23rd Jun 2009 07:00
23 June 2009 Preliminary Results
D1 Oils plc, which has interests in 25 per cent of the global planting of Jatropha, today announces its results for the year ended 31 December 2008.
Operational highlights
Progress in breeding and selection for oil yield and content - 13 promising selections under global trials and multiplication for release in 2010/2011
Further progress in husbandry techniques based on field surveys and agronomy research trials - first evidence-based planting handbook for new crop
New revenue stream development in animal feed programme - first commercial operation of patented process to turn Jatropha meal into animal feed expected in 2011
Corporate developments
Restructuring
Talks underway with BP to dissolve Jatropha joint venture to bring planting and plant science operations together under full D1 control
Maintain merged business on lower cost base until market conditions permit new injection of capital
Refocusing from planting to a focus on near term value objectives:
Delivering value from existing planting: farming, managing outgrowers, logistics, processing and routes to market
Securing third party revenues: selling technology, products and services to the rest of the Jatropha industry
Investing in key science and technology: breeding and cultivar testing, agronomy knowledge and animal feed processing
Financials
Gross cash as at 31 May 2009 of £11.3m; excluding cash in D1-BP Fuel Crops of £7.1m
Cash positive until end 2010
Loss for the year was £33.6m (2007: £46.1m)
Commenting on the results, Brian Myerson, Chairman, said:
"We remain committed to developing Jatropha, which remains the most attractive of the potential new oilseed crops. Our focus will be to capitalise on our established lead in planting and the plant science of the crop and associated technologies to demonstrate a value proposition."
Ben Good, Chief Executive Officer, commented:
"Our discussions with BP to acquire its interest in the capital structure of D1-BP Fuel Crops for an interest in the long-term success of D1 Oils plc will allow us to consolidate our operations to focus on operational delivery and the effectiveness of our existing planting. Our activities will also focus on generating revenue through sales of products and services to the Jatropha industry and in the longer term by ensuring that our planting delivers an annuity to the business in terms of crude vegetable oil and high value co-product in the form of animal feed. We are forecast to remain cash positive to the end of 2010 when we expect to be able to demonstrate value based upon improved operational performance."
Contacts
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D1 Oils: |
Graham Prince, Head of Corporate Communications Tel: +44 (0) 20 7367 5600 Mobile: +44 (0) 7973 323840 |
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Brunswick Group: |
Camilla Gore / Kevin Byram Tel: +44 (0) 20 7404 5959 |
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Piper Jaffray: |
Michael Covington / William Carnwath (Qualified Executive) Tel: +44 (0) 20 3142 8700 |
Notes to Editors:
D1 Oils plc is an alternative energy crop company. We are pioneering the development of Jatropha curcas, a robust, tropical oilseed bearing tree, into a new sustainable energy crop that has the potential to replace food crops as a source of biodiesel. Jatropha is a hardy crop that is able to grow on a wide range of soils, including soils which are sub-optimal for arable agriculture. Its grain is crushed to produce inedible oil for biodiesel and meal that has the potential to be processed into a high-value, protein source for animal feed. We have an established plant science and planting programme for Jatropha, and we provide commercial technology and services to the emerging Jatropha sector, including the breeding and selection of Jatropha seeds and seedlings, the development of planting practices and husbandry methods, and the harvesting and processing of Jatropha oil and meal.
As required by section 240 of the Companies Act 1985, this preliminary announcement does not constitute the statutory accounts of the Company. The report of the Company's auditors on those accounts will include an emphasis of matter paragraph drawing the shareholders' attention to note 1 to the financial statements, which discusses the material uncertainty that may cast significant doubt about the Company and Group's ability to continue as a going concern.
Chairman and Chief Executive Officer's Report
The following is our report to shareholders of our results for the year ended 31 December 2008.
The year 2008 was a period of significant change and development for the Company. In response to rapid changes in the biodiesel refining sector, we restructured the business to concentrate exclusively on upstream plant science and planting. The principal focus of the business became the development of Jatropha curcas into a low-cost, sustainable crop for biodiesel and the delivery of the associated products, services and technology to realise that development. Our principal operations became our plant science programme, tasked to improve Jatropha yields and to maximise the value of its co-products, and our share in D1-BP Fuel Crops Limited (D1-BP Fuel Crops or the Joint Venture), our global Jatropha planting joint venture with BP International (BP).
As we enter the second half of 2009, we remain committed to developing Jatropha as a new energy crop and, despite unfavourable economic circumstances, to investing in the technologies and capabilities that differentiate us from our competition.
We agreed with BP in early 2009 to market a substantial share in D1-BP Fuel Crops to third parties to contribute to the funding of the further growth and development of the business. However, this process resulted in an insufficient level of interest from potential investors and we are now in discussions with BP over the future of the Joint Venture. The objective is to acquire BP's interest in the capital structure of D1-BP Fuel Crops for an interest in the long-term success of D1 Oils plc, whilst leaving in place substantially all existing cash resources.
This will allow us to merge the planting business with our plant science business and to take advantage of opportunities to generate significant short-term revenue and achieve substantial cost savings. On the revenue side, we are seeing increasing interest from third parties in paying for access to our technology and knowhow in plant breeding, agronomy research and meal (seedcake) processing. On the costs side, the merger will allow us to consolidate central and support activities and reduce overlap and interface costs in the field.
Having undertaken these improvements, we will be well-positioned to implement a less capital intensive business plan to demonstrate value within existing cash reserves. At 31 May 2009, existing cash resources were £11.3m, excluding £7.1m in D1-BP Fuel Crops at the same date. This position reflects the £14.9m proceeds from the May 2008 placing of ordinary shares at 25 pence per share and careful cash management at the D1 level. Under the new unified management structure, we will continue to use our cash sparingly across the Group, tightening our geographic focus and concentrating on the effectiveness of our existing planting rather than investing significantly in further expansion. We believe this is a further improvement on our historic approach, which has arguably concentrated too much on growth and not enough on operational delivery. Cash flow forecasts approved by the Board show that the Group will remain cash positive at least until the end of 2010. It is likely that further development of the business beyond this date will depend on a successful injection of capital at that time. This plan relies on the delivery of a number of objectives further discussed in the Finance Review.
Our future strategy is based on five key beliefs:
biodiesel will form a significant part of the fuel/energy mix on a global basis for the long term;
Jatropha's strong sustainability credentials mean it has excellent prospects as an energy crop. It offers a solution to the shortcomings of many first generation biodiesel crops;
these strong prospects are reflected in the increasing amount of new investment we are seeing in Jatropha projects by serious industrial players. This is a significant opportunity for D1, as it deepens the market for what we offer;
D1 has been supporting the planting of Jatropha since early 2006 and has an established lead in both the plant science of the crop and in the technology to turn Jatropha meal co-product into a high value animal feed; and
we can capitalise on our world-leading position in our knowledge of the crop and associated technologies to capture value both in our own planting projects and in those of third parties.
Value in our own projects arises from the prospect of generating a long-term, stable annuity cash flow from planted areas in which we have an interest, helped by high yields and good prices for oil and meal. We aim to generate further value by supplying knowhow and technology to other businesses engaged in Jatropha planting.
Over the next 18 months, we will therefore focus our efforts on those activities which will demonstrably underpin this value proposition. At the end of this period it is our aim to have delivered results that will reduce perceptions of risk and enhance perceptions of value for both existing and potential investors. These results will include another year of yield performance from our plantations, a clear route-to-market demonstration, critical results in our breeding and agronomy research programme, and the next phase of trials to produce animal feed from Jatropha meal.
Industry overview
2008 brought a number of positive developments for Jatropha that support our decision to focus on upstream plant science and planting operations as offering the best long-term value for shareholders.
World demand for vegetable oil is widely expected to increase in the medium to long term. As a consequence, the drive to increase supplies has continued, particularly from sustainable vegetable oil sources in the developing world. Jatropha remains the most attractive of the potential new oilseed crops. A global market study, prepared by the Global Exchange for Social Investment (GEXSI) for the World Wide Fund for Nature (WWF) estimated that, although the Jatropha industry is in the early stages of development, a total of 900,000 hectares of Jatropha had been planted by May 2008. The study predicts that approximately 1.5 to 2m hectares of Jatropha could be planted each year for the next 5-7 years, representing an annual investment of over a billion US dollars, and possibly bringing global planting to 5m hectares by 2010 and 13m hectares by 2015. D1-BP Fuel Crops' planting interests account for 25% of the estimated total global Jatropha planting in 2008. Although the global recession is likely to slow the rate of expansion of planting, we nonetheless believe that the opportunities for D1 presented by the growth of the Jatropha industry are considerable.
Jatropha's ability to be grown on land not normally suitable for food crops makes it both a sustainable alternative feedstock and a potential new cash crop for developing world farmers, including smallholders. The UK's 2008 Gallagher Review recognised that Jatropha could have an "important role" as a biodiesel feedstock, for example as a smallholder crop to meet local energy needs and where marginal land cultivation is a policy objective, as in India. Jean Ziegler, UN Special Rapporteur on the Right to Food, has also welcomed Jatropha as a "good solution" to the food versus fuel debate facing world agriculture: "Over half of Africa's arid lands are considered suitable for Jatropha cultivation and cultivating this plant would not only produce biofuel but could simultaneously provide livelihoods for African farmers, increase the productivity of the soil and reverse land degradation and desertification". GEXSI's research is already bearing out expectations, concluding that the expansion of Jatropha production has neither encroached on arable land for food production nor led to deforestation.
The first steps were taken during 2008 to establish global sustainability criteria for the crop, including the establishment of the Roundtable on Sustainable Biofuels (RSB), an international initiative bringing together farmers, companies, non-governmental organisations and inter-governmental agencies, including D1 and D1-BP Fuel Crops. The year also saw increasing interest in the potential of Jatropha as an advanced sustainable fuel, with Air New Zealand carrying out test flights with a Jatropha biodiesel and jet fuel mix, a trend followed in early 2009 by Japan Airlines and Continental Airlines.
Plant science programme
Jatropha curcas has only a short history as a domesticated crop, and to date most planting of Jatropha for biodiesel production worldwide has been carried out with uncultivated ("wild") seed and with limited knowledge of the best agronomy practices.
D1's plant science programme, operated by our wholly-owned subsidiary, D1 Oils Plant Science Limited (DOPSL), aims to address this with research designed to improve yields and revenues per hectare. This programme broadly spans three areas:
what to plant: the selection and breeding of cultivars with promising characteristics;
how and where to plant it: agronomy research into nutrient requirements, crop protection, pruning, etc. as well as suitability maps for Jatropha; and
how to process the harvest: development of a process to co-extract both crude vegetable oil and meal with potential to be a high value animal feed supplement.
2008 saw significant progress in each area. In our selection and breeding programme, we delivered 19m seedlings of our first selected Jatropha accession to farmers.
We have selected 13 cultivars of Jatropha and have established a network of 29 Product Placement trials worldwide. These cultivars have shown encouraging results in comparative trials, both for grain yield per hectare (more than 25 per cent higher yields) and in oil content (up to 38 per cent oil content on a grain weight basis). During 2009 we have taken the best performing selections from these trials and are multiplying them into seedlots for potential commercial release to farmers in 2010. A number of other promising selections in the breeding pipeline have been identified for potential release in 2011 and onwards.
In agronomy research, we have developed our capability on a number of fronts. We have extensively surveyed large areas of our planting interests to improve our ability to forecast yield based on detailed plant observation. We have used the results of a number of field trials to make specific recommendations to Jatropha farmers. These interventions frequently have a rapid, measurable impact on plant vigour and performance. We have also substantially updated and revised our technical manual for plantation operations.
In India we have signed a non-binding Memorandum of Understanding with Bayer CropScience Ltd, India, the local subsidiary of Bayer CropScience AG, one of the world's leading crop protection companies, to work together to develop a sustainable crop protection model for Jatropha curcas.
We also collaborate in agronomy research with a range of universities and research institutes, including the International Crop Research Institute for the Semi-Arid Tropics (ICRISAT) in India, Kasetsart University in Thailand, the University of Bengkulu in Indonesia, and the Golden Valley Agricultural Research Trust (GART) and the Zambia Agriculture Research Institute (ZARI) in Zambia.
We are also gathering data on performance against sustainability criteria. According to research carried out by Ecofys, the sustainable energy consulting company, based on data from our planting interests in north east India, biodiesel produced from Jatropha curcas grown in that region delivers carbon savings of over 60 per cent compared to fossil fuel diesel. Ecofys made its calculations using the greenhouse gas methodology of the UK Renewable Transport Fuel Obligation (RTFO), taking into account land use change from uncultivated, tropical dry grassland.
In the Jatropha meal to animal feed project, our progress has the potential to benefit significantly the economics of the crop. Currently meal is generally burnt or used as fertiliser and has a lower commercial value. D1's process to enable the co-extraction of oil and high protein content meal will enable us to produce a valuable animal feed component. Tests have shown that the improved meal contains more digestible protein than soya bean meal and has an energy and amino acid composition competitive with the best available protein sources for animal feed production. In 2008, we applied for a UK patent on this process. As a potential complement for soya meal or an alternative in areas where protein meals are scarce, the digestible grain has a potentially high market value. Over the last 12 months, CBOT soya meal prices traded between circa $265 - $400/tonne. We believe that Jatropha meal with similar qualities will in time command a similar value.
Having proved technical feasibility, we are now scaling up the process to produce sufficient quantities of purified meal for animal feed trials during 2009 to test palatability, digestibility, animal growth and other performance indicators. The results of these trials will form the basis for product registration. Our aim is for the first commercial plant to come into operation in 2011. Global patent rights based on the UK patent will give us access to key end-use markets for animal feed.
Overall, the plant science programme made excellent progress in 2008. We believe the knowledge base derived from our programme of field surveys, trials and research is one of the most advanced in the world. Our technical breakthroughs were further validated by confirmation of grant aid of £720,000 from the Dutch government to continue the work.
D1-BP Fuel Crops
As in our plant science operations, the strategy for D1-BP Fuel Crops has been to focus on creating value from existing planting assets and interests. The Joint Venture switched its emphasis from the expansion of planting to the facilitation of the effective farming of the maturing trees to maximise oil yield, investing in the quality of plantations and securing the future flow of oil and co-products to deliver value to investors. Resources have been shifted from the centre to the field to reduce overheads and to increase strength on the ground. Grain is now being collected in key regions as D1-BP Fuel Crops develops its supply chain.
The year 2008 was the first full year of D1-BP Fuel Crops' operation. Based on the accumulated experience with the D1 Group, D1-BP Fuel Crops focused its operations during 2008 on planting regions with good growing prospects for Jatropha and access to the necessary logistics and processing infrastructure to enable future delivery of oil and co-products.
Total planting of Jatropha in which D1-BP Fuel Crops has an interest as at 31 May 2009 is 221,769 hectares, compared to 192,016 hectares as at 31 March 2008. Substantially all of this area is planted under contract farming arrangements. During 2008 the Joint Venture successfully produced its first quantities of crude Jatropha oil, making its first sales for in-country use in Africa at $1,800/tonne. Volumes of oil will increase in 2009 as existing trees mature and younger trees become productive. Given the variability of growing conditions and farming practices, and the potential to obtain additional grain harvested and collected by farmers who are not contracted to us, we are increasingly of the view that additions to the total planted area are not the best measure of progress for the business. We therefore intend progressively to move to measures and projections of harvested and processed volumes as our standard measure of progress in future.
The majority of planting activity during the year took place in north east India through the joint venture with Williamson Magor ("D1-WM"), in which D1-BP Fuel Crops has a 50 per cent interest. Williamson Magor is one of the world's largest tea producers, and its established capability in agricultural operations and outgrower management have contributed to D1-WM's success in developing a strong market position in the region. Planting by D1-WM was 132,000 hectares at 31 May 2009. By the end of 2009, the Company expects this planting to be producing commercial quantities of grain. D1-WM is particularly focused on agronomy support to third party, small-scale farmers.
In central India, we are working with more than 8,000 village communities (Panchayats) with some 74,000 hectares of planted Jatropha. Although some of these communities have contract farming agreements with D1-BP Fuel Crops, the Joint Venture is also in a position to obtain grain collected by other farmers. We are supporting these communities with practical agronomy advice for growing Jatropha and integrating it with their other crops. At this stage most grain will be crushed on a toll basis using third party equipment.
In Africa, D1-BP Fuel Crops began to develop its first "cluster" of planting operations in Malawi, with the proposed acquisition of a 51 per cent share in a 7,000 hectare farm on the Shire River in Malawi. The cluster model aims to encourage Jatropha planting by commercial farmers and small-scale outgrowers around a plantation owned and managed by the Joint Venture, thereby delivering greater efficiencies in processing and logistics. The Malawi farm has good logistics via road and rail into Zambia and Mozambique. Approximately 700 hectares of Jatropha have already been planted on the farm in co-operation with the local partner.
In Indonesia, D1-BP Fuel Crops has concentrated its efforts in East Java, where the crop performs well. However, grain is also being collected from existing planting in West Java and Southern Sumatra. The Joint Venture currently has an interest in over 13,000 hectares of Jatropha planted in the region and has identified several areas for future development. We are now exploring options as to how best to manage operations given both the scale of the opportunity in the region and the costs involved.
As a result of the review of planting performance carried out during 2008, D1-BP Fuel Crops closed its operations in Malaysia, the Philippines and Thailand. It also substantially reduced its scope of activities in Zambia. Planting in Madagascar and Swaziland has been handed over to local management under a buy-out arrangement.
Following completion of the discussions with BP outlined earlier, we intend to operate, using the knowledge of our plant science programme, the most commercially viable areas of planting in which we will maintain an interest in Africa, India and South East Asia . At this stage we will concentrate our resources on extracting maximum value from the existing planting through improving yields and investing in downstream logistics and processing where necessary. We do not anticipate significant additional planting beyond this footprint.
