9th Apr 2008 07:39
D1 Oils Plc09 April 2008 Part 2 Notes to the financial statementsfor the year ended 31 December 2007 1. Authorisation of financial statements and compliance with IFRS The financial statements of D1 Oils plc and its subsidiaries ("the Group") forthe year ended 31 December 2007 were authorised for issue by the Board ofDirectors on 8 April 2008 and the balance sheet was signed on the Board's behalfby Christopher Tawney. D1 Oils plc is a public limited company incorporated anddomiciled in England and Wales. The Company's ordinary shares are traded on AIM. The Group's financial statements have been prepared in accordance withInternational Financial Reporting Standards (IFRS) as adopted by the EuropeanUnion as they apply to the financial statements of the Group for the year ended31 December 2007. 2. Summary of significant accounting policies. Basis of preparation The Group's financial statements have been prepared in accordance withInternational Financial Reporting Standards (IFRS) as adopted by the EuropeanUnion as they apply to the financial statements of the Group for the year ended31 December 2007. The Group's date of transition to IFRS reporting is 1 January 2006, havingpreviously reported under UK GAAP. Reconciliations of net assets, profit andcash flow under UK GAAP to IFRS are summarised in note 30. The Group financial statements are presented in Sterling and all values arerounded to the nearest thousand pounds (£000) except where otherwise indicated. Key sources of estimation uncertainty The preparation of financial statements requires management to make estimatesand assumptions that affect the amounts reported for assets and liabilities asat the balance sheet date and the amounts reported for revenues and expensesduring the year. The nature of estimation means that actual outcomes coulddiffer from those estimates. The key sources of estimation uncertainty that have a significant risk ofcausing material adjustment to the carrying amounts of assets and liabilitieswithin the next financial year are discussed below. Impairment of non-financial assets The Group asses whether there are any indicators of impairment for allnon-financial assets at each reporting date. Goodwill and other indefinite lifetangible and intangible assets are tested for impairment annually and at othertimes when there are indicators that the carrying amounts may not berecoverable. When value in use calculations are undertaken, management mustestimate the expected future cash flows from the asset or cash generating unitand choose a suitable discount rate in order to calculate the present value ofthose cash flows. Where realisable value is used as the basis of valuation,management must estimate the net income realisable from the sale of the assetand apply an appropriate discount rate to the cash flows arising. Impairment of available-for-sale financial assets The Group classifies certain financial assets as available-for-sale andrecognises movements in their fair value in equity. When the fair valuedeclines, management makes assumptions about the decline in value to determinewhether it is an impairment that should be recognised in profit or loss. At 31December 2007 no impairment losses have been recognised for available-for-saleassets (2006: £nil). Share based payments The estimation of the share-based payment cost requires the selection of anappropriate valuation model, consideration as to the inputs necessary for thevaluation model chosen and the estimation of the number of awards that willultimately vest, inputs which arise from judgments relating to the probabilityof meeting non-market performing performance conditions and the continuingparticipation of employees. Basis of consolidation The Group financial statements consolidate the financial statements of D1 Oilsplc and the entities it controls drawn up to 31 December each year. Subsidiaries are consolidated from the date of their acquisition, being the dateon which the Group obtains control and continue to be consolidated until thedate that such control ceases. Control comprises the power to govern thefinancial and operating polices of the investee so as to obtain benefit from itsactivities and is achieved through direct or indirect ownership of votingrights; currently exercisable or convertible voting rights; or by way ofcontractual agreement. The financial statements of subsidiaries are prepared for the same reportingyear as the parent company and are based on consistent accounting policies. Allinter-company balances and transactions, including unrealised profits arisingfrom intra-group transactions, are eliminated. Minority interests represent theportion of profit or loss and net assets in subsidiaries that is not held by theGroup and is presented within equity in the consolidated balance sheet,separately from parent company's shareholders' equity. When a subsidiary is notwholly owned by the Group and it incurs losses, amounts allocated to theminority are limited to the value in the balance sheet of the minority interestin the subsidiary's equity. Losses in excess of this limit have been allocatedagainst the majority interest, except where the minority is under an obligationto make good any loss. Interests in joint ventures A joint venture is defined in IAS 31 as a 'contractual arrangement whereby twoor more parties undertake an economic activity that is subject to jointcontrol.' Where the joint venture is established through an interest in a company,partnership or other entity (a jointly controlled entity), the Group recognisesits interest in the entity's assets and liabilities using the equity method ofaccounting. Under the equity method, the interest in the joint venture iscarried in the balance sheet at cost plus post-acquisition changes in theGroup's share of its net assets, less distributions received and less anyimpairment in value of individual investments. The Group income statementreflects the share of the jointly controlled entity's results after tax. TheGroup statement of recognised income and expense reflects the Group's share ofany income and expense recognised by the jointly controlled entity outsideprofit and loss. Any goodwill arising on the acquisition of a jointly controlled entity,representing the excess of the cost of the investment compared to the Group'sshare of the net fair value of the entity's identifiable assets, liabilities andcontingent liabilities, is included in the carrying amount of the jointlycontrolled entity and is not amortised. To the extent that the net fair valueof the entity's identifiable assets, liabilities and contingent liabilities isgreater than the cost of the investment, a gain is recognised and added to theGroup's share of the entity's profit or loss in the period in which theinvestment is acquired. Financial statements of jointly controlled entities are prepared for the samereporting period as the Group. Where necessary adjustments are made to bringthe accounting policies into line with those of the Group: to take into accountfair values assigned at the date of acquisition and to reflect impairment losseswhere appropriate. Adjustments are also made in the Group's financialstatements to eliminate the Group's share of unrealised gains and losses ontransactions between the Group and its jointly controlled entities.The Group ceases to use the equity method on the date from which it no longerhas joint control over, or significant influence in, the joint venture. Where the financial statements of a jointly controlled entity used in thepreparation of the financial statements are prepared as of a reporting date thatis different from that of the Group, interim accounts are drawn up as at theGroup reporting date and adjustments are made for the effects of significanttransactions or events falling within the Group reporting period. Interests in associates The Group's interests in its associates, being those entities over which it hasa significant influence and which are neither subsidiaries nor joint ventures,are accounted for using the equity method of accounting, as described above forjointly controlled entities. Financial assets Financial assets are recognised when the Group becomes party to the contractsthat give rise to them and are classified as loans and receivables orheld-to-maturity investments, as appropriate. Financial assets also includecash and cash equivalents; trade and other receivables; other investments andderivative financial instruments. The Group determines the classification of itsfinancial assets at initial recognition. When financial assets are recognisedinitially, they are measured at fair value, being the transaction price plus, inthe case of financial assets not at fair value through profit or loss, directlyattributable transaction costs. The subsequent measurement of financial assets classified as fair valuefinancial assets is as follows: The fair value of quoted investments is determined by reference to bid prices atthe close of business on the balance sheet date. When there is no activemarket, fair value is determined using valuation techniques. These includeusing recent arm's length market transactions; reference to the current marketvalue of another instrument which is substantially the same; discounted cashflow analysis and pricing models. Where fair value cannot be reliablyestimated, assets are carried at cost. Loans and receivables are non-derivative financial assets with fixed ordeterminable payments that are not quoted in an active market, do not qualify astrading assets and have not been designated as either fair value through profitand loss or available for sale. Such assets are carried at amortised cost usingthe effective interest method if the time value of money is significant. Gainsand losses are recognised in income when the loans and receivables arederecognised or impaired, as well as through the amortisation process. Derecognition of financial assets and liabilities A financial asset or liability is generally derecognised when the contract thatgives rise to it is settled, sold, cancelled or expires. Where an existing financial liability is replaced by another from the samelender on substantially different terms, or the terms of an existing liabilityare substantially modified, such an exchange or modification is treated as aderecognition of the original liability and the recognition of a new liability,such that the difference in the respective carrying amounts together with anycosts or fees incurred are recognised in profit or loss. Impairment of financial assets The Group assesses at each balance sheet date whether a financial asset or groupof assets is impaired. Assets carried at amortised cost If there is objective evidence that an impairment loss on loans and receivablescarried at amortised cost has been incurred, the amount of the loss is measuredas the difference between the asset's carrying amount and the present value ofestimated future cash flows (excluding future credit losses that have not beenincurred) discounted at the financial asset's original effective interest rate(i.e. the effective interest rate computed at initial recognition). Thecarrying amount of the asset is reduced with the amount of the loss recognisedin administration costs. If, in a subsequent period, the amount of the impairment loss decreases and thedecrease can be related objectively to an event occurring after the impairmentwas recognised, the previously recognised impairment loss is reversed. Anysubsequent reversal of an impairment loss is recognised in the income statement,to the extent that the carrying value of the asset does not exceed its amortisedcost at the reversal date. Intangible assets Research and development expenditure The Group undertakes a range of plant science related research and developmentactivities. Product placement and agronomy research involves testing how well individualcultivars perform in identified growing areas. In these trials, the keyperformance characteristics of grain and oil yield and disease and insectresistance are measured, typically over a period of two years. On the basis ofthese tests, a number of the best performing cultivars are identified astechnically feasible and are selected for commercial release. Any costs incurredup to the point of selection of these cultivars are regarded as research and arecharged to the income statement as they are incurred. Costs subsequentlyincurred in producing the mother plants for planting seed orchards are classedas development expenditure and are capitalised as intangible assets. However,the useful economic life of any particular cultivar cannot be accuratelypredicted and may be as little as one year before it is superseded by the nextgeneration. Therefore development expenditure is written off over a period of 12months. The sustainable oil supply programme collects and analyses data from commercialplantations and model farms with the aim of optimising the grain and oil yieldthrough harvesting and expelling techniques. The costs of collation, creationand analysis of the database are treated as research expenditure and are chargedto the income statement as it is incurred. Any subsequent expenditure incurredin producing instruction manuals, training programmes and other materialsintended to assist planting partners improve performance is treated asdevelopment expenditure and is charged to the income statement as incurred. The feed programme investigates alternative uses for and the removal ofanti-nutritional substances from the by-product created when oil is extractedfrom the jatropha kernel. Any costs incurred in the design and construction ofprototype processes and equipment are capitalised as intangible assets andcharged against income over the useful economic life of the process. Otherwisecosts are expensed to the income statement as incurred. Various technologies for expelling oil from the harvested grains are beingevaluated. The costs associated with the design, construction and testing ofpilot plants are capitalised as tangible assets and charged against income overthe expected useful economic life of the plant. Costs incurred prior to theconstruction of pre-production prototypes are charged against income asincurred. Software Software is initially carried at cost and thereafter stated at cost lessaccumulated amortisation and accumulated impairment losses. Intangible assetswith a finite life have no residual value and are amortised on a straight-linebasis over their expected useful economic lives of 3-5 years. The carrying value of intangible assets is reviewed for impairment wheneverevents or changes in circumstances indicate the carrying value may not berecoverable. In addition, the carrying value of capitalised developmentexpenditure is reviewed for impairment annually before being brought into use. Leases Assets held under finance leases, which transfer to the Group substantially allof the risks and benefits incidental of ownership of the leased item arecapitalised at the inception of the lease, with a corresponding liability beingrecognised for the lower of the fair value of the leased asset and the presentvalue of minimum lease payments. Lease payments are apportioned betweenreduction of the lease liability and finance charges in the income statement soas to achieve a constant rate of interest on the remaining balance of theliability. Assets held under finance leases are depreciated