TIDMDOO
RNS Number : 2122J
D1 Oils Plc
28 June 2011
ANNUAL FINANCIAL REPORT 2010
The audited accounts of D1 Oils plc for the financial year ended
31 December 2010 are hereby released to the market.
Overview
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 an inedible oil and
seedcake that has the potential to be processed into a high-value,
protein source for animal feed on a commercial scale.
Through our efforts in recent years, many farmers across India,
Africa and Asia have been encouraged to plant Jatropha and advised
on how to farm the crop towards maturity. We have contracts with
these farmers that, in due course, we plan to purchase the grain
harvest of these crops at the prevailing market price as they
become ready for market. Elsewhere in this annual report this
arrangement is referred to as "contract farming" and "planting
interests". D1 does not own this land or the crops growing on the
land. As Jatropha grain harvests scale up, we are facilitating the
transportation, processing and distribution of Jatropha oil and
seedcake. In addition, we are investing in a research and
development programme designed to scale up D1's proprietary process
to turn part of the seedcake into animal feed.
Following the first substantial harvest in 2010/11, the business
is moving towards delivering sufficient quantities of grain to make
the business self-sustaining, promoting planting of next generation
Jatropha and pioneering the conversion of seedcake into animal feed
at commercial scale.
Chairman's statement
Introduction
I was appointed Chairman of the Company in March 2010, three
months before the last annual report was issued, having been a
Non-Executive Director since October 2004.
Since my last statement there have been a number of significant
changes to both the Board and the structure of the company; most
notably the spin-off of the majority of the Science &
Technology part of the business. My statement deals with these and
other corporate matters.
A separate section of this Annual Report contains the Report of
Martin Jarvis, our Chief Executive Officer and Chief Operations
Officer, in which he sets out the progress made on our Jatropha
activities over the last year. I am pleased to report that the
business has made significant progress on delivering on its
strategy during the last year with significant amounts of crude
Jatropha oil ("CJO") being produced and sold in most geographies,
but especially India; with the small amounts of "next generation"
Jatropha planting beginning to demonstrate that with selected seed;
properly planted and maintained, Jatropha can deliver sustainable
economics for both farmer and industry; and with the Animal Feed
Programme delivering a UK patent and continuing to meet milestones
on the way to a commercial plant being up and running in 2012.
Strategy and funding
On 24 June 2011, the Company appointed two new directors, Steven
Rudofsky and Nicholas Myerson, who will conduct a review of the
Company's plan to be concluded no later than mid-August 2011. On
the back of this review, the Board will endeavour to secure funds
to deliver the agreed strategy. The Company has received
correspondence from several large existing shareholders to confirm
they support this process.
Outcome of General Meeting of 19 July 2010
On 19 July 2010 a General Meeting was held to vote on
resolutions; contained within the requisition notice received from
Evo Nominees Limited on behalf of Principle Capital Investments
Limited ("PCIL") that the Company announced on 12 May 2010. This
meeting had been adjourned from the original date, of 14 June, by
agreement with PCIL.The resolutions to remove Ben Good, Henk Joos,
Martin Jarvis and myself from the Board of D1 and to replace us
with two individuals associated with PCIL were unanimously
rejected. Following the meeting, the Board continued to deliver the
existing strategy.
Sale of Bromborough site
On 2 July 2010 the Company announced the completion of the sale
of the Bromborough site and therefore the completion of the final
phase of the Company's withdrawal from downstream refining
operations in accordance with its strategy. The sale was to Organic
Waste Management Ltd for a price of GBP1.8m plus a deferred payment
of GBP0.4m and a royalty of up to GBP0.4m based on the future
biodiesel output of the site. I can confirm that the company has
received to date the GBP2.2m payment and is looking forward to
seeing the first royalty payments in the next 12 months.
Closing of Offer Period
Despite lengthy discussions with both Mission and a second,
unnamed, offeror the Company concluded that no sale was imminent
and, on advice from the Takeover Panel, declared that the Offer
Period was closed on 15 October 2010.
Quinvita sale
Following approval by shareholders at the General Meeting held
on 10 December 2010 the Company disposed of substantially all of
its Jatropha plant science and technology services business, with
the exception of the Animal Feed Programme, via the sale of all the
issued share capital of D1 Oils Plant Science Limited and Quinvita
Limited to companies owned by Henk Joos, Vincent Volckaert and
Greta de Both. Since Henk was a Director of D1 Oils, Vincent was a
Director of a subsidiary of the Company and Greta was an employee
of a subsidiary of the Company this disposal was deemed a related
party transaction.
D1 had continued with the science and technology work on the
assumption, explicit in the Strategy Update of 25 November 2009,
that enough revenue could be generated from the sale of seeds and
services to fully fund the programme. Disappointingly this had
turned out not to be the case and the Board concluded that, despite
a strong belief in the value of the science and technology
programme, the Company did not have the cash reserves to continue
funding at approximately GBP1.5m p.a.. A solution was sought that
realised as much value as possible from the work done to date,
preserved as much of the intellectual property as possible, reduced
expenditure as quickly as possible and allowed the programme to
continue but with separate funding.
I believe that the final deal structure achieved this with the
following key elements:
1. Retention by D1 of all agronomy and breeding intellectual
property developed to 1 November 2010;
2. D1 providing Quinvita with GBP0.8m working capital - less
than the cost of an orderly wind-up of approximately GBP1.1m;
3. Issue of GBP0.8m in redeemable preference shares by Quinvita
to the Company with a 5% coupon plus future royalties on Jatropha
related sales on a sliding scale over 10 years (15% to year 5; 10%
years 6 - 8; 5% years 9 - 10); and
4. D1 becoming a member of Quinvita's agronomy and breeding
platforms for a minimum of three years (subject to certain
conditions) giving D1 access to ongoing Jatropha developments.
This transaction has effectively removed the cash burn,
preserved intellectual property and given D1 the prospect of access
to an ongoing agronomy and breeding improvement programme for
Jatropha. At present the redeemable preference shares and royalties
are impaired to nil until the timing and amount of repayments is
more certain.
Financial statements for year ended 31 December 2010
The financial statements are attached and detailed comments
thereon are included in Martin Jarvis's Report.
Principal risks and uncertainties
The attention of shareholders is drawn to the Directors' Report
on pages 12 to 16, which sets out the principal risks and
uncertainties faced by the Group.
Going concern
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 summarised
below.
