29th Sep 2005 07:03
D1 Oils Plc29 September 2005 D1 Oils Plc Interim Results D1 Oils plc, the UK-based global producer of biodiesel from renewable energycrops, announces its interim results for the six month period from 1st January2005 to 30th June 2005. Highlights •Agronomy programme underway to secure consistent, high yields of jatropha oil with support of expert plant breeders and tissue culture specialists •Increased jatropha planting target of 267,000 ha by end of 2006 remains on track •Bank loan financing arranged for jatropha planting by Indian farmers increases threefold to approximately £45m •Successful testing of refinery technology on alternative feedstocks opens up new opportunities for deployment of D1 20 •Commenced large scale D1 200 refinery programme •Strengthened management team Philip Wood, Chief Executive Officer: "Alternative energy sources are a global imperative. Our business addresses thegrowing worldwide demand for cleaner, low carbon fuel. Our primary feedstock isjatropha curcas, a hardy bush which does not require arable land. Jatropha seedsare crushed to produce vegetable oil for refining into biodiesel. We arebuilding a global supply chain to harvest jatropha oil from D1 plantationsacross the developing world and to refine jatropha and other third partyvegetable oil feedstocks into biodiesel using our proprietary technology." Enquiries: D1 Oils plc Philip Wood, CEO 020 7321 3885 Elliott Mannis, CFO 020 7321 3885 Graham Prince, Head of Corporate Communications 020 7321 3892 07973 323840 Brunswick Gill Ackers 020 7404 5959 Helen Barnes 020 7404 5959 Notes to editors D1 Oils plc is the owner of technical, marketing, logistical and otherintellectual property related to the establishment, development and harvestingof jatropha plantations, the extraction of oil from the harvested seed and theproduction of biodiesel and other valuable by-products from jatropha and othervegetable oils. Chairman's Report I am pleased to announce our results for the six months ended 30 June 2005 andto be able to report on the progress the Company is making in establishingitself as a leading global producer of biodiesel and biodiesel feedstock. Having raised an additional £24.4 million net in funding in June, we are nowable to deliver our expanded jatropha planting program, and to advancedevelopment and deployment of our proprietary refinery technology. Theflexibility of our technology is enabling us to diversify our feedstock andproduce biodiesel ahead of the first jatropha harvests. Our financial position reflects the fact that we are building our business andinvesting for future growth. In the six months ended 30 June 2005, the companymade a loss on ordinary activities before taxation of £3.1m, which represents aloss per ordinary share of 14.25p. The net cash balance at the end of the periodwas £26.4m. This excludes £3.5m loaned by the Company to the Employee ShareTrust, which was substantially repaid in July. Significant progress has been achieved in the business over the last 12 months,and I am delighted that its evolution has been matched by the strengthening inbreadth and depth of our management team. The Company is developing from a youngbusiness driven primarily by entrepreneurial and individual decision making, toa more established, team-focused organization. We are delighted that Elliott Mannis chose to join us as Chief FinancialOfficer. Steve Douty has been promoted to the Board as Regional Director, inrecognition of his major contribution to the development of our global businessmodel. Ian Stokes has recently joined as Business Development Director, and itis expected that he will join the Board by the end of the year. Chris Chattertonand Demetri Pappadopoulos have been appointed to head our operations in SouthEast Asia and Africa respectively. Mark Quinn, a colleague, close friend and founder director of D1, is retiringfrom the Board. Mark has made a major contribution to establishing the D1business. The Board is very grateful to him for his efforts, and we wish himwell for the future. The Board has appointed Dr Clive Morton to the position of Deputy Chairman andSenior Independent Director. At the same time, Clive