over the shorter ofthe estimated useful life of the asset and the lease term. Leases where the lessor retains a significant portion of the risks and benefitsof ownership of the asset are classified as operating leases and rentals payableare charged in the income statement on a straight-line basis over the leaseterm. Cash and cash equivalents Cash and cash equivalents comprise cash at bank and in hand and short-termdeposits with an original maturity of three months or less. Restricted depositssuch as amounts held by Allied Irish Bank as security are classified asfinancial assets rather than cash where the terms of the deposit mean that thebalance cannot be readily converted to finance the day-to-day operations of theGroup. For the purpose of the consolidated cash flow statement, cash and cashequivalents consist of cash and cash equivalents as defined above, net ofoutstanding bank overdrafts. Property, plant and equipment Property, plant and equipment is stated at cost less accumulated depreciationand accumulated impairment losses. Cost comprises the aggregate amount paid andthe fair value of any other consideration given to acquire the asset andincludes costs directly attributable to making the asset capable of operating asintended. Borrowing costs attributable to assets under construction arerecognised as an expense as incurred. Depreciation is provided on all property, plant and equipment, other than land,on a straight-line basis over the expected useful life as follows: Buildings over 20 yearsPlant and machinery over 3-10 yearsMotor vehicles over 3-10 yearsFixtures, fittings and equipment over 3-5 years The carrying value of property, plant and equipment is reviewed for impairmentif events or changes in circumstance indicate the carrying value may not berecoverable, and are written down immediately to their recoverable amount.Useful lives and residual values are reviewed annually and where adjustments arerequired these are made prospectively. An item of property, plant and equipment is derecognised upon disposal or whenno future economic benefits are expected to arise from the continued use of theasset. Any gain or loss arising on the derecognition of the asset is includedin the income statement in the period of derecognition. Where assets are held under finance leases and there is reasonable certaintythat the Group will obtain ownership of the asset bythe end of the lease term (based on best estimates as at the balance sheetdate), the asset is depreciated over its expected useful economic life.Otherwise, assets held under finance lease are depreciated over the shorter ofthe lease term and its useful economic life. Plantations The cost of managed plantations is capitalised included in property, plant andequipment and includes the direct costs of site preparation and clearance,fencing and all costs incurred to bring the plantation to a state in which seedsand seedlings can be planted. The trees themselves are classed as biologicalassets and are not included in the cost of the plantation. Biological assets Biological assets are the costs of seeds or seedlings purchased and theassociated propagation, planting and cultivation costs incurred up to the pointthat the trees produce their first commercial harvest. Jatropha trees producetheir first commercial harvest approximately two years after planting and areconsidered mature after five to six years. Following the first commercialharvest of grain, the trees are measured at fair value less estimated point ofsale costs using discounted cash flow techniques. Until the first commercial harvest, the viability and yield of any plantationcannot be reliably measured and therefore immature or juvenile trees arerecorded at cost. Foreign currency translation Transactions in foreign currencies are initially recorded in the functionalcurrency by applying the spot exchange rate ruling at the date of thetransaction. Monetary assets and liabilities denominated in foreign currenciesare retranslated at the functional currency rate of exchange ruling at thebalance sheet date. All differences are taken to the income statement, exceptwhen hedge accounting is applied and for differences on monetary assets thatform part of the Group's net investment in a foreign operation. These are takendirectly to equity until the disposal of the net investment, at which time theyare recognised in profit or loss. The assets and liabilities of foreign operations and jointly controlledentities, including the related goodwill, are translated into Sterling at therate of exchange ruling at the balance sheet date. Income, expenses and cashflows are translated at weighted average exchange rates for the year. Theresulting exchange differences are taken directly to a separate component ofequity. On disposal of a foreign entity, the deferred cumulative amountrecognised in equity relating to that particular foreign operation is recognisedin the income statement. The Group has taken advantage of the exemption in IFRS 1 in respect ofcumulative translation differences so as to record the cumulative translationdifferences for all foreign entities as nil as at 1 January 2006. Non-monetary items that are measured in terms of historic cost in a foreigncurrency are translated using the exchange rates as at the dates of the initialtransactions. Non-monetary items measured at fair value in a foreign currencyare translated using the exchange rates at the date when the fair value wasdetermined. Business combinations and goodwill Business combinations on or after 1 January 2006 are accounted for under IFRS 3using the purchase method. Any excess of the cost of the business combinationover the Group's interest in the net fair value of the identifiable assets,liabilities and contingent liabilities is recognised in the balance sheet asgoodwill and is not amortised. To the extent that the net fair value of theacquired entity's identifiable assets, liabilities and contingent liabilities isgreater than the cost of the investment, a gain is recognised immediately in theincome statement. Goodwill recognised as an asset as at 31 December 2005 isrecorded at its carrying amount under UK GAAP and is not amortised. Anygoodwill asset arising on the acquisition of equity accounted entities isincluded within the cost of those entities. After initial recognition, goodwill is stated at cost less any accumulatedimpairment losses, with the carrying value being reviewed for impairment, atleast annually and whenever events or changes in circumstances indicate that thecarrying value may be impaired. For the purpose of impairment testing, goodwill is allocated to the relatedcash-generating units expected to benefit from the combination's synergies andmonitored by management. Where the recoverable amount of the cash-generatingunit is less than its carrying amount, including goodwill, an impairment loss isrecognised in the income statement. On disposal of a cash-generating unit, theallocated goodwill is taken into account when determining the gain or loss ondisposal to be recognised in the income statement. Inventories Inventories are stated at the lower of cost and net realisable value. Costincludes all costs incurred in bringing each product to its present location andcondition, as follows: Raw materials, consumables and goods for resale - purchase cost on a first-in, first-out basis Work in progress and finished goods - cost of direct materials and labour plus attributable overheads based on a normal level of activity, excluding borrowing costs Net realisable value is based on estimated selling price less any further costsexpected to be incurred to completion and disposal. Trade and other receivables Trade receivables, which generally have 7-14 day terms, are recognised andcarried at the lower of their original invoiced value and recoverable amount.Provision is made where there is objective evidence that the Group will not beable to recover balances in full. Balances are written off when the probabilityof recovery is assessed as being remote. Interest bearing loans and borrowings Loans and borrowings are recognised when the Group becomes party to the relatedcontracts and are measured initially at fair value, being the proceeds receivedless directly attributable transaction costs. After initial recognition, interest bearing loans and borrowings aresubsequently measured at amortised cost using the effective interest method andtaking into account any issue costs and any discount or premium on settlement. Gains and losses arising on the repurchase, settlement or otherwise cancellationof liabilities are recognised respectively in finance revenue and finance cost. Income taxes Current tax assets and liabilities are measured at the amount expected to berecovered from or paid to the taxation authorities, based on tax rates and lawsthat are enacted or substantively enacted by the balance sheet date. Deferred income tax is recognised on all temporary differences arising betweenthe tax bases of assets and liabilities and their carrying amounts in thefinancial statements, with the following exceptions: • Where the temporary difference arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination that at the time of the transaction affects neither the accounting nor taxable profit or loss; • In respect of taxable temporary differences associated with investments in subsidiaries, associates and joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future; and • Deferred income tax assets are recognised only to the extent that it is probable that taxable profits will be available against which the deductible temporary differences, carried forward tax credits or tax losses can be utilised. Deferred income tax assets and liabilities are measured on an undiscounted basisat the tax rates that are expected to apply when the related asset is realisedor liability is settled, based on tax rates and laws enacted or substantivelyenacted at the balance sheet date. Tax is charged or credited directly to equity if it relates to items that arecredited or charged to equity. Otherwise tax is recognised in the incomestatement. Derivative financial instruments and hedging The Group uses derivative financial instruments to hedge its risks associatedwith fluctuations in the price of Ultra Low Sulphur Diesel (ULSD), which is usedin the invoice price of certain sales. From 1 January 2006, such derivativefinancial instruments are initially recognised at fair value on the date onwhich a derivative contract is entered into and are subsequently re-measured atfair value. Derivatives are carried as assets when the fair value is positiveand as liabilities when the fair value is negative. For those derivatives designated as hedges and for which hedge accounting isdesired, the hedging relationship is documented at its inception. Thisdocumentation identifies the hedging instrument, the hedged item or transaction,the nature of the risk being hedged and how effectiveness will be measuredthroughout its duration. Such hedges are expected at inception to be highlyeffective. For the purpose of hedge accounting, hedges are classified as cash flow hedgeswhen hedging exposure to variability in cash flows that is either attributableto a particular risk associated with a recognised asset or liability or a highlyprobable forecast transaction. Any gains or losses arising from changes in the fair value of derivatives thatdo not quality for hedge accounting are taken to the income statement. Thetreatment of gains and losses arising from revaluing derivatives designated ashedging instruments depends on the nature hedging relationship, as follows: Cash flow hedges: For cash flow hedges, the effective portion of the gain or loss on the hedginginstrument is recognised directly in equity, while the ineffective portion isrecognised in profit or loss. Amounts taken to equity are transferred to theincome statement when the hedged transaction affects profit or loss, such aswhen a forecast sale or purchase occurs. Where the hedged item is the cost of anon-financial asset or liability, the amounts taken to equity are transferred tothe initial carrying amount of the non-financial asset or liability. If a forecast transaction is no longer expected to occur, amounts previouslyrecognised in equity are transferred to profit or loss. If the hedginginstrument expires or is sold, terminated or exercised without replacement orrollover, or if its designation as a hedge is revoked, amounts previouslyrecognised in equity remain in equity until the forecast transaction occurs andare transferred to the income statement or to the initial carrying amount of anon-financial asset or liability as above. Revenue recognition Revenue is recognised to the extent that it is probable that the economicbenefits will flow to the Group and the revenue can be reliably measured.Revenue is measured at the fair value of the consideration received, excludingdiscounts, rebates, VAT and other sales taxes or duty. The following criteriamust also be met before revenue is recognised: Sale of goods Revenue from the sale of goods is recognised when the significant risks andrewards of ownership of the goods have passed to the buyer, usually on dispatchof the goods. Interest income Finance revenue is recognised as interest accrued using the effective interestmethod, that is the rate that exactly discounts estimated future cash receiptsthrough the expected life of the financial instruments to its net carryingamount. Borrowing costs Borrowing costs are recognised as an expense when incurred. Share-based payments Equity-settled transactions The cost of equity-settled transactions with employees is measured by referenceto the fair value at the date at which they are granted and is recognised as anexpense over the vesting period, which ends on the date on which the relevantemployees become entitled to the award. Fair value is determined by an externalvaluer using an appropriate pricing model. In valuing equity-settledtransactions, no account is taken of any vesting conditions, other thanconditions linked to the price of the shares of the Company (market conditions). No expense is recognised for awards that do not ultimately vest, except forawards where vesting is conditional upon a market condition, which are treatedas vesting irrespective of whether or not the market condition is satisfied,provided that all other performance conditions are satisfied. At each balance sheet date before vesting, the cumulative expense is calculated,representing the extent to which the vesting period has expired and management'sbest estimate of the achievement or otherwise of non-market conditions and ofthe number of equity instruments that will ultimately vest or, in the case of aninstrument subject to a market condition, be treated as vesting as describedabove. The movement in cumulative expense since the previous balance sheet dateis recognised in the income statement, with a corresponding entry in equity. Where the terms of an equity-settled award are modified or a new award isdesignated as replacing a cancelled or settled award, the cost based on theoriginal award terms continues to be recognised over the original vestingperiod. In addition, an expense is recognised over the remainder of the newvesting period for the incremental fair value of any modification, based on thedifference between the fair value of the original award and the fair value ofthe modified award, both as measured on the date of the modification. Noreduction is recognised if this difference is negative. Where an equity-settled award is cancelled, it is treated as if it had vested onthe date of cancellation, and any cost not yet recognised in the incomestatement for the award is expensed immediately. Any compensation paid up tothe fair value of the award at the cancellation is deducted from equity, withany excess over fair value being treated as an expense in the income statement. Assets held for sale When an asset or disposal group's carrying value will be recovered principallythrough a sale transaction rather than through continuing use, it is classifiedas held for sale and stated at the lower of carrying value and fair value lesscosts to sell. No depreciation is charged in respect of non-current assetsclassified as held for sale. New standards and interpretations not applied During the year the IASB and IFRIC have issued the following standards andinterpretations with an effective date after the date of these financialstatements: International Accounting Standards (IAS/IFRS) IAS1 Amendment to IAS 1 - Presentation of Financial Statements (revised September 2007) 1 January 2009 IAS 23 Amendment to IAS 23 - Borrowing costs 1 January 2009 IAS 27 Consolidated and Separate Financial Statements (revised January 2008) 1 July 2009 IFRS 2 Amendment to IFRS 2 - Vesting Conditions and Cancellations 1 January 2009 IFRS3 Business Combinations (revised January 2008) 1 July 2009 IFRS 8 Operating Segments 1 January 2009 International Financial Reporting Interpretations Committee (IFRIC) IFRIC 12 Service Concession Arrangements 1 January 2008 IFRIC 13 Customer Loyalty Programmes 1 July 2008 IFRIC 14 IAS 19 The Limit on Defined Benefit Assets, Minimum Funding Requirements 1 January 2008 The Directors are currently reviewing the amendments to IAS 23 to determinewhether there will be a material impact on the Group's financial statements. IFRS 8 requires disclosure based on information presented to the board. This isnot expected to differ from the disclosures currently provided. Apart from this, the Directors do not anticipate that the adoption of thesestandards will have a material impact on the Group's financial statements in theperiod of initial application. 