Refining and trading
After a thorough review of operations in early 2008, the Board took the decision that refining and trading no longer represented the best use of shareholders' funds. Our withdrawal from refining and trading was announced in our Preliminary Results on 9 April 2008.
Following this decision we decommissioned our refining equipment and sites at Middlesbrough and Bromborough. Both sites are now closed and ready for sale along with the associated refining equipment. The headcount associated with refining and trading was reduced from 84 at the beginning of 2008 to 2 by the end of the year. Although solid interest in the sites and equipment has been received from a number of parties, the deterioration in the economic climate and the ongoing difficulties of the biodiesel refining sector have delayed the disposal of the sites and equipment.
Management
Ben Good, as Finance and Commercial Director, and Dr Henk Joos, as Plant Science and Agronomy Director, joined the Board in May 2008. Ben Good was appointed Chief Executive Officer in December 2008. Brian Myerson joined the Board as a Non-Executive Director in July 2008 and became Chairman in December 2008.
Chris Tawney, Group Finance Director, left the Company and the Board in May 2008, and Elliott Mannis, Chief Executive Officer, left the Company and the Board in December 2008. Karl Watkin, founder and former Chairman, left the Board in March 2008. Lord Oxburgh, Non-Executive Chairman, and Non-Executive Directors Dr Clive Morton and Professor Christopher Leaver, all stepped down from the Board in December 2008. We thank them all for their contributions to the business.
2008 was a challenging year for D1, and the present year is proving its equal given the external economic climate. On behalf of the Board we would like to thank all of our staff for their continuing hard work and commitment, not only to the business but also to our vision for Jatropha.
Outlook
We are determined that we will weather the current economic climate by concentrating our efforts on activities that will deliver value for shareholders, both in the short term by generating revenue through sales of products and services to the Jatropha industry, and in the longer term by ensuring that our planting interests deliver an annuity to the business in terms of crude vegetable oil and high value co-product in the form of animal feed.
We believe that longer-term political and macroeconomic trends will support this strategy. Policy momentum to reduce emissions from transport and enhance energy security remains very strong in both developed and developing economies and will continue to encourage biodiesel demand. Meanwhile, rising consumption of food oils and limits on oilseed production are likely to further increase demand and constrain supply. New crops like Jatropha, that can use a wide range of land types, will make it possible to meet demand for both fuel and food without threatening forests and other regions of environmental importance, particularly in developing countries. As a result, D1 sees continuing recognition of the potential of Jatropha as an alternative, low-cost, sustainable feedstock that can enable developing world farmers to cultivate otherwise unproductive land.
We believe that Jatropha curcas is one of the most significant new oilseed crops for biodiesel and that the fundamentals of the market favour the alternative feedstock approach which differentiates us from the rest of the sector. We believe that our established lead in the plant science of Jatropha and our experience of planting give us a significant competitive advantage over other Jatropha businesses. We aim to leverage that advantage to generate revenues and deliver value.
In order to achieve our longer term goals, additional fundraising will be required in late 2010. Our planting interests are now generating modest quantities of revenue, and we need to demonstrate further the commercial viability of Jatropha in order to attract investors on acceptable terms in a year to 18 months' time, when there may also be a more favourable macroeconomic climate.
We intend to do so through a range of activities: by increasing volumes of oil and seedcake delivered to market; by accumulating further experience in farming the crop in key regions; by producing the next generation of Jatropha planting seeds; by creating a pool of third parties ready to pay for access to our Jatropha technology and services; and by delivering a commercial co-extraction technology to produce both crude Jatropha oil and high-protein meal for animal feed. The lessons we have learned over the past two years, and our pre-eminent Jatropha knowledge base, puts us in an excellent position to do this by 2011. We are confident that, in due course, our success in these activities will deliver value to shareholders and convince investors of the value of the business.
Brian Myerson
Chairman
Ben Good
Chief Executive Officer and Finance Director
22 June 2009
Finance Review
The financial results for the year ended 31 December 2008 reflect the challenging market conditions, particularly for downstream refining and trading activities, and the continuing development of the upstream plant science and planting business. References to Group results include both continuing and discontinued operations for the period unless otherwise stated.
Total Group revenue of £7.1m (2007: £10.6m) in the year ended 31 December 2008 arose from plant science services supplied to the Joint Venture and the sale of biodiesel from refining and trading operations.
The loss on ordinary activities before taxation was £33.6m (2007: £46.1m) and the loss per ordinary share was 30.84p (2007: 74.85p).
Interest received of £0.9m (2007: £1.6m) relates to cash deposits held during the year.
Group revenue from continuing operations was £4.2m (2007: £nil) and arose primarily from invoicing the Joint Venture for services and products supplied by D1 Oils Plant Science (DOPSL). Cost of sales and administrative expenses of £11.8m (2007: £10.8m) reflect the ongoing development of the business, particularly in plant science and agronomy. The loss on continuing operations before tax was £21.8m (2007: £13.6m) and the loss per ordinary share was 20.02p (2007: 22.08p).
Group revenue from discontinued operations was £2.9m (2007: £10.6m) and arose primarily from sales of biodiesel. Administrative expenses were £9.2m (2007: £20.1m). Asset impairments for 2008 totalled £5.6m (2007: £22.8m). The loss on discontinued operations before tax was £12.0m (2007: £32.5m).
The loss on the operations of D1-BP Fuel Crops was £8.7m (2007: £1.5m). Further, the Board of D1 took the decision to impair the Group's investment in the Joint Venture by £6.7m to £nil to reflect the current valuation of future cash flows from D1-BP Fuel Crops in light of the uncertainty surrounding the Joint Venture fundraising exercise. Notwithstanding the impairment, the Group is in discussions with its partner, BP, to enable the Group to realise value from the planting business as described in the Chairman and Chief Executive Officer's Report.
On 9 April 2008, the Company announced a placing of ordinary shares at 25 pence per share to realise £14.9m, net of expenses. Gross cash in hand (defined as cash held in bank accounts and on deposit) as at 31 December 2008 was £20.1m (2007: £14.3m). Net cash (defined as gross cash less mortgage and cash held as collateral) as at 31 December 2008 amounted to £17.4m (2007: £7.8m). The differences between gross and net cash relate to the mortgage on the Middlesbrough site of £0.7m (2007: £0.8m) and cash held as collateral with Allied Irish Bank in respect of finance leases for the D120 modular refineries of £2.0m (2007: £2.3m). As a result of the Board's decision to stop trading activities, as at June 2009 we no longer hold any letter of credit facilities or guarantees to third parties and any related cash collateral other than in respect of the finance lease has now been released.
In March 2009 D1 was awarded £4.2m in damages and costs following arbitration in a dispute with a US company. This award was in London and recovery steps are now being undertaken in the US. The results of this recovery may not be clear for several months. This item is therefore shown as a contingent asset in the 31 December 2008 financial statements.
As announced in our trading update of 4 February 2009, D1 and BP reached a full and final settlement of the matter of the planting shortfall, including a payment by D1 to BP of £5.0m, £3.0m of which was provided for in the year ended 31 December 2007.
In view of the difficulties in realising value from the refinery sites and associated assets at Bromborough and Middlesbrough, we have taken the decision to reduce the holding value of these assets by £3.9m since their classification as assets held for sale.
Financial Outlook
The gross cash position of the Company as at 31 May 2009 was £11.3m, and net cash (after cash held as collateral and the Middlesbrough site mortgage) was £8.7m. These figures exclude cash in D1-BP Fuel Crops, which amounted to £7.1m at the same date. Substantially all of both these cash sums will be applied to the business plan going forward, together with the proceeds from the site sales and the arbitration award, the timings of which are uncertain. After allowing for estimated revenues from the sales of Jatropha oil and co-products, and sales of seeds and agronomy services, plus associated grant income, the business plan will not be cash generative in either 2009 or 2010. However, as discussed in the Chairman and Chief Executive Officer's report, we intend to reduce significantly the rate of expenditure by rationalising and merging the D1-BP Fuel Crops and DOPSL organisations and associated office structures, as well as limiting our investment in the operating countries. Although there are uncertainties associated with both the revenues and cost reductions in this plan, the Board has considered these risks and projects that the Group will remain in a positive cash position until at least the end of 2010.
Developing the business beyond the end of 2010 will require a capital injection, which constitutes a material uncertainty. If the fundraising is not successful then there would be significant doubt about the Group's capability, in its current form, to continue as a going concern. However, there are lessons to be learned from the fundraising for D1-BP Fuel Crops attempted during the first half of 2009. This was unsuccessful, in broad terms, for three reasons: the generally unfavourable macroeconomic conditions; the financial profile of the plan (including length of time and amount of investment required before positive cash flows); and the perception of risk associated with as yet undemonstrated aspects of the business model. In relation to these three reasons, subject to the progress reflected in the plans to demonstrate key aspects of our technology and operating model, the Board considers that, by the end of 2010, there will have been a significant improvement in the conditions necessary to attract new capital into the business.
Ben Good
Chief Executive Officer and Finance Director
|
Consolidated income statement |
|||
|
for the year ended 31 December 2008 |
|||
|
Note |
Year ended 31 December 2008 |
Year ended 31 December 2007 |
|
|
£000 |
£000 |
||
|
Group revenue |
3, 4 |
4,168.9 |
10.1 |
|
Cost of sales |
|
(3,023.5) |
(579.4) |
|
Gross profit |
1,145.4 |
(569.3) |
|
|
Administrative expenses |
4 |
(8,730.2) |
(10,231.3) |
|
Trading loss |
|
(7,584.8) |
(10,800.6) |
|
Share of post tax losses of joint ventures accounted for using the equity method |
12 |
(8,675.0) |
(1,516.5) |
|
Impairment of investments |
12 |
(6,660.5) |
- |
|
Exceptional item - net deficit on transfer of operation to joint venture |
- |
(2,764.3) |
|
|
Group operating loss from continuing operations |
|
(22,920.3) |
(15,081.4) |
|
Finance income |
4, 7 |
1,205.0 |
1,572.5 |
|
Finance costs |
(57.0) |
(63.9) |
|
|
Loss from continuing operations before taxation |
(21,772.3) |
(13,572.8) |
|
|
Tax expense |
8 |
(20.9) |
(36.7) |
|
Loss for the period from continuing operations |
|
(21,793.2) |
(13,609.5) |
|
Discontinued operations |
|||
|
Loss for the year from discontinued operations |
14 |
(11,773.5) |
(32,526.7) |
|
Total loss for the year |
|
(33,566.7) |
(46,136.2) |
|
Loss for the period attributable to equity holders of the parent |
(33,566.7) |
(46,136.2) |
|
|
Loss per ordinary share |
|||
|
Basic and diluted earnings/(loss) per ordinary share (pence) |
9 |
(30.84) |
(74.85) |
|
Basic and diluted earnings/(loss) per ordinary share from continuing operations (pence) |
9 |
(20.02) |
(22.08) |
No profit and loss account is presented by the Company as permitted by Section 230 of the Companies Act 1985. The Company's loss for the year was £23,898,500 (2007: £2,774,400).
|
Consolidated statement of recognised income and expense |
|||
|
for the year ended 31 December 2008 |
|||
|
Year ended 31 December 2008 |
Year ended 31 December 2007 |
||
|
|
£000 |
£000 |
|
|
Income and expense recognised directly in equity |
|||
|
Losses on cash flow hedges taken to equity |
- |
(1,100.6) |
|
|
Exchange difference on retranslation of foreign operations |
- |
(90.1) |
|
|
Net income recognised directly in equity |
|
- |
(1,190.7) |
|
Transfers to the income statement |
|||
|
Losses on cash flow hedges taken to cost |
|
- |
1,100.6 |
|
Transfer of foreign exchange reserves to income statement |
(710.9) |
- |
|
|
Net transfers to the income statement |
(710.9) |
1,100.6 |
|
|
Loss for the year |
(33,566.7) |
(46,136.2) |
|
|
Total recognised income and expense for the year |
|
(34,277.6) |
(46,226.3) |
|
Attributable to: Equity holders of the parent |
|
(34,277.6) |
(46,226.3) |
|
Consolidated balance sheet |
|||
|
as at 31 December 2008 |
|||
|
As at 31 December 2008 |
As at 31 December 2007 |
||
|
|
Note |
£000 |
£000 |
|
Assets |
|||
|
Non-current assets |
|||
|
Property, plant and equipment |
10 |
502.3 |
6,984.3 |
|
Intangible assets |
11 |
6.6 |
41.3 |
|
Investments accounted for using the equity method |
12 |
- |
15,180.5 |
|
508.9 |
22,206.1 |
||
|
Current assets |
|||
|
Inventories |
15 |
20.3 |
2,220.3 |
|
Trade and other receivables |
16 |
815.0 |
4,118.7 |
|
Other financial assets |
17 |
5,072.4 |
11,021.6 |
|
Cash and short-term deposits |
18 |
15,055.9 |
3,596.6 |
|
20,963.6 |
20,957.2 |
||
|
Assets held for resale |
13 |
3,141.8 |
100.0 |
|
Total assets |
|
24,614.3 |
43,263.3 |
|
Equities and liabilities |
|||
|
Current liabilities |
|||
|
Trade and other payables |
19 |
(1,096.4) |
(2,367.4) |
|
Interest-bearing loans and borrowings |
20 |
(3,286.8) |
(492.9) |
|
Accruals and deferred income |
(1,183.5) |
(1,678.9) |
|
|
Other financial liabilities |
22 |
- |
(1,135.3) |
|
Provisions |
23 |
(5,801.0) |
(3,000.0) |
|
(11,367.7) |
(8,674.5) |
||
|
Non-current liabilities |
|||
|
Interest-bearing loans and borrowings |
20 |
- |
(3,307.2) |
|
|
|
- |
(3,307.2) |
|
Total liabilities |
(11,367.7) |
(11,981.7) |
|
|
Net assets |
|
13,246.6 |
31,281.6 |
|
Capital and reserves |
|||
|
Equity share capital |
25, 26 |
1,266.3 |
622.4 |
|
Share premium |
26 |
99,290.3 |
85,051.4 |
|
Own shares held |
26 |
(484.0) |
(484.0) |
|
Other reserves |
26 |
437.7 |
437.7 |
|
Revenue reserves |
26 |
(100,079.9) |
(66,451.2) |
|
Share option reserve |
26 |
12,787.0 |
12,787.0 |
|
Currency translation reserve |
26 |
29.2 |
(681.7) |
|
Equity shareholders' funds |
|
13,246.6 |
31,281.6 |
These financial statements were approved by the Board of Directors on 22 June 2009.
Ben Good
Chief Executive Officer and Finance Director
|
Consolidated cash flow statement |
||
|
for the year ended 31 December 2008 |
||
|
Year ended 31 December 2008 |
Year ended 31 December 2007 |
|
|
|
£000 |
£000 |
|
Operating activities |
||
|
Loss for the year |
(33,566.7) |
(46,136.2) |
|
Adjustments to reconcile loss for the year before tax to net cash flow from operating activities: |
||
|
Depreciation of property, plant and equipment, and amortisation of intangible assets |
135.0 |
863.8 |
|
Impairment of fixed assets |
5,562.2 |
22,778.9 |
|
Impairment of goodwill |
- |
64.1 |
|
Impairment of investments |
6,660.5 |
60.0 |
|
Share-based payments |
649.0 |
1,857.0 |
|
Profit on disposal of investments |
- |
(7.0) |
|
Exceptional item |
- |
2,764.3 |
|
Cash items within exceptional item |
- |
(2,393.9) |
|
Share of post tax losses of joint ventures accounted for using the equity method |
8,675.0 |
1,516.5 |
|
Finance income |
(1,205.0) |
(1,286.9) |
|
Finance expense |
244.4 |
306.8 |
|
Income tax expense |
(226.5) |
36.7 |
|
Tax paid |
(24.0) |
- |
|
Decrease/(increase) in inventories |
2,029.9 |
803.3 |
|
Decrease/(increase) in trade and other receivables |
3,554.1 |
(1,992.7) |
|
Decrease/(increase) in other financial assets |
1,746.2 |
(56.3) |
|
Increase/(decrease) in trade and other payables |
(1,766.4) |
1,510.9 |
|
Increase/(decrease) in other financial liabilities |
(1,135.3) |
1,135.3 |
|
Increase/(decrease) in provisions |
2,801.0 |
(3,000.0) |
|
Net cash flow from operating activities |
(5,863.6) |
(21,175.4) |
|
Investing activities |
||
|
Interest received |
1,075.2 |
1,286.9 |
|
Payments to acquire property, plant and equipment, and intangible assets |
(2,033.3) |
(16,585.1) |
|
Funds transferred to deposits |
4,096.0 |
(8,362.4) |
|
Purchase of joint venture investments |
- |
(903.5) |
|
Purchase of trade investments |
- |
(60.0) |
|
Sale of trade investments |
- |
25.2 |
|
Net cash flow from investing activities |
3,137.9 |
(24,598.9) |
|
Consolidated cash flow statement continued |
||
|
for the year ended 31 December 2008 |
||
|
Year ended 31 December 2008 |
Year ended 31 December 2007 |
|
|
|
£000 |
£000 |
|
Financing activities |
||
|
Interest paid |
(244.4) |
(306.8) |
|
Proceeds of share issue (net of expenses) |
14,882.8 |
- |
|
Exercise of share options |
- |
1,008.2 |
|
Bonus shares |
- |
136.5 |
|
New borrowings |
- |
36.4 |
|
Settlement of non-current liabilities |
- |
(12.8) |
|
Repayment of mortgage |
(60.0) |
(60.0) |
|
Repayment of capital element of finance leases |
(453.3) |
(361.3) |
|
Net cash flow from financing activities |
14,125.1 |
440.2 |
|
Net (decrease)/increase in cash and cash equivalents |
11,399.4 |
(45,334.1) |
|
Cash and cash equivalents at the start of the year |
3,596.6 |
49,024.4 |
|
Effects of exchange rates on cash at the start of the year |
59.9 |
(93.7) |
|
Cash and cash equivalents at the end of the year |
15,055.9 |
3,596.6 |
Cash and cash equivalents comprises the following:
|
Note |
Year ended 31 December 2008 |
Year ended 31 December 2007 |
|
|
£000 |
£000 |
||
|
Cash at bank and in hand |
18 |
2,894.1 |
3,206.3 |
|
Short-term deposits |
18 |
12,161.8 |
390.3 |
|
|
|
15,055.9 |
3,596.6 |
In addition to cash and cash equivalents, the Group also held £5.1m in restricted cash and long-term deposits at 31 December 2008 (see note 17).