Business planning uncertainty
The Report of the Chief Executive Officer on pages 6 to 9 sets
out the strategy of the business and what it is seeking to achieve
and the milestones it aims to reach. Whilst the Directors believe
these milestones are realistic, there are inevitably uncertainties
as to whether they will be achieved in full and in time. In
addition, following the appointment of Steven Rudofsky and Nicholas
Myerson on 24 June 2011, the Board has commenced a business plan
review process to be concluded no later than mid-August 2011. The
review may or may not result in changes to the existing business
plan. While the Board is confident it can deliver a Jatropha based
strategy that is viable and cash generative over the longer term,
until the business plan is finalised the Board cannot assess with
certainty the implications of pursuing a revised business plan.
Funding uncertainty
The Directors informed the market over eighteen months ago that
the Company would require a further injection of funds during 2011
and, as such, have been working on a new fund raising exercise.
Following the appointment to the Board on 24 June 2011 of Steven
Rudofsky and Nicholas Myerson, the Board now believes it will
secure sufficient shareholder support to pass a resolution to
enable sufficient funds to be raised once a successful business
plan review has been completed. The Board currently intends to seek
sufficient funds to cover the business's activities until key
harvest and animal feed milestones are reached in mid-2012. The
Board believes that the case will be made in time for final follow
on funding for capital investment ahead of the business becoming
cash generative. The Board is encouraged by the feedback it has
received to date on the willingness of existing shareholders to
participate in a future fund raising. However, if the Directors are
unable to secure the appropriate level of shareholder support for
the strategy and associated future fund raising before late 2011
and again by mid-2012, the Company and the Group will be unable to
continue as a going concern.
Directors' view
After making enquiries and considering these uncertainties, the
Directors conclude that the implications of the business plan
review and whether funding can be secured before cash resources are
depleted are material uncertainties which may cast significant
doubt about the Group and Company's ability to continue as a going
concern in its current form. The Directors believe that these
uncertainties can be managed and mitigated and the Directors have a
reasonable expectation that the 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 the strategic milestones not be achieved or the business
plan be changed in a way which restricts the Group's ability to
implement or fund the business plan, 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.
The Board
Moira Black, Non-Executive Director, and Brian Myerson,
Non-Executive Director and Chairman, stepped down from the Board in
February 2010 and March 2010 respectively, as mentioned in the
Chairman's statement in the 2009 Annual Report. We thank them for
their contributions to the business.
Nicholas Ward joined the Board as Non-Executive Director in
April 2010. On 4 August 2010 Nicholas Ward resigned from the Board;
we thank him for his, albeit brief, contribution to the
business.
On 27 August 2010, Ben Good stepped down as CEO and Finance
Director. Martin Jarvis took over the CEO post, combining the role
with that of Operations Director.
On 24 June 2011, Steven Rudofsky and Nicholas Myerson joined the
Board as Executive Directors.
Section 656 - Serious loss of capital
The Companies Act 2006 requires a general meeting to be held to
determine what, if any, steps should be taken to deal with the
situation when net assets of a public company are half or less of
its called-up share capital. A general meeting for this purpose was
held on 29 June 2010. No resolutions were proposed and it was
concluded that no additional actions were required over and above
the existing strategy.
Staff
2010 was a year of very significant change for D1 and this has
continued into 2011; although it should be noted that operationally
things have begun to settle down as significant quantities of grain
have begun to flow, be crushed and be sold as oil. We thank all our
staff for the capability, commitment and hard work that they have
shown in what has been a challenging and fast-moving corporate
environment.
Conclusion
I would like to thank our shareholders for their interest and
support through a very difficult, challenging and uncertain time
for the business.
Barclay Forrest
Chairman
27 June 2011
Report of Chief Executive Officer
I took over as Chief Executive Officer on 27 August 2010,
combining the role with that of Chief Operating Officer - dividing
my time roughly 50/50 between the London office and the field in
order to manage the corporate agenda whilst staying as close as
possible to the operation during this exciting time for the
Company.
Soon after taking over it proved necessary to complete a
strategy review, particularly with the closing of the Offer Period
and the relatively slow uptake of sales of seed and agronomy
services compared to plan. The main result of this review was the
sale of substantial parts of the Science & Technology business
(covered in the Chairman's Statement) and that has left a very
focussed business with a clear strategy:
-- Deliver value from the existing planting in India, Africa and
Indonesia; demonstrate that we can collect grain; crush it to
create CJO and sell that CJO at a profit both locally and into
export markets. In other words prove that the Jatropha supply chain
can operate at more than just trial volumes;
-- Plant small quantities of Jatropha 2.0, "next generation
Jatropha", using selected seeds, planted and looked after properly
to demonstrate that we have learned how to do this effectively and
that growing Jatropha can be economically sustainable for both the
farmer and the business;
-- Develop the animal feed technology to the point where we can
demonstrate that it can deliver a substantial improvement in
Jatropha economics at commercial scale;
-- Develop strategic customers for offtake of CJO;
-- Reduce central costs as much as possible whilst retaining the
ability to develop strategic customers and to respond to
opportunities; and
-- To secure the funding required to deliver this strategy.
With the reorganisation following the Science & Technology
sale complete the overhead cash burn rate is currently down to
GBP2.9m a year with further cost saving opportunities being
explored.
Operations
D1's key value proposition in the medium term remains our
ability to deliver increasing quantities of oil from our existing
planting areas in India, Africa and Indonesia. The 2010/2011 season
(twelve months ending June 2011) is the first time that substantial
volumes have been delivered through our networks and as such the
farmers have received a substantial increase in cash for the
Jatropha that they have collected. The Board believes both farmers
and customers are beginning to realise that Jatropha is a viable
proposition and we have started to see farmers bringing the grain
to us unbidden and customers chase us for supply. The Board was
disappointed with collection in North East India as discussed
below.
The Board believe we are now producing and selling more CJO than
anyone else and this allows us to start to aggregate the available
Jatropha for sale with us attracting both grain and CJO itself from
3(rd) parties that can be consolidated with our own production to
better meet the needs of customers.
In addition to the existing planting we are now, for the second
year, planting small quantities of selected seed with chosen
farmers in Zambia, who have been trained to our standard operating
procedures for planting, maintaining and harvesting Jatropha, The
success of the first two seasons of Jatropha 2.0 has led to us
planning to extend new planting to Indonesia during 2011.