3. Segmental information The Group's primary reporting format is business segments as the Group's risksand returns are affected predominantly by differences in the products andservices provided. Secondary segmental information is reported geographically.The operating businesses are organised and managed separately according to thenature of the products and services provided with each segment representing astrategic business unit that offers different products and serves differentmarkets. The plant science segment breeds seedlings for commercial planting andundertakes research and development activities focused on jatropha curcas. The refining and trading segment is concerned with the procurement and refiningof vegetable oil and other feedstocks and the sale of biodiesel. The agronomy segment is responsible for the commercial planting of jatropha andwas transferred to the joint venture created with BP with effect from 1 October2007. D1-BP Fuelcrops is the joint venture established with BP on 1 October 2007 andwith effect from that date, is responsible for all commercial plantingactivities. The corporate segment includes the activities of the Company and other centralunallocated overheads. The corporate segment is responsible for raising financeand financing subsidiary operations. Included in operating loss for this segmentare the operating costs of D1 Oils plc as well as central unallocated finance,business development, and corporate communications costs. The only item ofincome included is interest accruing on cash balances and short-term deposits.Assets held in the corporate segment are primarily cash and short-term depositsand interest accruing thereon. The following table presents revenue and loss information and certain asset andliability information regarding the Group's business segments for the yearsended 31 December 2007 and 31 December 2006. Year ended 31 December 2007 UK Europe Africa Asia India JV's Elimination Group £000 £000 £000 £000 £000 £000 £000 £000_____________________________________________________________________________________________________________________ Revenue to external customersPlant science - - - 9.7 0.4 - - 10.1Refining & trading 10,569.6 - - - - - - 10,569.6_____________________________________________________________________________________________________________________Total 10,569.6 - - 9.7 0.4 - - 10,579.7_____________________________________________________________________________________________________________________ Operating lossPlant science (1,286.6) (226.9) (241.9) 30.1 (278.7) - - (2,004.0)Agronomy - - (1,450.9) (1,246.9) (657.4) - - (3,355.2)D1-BP Fuel Crops - - - - - (1,516.5) - (1,516.5)Refining & trading (31,746.3) - - - - - - (31,746.3)Exceptional item (2,491.2) - (296.3) 31.3 (8.1) - - (2,764.3)_____________________________________________________________________________________________________________________ (35,524.1) (226.9) (1,989.1) (1,185.5) (944.2) (1,516.5) - (41,386.3)Corporate (4,713.2) - - - - - - (4,713.2)_____________________________________________________________________________________________________________________Total (40,237.3) (226.9) (1,989.1) (1,185.5) (944.2) (1,516.5) - (46,099.5)_____________________________________________________________________________________________________________________ Assets by business segmentPlant science 236.7 159.7 2,463.3 943.1 431.8 - (902.2) 3,332.4D1-BP Fuel Crops - - - - - 15,180.5 - 15,180.5Refining & trading 31,762.0 - - - - - (18,799.4) 12,962.6_____________________________________________________________________________________________________________________ 31,998.7 159.7 2,463.3 943.1 431.8 15,180.5 (19,701.6) 31,475.5Corporate 83,109.9 - - - - - (71,322.1) 11,787.8_____________________________________________________________________________________________________________________Total 115,108.6 159.7 2,463.3 943.1 431.8 15,180.5 (91,023.7) 43,263.3_____________________________________________________________________________________________________________________ UK Europe Africa Asia India JV's Elimination Group £000 £000 £000 £000 £000 £000 £000 £000_____________________________________________________________________________________________________________________ Liabilities by business segmentPlant science (1,456.6) (91.1) (7,519.4) (196.7) (1,949.6) - 10,377.9 (835.5)Refining & trading (88,018.5) - - (2,855.1) - - 80,645.9 (10,227.7)_____________________________________________________________________________________________________________________ (89,475.1) (91.1) (7,519.4) (3,051.8) (1,949.6) - 91,023.8 (11,063.2)Corporate (918.5) - - - - - - (918.5)_____________________________________________________________________________________________________________________Total (90,393.6) (91.1) (7,519.4) (3,051.8) (1,949.6) - 91,023.8 (11,981.7)_____________________________________________________________________________________________________________________ Capital expenditure - tangible assetsPlant science 25.3 3.9 - 2.0 - - - 31.2Agronomy - - 914.3 65.0 134.3 - - 1,113.6Refining & trading 15,962.2 - - - - - - 15,962.2_____________________________________________________________________________________________________________________ 15,987.5 3.9 914.3 67.0 134.3 - - 17,107.0Corporate 55.7 - - - - 55.7_____________________________________________________________________________________________________________________Total 16,043.2 3.9 914.3 67.0 134.3 - - 17,162.7_____________________________________________________________________________________________________________________ DepreciationPlant science (3.5) (0.4) - (1.9) (0.5) - - (6.3)Agronomy - - (151.8) (36.3) (42.2) - - (230.3)Refining & trading (533.7) - - - - - - (533.7)_____________________________________________________________________________________________________________________ (537.2) (0.4) (151.8) (38.2) (42.7) - - (770.3)Corporate (75.1) - - - - (75.1)_____________________________________________________________________________________________________________________Total (612.3) (0.4) (151.8) (38.2) (42.7) - - (845.4)_____________________________________________________________________________________________________________________ Capital expenditure - intangible assetsPlant science 1.4 - - - - - - 1.4Refining & trading 3.3 - - - - - - 3.3_____________________________________________________________________________________________________________________Total 4.7 - - - - - - 4.7_____________________________________________________________________________________________________________________ Intangible amortisationPlant science 0.3 - - - - - - 0.3Refining & trading 18.1 - - - - - - 18.1_____________________________________________________________________________________________________________________Total 18.4 - - - - - - 18.4_____________________________________________________________________________________________________________________ Asset impairmentRefining & trading 22,778.9 - - - - - - 22,778.9_____________________________________________________________________________________________________________________Total 22,778.9 - - - - - - 22,778.9_____________________________________________________________________________________________________________________ UK Europe Africa Asia India JV's Elimination Group £000 £000 £000 £000 £000 £000 £000 £000_____________________________________________________________________________________________________________________ Impairment of investmentsCorporate 60.0 - - - - - - 60.0_____________________________________________________________________________________________________________________Total 60.0 - - - - - - 60.0_____________________________________________________________________________________________________________________ Share-based paymentsCorporate 1,857.0 - - - - - - 1,857.0_____________________________________________________________________________________________________________________Total 1,857.0 - - - - - - 1,857.0_____________________________________________________________________________________________________________________ Year ended 31 December 2006 UK Europe Africa Asia India JV's Elimination Group £000 £000 £000 £000 £000 £000 £000 £000_____________________________________________________________________________________________________________________ Revenue to external customersAgronomy - - - 1.7 - (11.5) - (9.8)Refining & trading 1,570.1 - - - - - - 1,570.1_____________________________________________________________________________________________________________________Total 1,570.1 - - 1.7 - (11.5) - 1,560.3_____________________________________________________________________________________________________________________ Operating lossAgronomy - - (1,578.0) (786.1) (279.5) (121.5) - (2,765.1)Refining & trading (6,669.3) - - - - - - (6,669.3)_____________________________________________________________________________________________________________________ (6,669.3) - (1,578.0) (786.1) (279.5) (121.5) - (9,434.4)Corporate (3,194.3) - - - - - - (3,194.3)_____________________________________________________________________________________________________________________Total (9,863.6) - (1,578.0) (786.1) (279.5) (121.5) - (12,628.7)_____________________________________________________________________________________________________________________ Assets by business segmentAgronomy - - 1,317.8 703.8 446.0 480.1 (161.0) 2,786.7Refining & trading 28,285.8 - - - - - (8,736.7) 19,549.1_____________________________________________________________________________________________________________________ 28,285.8 - 1,317.8 703.8 446.0 480.1 (8,897.7) 22,335.8Corporate 81,873.5 - - - - - (33,157.1) 48,716.4_____________________________________________________________________________________________________________________Total 110,159.3 - 1,317.8 703.8 446.0 480.1 (42,054.8) 71,052.2_____________________________________________________________________________________________________________________ Liabilities by business segmentAgronomy - - (4,190.3) (1,744.7) (1,058.2) (634.6) 5,068.5 (2,559.3)Refining & trading (42,262.3) - - - - - 36,986.3 (5,276.0)_____________________________________________________________________________________________________________________ (42,262.3) - (4,190.3) (1,744.7) (1,058.2) (634.6) 42,054.8 (7,835.3)Corporate (1,579.8) - - - - - - (1,579.8)_____________________________________________________________________________________________________________________Total (43,842.1) - (4,190.3) (1,744.7) (1,058.2) (634.6) 42,054.8 (9,415.1)_____________________________________________________________________________________________________________________ UK Europe Africa Asia India JV's Elimination Group £000 £000 £000 £000 £000 £000 £000 £000 _____________________________________________________________________________________________________________________ Capital expenditureAgronomy - - 342.0 27.4 94.0 - - 463.4Refining & trading 11,078.9 - - - - - - 11,078.9_____________________________________________________________________________________________________________________Total 11,078.9 - 342.0 27.4 94.0 - - 11,542.3_____________________________________________________________________________________________________________________ DepreciationAgronomy - - 38.8 15.1 33.3 - - 87.2Refining & trading 280.4 - - - - - - 280.4_____________________________________________________________________________________________________________________ 280.4 - 38.8 15.1 33.3 - - 367.6_____________________________________________________________________________________________________________________ Intangible amortisationRefining & trading 7.0 - - - - - - 7.0_____________________________________________________________________________________________________________________Total 7.0 - - - - - - 7.0_____________________________________________________________________________________________________________________ Share-based paymentsCorporate 1,135.0 - - - - - - 1,135.0_____________________________________________________________________________________________________________________Total 1,135.0 - - - - - - 1,135.0_____________________________________________________________________________________________________________________ 4. Revenue and administrative expenses Revenue recognised in the income statement is analysed as follows: Year Year ended ended 31 December 31 December 2007 2006 £000 £000__________________________________________________________________________________________________________________Sales of goods 10,579.7 1,560.3Finance revenue 1,572.5 566.4__________________________________________________________________________________________________________________ 12,152.2 2,126.7__________________________________________________________________________________________________________________ No revenue was derived from exchanges of goods or services. Group operating loss is stated after charging/(crediting): Year Year ended ended 31 December 31 December 2007 2006 £000 £000_________________________________________________________________________________________________________________Research and development costs written off 110.4 976.0 Depreciation of plant, property and equipment - owned assets 462.7 310.1 - impairment 22,778.9 - - leased assets 382.7 57.5Amortisation of intangible assets 18.4 3.5Impairment of Goodwill 64.1 6.3_________________________________________________________________________________________________________________Total depreciation and amortisation expense 23,706.8 377.4_________________________________________________________________________________________________________________ (Profit)/loss on disposal of fixed assets 7.0 -Net foreign currency differences (45.1) - Auditors' remuneration - audit fees 115.0 119.3 - interim audit 29.6 45.5 - overseas audit 165.5 126.0 - taxation services 167.5 18.0 - audit of IFRS conversion 40.7 - - advice in relation to establishment of the D1-BP Fuel Crops joint venture 23.6 - - corporate finance services - 85.0_________________________________________________________________________________________________________________ Total 541.9 393.8_________________________________________________________________________________________________________________ Payments under operating leases - property rents 136.7 - - plant and machinery 126.7 156.0 Provision for bad and doubtful debts 16.3 - Financial assets at fair value through income statement classified as held fortrading - fair value on foreign currency contracts (56.3) - Financial liabilities at fair value through income statement classified as heldfor trading - fair value on commodity swaps 1,101.7 - - fair value on foreign currency contracts 33.6 -_________________________________________________________________________________________________________________ 5. Staff numbers and costs The average number of persons employed by the Group (including Directors) duringthe year, analysed by category was as follows: Year Year ended ended 31 December 31 December 2007 2006 Number Number___________________________________________________________________________________________________________________Executive Directors 3 4Technical 66 25Administration and operational staff 204 70___________________________________________________________________________________________________________________Total 273 99___________________________________________________________________________________________________________________ The costs incurred in respect of these employees (including Directors) were: Year Year ended ended 31 December 31 December 2007 2006 £000 £000___________________________________________________________________________________________________________________Wages and salaries 6,271.8 4,867.4Social security costs 752.2 409.9___________________________________________________________________________________________________________________Total 7,024.0 5,277.3___________________________________________________________________________________________________________________ The average number of persons employed by the Company (including ExecutiveDirectors) during the year was: Year Year ended ended 31 December 31 December 2007 2006 Number Number___________________________________________________________________________________________________________________Executive Directors 3 4Administration and operational staff 1 1___________________________________________________________________________________________________________________Total 4 5___________________________________________________________________________________________________________________ The costs incurred in respect of these employees (including Directors) were: Year Year ended ended 31 December 31 December 2007 2006 £000 £000___________________________________________________________________________________________________________________Wages and salaries 943.2 714.4Social security costs 132.8 95.7___________________________________________________________________________________________________________________Total 1,076.0 810.1___________________________________________________________________________________________________________________ 6. Directors' remuneration Benefits Year ended Year ended Basic In kind 31 December 31 December salaries Bonus Fees and other 2007 2006 £000 £000 £000 £000 £000 £000_______________________________________________________________________________________________________________Executive DirectorsElliott Michael Mannis 200.0 50.0 - 16.4 266.4 223.3Richard Keith Gudgeon (i) 67.5 25.0 - 5.8 98.3 58.6Stephen Peter Douty (ii) 112.5 25.0 - 9.5 147.0 179.1William Peter Campbell (iii) 120.7 - - 2.7 123.4 140.0Philip Kenneth Wood - - - - - 164.4Christopher Tawney (iv) 50.0 - - 3.1 53.1 -Non-Executive DirectorsKarl Eric Watkin - - 55.0 - 55.0 75.0John Barclay Forrest - - 40.6 - 40.6 35.0Clive Neil Morton - - 52.2 - 52.2 62.5Peter John Davidson (v) - 10.0 23.3 0.6 33.9 35.9Lord Oxburgh of Liverpool 75.0 - - - 75.0 12.5Christopher Leaver (vi) - - 17.5 - 17.5 -Moira Black (vii) - - 9.1 - 9.1 -_______________________________________________________________________________________________________________ 625.7 110.0 197.7 38.1 971.5 986.3_______________________________________________________________________________________________________________(i) Richard Keith Gudgeon resigned as a Director on 28 September 2007. (ii) Stephen Peter Douty resigned as a Director on 28 September 2007.(iii) William Peter Campbell resigned as a Director on 31 March 2007. Amounts totaling £90,690 were paid to him as compensation for loss of office and are included in the table above.(iv) Christopher Tawney was appointed as a Director on 26 September 2007.(v) Peter John Davidson resigned as a Director on 28 September 2007. During the year ended 31 December 2007 the Group incurred consultancy costs of £88,458 to Davidson Technology Limited (2006: £161,333), a company in which Peter John Davidson has indirect control.(vI) Christopher Leaver was appointed as a Director on 13 July 2007.(viI) Moira Black was appointed as a Director on 26 September 2007. Directors' share options: Options Granted Exercised Lapsed in Options Exercise Date Expiry 1 January 2007 2007 2007 31 December price exercisable Date_______________________________________________________________________________________________________________________ Karl Eric Watkin 39,062 - - - 39,062 £1.280 October 2005 October 2014 William Peter Campbell 39,062 - (39,062) - - £1.280 October 2005 October 2014 John Barclay Forrest 78,125 - - - 78,125 £1.280 October 2005 October 2014 Peter John Davidson 156,250 - (156,250) - - £1.280 October 2005 October 2014 Clive Neil Morton 156,250 - - - 156,250 £1.280 October 2005 October 2014 William Peter Campbell 106,897 - - (106,897) - £2.900 (a) October 2015 William Peter Campbell 136,363 - - (136,363) - £2.640 (a) March 2016 Elliott Michael Mannis 33,613 - - - 33,613 £2.975 (a) May 2015 Elliott Michael Mannis 132,075 - - - 132,075 £2.650 (a) May 2015 Elliott Michael Mannis 500,000 - - - 500,000 £2.000 (a) January 2016 Stephen Peter Douty 56,497 - - - 56,497 £1.770 (a) January 2015 Stephen Peter Douty 132,075 - - - 132,075 £2.650 (a) May 2015 Stephen Peter Douty 170,454 - - - 170,454 £2.640 (a) March 2016 Richard Keith Gudgeon 100,378 - - - 100,378 £2.640 (a) March 2016 Lord Oxburgh of - 50,000 - - 50,000 £0.010 (a) September Liverpool 2016 Elliott Michael Mannis - 487,500 - - 487,500 £1.725 (a) March 2017 Stephen Peter Douty - 175,000 - - 175,000 £1.725 (a) March 2017 Richard Keith Gudgeon - 22,727 - - 22,727 £2.640 (a) May 2016 Richard Keith Gudgeon - 75,000 - - 75,000 £1.725 (a) March 2017_______________________________________________________________________________________________________________________ 1,837,101 810,227 (195,312) (243,260) 2,208,756_______________________________________________________________________________________________________________________ (a) These options have been granted as one third exercisable on the firstanniversary of their date of grant. Thereafter a further 1/36 vests each monthover the next 24 months so that the full amount is capable of being exercisedafter three years. The aggregate amounts of gains made by former Directors onthe exercise of share options during the year amounted to £178,515. Thisrepresents the market price of the shares in excess of the exercise price on thedate the options were exercised. 7. Finance revenue and costs Year Year ended ended 31 December 31 December 2007 2006 £000 £000___________________________________________________________________________________________________________________ Interest received on bank deposits 1,572.5 566.4___________________________________________________________________________________________________________________Interest income 1,572.5 566.4___________________________________________________________________________________________________________________ Bank loans and overdrafts 63.9 0.9Interest payable under finance leases and hire purchase agreements 242.9 46.0___________________________________________________________________________________________________________________Interest expense 306.8 46.9___________________________________________________________________________________________________________________ 8. Taxation Tax recognised in the income statement Year Year ended ended 31 December 31 December 2007 2006 £000 £000__________________________________________________________________________________________________________________Current tax charge - UK - -Current tax charge - overseas (India) 36.7 -__________________________________________________________________________________________________________________Tax reported in consolidated income statement 36.7 -__________________________________________________________________________________________________________________ Reconciliation A reconciliation of total tax applicable to accounting profit before tax at thestatutory tax rate at the Group's effective tax rate for the years ended 31December 2007 and 31 December 2006 is as follows: Year Year ended ended 31 December 31 December 2007 2006 £000 £000__________________________________________________________________________________________________________________Loss on ordinary activities before taxation (46,099.5) (12,627.6)At United Kingdom tax rate of 30% (2006 - 30%) (13,829.9) (3,788.3)Expenditure not allowable for tax purposes 100.0 100.0Unrecognised deferred tax asset on impairment of assets 6,893.7 -Unrecognised deferred tax asset on ULSD swaps 330.5 -Share option charge 557.1 340.5Share of loss of joint venture 443.7 -Transfer of operations to joint venture not taxable 992.0 -Unrecognised tax losses 3,513.9 2,554.6Losses of overseas subsidiaries for which no tax relief available 1,035.7 793.2__________________________________________________________________________________________________________________Total tax expense reported in consolidated income statement 36.7 -__________________________________________________________________________________________________________________ 9. Loss per ordinary share Year Year ended ended 31 December 31 December 2007 2006 Number Number___________________________________________________________________________________________________________________Weighted average number of shares in issue 61,638,732 31,584,579___________________________________________________________________________________________________________________ Pence Pence___________________________________________________________________________________________________________________Loss per ordinary share - basic and diluted 74.85 39.98___________________________________________________________________________________________________________________ The number of shares in issue at 31 December 2007 was 62,241,219 (2006:61,480,578). For the purposes of calculating the loss per ordinary share theweighted average number of shares excludes 193,645 shares (2006: 193,645 shares)held by the D1 Oils plc Employee Benefit Trust. No diluted loss per share hasbeen disclosed as the share options are anti-dilutive. 10. Property, plant and equipment Freehold Motor Plant and Fixtures land Buildings Plantations vehicles machinery and fittings Total £000 £000 £000 £000 £000 £000 £000_______________________________________________________________________________________________________________________CostAt 1 January 2006 1,283.2 - 650.7 24.4 2,217.4 73.7 4,249.4Additions - 25.8 64.3 14.0 11,073.7 271.4 11,449.2Disposals - - - (7.7) (6.2) (3.8) (17.7)Reclassify as assets held for sale - - - - (100.0) - (100.0)Sale of assets to joint venture - - (650.7) - - - (650.7)_______________________________________________________________________________________________________________________At 31 December 2006 1,283.2 25.8 64.3 30.7 13,184.9 341.3 14,930.2_______________________________________________________________________________________________________________________Additions 2,941.7 - 346.5 229.7 13,297.1 347.7 17,162.7Disposal - - - - - - -Reclassifications - 300.0 - - (300.0) - -Foreign exchange movements - 1.0 4.2 10.3 7.7 23.2Transfer of assets to joint venture - - (411.8) (242.8) (339.0) (203.6) (1,197.2)_______________________________________________________________________________________________________________________At 31 December 2007 4,224.9 325.8 - 21.8 25,853.3 493.1 30,918.9_______________________________________________________________________________________________________________________Accumulated depreciationAt 1 January 2006 - - - 4.9 60.2 15.2 80.3Charge for the year - 4.1 - 9.9 281.1 68.5 363.6_______________________________________________________________________________________________________________________At 31 December 2006 - 4.1 - 14.8 341.3 83.7 443.9_______________________________________________________________________________________________________________________Charge for the year - 30.0 - 5.5 531.8 278.1 845.4Impairment 1,241.7 253.2 - - 21,127.9 156.1 22,778.9Foreign exchange movements - - - 0.4 3.4 3.2 7.0Transfer of assets to joint venture - - - (3.3) (1.5) (135.8) (140.6)_______________________________________________________________________________________________________________________At 31 December 2007 1,241.7 287.3 - 17.4 22,002.9 385.3 23,934.6_______________________________________________________________________________________________________________________Net book valueAt 31 December 2007 2,983.2 38.5 - 4.4 3,850.4 107.8 6,984.3_______________________________________________________________________________________________________________________At 31 December 2006 1,283.2 21.7 64.3 15.9 12,843.6 257.6 14,486.3_______________________________________________________________________________________________________________________At 1 January 2006 1,283.2 - 650.7 19.5 2,157.2 58.5 4,169.1_______________________________________________________________________________________________________________________ Impairment In accordance with accounting standards, the Group undertakes an annualimpairment test of its cash generating units. The refinery operations at ourMiddlesbrough and Bromborough sites have been impacted by high feedstock pricesand imports of heavily subsidised biodiesel from the US. As a consequence, theDirectors have stated their intention to cease refining and trading operations,to close the UK refining sites at Middlesbrough and Bromborough and to impairthe assets at both sites down to their estimated net realisable values. Thetotal impairment charge is as follows: 2007 2007 2007 Freehold 2007 Plant and Fixtures and 2007 land Buildings machinery fittings Total £000 £000 £000 £000 £000______________________________________________________________________________________________________________________Middlesbrough - site - 253.2 - - 253.2Bromborough - site 1,241.7 - - - 1,241.7Middlesbrough - refinery and associated assets - - 12,198.9 156.1 12,355.0Bromborough - refinery and associated assets - - 8,929.0 - 8,929.0______________________________________________________________________________________________________________________ 1,241.7 253.2 21,127.9 156.1 22,778.9______________________________________________________________________________________________________________________ All impairment losses are attributable to the refining and trading segment andhave been recognised in the income statement as a separate line item withinoperating profit. Middlesbrough The impairment of the refinery and associated assets held at Middlesbrough isbased on the Board's estimate of their realisable value less costs ofrealisation. A charge of £12,355,000 has been recognised in the year (2006:£nil). At 31 December 2007 these assets have a carrying value of £3,750,000.The carrying value of these assets is based on recent discussions held withthird parties who have expressed an interest in buying the D1-20 units. The carrying value of the Middlesbrough site is a based on the Board's estimateof the realisable value net of any associated costs and an impairment charge of£253,200 (2006: £nil) has been recognised. The carrying value of theMiddlesbrough site at 31 December 2007 stands at £1,000,000 (2006: £1,283,200). Bromborough The impairment of the Bromborough refinery assets was based on value in use andresulted in an impairment of £8,929,000 (2006: £nil). These now have a carryingvalue of £nil. The carrying value of the Bromborough site is a based on an independentthird-party valuation and has been impaired by £1,241,700 (2006: £nil) to£2,000,000. 