takes responsibility forthe Nominations Committee, and hands over Chairmanship of the Audit Committee toAlex Worrall. Barclay Forrest remains Chair of the Remuneration Committee. Myconfidence in the enlarged team's ability to run the business is measured by mydecision to move from Executive to Non Executive Chairman with immediate effect. We remain confident in the prospects for the business. Our strategy continues tobe supported by national policy initiatives to reduce pollution and transportemissions, and by growing international awareness, demonstrated at the recent G8Summit, of the need to promote sustainable development in the world's poorercountries. These trends are strengthened by the increasing demand for oil andoil related products, and by the recognition of the need to diversify fuelsupplies in a tightening oil market. We are well positioned to meet the demandfor biodiesel emerging in the global energy economy. A detailed business review is contained in the Chief Executive's report whichfollows. Chief Executive's Report Planting Strategy During the period we increased our planting target for jatropha to the end ofthe 2006 planting season from 37,500 hectares to 267,000 hectares. We expect thebulk of our planting to take place next year. We are pioneers in the planting ofjatropha on a commercial scale, and we operate in the often challengingenvironmental and business conditions common in developing countries. Where suchchallenges have arisen we have addressed them promptly. We have put in place asolid foundation on which to scale up planting in order to achieve our increasedtarget. Agronomy strategy Jatropha is an under developed crop and initial yields from plantations withindigenous wild seeds may be modest. However, the application of advancedagronomy techniques offers the potential for consistent and significantly higheryields. We are already at the forefront of this research and we have collectedhigh yielding varieties from around the world which are being tested at ourProduct Development Centre in Coimbatore, India. We are now undertaking a majoragronomy programme, working with leading international plant breeders and tissueculture specialists. The objective is to develop further our own high yieldingplant varieties and produce quality planting seeds in volumes sufficient to meetthe demand of significantly accelerated planting targets over the coming years. Refining strategy Our D1 20 development refinery, currently located in the North West of England,completed 24x7 trials to produce biodiesel meeting the EU's EN 14214 standardfrom rapeseed oil. We have now successfully completed trials of RBD palm olein,and we expect to have tested a number of other oils by the end of the year.These trials demonstrate the flexibility of our proprietary refining technologyto deal with a range of potential feedstocks. We have a significant opportunityto leverage this capability to build our refining operations more quickly aheadof the availability of jatropha in scale, and to produce biodiesel blends thatoptimise output characteristics for different markets. We plan to transfer theD1 20 test refinery to new premises on Teesside around the turn of the year.This will bring together our refinery research, testing and assembly operations,and become a showcase for potential partners. Our North East operational staffwill also be based there. During the period we raised the number of D1 20s we aim to build by the end of2006 to nine. We now expect that four of these will be deployed progressivelyduring the first half of 2006, and will be fully commissioned shortly thereafterto produce biodiesel. Manufacture of these units has commenced. Given thesignificant opportunities emerging for the large scale refining of a range offeedstocks, we are accelerating our development programme for the D1 200, whichwill provide an approximately tenfold increase in capacity over the D1 20. We have completed a pilot toll processing programme in Belgium with DowHaltermann, a Dow business unit, whereby EN 14214 biodiesel was produced fromrapeseed oil and sold to customers in Germany. This is an important first stepin developing our supply capability