Sales of CJO As reported in the Company's operational update on
2 March 2011, D1 has continued to experience demand for greater
quantities of CJO than it is able to supply and has, in the 6
months to the end of February, sold all of its production, some 500
tonnes. These sales have been achieved at an average, ex works,
selling price of approximately US$975 per tonne. This price is
slightly lower than anticipated due to a change in mix between
local and export sales and between spot purchases for trial work
and repeat purchases from commercial customers (both local and
multi-national). The spot price is continuing to firm and D1 now
has a strong backlog of orders for ex-tank sales in India at above
$1,000 per tonne. Sourcing of Jatropha grain D1 continues to
develop proprietary networks to source grain and market CJO
principally in Central and North-West India (from both D1's
contract farmers and established third party grain traders in those
areas), North-East India (through its joint venture with
Williamson-Magor ("D1-WM"), one of India's largest tea plantation
groups), Zambia and Indonesia.
In Central and North-West India, late rains during November and
December 2010 have caused the grain collection period to extend to
the end of June 2011. Accordingly, the Board is not yet in a
position to confirm final grain collection numbers for the season.
Despite this delay grain sourced from D1's contract farmers in
these areas has already exceeded expectations in many districts and
the Board remains pleased with the performance of these regions and
expects further significant growth in collection volumes in the
next harvest season. However, North East India experienced the
heaviest rainfall, and lowest levels of sunshine, in June and July
for thirty years, which led to depressed flowering and in turn
reduced weeding and other activity by our partner farmers. As a
result, yield in this region will fall significantly below
expectations and consequently D1-WM has not extracted oil in the
North-East this season. Despite this disappointing result, the
Board continues to believe that North-East India can deliver
substantial quantities of Jatropha grain, particularly with a
normalisation of weather patterns. Overall, grain collection in the
other regions of activity is on track. Accordingly, the Board
estimates that D1 will now acquire sufficient grain and oil to
deliver approximately 850 tonnes of CJO in the twelve months to
June 2011 with additional grain harvest to spill over
into the second half of 2011. The Directors are pleased to
report that the variable cost of D1's CJO in India (net of biomass
sales credits) is currently running at about US$700 per tonne as
compared to roughly US$850 a year ago mainly due to achieving high
seedcake prices and lower expelling costs which have helped offset
the higher transport costs experienced. Given the successful grain
yields delivered in Central & North-West India, Zambia and
Indonesia, the Board remains confident that D1 will have both the
grain and the supply chain organisation to deliver a substantial
increase in CJO during the 2011/12 harvest season and in future
years.
Animal Feed Programme
Our animal feed programme is focused on the commercial
development of intellectual property which is unique in the
industry. We have a process, for which a UK patent was granted on 3
November 2010, which enables the production of Jatropha Kernel Meal
("JKM"), one of the co-products of oil extraction, as a
high-protein content substance that is very suitable for sale as
animal feed. This creates an opportunity for a significant
improvement in the economics of CJO production. Having successfully
tested JKM as a protein source for rats, as announced in February
2010; and for chickens, as announced on 23 September 2010; JKM is
now being evaluated in a 90 day cattle feeding trial in the USA. We
are still on track for being able to achieve commercial deployment
of this technology in 2012.
Business Development
The goal of our Business Development team is to acquire
strategic customers - customers with large or very specific
off-take requirements for CJO (power generation customers or
bio-lubricant customers for example) and customers who wish to be
involved across the whole value chain (for instance in those cases
where there is a distinct captive fuel requirement, like a mine).
Debates with this type of customer have only become possible since
D1 has been in a position to source quantities of CJO in the tens
and hundreds of tonnes - even trial quantities for some of these
customers are larger than would have been feasible to supply
pre-2010.
Having shipped trial quantities amounting to some 70 tonnes in
Q1 2011, we are now in discussions with three large European based
multi-nationals and one Japanese based multi-national about large
off-take deals.
The team is also in discussion with a number of customers about
specific plantation projects for 100% use in specific local
projects.
Accounts for year ended 31 December 2010
The financial results for the year ended 31 December 2010
primarily reflect the activities of the plantation operations and
the science & technology business. In December 2010, the Group
disposed of a substantial portion of the science & technology
business and the results include a loss on disposal. The disposed
portion of the science & technology business is included as a
discontinued operation. The refining & trading business was
discontinued in 2008.
Group revenue was GBP0.3m (2009: GBP1.8m) in the year ended 31
December 2010. The drop in revenue from 2009 reflects the
re-acquisition of the D1-BP joint venture in mid-2009. Prior to the
re-acquisition, the Group provided agronomy support to the joint
venture as its sole customer. The loss on ordinary activities
before taxation was GBP6.6m (2009: GBP5.2m) and the loss per
ordinary share was 4.8p (2009: 4.0p).
Group revenue from continuing activities of GBP0.2m (2009:
GBP0.1m) was primarily generated by sales of CJO and biomass in the
Operations segment.
Cost of sales and administration expenses from continuing
operations of GBP3.6m (2009: GBP5.1m) reflected restructuring and
cost-saving measures undertaken. The 2009 comparatives only include
five months of costs in relation to plantation operations following
the re-acquisition of these operations from the D1-BP joint venture
in late July 2009. The gain on the re-acquisition of GBP2.8m was
also recognised in the 2009 comparatives. The loss on continuing
operations before tax was GBP3.6m (2009: GBP1.8m) and the loss per
ordinary share was 2.6p (2009: 1.3p).
Group revenue from the discontinued operations was GBP0.2m
(2009: GBP1.7m) and consisted of revenue from agronomy consulting
services, which formed part of the Science & Technology
segment. This consulting revenue was disappointing and the Board
concluded that it was unlikely to cover the costs of the agronomy
and breeding activities in the foreseeable future. As a
consequence, in December 2010 the Board disposed of these
activities to companies controlled by three senior D1 employees or
directors. The disposal resulted in a GBP0.9m loss recognised in
2010. The loss primarily reflected the GBP0.8m cash that went with
the disposed entities in return for GBP0.8m of Redeemable
Preference Shares. D1 is also entitled to receive royalties on
future Jatropha related sales on a sliding scale over 10 years (15%
to year 5; 10% years 6 - 8; 5% years 9 - 10).
The total loss before tax from discontinued operations was
GBP2.8m (2009: 3.4m) and the loss per ordinary share on
discontinued operations was 2.2p (2009: 2.7p). The 2010 loss on
discontinued operations included the release of a GBP1.1m provision
in relation to the Bromborough refining site.
