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Solid foundations in Ayenounan. Now set for expansion projects.


We believe DekelOil still offers investors a compelling and a deep value investment opportunity; DekelOil trade on a forward FY18 P/E of 4x on double-digit EPS growth. We have adjusted our price to 30p from 34p, and if the Guitry project is successfully implemented, our target price increases to 36.3p.

H1 2017 Summary:


·       Total CPO Production 26,957 in H1 2017

·       22.6% increase in revenues to €19.6m (H1 2016: €16.0m)

·       19.4% increase in EBITDA to €3.7m vs (H1 2016: €3.1m)

·       33.3% increase in Net Profits to €3.7m (H1 2016: €1.8m)

·       0.17p dividend to be paid on 4 September 2017


In our view, the management continue to deliver robust revenue, profitability and cash growth despite of the one-off mechanical issues.  The issue resulted in a loss of production of about 3.5/4kt of CPO. This was due to blockage in production flow in the kernel processing pipe and equipment failure within the de-oiling tank. These issues have been rectified, but we are taking a conservative view in H2 and FY18, which is reflected in our adjusted forecast shown below.


Expansion Projects:


The real excitement in the H1 interims comes from the management decision to formally expand into Guitry; a 100% owned second-project based on Cote d’Iviore and interest in Norpalm Ghana Limited, a vertically integrated palm oil producer in Western Ghana.




Guitry is situated 160km north west of Abidijan, and 240km west from the current project in Ayenouan.

DekelOil has the right to develop;


·       24,000Ha brownfield land

·       Establish a plant nursery facility with the capacity to product 1m palm plants per annum

·       30 tonnes per hour Mill


The management has already ordered nursery equipment, completed the Social & Environmental Impact Assessment and water survey. We anticipate development costs of €200-250k in the next 12 months, which will be funded through the Ayenouan project cash flows.


Guitry Economics:


The current Ayenounan 60t/h Mill had a capital cost of €15.5m, of which 92% was funded by debt. We will assume the new 30t/h Mill will have a capital cost of approximately €10m and will begin operations in 2020. We also assume that DekelOil will secure 90% debt funding and minority equity partner for 49%, a similar strategy to how they commenced the Ayenounan project in 2013/14. At a CPO price of €500/t we get a conservative project valuation of €35m for Guitry, which attributes an additional 6.3p to DekelOil shareholders.   



Ghana expansion Project: Expanding outside by acquiring NorPalm Ghana Ltd


Norpalm Ghana Limited (“NGL”) was initially set up as a vehicle to acquire assets of the former state owned enterprise National Oil Palms Ltd. Norpalm AS is quoted on the OTC B listed in Oslo, Norway by 300 shareholders of which, 60% of the shares are held by the 20 largest shareholders. Norpalm AS owns 68.6% and PZ Cussons Ghana Ltd own 31.4%. Based on the information provided on their website, the palm oil mill generated around 80,000 tonnes of FFB in 2012, with 13,000 tonnes of CPO and 1,750 tonnes of PKO.  We think the current mill is running at optimum efficiency and the average age of NGL’s equipment is over 10 years.


Based on 15,000 tonnes of CPO production and a CPO price of around €650/tn, NGL should be reporting revenues of around €9.75m with further €1.7m for their palm oil kernel project, implying total revenues of around €11.45m. If we assume a conservative net profit margin of around 15%, it would imply profits of €1.7m. If a transaction were to take place for DekelOil, it would provide further growth from a strong base and demonstrate to the market that DekelOil are now strategically viewing expansion opportunities outside of Cote d’Ivoire. This will not only provide operational growth but will fuel higher dividend pay-out in the near future. We think it is highly unlikely that the management will issue any new equity based on the current share price, but may use a combination of cash and debt to fund the acquisition. This will thereby provide existing investors with significant upside in DKL’s valuation as the acquisition is likely to be earnings enhancing



Optiva’s 2017 Full Year Projections:


Total Revenues  of €29m from €32m


EBIT of €6.3m from €9m


Net Income of €4.4m from €5.8m


EPS of 1.4p


Optiva’s 2018 Full Year Projections:


Total Revenues  of €35m from €40m


EBIT of €10m from €13m


Net Income of €9.5m


EPS of 3.1p


We believe the Company still offers investors a compelling and a deep value investment opportunity. DekelOil trade on a forward P/E of 12x on double-digit EPS growth. We have adjusted our price to 30p from 34p, and if

If the Guitry project is successfully implemented, our target price increases to 36.3p


Dekeloil PLC (DKL) - Interim Results

RNS Number : 9321R

Dekeloil Public Limited

27 September 2017


The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR").  Upon the publication of this announcement via a Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain.


DekelOil Public Limited / Index: AIM / Epic: DKL / Sector: Food Producers

27 September 2017

DekelOil Public Limited ('DekelOil' or 'the Company')

2017 Interim Results


DekelOil Public Limited, operator and 100% owner of the vertically integrated Ayenouan palm oil project in Côte d'Ivoire (the "Project"), is pleased to announce its interim results for the six months ended 30 June 2017. 




Record H1 financial performance

·     Record H1 financial performance due to stronger pricing and the increase in CPO storage capacity from 5,000 to 8,000 tonnes which enabled the Company to sell CPO at a premium to international prices

·     22.6% increase in revenues to €19.6 million (H1 2016: €16.0 m) - includes sale of Crude Palm Oil ('CPO'), Palm Kernel Oil ('PKO'), Palm Kernel Cake ('PKC') and Nursery Plants

·     19.4% increase in EBITDA to €3.7 million (H1 2016: €3.1 m)

·     33.3% increase in net profit after tax to €2.4million (H1 2016: €1.8m)

·     26,947 tonnes of CPO produced in H1 2017 (H1 2016: 28,550 tonnes) - record Q1 like-for-like production was followed by lower Q2 CPO volumes due to now rectified mechanical issues


100% interest in Ayenouan secured 

·     Acquisition of outstanding 14.25% interest in CS DekelOil Siva Limited ('CSDS'), the owner of Ayenouan, from Biopalm Energy Limited ('Biopalm') by way of a share conversion

o  Executed on value accretive terms for shareholders -  share conversion at 13.25p per DekelOil Ordinary share, a 19.2% premium to the closing price on 6 January 2017

·     Secures 100% of Ayenouan's growing revenues and cash flows which will be used to accelerate the Company's strategy to build a leading West African palm oil producer


Maiden final dividend

·     Progressive dividend policy adopted and final dividend of 0.17p per ordinary share declared and paid on 4 September 2017

·     Follows conversion of all outstanding capital notes into 12,578,616 new ordinary shares at 13.25p per share, a 10.4% premium to the closing share price on 13 January 2016


DekelOil Executive Director Lincoln Moore said, "The record first half financial performance, specifically in terms of revenues, EBITDA and net profit, demonstrates how cash generative our 100%-owned palm oil project at Ayenouan is becoming.  Not only does it generate funds for additional investment into the project to increase profitability further, such as the new 3,000 tonne storage tank, but also sufficient cash to pay down debt and to fund a progressive dividend policy.  


"Ayenouan proves our strategy to work closely with local smallholders works for all parties and we are keen to roll-out our vertically integrated model, which includes a state of the art nursery, mill, and company-owned estates, elsewhere in the region. We are already making progress:  as announced post period end, operations at Guitry, our second 100%-owned project in Côte d'Ivoire have formally commenced; and we remain in discussions to acquire an interest in Norpalm Ghana Limited, a vertically integrated palm oil producer in Western Ghana which produces approximately 15,000 tonnes of CPO a year from a 30t/hr mill.  Becoming a multi-project palm oil producer is key to delivering on our goal to transform DekelOil into a leading palm oil company in West Africa and I look forward to providing further updates on our progress in due course."