11. Intangible assets Software licences Goodwill Total £000 £000 £000_________________________________________________________________________________________________________________CostAt 1 January 2006 1.5 64.1 65.6Additions in the period 60.5 - 60.5_________________________________________________________________________________________________________________At 31 December 2006 62.0 64.1 126.1_________________________________________________________________________________________________________________Additions in the period 4.7 - 4.7_________________________________________________________________________________________________________________At 31 December 2007 66.7 64.1 130.8_________________________________________________________________________________________________________________Accumulated amortisationAt 1 January 2006 0.6 - 0.6Charge for the year 6.4 - 6.4_________________________________________________________________________________________________________________At 31 December 2006 7.0 - 7.0_________________________________________________________________________________________________________________Charge for the year 18.4 - 18.4Impairment - 64.1 64.1_________________________________________________________________________________________________________________At 31 December 2007 25.4 64.1 89.5_________________________________________________________________________________________________________________Net book valueAt 31 December 2007 41.3 - 41.3_________________________________________________________________________________________________________________At 31 December 2006 55.0 64.1 119.1_________________________________________________________________________________________________________________At 1 January 2006 0.9 64.1 65.0_________________________________________________________________________________________________________________ Goodwill arose on the acquisition of D1 Oils Subsidiary Limited by D1 OilsTrading Limited in 2004. It represents the excess of the fair value of theacquired net assets over their book value. As from 1 January 2006, the date oftransition to reporting under IFRS, goodwill is no longer amortised but is nowsubject to annual impairment testing. The Directors have taken the decision toimpair the carrying value of the goodwill in light of the decision to ceaserefining and trading operations in the UK. 12. Investments in subsidiaries and jointly controlled entities The Company owns more than 10% of the share capital of the following companies: Nature of Country of ShareholderName business incorporation class Percentage_________________________________________________________________________________________________________________D1 Oils Trading Limited Biodiesel trading UK Ordinary 100%D1 Oils Subsidiary Limited Biodiesel trading UK Ordinary 100%D1 (UK) Limited Biodiesel trading UK Ordinary 100%D1-BP Fuel Crops Limited Jatropha plantations UK Ordinary 50%D1 Oils Plant Science (UK) Limited Plant science UK Ordinary 100%D1 Oils Plant Science Belgium BVT Plant science Belgium Ordinary 100%D1 Oils Plant Science Netherlands BVT Plant science Netherlands Ordinary 100%D1 Oils Plant Science Australia Pty Limited Dormant Australia Ordinary 100%D1 Oils Plant Science West Africa Plant science Cape Verde Ordinary 100%D1 Oils Plant Science Swaziland Plant science Swaziland Ordinary 100%D1 Oils Plant Science Indonesia Plant science Indonesia Ordinary 100%D1 Oils Plant Science Thailand Plant science Thailand Ordinary 100%D1 Oils Plant Science Zambia Plant science Zambia Ordinary 100%D1 Oils Plant Science Philippines Plant science Philippines Ordinary 100%D1 Oils Plant Science Madagascar Plant science Madagascar Ordinary 100%D1 Oils Plant Science India Pvt Plant science India Ordinary 100%D1 Oils Plant Science Hybrid Creations (Asia) Plant science Malaysia Ordinary 100%D1 Oils Africa Pty Limited Dormant South Africa Ordinary 95%D1 Oils Ghana Pty Limited Dormant Ghana Ordinary 100%D1 Oils Asia Pacific Pte Limited Plant science Singapore Ordinary 100%GroupBio Limited Engine development UK Ordinary 55% Investments in the Group comprise interests in joint ventures and tradeinvestments. Investments in the Company comprise interests in subsidiaryundertakings and trade investments. Group D1-BP Fuel Crops Other joint Other joint venture ventures investments Total £000 £000 £000 £000_________________________________________________________________________________________________________________Cost1 January 2007 - (154.6) 18.2 (136.4)Additions in the year 16,693.5 903.5 60.0 17,657.0Disposals in the year - - (18.2) (18.2)Share of joint ventures' results (1,516.5) (249.5) - (1,766.0)Exchange difference 3.5 12.5 - 16.0Impairment - - (60.0) (60.0)Written off on transfer to BP-D1 - (511.9) - (511.9)Fuelcrops31 December 2007 15,180.5 - - 15,180.5 Additions in the year for other joint ventures represent investments in jointventures subsequently transferred into the D1-BP Fuel Crops joint venture. Company D1-BP Fuel Crops Subsidiary Other joint venture undertakings investments Total £000 £000 £000 £000_________________________________________________________________________________________________________________Cost1 January 2007 - 125.0 18.2 143.2Additions in the year 12,787.0 - - 12,787.0Disposals in the year - - (18.2) (18.2)_________________________________________________________________________________________________________________31 December 2007 12,787.0 125.0 - 12,912.0_________________________________________________________________________________________________________________ The Group's share of joint ventures' assets and liabilities are as follows: 2007 2006 £000 £000_________________________________________________________________________________________________________________Non Current assets 883.5 416.8Current assets 16,527.5 63.2Current liabilities (2,193.0) (6.0)Non-current liabilities (37.5) (628.6)_________________________________________________________________________________________________________________Share of net assets of joint ventures 15,180.5 (154.6)_________________________________________________________________________________________________________________ The Group's share of joint ventures' losses is as follows: 2007 2006 £000 £000_________________________________________________________________________________________________________________Revenue - -Net operating costs (1,493.0) (121.5)_________________________________________________________________________________________________________________Operating profit (1,493.0) (121.5)Net finance income 21.0 -Share of loss from joint ventures accounted for using the equity method (70.5) -_________________________________________________________________________________________________________________Profit before tax (1,542.5) (121.5)Minority interest 26.0 0.0_________________________________________________________________________________________________________________Share of losses of joint ventures (1,516.5) (121.5)_________________________________________________________________________________________________________________ D1-BP Fuel Crops Limited had no capital commitments as at 31 December 2007. 13. Creation of joint venture with BP On 27 July 2007, Shareholders approved a 50/50 joint venture between D1 OilsTrading Limited and BP International Limited for the purpose of plantingJatropha curcas and selling jatropha oil. The joint venture was established on 1 October 2007 through the creation ofD1-BP Fuel Crops Limited, a company incorporated in England, in which D1 OilsTrading Limited and BP International Limited own equal shares. Under the terms of the joint venture agreement, D1 has transferred its existingplanting and overseas operations into D1-BP Fuel Crops Limited and has grantedto BP International Limited options over 11,725,467 ordinary shares in D1 Oilsplc which represents 16% of the issued share capital of the Company afterexercise of the option in full. In consideration, BP International Limited hasundertaken to fund the first £31.75 million of the Joint Venture's workingcapital requirements through an equity subscription. Thereafter, both partieswill fund the expenditure within the Joint Venture on a pro rata basis. It isanticipated that the total funding requirement of the Joint Venture over thenext five years will amount to approximately £80 million. The options granted to BP International are detailed in note 28. Upon issue, itis intended that the option shares will be admitted to trading on AIM and willrank pari passu with all other Ordinary Shares Exceptional item - deficit on transfer of operations to joint venture £'000__________________________________________________________________________________________________________________Investment in D1-BP Fuel Crops Limited (50% share) 16,693.5Share option recognised in equity (12,787.0)Net assets transferred to joint venture or impaired (4,993.3)Costs associated with transfer (1,677.5)__________________________________________________________________________________________________________________Net deficit on transfer (2,764.3)__________________________________________________________________________________________________________________ 14. Assets held for resale The Company has been actively pursuing a disposal strategy for certain oilstorage facilities located in Ghana. As at 31 December 2007 terms were agreedfor their sale subject to certain conditions being met. The Directors have areasonable expectation that these conditions will be met early in 2008 and thatthe disposal will realise net revenue in excess of the carrying value of£100,000. Disposal of the assets will be recognised when all conditions havebeen satisfied. 15. Inventories Group Group Company Company 2007 2006 2007 2006 £000 £000 £000 £000______________________________________________________________________________________________________________Raw material stock 1,962.7 3,023.3 - -Work in progress 98.5 - - -Finished product 159.1 - - -______________________________________________________________________________________________________________Total 2,220.3 3,023.3 - -______________________________________________________________________________________________________________ 16. Trade and other receivables Group Group Company Company 2007 2006 2007 2006 £000 £000 £000 £000_______________________________________________________________________________________________________________Non-currentAmounts owed by joint ventures - 898.9 - -Amounts owed by Group undertakings - - -Other debtors - 50.0 - -_______________________________________________________________________________________________________________ - 948.9 - -_______________________________________________________________________________________________________________CurrentTrade receivables 909.0 547.8 - -Amounts owed by Group undertakings - - 431.6 33,152.7Other receivables 2,776.5 - - -Prepayments and accrued income 432.6 346.2 26.1 8.2Taxation and social security 0.6 4.3 - -_______________________________________________________________________________________________________________ 4,118.7 898.3 457.7 33,160.9_______________________________________________________________________________________________________________ As at 31 December 2007, trade receivables at a nominal value of £16,300 wereimpaired and are fully provided for. Movements in the provision for impairmentof receivables were as follows: Individually Collectively impaired impaired Total £000 £000 £000__________________________________________________________________________________________________________________At 1 January 2007 - - -Charge for the year 16.3 - 16.3__________________________________________________________________________________________________________________At 31 December 2007 16.3 - 16.3__________________________________________________________________________________________________________________ The Company had no impairment provisions at any time during 2007 or 2006. As at 31 December 2007, the ageing of trade receivables is as follows: Group Not yet Overdue Overdue Overdue due < 30 days 31-60 days > 60 days Total £000 £000 £000 £000 £000________________________________________________________________________________________________________________Gross trade receivables as at 31 December 2007 829.1 77.0 - 19.2 925.3Other receivables - 2,776.5 - - 2,776.5Impairment - - - (16.3) (16.3)_______________________________________________________________________________________________________________Net trade receivables as at 31 December 2007 829.1 2,853.5 - 2.9 3,685.5_______________________________________________________________________________________________________________ Company Not yet Overdue Overdue Overdue due < 30 days 31-60 days > 60 days Total £000 £000 £000 £000 £000_______________________________________________________________________________________________________________Amounts owed by Group undertakings 71,321.7 - - - 71,321.7Impairment of amounts owed by Group undertakings (70,890.1) - - - (70,890.1)_______________________________________________________________________________________________________________Net trade receivables as at 31 December 2007 431.6 - - - 431.6_______________________________________________________________________________________________________________ The Company has advanced funds to subsidiary companies to meet their workingcapital and capital expenditure funding requirements. Amounts owed by Groupcompanies have no fixed repayment date. The Company has not made any calls onsubsidiary companies to repay these amounts so they have been classified as notyet due. In view of the Board's decision to close the UK refining and tradingoperations at Middlesbrough and Bromborough, and in light of the transfer ofoverseas planting operations into the D1-BP Fuel Crops joint venture during thecourse of the year, amounts owed by Group undertakings have been impaired totheir estimated realisable amount. The balance of amounts owed by Groupundertakings of £431,600 represents the balance due from D1 Oils Plant ScienceLimited which forms an integral part of the Group's strategy and the Directorsbelieve there is a reasonable expectation that this amount will be recoverablein full in the future. The Group has no concerns over the credit quality of amounts which are overdueand not impaired. An amount of £2,119,000 included in other receivablesrepresents amounts owed to the Group by D1-BP Fuel Crops Limited. 