The Bromborough refining site was sold in July 2010 for GBP2.2m.
In addition, the buyer agreed to pay the Group a royalty on future
production capped at GBP0.4m. This royalty is classified as a
contingent asset. The leases over two parcels of land adjacent to
the Bromborough site were also transferred as part of the sale. If
the new tenant defaults on the lease, responsibility may revert to
D1. The maximum exposure is GBP2.0m and this item is disclosed as a
contingent liability as the Board does not consider reversion to be
likely.
Interest received of GBP0.0m (2007: GBP0.9m) relates to cash
deposits held during the year and reflects lower prevailing
interest rates in the UK and reducing Group cash deposit
balances.
During 2011, the Board will consider whether to align the
accounting year end of the Group to the Indian harvest season.
Outlook
Despite the uncertainties we face that are described in the
Chairman's Statement and in note 1 to the financial statements,
since the start of 2010 , we have seen positive developments on a
range of external fronts in our view, each helpful to our plan. In
the US and Europe, policy support for biofuels remains strong; and
in our main supply market: India, support for bio-fuels continues
to increase. The European Commission's biofuel policy review has so
far been very supportive of the role sustainably produced vegetable
oils can play in the European energy mix. Recent events, notably
the tragic events in Japan and the substantial increase in mineral
oil and edible vegetable oil prices in the past year in our view
highlight the fact that there is a continuing need to develop a
range of alternative energy sources, Jatropha offers potential as a
sustainable, low carbon alternative.
In some quarters there are concerns about the potentially
distorting influence of western biofuels policies on rural
economies in the developing world. However, Jatropha's strong
credentials as a non-food crop, cultivable in a variety of
different environmental conditions, including farm margins and on
degraded farmlands (such as ex-tobacco projects) mean that it is
excellently positioned to address these concerns and support,
rather than detract from, food production. In central India for
example, our surveys indicate that over 90% of the land selected by
farmers to grow Jatropha for us, was not previously being used to
grow food. In Zambia we have supplied biodiesel and CJO to local
farmers, who have replaced high cost imported petroleum fuel with
lower cost locally produced biofuels and reduced their food
production costs accordingly. Gentrification and population growth
in the developing world, alongside the global desire to replace
fossil fuels and edible vegetable oils with alternative vegetable
oils, are expected to increase demand for both high quality protein
meals and non-food vegetable oil going forwards - Jatropha offers
the potential to supply both.
This is all very helpful to D1: we believe we have pre-eminent
operational scale and technical position in a clearly growing
industry. It increases the market for what we have to offer, and,
alongside the progress we report here, reinforces our view that our
plan has the prospect of delivering value to shareholders. The
Board is committed to addressing the Group's fundraising
requirement to enable this vision to be fulfilled.
Martin Jarvis
Chief Executive Officer
27 June 2011
Directors and advisors
Barclay Forrest OBE, FRAgS
Non-Executive Chairman, 69
Barclay Forrest farmed in Berwickshire, Scotland, and developed
one of the UK's largest drying, storing and haulage businesses for
barley, wheat and rapeseed. He is a former Vice President of the
Scottish NFU and past Chairman of British Cereal Exports where he
was responsible for promoting to Europe, North Africa and China. He
was Vice President of The China Britain Business Council,
responsible for Food and Agriculture, and Chairman of the Oxford
Farming Conference 2003. He is a Non-Executive Director and former
Chairman of Helius Energy plc.
Martin Jarvis
Chief Executive Officer, 48
Martin Jarvis was formerly Chief Operating Officer and the Chief
Executive Officer of D1-BP Fuel Crops Limited. Martin's earlier
career includes 23 years at Unilever in a range of international
manufacturing and supply chain management roles, including Global
Supply Chain VP, with responsibilities throughout Asia, Africa and
Europe.
Steven Rudofsky
Executive Director, 49
Steven Rudofsky began his career working for Marc Rich & Co.
AG and Glencore AG where he traded both soft commodities and Ferro
Alloys in Rotterdam and Zug. Thereafter he held senior management
positions in London at Aletri Limited (Motor Oil Hellas),
TransCanada Pipeline Ltd, Credit Agricole CIB and Crown Resources
(Alfa Group of Russia). Since 2003, Steven has been focused on
property development in Poland through Huntington Polska whilst
also consulting on various commodity projects in Europe, North
America, Middle East and Asia. Steven holds a BA cum laude in
History and International Relations from Clark University and a JD
from Emory University. He has been a member of the New York Bar
since 1988.
Nicholas Myerson
Executive Director, 26
Nicholas began his career as part of the corporate finance team
at Dubai World, focusing on real estate and infrastructure
investments in the Chinese, Indian, and Polish markets. Nicholas
was until recently head analyst for Salamanca Capital, a London
based private equity group, where he was responsible for the firm's
infrastructure, commodity and mining investment portfolios.
Nicholas holds a MA in Law from Cambridge University. Nicholas is
the son of former D1 Oils plc Chairman, Brian Myerson, who is
Executive Chairman of Principle Capital Group whose managed funds
hold 27.5% of D1's ordinary shares. However, Nicholas confirms he
is not a representative of the Principle Capital Group or its
managed funds.
Company Secretary
Marie Edwards
Registered office
1 Park Row
Leeds LS1 5AB
Registered number
5212852
Broker and nominated advisor
WH Ireland Limited
24 Martin Lane
London EC4R 0DR
Bankers
Barclays Bank plc
PO Box 378
71 Grey Street
Newcastle upon Tyne NE99 1JP
Auditors
Ernst & Young LLP
Citygate
St James' Boulevard
Newcastle upon Tyne NE1 4JD
Solicitors
Pinsent Masons
30 Crown Place
London EC2A 4ES
Registrars
Capita IRG plc
The Registry
34 Beckenham Road
Kent BR3 4TU
Directors' report
The Directors present their report and the audited financial
statements for D1 Oils plc (company number 5212852) for the year
ended 31 December 2010.
Principal activity
The Company's principal activity is that of a holding company.
D1 Oils plc is the parent company of a group of companies engaged
in the development of Jatropha curcas as an alternative,
sustainable feedstock for the production crude Jatropha oil ("CJO")
and its co-products.
Review of business
During most of 2010, the ongoing business was divided into two
business groups - Operations and Science & Technology.