|
Company statement of recognised income and expense |
|||
|
for year ended 31 December 2008 |
|||
|
Year ended 31 December 2008 |
Year ended 31 December 2007 |
||
|
|
£000 |
£000 |
|
|
Loss for this period |
(23,898.5) |
(72,266.7) |
|
|
Total recognised income and expense for the period |
(23,898.5) |
(72,266.7) |
|
|
Attributable to: Equity holders of the parent |
(23,898.5) |
(72,266.7) |
|
Company balance sheet |
|||
|
as at 31 December 2008 |
|||
|
Note |
As at 31 December 2008 |
As at 31 December 2007 |
|
|
|
|
£000 |
£000 |
|
Assets |
|||
|
Non-current assets |
|||
|
Property, plant and equipment |
10 |
20.2 |
- |
|
Investments accounted for using the equity method |
12 |
- |
12,787.0 |
|
Other investments |
12 |
125.1 |
125.0 |
|
145.3 |
12,912.0 |
||
|
Current assets |
|||
|
Trade and other receivables |
16 |
601.3 |
457.7 |
|
Other financial assets |
17 |
3,082.5 |
8,704.3 |
|
Cash and short-term deposits |
18 |
12,730.7 |
3,025.8 |
|
|
|
16,414.5 |
12,187.8 |
|
Total assets |
|
16,559.8 |
25,099.8 |
|
Equity and liabilities |
|||
|
Current liabilities |
|||
|
Trade and other payables |
19 |
(361.0) |
(377.0) |
|
Accruals and deferred income |
(417.8) |
(541.5) |
|
|
Financial liabilities |
22 |
- |
(33.6) |
|
Total liabilities |
|
(778.8) |
(952.1) |
|
Net assets |
|
15,781.0 |
24,147.7 |
|
Capital and reserves |
|||
|
Equity share capital |
25, 26 |
1,266.3 |
622.4 |
|
Share premium |
26 |
99,290.3 |
85,051.4 |
|
Own shares held |
26 |
(484.0) |
(484.0) |
|
Revenue reserves |
26 |
(97,078.6) |
(73,829.1) |
|
Share option reserve |
26 |
12,787.0 |
12,787.0 |
|
Equity shareholders' funds |
|
15,781.0 |
24,147.7 |
These financial statements were approved by the Board of Directors on 22 June 2009.
Ben Good
Chief Executive Officer and Finance Director
|
Company cash flow statement |
|||
|
for the year ended 31 December 2008 |
|||
|
Year ended 31 December 2008 |
Year ended 31 December 2007 |
||
|
|
|
£000 |
£000 |
|
Operating activities |
|||
|
Loss for the year |
(23,898.5) |
(72,266.7) |
|
|
Adjustments to reconcile loss for the year before tax to net cash flow from operating activities: |
|||
|
Depreciation of property, plant and equipment |
3.6 |
||
|
Share-based payments |
649.0 |
1,857.0 |
|
|
Profit on disposal of investments |
- |
(7.0) |
|
|
Impairments of amounts owed by Group undertakings |
- |
- |
|
|
Impairment of investments |
12,786.9 |
70,890.1 |
|
|
Finance income |
770.1 |
(1,451.5) |
|
|
Increase in trade and other receivables |
(143.6) |
(38,529.3) |
|
|
(Decrease)/increase in trade and other payments |
(173.3) |
(295.1) |
|
|
Net cash flow from operating activities |
|
(10,005.8) |
(39,802.5) |
|
Investing activities |
|||
|
Interest received |
755.7 |
1,451.5 |
|
|
Payments to acquire property, plant and equipment |
(23.8) |
(8,362.4) |
|
|
Funds transferred to deposits |
4,096.0 |
- |
|
|
Sale of trade investments |
- |
25.2 |
|
|
Net cash flow from investing activities |
|
4,827.9 |
(6,885.7) |
|
Financing activities |
|||
|
Proceeds of share issue |
14,882.8 |
- |
|
|
Exercise of share options |
- |
1,008.2 |
|
|
Bonus scheme |
- |
136.5 |
|
|
Net cash flow from financing activities |
|
14,882.8 |
1,144.7 |
|
Net (decrease)/increase in cash and cash equivalents |
9,704.9 |
(45,543.5) |
|
|
Cash and cash equivalents at the start of the year |
|
3,025.8 |
48,569.3 |
|
Cash and cash equivalents at the end of the year |
|
12,730.7 |
3,025.8 |
Cash and cash equivalents comprises the following:
|
Note |
Year ended 31 December 2008 |
Year ended 31 December 2007 |
|
|
|
|
£000 |
£000 |
|
Cash at bank and in hand |
18 |
568.9 |
2,635.5 |
|
Short-term deposits |
18 |
12,161.8 |
390.3 |
|
|
|
12,730.7 |
3,025.8 |
Notes to the financial statements
for the year ended 31 December 2008
1. Authorisation of financial statements and compliance with IFRS
Fundamental accounting concept
The financial statements have been prepared on a going concern basis which assumes that the company and the Group will continue in operating existence for the foreseeable future and meet its liabilities as they fall due. There are uncertainties that the Directors have had to consider in deciding to prepare the financial statements on the going concern basis, which are set out below.
As discussed in the Report of the Chairman and the Chief Executive Officer, the business is currently undertaking a period of substantial restructuring. This restructuring aims to deliver the revised strategy of the Group at considerably reduced costs and to achieve a successful new fundraising before the end of 2010.
The revised strategy of the Group includes the Group obtaining full control of the joint venture established with BP in 2007, D1-BP Fuel Crops, for which negotiations are ongoing.
On this basis, the Directors have prepared cash flow forecasts covering the period from 2009 to 2013 which show the restructured Group to be adequately funded to the end of 2010. The key assumptions underlying these forecasts include completing the acquisition of D1-BP Fuel Crops in accordance with the terms being discussed, successfully restructuring the existing operations to significantly reduce the current rate of cash outflow, achieving the restructuring within budgeted costs and generating cash inflow from the sale of certain assets and plant science services. The cashflow forecasts approved by the Board of Directors show that there is the cash headroom available to absorb a substantial risk of underperformance against expectations in relation to these issues.
By the end of 2010, the Directors expect to have successfully raised new funding to develop the business further. In order to achieve this objective, the business needs to ensure that it has made sufficient progress in demonstrating Jatropha as a new energy crop, and thereafter it is able to achieve profitability and be cash generative over the longer term.
The Directors have concluded that the fundraising represents a material uncertainty; if it is unsuccessful then there could be significant doubt about the Group and Company's ability to continue as a going concern in its current form.
Nevertheless, after making enquiries and considering these uncertainties, the Directors have a reasonable expectation that Group and the company have adequate resources to continue in operational existence for the foreseeable future. Consequently the Directors believe that it is appropriate to prepare the financial statements on a going concern basis.
Should management significantly underachieve the targets set out above and cash resources be depleted before new funds can be raised, then the going concern basis would be invalid and adjustments may have to be made to reduce the value of the assets to their recoverable amount, to provide for any further liabilities which might arise and to reclassify fixed assets and long term liabilities to current assets and current liabilities.
Authorisation of financial statements
The financial statements of D1 Oils plc and its subsidiaries for the year ended 31 December 2008 were authorised by the Board of Director on 22 June 2009 and the balance sheet was signed on the Board's behalf by Ben Good, Chief Executive Officer and Finance Director. D1 Oils plc is a public limited company incorporated and domiciled in England and Wales. The Company's ordinary shares are traded on AIM.
2. Summary of significant accounting policies
Basis of preparation
The Group's financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union as they apply to the financial statements of the Group for the year ended 31 December 2008 and applied in accordance with the Companies Act 1985.
The Group's date of transition to IFRS reporting was 1 January 2006, having previously reported under UK GAAP.
The Group financial statements are presented in Sterling and all values are rounded to the nearest thousand pounds (£000) except where otherwise indicated.
Key sources of estimation uncertainty
The preparation of financial statements requires management to make estimates and assumptions that affect the amounts reported for assets and liabilities as at the balance sheet date and the amounts reported for revenues and expenses during the year. The nature of estimation means that actual outcomes could differ from those estimates.
The key sources of estimation uncertainty that have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
Impairment of non-financial assets
The Group assesses whether there are any indicators of impairment for all non-financial assets at each reporting date. Goodwill and other indefinite life tangible and intangible assets are tested for impairment annually and at other times when there are indicators that the carrying amounts may not be recoverable. When value in use calculations are undertaken, management must estimate the expected future cash flows from the asset or cash-generating unit and choose a suitable discount rate in order to calculate the present value of those cash flows. Where realisable value is used as the basis of valuation, management must estimate the net income realisable from the sale of the asset and apply an appropriate discount rate to the cash flows arising.
Share-based payments
The estimation of the share-based payment cost requires the selection of an appropriate valuation model, consideration as to the inputs necessary for the valuation model chosen and the estimation of the number of awards that will ultimately vest, inputs which arise from judgments relating to the probability of meeting non-market performing performance conditions and the continuing participation of employees.
Basis of consolidation
The Group financial statements consolidate the financial statements of D1 Oils plc and the entities it controls drawn up to 31 December each year.
Subsidiaries are consolidated from the date of their acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. Control comprises the power to govern the financial and operating polices of the investee so as to obtain benefit from its activities, and is achieved through direct or indirect ownership of voting rights, currently exercisable or convertible voting rights, or by way of contractual agreement.
The financial statements of subsidiaries are prepared for the same reporting year as the parent Company and are based on consistent accounting policies. All inter-company balances and transactions, including unrealised profits arising from intra-group transactions, are eliminated. Minority interests represent the portion of profit or loss and net assets in subsidiaries that is not held by the Group and is presented within equity in the consolidated balance sheet, separately from the parent Company's shareholders' equity. When a subsidiary is not wholly owned by the Group and it incurs losses, amounts allocated to the minority are limited to the value in the balance sheet of the minority interest in the subsidiary's equity. Losses in excess of this limit have been allocated against the majority interest, except where the minority is under an obligation to make good any loss.
Interests in joint ventures
A joint venture is defined in IAS 31 as a 'contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control'.
Where the joint venture is established through an interest in a company, partnership or other entity (a jointly controlled entity), the Group recognises its interest in the entity's assets and liabilities using the equity method of accounting. Under the equity method, the interest in the joint venture is carried in the balance sheet at cost plus post-acquisition changes in the Group's share of its net assets, less distributions received and less any impairment in value of individual investments. The Group income statement reflects the share of the jointly controlled entity's results after tax. The Group statement of recognised income and expense reflects the Group's share of any income and expense recognised by the jointly controlled entity outside profit 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's share of the net fair value of the entity's identifiable assets, liabilities and contingent liabilities, is included in the carrying amount of the jointly controlled entity and is not amortised. To the extent that the net fair value of the entity's identifiable assets, liabilities and contingent liabilities is greater than the cost of the investment, a gain is recognised and added to the Group's share of the entity's profit or loss in the period in which the investment is acquired.
Financial statements of jointly controlled entities are prepared for the same reporting period as the Group. Where necessary, adjustments are made to bring the accounting policies into line with those of the Group to take into account fair values assigned at the date of acquisition and to reflect impairment losses where appropriate. Adjustments are also made in the Group's financial statements to eliminate the Group's share of unrealised gains and losses on transactions between the Group and its jointly controlled entities.
The Group ceases to use the equity method on the date from which it no longer has joint control over, or significant influence in, the joint venture.
Where the financial statements of a jointly controlled entity used in the preparation of the financial statements are prepared as of a reporting date that is different from that of the Group, interim accounts are drawn up as at the Group reporting date and adjustments are made for the effects of significant transactions or events falling within the Group reporting period.
Financial assets
Financial assets are recognised when the Group becomes party to the contracts that give rise to them and are classified as loans and receivables or held-to-maturity investments, as appropriate. Financial assets also include cash and cash equivalents, trade and other receivables, other investments and derivative financial instruments. The Group determines the classification of its financial assets at initial recognition. When financial assets are recognised initially, they are measured at fair value, being the transaction price plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs.
The subsequent measurement of financial assets classified as fair value financial assets is as follows:
The fair value of quoted investments is determined by reference to bid prices at the close of business on the balance sheet date. When there is no active market, fair value is determined using valuation techniques. These include using recent arm's length market transactions, reference to the current market value of another instrument which is substantially the same discounted cash flow analysis and pricing models. Where fair value cannot be reliably estimated, assets are carried at cost.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market, do not qualify as trading assets and have not been designated as either fair value through profit and loss or available for sale. Such assets are carried at amortised cost using the effective interest method if the time value of money is significant. Gains and losses are recognised in income when the loans and receivables are derecognised 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 that gives rise to it is settled, sold, cancelled or expires.
Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, such that the difference in the respective carrying amounts together with any costs 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 group of assets is impaired.
Assets carried at amortised cost
If there is objective evidence that an impairment loss on loans and receivables carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset's original effective interest rate (i.e. the effective interest rate computed at initial recognition). The carrying amount of the asset is reduced with the amount of the loss recognised in administration costs.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed. Any subsequent 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 amortised cost at the reversal date.
Intangible assets
Research and development expenditure
The Group undertakes a range of plant science related research and development activities.
Product placement and agronomy research involves testing how well individual Jatropha curcas cultivars perform in identified growing areas. In these trials the key performance characteristics of grain and oil yield and disease and insect resistance are measured, typically over a period of two years. On the basis of these tests, a number of the best performing cultivars are identified as technically feasible and are selected for commercial release. Any costs incurred up to the point of selection of these cultivars are regarded as research and are charged to the income statement as they are incurred. Costs subsequently incurred in producing the mother plants for planting seed orchards are classed as development expenditure and are capitalised as intangible assets. However, the useful economic life of any particular cultivar cannot be accurately predicted and may be as little as one year before it is superseded by the next generation. Therefore development expenditure is written off over a period of 12 months.
The Sustainable Oil Supply Programme (SOSP) collects and analyses data from commercial Jatropha plantations and model farms with the aim of optimising the grain and oil yield. The costs of collation, creation and analysis of the database are treated as research expenditure and are charged to the income statement as they are incurred. Any subsequent expenditure incurred in producing instruction manuals, training programmes and other materials intended to assist planting partners improve performance is treated as development expenditure and is charged to the income statement as incurred.
The feed programme investigates alternative uses for and the removal of anti-nutritional substances from the seedcake (meal) co-product created when oil is extracted from the Jatropha kernel. Any costs incurred in the design and construction of prototype processes and equipment are capitalised as intangible assets and charged against income over the useful economic life of the process. Otherwise costs are expensed to the income statement as incurred.
Various technologies for expelling oil from the harvested grains are being evaluated. The costs associated with the design, construction and testing of pilot plants are capitalised as tangible assets and charged against income over the expected useful economic life of the plant. Costs incurred prior to the construction of pre-production prototypes are charged against income as incurred.
Software
Software is initially carried at cost and thereafter stated at cost less accumulated amortisation and accumulated impairment losses. Intangible assets with a finite life have no residual value and are amortised on a straight-line basis over their expected useful economic lives of 3-5 years.
The carrying value of intangible assets is reviewed for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable. In addition, the carrying value of capitalised development expenditure is reviewed for impairment annually before being brought into use.
Leases
Assets held under finance leases, which transfer to the Group substantially all of the risks and benefits incidental of ownership of the leased item, are capitalised at the inception of the lease, with a corresponding liability being recognised for the lower of the fair value of the leased asset and the present value of minimum lease payments. Lease payments are apportioned between reduction of the lease liability and finance charges in the income statement so as to achieve a constant rate of interest on the remaining balance of the liability. Assets held under finance leases are depreciated over the shorter of the estimated useful life of the asset and the lease term.
Leases where the lessor retains a significant portion of the risks and benefits of ownership of the asset are classified as operating leases and rentals payable are charged in the income statement on a straight-line basis over the lease term.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less. Restricted deposits such as amounts held by Allied Irish Bank as security are classified as financial assets rather than cash where the terms of the deposit mean that the balance cannot be readily converted to finance the day-to-day operations of the Group.
For the purpose of the consolidated cash flow statement, cash and cash equivalents as defined above, net of outstanding bank overdrafts.
The Group endeavours to maintain sufficient cash at bank and in hand to fund operations in the short-term and invests surplus funds in term deposits to maximise interest revenue.
Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation and impairment losses. Cost comprises the aggregate amount paid and the fair value of any other consideration given to acquire the asset and includes costs directly attributable to making the asset capable of operating as intended. Borrowing costs attributable to assets under construction are recognised 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 years
Plant and machinery over 3-10 years
Motor vehicles over 3-10 years
Fixtures, fittings and equipment over 3-5 years
The carrying value of property, plant and equipment is reviewed for impairment and are written down immediately to their recoverable amount if events or changes in circumstance indicate the carrying value may not be recoverable. Useful lives and residual values are reviewed annually and where adjustments are required these are made prospectively.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the derecognition of the asset is included in the income statement in the period of derecognition.
