resulted in immediate additional funds of approximately € 9.7 million, with an additional € 9.2 million available to draw down in the future. As of the date of approval of the financial statements, expenditures for the completion of the RCN processing plant of Pearlside have been substantially paid. Additional funding for the initial operation of the plant in the second half of 2021 are in place and are expected to be sufficient until the plant reaches the production level necessary to provide a positive cash flow from its operations. Based on the above, Company 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. f. The recent outbreak of Coronavirus, a virus causing potentially deadly respiratory tract infections originating in China and spreading in various jurisdictions, had a significant effect on the global economic conditions and CPO prices but it had no significant effect on the Company’s operations during the reported year. The outbreak of Coronavirus may resume its negative affect on economic conditions regionally as well as globally, disrupt operations situated in countries particularly exposed to the contagion, affect the Company's customers and suppliers or business practices previously applied by those entities, or otherwise impact the Company's activities. Governments in affected countries are imposing travel bans, quarantines and other emergency public safety measures. Those measures, though apparently temporary in nature, may continue and increase depending on developments in the virus’ outbreak. The ultimate severity of the Coronavirus outbreak is uncertain at this time and therefore the Company cannot reasonably estimate the impact it may have on its end markets and its future revenues, profitability, liquidity and financial position. NOTE 1:- GENERAL (Cont.) 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. Associate - Company in which the Group has significant influence over the financial and operating policies without having control – Pearlside Holdings Ltd (until December 2020). 33 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES DEKEL AGRI-VISION PLC. 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. 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. 34 DEKEL AGRI-VISION PLC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.) c. Investment in an associate: The Group's investment in an associate is accounted for using the equity method. Under the equity method, the investment in the associate is presented at cost with the addition of post-acquisition changes in the Group's share of net assets, including other comprehensive income of the associate. Gains and losses resulting from transactions between the Group and the associate are eliminated to the extent of the interest in the associate. Goodwill relating to the acquisition of an associate is presented as part of the investment in the associate, measured at cost and not systematically amortized. Goodwill is evaluated for impairment as part of the investment in the associate as a whole. The financial statements of the Company and of the associate are prepared as of the same dates and periods. The accounting policies applied in the financial statements of the associate are uniform and consistent with the policies applied in the consolidated financial statements of the Group. Losses of an associate in amounts which exceed its equity are recognized by the Company to the extent of its investment in the associate plus any losses that the Company may incur as a result of a guarantee or other financial support provided in respect of the associate. For this purpose, the investment includes long-term receivables (such as loans granted) for which settlement is neither planned nor likely to occur in the foreseeable future. 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 35 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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 DEKEL AGRI-VISION PLC. NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.) 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. 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. 36 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DEKEL AGRI-VISION PLC. NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.) 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 such as derivatives, including embedded derivatives separated from the host contract, 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. 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. 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. 37 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS b) Financial liabilities: DEKEL AGRI-VISION PLC. A financial liability is derecognized when it is extinguished, that is when the obligation is discharged or cancelled or expires. NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.) 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. 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: On January 1, 2019, the Company first applied IFRS 16, "Leases" ("the Standard"). The Company elected to apply the provisions of the Standard using the modified retrospective method (without restatement of comparative data). 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. 