In 2010, the Group made significant progress towards
establishing itself as the world's leading Jatropha producer of CJO
and its co-products. The Operations business group, which manages
our planting interests to produce oil and co-products, delivered
the first significant grain harvest in 2010/11. In India and
Indonesia we have demonstrated that we have a supply chain,
processing set up and customers to collect grain, process and sell
the resulting CJO and seedcake. In Zambia we have instituted a
programme for outgrowers to plant 'next generation' Jatropha that
has started, and will continue, to demonstrate the returns
available from Jatropha when planted and maintained in line with
D1's best practice.
The Science & Technology business group also continued to
progress its knowledge in the agronomy and breeding of animal feed.
In addition, the proprietary process for turning the seedcake left
over following oil extraction into a high protein animal feed took
huge strides forward. The animal feed meal underwent tests in rats
and chickens during 2010 with these tests raising no material
concerns about the toxicity or palatability of the meal. In the UK,
a patent application was granted for the extraction process and six
further patent applications were filed in other jurisdictions.
Despite the scientific progress of the Science & Technology
business, the revenue generated from these activities fell well
short of expectation. As a result of this revenue shortfall, and
the ongoing cost of the science & technology programme, a
decision was taken to dispose of the Science & Technology
business group except for animal feed activities. The disposed
business activities were taken on by three senior members of D1 who
oversaw these activities. D1 retains all intellectual property
developed to the date of disposal.
The decision to focus solely on production of oil and its
co-products including animal feed means the business still retains
the primary activities to deliver shareholder value. Further
details of the ongoing business and the disposal are in the
Chairman's Statement and the Report of the Chief Executive
Officer.
Principal risks and uncertainties
The principal risks and uncertainties facing the Group are
assessed as funding risk, commercial risk, biological and planting
risk, technology risk, competitive risk, contractual risk, lease
reversion risk, political and legislative risk, and nancial
instrument risk.
Funding risk
The Group will continue to have a cash requirement until it
becomes cash generating. The Group has restructured its activities
to concentrate on planting operations that are likely to generate
short to medium term revenue. The Group anticipates that this
activity will position the business more attractively for investors
to raise new funds during 2011. However, there is a risk that
future funding will not materialise, in which case the activities
of the Group may no longer be sustainable. The directors have been
working on fund raising plans for some months now and communicating
with shareholders and investors. This process is ongoing and under
review.
Commercial risk
Business volumes are anticipated to increase as a result of
increasing yields. New technical, operational and commercial
challenges may arise as a result of this increase in scale. There
is a substantial challenge to put in place or access further the
infrastructure needed to collect, process, ship and distribute the
products in viable quantities. The Group manages these risks by
employing staff and engaging third parties with relevant skills to
address these issues when they arise.
Biological risk
There are inherent biological risks associated with any
agricultural activity, including pests, disease, drought, excessive
rainfall and other stress factors. These risks are greater in new
crops, such as Jatropha curcas, for which agronomy and husbandry
practices are still being developed. The Group continues to learn
from experience and apply these lessons to manage biological
risk.
Technology risk
D1 has chosen Jatropha curcas as its crop as a source of
vegetable oil for sale to biodiesel producers and other biofuels
markets. The cultivation of Jatropha poses the normal risks
associated with the cultivation of crops. In addition, Jatropha is
a new crop for which planting and cropping practices are in
development. We are addressing these issues through the work of our
Operations group. D1 has developed a process that expels crude
vegetable oil from Jatropha seeds and purifies the meal left after
oil extraction to produce high protein animal feed. Although the
Company has proved the technical feasibility of the process, there
is no guarantee that it will be successful when undertaken on a
larger commercial scale nor that its product will pass the
necessary animal feed trials. D1 has applied for patents for the
process and, with some of those patents still pending approval, may
be subject to challenge from similar, competing processes.
Competitive risk
Planting - The global development of the biofuels industry is
leading to an increase in Jatropha planting operations worldwide.
Our Operations group has significantly progressed its operations to
become an established market leader in facilitating the planting of
Jatropha and to develop its expelling and transport logistics to
bring Jatropha vegetable oil to market.
Jatropha planting in which D1 has an interest comprises the
following:
-- managed plantations are those farms where land is farmed and
labour is controlled by D1, either through its subsidiaries or
through collaborations or joint ventures with local partners;
and
-- contract farming where the farmer plants his own trees on his
own land. D1 and its partners may assist with the provision of
seedlings and the arrangement of bank finance for planting, and
offer a buyback of harvested grains with an offtake agreement,
subject to a floor price and the achievement of agreed quality
standards, and provide support and advice during cultivation, and
monitor the condition of the crops.
The rights to some planting are shared with third parties, such
as joint venture partners, with whom D1 has worked to achieve
rights to planting of Jatropha. As such, offtake from these areas
of planting may well be shared with third parties.
In addition to the biological risks noted above, planting
operations, and in particular contract farming over which D1 has
less control, are subject to a range of commercial and contractual
risks. D1 or its subsidiaries or joint venture have relationships
with over 115,000 farmers. Planting undertaken by third parties can
be difficult to measure and monitor in terms of performance.
Furthermore, the rights to planting or offtake may prove difficult
to enforce in various countries and prices payable will vary with
local market conditions and the accessibility of the crop.
Contractual risk
There are inherent uncertainties and risks associated with
entering into contracts with suppliers, customers, financial
institutions, landowners and employees. It is possible that such
contracts may become unenforceable and financial commitments may
become onerous if circumstances change. The Group attempts to
manage this risk through establishing good working relationships
and dialogue with contracted parties.
Lease reversion risk
The group has disclosed a contingent liability related to the
Bromborough refining site sold in July 2010. Specifically, the
group will be liable for lease costs on two sites adjacent to the
Bromborough property if the purchaser of the Bromborough sites
defaults on the leases. If lease reversion occurs, any liability
could be mitigated by sub-letting the leased sites.
Political and legislative risk
The Group operates on a global basis and must comply with a
range of local legislative requirements and regulations that
include: legal, regulatory and taxation requirements; trade
standards; trade and transportation restrictions; and tariffs.
Furthermore, the Group depends on the position and continued
support of various third parties, including national governments.
Any of these factors may be subject to changes which could
adversely affect the Group's ability to do business, or the
performance of its business.