Where assets are held under finance leases and there is reasonable certainty that the Group will obtain ownership of the asset by the end of the lease term (based on best estimates as at the balance sheet date), the asset is depreciated over its expected useful economic life. Otherwise, assets held under finance lease are depreciated over the shorter of the lease term and its useful economic life.
Employee benefits
Defined contribution plans
The Group's funding of the defined contribution plans is charged to the income statement in the same year as the related service is provided.
Leave benefits
Annual leave is provided for over the period that the leave accrues.
Foreign currency translation
Transactions in foreign currencies are initially recorded in the functional currency by applying the spot exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate of exchange ruling at the balance sheet date. All differences are taken to the income statement, except when hedge accounting is applied and for differences on monetary assets that form part of the Group's net investment in a foreign operation. These are taken directly to equity until the disposal of the net investment, at which time they are recognised in profit or loss.
The assets and liabilities of foreign operations and jointly controlled entities, including the related goodwill, are translated into Sterling at the rate of exchange ruling at the balance sheet date. Income, expenses and cash flows are translated at weighted average exchange rates for the year. The resulting exchange differences are taken directly to a separate component of equity. On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that particular foreign operation is recognised in the income statement.
The Group has taken advantage of the exemption in IFRS 1 in respect of cumulative translation differences so as to record the cumulative translation differences for all foreign entities as nil as at 1 January 2006.
Non-monetary items that are measured in terms of historic cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.
Business combinations and goodwill
Business combinations on or after 1 January 2006 are accounted for under IFRS 3 using the purchase method. Any excess of the cost of the business combination over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities is recognised in the balance sheet as goodwill and is not amortised. To the extent that the net fair value of the acquired entity's identifiable assets, liabilities and contingent liabilities is greater than the cost of the investment, a gain is recognised immediately in the income statement. Goodwill recognised as an asset as at 31 December 2005 is recorded at its carrying amount under UK GAAP and is not amortised. Any goodwill asset arising on the acquisition of equity accounted entities is included within the cost of those entities.
After initial recognition, goodwill is stated at cost less any accumulated impairment losses, with the carrying value being reviewed for impairment, at least annually and whenever events or changes in circumstances indicate that the carrying value may be impaired.
For the purpose of impairment testing, goodwill is allocated to the related cash-generating units expected to benefit from the combination's synergies and monitored by management. Where the recoverable amount of the cash-generating unit is less than its carrying amount, including goodwill, an impairment loss is recognised in the income statement. On disposal of a cash-generating unit, the allocated goodwill is taken into account when determining the gain or loss on disposal to be recognised in the income statement.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost includes all costs incurred in bringing each product to its present location and condition, 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 costs expected to be incurred to completion and disposal.
Trade and other receivables
Trade receivables, which generally have 30 day terms, are recognised and carried at the lower of their original invoiced value and recoverable amount. Provision is made where there is objective evidence that the Group will not be able to recover balances in full. Balances are written off when the probability of recovery is assessed as being remote.
Interest bearing loans and borrowings
Loans and borrowings are recognised when the Group becomes party to the related contracts and are measured initially at fair value, being the proceeds received less directly attributable transaction costs.
After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method and taking into account any issue costs and any discount or premium on settlement.
Gains and losses arising on the repurchase, settlement or other cancellation of liabilities are recognised respectively in finance revenue and finance cost.
Income taxes
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates and laws that are enacted or substantively enacted by the balance sheet date.
Deferred income tax is recognised on all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial 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 basis at the tax rates that are expected to apply when the related asset is realised or liability is settled, based on tax rates and laws enacted or substantively enacted at the balance sheet date.
Tax is charged or credited directly to equity if it relates to items that are credited or charged to equity. Otherwise tax is recognised in the income statement.
Derivative financial instruments and hedging
The Group uses derivative financial instruments to hedge its risks associated with fluctuations in the price of Ultra Low Sulphur Diesel (ULSD), which are used in the invoice price of certain sales. From 1 January 2006, such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative.
For those derivatives designated as hedges and for which hedge accounting is desired, the hedging relationship is documented at its inception. This documentation identifies the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how effectiveness will be measured throughout its duration. Such hedges are expected at inception to be highly effective.
For the purpose of hedge accounting, hedges are classified as cash flow hedges when hedging exposure to variability in cash flows that is either attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction.
Any gains or losses arising from changes in the fair value of derivatives that do not quality for hedge accounting are taken to the income statement. The treatment of gains and losses arising from revaluing derivatives designated as hedging instruments depends on the nature of the hedging relationship, as follows:
Cash flow hedges
For cash flow hedges, the effective portion of the gain or loss on the hedging instrument is recognised directly in equity, while the ineffective portion is recognised in profit or loss. Amounts taken to equity are transferred to the income statement when the hedged transaction affects profit or loss, such as when a forecast sale or purchase occurs. Where the hedged item is the cost of a non-financial asset or liability, the amounts taken to equity are transferred to the initial carrying amount of the non-financial asset or liability.
If a forecast transaction is no longer expected to occur, amounts previously recognised in equity are transferred to profit or loss. If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if its designation as a hedge is revoked, amounts previously recognised in equity remain in equity until the forecast transaction occurs and are transferred to the income statement or to the initial carrying amount of a non-financial asset or liability as above.
Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received, excluding discounts, rebates, VAT and other sales taxes or duty. The following criteria must also be met before revenue is recognised:
Sale of goods
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, usually on dispatch of the goods.
Interest income
Finance revenue is recognised as interest accrued using the effective interest method, that is the rate that exactly discounts estimated future cash receipts through the expected life of the financial instruments to its net carrying amount.
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 reference to the fair value at the date at which they are granted and is recognised as an expense over the vesting period, which ends on the date on which the relevant employees become entitled to the award. Fair value is determined by an external valuer using an appropriate pricing model. In valuing equity-settled transactions, no account is taken of any vesting conditions, other than conditions linked to the price of the shares of the Company (market conditions).
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition, which are treated as 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's best estimate of the achievement or otherwise of non-market conditions and of the number of equity instruments that will ultimately vest or, in the case of an instrument subject to a market condition, be treated as vesting as described above. The movement in cumulative expense since the previous balance sheet date is 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 is designated as replacing a cancelled or settled award, the cost based on the original award terms continues to be recognised over the original vesting period. In addition, an expense is recognised over the remainder of the new vesting period for the incremental fair value of any modification, based on the difference between the fair value of the original award and the fair value of the modified award, both as measured on the date of the modification. No reduction is recognised if this difference is negative.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any cost not yet recognised in the income statement for the award is expensed immediately. Any compensation paid up to the fair value of the award at the cancellation is deducted from equity, with any 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 principally through a sale transaction rather than through continuing use, it is classified as held for sale and stated at the lower of carrying value and fair value less costs to sell. No depreciation is charged in respect of non-current assets classified as held for sale.
New standards and interpretations not applied
During the year the IASB and IFRIC have issued the following standards and interpretations with an effective date after the date of these financial statements:
International Accounting Standards (IAS/IFRS)
IAS 1 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 1 Cost of an Investment in a Subsidiary, Jointly Controlled Entity of Associate 1 January 2009
IFRS 2 Amendment to IFRS 2 - Vesting Conditions and Cancellations 1 January 2009
IFRS 3 Business Combinations (revised January 2008) 1 July 2009
IFRS 7 Amendment to IFRS 7 - Improving Disclosures about Financial Instruments 1 January 2009
IFRS 8 Operating Segments 1 January 2009
Annual improvements to IFRS (issued April 2009) 1 July 2009 or 1 January 2010
International Financial Reporting Interpretations Committee (IFRIC)
IFRIC 12 Service Concession Arrangements 1 January 2009
The Directors are currently reviewing the amendments to IFRS 1, IFRS 2 , IAS 23 and annual improvements to IFRS (issued April 2009) to determine whether there will be a material impact on the Group's financial statements.
IFRS 8 requires disclosure based on information presented to the Board. This is not expected to differ from the disclosures currently provided.
Apart from this, the Directors do not anticipate that the adoption of these standards will have a material impact on the Group's financial statements in the period of initial application.
3. Segmental information
The Group's primary reporting format is business segments as the Group's risks and returns are affected predominantly by differences in the products and services provided. Secondary segmental information is reported geographically. The operating businesses are organised and managed separately according to the nature of the products and services provided with each segment representing a strategic business unit that offers different products and serves different markets.
The plant science segment breeds seedlings for commercial planting and undertakes research and development activities focused on Jatropha curcas.
The refining and trading segment is concerned with the procurement and refining of vegetable oil and other feedstocks and the sale of biodiesel. The Group ceased refining and trading activities during the year.
The agronomy segment is responsible for the commercial planting of Jatropha and was transferred to the joint venture created with BP with effect from 1 October 2007.
D1-BP Fuel Crops is the joint venture established with BP on 1 October 2007 and, with effect from that date, is responsible for all commercial planting activities.
The corporate segment includes the activities of the Company and other central unallocated overheads. The corporate segment is responsible for raising finance and financing subsidiary operations. Included in the operating loss for this segment are the operating costs of D1 Oils plc as well as central unallocated finance, business development, and corporate communications costs. The only item of income included is interest accruing on cash balances and short-term deposits. Assets held in the corporate segment are primarily cash and short-term deposits and interest accruing thereon.
The following table presents revenue and loss information and certain asset and liability information regarding the Group's business segments for the years ended 31 December 2008 and 31 December 2007.
|
UK |
Europe |
Africa |
Asia |
India |
JVs |
Elimination |
Group |
|||||
|
Year ended 31 December 2008 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
||||
|
Revenue to external customers |
||||||||||||
|
Plant science |
4,168.4 |
1,267.3 |
470.1 |
- |
1,971.8 |
- |
(3,708.7) |
4,168.9 |
||||
|
Refining and trading (discontinued operation) |
2,904.4 |
- |
- |
- |
- |
- |
- |
2,904.4 |
||||
|
Total |
7,072.8 |
1,267.3 |
470.1 |
- |
1,971.8 |
- |
(3,708.7) |
7,073.3 |
||||
|
Operating loss |
||||||||||||
|
Plant science |
2,194.7 |
(1,185.1) |
(185.4) |
(572.5) |
(414.7) |
- |
- |
(163.0) |
||||
|
Agronomy |
- |
- |
- |
- |
- |
(2,000.0) |
- |
(2,000.0) |
||||
|
D1-BP Fuel Crops |
- |
- |
- |
- |
- |
(15,335.5) |
- |
(15,335.5) |
||||
|
Refining and trading (discontinued operation) |
(11,833.5) |
- |
- |
- |
- |
- |
- |
(11,833.5) |
||||
|
(9,638.8) |
(1,185.1) |
(185.4) |
(572.5) |
(414.7) |
(17,335.5) |
- |
(29,332.0) |
|||||
|
Corporate |
(5,421.8) |
- |
- |
- |
- |
- |
- |
(5,421.8) |
||||
|
Total |
(15,060.6) |
(1,185.1) |
(185.4) |
(572.5) |
(414.7) |
(17,335.5) |
- |
(34,753.8) |
||||
|
Assets by business segment |
||||||||||||
|
Plant science |
6,045.5 |
467.0 |
1,752.8 |
216.1 |
298.4 |
- |
(7,194.1) |
1,585.7 |
||||
|
D1-BP Fuel Crops |
- |
- |
- |
- |
- |
- |
- |
- |
||||
|
Refining and trading (discontinued operation) |
3,338.1 |
- |
- |
- |
- |
- |
- |
3,338.1 |
||||
|
9,383.6 |
467.0 |
1,752.8 |
216.1 |
298.4 |
- |
(7,194.1) |
4,923.8 |
|||||
|
Corporate |
28,465.6 |
- |
- |
- |
- |
- |
(8,775.1) |
19,690.5 |
||||
|
Total |
37,849.2 |
467.0 |
1,752.8 |
216.1 |
298.4 |
- |
(15,969.2) |
24,614.3 |
||||
|
Liabilities by business segment |
||||||||||||
|
Plant science |
(2,930.3) |
(366.9) |
(5,167.3) |
(2,662.2) |
(264.2) |
- |
10,240.4 |
(1,150.5) |
||||
|
Agronomy |
- |
- |
- |
- |
- |
(5,000.0) |
- |
(5,000.0) |
||||
|
Refining and trading (discontinued operation) |
(3,759.8) |
- |
- |
- |
- |
- |
- |
(3,759.8) |
||||
|
(6,690.1) |
(366.9) |
(5,167.3) |
(2,662.2) |
(264.2) |
(5,000.0) |
10,240.4 |
(9,910.3) |
|||||
|
Corporate |
(6,810.9) |
- |
- |
- |
- |
- |
5,353.5 |
(1,457.4) |
||||
|
Total |
(13,501.0) |
(366.9) |
(5,167.3) |
(2,662.2) |
(264.2) |
(5,000.0) |
15,593.9 |
(11,367.7) |
||||
|
UK |
Europe |
Africa |
Asia |
India |
JVs |
Elimination |
Group |
|||||
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
||||
|
Capital expenditure - tangible assets |
||||||||||||
|
Plant science |
108.6 |
13.5 |
101.8 |
91.1 |
58.3 |
- |
- |
373.3 |
||||
|
Refining and trading (discontinued operation) |
1,629.5 |
- |
- |
- |
- |
- |
- |
1,629.5 |
||||
|
1,738.1 |
13.5 |
101.8 |
91.1 |
58.3 |
- |
- |
2,002.8 |
|||||
|
Corporate |
23.7 |
- |
- |
- |
- |
- |
- |
23.7 |
||||
|
Total |
1,761.8 |
13.5 |
101.8 |
91.1 |
58.3 |
- |
- |
2,026.5 |
||||
|
Depreciation |
||||||||||||
|
Plant science |
(19.3) |
(4.2) |
(17.0) |
(13.1) |
(62.4) |
- |
- |
(116.0) |
||||
|
Refining and trading (discontinued operation) |
(4.3) |
- |
- |
- |
- |
- |
- |
(4.3) |
||||
|
(23.6) |
(4.2) |
(17.0) |
(13.1) |
(62.4) |
- |
- |
(120.3) |
|||||
|
Corporate |
(3.7) |
- |
- |
- |
- |
- |
- |
(3.7) |
||||
|
Total |
(27.3) |
(4.2) |
(17.0) |
(13.1) |
(62.4) |
- |
- |
(124.0) |
||||
|
Capital expenditure - intangible assets |
||||||||||||
|
Plant science |
- |
- |
6.3 |
0.5 |
- |
- |
- |
6.8 |
||||
|
Refining and trading (discontinued operation) |
- |
- |
- |
- |
- |
- |
- |
- |
||||
|
Total |
- |
- |
6.3 |
0.5 |
- |
- |
- |
6.8 |
||||
|
Intangible amortisation |
||||||||||||
|
Plant science |
(0.7) |
- |
(1.8) |
- |
- |
- |
- |
(2.5) |
||||
|
Refining and trading (discontinued operation) |
(8.5) |
- |
- |
- |
- |
- |
- |
(8.5) |
||||
|
Total |
(9.2) |
- |
(1.8) |
- |
- |
- |
- |
(11.0) |
||||
|
Asset impairment |
||||||||||||
|
Refining and trading (discontinued operation) |
(5,522.7) |
- |
- |
- |
- |
- |
- |
(5,522.7) |
||||
|
Total |
(5,522.7) |
- |
- |
- |
- |
- |
- |
(5,522.7) |
||||
|
Impairment of investments |
||||||||||||
|
D1-BP Fuel Crops |
- |
- |
- |
- |
- |
(6,660.5) |
- |
(6,660.5) |
||||
|
Total |
- |
- |
- |
- |
- |
(6,660.5) |
- |
(6,660.5) |
||||
|
Share - based payments |
||||||||||||
|
Corporate |
(649.0) |
- |
- |
- |
- |
- |
- |
(649.0) |
||||
|
Total |
(649.0) |
- |
- |
- |
- |
- |
- |
(649.0) |
||||
|
UK |
Europe |
Africa |
Asia |
India |
JVs |
Elimination |
Group |
|||||
|
Year ended 31 December 2007 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
||||
|
Revenue to external customers |
||||||||||||
|
Plant science |
- |
- |
- |
9.7 |
0.4 |
- |
- |
10.1 |
||||
|
Refining and trading (discontinued operation) |
10,569.6 |
- |
- |
- |
- |
- |
- |
10,569.6 |
||||
|
Total |
10,569.6 |
- |
- |
9.7 |
0.4 |
- |
- |
10,579.7 |
||||
|
Operating loss |
||||||||||||
|
Plant 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 and trading (discontinued operation) |
(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) |
(936.1) |
(1,524.6) |
- |
(41,386.3) |
|||||
|
Corporate |
(4,713.2) |
- |
- |
- |
- |
- |
- |
(4,713.2) |
||||
|
Total |
(40,237.3) |
(226.9) |
(1,989.1) |
(1,185.5) |
(936.1) |
(1,524.6) |
- |
(46,099.5) |
||||
|
UK |
Europe |
Africa |
Asia |
India |
JVs |
Elimination |
Group |
|||||
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|||||
|
Assets by business segment |
||||||||||||
|
Plant science |
236.7 |
159.7 |
2,463.3 |
943.1 |
431.8 |
- |
(902.2) |
3,332.4 |
||||
|
D1-BP Fuel Crops |
- |
- |
- |
- |
- |
15,180.5 |
- |
15,180.5 |
||||
|
Refining and trading (discontinued operation) |
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) |
31,475.5 |
|||||
|
Corporate |
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 |
||||
|
Liabilities by business segment |
||||||||||||
|
Plant science |
(1,456.6) |
(91.1) |
(7,519.4) |
(196.7) |
(1,949.6) |
- |
10,377.9 |
(835.5) |
||||
|
Refining and trading (discontinued operation) |
(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 assets |
||||||||||||
|
Plant science |
25.3 |
3.9 |
- |
2.0 |
- |
- |
- |
31.2 |
||||
|
Agronomy |
- |
- |
914.3 |
65.0 |
134.3 |
- |
- |
1,113.6 |
||||
|
Refining and trading (discontinued operation) |
15,962.2 |
- |
- |
- |
- |
- |
- |
15,962.2 |
||||
|
15,987.5 |
3.9 |
914.3 |
67.0 |
134.3 |
- |
- |
17,107.0 |
|||||
|
Corporate |
55.7 |
- |
- |
- |
- |
- |
- |
55.7 |
||||
|
Total |
16,043.2 |
3.9 |
914.3 |
67.0 |
134.3 |
- |
- |
17,162.7 |
||||
|
Depreciation |
||||||||||||
|
Plant science |
(3.5) |
(0.4) |
- |
(1.9) |
(0.5) |
- |
- |
(6.3) |
||||
|
Agronomy |
- |
- |
(151.8) |
(36.3) |
(42.2) |
- |
- |
(230.3) |
||||
|
Refining and trading (discontinued operation) |
(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 assets |
||||||||||||
|
Plant science |
1.4 |
- |
- |
- |
- |
- |
- |
1.4 |
||||
|
Refining and trading (discontinued operation) |
3.3 |
- |
- |
- |
- |
- |
- |
3.3 |
||||
|
Total |
4.7 |
- |
- |
- |
- |
- |
- |
4.7 |
||||
|
Intangible amortisation |
||||||||||||
|
Plant science |
0.3 |
- |
- |
- |
- |
- |
- |
0.3 |
||||
|
Refining and trading (discontinued operation) |
18.1 |
- |
- |
- |
- |
- |
- |
18.1 |
||||
|
Total |
18.4 |
- |
- |
- |
- |
- |
- |
18.4 |
||||
|
Asset impairment |
||||||||||||
|
Refining and trading (discontinued operation) |
22,778.9 |
- |
- |
- |
- |
- |
- |
22,778.9 |
||||
|
Total |
22,778.9 |
- |
- |
- |
- |
- |
- |
22,778.9 |
||||
|
Impairment of investments |
||||||||||||
|
Corporate |
60.0 |
- |
- |
- |
- |
- |
- |
60.0 |
||||
|
Total |
60.0 |
- |
- |
- |
- |
- |
- |
60.0 |
||||
|
Share-based payments |
||||||||||||
|
Corporate |
1,857.0 |
- |
- |
- |
- |
- |
- |
1,857.0 |
||||
|
Total |
1,857.0 |
- |
- |
- |
- |
- |
- |
1,857.0 |
||||
4. Revenue and administrative costs
Revenue recognised in the income statement is analysed as follows:
|
Year ended 31 December 2008 |
Year ended 31 December 2007 |
|
|
|
£000 |
£000 |
|
Continuing operations |
||
|
Sales of goods |
4,168.9 |
- |
|
Finance revenue |
1,205.0 |
1,572.5 |
|
|
5,373.9 |
1,572.5 |
|
Discontinued operations |
||
|
Sales of goods |
2,904.4 |
10,569.6 |
|
|
2,904.4 |
10,569.6 |
No revenue was derived from exchanges of goods or services.
