26th Sep 2007 07:03
D1 Oils Plc26 September 2007 Press release 26 September 2007 D1 Oils plc Interim results for the six months ended 30 June 2007 D1 Oils plc, the UK-based global producer of biodiesel today announces itsInterim results for the six months ended 30 June 2007. Highlights o Established global planting joint venture with BP to create a world-leading business in jatropha o Plant science operations to develop high-yielding varieties of jatropha progressing well o Significant increase in jatropha planting; D1 now has now planted or obtained rights to offtake from a total of over 198,000 hectares of jatropha worldwide o Commercial planting of Elite seed will start ahead of schedule in 2007 Commenting on the results, Elliott Mannis, Chief Executive Officer, said: "This very active and successful half year culminated in the announcement of ourjoint venture with BP to create a world-leading business in the planting ofJatropha curcas. This is a transforming event for the Company and validates ourstrategy of focusing on sustainable, inedible oils as the future staple rawmaterials for biodiesel. Although the biodiesel industry in Europe faces theshort-term challenges of higher feedstock prices and inconsistent subsidyregimes, our strategy of focusing on sustainable, low-cost, long term suppliesof inedible feedstocks is on track and is the right way forward both for theCompany and for the industry." Lord Oxburgh of Liverpool, Non-Executive Chairman, added: "There is a growing recognition that if biofuels are to make a significantcontribution to the world's need for transport fuels, this must not be at theexpense of the environment. Equally, biofuels must not adversely affect foodproduction or disadvantage vulnerable communities. Non-food oils such as thatfrom Jatropha curcas offer a real alternative to the food oils from whichbiodiesel is commonly produced today. Jatropha does not need the same qualityof land as food crops and nor does it do well in the wetter areas that supportrain forest. Jatropha can make a vital contribution to the world's need forsustainable biofuels." Contacts D1 Oils: Graham Prince, Head of Corporate CommunicationsTel: +44 (0) 1642 755580Mobile: +44 (0) 7973 323840 Brunswick Group: Mark AntelmeTel: +44 (0) 20 7404 5959 Notes to Editors D1 Oils plc is a UK-based global producer of biodiesel. We are building a globalsupply chain and network that is sustainable and delivers value from'earth-to-engine'. Our operations cover agronomy, refining and trading. We arepioneering the science, planting and production of inedible vegetable oils; wedesign, build, own, operate and market biodiesel refineries; and we source,transport and trade seeds and seedlings, seedcake, crude vegetable oils andbiodiesel. Report of the Chairman and the Chief Executive Officer We are pleased to announce our results for the six months ended 30 June 2007.This has been an active first half of the year for the Company. We began theyear having successfully completed a placing in December 2006 raising £49.2m. Atthe beginning of January 2007, we acquired our new refinery and distributionsite at Bromborough on Merseyside. In June, we announced our plans to establisha global joint venture with BP to create a world-leading business in Jatrophacurcas. The creation of this new company, D1-BP Fuel Crops Limited, was ratifiedby our shareholders at an Extraordinary General Meeting in July. These key stepshave been achieved while continuing the day-to-day work of building ouragronomy, refining and trading businesses. The establishment of D1-BP Fuel Crops Limited is a transforming event for D1.BP's decision to join us in this new venture is a significant endorsement of ourfeedstock strategy. The joint venture will enable us to speed up the developmentof jatropha for the production of sustainable biodiesel and to delivercommercial volumes of jatropha oil at competitive prices, benefiting both theeconomies of developing countries that will grow the crop and the ruralcommunities where planting will be based. D1-BP Fuel Crops will commenceoperations on 1 October. The new joint venture also represents a turning point for biodiesel globally.Although biodiesel is a young industry, it has rapidly become not only anestablished part of the global renewable energy landscape, but also a commercialand strategic requirement in the global transport fuel market. BP's decision, asa major global supplier of transport fuels, to focus on jatropha as the sourceof sustainable biodiesel is a recognition of the pressing need to base morebiofuels on inedible crops that are not subject to the same demand pressures asfood oils and that are grown on marginal land. The progress we have made in the first half of the year has been achievedagainst the background of the challenges experienced by the biofuels sector as awhole. The impact of the continuing increase in the prices of rapeseed, soya andpalm oils, the established biodiesel feedstocks, has been exacerbated by heavilysubsidised imports from the USA. Such issues are to be expected in a relativelynew and developing market. However, they demonstrate the strategic imperativefor the biodiesel industry to access low-cost, alternative and sustainable oils,such as jatropha. The recent experience of the industry vindicates our corestrategies: to focus on non-food oils that will not impact food production, andto develop a vertically integrated business that gives control not just ofrefining capacity but most importantly of raw material inputs at competitiveprices. Agronomy - plant science programme We made solid progress in our plant science programme during the first halfyear. We have continued to collect individual accessions of Jatropha curcas fromaround the globe, and we began putting the most promising varieties from ouralready significant collection through the first ever commercial breeding andproduct placement trials. These trials will identify optimal adaptation todifferent cultivation conditions. We continued the development of our breedingprogramme to create the first cultivars for future selection of high-yieldingvarieties. We also added two further Regional Development Centres (RDCs) inSwaziland and Thailand respectively. Multiplication of our first generation,selected seed material, referred to as 'E1', was begun in all three operatingregions. This seed material has been selected for higher yield and goodbiodiesel profile. During the period, we also introduced our Sustainable Oil Supply Programme(SOSP), in co-operation with our joint venture partners and farmers. Thisstewardship programme will record the performance of planting, enable thedevelopment of accurate oil production forecasts and will also monitor theimplementation of policies for social, economic and environmentalsustainability. As a result of the formation of our joint venture with BP, D1's plant scienceprogramme has been established as a separate company, wholly owned by D1 Oilsplc. The activities of this new company will comprise research and development,plant science, breeding, and production and multiplication of seed andseedlings. It will act as the exclusive supplier to D1-BP Fuel Crops, the planting joint venture, on a cost-plus basis, of selected, high-yieldingjatropha seeds and seedlings. It will also provide technical agronomy supportand expertise to support and implement the SOSP programme. D1-BP Fuel Crops willpay D1 an annual royalty fee for the high yield performance by the plants itsupplies. Plant science operations to support the joint venture are well on track. Weanticipate that a proportion of the first of the selected E1 seedlings will beavailable before the end of this year. We previously stated that it was ourintention to plant 50,000 hectares with E1 seedlings in 2008. We now expect toplant out the first 5-10% of this total ahead of schedule in 2007.We are also expanding our research and testing infrastructure in anticipation ofthe growth in business from the joint venture. New Development Centres are beingestablished in Cape Verde (as a central facility), as well as Indonesia andother countries where D1-BP Fuel Crops will operate, enabling D1 to supportfully the joint venture's planting activities. A significant development is our recent signing of an exclusive worldwideservice agreement with Keygene NV of the Netherlands (www.keygene.com). Keygeneis one of the global leaders in the science of genetic fingerprinting, inparticular molecular markers and marker-assisted breeding approaches. Theagreement provides D1 with exclusive rights to contract research and molecularservices carried out by Keygene on jatropha. Keygene's genetic fingerprintingtechnology enables the identification of different jatropha cultivars throughgenetic markers similar to commercial bar codes. The technology has thepotential to increase significantly the effectiveness of D1's breeding programmefor jatropha. In addition to focusing on jatropha, we are continuing to investigate otherinedible oil crops. Under the terms of our joint venture arrangements, D1-BPFuel Crops has a right of first refusal on any new crops and technologies thatD1 may develop. Agronomy - planting programme During the period we continued to develop our planting partnerships and expandour planting footprint across all three operating regions. Our joint venturerelationship in North East India with Williamson Magor, one of India's leadingtea companies, has been particularly successful. Ongoing planting of jatropha isnow approaching 50,000 hectares. We see quality partners of this calibre as thekey to D1-BP Fuel Crops expanding commercial planting more rapidly. We believe that the two Memoranda of Understanding (MOU) recently signed inIndonesia have the potential to produce equally strong results for the future.The first, with PT Astra Agro Lestari, part of the Jardine Matheson Group andthe largest publicly traded agribusiness in Indonesia, concerns the creation ofa 500 hectare Jatropha curcas pilot plantation, planting of which is planned tostart in Q4 2007. Once the pilot is successful, the relationship will then turnto commercial planting. The second, a tripartite MOU between D1 Oils AsiaPacific, PT Medco Energi International, a publicly listed integrated energycompany, and PT Mambruk Sarana Interbuana, a pioneer of solar energy inIndonesia, is for a 500 hectare pilot plantation in West Java. Plantingoperations here will commence in Q4 2007 with the intention to expand to 10,000hectares. In a key development for planting operations in South Africa, D1 is workingtogether with the South African Government to establish the first commerciallevel jatropha pilot project in that country. The initial plantation size willbe 5,000 hectares of which 1,000 hectares is expected to be planted in the firstyear. Planting will be carried out by D1 in co-operation with the Central EnergyFund, the Department of Agriculture and a commercial farming concern made up ofboth black and white farmers. The project is intended to determine economicfeasibility and will be used as a model for commercial