In common with other crops, imports of Jatropha seed and
seedlings are subject to biological material import regulations. In
addition, as a new crop, a number of jurisdictions require
additional regulatory measures prior to cultivating Jatropha on a
larger scale. We continuously test to ensure that our product is in
compliance. A significant number of the world's key economies
either have or are in the process of implementing mandatory
biodiesel blends and other policies to encourage the use of greener
road transport fuel. In addition, many countries have incentives
for renewable electricity generation, including generation using
vegetable oil as a feedstock. However, these policies continue to
be opposed by environmental pressure groups concerned about the
sustainability of biofuels. Although Jatropha offers the potential
to be one of the most promising sustainable feedstocks for
biofuels, the policies that encourage the adoption of vegetable
oil-based biofuels in national markets may be subject to policy
change.
Financial risk
The Group's results from its operations overseas could be
adversely affected by currency fluctuations and dividend and
exchange controls. The Group looks to limit undue counterparty
exposure, ensure sufficient working capital exists and monitor the
management of risk at a country level. This is achieved by
negotiating contracts in our regions of operation using local
currencies and regulations. The Group also looks to manage currency
fluctuation risk through forward contracts, such as the Euro
forward taken out in 2010.
Research and development
The Group has an active research and development programme
focused on animal feed. Further details are included in the Report
of the Chief Executive Officer.
Safety, health and environment (SHE)
The Board considers managing the safety and health of our people
and protecting the environment as a corporate governance
priority.
Martin Jarvis, Chief Executive Officer, is ultimately
responsible for SHE performance in D1 and also has functional
responsibility. Fundamental to our management of SHE is the
recognition that it is a line management responsibility and should
not be delegated to a function. It is a responsibility of all
managers and employees and this is regularly communicated and
reinforced. We aim to continually test and improve SHE performance
across our business.
During 2010 we continued our programme to raise awareness of
behavioural safety throughout the Group. We have particularly
focussed on improving the safety awareness of our people as regards
moving vehicles; particularly in India as this is the largest
source of accidents in the Group.
The key features of SHE include: a formal regime for reporting
all incidents, including "near hits"; local investigation and
measurement of performance to international standards; and
assessment of key risks for each locality, in particular travel
issues, field work and wildlife.
A total of 2 major incidents leading to lost time were recorded
in overseas operations during 2010, both involving motor vehicles
in India. In both cases investigation highlighted that the employee
was not at fault and luckily neither was serious. There were also
several, similar incidents, which led to near hits.
As a result of this we repeated and re-enforced the defensive
driving aspects of our two-wheeler training and took the step of
prohibiting night-time driving in certain high risk areas.
Corporate and social responsibility
D1 Oils plc is committed to acting ethically and to contributing
to the economic development of the regions where we operate. We
believe strongly in the need to improve the quality of life of
farmers and farming communities in the developing world.
Jatropha curcasis an energy crop that has the potential to
produce commercial volumes of crude oil and biodiesel sustainably.
Jatropha's environmental "elasticity" enables it to grow a wide
range of poorer soils, including marginal land. Growing Jatropha
need not threaten the supply of arable land for food production and
can enable previously unused land to be brought back into
production. Food crops can be intercropped with Jatropha trees in
their first three to four years of growth, enabling co-production
of food and food fuel. In addition, D1 is developing a proprietary
process to turn seedcake derived from the expelling process into
animal feed. D1 is committed to the sustainable planting of
Jatropha and is working to establish sustainability standards for
planting. In addition to evaluating the success and risk factors
for commercial Jatropha planting in different regions, D1's field
manuals and standard operating procedures are designed to enable
operations to achieve to the highest standards of social,
environmental and economic sustainability.
Disabled employees
Applications for employment by disabled persons are always fully
considered, bearing in mind the aptitudes of the applicant
concerned. In the event of members of staff becoming disabled every
effort is made to ensure that their employment with the Group
continues and that appropriate training is arranged. It is the
policy of the Group that the training, career development and
promotion of disabled persons should, as far as possible, be
identical with that of other employees.
Directors
The current Directors are listed on page 10 of this report.
Moira Black, Brian Myerson and Ben Good left the Board on 2
February 2010, 12 March 2010 and 27 August 2010, respectively.
Barclay Forrest replaced Brian Myerson as Chairman from 12 March
2010. Nicholas Ward joined the board as Non-Executive Director from
7 April 2010 and left the Board on 4 August 2010. Steven Rudofsky
and Nicholas Myerson joined the board as Executive Directors on 24
June 2011.
Dividends and transfers to reserves
No dividend has been paid or proposed for the period.
Corporate governance
As an AIM-listed company, there is no requirement to comply with
the revised Combined Code, issued by the Financial Reporting
Council in June 2008 (the "Combined Code"). However, the Directors
recognise the value of the provisions set out in the Combined Code
and have decided to provide limited corporate governance
disclosures based on certain of the disclosures required of a fully
listed company.
The Board has established an Audit Committee, a Remuneration
Committee and a Nominations Committee, each with formally delegated
duties and responsibilities. The Audit Committee comprises Barclay
Forrest (Chairman) and Martin Jarvis. Moira Black held the position
of Chairman of this committee until February 2010, when she was
replaced by Barclay Forrest. Nicholas Ward was a member of this
committee until his resignation from the Board in August 2010. The
Remuneration Committee comprises Barclay Forrest (Chairman) and
Martin Jarvis. Moira Black, Brian Myerson and Nicholas Ward stepped
down from the committee when they left the Board. The Nominations
Committee comprises Barclay Forrest (Chairman) and Martin Jarvis.
Barclay Forrest replaced Brian Myerson as Chairman of the committee
when the latter stepped down from the Board. Moira Black and
Nicholas Ward stepped down from the committee when they left the
Board.
The Audit Committee receives and reviews reports from management
and the Company's auditors relating to the interim and annual
financial statements and the accounting and internal control
systems in use throughout the Group. The Audit Committee has
unrestricted access to the Group's auditors.
The Remuneration Committee reviews the scale and structure of
the Executive Directors' remuneration and the terms of their
service contracts. The remuneration and terms and conditions of
appointment of the Non-Executive Directors are set by the Board.
The Remuneration Committee also administers the Group's share
option scheme.
The Nominations Committee meets as required to consider and make
recommendations on the appointment of Directors to the Board.
Since August 2010, the Board has only had two directors and
consequently the operation of committees with separate directors
has not been practicable.