Group operating loss is stated after charging/(crediting):
|
Year ended 31 December 2008 |
Year ended 31 December 2007 |
|
|
|
£000 |
£000 |
|
Research and development costs written off |
198.6 |
110.4 |
|
Depreciation of plant, property and equipment |
124.0 |
845.4 |
|
Impairment of plant, property and equipment |
1,653.4 |
22,778.9 |
|
Amortisation of intangible assets |
11.0 |
18.4 |
|
Impairment of intangible assets |
30.6 |
64.1 |
|
Impairment of assets held for sale |
3,878.2 |
- |
|
(Profit)/loss on disposal of fixed assets |
- |
7.0 |
|
Net foreign currency differences |
590.9 |
(45.1) |
|
Auditors' remuneration |
||
|
- audit fees |
95.0 |
115.0 |
|
- interim audit |
32.7 |
29.6 |
|
- overseas audit |
23.6 |
165.5 |
|
- taxation services |
81.6 |
167.5 |
|
- audit of IFRS conversion |
- |
40.7 |
|
- advice in relation to establishment of the D1-BP Fuel Crops joint venture |
- |
23.6 |
|
- advice for 2008 fundraising |
118.3 |
- |
|
- consulting services |
0.6 |
- |
|
Total |
351.8 |
541.9 |
|
Payment under operating leases |
||
|
- property |
340.5 |
136.7 |
|
- plant and machinery |
52.0 |
126.7 |
|
Provision for bad and doubtful debts |
19.5 |
16.3 |
|
Financial assets at fair value through income statement classified as held for trading |
||
|
- fair value on foreign currency contracts |
- |
(56.3) |
|
Financial liabilities at fair value through income statement classified as held for 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) during the year, analysed by category was as follows:
|
Year ended 31 December 2008 |
Year ended 31 December 2007 |
|
|
|
Number |
Number |
|
Executive Directors |
2 |
3 |
|
Technical |
29 |
66 |
|
Administration and operational staff |
143 |
204 |
|
Total |
174 |
273 |
The costs incurred in respect of these employees (including Directors) were:
|
Year ended 31 December 2008 |
Year ended 31 December 2007 |
|
|
|
£000 |
£000 |
|
Wages and salaries |
3,686.0 |
6,271.8 |
|
Social security costs |
503.8 |
752.2 |
|
Other pension costs |
178.9 |
- |
|
Total |
4,368.7 |
7,024.0 |
Other pension costs consist of contributions to defined contribution pension plans.
In addition to staff costs incurred in the course of the Group's ordinary activities, as part of the cessation of refining and trading activities a number of staff received payouts under compromise agreements following the termination of their employment. The total payout was £1,769,000.
The average number of persons employed by the Company (including Executive Directors) during the year was:
|
Year ended 31 December 2008 |
Year ended 31 December 2007 |
|
|
|
Number |
Number |
|
Executive Directors |
2 |
3 |
|
Technical |
3 |
- |
|
Administration and operational staff |
34 |
1 |
|
Total |
39 |
4 |
A reorganisation resulted in an increase in the number of staff in the Company.
The costs incurred in respect of these employees (including Directors) were:
|
Year ended 31 December 2008 |
Year ended 31 December 2007 |
|
|
|
£000 |
£000 |
|
Wages and salaries |
2,137.4 |
943.2 |
|
Social security costs |
294.2 |
132.8 |
|
Other pension costs |
178.9 |
- |
|
Total |
2,610.5 |
1,076.0 |
6. Directors' remuneration
|
Short-term employee benefits |
Post-employment benefits (b) |
Other long-term benefits |
Termination benefits (c) |
Share-based payment |
Year ended 31 December 2008 |
Year ended 31 December 2007 |
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
|
Executive Directors |
|||||||
|
Elliott Michael Mannis |
231.5 |
46.0 |
46.0 |
231.5 |
- |
555.0 |
266.4 |
|
Richard Keith Gudgeon |
- |
- |
- |
- |
- |
- |
98.3 |
|
Stephen Peter Douty |
- |
- |
- |
- |
- |
- |
147.0 |
|
William Peter Campbell |
- |
- |
- |
- |
- |
- |
123.4 |
|
Christopher Tawney |
59.6 |
- |
4.5 |
88.3 |
- |
152.4 |
53.1 |
|
Benjamin Richard Good |
78.4 |
- |
5.9 |
- |
- |
84.3 |
- |
|
Henk Jean Pierre Joos |
106.2 |
- |
- |
- |
- |
106.2 |
- |
|
Non-Executive Directors |
|||||||
|
Karl Eric Watkin |
6.0 |
- |
- |
- |
- |
6.0 |
55.0 |
|
John Barclay Forrest |
60.0 |
- |
- |
- |
- |
60.0 |
40.6 |
|
Clive Neil Morton |
39.1 |
- |
- |
8.8 |
- |
47.9 |
52.2 |
|
Peter John Davidson |
- |
- |
- |
- |
- |
- |
33.9 |
|
Lord Oxburgh of Liverpool |
75.0 |
- |
- |
18.8 |
- |
93.8 |
75.0 |
|
Christopher Leaver |
35.0 |
- |
- |
- |
- |
35.0 |
17.5 |
|
Moira Elizabeth Black |
37.9 |
- |
- |
- |
- |
37.9 |
9.1 |
|
Brian Alan Myerson (a) |
14.6 |
- |
- |
- |
- |
14.6 |
- |
|
|
743.3 |
46.0 |
56.4 |
347.4 |
- |
1,193.1 |
971.5 |
(a) Brian Myerson is a director of Principle Capital Investment Trust plc. He is also a director of Principle Capital Fund Managers Limited which is the 100% owner of Principle Capital GP Limited, the general partner of Principle Capital, L.P.. Principle Capital Investment Trust plc owns 26,473,330 shares in D1 Oils plc and Principle Capital L.P., which owns 8,415,759 shares in D1 Oils plc. Principle Capital Fund Managers Limited receives director fees for Brian Myerson, which it rebates to Principle Capital Investment Trust plc and Principle Capital, L.P..
(b) Post-employment benefits are contributions to the defined contribution pension scheme operated by the Group.
(c) As part of the restructuring of the business, the appointments of several directors were terminated. These directors were not compensated for the required notice periods and other losses of benefits but instead received payments following the terminations under compromise agreements. As part of the compromise agreement for Elliott Mannis, a contribution of £46,000 was made to a designated pension fund. This contribution is recognised in post-employment benefits in the table above.
|
|
Options 1 January 2008 (a) |
Granted 2008 |
Exercised 2008 |
Lapsed in 2008 |
Options 31 December 2008 |
Exercise price |
Exercisable date |
Expiry date |
|
Karl Eric Watkin |
39,062 |
- |
- |
(39,062) |
- |
£1.28 |
October-05 |
October-14 |
|
John Barclay Forrest |
78,125 |
- |
- |
- |
78,125 |
£1.28 |
October-05 |
October-14 |
|
Clive Neil Morton |
156,250 |
- |
- |
(156,250) |
- |
£1.28 |
October-05 |
October-14 |
|
Elliott Michael Mannis |
33,613 |
- |
- |
- |
33,613 |
£2.98 |
(b) |
May-15 |
|
Elliott Michael Mannis |
132,075 |
- |
- |
- |
132,075 |
£2.65 |
(b) |
May-15 |
|
Elliott Michael Mannis |
500,000 |
- |
- |
- |
500,000 |
£2.00 |
(b) |
January-16 |
|
Lord Oxburgh of Liverpool |
50,000 |
- |
- |
- |
50,000 |
£0.01 |
(b) |
September-16 |
|
Henk Jean Pierre Joos |
170,915 |
- |
- |
- |
170,915 |
£2.30 |
(b) |
October-16 |
|
Elliott Michael Mannis |
487,500 |
- |
- |
- |
487,500 |
£1.73 |
(b) |
March-17 |
|
Henk Jean Pierre Joos |
56,250 |
- |
- |
- |
56,250 |
£1.73 |
(b) |
March-17 |
|
Benjamin Richard Good |
208,696 |
- |
- |
- |
208,696 |
£1.73 |
(b) |
March-17 |
|
Benjamin Richard Good |
- |
1,284,000 |
- |
- |
1,284,000 |
£0.21 |
(b) |
May-18 |
|
Henk Jean Pierre Joos |
- |
1,417,000 |
- |
- |
1,417,000 |
£0.21 |
(b) |
May-18 |
|
Elliott Michael Mannis |
- |
2,030,000 |
- |
- |
2,030,000 |
£0.21 |
(b) |
May-18 |
|
|
1,912,486 |
4,731,000 |
- |
(195,312) |
6,448,174 |
(a) Options in issue at 1 January 2008 or the date of appointment if later.
(b) These options have been granted as one third exercisable on the first anniversary of their date of grant. Thereafter a further 1/36 vests each month over the next 24 months so that the full amount is capable of being exercised after three years. The aggregate amounts of gains made by former Directors on the exercise of share options during the year amounted to £nil (2007: £178,515). This represents the market price of the shares in excess of the exercise price on the date the options were exercised.
7. Finance revenue and costs
|
Year ended 31 December 2008 |
Year ended 31 December 2007 |
|
|
£000 |
£000 |
|
|
Interest received on bank deposits |
872.1 |
1,572.5 |
|
Net foreign exchange movements |
332.9 |
- |
|
Finance revenue |
1,205.0 |
1,572.5 |
|
Bank loans and overdrafts |
(57.0) |
(63.9) |
|
Interest payable under finance leases and hire purchase agreements |
(187.4) |
(242.9) |
|
Finance costs |
(244.4) |
(306.8) |
8. Taxation
Tax recognised in the income statement
|
Continuing operations |
Discontinued operations |
Total |
||||
|
Year ended 31 December 2008 |
Year ended 31 December 2007 |
Year ended 31 December 2008 |
Year ended 31 December 2007 |
Year ended 31 December 2008 |
Year ended 31 December 2007 |
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
|
Current tax credit - UK |
- |
- |
(247.4) |
- |
(247.4) |
- |
|
Current tax income - overseas |
20.9 |
36.7 |
- |
- |
20.9 |
36.7 |
|
Tax reported in consolidated income statement |
20.9 |
36.7 |
(247.4) |
- |
(226.5) |
36.7 |
Reconciliation
A reconciliation of total tax applicable to accounting profit before tax at the Group's effective tax rate for the years ended 31 December 2008 and 31 December 2007 is as follows:
|
Year ended 31 December 2008 |
Year ended 31 December 2007 |
|
|
£000 |
£000 |
|
|
Loss on ordinary activities before taxation |
(33,793.2) |
(46,099.5) |
|
At United Kingdom tax rate of 28% (2007: 30%) |
(9,462.1) |
(13,829.9) |
|
Expenditure not allowable for tax purposes |
(248.1) |
100.0 |
|
Unrecognised deferred tax asset on impairment of assets |
1,212.4 |
6,893.7 |
|
Unrecognised deferred tax on ULSD swaps |
(308.5) |
330.5 |
|
Share option charge |
181.7 |
557.1 |
|
Share of loss of joint venture |
2,429.0 |
443.7 |
|
Transfer of operations to joint venture not taxable |
- |
992.0 |
|
Effect of different tax rates of subsidiaries in other jurisdictions |
2.5 |
- |
|
Unrecognised tax losses |
4,856.5 |
3,513.9 |
|
Losses of overseas subsidiaries for which no tax relief available |
- |
1,035.7 |
|
Utilisation of prior year losses |
(507.5) |
- |
|
Write back of investment impairment |
1,864.9 |
- |
|
Research and development tax credits refunded |
(247.4) |
- |
|
Total tax income reported in consolidated income statement |
(226.5) |
36.7 |
The applicable corporation tax rate reduced from 30% in 2007 to 28% in 2008 in line with the reduction in the main rate of corporation tax in the UK.
The Group has tax losses of £6.9m (£5.7m) that are available indefinitely for offset against future taxable profits in the companies in which they arose. Deferred tax assets have not been recognised in respect of these losses as the companies with losses are not forecast to generate taxable profits for several years and the losses are not transferrable.