jatropha planting inSouth Africa. In addition to continuing planting in Africa, India and South East Asia, D1-BPFuel Crops will expand planting to new, emerging markets, in particular SouthAmerica. To this end D1 has signed a strategic partnership agreement with aBrazilian group, Curcas Diesel Brazil, to develop jatropha plantation projectsthroughout that country. In the medium term, we also believe that Australia haspotential as a production location for jatropha and we are in active dialoguewith the relevant Federal and State authorities regarding permission to importseeds and begin the first controlled trials for commercial planting of Jatrophacurcas. Up to 15 September 2007, D1 has planted or obtained rights to offtake from atotal of 198,690 hectares of jatropha worldwide. This represents an increase ofover 53,000 hectares on the total of 145,625 at 16 March 2007, as announced inour preliminary results on 28 March, and an increase of 23,609 hectares on thetotal of 175,081 hectares at 30 June 2007, as announced in the quarterly updateon 27 July 2007. The cumulative position at 15 September 2007 is summarised in the table below: Managed Contract Seed purchase Total plantations farming and oil hectares supply hectares agreementsIndia North East - 49,200 2,000 51,200 South - 8,264 - 8,264 Rest - 4,905 17,123 22,028 ------------------------------------------------- - 62,369 19,123 81,492 -------------------------------------------------Africa Zambia 2,411 20,760 - 23,171 Swaziland 1,227 - 8,017 9,244 Rest - - 8,629 8,629 ------------------------------------------------- 3,638 20,760 16,646 41,044 -------------------------------------------------South East Indonesia - 36,640 1,758 38,398Asia China - - 28,000 28,000 Rest - 4,780 4,976 9,756 ------------------------------------------------- - 41,420 34,734 76,154 -------------------------------------------------Total 3,638 124,549 70,503 198,690 The table above indicates the broad geographic locations and types ofarrangements associated with jatropha planting worldwide in which D1 has aninterest. The level of investment costs and security of future oil supply areproportional to the degree of direct involvement by D1 and its joint venturepartners. Where trees are lost due to natural wastage or mortality, or whereplanting has not taken, either replanting or new planting is undertaken in thefollowing planting season and only the net increase in planting is recorded.Where replanting is not possible or inappropriate, a provision is made and theplanting is reported net. Managed plantations are those farms where land and labour is controlled by D1,either through its subsidiaries or joint venture partners. Under contractfarming, the farmer plants his own trees on his own land. D1 and its partnersassist with the provision of seedlings and the arrangement of bank finance forplanting, and offer a buyback of harvested grains with an offtake agreement,subject to a floor price and the achievement of agreed quality standards. Weprovide support and advice during cultivation, and monitor the condition of thecrops. Seed and oil supply agreements are arms-length supply contracts withthird parties whereby D1, either directly or through joint venture partners, hasofftake arrangements in place over future output from jatropha plantations whichthe third party is developing. D1 has limited involvement in this planting andrelies on third parties to measure and manage the crop effectively. The increase in planting in the period is accounted for predominantly byplanting in North East India with Williamson Magor. In Africa planting ceasedaround the middle of the year as anticipated due to the onset of their winterand will resume towards the end of the year. From 1 October, all planting will be conducted under the management of D1-BPFuel Crops. Over the next four years, D1-BP Fuel Crops is targeting to plant anadditional one million hectares of jatropha. We are on track to deliver thefirst quantities of jatropha oil during 2008. Refining and Trading Our activities in refining and trading have been impacted by the ongoingchallenges of high feedstock prices exacerbated by subsidised biodiesel importsfrom the United States. Refining margins across the industry have come underincreasing pressure, and we announced in February 2007 our intention to run ourrefineries below capacity and to manage stocks of vegetable oil previouslypurchased at lower prices. There has been no improvement in the overall level offeedstock prices (in fact they have continued to increase), and, havingprocessed existing stocks, we are no longer refining virgin oil. However, we aretaking advantage of the flexibility and precision of our modular D1 20 refineryunits to refine parcels of "off-spec" material purchased from other suppliers. During the period we increased the capacity of our Teesside site with theaddition of a fifth D1 20 refinery unit. This is the first of our upgraded D1 20units and has an enhanced capacity of 10,000 tonnes per year. Finalcommissioning is now underway, increasing the production capacity of ourTeesside site to 42,000 tonnes. Having completed the acquisition of our Bromborough site, we began theconversion of the existing facilities, which formerly produced fuel andlubricant additives, to create 100,000 tonnes of initial biodiesel refiningcapacity. Given market conditions, we have slowed the timetable forcommissioning the first 50,000 tonnes of this capacity, which will be completedshortly. We also believe it is prudent to extend the timetable