to the continental European market. It hasenabled us to build experience in logistics and quality control, which willsupport the eventual supply of jatropha-based biodiesel to this market. Carbon Credits D1 refineries operating in developing countries should qualify for credits byenabling fuel switching from fossil fuel to biodiesel. In addition our jatrophaagroforestry and planting programmes have the potential to produce carboncredits through the CO2 absorbed by the Jatropha trees. We are working withleading technical advisers to ensure that these credits are secured. Global Operations Business in India is moving ahead strongly, particularly in agronomy researchand jatropha planting. South East Asia continues to show significant potentialfor jatropha planting and refining of alternative feedstocks. Encouragingdevelopments in Southern Africa have more than offset slower progress in theMiddle East and North Africa. Despite initial delays, China remains a key partof our long term strategy. India We have a number of relationships, of which the most significant is the largescale contract farming programme undertaken through our joint venture, D1 MohanBio Oils. This comprises the largest component of our increased two year globalplanting target. After a slow start, planting is progressing rapidly. Inaddition to the previously announced £15 million in financing from the StateBank of India, D1 Mohan has arranged loan finance from Indian Bank for farmersin Tamil Nadu, Andhra Pradesh and Chhattishgarh for an initial 100,000 hectaresof planting. This increases threefold to approximately £45m the total bankfunding available for Indian farmers contracted with D1 Mohan. South East Asia Government initiatives to introduce biodiesel blends for transport are underwayin Indonesia, Malaysia, the Philippines and Thailand. The region has significantresources of palm and coconut crops that can produce vegetable oil for biodieselrefining, and conditions in many areas are suitable for jatropha planting, particularly where land requires regeneration following deforestation. Followingthe appointment of Chris Chatterton as head of operations in the region, we arestrengthening our existing network of offices and relationships to pursue aggressively opportunities for commercial planting of jatropha and the application of D1's technology to refine other vegetable oil feedstocks into biodiesel. China The potential demand for biodiesel, the suitability of its climate for jatropha,and the need to create jobs in rural areas make China a very promising market.The financing partner for our initial joint venture did not deliver the fundingpromised, and the agreement therefore lapsed. We maintain our good relationshipwith Sichuan University and with senior level government contacts and we are nowin early stage discussions with other potential joint venture partners. Middle East and Africa Legislative changes in South Africa will introduce compulsory biodiesel blendsby 2007 and the government is expected to announce subsidies for biodieselproduction early in 2006. This will provide a very positive environment fordeployment of our refinery technology, and our first D1 20 refinery is expectedto be deployed in Q1 2006. Until sufficient jatropha feedstock is available, wewill accelerate refining operations using alternative feedstocks such as palmolein and soya oil. Our strengthened African management team is progressing ourexisting planting relationship with Stancom Tobacco in Zambia, and developingnew commercial planting in Cameroon, Malawi, Mozambique, Swaziland and Tanzania.These developments more than offset slower than hoped for progress in the MiddleEast and North Africa. We have also found the logistics of harvesting wild seedsin Ghana and Madagascar to be uneconomic. Finance Review The significant progress and development in the business is reflected in thefinancial results for the six months ended 30 June 2005. The financial results have been prepared on a basis consistent with previousperiods except that the Group has adopted a new accounting policy related to itsmanaged plantations. The direct costs of site preparation and planting are beingcapitalised