9. Loss per ordinary share
For Group
|
Year ended 31 December 2008 |
Year ended 31 December 2007 |
|
|
Number |
Number |
|
|
Weighted average number of shares in issue |
108,840,317 |
61,638,732 |
|
Pence |
Pence |
|
|
Loss per ordinary share - basic and diluted |
(30.84) |
(74.85) |
For Group from continuing operations
|
Year ended 31 December 2008 |
Year ended 31 December 2007 |
|
|
Number |
Number |
|
|
Weighted average number of shares in issue |
108,840,317 |
61,638,732 |
|
Pence |
Pence |
|
|
Loss per ordinary share - basic and diluted |
(20.02) |
(22.08) |
The number of shares in issue at 31 December 2008 was 125,625,219 (2007: 62,241,219). For the purposes of calculating the loss per ordinary share the weighted average number of shares excludes 193,645 shares (2007: 193,645 shares) held by the D1 Oils plc Employee Benefit Trust. No diluted loss per share has been disclosed as the share options are anti-dilutive. For the purposes of calculating earnings per share, the following profit figures were used:
|
Year ended 31 December 2008 |
Year ended 31 December 2007 |
|
|
£000 |
£000 |
|
|
Loss for the period attributable to equity holders of the parent from continuing operations |
(21,793.2) |
(13,609.5) |
|
Loss for the period attributable to equity holders of the parent from discontinued operations |
(11,773.5) |
(32,526.7) |
|
Total loss for the period attributable to equity holders of the parent |
(33,566.7) |
(46,136.2) |
10. Property, plant and equipment
Group
|
Freehold land |
Buildings |
Plantations |
Motor vehicles |
Plant and machinery |
Fixtures and fittings |
Total |
|
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
Cost |
|||||||
|
At 1 January 2007 |
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 |
17,162.7 |
|
Reclassifications |
- |
300.0 |
- |
- |
(300.0) |
- |
- |
|
Foreign exchange movements |
- |
- |
1.0 |
4.2 |
10.3 |
7.7 |
23.2 |
|
Transfer 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 |
|
Additions |
- |
- |
- |
9.0 |
1,923.4 |
94.1 |
2,026.5 |
|
Disposal |
- |
- |
- |
- |
(136.4) |
(47.3) |
(183.7) |
|
Reclassify assets between categories |
- |
(15.5) |
- |
- |
15.5 |
- |
- |
|
Reclassify as assets held for sale |
(4,224.9) |
(310.3) |
- |
- |
(27,267.5) |
(347.3) |
(32,150.0) |
|
Reclassify as intangible |
- |
- |
- |
- |
(17.9) |
- |
(17.9) |
|
Foreign exchange movements |
- |
- |
- |
2.8 |
17.5 |
7.6 |
27.9 |
|
At 31 December 2008 |
- |
- |
- |
33.6 |
387.9 |
200.2 |
621.7 |
|
Accumulated depreciation |
|||||||
|
At 1 January 2007 |
- |
4.1 |
- |
14.8 |
341.3 |
83.7 |
443.9 |
|
Charge for the year |
- |
30.0 |
- |
5.5 |
531.8 |
278.1 |
845.4 |
|
Impairment |
1,241.7 |
253.2 |
- |
- |
21,127.9 |
156.1 |
22,778.9 |
|
Foreign exchange movements |
- |
- |
- |
0.4 |
3.4 |
3.2 |
7.0 |
|
Transfer 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 |
|
Charge for the year |
- |
- |
- |
11.4 |
81.6 |
31.0 |
124.0 |
|
Impairment |
- |
- |
- |
- |
1,653.4 |
- |
1,653.4 |
|
Elimination on disposal |
- |
- |
- |
- |
(111.8) |
(71.9) |
(183.7) |
|
Elimination on reclassification as assets held for sale |
(1,241.7) |
(287.3) |
- |
- |
(23,558.7) |
(312.4) |
(25,400.1) |
|
Elimination on reclassification as intangible |
- |
- |
- |
- |
(17.8) |
- |
(17.8) |
|
Foreign exchange movements |
- |
- |
- |
0.8 |
6.2 |
2.0 |
9.0 |
|
At 31 December 2008 |
- |
- |
- |
29.6 |
55.8 |
34.0 |
119.4 |
|
Net book value |
|||||||
|
At 31 December 2008 |
- |
- |
- |
4.0 |
332.1 |
166.2 |
502.3 |
|
At 31 December 2007 |
2,983.2 |
38.5 |
- |
4.4 |
3,850.4 |
107.8 |
6,984.3 |
|
At 1 January 2007 |
1,283.2 |
21.7 |
64.3 |
15.9 |
12,843.6 |
257.6 |
14,486.3 |
Impairment and reclassification of property, plant and equipment
In April 2008, the Group announced its intentions to exit from biodiesel refining and trading activities undertaken at its Middlesbrough and Bromborough sites. Assets used in the refining and trading operations were reclassified as held for sale in April 2008 (see note 13 for details). Prior to the reclassification, plant and machinery acquired in 2008 for refining and trading segment was impaired to reflect its fair value less cost to sell. The assets are not traded in an active market so the recoverable amount has been determined by reference to indicative interest in the assets received to date. The valuations assume the assets will be sold for scrap.
Company
|
Plant and machinery |
Fixtures and fittings |
Total |
|
|
|
£000 |
£000 |
£000 |
|
Cost |
|||
|
At 1 January 2007 and 31 December 2007 |
- |
- |
- |
|
Additions |
5.8 |
18.0 |
23.8 |
|
At 31 December 2008 |
5.8 |
18.0 |
23.8 |
|
Accumulated depreciation |
|||
|
At 1 January 2007 and 31 December 2007 |
- |
- |
- |
|
Charge for the year |
1.0 |
2.6 |
3.6 |
|
At 31 December 2008 |
1.0 |
2.6 |
3.6 |
|
Net book value |
|||
|
At 31 December 2008 |
4.8 |
15.4 |
20.2 |
|
At 1 January 2007 and 31 December 2007 |
- |
- |
- |
11. Intangible assets
|
Software licenses |
Goodwill |
Total |
|
|
|
£000 |
£000 |
£000 |
|
Cost |
|||
|
At 1 January 2007 |
62.0 |
64.1 |
126.1 |
|
Additions in the period |
4.7 |
- |
4.7 |
|
At 31 December 2007 |
66.7 |
64.1 |
130.8 |
|
Reclassification |
17.9 |
- |
17.9 |
|
Additions in the period |
6.8 |
- |
6.8 |
|
At 31 December 2008 |
91.4 |
64.1 |
155.5 |
|
Accumulated amortisation |
|||
|
At 1 January 2007 |
7.0 |
- |
7.0 |
|
Charge for the year |
18.4 |
- |
18.4 |
|
Impairment |
- |
64.1 |
64.1 |
|
At 31 December 2007 |
25.4 |
64.1 |
89.5 |
|
Reclassification |
17.8 |
- |
17.8 |
|
Charge for the year |
11.0 |
- |
11.0 |
|
Impairment |
30.6 |
- |
30.6 |
|
At 31 December 2008 |
84.8 |
64.1 |
148.9 |
|
Net book value |
|||
|
At 31 December 2008 |
6.6 |
- |
6.6 |
|
At 31 December 2007 |
41.3 |
- |
41.3 |
|
At 1 January 2007 |
55.0 |
64.1 |
119.1 |
Goodwill arose on the acquisition of D1 Oil Subsidiary Limited by D1 Oils Trading Limited in 2004. It represents the excess of the fair value of the acquired net assets over their book value. As from 1 January 2006, the date of transition to reporting under IFRS, goodwill is no longer amortised but is now subject to annual impairment testing. The Directors have taken the decision to impair the carrying value of the goodwill in light of the decision to cease refining 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:
|
Name |
Nature of business |
Country of incorporation |
Shareholder class |
Percentage |
|
D1 (UK) Limited |
Biodiesel trading |
UK |
Ordinary |
100% |
|
D1 Oil Subsidiary Limited |
Biodiesel trading |
UK |
Ordinary |
100% |
|
D1 Oils Africa (Pty) Limited |
Plant science |
South Africa |
Ordinary |
100% |
|
D1 Oils Asia Pacific Pte Limited |
Plant science |
Singapore |
Ordinary |
100% |
|
D1 Oils Ghana Pty Limited |
Dormant |
Ghana |
Ordinary |
100% |
|
D1 Oils India Private Limited |
Plant science |
India |
Ordinary |
100% |
|
D1 Oils Madagascar SARL |
Plant science |
Madagascar |
Ordinary |
99% |
|
D1 Oils Malaysia Sbn Bhd |
Dormant |
Malaysia |
Ordinary |
100% |
|
D1 Oils Philippines Inc |
Plant science |
Philippines |
Ordinary |
100% |
|
D1 Oils Plant Science (Thailand) Co Limited |
Plant science |
Thailand |
Ordinary |
100% |
|
D1 Oils Plant Science (UK) Limited |
Plant science |
UK |
Ordinary |
100% |
|
D1 Oils Plant Science (Zambia) Limited |
Plant science |
Zambia |
Ordinary |
100% |
|
D1 Oils Plant Science Africa (Pty) Limited |
Plant science |
South Africa |
Ordinary |
100% |
|
D1 Oils Plant Science Australia Pty Limited |
Dormant |
Australia |
Ordinary |
100% |
|
D1 Oils Plant Science Belgium NV |
Plant science |
Belgium |
Ordinary |
100% |
|
D1 Oils Plant Science Netherlands BV |
Plant science |
The Netherlands |
Ordinary |
100% |
|
D1 Oils Plant Science West Africa Soceidad Unipessoal, SA |
Plant science |
Cape Verde |
Ordinary |
100% |
|
D1 Oils South Africa (Pty) Limited |
Plant science |
South Africa |
Ordinary |
95% |
|
D1 Oils Trading Limited |
Biodiesel trading |
UK |
Ordinary |
100% |
|
D1 Oils Zambia Limited |
Plant science |
Zambia |
Ordinary |
100% |
|
D1-BP Fuel Crops Limited |
Jatropha plantations |
UK |
Ordinary |
50% |
|
GroupBio Limited |
Dormant |
UK |
Ordinary |
55% |
|
Hybrid Creations Sdn Bhd |
Plant science |
Malaysia |
Ordinary |
100% |
Investments in the Group comprise interests in joint ventures and trade investments. Investments in the Company comprise interests in subsidiary undertakings and trade investments.
12. Investments in subsidiaries and jointly controlled entities continued
Group
|
D1-BP Fuel Crops joint venture |
Other joint ventures |
Other investments |
Total |
|
|
|
£000 |
£000 |
£000 |
£000 |
|
Cost |
||||
|
1 January 2007 |
- |
(154.6) |
18.2 |
(136.4) |
|
Additions in the year |
16,693.5 |
903.5 |
60.0 |
17,657.0 |
|
Disposals 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 |
- |
16.0 |
|
Impairment |
- |
- |
(60.0) |
(60.0) |
|
Written off on transfer to D1-BP Fuel Crops Limited |
- |
(511.9) |
- |
(511.9) |
|
1 January 2008 |
15,180.5 |
- |
- |
15,180.5 |
|
Additions in the year |
- |
- |
- |
- |
|
Disposals in the year |
- |
- |
- |
- |
|
Share of joint ventures' results |
(8,675.0) |
- |
- |
(8,675.0) |
|
Exchange difference |
155.0 |
- |
- |
155.0 |
|
Impairment |
(6,660.5) |
- |
- |
(6,660.5) |
|
Written off on transfer to D1-BP Fuel Crops Limited |
- |
- |
- |
- |
|
31 December 2008 |
- |
- |
- |
- |
The Group is a 50% shareholder in D1-BP Fuel Crops. In the first half of 2009, the joint venture sought a third joint venturer to contribute to the operation. The result of the fundraising exercise remains uncertain and as a consequence the Group impaired its investment in the joint venture to nil to reflect the uncertainty of future cash flow from the investment. The recoverable amount of the investment was determined by its value in use. The uncertainty surrounding the business led the Group to estimate it could not currently expect any future cash flows from the investment - consequently no discount rate was required to determine value in use. The investment belongs to the JV's segment.
Company
|
D1-BP Fuel Crops joint venture |
Subsidiary undertakings |
Other investments |
Total |
|
|
|
£000 |
£000 |
£000 |
£000 |
|
Cost |
||||
|
1 January 2007 |
- |
125.0 |
18.2 |
143.2 |
|
Additions in the year |
12,787.0 |
- |
- |
12,787.0 |
|
Disposals in the year |
- |
- |
(18.2) |
(18.2) |
|
1 January 2008 |
12,787.0 |
125.0 |
- |
12,912.0 |
|
Additions in the year |
- |
0.1 |
- |
0.1 |
|
Impairment in the year |
(12,787.0) |
- |
- |
(12,787.0) |
|
31 December 2008 |
- |
125.1 |
- |
125.1 |
The Group's share of the joint ventures' assets and liabilities are as follows:
|
2008 |
2007 |
|
|
|
£000 |
£000 |
|
Current assets |
7,784.0 |
16,527.5 |
|
Non-current assets |
687.5 |
883.5 |
|
Current liabilities |
(1,782.5) |
(2,193.0) |
|
Non-current liabilities |
(28.5) |
(37.5) |
|
Share of net assets of joint ventures (before impairment) |
6,660.5 |
15,180.5 |
12. Investments in subsidiaries and jointly controlled entities continued
The Group's share of the joint ventures' losses is as follows:
|
2008 |
2007 |
|
|
|
£000 |
£000 |
|
Revenue |
23.0 |
- |
|
Net operating costs |
(8,211.0) |
(1,493.0) |
|
Operating loss |
(8,188.0) |
(1,493.0) |
|
Net finance income |
145.0 |
21.0 |
|
Share of loss from joint ventures accounted for using the equity method |
(628.0) |
(70.5) |
|
Loss before tax |
(8,671.0) |
(1,542.5) |
|
Income tax expense |
(4.0) |
- |
|
Minority interest |
- |
26.0 |
|
Share of losses of joint ventures |
(8,675.0) |
(1,516.5) |
D1-BP Fuel Crops Limited had no capital commitments as at 31 December 2008.
13. Assets held for sale
In April 2008, the Group announced its intentions to exit from biodiesel refining and trading activities undertaken at its Middlesbrough and Bromborough sites. The following assets used in the refining and trading operations were reclassified as held for sale in April 2008. At 31 December 2008, their carrying values were:
|
Freehold land |
Buildings |
Prepaid insurance |
Total |
|
|
|
£000 |
£000 |
£000 |
£000 |
|
Middlesbrough - site |
- |
1,000.0 |
- |
1,000.0 |
|
Bromborough - site |
2,000.0 |
- |
141.8 |
2,141.8 |
|
|
2,000.0 |
1,000.0 |
141.8 |
3,141.8 |
Following the classification of these assets as held for sale, an impairment loss of £3,878,000 in total was recognised to reduce the carrying amount of the assets in the disposal group to the recoverable amount (fair value less costs to sell). The assets are not traded in an active market so the recoverable amount has been determined by reference to indicative interest in the assets received to date. Of this impairment loss, £3,878,000 was recognised in 2008. This was recognised in the income statement in the line item 'Profit for the year from a discontinued operation'. The assets are the subject of ongoing sale negotiations.
The Group holds five refining units as assets held for sale following the closure of the refining and trading operations. The carrying value of these units is nil. Four of the five units are the subject of the Group's sole finance lease.
14. Discontinued operations
On 9 April 2008, the Group announced the decision of its Board to cease biodiesel refining and trading operations. The two refining sites at Middlesbrough and Bromborough in the UK were closed. Closure of these businesses resulted in the sites and refining equipment being reclassified from plant, property and equipment to assets held for sale. Negotiations to sell the assets are ongoing with various parties. The valuations of the assets held for sale reflect the length of time the assets have remained unsold and prevailing market conditions including the difficulty potential buyers have obtaining credit. These conditions have resulted in further impairment of the value of these assets. At 31 December 2008, the refining and trading operations remained classified as discontinued operations and the site and refining equipment as assets held for sale.
The results of the refining and trading activities of the Group for the year are presented below:
|
Year ended 31 December 2008 |
Year ended 31 December 2007 |
|
|
|
£000 |
£000 |
|
Revenue |
2,904.4 |
10,569.6 |
|
Expenses |
(9,175.7) |
(20,074.4) |
|
Gross loss |
(6,271.3) |
(9,504.8) |
|
Asset impairment |
(5,562.2) |
(22,778.9) |
|
Operating loss |
(11,833.5) |
(32,283.7) |
|
Finance costs |
(187.4) |
(243.0) |
|
Loss before tax from discontinued operation |
(12,020.9) |
(32,526.7) |
|
Tax income |
247.4 |
- |
|
Loss from discontinued operation |
(11,773.5) |
(32,526.7) |
The assets and liabilities of the refining and trading operations held for sale at 31 December are as follows:
|
As at 31 December 2008 |
As at 31 December 2007 |
|
|
|
£000 |
£000 |
|
Property, plant and equipment |
3,141.8 |
- |
The net cash flows incurred by the refining and trading operations are as follows:
|
As at 31 December 2008 |
As at 31 December 2007 |
|
|
|
£000 |
£000 |
|
Operating |
(4,388.8) |
(10,401.5) |
|
Investing |
(1,673.8) |
(16,120.0) |
|
Financing |
(757.7) |
(728.1) |
|
Net cash (outflow)/ inflow |
(6,820.3) |
(27,249.6) |
The earnings per share for the refining and trading operations are as follows:
|
Year ended 31 December 2008 |
Year ended 31 December 2007 |
|
|
£000 |
£000 |
|
|
Basic and diluted from discontinued operations |
(10.8) |
(52.8) |
15. Inventories
|
Group |
Group |
Company |
Company |
|
|
2008 |
2007 |
2008 |
2007 |
|
|
£000 |
£000 |
£000 |
£000 |
|
|
Raw material stock |
- |
1,962.7 |
- |
1,962.7 |
|
Work in progress |
- |
98.5 |
- |
98.5 |
|
Finished product |
20.3 |
159.1 |
- |
179.4 |
|
Total |
20.3 |
2,220.3 |
- |
2,240.6 |
16. Trade and other receivables
|
Group |
Group |
Company |
Company |
|
|
2008 |
2007 |
2008 |
2007 |
|
|
£000 |
£000 |
£000 |
£000 |
|
|
Non-current |
||||
|
Amounts owed by joint ventures |
- |
- |
- |
- |
|
Amounts owed by Group undertakings |
- |
- |
- |
- |
|
Other debtors |
- |
- |
- |
- |
|
|
- |
- |
- |
- |
|
Current |
||||
|
Trade receivables |
9.8 |
909.0 |
- |
- |
|
Amounts owed by Group undertakings |
- |
- |
377.9 |
431.6 |
|
Other receivables |
124.8 |
2,776.5 |
24.5 |
- |
|
Prepayments and accrued income |
381.8 |
432.6 |
198.9 |
26.1 |
|
Taxation and social security |
298.6 |
0.6 |
- |
- |
|
|
815.0 |
4,118.7 |
601.3 |
457.7 |
As at 31 December 2008, trade receivables at a nominal value of £nil (2007: £16,300) were impaired and are fully provided for. Movements in the provision for impairment of receivables were as follows:
|
Individually impaired |
Collectively impaired |
Total |
|
|
|
£000 |
£000 |
£000 |
|
At 1 January 2008 |
16.3 |
- |
16.3 |
|
Charge for the year |
(16.3) |
- |
(16.3) |
|
At 31 December 2008 |
- |
- |
- |
The Company had no impairment provisions at any time during 2008 or 2007.