for thecompletion of the remaining 50,000 tonnes of capacity from the end of 2007 tothe first half of 2008, bringing expected total UK capacity at that time(including our Middlesbrough site) to 142,000 tonnes. Until we have more data tofully assess the impact of the Renewable Transport Fuels Obligation (RTFO) onthe UK market after April 2008, we do not believe it is in our shareholders'interests to increase our total UK refining capacity to the previously announcedtarget of 320,000 tonnes by the end of 2008. However, having completed thenecessary preparatory work for its installation, we are in a position tocomplete this capacity rapidly should market conditions improve. Although we expect the RTFO to have a positive impact on trading conditions forUK biodiesel refining, we believe this benefit is likely to be counterbalancedby both higher feedstock prices and the continuation of subsidised soya methylester imports from the USA, which are entering the EU market in the form of a99% soya biodiesel and 1% mineral diesel blend; so-called B99. US producers arecurrently eligible for subsidies of US$1 for every gallon (approximately 11pence per litre) of biodiesel blended with mineral diesel, which then receivesfurther subsidy in EU markets. As a result, this material is setting marketprices in the EU and refinery margins are substantially eroded. We are workingwith industry groups to assist the UK and EU authorities in taking the necessarymeasures to end the eligibility of US imports for double taxation relief. Unlessthe B99 taxation "double dip" issue is addressed, we believe it will bedifficult for the EU to develop a robust biodiesel refinery industry and for UKrefiners to supply motorists and road transport businesses under the RTFO. Until commercial volumes of low-cost jatropha oil become available for UKrefining, we are purchasing and selling modest quantities of B99 to enable us tomeet our obligations to clients and to develop our supply chain. We willcontinue to do so until the issue of asymmetric subsidies is resolved orfeedstock prices reduce. Finance Our continuing investment in the development of our agronomy, refining andtrading strategy is reflected in the financial results for the six months ended30 June 2007. This report is the first set of financial statements for the Group to beprepared under International Financial Reporting Standards (IFRS). The newaccounting policies adopted, and the detail of the impact of moving to IFRS, areset out in the group's IFRS transition report, available on the Group's websiteat www.d1plc.com. The Group's net assets at the date of transition, 1 January2007, were not materially affected; however, there were some minorreclassifications. There was no impact on the Group's income statement. Total Group turnover of £4.1m (2006: £33,000) reflects sales of 8,588 tonnes ofbiodiesel generated from our D1 20 biodiesel refineries together with productsold directly and not requiring transesterification. An analysis of volumes of product refined and sold in the six months to 30 June2007 is set out in the tables below: Material refined Total (tonnes)Virgin oil 3,106Third party off-spec 2,467---------------------------------------------Total 5,573--------------------------------------------- Material sold Total (tonnes)Virgin oil/third party off-spec 5,871B99 2,717---------------------------------------------Total 8,588--------------------------------------------- The high cost of vegetable oils and the resulting decision to run our refineriesbelow capacity resulted in a gross loss of £0.4m (2006: £0.4m). Operating costs were £10.0m (2006: £4.7m) of which storage and indirect refiningcosts amounted to £1.7m (2006: £0.1m), IAS2 charges for share based payments to£1.3m (2006: £0.5m) and overhead costs to £7.0m (2006: £4.1m). The overhead costs of £7.0m (2006:£4.3m) reflect the investment made in ourregional teams in Africa and South East Asia and the development of oursecondary refinery site at Bromborough. We have also taken the decision toaccelerate the depreciation charge against our prototype refinery asset in theperiod by £0.6m. Net interest received was £0.8m (2006: £0.3m). The loss on ordinary activities before and after taxation was £10.3m (2006:£4.8m) and the loss per ordinary share was 16.88p (2006: 15.34p). As the Grouphas brought forward losses and losses were incurred in the period, nocorporation tax was payable. Net cash (defined as gross cash less mortgage and cash collateral) on hand at 30June 2007 was £27.8m (2006: £12.8m). Gross cash was £30.9m (2006: £13.7m), themortgage loan was £0.8m (2006:£0.8m) and cash held as collateral was £2.3m(2006: £nil). The net cash outflow in the period of £20.3m reflects the operating cash outflowof £8.5m, the purchase for £2.9m of the Bromborough site and expenditure on thedevelopment of biodiesel manufacturing facilities on that site of £3.5m. Furtherinvestment of £2.7m was made both in infrastructure and the new Mark II D1 20skid on Teesside. We have invested an additional £1.4m of working capital inbuilding stocks of refined oils and methyl esters to meet our growing salesdemands. Investments in planting projects were £1.3m. Management We are today announcing a number of changes to the Board with immediate effect.Steve Douty steps down to join D1-BP Fuel Crops as Global Business DevelopmentDirector. Christopher Tawney, whose appointment as Group Finance Director weannounce today, joins the Board, replacing Richard Gudgeon, who steps down tobecome Deputy Group Finance Director. Peter