into tangible fixed assets and then amortised over the useful lifeof the trees, which is estimated at 30 years. Total Group turnover of £32k (nil previously) in the six months to 30 June 2005arose from the sale of biodiesel produced by the test refinery during trials. Operating expenses of £3.2m (2004 - £0.9m) reflect the growth in the managementteam and efforts expended on business development. The cost of feedstock andchemicals purchased for refinery testing, from which the biodiesel produced wasnot subsequently sold, has been reflected as a development cost within operatingexpenses. Interest earned of £0.2m relates to the monies on deposit and arisingfrom the share placing completed in June. The loss on ordinary activities before and after taxation was £3.1m (2004 -£0.9m) and the loss per ordinary share was 14.25p (2004 - £11.68). As losseswere incurred, there was no corporation tax payable. Cash on hand at 30 June was £26.4m (2004 - £9.6m). The net inflow in the sixmonths to 30 June was £16.9m (2004 - £22k). The most significant element in thecash flow was the proceeds from the share placing which was completed in June.£25.8m was raised before expenses of £1.4m. A further £3.5m was received in July arising from the disposal of shares in theCompany by the D1 Oils Employee Benefit Trust. The shares held by the Trust wereincluded in the balance sheet at 30 June and shown as own shares held withincapital and reserves. CONSOLIDATED PROFIT AND LOSS ACCOUNTUnaudited results for the six months ended 30 June 2005 Six months Six months Year ended 31 ended 30 June ended 30 June December 2005 2004 2004 Unaudited Unaudited Audited Note £000 £000 £000Turnover:Group and share of joint venture 32.1 - -Less: Share of joint venture (0.9) - - -------- -------- ---------Group turnover 31.2 - -Cost of sales (24.5) - - -------- -------- ---------GROSS PROFIT 6.7 - -Operating expenses (3,236.2) (913.4) (3,024.8) -------- -------- ---------OPERATING LOSS (3,229.5) (913.4) (3,024.8)Share of operating lossof joint venture (17.0) -------- -------- ---------GROUPOPERATING LOSS (3,246.5) - -Interest receivable andsimilar income 168.6 - 77.2Interest payable andsimilar charges - - (116.7) -------- -------- ---------LOSS ON ORDINARY ACTIVITIESBEFORE TAXATION 3 (3,077.9) (913.4) (3,064.3)Tax on loss on ordinary - -activities -------- -------- ---------LOSS ON ORDINARY ACTIVITIESAFTER TAXATION (3,077.9) (913.4) (3,064.3)Equity minority interests - - - -------- -------- ---------RETAINED LOSS FOR THE FINANCIAL PERIOD WITHDRAWN FROM RESERVES (3,077.9) (913.4) (3,064.3) -------- -------- --------- LOSS PER ORDINARY SHAREBasic and diluted lossper ordinary share 4 14.25p £11.68 47.53p -------- -------- --------- Consolidated statement of total recognised gains and lossesUnaudited results for the six months ended 30 June 2005 Six months Six months Year ended ended 30 June ended 30 June 31 December 2005 2004 2004 Unaudited Unaudited Audited £000 £000 £000Retained loss for thefinancial period (3,077.9) (913.4) (3,064.3)Currency translationdifference 1.0 (1.9) 0.0 -------- -------- ---------Total recognised loss for the financial period (3,076.9) (915.3) (3,064.3) -------- -------- --------- Reconciliation of movement in equity shareholders' funds/(deficit)Unaudited results for the six months ended 30 June 2005 Six months Six months Year ended ended 30 June ended 30 June 31 December 2005 2004 2004 Unaudited Unaudited Audited £000 £000 £000Retained loss for the financial period (3,077.9) (913.4) (3,064.3)Issue of shares by thecompany (net of expenses) 24,425.1 484.5 13,023.4Purchase of own shares (3,479.8) - -Merger reserve adjustment - - 437.7Currency translationdifference 1.0 (1.9) - -------- -------- ---------Net increase/(decrease)in equity shareholders'funds 17,868.4 430.8) 10,396.8Opening equityshareholders' funds/(deficit 9,692.3 (704.5) (704.5) -------- -------- ---------Closing equityshareholders'funds/(deficit) 27,560.7 (1,135.3) 9,692.3 -------- -------- --------- CONSOLIDATED BALANCE SHEETUnaudited results for the six months ended 30 June 2005 As at As at As at 30 June 30 June 31 2005 2005 December 2004 Unaudited Unaudited Audited Note £000 £000 £000FIXED ASSETSIntangible 65.8 420.2 67.6Investment in joint ventureShare of gross assets 28.1 - -Share of gross liabilities (45.1) - - -------- -------- ---------Share of net assets (17.0) - -Tangible 1,421.6 807.1 831.1 -------- -------- --------- 1,470.4 1227.3 898.7 -------- -------- ---------CURRENT ASSETSDebtors 793.9 216.9 79.3Stock 308.0 - -Cash at bank and in hand 26,449.9 25.6 9,562.4 -------- -------- --------- 27,551.8 242.5 9,641.7CREDITORS:amounts falling duewithin one year (1,376.8) (1,846.3) (816.2) -------- -------- ---------NET CURRENTASSETS/(LIABILITIES) 26,175.0 (1,603.8) 8,825.5 -------- -------- ---------TOTAL ASSETS LESS CURRENTLIABILITIES 27,645.4 (376.5) 9,724.2CREDITORS:amounts falling dueafter more than one year (84.7) (758.8) (31.9) -------- -------- ---------NETASSETS/(LIABILITIES) 3 27,560.7 (1,135.3) 9,692.3 -------- -------- --------- CAPITAL AND RESERVESShare capital 5 312.4 125.0 214.9Share premium 5 37,136.0 359.4 12,808.4Merger reserve 5 437.7 - 437.7Own shares held 5 (3,479.8) - -Profit & loss reserve 5 (6,845.6) (1,619.7) (3,768.7) -------- -------- ---------TOTAL EQUITY SHAREHOLDERS'FUNDS/(DEFICIT) 27,560.7 (1,135.3) 9,692.3 -------- -------- --------- CONSOLIDATED CASH FLOW STATEMENTUnaudited results for the six months ended 30 June 2005 Six months Six months Year ended 31 ended 30 June ended 30 June December 2005 2004 2004 Unaudited Unaudited Audited Note £000 £000 £000Net cash (outflow) fromoperating activities a (3,678.9) (358.9) (3,065.0) -------- -------- ---------Returns on investmentsand servicing of financeInterest paid on financelease - - (116.6)Interest received 168.6 - 77.2 -------- -------- ---------Net cash inflow fromreturns on investments 168.6 0.0 (39.4) -------- -------- ---------Capital expenditurePayments to acquiretangible fixed assets (600.4) (6.4) (38.2) -------- -------- ---------Net cashflow from capitalexpenditure (600.4) (6.4) (38.2) -------- -------- ---------FinancingIssue of ordinary sharecapital 25,791.4 391.1 14,951.3Expenses paid in connectionwith share issues (1,366.3) - (1,490.2)Purchase of own shares (3,479.8) - -New long term loans 58.9 - -Capital element offinance lease (6.0) (3.0) (759.0) -------- -------- ---------Net cashflow from financing 20,998.2 388.1 12,702.1 -------- -------- ---------Increase in cash in theperiod b 16,887.5 22.8 9,559.5 -------- -------- --------- Notes to the consolidated cash flow statementUnaudited results for the six months ended 30 June 2005 a) Reconciliation of operating loss to operating cash flow Six months Six months Year ended 31 ended 30 June ended 30 June December 2004 2005 2004 Unaudited Unaudited Audited £000 £000 £000Group operating loss (3,229.5) (913.4) (3,024.8)Depreciation 10.9 4.3 12.0Amortisation of goodwill 1.8 - 2.6(Increase)/decrease indebtors (714.6) (53.9) 64.5(Increase)/decrease instock (308.0) - -Increase/(decrease) increditors 560.5 604.1 (119.3) -------- -------- ---------Operating cash flow (3,678.9) (358.9) (3,065.0) -------- -------- --------- b) Reconciliation of net cash flow to movement in net funds Six months Six months Year ended 31 ended 30 June ended 30 June December 2004 2005 2004 Unaudited Unaudited AuditedReconciliationof net cash flow tomovement in net funds £000 £000 £000Increase in cash inthe period 16,887.5 22.7 9,559.5Cash inflow from theincrease in debt andlease financing (52.9) 3.0 759.0 -------- -------- ---------Change in net fundsresulting from cashflows 16,834.6 25.7 10,318.5New finance leases - (750.0) (750.0)New finance leasesobtained on acquisitionof subsidiary - (52.7) 52.7)Net funds atbeginning ofperiod 9,518.7 2.9 2.9 -------- -------- ---------Netfunds/(debt)at end of period 26,353.3 (774.1) 9,518.7 -------- -------- --------- c) Analysis of changes in net funds At 1 January Cash flows Other non-cash At 30 June 2005 2005 changes £000 £000 £000 £000Cash at bankand in hand 9,562.4 16,887.5 0.0 26,449.9Long termloans 0.0 (58.9) 0.0 (58.9)Finance leases (43.7) 6.0 0.0 (37.7) -------- -------- -------- -------- 9,518.7 16,834.6 0.0 26,353.3 -------- -------- -------- -------- NOTESUnaudited results for the six months ended 30 June 2005 1. Basis of preparation