Exercise of Warrants and Issue of Equity

The Company has received notice of exercise of warrants of 1,070,000 ordinary shares of €0.0003367 each ("Ordinary Shares") at a price of 10 pence per share. The gross proceeds of this exercise amounts to £107,000.


Application has been made to the London Stock Exchange for the admission of the 1,070,000 Ordinary Shares ("Admission") and it is expected that Admission will become effective on 6 October 2017. Following Admission, the Company's issued share capital will consist of 298,381,700 Ordinary Shares.


Chairman's Statement

As the table below highlights our 100% owned vertically integrated palm oil project at Ayenouan in Côte d'Ivoire has generated a fourth consecutive set of record H1 numbers: 



H1 2017

H1 2016

H1 2015

H1 2014


€19.6 m









Net Profit / (Loss) after Tax





In four years, we have more than quadrupled our total half yearly sales to €19.6m; increased EBITDA more than 12 times to €3.7m; and grown net profit to €2.4m in H1 2017 having reported a loss of (€764k) in 2014.  In our view, this is testament to the strategy we adopted at the outset to rapidly build a palm oil producing operation at Ayenouan by working closely with local smallholders to effectively turn the traditional palm oil business model on its head. 


Instead of investing considerable capital in planting out company-owned estates and having to wait at least five years for these to mature, DekelOil hit the ground running in terms of generating early cash flows by building a state of the art nursery to supply local smallholders with plants and one of West Africa's largest CPO processing mills.  This has allowed us to capitalise on the major shortfall in regional CPO processing capacity which we had identified in the Ayenouan region, a shortfall which had resulted in DekelOil securing supply with thousands of local smallholders to provide fresh fruit bunches ('FFB') well before construction work had started at the mill site.  


Execution has been and continues to be key.  Not only was the mill built and commissioned on time and on schedule but the implementation of a comprehensive logistics solution in the surrounding area centred on collection hubs and a fleet of trucks have been crucial to rapidly growing CPO production from a standing start to 39,498 tonnes of CPO during the last full year.  While we are focused on increasing capacity utilisation at the mill further, we continue to work hard to squeeze as much value as possible from each FFB that passes through our mill.  In 2015, we added a Kernel Crushing Plant ('KCP') at Ayenouan which allowed us to increase sales and profitability via the production of Palm Kernel Oil and Palm Kernel Cake.  2016 saw us acquire an Empty Fruit Press to extract additional CPO from empty fruit bunches which is estimated to have increased the total CPO extraction rate by at least a half a percentage point, the benefits of which were felt in H1 2017 despite FFB oil content being lower than we have seen in previous years.


Our strategy to maximise returns is not limited to extracting the maximum oil from FFB. The installation during the period of an additional 3,000 tonne tank has increased the Project's overall CPO storage capacity to 8,000 tonnes.  This provides us with the flexibility to finesse the timing of CPO sales, thereby allowing us to maximise sale prices.   Coupled with stronger CPO pricing, this contributed to a 30.4% year on year increase in average CPO prices achieved by the Company to €707 per tonne in H1 2017 (H1 2016: €542), a 5% premium to average international CPO prices of €674 per tonne during H1 2017. 


In terms of our half yearly revenues the more favourable pricing environment more than offset unscheduled downtime at the Mill during May and June 2017 following two separate mechanical issues, both of which have since been rectified.   The first related to blockages in production flow in the kernel separation process.  The second related to an equipment failure within the de-oiling tank which the Mill's original engineer Modipalm has taken responsibility for.  The Company is in discussions with Modipalm in pursuit of capital reimbursement.  As a result of lost hours, we estimate CPO production during this period was reduced by approximately 3,500 - 4,000 tonnes.  However, thanks to record like for like CPO production in Q1 2017, the impact on overall CPO volumes produced during the half year was limited to a shortfall of 1,603 tonnes.  Needless to say we are working hard to ensure similar mechanical issues do not happen again.