17. Other financial assets Group Group Company Company 2007 2006 2007 2006 Note £000 £000 £000 £000_______________________________________________________________________________________________________________Cash held as collateral against finance lease (a) 2,317.3 2,317.3 - -creditorsCash held as collateral against swap transactions (b) 2,000.0 - 2,000.0 -Cash held as collateral against letter of credit (c) 1,112.4 - 1,112.4 -transactionsCash held as collateral against 3rd party (d) 250.0 - 250.0 -guaranteesOther cash deposits 5,000.0 - 5,000.0 -Accrued bank interest 285.6 - 285.6 -Forward currency contracts 56.3 - 56.3 -_______________________________________________________________________________________________________________ 11,021.6 2,317.3 8,704.3 -_______________________________________________________________________________________________________________ (a) The Group has a deposit of £2,317,300 (2006: £2,317,300) chargedto Allied Irish Bank as cash collateral for part of the finance lease creditor.The deposit earns interest at 5%. (b) The Group has entered into swap transactions with its bank tohedge its exposure to fluctuating Ultra Low Sulphur Diesel prices. An amount of£2,000,000 (2006: £nil) has been deposited with the bank to act as security forany accrued trading losses. The bank holds a charge over these funds which areplaced on deposit and earn interest at variable short-term deposit rates. (c) During the year, the Group entered into transactions to buy rawmaterials which were paid for by means of documentary letters of credit. At 31December the Group has a £3,000,000 facility (2006: £nil) with its bank to enterinto documentary letters of credit transactions. The bank requires the Group toplace on deposit as collateral an amount equal to the value of any open lettersof credit, and, as at 31 December 2007, the Group had deposited amounts totaling£1,112,400 (2006: £nil). The bank holds a charge over these funds which areplaced on deposit and earn interest at variable short-term deposit rates. (d) During the year, the Group has entered into an agreement for theprocurement of bulk storage facilities. Under the terms of the agreement, theGroup's bank has provided a guarantee of £250,000 to the supplier. The guaranteeexpires on 30 September 2008. As at 31 December 2007, the Group has deposited anamount of £250,000 (2006: £nil) with its bank to act as collateral for theguarantee. The bank holds a charge over these funds which are placed on depositand earn interest at variable short-term deposit rates. Other cash deposits represent funds placed on 12 month deposit with Bank ofScotland at an interest rate of 5.83%. The maturity date is 21 January 2008. Forward currency contracts represent the fair value of futures contracts to buyUS dollars at fixed rates (note 29). 18. Cash and short-term deposits Group Group Company Company 2007 2006 2007 2006 £000 £000 £000 £000________________________________________________________________________________________________________________Cash at bank and in hand 3,206.3 2,261.8 2,635.5 1,764.8Short-term deposits 390.3 46,804.5 390.3 46,804.5________________________________________________________________________________________________________________ 3,596.6 49,066.3 3,025.8 48,569.3________________________________________________________________________________________________________________ Cash at bank earns interest at floating rates based on daily bank deposit rates.Short-term deposits are made for varying periods up to three months depending onthe immediate cash requirements of the Group and earn interest are varyingshort-term deposit rates. The fair value of Group cash and cash equivalents at31 December 2007 is £3,596,600 (2006: £49,066,300).19. Trade and other payables Group Group Company Company 2007 2006 2007 2006 £000 £000 £000 £000______________________________________________________________________________________________________________CurrentTrade payables 1,782.1 2,660.5 194.8 181.8Taxation and social security 585.3 151.4 182.2 42.5______________________________________________________________________________________________________________ 2,367.4 2,811.9 377.0 224.3______________________________________________________________________________________________________________ 20. Interest-bearing loans and borrowings Group Group Company Company 2007 2006 2007 2006 £000 £000 £000 £000______________________________________________________________________________________________________________CurrentBank overdrafts - 41.9 - -Current obligations under finance leases and hire purchase 432.9 374.2 - -agreementsMortgage payable 60.0 60.0 - -______________________________________________________________________________________________________________ 492.9 476.1 - -______________________________________________________________________________________________________________Non-currentNon-current obligations under finance leases and hire 2,587.2 2,983.6 - -purchase agreementsMortgage payable 720.0 780.0 - -______________________________________________________________________________________________________________ 3,307.2 3,763.6 - -______________________________________________________________________________________________________________ Group borrowings include a mortgage over Forty Foot Road, Middlesbrough, TS21HG. The mortgage is secured by a fixed and floating charge over the propertyand is repayable in 56 equal quarterly instalments commencing March 2007.Interest is charged at 1.75% over LIBOR. 21. Finance lease and hire purchase commitments Group Minimum Present value Minimum Present value payments Of payments payments of payments 2007 2007 2006 2006 £000 £000 £000 £000________________________________________________________________________________________________________________Within one year 623.3 432.9 617.1 374.2After one year but not more than five years 2,818.5 2,587.2 3,400.4 2,983.6________________________________________________________________________________________________________________Total minimum lease payments 3,441.8 3,020.1 4,017.5 3,357.8Less amounts representing finance charges (421.7) - (659.7) -________________________________________________________________________________________________________________ 3,020.1 3,020.1 3,357.8 3,357.8________________________________________________________________________________________________________________ The Company did not have any finance leases in either 2007 or 2006. In the light of the intended cessation of refining and trading operations, D1 isin discussions with Allied Irish Bank (the lessor under certain leases ofrefining equipment), with a view to terminating such leases in due course. 22. Other financial liabilities Group Group Company Company 2007 2006 2007 2006 £000 £000 £000 £000________________________________________________________________________________________________________________ULSD swaps 1,101.7 - - -Forward currency contracts 33.6 - 33.6 -________________________________________________________________________________________________________________ 1,135.3 - 33.6 -________________________________________________________________________________________________________________ The Group has entered in to Ultra Low Sulphur Diesel (ULSD) swaps to hedge itsexposure to fluctuating commodity prices. The fair value of these contacts at 31December was a liability of £1,101,700 (2006: £nil). Forward currency contracts represent the fair value of futures contracts to buyUS dollars at fixed rates (note 29). 23. Provisions Contractual commitments £000_________________________________________________________________________________________________________________Current At 1 January 2007 -Movements in the year 3,000.0a_________________________________________________________________________________________________________________At 31 December 2007 3,000.0 Provision has been made for the Directors' current best estimate of the cost ofsettling various contractual commitments which subsisted as at 31 December 2007.These commitments arise as a consequence of entering into the joint venture andthe announced changes in strategic direction. This provision is expected tocrystallise within 12 months. 24. Operating lease commitments Future minimum rentals payable under non-cancellable operating leases as at 31December 2007 are as follows: Group Group Group Group Land and Plant and Land and Plant and buildings equipment buildings equipment 2007 2007 2006 2006 £000 £000 £000 £000______________________________________________________________________________________________________________Within one year 159.0 726.9 - -After one year but not more than five years 636.0 2,889.1 - -After more than five years 1,407.4 - - -______________________________________________________________________________________________________________ 2,202.4 3,616.0 - -______________________________________________________________________________________________________________ The Group entered into commercial leases on certain property and items ofmachinery. There are two property leases at Bromborough. Each lease runs untilthe year 2106 and each lease contains a break clause exercisable in 2021. Themachinery leases have an average duration of between one and four years. Thereare no restrictions placed upon the lessee by entering into these leases. Company Company Land and Land and buildings buildings 2007 2006 £000 £000_________________________________________________________________________________________________________________Within one year 159.0 -After one year but not more than five years 636.0 -After more than five years 1,407.4 -_________________________________________________________________________________________________________________ 2,202.4 -_________________________________________________________________________________________________________________ 25. Authorised and issued share capital Group and Group and Group and Group and Company company company company 2007 2006 2007 2006 No. of No. of shares shares £000 £000_________________________________________________________________________________________________________________AuthorisedOrdinary shares of 1p each 200,000,000 100,000,000 2,000.0 1,000.0_________________________________________________________________________________________________________________Called up, allotted and fully paidAt 1 January 61,480,578 31,225,517 614.8 312.3Issued on exercise of share options 681,521 416,213 6.8 4.1Issued under bonus share scheme 79,120 - 0.8 -Issued on placing of new shares - 29,838,848 - 298.4_________________________________________________________________________________________________________________At 31 December 62,241,219 61,480,578 622.4 614.8_________________________________________________________________________________________________________________The company has one class of ordinary shares which carry no rights to fixedincome. On 27 July 2007, the Company increased its authorised share capital from100,000,000 ordinary shares of 1p each to 200,000,000 ordinary shares of 1peach. During the year 681,529 shares with a nominal value of £6,815.29 were allottedon the exercise of share options as follows: No of Average shares exercise price_________________________________________________________________________________________________________________Directors and related parties 156,250 £1.28Former directors 413,258 £1.57Employees and former employees 112,023 £1.43_________________________________________________________________________________________________________________ 681,521 £1.48_________________________________________________________________________________________________________________ During the year, the directors and other senior executives were given the optionto take all or part of their 2006 bonus entitlement in the form of shares in theCompany at a deemed issue price of £1.725. In total 79,120 shares were issued todirectors and other senior executives as follows: No ofName shares__________________________________________________________________________________________________________________Elliott Michael Mannis 37,623Stephen Peter Douty 5,772Peter John Davidson 2,437Richard Keith Gudgeon 2,924Other senior executives 30,364__________________________________________________________________________________________________________________ 79,120__________________________________________________________________________________________________________________ On 28 December 2006, the Company completed the placing of 29,838,848 newordinary shares. The Company received cash consideration of £49,234,100 for thisplacing prior to expenses of £3,005,200. During the prior year 416,249 ordinary shares with a nominal value of £4,162.49were allotted on the exercise of share options. On 2 February 2006 PhilipKenneth Wood exercised options over 78,125 shares at £1.28 per share and 150,000ordinary shares at £1.60 per share. On 31 May 2006 he exercised options over afurther 70,000 ordinary shares at £1.60 per share. On 13 April 2006 Mark Lockhart Muir exercised options over 39,062 ordinaryshares at £1.28. 