Substantial interests
The following shareholdings of 3% or more of the ordinary share
capital of the Company are set out in the register of members of
the Company as at 23 June 2011:
Nature
Number of shares % of holding
--------------------------------- ----------------- ------ ------------
Direct
Principle Capital 34,889,089 27.54 & Indirect
BlackRock Investment Management
(UK) 12,465,798 9.84 Indirect
Lansdowne Partners LP 12,250,474 9.67 Indirect
Henderson Global Investors 11,748,429 9.27 Indirect
John Teeling 6,350,679 5.01 Indirect
Majedie Asset Management 4,039,647 3.19 Indirect
81,744,116 64.52
--------------------------------- ----------------- ------
Policy on financial instruments
The Group's financial instruments comprise cash, and short-term
debtors and creditors arising from its operations. The Group has
not established a formal policy on the use of financial instruments
but assesses the risks faced by the Group as economic conditions
and the Group's operations develop. In 2010, the Group took a
forward on approximately EUR1m to limit its exposure to fluctuating
Euro to British Pound currency rates in relation to its Belgian and
Dutch operations. The Group will reassess the need for hedging in
2011.
Supplier payment policy
It is Group policy to agree and clearly communicate the terms of
payment as part of the commercial arrangements negotiated with
suppliers and then to pay in accordance with those terms based upon
the timely receipt of an accurate invoice. The holding company does
not trade. The trade creditors' days of the Group for the year
ended 31 December 2010 were 22 days calculated in accordance with
the requirements set down in the Companies Act 2006.
Political and charitable donations
During the year the Group has made no political or charitable
donations.
Directors' declaration
As far as each Director is aware, there is no relevant audit
information of which the Company's auditors are unaware and each
Director has taken all the steps that he ought to have taken as a
Director to make himself aware of any relevant audit information
and to establish that the Company's auditors are aware of that
information.
Serious loss of capital requirement
Under the Companies Act 2006, where the Group's net assets are
half or less of its called-up share capital, the Directors are
required to convene a general meeting to consider whether any, and
if so what, steps should be taken to deal with the situation.
Accordingly, a general meeting was held on 29 June 2010 to discuss
this matter. The Board presented its ongoing plans for the
business. No resolutions were proposed at the meeting.
Auditors
Ernst & Young LLP were appointed as auditors to the Group in
2006.
Approved by the Board of Directors and signed on behalf of the
Board.
Martin Jarvis
Chief Executive Officer
27 June 2011
Statement of Directors' responsibilities
The Directors are responsible for preparing the annual review
and the Group and Company financial statements in accordance with
applicable United Kingdom law and those International Financial
Reporting Standards ('IFRSs') as adopted by the European Union.
Company law requires the directors to prepare Group and Company
financial statements for each financial year. Under that law the
Directors must not approve Group or Company financial statements
unless they are satisfied that they present fairly the financial
position and the financial performance and cash flows of the Group
and the Company for that period. In preparing these financial
statements, the Directors are required to:
-- select suitable accounting policies in accordance with IAS 8
"Accounting Policies, Change in Accounting Estimates and Errors"
and then apply them consistently;
-- present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
-- provide additional disclosures when compliance with the
specific requirements in IFRSs is insufficient to enable users to
understand the impact of particular transactions, other events and
conditions on the financial position and financial performance of
the Group and the Company;
-- state that the Group and the Company have complied with
IFRSs, subject to any material departures disclosed and explained
in the financial statements; and
-- make judgements and estimates that are reasonable and
prudent.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group and
Company's transactions and disclose with reasonable accuracy at any
time the financial position of the Group and Company and enable
them to ensure that the financial statements comply with the
Companies Act 2006 and International Accounting Standards. They are
also responsible for safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention and detection
of fraud and irregularities.
Directors' declaration
As far as each Director is aware, at the date when this report
was approved, there is no relevant audit information of which the
Group's auditors are unaware and each Director has taken all the
steps that he ought to have taken as a Director in order to make
himself aware of any relevant audit information and to establish
that the Group's auditors are aware of that information.
Pages 12 to 16, inclusive, of this Annual Report comprise a
Directors' Report that has been drawn up and presented in
accordance with English company law and the liabilities of the
Directors in connection with that report shall be subject to the
limitations and restrictions provided by such law.
In particular, Directors would be liable to the Company (but not
to any third party) if the Directors' Report contains errors as a
result of recklessness or knowing misstatement or dishonest
concealment of a material fact, but would not otherwise be
liable.
Cautionary statement regarding forward-looking statements
This Annual Report has been prepared for the members of the
Company and no one else. The Company, its Directors, employees or
agents do not accept or assume responsibility to any other person
in connection with this document and any such responsibility or
liability is expressly disclaimed.
This Annual Report contains certain forward-looking statements
with respect to the principal risks and uncertainties facing D1
Oils plc. By their nature, these statements and forecasts involve
risk and uncertainty because they relate to events and depend on
circumstances that may or may not occur in the future. There are a
number of factors that could cause actual results or developments
to differ materially from those expressed or implied by these
forward-looking statements and forecasts. The forward-looking
statements reflect the knowledge and information available at the
date of preparation of this Annual Report, and will not be updated
during the year. Nothing in this Annual Report should be construed
as a profit forecast.
Independent auditors' report
to the members of D1 Oils plc
We have audited the financial statements of D1 Oils Plc for the
year ended 31 December 2010 which comprise the Consolidated Income
Statement, the Consolidated and Company Statements of Comprehensive
Income, the Consolidated and Company Statements of Changes in
Equity, the Consolidated and Company Balance Sheets, the
Consolidated and Company Cash flow Statements and the related notes
1 to 30. The financial reporting framework that has been applied in
their preparation is applicable law and International Financial
Reporting Standards ('IFRSs') as adopted by the European Union and,
as regards the parent company financial statements, as applied in
accordance with the provisions of the Companies Act 2006.
This report is made solely to the Company's members, as a body,
in accordance with chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
Company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Respective responsibilities of directors and auditor
As explained more fully in the Directors' Responsibilities
Statement set out on page 17, the directors are responsible for the
preparation of the financial statements and for being satisfied
that they give a true and fair view. Our responsibility is to audit
the financial statements in accordance with applicable law and
International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Auditing Practices Board's
Ethical Standards for Auditors. Because of the matters described in
the Basis for Disclaimer of Opinion paragraph, however, we were not
able to obtain sufficient appropriate audit evidence to provide a
basis for an audit opinion.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and
disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from
material misstatement, whether caused by fraud or error. This
includes an assessment of: whether the accounting policies are
appropriate to the Group's and the parent Company's circumstances
and have been consistently applied and adequately disclosed; the
reasonableness of significant accounting estimates made by the
directors; and the overall presentation of the financial
statements.