As at 31 December, the ageing of receivables is as follows:
Group at 31 December 2008
|
Not yet |
Overdue |
Overdue |
Overdue |
||
|
due |
|
31-60 days |
>60 days |
Total |
|
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
|
Gross trade receivables as at 31 December 2008 |
9.8 |
- |
- |
- |
9.8 |
|
Other receivables |
124.8 |
- |
- |
- |
124.8 |
|
Impairment |
- |
- |
- |
- |
- |
|
Net trade receivables as at 31 December 2008 |
134.6 |
- |
- |
- |
134.6 |
Group at 31 December 2007
|
Not yet |
Overdue |
Overdue |
Overdue |
||
|
due |
|
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 |
925.3 |
|
Other receivables |
- |
2,776.5 |
- |
- |
2,776.5 |
|
Impairment |
- |
- |
- |
(16.3) |
(16.3) |
|
Net trade receivables as at 31 December 2007 |
829.1 |
2,853.5 |
- |
2.9 |
3,685.5 |
Company at 31 December 2008
|
Not yet |
Overdue |
Overdue |
Overdue |
||
|
due |
|
31-60 days |
>60 days |
Total |
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
|
|
Amounts owed by Group undertakings |
377.9 |
- |
- |
- |
377.9 |
|
Impairment of amounts owed by Group undertakings |
- |
- |
- |
- |
- |
|
Net trade receivables as at 31 December 2008 |
377.9 |
- |
- |
- |
377.9 |
16. Trade and other receivables continued
Company at 31 December 2007
|
Not yet |
Overdue |
Overdue |
Overdue |
||
|
due |
|
31-60 days |
>60 days |
Total |
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
|
|
Amounts owed by Group undertakings |
71,321.7 |
- |
- |
- |
71,321.7 |
|
Impairment 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 working capital and capital expenditure funding requirements. Amounts owed by Group companies have no fixed repayment date. The Company has not made any calls on subsidiary companies to repay these amounts so they have been classified as not yet due. In view of the Board's decision to close the UK refining and trading operations at Middlesbrough and Bromborough, and in light of the transfer of overseas planting operations into the D1-BP Fuel Crops joint venture during the course of the year, amounts owed by Group undertakings have been impaired to their estimated realisable amount. The balance of amounts owed by Group undertakings of £377,876 represents the balance due from D1 Oils Plant Science Limited which forms an integral part of the Group's strategy and the Directors believe there is a reasonable expectation that this amount will be recoverable in full in the future.
The Group has no concerns over the credit quality of amounts which are overdue and not impaired. No receivables have been impaired. Trade receivables are non-interest bearing and on 30 day terms. Since the cessation of the refining and trading business, apart from miscellaneous sales, the Group only provides services to the D1-BP Fuels Crops joint venture.
17. Other financial assets
|
Group |
Group |
Company |
Company |
||
|
2008 |
2007 |
2008 |
2007 |
||
|
|
Note |
£000 |
£000 |
£000 |
£000 |
|
Cash held as collateral against finance lease creditors |
(a) |
1,989.9 |
2,317.3 |
- |
- |
|
Cash held as collateral against swap transactions |
- |
2,000.0 |
- |
2,000.0 |
|
|
Cash held as collateral against letter of credit transactions |
- |
1,112.4 |
- |
1,112.4 |
|
|
Cash held as collateral against third party guarantees |
- |
250.0 |
- |
250.0 |
|
|
Other cash deposits |
(b) |
3,000.0 |
5,000.0 |
3,000.0 |
5,000.0 |
|
Accrued bank interest |
82.5 |
285.6 |
82.5 |
285.6 |
|
|
Forward currency contracts |
- |
56.3 |
- |
56.3 |
|
|
|
|
5,072.4 |
11,021.6 |
3,082.5 |
8,704.3 |
(a) The Group has a deposit of £1,989,866 (2007: £2,317,300) charged to Allied Irish Bank as cash collateral for part of the finance lease creditor. The deposit earns interest at fluctuating rates which averaged 4.4% in 2008.
(b) Other cash deposits represent funds placed on deposit for 258 days at an interest rate of 5.94%. The deposit matures on 30 March 2009.
18. Cash and short-term deposits
|
Group |
Group |
Company |
Company |
|
|
2008 |
2007 |
2008 |
2007 |
|
|
|
£000 |
£000 |
£000 |
£000 |
|
Cash at bank and in hand |
2,894.1 |
3,206.3 |
568.9 |
2,635.5 |
|
Short-term deposits |
12,161.8 |
390.3 |
12,161.8 |
390.3 |
|
|
15,055.9 |
3,596.6 |
12,730.7 |
3,025.8 |
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 on the immediate cash requirements of the Group and earn interest at varying short-term deposit rates. The fair value of Group cash and cash equivalents at 31 December 2008 is £15,055,900 (2007: £3,596,600).
19. Trade and other payables
|
Group |
Group |
Company |
Company |
|
|
2008 |
2007 |
2008 |
2007 |
|
|
|
£000 |
£000 |
£000 |
£000 |
|
Current |
||||
|
Trade payables |
657.1 |
1,782.1 |
293.7 |
194.8 |
|
Other payables |
179.4 |
- |
- |
- |
|
Taxation and social security |
259.9 |
585.3 |
67.3 |
182.2 |
|
|
1,096.4 |
2,367.4 |
361.0 |
377.0 |
Trade payables are non-interest bearing and the average creditor days is 21.
Other payables includes £171,680 owed to D1-BP Fuel Crops Limited, a related party, representing repayments of £229,404 due under the Seed Purchase and Service Agreement between the Group and D1-BP Fuel Crops Limited less payments due to the Group as consideration for the sale of its Madagascar agronomy operation of £58,724.
20. Interest-bearing loans and borrowings
|
Group |
Group |
Company |
Company |
|
|
2008 |
2007 |
2008 |
2007 |
|
|
|
£000 |
£000 |
£000 |
£000 |
|
Current |
||||
|
Current obligations under finance leases and hire purchase agreements |
2,566.8 |
432.9 |
- |
- |
|
Mortgage payable |
720.0 |
60.0 |
- |
- |
|
|
3,286.8 |
492.9 |
- |
- |
|
Non-current |
||||
|
Non-current obligations under finance leases and hire purchase agreements |
- |
2,587.2 |
- |
- |
|
Mortgage payable |
- |
720.0 |
- |
- |
|
|
- |
3,307.2 |
- |
- |
The lease obligation is over four D1 20 skid biodiesel refining units situated at the Group's Middlesbrough site. The lease is payable in equal instalments of £50,360 commencing in November 2006 with the final payment due in October 2011. Under the terms of the lease, the lessor, Allied Irish Bank, has grounds to terminate the lease and demand immediate payment of all outstanding amounts if, amongst other conditions, the Group states its intention to cease utilising the units in refining activities. The Group announced this intention in April 2008 when it announced its refining and trading activities would cease immediately. Agreement has been reached for the Group to settle this obligation in 2009.
Group borrowings include a mortgage over the decommissioned refinery site at Forty Foot Road, Middlesbrough, TS2 1HG. The mortgage is secured by a fixed and floating charge over the property and is repayable in 56 equal quarterly instalments commencing March 2007. Interest is charged at 1.75% over LIBOR.
The mortgage has been classed as a current liability in line with the classification of the Forty Foot Road property as an asset held for sale, which assumes the asset will be sold within twelve months. Accordingly, the associated mortgage is classed as falling due for repayment within twelve months.
21. Finance lease and hire purchase commitments
Group
|
Minimum payments |
Present value of payments |
Minimum payments |
Present value of payments |
|
|
2008 |
2008 |
2007 |
2007 |
|
|
|
£000 |
£000 |
£000 |
£000 |
|
Within one year |
701.9 |
472.5 |
623.3 |
432.9 |
|
After one year but not more than five years |
2,213.1 |
2,094.3 |
2,818.5 |
2,587.2 |
|
Total minimum lease payments |
2,915.0 |
2,566.8 |
3,441.8 |
3,020.1 |
|
Less amounts representing finance charges |
(348.2) |
- |
(421.7) |
- |
|
|
2,566.8 |
2,566.8 |
3,020.1 |
3,020.1 |
The Company did not have any finance leases in either 2008 or 2007.
In the light of the cessation of refining and trading operations, D1 is in discussions with Allied Irish Bank (the lessor under leases of refining equipment), with a view to terminating the leases in due course. As disclosed in note 20, although the lease runs until October 2011, all lease payments have been classified as current due to the possibility that the lessor may terminate the lease due to default by the Group triggered by the cessation of refining activities.
22. Other financial liabilities
|
Group |
Group |
Company |
Company |
|
|
2008 |
2007 |
2008 |
2007 |
|
|
|
£000 |
£000 |
£000 |
£000 |
|
ULSD swaps |
- |
1,101.7 |
- |
- |
|
Forward currency contracts |
- |
33.6 |
- |
33.6 |
|
|
- |
1,135.3 |
- |
33.6 |
At 31 December 2007, the Group had entered in to Ultra Low Sulphur Diesel (ULSD) swaps to hedge its exposure to fluctuating commodity prices and forward currency contracts to buy US dollars. Following the closure of the Group's refining and trading activities in April 2008, these contracts were no longer considered necessary. At 31 December 2008, the Group did not hold any ULSD swaps or forward currency contracts.
23. Provisions
|
Planting provision (a) |
Redundancy provision (b) |
Contract settlement provision (c) |
Group contractual commitments |
|
|
|
£000 |
£000 |
£000 |
£000 |
|
Current |
||||
|
At 1 January 2008 |
3,000.0 |
- |
- |
3,000.0 |
|
Movements in the year |
2,000.0 |
161.0 |
640.0 |
2,801.0 |
|
At 31 December 2008 |
5,000.0 |
161.0 |
640.0 |
5,801.0 |
(a) In 2007, a planting provision was raised to cover a potential shortfall in planting assets contributed to the joint venture. In 2008, the planting provision was increased to £5m. On 4 February 2009, the Group announced it had settled the provision of £5m with its joint venture partner, BP.
(b) The redundancy provision covered redundancy settlements still under negotiation at 31 December 2008. The provision was settled in January 2009.
(c) The contract settlement provision covered the cost to exit from a storage tank contract. The provision was settled in January 2009.
The Company did not hold any provisions at 31 December 2007 or 31 December 2008.
24. Operating lease commitments
Future minimum rentals payable under non-cancellable operating leases as at 31 December 2008 are as follows:
|
Group |
Group |
Group |
Group |
|
|
Land and buildings |
Plant and equipment |
Land and buildings |
Plant and equipment |
|
|
2008 |
2008 |
2007 |
2007 |
|
|
|
£000 |
£000 |
£000 |
£000 |
|
Within one year |
478.4 |
2.9 |
159.0 |
726.9 |
|
After one year but not more than five years |
1,177.4 |
5.7 |
636.0 |
2,889.1 |
|
After more than five years |
1,016.0 |
- |
1,407.4 |
- |
|
|
2,671.8 |
8.6 |
2,202.4 |
3,616.0 |
The Group entered into commercial leases on certain property and items of machinery. There are two property leases at Bromborough. Each lease runs until the year 2106 and each lease contains a break clause exercisable in 2021. The machinery leases have an average duration of between one and four years. There are no restrictions placed upon the lessee by entering into these leases.
|
Company |
Company |
|
|
Land and buildings |
Land and buildings |
|
|
2008 |
2007 |
|
|
|
£000 |
£000 |
|
Within one year |
98.0 |
159.0 |
|
After one year but not more than five years |
133.9 |
636.0 |
|
After more than five years |
- |
1,407.4 |
|
|
231.9 |
2,202.4 |
25. Authorised and issued share capital
|
Group and Company |
Group and Company |
Group and Company |
Group and Company |
|
|
2008 |
2007 |
2008 |
2007 |
|
|
No. of shares |
No. of shares |
£000 |
£000 |
|
|
Authorised |
||||
|
Ordinary shares of 1p each |
200,000,000 |
200,000,000 |
2,000.0 |
2,000.0 |
|
Called up, allotted and fully paid |
||||
|
At 1 January |
62,241,219 |
61,480,578 |
622.4 |
614.8 |
|
Issued on exercise of share options |
- |
681,521 |
- |
6.8 |
|
Issued under bonus share scheme |
- |
79,120 |
- |
0.8 |
|
Issued on placing of new shares |
64,384,000 |
- |
643.9 |
- |
|
At 31 December |
126,625,219 |
62,241,219 |
1,266.3 |
622.4 |
The Company has one class of ordinary shares which carry no rights to fixed income.
On 9 April 2008, the Company completed the placing of 64,384,000 new ordinary shares. The Company received cash consideration of £16,096,000 for this placing prior to expenses of £1,213,259.
26. Movements in equity
|
Share capital |
Share premium |
Own shares held |
Merger reserve |
Profit and loss reserve |
Share option reserve |
Currency translation reserve |
Total |
|
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
Group |
||||||||
|
At 1 January 2007 |
614.8 |
83,832.2 |
(484.0) |
437.7 |
(22,172.0) |
- |
(591.6) |
61,637.1 |
|
Total recognised income and expense |
- |
- |
- |
- |
(46,136.2) |
- |
(90.1) |
(46,226.3) |
|
Issue of shares by the Company |
7.6 |
1,137.1 |
- |
- |
- |
- |
- |
1,144.7 |
|
Share-based payments |
- |
- |
- |
- |
1,857.0 |
- |
- |
1,857.0 |
|
Issue of equity instruments |
- |
- |
- |
- |
- |
12,787.0 |
- |
12,787.0 |
|
Adjustment to 2006 share issue costs |
- |
82.1 |
- |
- |
- |
- |
- |
82.1 |
|
At 31 December 2007 |
622.4 |
85,051.4 |
(484.0) |
437.7 |
(66,451.2) |
12,787.0 |
(681.7) |
31,281.6 |
|
Total recognised income and expense |
- |
- |
- |
- |
(34,277.6) |
- |
710.9 |
(33,566.7) |
|
Issue of shares - net of expenses |
643.9 |
14,238.9 |
- |
- |
- |
- |
- |
14,882.8 |
|
Share-based payments |
- |
- |
- |
- |
649.0 |
- |
- |
649.0 |
|
Issue of equity instruments |
- |
- |
- |
- |
- |
- |
- |
- |
|
At 31 December 2008 |
1,266.3 |
99,290.3 |
(484.0) |
437.7 |
(100,079.8) |
12,787.0 |
29.2 |
13,246.7 |
|
Company |
||||||||
|
At 1 January 2007 |
614.8 |
83,832.2 |
(484.0) |
- |
(3,419.4) |
- |
- |
80,543.6 |
|
Retained loss for the period |
- |
- |
- |
- |
(72,266.7) |
- |
- |
(72,266.7) |
|
Issue of shares by the Company |
7.6 |
1,137.1 |
- |
- |
- |
- |
- |
1,144.7 |
|
Share option charge |
- |
- |
- |
- |
1,857.0 |
- |
- |
1,857.0 |
|
Issue of equity instruments |
- |
- |
- |
- |
- |
12,787.0 |
- |
12,787.0 |
|
Adjustment to 2006 share issue costs |
- |
82.1 |
- |
- |
- |
- |
- |
82.1 |
|
At 31 December 2007 |
622.4 |
85,051.4 |
(484.0) |
- |
(73,829.1) |
12,787.0 |
- |
24,147.7 |
|
Retained loss for the period |
- |
- |
- |
- |
(23,898.5) |
- |
- |
(23,898.5) |
|
Issue of shares by the Company - net of expenses |
643.9 |
14,238.9 |
- |
- |
- |
- |
- |
14,882.8 |
|
Share-based payments |
- |
- |
- |
- |
649.0 |
- |
- |
649.0 |
|
Issue of equity instruments |
- |
- |
- |
- |
- |
- |
- |
- |
|
At 31 December 2008 |
1,266.3 |
99,290.3 |
(484.0) |
- |
(97,078.6) |
12,787.0 |
- |
15,781.0 |
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 issue of shares by the Company.
Own shares held
D1 Oils Employee Benefit Trust holds 193,645 shares in D1 Oils plc which were acquired at a total cost of £484,000. Shares held by the trust can be purchased by employees exercising options under the Group's option scheme. At 31 December 2008, the shares had a market value of £18,203.
Merger reserve
The merger reserve arose when the Company acquired 100% of the issued share capital of D1 Oils Trading Limited in consideration for ordinary shares in D1 Oils plc. The acquisition was accounted for under the rules of merger accounting as a group reorganisation with the share premium being adjusted through the merger reserve.
Share option reserve
The share option reserve arose on the granting of options to BP on the formation of the D1-BP Fuel Crops Limited joint venture.
26. Movements in equity continued
Reconciliation of movement in equity shareholders' funds - Group
|
Year ended 31 December 2008 |
Year ended 31 December 2007 |
|
|
|
£000 |
£000 |
|
Loss for the financial period |
(34,277.6) |
(46,136.2) |
|
Issue of shares by the Company (net of expenses) |
14,882.8 |
1,144.7 |
|
Share-based payments - employee share options |
649.0 |
1,857.0 |
|
Issue of equity instruments - options granted to BP |
- |
12,787.0 |
|
Currency translation difference |
710.9 |
(90.1) |
|
Adjustment to 2006 share issue costs |
- |
82.1 |
|
Net increase/(decrease) in equity shareholders' funds |
(18,034.9) |
(30,355.5) |
|
Opening equity shareholders' funds |
31,281.6 |
61,637.1 |
|
Closing equity shareholders' funds |
13,246.7 |
31,281.6 |
Reconciliation of movement in equity shareholders' funds - Company
|
Year ended 31 December 2008 |
Year ended 31 December 2007 |
|
|
£000 |
£000 |
|
|
Loss for the financial period |
(23,898.5) |
(72,266.7) |
|
Issue of shares by the Company (net of expenses) |
14,882.8 |
1,144.7 |
|
Share-based payments - employee share options |
649.0 |
1,857.0 |
|
Issue of equity instruments - options granted to BP |
- |
12,787.0 |
|
Adjustment to 2006 share issue costs |
- |
82.1 |
|
Net increase/(decrease) in equity shareholders' funds |
(8,366.7) |
(56,395.9) |
|
Opening equity shareholders' funds |
24,147.7 |
80,543.6 |
|
Closing equity shareholders' funds |
15,781.0 |
24,147.7 |
27. Related party disclosures and principal subsidiary undertakings
The Group has a 50:50 joint venture agreement with BP International Limited, relating to D1-BP Fuel Crops Limited. Through this joint venture vehicle, the parties will plant, cultivate and harvest Jatropha curcas, and extract and trade Jatropha oil. As part of the agreement, the Group provides certain technical support and agronomy services to the joint venture. During the year ended 31 December 2008, the Group supplied assets and services to the joint venture totalling £4,168,412 (2007: £2,119,000) and the amount owed by the Group to the joint venture as at 31 December 2008 was £171,000 (2007: £2,119,000).