38 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DEKEL AGRI-VISION PLC. 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. 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.) h. 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. i. 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: % 2.5 3.33 33 Extraction mill Palm oil plantations Computers and peripheral equipment Equipment and furniture 15 – 20 Motor vehicles Agriculture equipment 25 15 39 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.) DEKEL AGRI-VISION PLC. 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. j. 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. The following criteria are applied in assessing impairment of these specific assets: Investment in associate: After application of the equity method, the Company determines whether it is necessary to recognize any additional impairment loss with respect to the investment in associates. The Company determines at each reporting date whether there is objective evidence that the carrying amount of the investment in the associate is impaired. The test of impairment is carried out with reference to the entire investment, including the goodwill attributed to the associate. k. Revenue recognition: 40 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DEKEL AGRI-VISION PLC. NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.) 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. 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. l. 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. m. 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. Basic earnings (loss) per share only include shares that were actually outstanding during the period. Potential Ordinary shares are only included in the computation of diluted earnings (loss) per share when their conversion decreases earnings per share or increases loss per share from continuing operations. Further, potential Ordinary shares that are converted during the period are included in diluted earnings (loss) per share only until the conversion date and from that date in basic earnings (loss) per share. The Company's share of earnings of investees is included based on the earnings (loss) per share of the investees multiplied by the number of shares held by the Company. 41 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DEKEL AGRI-VISION PLC. NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.) Basic and diluted earnings per share are adjusted retrospectively due to changes in shares outstanding resulting from bonus issues, share splits and share consolidations, including those that occur after the reporting period and through the date the financial statements are approved for issuance. n. 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. o. 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. 42 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DEKEL AGRI-VISION PLC. 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: 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). NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.) p. Share-based payment transactions: The Company applies the provisions of IFRS 2, "Share-Based Payment". IFRS 2 requires an expense to be recognized where the Company buys goods or services in exchange for shares or rights over shares ("equity-settled transactions"), or in exchange for other assets equivalent in value to a given number of shares of rights over shares ("cash-settled transactions"). The main impact of IFRS 2 on the Company is the expensing of employees' and directors' share options (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. q. 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: 43 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DEKEL AGRI-VISION PLC. 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. 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. NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.) 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. r. 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. s. Changes in accounting policies – initial application of new financial reporting and accounting standards and amendments to existing financial reporting and accounting standards: Amendment to IFRS 3, “Business Combinations” In October 2018, the IASB issued an amendment to the definition of a "business" in IFRS 3, "Business Combinations" ("the Amendment"). The Amendment clarifies that in order to meet the definition of a "business", an acquired set of activities and assets must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create 44 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DEKEL AGRI-VISION PLC. output. The Amendment also clarifies that a business can exist without including all of the inputs and processes necessary to create outputs. The Amendment includes an optional concentration test that permits a simplified assessment of whether an acquired set of activities and assets is not a business, with no need for other assessments. The Amendment is to be applied to business combinations and asset acquisitions for which the acquisition date is on or after January 1, 2020. The Company has applied the Amendment to the acquisition of the controlling interest in Pearlside in 2020. 