The accounts for the six months ended 30th June 2005 have not been audited, norhave the accounts for the equivalent period in 2004. They comply with relevantaccounting standards and have been prepared on a consistent basis usingaccounting policies set out in the 2004 Annual Report together with the newlyadopted policies below. Whilst this interim statement is unaudited it has beenreviewed by the company's auditors and their report is set out on page 15. Thefigures for the 12 months ended 31st December 2004 do not constitute thecompany's statutory accounts as defined in Section 240 of the Companies Act 1985for that period but have been extracted from the statutory accounts, which havebeen filed with the Registrar of Companies. The auditors have reported on thoseaccounts and that report was unqualified and did not contain a statement underSections 237(2) or 237(3) of the Companies Act 1985. 2. Accounting Policies Except as noted below, the unaudited results for the six months ended 30 June2005 have been prepared applying the accounting policies set out in the Group'sannual report for the year ended 31 December 2004. New accounting policy a. Plantation Accounting A major activity of the Group is to prepare previously untreated ground and toplant Jatropha seeds and seedlings. Once mature the Jatropha trees bear seedsthat contain crude Jatropha oil. This crude oil can be refined to produceBiodiesel. With effect from 1 January 2005 the direct costs of site preparationand planting have been capitalised and they are amortised over the useful lifeof the trees, which is on average 30 years. b. Stock Stocks are stated at the lower of cost and net realisable value. Stock(including seeds and seedlings) also includes direct labour and appropriateoverheads where applicable. Net realisable value is based on estimated sellingprice, less further costs expected to be incurred to completion and disposal.Provision is made for obsolete, slow-moving or defective items whereappropriate. c. Joint Ventures Entities in which the Group holds an interest on a long term basis, and arejointly controlled by the Group with one or more other parties under acontractual agreement, are treated as joint ventures and are accounted for usingthe gross equity method. d. Employee Benefit Trust In accordance with UITF38 "Accounting for ESOP Trusts", own shares held by theEmployee Benefit Trust are treated as a reduction to shareholders' funds. Theyare held at cost until disposed. Any profit or loss on disposal is treated as amovement in reserves. 3. Segmental Reporting Although all results derive from a single class of business the Group operatesin a number of different countries. An analysis of turnover, loss for thefinancial period, and net assets/(liabilities) by geographical area is set outbelow. The analysis by geographical area reflects the principal regions in whichthe Group is active. Six months Six months Year ended 31 ended 30 June ended 30 June December 2004 2005 2004 Unaudited Unaudited Audited £000 £000 £000Loss on ordinary activities beforetaxUK (2,709.0) (913.4) (2,888.6)India (40.0) - -Joint Venture (17.0) - -Africa (237.8) - (131.0)Asia Pacific (74.1) - (44.7) -------- -------- --------Loss onordinary activitiesbefore tax (3,077.9) (913.4) (3,064.3) -------- -------- -------- Net Assets/(Liabilities)UK 27,996.9 (1,135.3) 9,886.4India (42.4) - -Joint Venture (17.0) - -Africa (304.1) - (151.7)Asia Pacific (72.7) - (42.4) -------- -------- --------Netassets/(liabilities) 27,560.7 (1,135.3) 9,692.3 -------- -------- -------- All Group turnover for the six months ended 30 June 2005 has originated from theUK. 4. Loss per Ordinary share Six months Six months Year ended 31 ended 30 June ended 30 June December 2004 2005 2004 Unaudited Unaudited Audited No. No. No.Weightedaverage numberof shares in issue 21,603,108 78,186 6,447,640 ---------- -------- --------- Pence £ PenceLoss per ordinary share- basic and diluted 14.25 11.68 47.53 ---------- -------- --------- The number of shares in issue at 31 December 2004 was 21,492,864. Following theplacing, completed on 14 June 2005 of 9,732,617 ordinary shares, the totalnumber of shares in issue at 30 June 2005 was 31,225,481. For the purposes ofcalculating the loss per ordinary share the weighted average number of sharesexcludes 1,385,000 shares held by the D1 Oils plc Employee Benefit Trust. Nodiluted loss per share has been disclosed as the share options areanti-dilutive. 