Davidson, a founder Director, alsoleaves the Board. Moira Black joins the Board as a Non-Executive Director. Wewould like to thank Steve, Richard and Peter for their substantial contributionsto the business. In particular, we acknowledge Steve's achievements indeveloping D1's international business, Richard's work on the December 2006fundraising and the joint venture with BP and Peter's contribution to thedevelopment of our agronomy and refining programmes. Outlook The need to address the challenges of climate change and fuel security hasestablished biofuels as an increasingly important element in the globaltransport fuels market. Biofuels, and in particular biodiesel, are nowrecognised as a means to secure cost-effective supplies of sustainable transportfuel, and both national and regional policy initiatives are making biofuelsblends a reality in key developed markets. We continue to believe that themedium to long-term outlook for the industry is very promising. However, at present the sector remains immature and faces several short-termchallenges. High prices for edible vegetable oils mean that refining profitablyin Europe without significant subsidies will be difficult. Irregularities insubsidy regimes that exacerbate this situation need to be addressed. High vegetable oil prices demonstrate that the key to the future of the industryis access to cost-effective, sustainable, inedible feedstocks. Furthermore,there is growing awareness that unless produced sustainably, the spread ofbiofuels has the potential to lead to greater environmental damage than itprevents by replacing fossil fuels. The industry must ensure that new andexisting biofuels crops are produced in a manner that does not damage importantecosystems or disadvantage vulnerable communities. These issues validate our strategy to develop supplies of alternative,sustainable inedible oils. Jatropha curcas offers a viable alternative tofood-grade vegetable oils because it is not subject to the demand pressures offood use, does not thrive in the wetter conditions found in rainforest areas,and does not require the same quality of land as staple food crops. We believethat the commercial development of jatropha offers the best means currentlyavailable to replace fossil-fuel diesel with sustainable biodiesel. The meritsof this strategy and our leadership in the commercial development of the crophave been recognised by BP. The Board is very pleased with the achievements of the business to date.However, there remains much to be done and we are firmly committed to ourstrategy to take the Company forward; to ensure a successful launch of theplanting joint venture with BP and to deliver jatropha oil in commercialquantities into the market in 2008. Lord Oxburgh of Liverpool Elliott MannisChairman Chief Executive Officer 25 September 2007 Consolidated income statementUnaudited results for the six months ended 30 June 2007 Restated Restated Six months Six months Year ended ended ended 30 June 30 June 31 December 2007 2006 2006 Unaudited Unaudited Audited Note £000 £000 £000------------------------------------------------------------------------------------------Group revenue 2 4,130.8 32.6 1,560.3Cost of sales (4,570.2) (389.8) (2,366.7)------------------------------------------------------------------------------------------Gross loss (439.4) (357.2) (806.4)Operating costs (9,986.2) (4,727.7) (12,212.9)------------------------------------------------------------------------------------------Gross trading loss (10,425.6) (5,084.9) (13,019.3)Fixed asset impairment 6 (600.0) - -Share of post tax losses of associates and joint ventures accounted for using theequity method (160.3) (31.7) (121.5)Impairment of goodwill arising on acquisition - - (6.3)------------------------------------------------------------------------------------------Group operating loss from continuing operations (11,185.9) (5,116.6) (13,147.1)Finance revenue 997.1 353.0 566.4Finance costs (159.7) (26.8) (46.9)------------------------------------------------------------------------------------------Loss for the period from continuing operations 2 (10,348.5) (4,790.4) (12,627.6)------------------------------------------------------------------------------------------ Loss for the period attributable to:Equity holders of the parent (10,348.5) (4,790.4) (12,627.6)Minority interest - - ------------------------------------------------------------------------------------------- (10,348.5) (4,790.4) (12,627.6)------------------------------------------------------------------------------------------ Loss per ordinary shareBasic and diluted loss per ordinary share (pence) 3 16.88 15.34 39.98------------------------------------------------------------------------------------------ Consolidated statement of recognised income and expenseUnaudited results for the six months ended 30 June 2007 Restated Restated Six months Six months Year ended ended Ended 30 June 30 June 31 December 2007 2006 2006 Unaudited Unaudited Audited £000 £000 £000------------------------------------------------------------------------------------------Income and expense recognised directly inequityCash flow Hedges taken to equity (1,047.5) - -Exchange difference on retranslation of foreign operations 10.5 31.9 (591.6)------------------------------------------------------------------------------------------Net income recognised directly in equity (1,037.0) 31.9 (591.6)Loss for the period (10,348.5) (4,790.4) (12,627.6)------------------------------------------------------------------------------------------Total