45 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DEKEL AGRI-VISION PLC. NOTE 3:- DISCLOSURE OF NEW STANDARDS IN THE PERIOD PRIOR TO THEIR ADOPTION a. 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 January 1, 2022, with earlier application permitted. The Amendment is to be 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 company should recognize the cumulative effect of initially applying the Amendment as an adjustment to the opening balance of retained earnings at the beginning of the earliest period presented. The Company estimates that the application of the Amendment is not expected to have a material impact on the financial statements. b. Amendment to IAS 1, "Presentation of Financial Statements": In January 2020, the IASB issued an amendment to IAS 1, "Presentation of Financial Statements" ("the Amendment") regarding the criteria for determining the classification of liabilities as current or non-current. The Amendment includes the following clarifications: • What is meant by a right to defer settlement; • • • That a right to defer must exist at the end of the reporting period; That classification is unaffected by the likelihood that an entity will exercise its deferral right; That only if an embedded derivative in a convertible liability is itself an equity instrument would the terms of a liability not impact its classification. The Amendment is effective for annual periods beginning on or after January 1, 2023 and must be applied retrospectively. The Company is evaluating the possible impact of the Amendment on its current loan agreements. 46 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DEKEL AGRI-VISION PLC. c. Amendments to IFRS 9, IFRS 7, IFRS 16, IFRS 4 and IAS 39 regarding the IBOR reform: In August 2020, the IASB issued amendments to IFRS 9, "Financial Instruments", IFRS 7, "Financial Instruments: Disclosures", IAS 39, "Financial Instruments: Recognition and Measurement", IFRS 4, "Insurance Contracts", and IFRS 16, "Leases" ("the Amendments"). The Amendments provide practical expedients when accounting for the effects of the replacement of benchmark InterBank Offered Rates (IBORs) by alternative Risk Free Interest Rates (RFRs). Pursuant to one of the practical expedients, an entity will treat contractual changes or changes to cash flows that are directly required by the reform as changes to a floating interest rate. That is, an entity recognizes the changes in interest rates as an adjustment of the effective interest rate without adjusting the carrying amount of the financial instrument. The use of this practical expedient is subject to the condition that the transition from IBOR to RFR takes place on an economically equivalent basis. The Amendments include new disclosure requirements in connection with the expected effect of the reform on an entity's financial statements, such as how the entity is managing the process to transition to the interest rate reform, the risks to which it is exposed due to the reform and quantitative information about IBOR-referenced financial instruments that are expected to change. The Amendments are effective for annual periods beginning on or after January 1, 2021. The Amendments are to be applied retrospectively. However, restatement of comparative periods is not required. Early application is permitted. The Company is presently assessing the accounting implications, if any, of the transition from IBORs to RFRs on the financial instrument contracts that are expected to be in effect on the transition date, including the effects of the application of the above Amendments. 47 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 4:- ACCOUNTS AND OTHER RECEIVABLES Government authorities (VAT) Prepaid expenses and other receivables Loans to employees Advance payment to contractor NOTE 5:- INVESTMENT IN PEARLSIDE HOLDINGS LTD DEKEL AGRI-VISION PLC. 31 December 2020 2019 Euros in thousands 3 12 41 236 292 3 62 4 - 69 On 20 December 2018 the Company entered into an agreement to purchase a 43.8% interest in Pearlside Holdings Ltd ("Pearlside") by way of issuing 52,612,613 Ordinary shares of the Company. Pearlside, through its wholly-owned subsidiary, is in the final stages of development and construction of a Raw Cashew Nut (RCN) processing plant in Cote d'Ivoire, which is expected to be completed and operational in the second half of 2021. The closing of this purchase transaction occurred on 7 January 2019 (See also Note 10 Equity). Based on the market price of the Company's shares on the date of the purchase, the cost of the investment in Pearlside amounted to approximately €1.9 million. On 30 October 2020 the Company entered into an agreement to increase its holding in Pearlside to 52% by way of issuing 28,552,800 Ordinary shares of the Company. Based on the market price of the Company's shares on the date of the purchase, the cost of this additional investment in Pearlside is €740 thousand. The shares were issued, and the transaction was completed on 25 November 2020. Following this transaction, the Company gained control over Pearlside. The assets and liabilities of Pearlside are included for the first time in the consolidated statement of financial position as of 31 December 2020. As Pearlside is in the process of construction of its RCN