5. Movement on Reserves Share Capital Share Premium Merger Reserve Own Shares P&L Reserve Total £000 £000 £000 £000 £000 £000Openingbalanceas at 1 January2005 214.9 12,808.4 437.7 - (3,768.7) 9,692.3Retainedloss for theperiod - - - - (3,077.9) (3,077.9)Issue ofshares bythe company 97.5 24,327.6 - - - 24,425.1Exchangemovements - - - - 1.0 1.0Purchaseof own shares - - - (3,479.8) - (3,479.8) ------- ------- ------- ------- ------- -------At 30June 2005 312.4 37,136.0 437.7 (3,479.8) (6,845.6) 27,560.7 ------- ------- ------- ------- ------- ------- On 14 June 2005, the Company completed the placing of 9,732,617 new ordinaryshares. The Company received cash consideration of £25,791,400 for this placingbefore expenses of £1,366,300. Also during the period the Company purchased 1,385,000 of its own ordinaryshares of 1p, representing 4.4% of the issued share capital of the company at 30June 2005. This was also the maximum number of such shares held during the year.These shares, which are held in an Employee Benefit Trust established for thepurpose, were purchased on the open market with financing provided by theCompany and in accordance with UITF 38 are shown in reserves as own shares held. 6. Post Balance Sheet Event On the 19th July 2005 D1 Oils plc received £3,462.000 from Bailhache LabesseTrustees Limited as Trustees of the D1 Oils Employee Benefit Trust followingtheir disposal of 1,191,335 ordinary shares at £2.95 each in D1 Oils Plc. TheEBT's remaining shareholding in the Company is 193,665 ordinary shares and thereremains a loan payable to the Company from the Trust of £17,600 INDEPENDENT REVIEW REPORT TO D1 OILS plc Introduction We have been instructed by the company to review the financial information forthe six months ended 30 June 2005 which comprises the consolidated profit andloss account, the consolidated statement of total recognised gains and losses,the reconciliation of movement in equity shareholders' funds/(deficit), theconsolidated balance sheet, the consolidated cash flow statement, notes a to cto the consolidated cash flow statement, and related notes 1 to 6. We have readthe other information contained in the interim report and considered whether itcontains any apparent misstatements or material inconsistencies with thefinancial information. This report is made solely to the company, in accordance with Bulletin 1999/4issued by the Auditing Practices Board. Our work has been undertaken so that wemight state to the company those matters we are required to state to them in anindependent review report and for no other purpose. To the fullest extentpermitted by law, we do not accept or assume responsibility to anyone other thanthe company, for our review work, for this report, or for the conclusions wehave formed. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the directors. The directorsare also responsible for ensuring that the accounting policies and presentationapplied to the interim figures are consistent with those applied in preparingthe preceding annual accounts except where any changes, and the reasons forthem, are disclosed. Review work performed We conducted our review in accordance with the guidance contained in Bulletin1999/4 issued by the Auditing Practices Board for use in the United Kingdom. Areview consists principally of making enquiries of group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the accounting policies and presentationhave been consistently applied unless otherwise disclosed. A review excludesaudit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditperformed in accordance with United Kingdom auditing standards and thereforeprovides a lower level of assurance than an audit. Accordingly, we do notexpress an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 June 2005. Deloitte & Touche LLPChartered AccountantsNewcastle upon Tyne28 September 2005 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
NEOS.L