26. Movements in equity Own Profit Currency Share Share Share Merger shares and loss translation option capital premium reserve held reserve reserve reserve Total £000 £000 £000 £000 £000 £000 £000 £000____________________________________________________________________________________________________________________GroupAt 1 January 2006 312.3 37,104.7 437.7 (484.0) (10,679.4) - - 26,691.3Total recognised income and - - - - (12,627.6) (591.6) - (13,219.2)expenseShare issues net of expenses 302.5 46,727.5 - - - - - 47,030.0Share-based payments - - - - 1,135.0 - - 1,135.0____________________________________________________________________________________________________________________At 31 December 2006 614.8 83,832.2 437.7 (484.0) (22,172.0) (591.6) - 61,637.1Total recognised income and - - - - (46,136.2) (90.1) - (46,226.3)expenseIssue of shares by the Company 7.6 1,137.1 - - - - - 1,144.7Share-based payments - - - - 1,857.0 - - 1,857.0Issue of equity instruments - - - - - - 12,787.0 12,787.0Adjustment to 2006 share issue - 82.1 - - - - - 82.1costs____________________________________________________________________________________________________________________At 31 December 2007 622.4 85,051.4 437.7 (484.0) (66,451.2) (681.7) 12,787.0 31,281.6____________________________________________________________________________________________________________________ CompanyAt 1 January 2006 312.3 37,104.7 - (484.0) (1,780.0) - - 35,153.0Total recognised income and - - - - (2,774.4) - - (2,774.4)expenseShare issues net of expenses 302.5 46,727.5 - - - - - 47,030.0Share-based payments - - - - 1,135.0 - - 1,135.0____________________________________________________________________________________________________________________At 31 December 2006 614.8 83,832.2 - (484.0) (3,419.4) - - 80,543.6Retained loss for the period - - - - (72,266.7) - - (72,266.7)Issue of shares by the Company 7.6 1,137.1 - - - - - 1,144.7Share option charge - - - - 1,857.0 - - 1,857.0Issue of equity instruments - - - - - - 12,787.0 12,787.0Adjustment to 2006 share issue - 82.1 - - - - - 82.1costs____________________________________________________________________________________________________________________At 31 December 2007 622.4 85,051.4 - (484.0) (73,829.1) - 12,787.0 24,147.7____________________________________________________________________________________________________________________ Share capital Share capital represents the nominal value of shares issued by the Company. Share premium Share premium represents the premium over the nominal value raised on the issueof shares by the Company. Own shares held D1 Oils Employee Benefit Trust holds 193,645 shares in D1 Oils plc which wereacquired at a total cost of £484,000. Shares held by the trust can be purchasedby employees exercising options under the Group's option scheme. At 31 December2007, the shares had a market value of £261,420. Merger reserve The merger reserve arose when the Company acquired 100% of the issued sharecapital of D1 Oils Trading Limited in consideration for ordinary shares in D1Oils plc. The acquisition was accounted for under the rules of merger accountingas a group reorganisation with the share premium being adjusted through themerger reserve. Share option reserve The share option reserve arose on the granting of options to BP on the formationof the D1-BP Fuelcrops Limited joint venture (see note 28). Reconciliation of movement in equity shareholders' funds - Group Year Year ended ended 31 December 31 December 2007 2006 £000 £000_________________________________________________________________________________________________________________Loss for the financial period (46,136.2) (12,627.6)Issue of shares by the Company (net of expenses) 1,144.7 47,030.0Share-based payments - employee share options 1,857.0 1,135.0Issue of equity instruments - options granted to BP 12,787.0 -Currency translation difference (90.1) (591.6)Adjustment to 2006 share issue costs 82.1 -_________________________________________________________________________________________________________________Net (decrease)/increase in equity shareholders' funds (30,355.5) 34,945.8Opening equity shareholders' funds 61,637.1 26,691.3_________________________________________________________________________________________________________________Closing equity shareholders' funds 31,281.6 61,637.1_________________________________________________________________________________________________________________ Reconciliation of movement in equity shareholders funds - Company Year Year Ended Ended 31 December 31 December 2007 2006 £000 £000_________________________________________________________________________________________________________________Loss for the financial period (85,053.7) (2,774.4)Issue of shares by the Company (net of expenses) 1,144.7 47,030.0Share-based payments - employee share options 1,857.0 1,135.0Issue of equity instruments - options granted to BP 12,787.0 -Adjustment to 2006 share issue costs 82.1 -_________________________________________________________________________________________________________________Net (decrease)/increase in equity shareholders' funds (69,182.9) 45,390.6Opening equity shareholders' funds 80,543.6 35,153.0_________________________________________________________________________________________________________________Closing equity shareholders' funds 11,360.7 80,543.6_________________________________________________________________________________________________________________ 27. Related party disclosures and principal subsidiary undertakings The Group has a 50:50 joint venture agreement with a joint venture partner, BPInternational Limited relating to D1-BP Fuel Crops Limited. Through this jointventure vehicle, the parties will plant, cultivate and harvest Jatropha curcas,and extract and trade jatropha oil. As part of the agreement, the Group providescertain technical support and agronomy services to the joint venture. During theyear ended 31 December 2007, the Group supplied assets and services to the jointventure totaling £2,119,000 and the amount due to the Group as at 31 December2007 was £2,119,000. The Group had a 50:50 joint venture agreement with a joint venture partner,Mohan Breweries and Distilleries Limited, relating to D1 Oils Mohan Pty Limited.The agreement required Mohan Breweries to lead on planting of jatropha and forD1 Oils Trading Limited to lead on design and implementation oftransesterification technology. During the year ended 31 December 2007, D1 OilsTrading Limited subscribed for new shares in D1 Oils Mohan Pty Limited for anamount totaling £189,463. In entering into the joint venture arrangement with BPInternational Limited (note 13), D1Oils Trading Limited transferred its interestin D1 Oils Mohan Pty Limited to D1-BP Fuel Crops Limited on 1 October 2007. The Group entered into a 50:50 joint venture agreement with a joint venturepartner, Williamson Magor & Co Limited relating to D1 Williamson Magor Bio FuelLimited. The joint venture was established to plant, cultivate and harvestjatropha curcas and extract and trade jatropha oil. During the year ended 31December 2007, D1 Oils Trading Limited subscribed for new shares in D1Williamson Magor Bio Fuel Limited for amounts totaling £720,698. In enteringinto the joint venture arrangement with BP International (note 13), D1 OilsTrading Limited transferred its interest in D1 Williamson Magor Bio Fuel Limitedto D1-BP Fuel Crops Limited on 1 October 2007. Any related party transactions involving Directors are shown in note 6. During the year to 31 December 2007, the Company provided net funding tosubsidiary companies within the Group as follows: 2007 2006 £000 £000_________________________________________________________________________________________________________________D1 Oils Trading Limited 22,372.5 15,253.2D1 Oils Plant Science Limited 431.6 -D1 (UK) Limited 7,322.4 5,828.0D1 Oil Subsidiary Limited 8,038.2 683.2_________________________________________________________________________________________________________________Total 38,164.7 21,764.4_________________________________________________________________________________________________________________ At 31 December 2007, net funding balances due to the Company from subsidiaryundertakings was as follows: 2007 2006 £000 £000_________________________________________________________________________________________________________________D1 Oils Trading Limited 48,066.5 25,693.0D1 Oils Plant Science Limited 431.6 -D1 (UK) Limited 14,089.1 6,766.7D1 Oil Subsidiary Limited 8,735.5 697.3Impairment (70,891.1) -_________________________________________________________________________________________________________________Total 431.6 33,157.0_________________________________________________________________________________________________________________ The funding is repayable upon demand. With the exception of D1 Oils PlantScience Limited, the Company does not anticipate any repayments being madewithin one year and those balances have been fully impaired. The funding is notsubject to any interest charge. 28. Share-based payments - Group and Company All employees share option plan Awards are made to staff at the discretion of the Board of Directors either onappointment, at salary review time, or any other time that the Directors deemappropriate. There are no specific performance criteria attached to the options. Options granted vest 1/3 after 12 months with the remaining 2/3 vesting in equalmonthly instalments over the next 24 months. Equity settlement is applied to alloptions, there is no cash alternative. The expected life of the options has been assessed at 2.5 years for optionswhich vest 1 year from grant and 4 years for options which vest after 1 year.The contractual life of the options is 10 years. The fair value of the awards are calculated using the Black-Scholes model andsubsequently adjusted for gain dependency, assessed at 15%, and forfeitures,assessed at 10% over the life of the award. A volatility adjustment consideredappropriate for the sector and the age of the Group is included in thecalculation. In forming the volatility assumption, the Directors haveconsidered the volatility of the share price since the date of listing. Thevolatility of companies operating in the same sector has also been reviewed.Based on these factors, volatility has been assessed at 65% for awards grantedbefore 1 March 2007 and 60% for awards granted thereafter. Appropriate risk freerates (as defined by the Bank of England) between 4.4% and 5.6% have beenapplied to individual awards and a zero dividend yield are applied to thecalculation. The expenditure recognised in the income statement of the Group and the Companyfor share-based payments in respect of employee services received during theyear to 31 December 2007 is £1,857,000 (2006: £1,135,000). This expense allrelates to equity-settled, share-based payment transactions. The following table illustrates the number and weighted average exercise price(WAEP) of, and movements in, share options during the year. 2007 2007 2006 2006 Number WAEP Number WAEP_________________________________________________________________________________________________________________Outstanding at 1 January 3,452,517 2.12 3,452,517 2.12Granted during the year 3,177,367 1.85 1,514,799 2.47Forfeited during the year (562,290) 2.66 224,187 1.45Exercised (681,521) 1.48 415,311 1.60Outstanding at 31 December 5,386,073 1.99 3,452,517 2.12_________________________________________________________________________________________________________________Exercisable at 31 December 2,106,860 2.09 1,615,180 1.75_________________________________________________________________________________________________________________ The range of exercise prices for options outstanding at the end of the year was128p - 290p. The weighted average remaining contractual life of the options inissue at 31 December 2007 is 8.6 years. Option agreement with BP International Limited During the year a joint venture was established with BP International Limited.As part of this agreement, options were granted to BP International Limitedrepresenting 16% of the issued share capital of the Company after exercise ofthe options. The options are exercisable at the following prices: Options Exercise price__________________________________________________________2,931,367 ordinary shares 210p per share2,931,367 ordinary shares 230p per share2,931,367 ordinary shares 265p per share2,931,366 ordinary shares 300p per share These options may be exercised at any time between 1 October 2007 and 1 October2010. The fair value of the awards is calculated using the Binomial model. Avolatility assumption of 60% is included in the calculation and consideredappropriate for the sector and age of the Group. In forming the volatilityassumption the Directors have considered the volatility of the share price overthe two years to the date of grant. An appropriate risk free rate as defined bythe Bank of England of 5.7% and a zero dividend yield are applied to thecalculation. The total fair value of these options for the Group and the Company is£12,787,000 and this is all recognised in equity in the year to 31 December2007. The following table illustrates the number and weighted average exercise prices(WAEP) of, and movements in, these options during the year. 2007 2007 Number WAEP_________________________________________________________________________________________________________________Outstanding at 1 January - -Granted during the year 11,725,467 2.51Exercised - -Outstanding at 31 December 11,725,467 2.51_________________________________________________________________________________________________________________Exercisable at 31 December 11,725,467 2.51_________________________________________________________________________________________________________________ The weighted average fair value per option of options granted to BPInternational Limited during the year was 251.3p. The range of exercise pricesfor options outstanding at the end of the year was 210p - 300p. The weightedaverage remaining contractual life of the options in issue at 31 December 2007is 2.8 years. 