plant, the results of operations of Pearlside from the date of acquisition to 31 December 2020 are immaterial. On 8 December 2020 the Company entered into an agreement to purchase an additional 2% and to increase its holding to 54% by way of issuing 3,922,789 Ordinary shares of the Company. Based on the market price of the Company's shares on the date of the purchase, the cost of this additional investment in Pearlside is €144 thousand. As of the date of obtaining control, the RCN plant under construction represented substantially all of the gross assets of Pearlside. All of the activity of Pearlside relates to the construction of the plant. There are a few employees that are involved in the supervision of the construction which is being performed by external contractors. Accordingly, the purchase transaction is accounted for as an acquisition of assets. Pursuant to IFRS 3, the Company records the cash and other financial assets and liabilities at their fair value on date of acquisition (which approximates their carrying amounts, including loans which were recently obtained at market terms). The excess of (i) the cost of the investment plus 48 DEKEL AGRI-VISION PLC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (ii) the non-controlling interest recognized over (iii) the carrying amount of the net assets acquired (equity of Pearlside) is allocated to the RCN plant. The non-controlling interest in the amount of € 700 is measured at its proportionate share of the net assets (equity) of Pearlside. Following are the assets and liabilities acquired at the date of acquisition (Euros in thousands): Deficiency in working capital Non- current deposits Property, plant and equipment Lease liability Long-term debt (373) 264 12,191 (114) (8,174) 49 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 6:- PROPERTY AND EQUIPMENT, NET Composition and movement: DEKEL AGRI-VISION PLC. Computers and peripheral equipment Equipment and furniture Motor vehicles Agriculture equipment Extraction mill and land Palm oil plantations Cashew processing mill under construction and land Total Cost: Balance as of 1 January, 2019 Acquisitions during the year Disposals during the year Balance as of 31 December, 2019 Acquisitions during the year Disposals during the year Initial consolidation of subsidiary Balance as of 31 December, 2020 Accumulated depreciation: Balance as of 1 January 2019 Depreciation during the year Disposals during the year Balance as of 31 December 2019 Depreciation during the year Disposals during the year Balance as of 31 December 2020 Depreciated cost as of 31 December 2020 Depreciated cost as of 31 December 2019 338 109 1,397 460 26,003 7,543 5 (53) 1 - 128 (30) 4 - 278 - 77 - 290 110 1,495 464 26,281 7,620 4 - 103 (15) (7) (72) - - 3 3 26 26 - - - 12 - - 282 106 1,552 490 26,281 7,632 181 81 582 380 2,845 609 35 (53) 163 29 17 - 98 8 273 (30) 825 205 (15) (7) (72) 848 170 14 - - 394 3,693 15 - 876 - - 779 236 - 182 101 1,005 409 4,569 1,015 - - - - - - 12,133 12,133 - - - - - - - 35,850 493 (83) 36,260 119 (94) 12,191 48,476 4,678 1,357 (83) 5,952 1,369 (94) 7,281 105 7 594 81 21,712 6,617 12,133 41,249 127 12 669 70 22,589 6,841 - 30,308 50 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 7:- OTHER ACCOUNTS PAYABLE AND ACCRUED EXPENSES Employees and payroll accruals VAT payable Other accounts payable DEKEL AGRI-VISION PLC. 31 December 2020 2019 Euros in thousands 993 100 731 272 164 580 1,824 1,016 NOTE 8:- 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. In July 2015 a subsidiary of the Company signed a lease agreement for a vehicle. The lease is for 4 years and the payment is €1,062 per month. In January 2018 a subsidiary of the Company signed a lease agreement for a vehicle. The lease is for 5 years and the payment is €1,080 per month. A subsidiary consolidated for the first time at 31 December 2020 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 6). The balance of the lease liabilities at 31 December 2020 amounted to € 192 (2019 - €90). 51 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 9:- LOANS a. Long-term loans: DEKEL AGRI-VISION PLC. Interest rate as of 31 December 31 December Currency 2020 2020 2019 Euros in thousands In FCFA 6.2%-7.3% In FCFA In FCFA In FCFA In Euro In FCFA In FCFA In FCFA In FCFA In FCFA 8.4% 6.85% 8.2% 7.5% 7.25% 8.5% 7.75% 7.75% 7.5% SGBCI NSIA SOGEBOURSE (c.1) SIB (c.2) AgDevCo (c.3) BGFI (c.4) BIDC (c.5) NSIA (c.6) NSIA (c.7) BGFI (c.8) Total loans Less - current maturities b. Short-term loans and current maturities: Short-term loan from bank Current maturities - per a. above 1 - 6,387 377 7,200 1,153 4,053 1,834 762 1,524 26 207 8,380 490 7,200 - - - - - 23,291 (3,239) 20,052 16,303 (2,339) 13,963 31 December 2020 2019 Euros in thousands 2,437 3,239 5,676 1,490 2,339 3,829 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 52 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DEKEL AGRI-VISION PLC. 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. 3. 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. 