recognised income and expense for the period (11,385.5) (4,758.5) (13,219.2)------------------------------------------------------------------------------------------ Attributable to:Equity holders of the parent (11,385.5) (4,758.5) (13,219.2)------------------------------------------------------------------------------------------ Reconciliation of movement in equity shareholders' fundsUnaudited results for the six months ended 30 June 2007 Restated Restated Six months Six months Year ended ended Ended 30 June 30 June 31 December 2007 2006 2006 Unaudited Unaudited Audited £000 £000 £000------------------------------------------------------------------------------------------Loss for the financial period (10,348.5) (4,790.4) (12,627.6)Issue of shares by the Company (net of expenses) 232.1 395.1 47,030.0Share based payments 1,336.0 505.0 1,135.0Cash flow Hedges taken to equity (1,047.5) - -Currency translation difference 10.5 31.9 (591.6)------------------------------------------------------------------------------------------Net (decrease)/increase in equity shareholders' funds (9,817.4) (3,858.4) 34,945.8Opening equity shareholders' funds 61,637.1 26,691.3 26,691.3------------------------------------------------------------------------------------------Closing equity shareholders' funds 51,819.7 22,832.9 61,637.1------------------------------------------------------------------------------------------ Consolidated balance sheetUnaudited results as at 30 June 2007 Restated Restated As at As at As at 30 June 30 June 31 December 2007 2006 2006 Unaudited Unaudited Audited Note £000 £000 £000-----------------------------------------------------------------------------------------AssetsNon-current assetsProperty, plant and equipment 24,199.7 9,953.8 14,486.3Biological assets 75.0 27.0 74.5Intangible assets 112.2 87.8 119.1Trade and other receivables 1,215.4 - 948.9Other investments 60.0 14.0 18.2----------------------------------------------------------------------------------------- 25,662.3 10,082.6 15,647.0 Current assetsInventories 2,620.4 1,163.6 3,023.3Trade and other receivables 3,759.2 1,204.6 898.3Other financial assets 25,667.3 - 2,317.3Cash and short-term deposits 5,203.1 13,755.3 49,066.3----------------------------------------------------------------------------------------- 37,250.0 16,123.5 55,305.2Assets held for resale 100.0 - 100.0-----------------------------------------------------------------------------------------Total assets 63,012.3 26,206.1 71,052.2 Equity and liabilitiesCurrent liabilitiesTrade and other payables (3,297.3) (2,387.6) (2,811.9)Interest-bearing loans and borrowings (732.2) (32.8) (706.2)Accruals and deferred income (2,420.5) (59.8) (2,208.9)Financial liabilities (1,047.5) - ------------------------------------------------------------------------------------------ (7,497.5) (2,480.2) (5,727.0) Non-current liabilitiesInterest-bearing loans and borrowings (3,626.9) (840.0) (3,533.5)Investments accounted for using the equity method (68.2) (53.0) (154.6)----------------------------------------------------------------------------------------- (3,695.1) (893.0) (3,688.1)-----------------------------------------------------------------------------------------Total liabilities (11,192.6) (3,373.2) (9,415.1)-----------------------------------------------------------------------------------------Net assets 51,819.7 22,832.9 61,637.1----------------------------------------------------------------------------------------- Restated Restated As at As at As at 31 30 June 30 June December 2007 2006 2006 Unaudited Unaudited Audited Note £000 £000 £000-----------------------------------------------------------------------------------------Capital and reservesEquity share capital 4 616.0 318.7 614.8Share premium 4 84,063.1 37,493.8 83,832.2Own shares held 4 (484.0) (484.0) (484.0)Other reserves 4 437.7 437.7 437.7Revenue reserves 4 (31,184.5) (14,964.8) (22,172.0)Currency translation reserve 4 (581.1) 31.5 (591.6)Hedging reserve 4 (1,047.5) - ------------------------------------------------------------------------------------------Equity shareholders' funds 51,819.7 22,832.9 61,637.1----------------------------------------------------------------------------------------- Consolidated cash flow statementUnaudited results for the six months ended 30 June 2007 Restated Restated Six months Six months Year ended ended ended 30 June 30 June 31 December 2007 2006 2006 Unaudited Unaudited Audited £000 £000 £000-----------------------------------------------------------------------------------------Operating activitiesLoss for the period before tax (10,348.5) (4,790.4) (12,627.6)Adjustments to reconcile profit for the period to net cash flow from operatingactivities:Depreciation of property, plant and equipment 462.9 107.5 367.6Impairment of fixed assets 600.0 - -Impairment of goodwill on acquisition of joint ventures - - 6.3Share based payments 1,336.0 505.0 1,135.0Loss on disposal of fixed assets - - 17.7Share of post tax losses of joint ventures accounted for using the equity method 160.3 31.7 121.5Finance income (997.1) (353.0) (566.40)Finance expense 159.7 26.8 46.90Decrease/(increase) in inventories 402.9 (1,037.3) (2,897.1)Increase in trade and other receivables (2,573.0) (479.3) (1,062.1)Increase in trade and other payables 687.5 650.5 3,210.8------------------------------------------------------------------------------------------Net cash flow from operating activities (10,109.3) (5,338.5) (12,247.4)------------------------------------------------------------------------------------------Investing activitiesInterest received 442.7 353.0 566.40Payments to acquire property, plant and equipment (10,776.9) (5,942.1) (11,581.8)Funds transferred to deposits (23,350.0) - (2,317.3)Purchase of trade investments (280.5) - (4.2)Sale of trade investments 18.2 - -------------------------------------------------------------------------------------------Net cash flow from investing activities (33,946.5) (5,589.1) (13,336.9)------------------------------------------------------------------------------------------Financing activitiesInterest paid (159.7) (26.8) (46.9)Proceeds from share issue 232.1 395.5 47,030.0New borrowings 91.9 - 3,400.0Repayment of capital element of finance leases (203.6) - (55.0)------------------------------------------------------------------------------------------Net cash flow from financing activities (39.3) 368.7 50,328.1------------------------------------------------------------------------------------------Net (decrease)/increase in cash and cash equivalents (44,095.1) (10,558.9) 24,743.8Cash and cash equivalents at the start of the period 49,025.2 24,281.4 24,281.4------------------------------------------------------------------------------------------Cash and cash equivalents at the end of the period 4,930.1 13,722.5 49,025.2------------------------------------------------------------------------------------------ Notes to the consolidated cash flow statementUnaudited results for the six months ended 30 June 2007 Restated Restated Six months Six months Year ended ended ended 30 June 30 June 31 December 2007 2006 2006 Unaudited Unaudited Audited £000 £000 £000------------------------------------------------------------------------------------------Cash and cash equivalents is comprised as follows:Cash at bank and in hand 5,203.1 13,755.3 49,066.3Short-term borrowings and overdrafts (273.0) (32.8) (41.1)------------------------------------------------------------------------------------------ 4,930.1 13,722.5 49,025.2------------------------------------------------------------------------------------------ Notes Unaudited results for the six months ended 30 June 2007 1. Summary of significant accounting policies. The Group is required to adopt International Financial Reporting Standards(IFRS) with effect from 1 January 2007. The results for the six months to 30June 2007 represent the Group's first interim financial statements prepared inaccordance with IFRS. The Group's first IFRS Annual Report and FinancialStatements will be for the year ending 31 December 2007. Previously, the Group reported under UK GAAP. The accounting policies used inthis statement are consistent with those to be used in the December 2007 annualreport. Detailed reconciliations, showing the impact of transition to IFRS, arereported in a separate document, which is available on our website www.d1plc.com This interim report has been prepared using those standards that the Groupexpects to be endorsed and applicable when the IFRS financial statements areprepared for the year ending 31 December 2007. These standards are subject toongoing review and endorsement by the European Union or possible amendment byinterpretive guidance from the International Accounting Standards Board and theInternational Financial Reporting Interpretations Committee and are, therefore,still subject to change. 2. Segmental information The Group operates in a number of different business sectors. An analysis of therevenue and profit before tax for each sector for the financial period is setout below. Restated Restated Six months Six months Year ended ended ended 30 June 30 June 31 December 2007 2006 2006 Unaudited Unaudited Audited £000 £000 £000-------------------------------------------------------------------------------------RevenueAgronomy 0.8 - -Refining 25.9 - -Trading 4,104.1 32.6 1,560.3Other - - --------------------------------------------------------------------------------------Group total 4,130.8 32.6 1,560.3-------------------------------------------------------------------------------------Loss before taxAgronomy (3,349.1) (1,641.1) (4,676.9)Refining (3,271.8) (993.6) (2,189.6)Trading (1,198.5) (144.0) (634.8)Other (2,529.1) (2,011.7) (5,126.3)-------------------------------------------------------------------------------------Group total (10,348.5) (4,790.4) (12,627.6)------------------------------------------------------------------------------------- 3. Loss per ordinary share Restated Restated Six months Six months Year ended ended ended 30 June 30 June 31 December 2007 2006 2006 Unaudited Unaudited Audited Number Number Number------------------------------------------------------------------------------------Weighted average number of shares in issue 61,312,287 31,231,472 31,584,579------------------------------------------------------------------------------------ Pence Pence PenceLoss per ordinary share - basic and diluted 16.88 15.34 39.98------------------------------------------------------------------------------------ The number of shares in issue at 31 December 2006 was 61,480,578. The totalnumber of shares in issue at 30 June 2007 was 61,597,764. For the purposes ofcalculating the loss per ordinary share the weighted average number of sharesexcludes 193,645 shares held by the D1 Oils plc Employee Benefit Trust. Nodiluted loss per share has been disclosed as the share options areanti-dilutive. 