29. Financial risk management objectives and policies The main risks arising from the Group's operations are interest rate risk,liquidity risk, foreign currency translation risk and certain commodity pricerisks. Commodity risk During the year, the Group hedged its exposure to fluctuating Ultra Low SulphurDiesel (ULSD) prices by entering into a swap transaction. Up until 30 September2007, the Directors considered this to be an effective cash flow hedge and afair value adjustment of £1,100,600 has been recognised directly in equity andis shown in the statement of recognised income and expense. From 1 October, whenthe hedge was no longer considered effective, the fair value adjustment of£1,100,600 has been reversed out of equity and is shown as a transfer to theincome statement in the statement of recognised income and expense. At 31December 2007 the fair value of the swap was £1,101,700 (2006: £nil) which isdisclosed under other financial liabilities (note 22). The following table demonstrates the sensitivity of the Group's profit beforetax and equity to a reasonably possible change in the price of ULSD with allother variables held constant, through the impact of variable ULSD prices. Increase/ Effect on profit Effect on decrease before tax equity in ULSD rate £000 £000_________________________________________________________________________________________________________________2007 +10% (289.5) (289.5) -10% 289.5 289.5 2006 +10% 96.5 96.5 -10% (96.5) (96.5) Liquidity risk The Group seeks to manage financial risk to ensure sufficient liquid funds areavailable to meet foreseeable needs while investing cash assets safely andprofitably. The table below summarises the maturity profile of the Group's financialliabilities at 31 December 2007 and 2006 based on contractual undiscountedpayments. Interest rates on variable rate loans are based on the rate prevailingat the balance sheet date. Year ended 31 December 2007 Less than 3 to 12 1 to 5 On demand 3 months months years > 5 years Total £000 £000 £000 £000 £000 £000______________________________________________________________________________________________________________Interest bearing loans and borrowings - 181.7 544.1 3,330.5 543.5 4,599.8Trade and other payables - 7,046.3 - - - 7,046.3ULSD swaps - 742.9 358.8 - - 1,101.7Foreign currency contracts - 33.6 - - - 33.6______________________________________________________________________________________________________________ - 8,004.5 902.9 3,330.5 543.5 12,781.4______________________________________________________________________________________________________________ Year ended 31 December 2006 Less than 3 to 12 1 to 5 On demand 3 months months years > 5 years Total £000 £000 £000 £000 £000 £000______________________________________________________________________________________________________________Interest bearing loans and borrowings - 180.8 541.7 3,927.6 621.0 5,721.1Trade and other payables - 5,020.8 - - - 5,020.8______________________________________________________________________________________________________________ - 5,201.6 541.7 3,927.6 621.0 10,741.9______________________________________________________________________________________________________________ Interest rate risk The Group has one mortgage obligation, the terms of which include a floatinginterest rate of 1.75% above LIBOR. The capital outstanding at 31 December 2007was £780,000 (2006: £840,000 at 1.75% above LIBOR). The following table demonstrates the sensitivity of the Group's profit beforetax and equity to a reasonably possible change in LIBOR rates, with all othervariables held constant, through the impact of floating rate borrowings. Increase/ Effect on profit Effect on decrease before tax equity in LIBOR rate £000 £000________________________________________________________________________________________________________________2007 +0.5% (4.1) (4.1) -0.5% 4.1 4.1 2006 +0.5% (4.2) (4.2) -0.5% 4.2 4.2 Foreign currency risk An explanation of the Group's financial instrument risk is included in theDirectors' report in the principal risks and uncertainties section. A significant amount of the Group's raw material and other input costs isdenominated in US Dollars and it has entered into a number of forward exchangecontracts to buy dollars at a fixed price to mitigate the effect of fluctuatingexchange rates. In assessing the fair value of forward exchange contracts at theyear end, the Group and the Company have recognised financial assets of £56,300(2006: £nil) (note 17) and financial liabilities of £33,600 (2006: £nil) (note22). The following table demonstrates the sensitivity of the Group's profit beforetax and equity to a reasonably possible change in the US Dollar exchange rate,with all other variables held constant, through the impact of floating rateborrowings. Increase/ Effect on profit Effect on decrease before tax equity in USD rate £000 £000________________________________________________________________________________________________________________2007 +5% (84.0) (84.0) -5% 92.8 92.8 2006 +5% 89.6 89.6 -5% (99.0) (99.0) Managing capital The Group aims to optimise its capital structure by holding an appropriate levelof debt relative to equity in order to maximise shareholder value. Theappropriate level of debt is set with reference to a number of factors andfinancial ratios including expected operating and capital expenditure cashflows, contingent liabilities and the level of restricted cash as well as thegeneral economic environment. The Group aims to control its capital structure byissuing new shares and raising debt finance to the extent that it is possible oncommercially acceptable terms. The economic conditions currently prevailingwithin the biofuels industry have restricted the Group's ability to raise debtfinance and exert any significant degree of control over its gearing ratio. As aconsequence, the Group is currently financed primarily from equity. The Groupmonitors capital using a gearing ratio, being long-term liabilities divided byequity shareholder funds plus long-term liabilities. Year Year Ended Ended 31 December 31 December 2007 2006_________________________________________________________________________________________________________________ £000 £000Long-term liabilitiesNon-current obligations under finance leases 2,587.2 2,983.6Non-current instalments due on mortgage 720.0 780.0_________________________________________________________________________________________________________________Total long-term liabilities 3,307.2 3,763.6Equity 27,685.0 12,570.8_________________________________________________________________________________________________________________Total equity and long-term liabilities 30,992.2 16,334.4_________________________________________________________________________________________________________________Gearing ratio 10.7% 23.0%_________________________________________________________________________________________________________________ Fair values of financial assets and financial liabilities Set out below is a comparison by category of carrying amounts and fair values ofall of the Group's financial instruments that are carried in the financialstatements. Book value Fair value Book value Fair value 2007 2007 2006 2006 £ £000 £000 £000 £000_________________________________________________________________________________________________________________Financial assetsCash and short-term deposits 3,596.6 3,596.6 49,066.3 49,066.3Long-term deposits and cash collateral 10,679.7 10,679.7 2,317.3 2,317.3Forward currency contracts 56.3 56.3 - -Financial liabilitiesInterest bearing loans and borrowings 760.0 760.0 852.8 852.8Finance lease and hire purchase agreements 3,020.1 3,292.0 3,345.0 3,697.4Derivative financial instruments 1,101.7 1,101.7 - -Forward currency contracts 33.6 33.6 - - 30. Reconciliation of net assets, profit and cash flow under UK GAAP to IFRS The group has applied IFRS 1, "First Time Adoption of International financialReporting Standards", to provide a starting point for reporting under IFRS. TheGroup's date of transition to IFRS is 1 January 2006 and all comparativeinformation in the financial statements is restated to reflect the Group'sadoption of IFRS, except where otherwise required or permitted under IFRS1. The following is a summary of the key reconciling items: IFRS3 - Business combinations The Group has taken the option under the transitional arrangements not to applyIFRS3 'Business Combinations' retrospectively to acquisitions that occurredprior 31 December 2005. IFRS3 does not permit the annual amortisation of goodwill, but does require anannual impairment review of carrying values. Under UK GAAP goodwill wasamortised over the anticipated useful economic life of the business acquired.Goodwill amortisation of £3,500 has been reversed in the year to 31 December2006. IFRS5 - Assets held for disposal IFRS5 requires that any assets held for sale should be separately classified onthe balance sheet and any non-current assets classified as being held for saleshould not be depreciated from the date they meet the criteria to be recognisedas held for sale. As at 31 December 2006 £100,000 of assets have been disclosedas held for resale relating to some assets held in Ghana. There was no impact onreported profits. IAS38 - Intangible Assets Under IAS16 some items of software which do not meet the criteria of fixedassets have been reclassified as intangible assets. The adjustment was £55,000at 31 December 2006. IAS1 - Presentation of financial statements IAS 1 requires the split between current and non-current assets and liabilitieson the face of the balance sheet. First time adoption (IFRS1) In accordance with the requirements of IFRS 1 'First-time Adoption ofInternational Financial Reporting Standards', the Group is subject to a numberof voluntary and mandatory exemptions from full restatement to the requirementsof IFRS, which have been applied as follows: • IAS 32 'Financial Instruments: Disclosure and Presentation', and IAS 39 'Financial Instruments: Recognition and Measurement' was adopted with effect from 1 January 2006, • The Group has not applied IFRS 3 'Business Combinations' retrospectively to business combinations that occurred before 1 January 2006, and • IFRS 2 'Share-based Payments' has been applied to all grants of equity instruments after 7 November 2002 that had not vested at 1 January 2007. IAS7 - Cash flow statements IAS7 'Cash flow statements' defines cash as money an entity holds and moneydeposited with financial institutions that can be withdrawn without notice. Cashequivalents are defined as short-term, highly liquid investments that arereadily convertible to known amounts of cash and which are subject to aninsignificant risk of changes in value. The "short-term" characteristic of acash equivalent is generally taken as a maturity of three months from the dateof acquisition. The balance sheet has been adjusted to reclassify amounts heldon deposit with maturity periods greater than three months and restricted cashof £2,317,000 at 31 December 2006 as other financial assets. IAS 19 - Employee benefits IAS 19 'Employee Benefits' requires that holiday accrued by employees, but nottaken at the balance sheet date must be provided for. There is no impact at 31December, as the Group's holiday year is coterminous with its financial year. IAS 16 Property, plant and equipment IAS 16 requires maintenance spares, previously recorded as stock, to berecognised as non-current assets where the entity expects to use these spares inmore than one period or if the spare parts can be used only in connection withan item of property, plant or equipment. The balance sheet has been adjusted toreflect this reclassification with £41,900 reclassified from inventories tofixed assets as at 31 December 2006 together with £2,400 of depreciation in theyear to 31 December 2006. IAS 41 Biological assets IAS 41 'Biological Assets' requires certain assets previously recognised asproperty, plant and equipment to be reclassified as biological assets. Thebalance sheet as at 31 December 2006 has been adjusted to reflect areclassification of £74,500. Reconciliation of Group net assets 31 December 1 January 2006 2006 £000 £000________________________________________________________________________________________________________________Total net assets as reported under UK GAAP 61,636.0 26,691.3Depreciation of capital spares (2.4) -Reverse amortisation of goodwill 3.5 -________________________________________________________________________________________________________________Total net assets as restated under IFRS 61,637.1 26,691.3________________________________________________________________________________________________________________ Reconciliation of Group reported profit 2006 £000_________________________________________________________________________________________________________________Profit after tax as reported under UK GAAP (12,628.7)Depreciation of capital spares (2.4)Reverse amortisation of goodwill 3.5_________________________________________________________________________________________________________________Profit after tax as restated under IFRS (12,627.6)_________________________________________________________________________________________________________________ There were no material differences to the net assets or the reported profit ofthe Company. Restatement of cash flow statement from UK GAAP to IFRS The transition from UK GAAP to IFRS has no effect upon the reported cash flowsgenerated by the Group. The IFRS cash flow statement is presented in a differentformat from that required under UK GAAP with cash flows split into threecategories of activities - operating activities, investing activities andfinancing activities. The reconciling items between the UK GAAP presentation andthe IFRS presentation have no net impact on the cash flows generated. In preparingthe cash flow statement under IFRS, cash and cash equivalents include cash atbank and in hand, highly liquid interest bearing securities with originalmaturities of three months or less, and bank overdrafts. Under UK GAAP highlyliquid interest bearing securities were not classified as cash equivalents. 31. Contingent assets During the course of construction of the D1-20 transesterification units, one ofthe Group's subsidiary companies was supplied with components which subsequentlyproved to be out of specification. This resulted in commissioning delays and inthe company incurring rework costs. Discussions with the supplier are ongoingbut the Directors have a reasonable expectation that compensation terms will beagreed within the next 12 months although the amount is still uncertain. Theincome will be recognised when negotiations have been concluded. 32. Contingent liabilities (a) Nandan Biomatrix Limited Between 10 August 2004 and 26 November 2004, D1 entered into a number ofagreements in India with Nandan Biomatrix Limited ("Nandan") for the supply anddevelopment of jatropha seeds. On 17 June 2005, Nandan submitted a claim to D1for Rs. 80,796,029, (approximately £1.0m) alleging that D1 was in breach ofthese agreements and that a termination agreement (extinguishing Nandan'sclaims) is a forgery. D1 considers these claims groundless and accordingly hasnot made any provision in respect of them. On 25 March 2008, Nandan obtained a "freezing" injunction in the Indian courts against "D1 Oils Limited". Havingtaken Indian legal advice, D1 does not consider the injunction to be of anyeffect, although steps are being taken to dissolve it on substantive grounds. (b) D1-BP Fuel Crops Limited D1 has entered into discussions with D1-BP Fuel Crops and BP as to whether ornot there was a planting shortfall as at 31 July 2007 for the purposes of therelevant provisions of the joint venture agreement. A provision has been made inrelation to this matter and the Directors' current assessment is that there willbe no further financial obligation arising in this regard and they expect toreach a satisfactory agreement with their joint venture partner. 33. Capital commitments At the end of the year capital commitments were: 2007 2006 £000 £000_________________________________________________________________________________________________________________Contracted but not provided for in the accounts 1,967.7 2,700.0_________________________________________________________________________________________________________________ 34. Post balance sheet events (a) Cessation of refining and trading activities at Middlesbrough andBromborough D1 announced on 7 March 2008 that a consultation process had commenced withemployees at both the Middlesbrough and Bromborough sites. It is the intentionof the Group to cease its refining and trading operations and consultations asto the future of the sites will include their potential closure and sale. As aresult, certain contractual commitments which have become onerous are to berenegotiated or terminated and certain restructuring costs will be incurred. (b) Placing of ordinary shares Subject to shareholder approval, the Company has announced a proposed placing of64,384,000 ordinary shares at 25p per share to raise additional capital of£14.9m net of expenses of £1.2m. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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