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 Libor plus a pre-defined spread, and collared with a minimum rate of 6% per annum and a maximum rate of 9% per annum. The funds from the loan are to be used as follows: (i) €6.2 million to replace existing NSIA Bank loan (see also 3 above) and (ii) €1.0 million for Environmental, Social and Governance ("ESG") activities and general working capital purposes. The loan agreement contains the following financial covenants to be tested on a quarterly basis: (1) Current Ratio of at least 0.5; (2) Debt Service Coverage Ratio of at least 1. In December 2019 a waiver was received for the testing of the above financial covenants till 30 June 2020. AgDevCo then issued an extension to the waiver covering 30 June 2020 and 31 December 2020. The Company is expected to meet these financial covenants during 2021 (see Note 18 Subsequent Events). 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. 6. 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). 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. 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. 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. 53 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DEKEL AGRI-VISION PLC. 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. NOTE 10:- EQUITY a. Composition of share capital: 31 December 31 December 2020 2019 2020 2019 Authorized Issued and outstanding Number of shares Ordinary shares of € 0.0003367 par value each 1,000,000,000 1,000,000,000 457,126,075 423,064,443 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. In 2019 the Company issued 467,659 ordinary shares to certain brokers in consideration for services provided. The fair value of the shares issued amounting to € 17 thousand was recorded in general and administrative expenses On 7 January 2019 the Company completed a purchase of 43.8% interest in Pearlside Holding Ltd by way of issuing 52,612,613 Ordinary shares of the Company. Based on the market price of the Company's shares on the date of the purchase, the cost of the investment in Pearlside amounted to approximately €1.9 million. Of the total Ordinary shares issued, 36,156,157 Ordinary shares were issued to related parties of the Company. On 9 April 2019 the CEO of the Company's subsidiary exercised 600,000 options to acquire Ordinary shares granted to him as part of his employment agreement. On 8 August 2019 the Company raised a total amount of approximately €2.23 million (net of €88 thousands fund raising costs) through the issuance of 69,723,361 Ordinary shares (of which €1.5 million was invested by AgDevCo Limited (see also note 9 c.6). 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 2020, 400,000 Ordinary shares which are fully vested have not yet been issued to the General Manager. On 25 November 2020 the Company issued 28,552,800 Ordinary Shares according to an 54 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DEKEL AGRI-VISION PLC. agreement to increase its holding of Pearlside to 52% by way of a share swap. Based on the market price of the Company's shares on the date of the purchase, the cost of this additional investment in Pearlside is €740 thousand. On 10 December 2020 the Company completed a purchase of an additional 2% of Pearlside Holding Ltd, reaching a total holding of 54% of Pearlside, by way of issuing 3,922,789 Ordinary shares of the Company. Based on the market price of the Company's shares on the date of the purchase, the cost of this additional investment in Pearlside is €144 thousand. In 2020 the Company issued 1,587,043 ordinary shares to certain brokers in consideration for services provided. The fair value of the shares issued amounting to € 24 thousand was recorded in general and administrative expenses b. Share option plan: On 15 January 2015 the Company granted directors and senior employee's options to purchase 8,100,000 Ordinary shares. Of that amount, 1,800,000 options vested immediately, and the remainder will vest ratably over 3 years. Half of the options have an exercise price of 12.5 pence per share while the remainder is exercisable at a price of 20 pence per share. The fair value of the options granted calculated based on Black-Scholes option pricing model was approximately €820 thousand. On 19 October 2015 the Company granted directors and senior employee's options to purchase 1,800,000 Ordinary shares. The options will vest ratably over 3 years. Half of the options have an exercise price of 12.5 pence per share while the remainder is exercisable at a price of 20 pence per share. The fair value of the options granted calculated based on Black-Scholes option pricing model was approximately €139 thousand. On 30 June 2017 the Company granted directors and senior employee's options to purchase 10,750,000 Ordinary shares. The options will vest ratably over 5 years. The exercise price of the options is €0.1359 per share. The fair value of the options granted calculated based on Black-Scholes option pricing model was approximately €612 thousand. On 1 January 2017 a subsidiary appointed a new CEO, and as part of his employment compensation he was granted 1,200,000 options to purchase Ordinary shares of the Company at a nominal exercise price. The options vest linearly over three years. The fair value of the options at the date of grant was calculated based on the share price at that date and was approximately €151 thousand. On 2 December 2019 the Company granted directors and advisers options to purchase 17,600,000 Ordinary shares. The 2019 Options expire 10 years from the date of grant and have an exercise price of 2.45 pence per Ordinary Share. One third of the 2019 Options vest immediately. The balance of the 2019 Options are subject to vesting conditions as follows: (i) One third of the options may only be exercised if at any point following the date of grant, the 30-day Volume Weighted Average Price (VWAP) of the Ordinary Shares achieves a price per share equal to or exceeding 4.0 pence, this condition was met during 2020. These options vest over 12 months following the date of grant. 