4. Movement on reserves Own Profit Currency Share Share Merger shares and loss translation Hedging capital premium reserve held reserve reserve reserve Total £000 £000 £000 £000 £000 £000 £000 £000------------------------------------------------------------------------------------------------------------------------At 1 January 2007 (restated) 614.8 83,832.2 437.7 (484.0) (22,172.0) (591.6) - 61,637.1Retained loss for the period - - - - (10,348.5) - - (10,348.5)Issue of shares by the Company 1.2 230.9 - - - - - 232.1Share based payments - - - - 1,336.0 - - 1,336.0Hedging reserve - - - - - - (1,047.5) (1,047.5)Exchange movements - - - - - 10.5 - 10.5------------------------------------------------------------------------------------------------------------------------At 30 June 2007 616.0 84,063.1 437.7 (484.0) (31,184.5) (581.1) (1,047.5) 51,819.7------------------------------------------------------------------------------------------------------------------------ The hedging reserve reflects the movement in fair value of the Group's cash flowhedges in respect of the selling price of Biodiesel, which has been stated inaccordance with IAS 39. 5. Post balance sheet event On 29 June 2007, the Company announced its intentions to establish a globaljoint venture with BP International Limited to plant jatropha curcas and togrant options to BP International Limited to acquire 11,725,467 new ordinaryshares in the Company. The proposal was approved by the shareholders of theCompany in Extraordinary General Meeting on 27 July 2007. 6. Prototype refinery During the period the Directors reviewed the operational requirement for theoriginal prototype D1 20 refinery. With the completion of the new Mark II D1 20refinery the Directors consider that the original prototype refinery now haslimited commercial value. Accordingly a provision for accelerated depreciationhas been recorded such that the net book value of this asset is now nil. 7. Publication of non-statutory financial statements The financial information contained in the interim statements does notconstitute statutory accounts as defined in section 240 of the Companies Act1985. The results are unaudited but have been reviewed by the auditors. Thefinancial information for the year to 31 December 2006 and the six months ended30 June 2006 has been extracted from the group's IFRS transitional document,which were based on the group's 2006 Annual review and the 2006 interim report.The 2006 Annual Review has been filed with the Registrar of Companies. The auditreport on the Annual Report 2006 was unqualified and did not contain a statementunder Section 237 (2) or (3), of the Companies Act 1985. 8. Approval by the Board of Directors The Interim Report was approved by the Board of Directors on the 25 September2007. 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 2007 which comprises the Consolidated IncomeStatement, Consolidated Statement of recognised income and expense,Reconciliation of movement in equity shareholders funds, Consolidated BalanceSheet, Consolidated Cash Flow Statement and the related notes 1 to 8. We haveread the other information contained in the interim report and consideredwhether it contains any apparent misstatements or material inconsistencies withthe financial information. This report is made solely to the company in accordance with guidance containedin Bulletin 1999/4 'Review of interim financial information' issued by theAuditing Practices Board. To the fullest extent permitted by law, we do notaccept or assume responsibility to anyone other than the company, for our work,for this report, or for the conclusions we have formed. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the directors. The directorsare responsible for preparing the interim report as required by the AIM rulesissued by the London Stock Exchange. As disclosed in note 1, the next annual financial statements of the group willbe prepared in accordance with those IFRSs adopted for use by the EuropeanUnion. The accounting policies are consistent with those that the directors intend touse in the next financial statements. There is, however, a possibility that thedirectors may determine that some changes to these policies are necessary whenpreparing the full annual financial statements for the first time in accordancewith those IFRSs adopted for use by the European Union. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4'Review of interim financial information' issued by the Auditing Practices Boardfor use in the United Kingdom. A review consists principally of making enquiriesof group management and applying analytical procedures to the financialinformation and underlying financial data, and based thereon, assessing whetherthe accounting policies have been applied. A review excludes audit proceduressuch as tests of controls and verification of assets, liabilities andtransactions. It is substantially less in scope than an audit performed inaccordance with International Standards on Auditing (UK and Ireland) andtherefore provides a lower level of assurance than an audit. Accordingly we donot express 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 2007. Ernst & Young LLPNewcastle upon Tyne25 September 2007 Notes: 1. The maintenance and integrity of the D1 Oils plc website is the responsibility of the Directors; the work carried out by Ernst & Young LLP does not involve consideration of these matters and, accordingly, Ernst & Young LLP accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website. 2. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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