As this latest half year financial performance demonstrates, Ayenouan's cash flow generative credentials are clear. Importantly, having built up a track record of significant revenue and profit growth we are able to embark on the next leg of DekelOil's development, one which involves using Ayenouan as a platform from which to fund the Company's transformation into a multi-project palm oil producer, while at the same time rewarding our shareholders through the adoption of a progressive dividend policy.  Major progress has already been made on both fronts.  Firstly, in July we announced the formal commencement of operations at Guitry, our second project in Côte d'Ivoire, in which we hold a 100% interest.  As with Ayenouan, we plan to develop Guitry into a vertically integrated palm oil operation including nursery, company-owned estates and a mill producing CPO from FFB grown by both the Company and local smallholders.  Secondly, earlier this month DekelOil paid out a maiden final dividend of 0.17 pence per ordinary share for the year ending 31 December 2016.  We are confident this maiden dividend, which reflects the Company's status as a financially stable,  established and fast-growing palm producer, will be the first of many.



During the period, total sales amounted to €19.6m (H1 2016: €16m), and the Company reported a net profit after tax of €2.4m (H1 2016: €1.8m) and EBITDA of €3.7m (H1 2016: €3.1m).  


At the beginning of the period, we increased our stake in Ayenouan to 100% from 85.75% following the acquisition, by way of a share conversion, of the remaining 14.25% interest we did not already own in CSDS, which owns the Project, from Biopalm.  This completed the process initiated in May 2016 which has seen DekelOil acquire full ownership of Ayenouan.  The acquisition of this last tranche of 285 shares in CSDS at €21,428.57 per share at a fixed £/€ exchange rate of 1.3, an 11.5 per cent premium to the prevailing £/€ exchange rate of c.1.17 was satisfied via the issue of 35,455,111 ordinary shares in the Company at 13.25p per share, a premium of 19.2 per cent to the closing share price on 6 January 2017.  The premium achieved on both the conversion price and the prevailing exchange rate resulted in DekelOil obtaining this 14.25% interest in the Project via the issue of only 12.52 per cent in new shares, which in the Directors' view highlights the value accretive credentials of the transaction.


As mentioned earlier, the Company has adopted a progressive dividend policy for the next three years, after which the policy will be reassessed based on future years' trading results, the prevailing economic outlook, and the availability of distributable reserves.  The dividend policy not only follows the progress made on the ground at Ayenouan, but also the cancellation of certain capital notes during the period, the settlement of which was required before dividends could be distributed to ordinary shareholders and the reduction of interest costs with the refinancing in H2 2016. 



The first half of the year has seen DekelOil acquire 100% of Ayenouan, further strengthen our balance sheet, pay out a maiden dividend and report record sales and profits.  There is clear momentum behind the business, both at the operational and corporate level and we expect this momentum at the very least to be maintained going forward.   We will continue to optimise our operations at Ayenouan, pay down debt as appropriate, develop our second project at Guitry, and at the same time progress discussions to acquire an interest in Norpalm Ghana Limited ('NGL'), a vertically integrated palm oil producer with approximately 4,000 hectares of mature palm plantations in Western Ghana and a 30t/hr mill which produces approximately 15,000 tonnes of CPO a year. 


Having come a long way in such a short period of time, the Board is committed to continue to drive the fast-growing, profitable, dividend paying operator DekelOil further forward.  We remain resolutely focused on implementing our strategy to transform DekelOil into a leading West African focused palm oil producer, and thanks to the progress we have made to date, we believe we are well on the way to achieving this objective. 


I would like to take this opportunity to thank the Board and management team, along with our advisers, local stakeholders and partners for their continued hard work during the period.  Finally, I would like to thank all our valued shareholders for the support they have provided to the Company. I look forward to keeping the market updated regularly in the months ahead.


Andrew Tillery


Non-Executive Chairman    





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