55 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DEKEL AGRI-VISION PLC. (ii) A further one third of the options may only be exercised if at any point following the date of grant, the 30-day VWAP of the Ordinary Shares achieves a price per share equal to or exceeding 6.0 pence. These options vest over 12 months from the first anniversary of the date of grant. The fair value of the options granted calculated based on Black-Scholes option pricing model was approximately €289 thousand for the 14,100,000 options granted to directors and approximately €72 thousand for the 3,500,000 options granted to advisors. In addition, in December 2019 the Company amended the terms of 7,200,000 of the options granted in January 2015 (see above) and of the terms of 9,100,000 option granted on 30 June 2017 (see above), to reflect the same terms, vesting terms and duration of the options granted on 2 December 2019. The incremental fair value of the amended options totaling approximately €212 thousand was calculated based on the difference between the fair value of the options immediately before the amendment and their fair value immediately after the amendment. The calculation was based on Black-Scholes option pricing model. This incremental fair value will be recorded as an expense over the amended vesting period in addition to the expense recorded in respect of the original grant of these options. The following table lists the inputs used in the measurement of the fair value of options, in accordance with the Black and Scholes option pricing model, with respect to the above plans: Risk-free interest rate (%) Dividend yield (%) Expected volatility (%) Expected term (in years) 2019 0.6% 0% 70% 10 56 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS A summary of the activity in options for the years 2020 and 2019 is as follows: DEKEL AGRI-VISION PLC. Year ended 31 December 2020 2019 Weighted average exercise Number Number of Weighted average exercise of options price-Euro options price-Euro Outstanding at beginning of year 35,522,314 0.0332 18,722,314 0.1734 Exercised Granted Expired Forfeited - - - - - - - - (600,000) nil 17,600,000 0.0288 - - (200,000) nil Outstanding at end of year 35,522,314 0.0332 35,522,314 0.0332 Exercisable options 24,222,314 0.0352 12,922,314 0.0408 c. Capital reserve The capital reserve comprises the contribution to equity of the Company by the controlling shareholders. NOTE 11:- REVENUES a. The Company has one operating segment - production and sale of Palm Oil, Palm Kernel and Palm Kernel Oil. Substantially all of the revenues are derived from the sales of Palm Oil, Palm Kernel Oil and Palm Kernel Cake in Cote d'Ivoire. b. Major customers: Year ended 31 December 2020 2019 Euros in thousands 18,531 - 13,583 3,720 Revenues from major customers which each account for 10% or more of total revenues reported in the financial statements: Customer A - Customer B - 57 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 12:- FAIR VALUE MEASUREMENT DEKEL AGRI-VISION PLC. 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 €23,291 thousands and € 16,303 thousands (including current maturities) approximates their fair value as of 31 December 2020 and 2019, respectively (level 3 of the fair value hierarchy). NOTE 13:- 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 federal tax rate is 10%. The carryforward losses of the Company are approximately €26 thousand, of CS DekelOil Siva Ltd are approximately €17 thousand, and of Pearlside are approximately €9 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. NOTE 13:- INCOME TAXES (Cont.) b. Tax assessments: The Company's subsidiary, DekelOil CI SA, received a final tax assessment through 2017. As of 31 December 2020 the Company and all its other subsidiaries had not yet received final tax assessments 58 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DEKEL AGRI-VISION PLC. c. The tax expense during the year ended 31 December, 2020 relate to tax of the Company's subsidiaries DekelOil CI SA and DekelOil Consulting Ltd. 59 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 14:- SUPPLEMENTARY INFORMATION TO THE STATEMENT OF COMPREHENSIVE INCOME DEKEL AGRI-VISION PLC. Year ended 31 December 2020 2019 Euros in thousands 14,233 1,680 578 372 2,111 1,233 20,207 14,243 1,587 379 364 1,550 1,129 19,252 1,131 1,189 310 108 99 283 86 86 82 138 271 167 364 111 98 293 106 98 134 228 296 241 2,761 3,158 1,144 429 9 1,582 1,304 463 62 1,829 a. Cost of revenues: Cost of fruits Salaries and related benefits Cultivation & Nursery costs Vehicles Maintenance and other operating costs Depreciation b. General and administrative expenses: Salaries and related benefits Subcontractors Rents & related office expenses Travel expenses Legal & accounting and professional fees Vehicle maintenance Insurance Brokerage & nominated advisor fees Depreciation Share-based compensation Other c. Finance cost: Interest on loans Bank fees Exchange rate differences 60 DEKEL AGRI-VISION PLC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 15:- INCOME (LOSS) PER SHARE The following reflects the income (loss) and share data used in the basic and diluted earnings per share computations: Net income(loss) Year ended 31 December 2020 2019 Euros in thousands (2,226) (3,389) Weighted average number of Ordinary shares for computing basic and diluted earnings (loss) per share 428,930,844 352,290,622 In 2020 and 2019, share options are excluded from the calculation of diluted earnings per share as their effect is antidilutive. NOTE 16:- BALANCES AND TRANSACTIONS WITH RELATED PARTIES a.1 Balances: Other accounts payable and accrued expenses a.2 Transactions: Services and expense reimbursements b. Compensation of key management personnel of the Company: Short-term employee benefits Share-based compensation Year ended 31 December 2020 2019 Euros in thousands 191 33 379 224 31 92 564 224 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. 61 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DEKEL AGRI-VISION PLC. NOTE 16:- BALANCES AND TRANSACTIONS WITH RELATED PARTIES (Cont.) 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 2020 and 2019 was approximately €162 thousand and € 252 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 2020 and 2019 was approximately €146 thousand and € 194 thousand, respectively. NOTE 17:- 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: Financial liabilities measured at amortized cost: Trade and other payables Short-term loans Long-term lease liabilities Long-term loans (including current maturities) Total b. Financial risks factors: 31 December 2020 2019 Euros in thousands 2,717 2,437 192 23,291 28,637 1,687 1,490 90 16,303 19,570 The Group's activities expose it to market risk (foreign exchange risk). Certain of the Group's long-term obligations at the reporting date also bear variable interest rates which are linked to the inter banking interest rate in Cote d'Ivoire and in the UK, and therefore the Group is exposed to cash flow risks due to changes in that base interest rate. The effect on profit or loss is approximately €80 thousand for each 1% change in the base interest rate. 62 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 17:- FINANCIAL INSTRUMENTS (Cont.) DEKEL AGRI-VISION PLC. 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 31 December 2019, 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 2020 Less than one year 1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years > 5 years Euros in thousands Total Long-term loans (1) 4,254 4,784 3,935 4,504 3751 11,758 32,986 Short-term loan 2,437 Trade payables and other accounts payable Long-term lease liabilities 31 December 2019 - - 2,717 20 20 - - 6 - - 6 - - 6 - - 2,437 2,717 328 386 9,428 4,804 3,941 4,510 3,757 12,086 36,091 Less than one year 1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years > 5 years Euros in thousands Total Long-term loans (1) 3,147 2,863 2,739 1,852 2,421 7,368 20,390 Short-term loan 1,490 Trade payables and other accounts payable Long-term lease liabilities - - - - 1,687 23 20 20 - - 6 - - - - 1,490 1,687 6 334 409 6,347 2,883 2,759 1,858 2,427 7,702 23,976 (1) Including current maturities. 63 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Movement in financial liabilities: Short term loans Long term loans (1) Lease liabilities Balance as of 1 January 2019 670 17,293 DEKEL AGRI-VISION PLC. 94 14 (18) - - 90 - (12) 114 - - - Total 18,057 1,504 (18) (8,861) 7,200 17,882 2,437 (12) 114 (5,038) 2,363 8,174 Receipt of short-term loan Receipt of long-term lease Repayment of long-term lease Repayment of loans Receipt of long-term loans Balance as of 31 December 2019 Receipt of short-term loan Repayment of long-term lease New lease upon consolidation of subsidiary. 1,490 - (670) - 1,490 2,437 - - Repayment of loans (1,490) Receipt of long-term loans Initial consolidation of subsidiary Balance as of 31 December 2020 - - - - (8,191) 7,200 16,302 - - - (3,584) 2,363 8,174 2,437 23,291 192 23,557 1) Including current maturities and accrued interest. NOTE 18:- SUBSEQUENT EVENTS On 25 January 2021 DekelOil CI SA signed an agreement for a long-term bond of up to €15.2 million (10,000 million FCFA). The first tranch of €6 million (3,930 million FCFA) was received on 27 January 2021. The bond is for 7 years with a 3 year grace for principal repayments. The bond bears annual interest of 7.75%. On 29 January 2021 the Company raised equity totaling to £3.27 million (€3.69 million). This is 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 £708,000 (€806 thousand) of the consideration is to be settled in cash with the remaining £354,000 (€403 thousand) to be settled via the issue of 7,080,000 new Ordinary shares at 5 pence per share. Following this acquisition, the Company holds 70.7% of Pearlside (see also Note 6) - - - - - - - - - - - - - - - - 64 

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