Any related party transactions involving directors are shown in note 6.
During the year to 31 December 2008, the Company provided net funding to subsidiary companies within the Group as follows:
|
2008 |
2007 |
|
|
|
£000 |
£000 |
|
D1 Oils Trading Limited |
3,401.3 |
22,372.5 |
|
D1 Oils Plant Science Limited |
(53.7) |
431.6 |
|
D1 (UK) Limited |
1,864.8 |
7,322.4 |
|
D1 Oil Subsidiary Limited |
1,696.3 |
8,038.2 |
|
Total |
6,908.7 |
38,164.7 |
At 31 December 2008, net funding balances due to the Company from subsidiary undertakings were as follows:
|
2008 |
2007 |
|
|
|
£000 |
£000 |
|
D1 Oils Trading Limited |
51,467.8 |
48,066.5 |
|
D1 Oils Plant Science Limited |
377.9 |
431.6 |
|
D1 (UK) Limited |
15,953.9 |
14,089.1 |
|
D1 Oil Subsidiary Limited |
10,431.8 |
8,735.5 |
|
Impairment |
(77,853.5) |
(70,891.1) |
|
Total |
377.9 |
431.6 |
The funding is repayable upon demand. With the exception of D1 Oils Plant Science Limited, the Company does not anticipate any repayments being made within one year and those balances have been fully impaired. The funding is not subject to any interest charge. An impairment charge of £6,962,400 was recognised in 2008.
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 on appointment, at salary review time, or any other time that the Directors deem appropriate. There are no specific performance criteria attached to the options.
Options vest in one of two ways:
1. Options granted vest 1/3 after 12 months, 1/3 after 24 months and the remaining 1/3 after 36 months. 2. Options granted vest 1/3 after 12 months with the remaining 2/3 vesting in equal monthly instalments over the next 24 months.
Equity settlement is applied to all options, there is no cash alternative.
The expected life of the options has been assessed at 2.5 years for options which 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 and subsequently adjusted for gain dependency, assessed at 15%, and forfeitures, assessed at 10% over the life of the award. A volatility adjustment considered appropriate for the sector and the age of the Group is included in the calculation. In forming the volatility assumption, the Directors have considered the volatility of the share price since the date of listing. The volatility of companies operating in the same sector has also been reviewed. Based on these factors, volatility has been assessed at 65% for awards granted before 1 March 2007, 60% for awards granted after 1 March 2007 but before 1 January 2008 and 70% for awards granted after 1 January 2008. Appropriate risk free rates (as defined by the Bank of England) between 4.1% and 5.6% have been applied to individual awards. A zero dividend yield has been assumed.
The expenditure recognised in the income statement of the Group and the Company for share-based payments in respect of employee services received during the year to 31 December 2008 is £649,000 (2007: £1,857,000). This expense all relates 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.
|
2008 |
2008 |
2007 |
2007 |
|
|
|
Number |
WAEP |
Number |
WAEP |
|
Outstanding at 1 January |
5,386,073 |
1.99 |
3,452,517 |
2.12 |
|
Granted during the year |
8,375,379 |
0.21 |
3,177,367 |
1.85 |
|
Forfeited during the year |
(1,589,882) |
1.90 |
(562,290) |
2.66 |
|
Exercised |
- |
- |
(681,521) |
1.48 |
|
Outstanding at 31 December |
12,171,570 |
0.77 |
5,386,073 |
1.99 |
|
Exercisable at 31 December |
3,040,611 |
2.04 |
2,106,860 |
2.09 |
The range of exercise prices for options outstanding at the end of the year was 1p - 297.5p. The weighted average remaining contractual life of the options in issue at 31 December 2008 is 6.9 years.
The options granted in 2008 had a weighted average fair value of 9.3p and a weighted average exercise price of 21p.
Option agreement with BP International Limited
As part of the agreement establishing D1-BP Fuel Crops Limited, options were granted to BP International Limited that represent 9.26% of the issued share capital of the Company after exercise of the options at 31 December 2008. The options are exercisable at the following prices:
|
Options |
Exercise price |
|
2,931,367 ordinary shares |
210p per share |
|
2,931,367 ordinary shares |
230p per share |
|
2,931,367 ordinary shares |
265p per share |
|
2,931,366 ordinary shares |
300p per share |
These options may be exercised at any time between 1 October 2007 and 1 October 2010.
The fair value of the awards was calculated using the Binomial model. A volatility assumption of 60% is included in the calculation and considered appropriate for the sector and age of the Group. In forming the volatility assumption the Directors have considered the volatility of the share price over the two years to the date of grant. An appropriate risk free rate as defined by the Bank of England of 5.7% and a zero dividend yield are applied to the calculation.
The total fair value of these options for the Group and the Company is £12,787,000 and was all recognised in equity in the year to 31 December 2007.
28. Share-based payments continued
The following table illustrates the number and weighted average exercise prices (WAEP) of, and movements in, these options during the year.
|
2008 |
2008 |
2007 |
2007 |
|
|
|
Number |
WAEP |
Number |
WAEP |
|
Outstanding at 1 January |
11,725,467 |
2.51 |
- |
- |
|
Granted during the year |
- |
- |
11,725,467 |
2.51 |
|
Exercised |
- |
- |
- |
- |
|
Outstanding at 31 December |
11,725,467 |
2.51 |
11,725,467 |
2.51 |
|
Exercisable at 31 December |
11,725,467 |
2.51 |
11,725,467 |
2.51 |
The weighted average fair value per option of options granted to BP International Limited during the year was 251.3p. The range of exercise prices for options outstanding at the end of the year was 210p - 300p. The weighted average remaining contractual life of the options in issue at 31 December 2008 is 1.8 years.
29. Financial risk management objectives and policies
The main risks arising from the Group's 2008 operations were interest rate risk, liquidity risk, foreign currency translation risk and certain commodity price risks. Following the cessation of refining and trading activities in April 2008, commodity price risk was eliminated and foreign currency translation risk substantially reduced.
The main risk arising from the Company's 2008 operations is interest rate risk.
Interest rate risk
Mortgage obligations
The Group has one mortgage obligation, the terms of which include a floating interest rate of 1.75% above LIBOR. The capital outstanding at 31 December 2008 was £720,000 (2007: £780,000 at 1.75% above LIBOR).
The following table demonstrates the sensitivity of the Group's profit before tax and equity to a reasonably possible change in LIBOR rates, with all other variables held constant, through the impact of floating rate borrowings.
|
Increase/ decrease |
Effect on loss before tax |
Effect on equity |
|
|
|
in LIBOR rate |
£000 |
£000 |
|
2008 |
+0.5% |
3.6 |
3.6 |
|
|
-0.5% |
(3.6) |
(3.6) |
|
2007 |
+0.5% |
(4.1) |
(4.1) |
|
|
-0.5% |
4.1 |
4.1 |
'At call' cash
The Group and Company retain cash in 'at call' bank accounts to cover working capital requirements. Funds held 'at call' on floating interest rates at 31 December 2008 totalled £2,894,100 (2007: £3,206,300) in the Group and £568,900 (2007: £2,635,500) in the Company.
The following table demonstrates the sensitivity of the Group and Company's profit before tax and equity to a reasonably possible change in floating interest rates, with all other variables held constant, that may impact interest on 'at call' cash.
|
Group |
Group |
Company |
Company |
||
|
Increase/ decrease |
Effect on loss before tax |
Effect on equity |
Effect on loss before tax |
Effect on equity |
|
|
|
in floating interest rate |
£000 |
£000 |
£000 |
£000 |
|
2008 |
+0.5% |
14.5 |
14.5 |
2.8 |
2.8 |
|
|
-0.5% |
(14.5) |
(14.5) |
(2.8) |
(2.8) |
|
2007 |
+0.5% |
16.0 |
16.0 |
13.2 |
13.2 |
|
|
-0.5% |
(16.0) |
(16.0) |
(13.2) |
(13.2) |
Fixed term deposits
The Company invests surplus funds on behalf of the Group in fixed rate term deposits. Funds held on fixed rate term deposits at 31 December 2008 totalled £15,161,800 (2007: £5,390,300).
The following table demonstrates the sensitivity of the Group's profit before tax and equity to a reasonably possible change in interest rates on term deposits, with all other variables held constant, that may impact the Company and the Group following the maturity of the deposits and subsequent reinvestment of the funds.
|
Increase/ decrease |
Effect on loss before tax |
Effect on equity |
|
|
|
in term deposit interest rate |
£000 |
£000 |
|
2008 |
+1% |
151.6 |
151.6 |
|
|
-1% |
(151.6) |
(151.6) |
|
2007 |
+1% |
53.9 |
53.9 |
|
|
-1% |
(53.9) |
(53.9) |
Liquidity risk
The Group seeks to manage financial risk to ensure sufficient liquid funds are available to meet foreseeable needs while investing cash assets safely and profitably.
29. Financial risk management objectives and policies continued
The table below summarises the maturity profile of the Group's financial liabilities at 31 December 2008 and 2007 based on contractual undiscounted payments. Interest rates on variable rate loans are based on the rate prevailing at the balance sheet date.
|
On demand |
Less than 3 months |
3 to 12 months |
1 to 5 years |
> 5 years |
Total |
|
|
Year ended 31 December 2008 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
Interest bearing loans and borrowings |
2,566.8 |
23.2 |
68.7 |
417.8 |
409.4 |
3,486.0 |
|
Trade and other payables |
- |
1,096.4 |
- |
- |
- |
1,096.4 |
|
ULSD swaps |
- |
- |
- |
- |
- |
- |
|
Foreign currency contracts |
- |
- |
- |
- |
- |
- |
|
Total |
2,566.8 |
1,119.6 |
68.7 |
417.8 |
409.4 |
4,582.4 |
|
On demand |
Less than 3 months |
3 to 12 months |
1 to 5 years |
> 5 years |
Total |
|
|
Year ended 31 December 2007 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
Interest bearing loans and borrowings |
- |
181.7 |
544.1 |
3,330.5 |
543.5 |
4,599.8 |
|
Trade and other payables |
- |
7,046.3 |
- |
- |
- |
7,046.3 |
|
ULSD swaps |
- |
742.9 |
358.8 |
- |
- |
1,101.7 |
|
Foreign currency contracts |
- |
33.6 |
- |
- |
- |
33.6 |
|
Total |
- |
8,004.5 |
902.9 |
3,330.5 |
543.5 |
12,781.4 |
Foreign currency risk
An explanation of the Group's financial instrument risk is included in the Directors' report in the principal risks and uncertainties section.
Forward exchange contracts
A significant amount of the Group's raw material and other input costs in the now discontinued refining and trading operation is denominated in US Dollars and it has entered into a number of forward exchange contracts to buy dollars at a fixed price to mitigate the effect of fluctuating exchange rates. In assessing the fair value of forward exchange contracts at the year end, the Group and the Company have recognised financial assets of £nil (2007: £56,300) (note 17) and financial liabilities of £nil (2007: £33,600) (note 22).
The following table demonstrates the sensitivity of the Group's profit before tax and equity to a reasonably possible change in the US Dollar exchange rate, with all other variables held constant, through the impact of floating rate borrowings. At 31 December 2008, the Group did not hold any forward exchange contracts.
|
Increase/ decrease |
Effect on loss before tax |
Effect on equity |
|
|
|
in USD rate |
£000 |
£000 |
|
2008 |
+5% |
- |
- |
|
|
-5% |
- |
- |
|
2007 |
+5% |
(84.0) |
(84.0) |
|
|
-5% |
92.8 |
92.8 |
Foreign operations
The Group has operations in a number of countries. These operations are funded on a needs basis with outstanding external debtors and creditors kept to a minimum, in part to minimise exposure to foreign currency fluctuations. However, the Group is materially exposed to foreign currency fluctuations on cash balances of £1,503,974 (2007: £216,978) held in South African Rand and US Dollar denominated 'at call' accounts in two of its African companies. The Group is the process of repatriating these funds to the United Kingdom.
29. Financial risk management objectives and policies continued
The following table demonstrates the sensitivity of the Group's profit before tax and equity to a reasonably possible change in the South African Rand and US Dollar exchange rates against the British Pound, with all other variables held constant, on the cash balances detailed above.
|
Increase/ decrease |
Effect on loss before tax |
Effect on equity |
|
|
|
in GBP rate |
£000 |
£000 |
|
2008 |
+5% |
75.3 |
75.3 |
|
|
-5% |
(75.3) |
(75.3) |
|
2007 |
+5% |
10.8 |
10.8 |
|
|
-5% |
(10.8) |
(10.8) |
Commodity risk
During the year, the Group hedged its exposure to fluctuating ULSD prices by entering into a swap transaction. In line with the cessation of refining and trading activities, the Group concluded its final swap transaction in April 2008. At 31 December 2008, the fair value of the swap was £nil (2007: £1,101,700).
The following table demonstrates the sensitivity of the Group's profit before tax and equity to a reasonably possible change in the price of ULSD, with all other variables held constant, through the impact of variable ULSD prices.
|
Increase/ decrease |
Effect on loss before tax |
Effect on equity |
|
|
|
in ULSD rate |
£000 |
£000 |
|
2008 |
+10% |
- |
- |
|
|
-10% |
- |
- |
|
2007 |
+10% |
(289.5) |
(289.5) |
|
|
-10% |
289.5 |
289.5 |
Managing capital
The Group aims to optimise its capital structure by holding an appropriate level of debt relative to equity in order to maximise shareholder value. The appropriate level of debt is set with reference to a number of factors and financial ratios including expected operating and capital expenditure cash flows, contingent liabilities and the level of restricted cash as well as the general economic environment. The Group aims to control its capital structure by issuing new shares and raising debt finance to the extent that it is possible on commercially acceptable terms. The economic conditions currently prevailing within the biodiesel industry have restricted the Group's ability to raise debt finance and exert any significant degree of control over its gearing ratio. As a consequence, the Group is currently financed primarily from equity. The Group monitors capital using a gearing ratio, being loans and borrowings divided by equity funds plus loans and borrowings.
|
Year ended 31 December 2008 |
Year ended 31 December 2007 |
|
|
|
£000 |
£000 |
|
Loans and borrowings |
||
|
Obligations under finance leases |
2,566.8 |
3,020.1 |
|
Instalments due on mortgage |
720.0 |
780.0 |
|
Total loans and borrowings |
3,286.8 |
3,800.1 |
|
Equity |
476.7 |
19,222.6 |
|
Total equity and loans and borrowings |
3,763.5 |
23,022.7 |
|
Gearing ratio |
87.3% |
16.5% |
Equity includes all capital and reserves of the Group attributable to the equity holders of the parent. The Group is primarily financed through equity and it should be noted that the equity component in the gearing ratio calculation includes the impact of retained losses of £100.1m.
29. Financial risk management objectives and policies continued
Fair values of financial assets and financial liabilities
Set out below is a comparison by category of carrying amounts and fair values of all of the Group's financial instruments that are carried in the financial statements.
|
Book value |
Fair value |
Book value |
Fair value |
|
|
2008 |
2008 |
2007 |
2007 |
|
|
£000 |
£000 |
£000 |
£000 |
|
|
Financial assets |
||||
|
Cash and short-term deposits |
15,055.9 |
15,055.9 |
3,596.6 |
3,596.6 |
|
Long-term deposits and cash collateral |
5,072.4 |
5,072.4 |
10,679.7 |
10,679.7 |
|
Forward currency contracts |
- |
- |
56.3 |
56.3 |
|
Financial liabilities |
||||
|
Interest-bearing loans and borrowings |
720.0 |
720.0 |
760.0 |
760.0 |
|
Finance lease and hire purchase agreements |
2,566.8 |
2,566.8 |
3,020.1 |
3,292.0 |
|
Derivative financial instruments |
- |
- |
1,101.7 |
1,101.7 |
|
Forward currency contracts |
- |
- |
33.6 |
33.6 |
30. Contingent assets
On 27 March 2009, the Group announced that it that it was in receipt of a final and binding arbitral award in relation to a dispute with a US company awarding D1 Oils Trading Limited the sum of £4.2m. Steps have been initiated to recover the amount due.
31. Contingent liabilities
Between 10 August 2004 and 26 November 2004, D1 entered into a number of agreements in India with Nandan Biomatrix Limited ("Nandan"), an Indian plant science company, for the supply and development of Jatropha seeds. On 17 June 2005, Nandan submitted a claim to D1 for Rupees (Rs) 80,796,029, (approximately £1.0m) alleging that D1 was in breach of these agreements and that a termination agreement (extinguishing Nandan's claims) was a forgery. D1 considers these claims groundless. On 19 March 2009, Nandan initiated arbitration at the Singapore International Arbitration Centre to recover Rs. 100,796,029 (approximately £1.3m). D1 continues to contest these proceedings.
32. Capital commitments
At the end of the year capital commitments were:
|
2008 |
2007 |
|
|
|
£000 |
£000 |
|
Contracted but not provided for in the accounts |
- |
1,967.7 |
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