Basis for disclaimer of opinion on financial statements
In seeking to form an opinion on the financial statements we
considered the implications of the significant uncertainties
disclosed in note 1 to the financial statements concerning the
following matters:
-- The business planning uncertainty which depends on the
outcome of the Boards business planning review process which is
expected to be concluded by August 2011. Until the business
planning is finalised the Board cannot assess with certainty the
implications of pursuing any revised business plan and its effect
on the ability of the Company and the Group to continue as a going
concern.
-- Achieving the milestones the Company aims to reach. The
Company needs to demonstrate that Jatropha can deliver sustainable
economics for both farmer and industry.
-- The outcome of efforts by the Directors to raise new finance
before the Company's cash resources are utilised. The Directors
currently estimate that new finance will need to be raised before
late 2011 and then again by mid 2012. Without such funding the
Company and the Group will be unable to continue as a going
concern.
There is potential for the uncertainties to interact with one
another such that we have been unable to obtain sufficient
appropriate audit evidence regarding the possible effect of the
uncertainties taken together.
Disclaimer of opinion on financial statements
Because of the significance of the possible impact of the
uncertainties, described in the Basis for Disclaimer of Opinion on
Financial Statements paragraph, to the financial statements, we
have not been able to obtain sufficient appropriate audit evidence
to provide a basis for an audit opinion. Accordingly we do not
express an opinion on the financial statements.
Opinion on other matter prescribed by the Companies Act 2006
Notwithstanding our disclaimer of an opinion on the financial
statements, in our opinion the information given in the Directors'
Report for the financial year for which the financial statements
are prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters
where the Companies Act 2006 requires us to report to you if, in
our opinion:
-- adequate accounting records have not been kept by the parent
Company, or returns adequate for our audit have not been received
from branches not visited by us;
-- the parent Company financial statements are not in agreement
with the accounting records and returns; or
-- certain disclosures of directors' remuneration specified by
law are not made; or
-- we have not received all the information and explanations we
require for our audit.
Mark Hatton (Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory
Auditor
Newcastle upon-Tyne
27 June 2011
Notes:
1. The maintenance and integrity of the D1 Oils plc web site is
the responsibility of the Directors; the work carried out by the
auditors does not involve consideration of these matters and,
accordingly, the auditors accept no responsibility for any changes
that may have occurred to the financial statements since they were
initially presented on the web site.
2. Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
Consolidated income statement
for the year ended 31 December 2010
Year Year
ended ended
31 December 31 December
2010 2009
Restated
Note GBP000 GBP000
---------------------------------------------- ---- ----------- -----------
Group revenue 3, 4 168.2 106.7
Cost of sales (85.4) (19.9)
---------------------------------------------- ---- ----------- -----------
Gross profit 82.8 86.8
Administrative expenses (3,646.1) (5,147.0)
---------------------------------------------- ---- ----------- -----------
Trading loss (3,563.3) (5,060.2)
Share of post tax losses of joint ventures
accounted for using the equity method 12 (306.1) (95.0)
Net gain on transfer of operation from joint
venture 30 - 2,750.6
---------------------------------------------- ---- ----------- -----------
Group operating loss from continuing
operations (3,869.4) (2,404.6)
Finance income 7 373.5 665.0
Finance costs 7 (57.8) (21.7)
---------------------------------------------- ---- ----------- -----------
Loss from continuing operations before
taxation (3,553.7) (1,761.3)
Tax credit 8 235.9 130.8
---------------------------------------------- ---- ----------- -----------
Loss for the period from continuing operations (3,317.8) (1,630.5)
---------------------------------------------- ---- ----------- -----------
Discontinued operations
Profit/(loss) for the year from discontinued
operations 14 (2,770.6) (3,397.2)
---------------------------------------------- ---- ----------- -----------
Total loss for the year (6,088.4) (5,027.7)
---------------------------------------------- ---- ----------- -----------
Loss for the period attributable to equity
holders of the parent (6,088.4) (5,027.7)
Loss per ordinary share
Basic and diluted loss per ordinary share
(pence) 9 (4.81) (3.98)
Basic and diluted loss per ordinary share
from continuing operations (pence) 9 (2.62) (1.29)
---------------------------------------------- ---- ----------- -----------
No profit and loss account is presented by the Company as
permitted by Section 408 of the Companies Act 2006. The Company's
loss for the year was GBP9,070,800 (2009: GBP2,614,600).
Consolidated statement of comprehensive income
for the year ended 31 December 2010
Year Year
ended ended
31 December 31 December
2010 2009
Restated
GBP000 GBP000
---------------------------------------------------- ----------- -----------
Loss for the year (6,088.4) (5,027.7)
Exchange difference on retranslation of foreign
operations (302.2) (62.3)
Exchange differences on disposed operations
recognised in income statement (12.5) -
Total comprehensive income for the year (6,403,1) (5,090.0)
---------------------------------------------------- ----------- -----------
Attributable to:
Equity holders of the parent (6,403,1) (5,090.0)
Non-controlling interests - -
---------------------------------------------------- ----------- -----------
Consolidated balance sheet
as at 31 December 2010
As at As at
31 December 31 December
2010 2009
Note GBP000 GBP000
------------------------------------------- ---- ----------- -----------
Assets
Non-current assets
Property, plant and equipment 10 169.2 399.2
Intangible assets 11 - 2.5
Investments accounted for using the equity
method 12 - 206.1
------------------------------------------- ---- ----------- -----------
169.2 607.8
Current assets
Inventories 15 211.4 100.9
Trade and other receivables 16 899.7 1,233.1
Other financial assets 17 90.0 4,547.6
Cash and short-term deposits 18 3,440.5 4,425.5
------------------------------------------- ---- ----------- -----------
4,641.6 10,307.1
Assets held for resale 13 - 2,124.0
------------------------------------------- ---- ----------- -----------
Total assets 4,810.8 13,038.9
------------------------------------------- ---- ----------- -----------
Equities and liabilities
Current liabilities
Trade and other payables 19 (336.7) (623.2)
Accruals and deferred income (498.5) (552.2)
Payments due to vendors 30 (4.1) (51.0)
Provisions 20 (274.0) (1,796.5)
------------------------------------------- ---- ----------- -----------
(1,113.3) (3,022.9)
Non-current liabilities
Payments due to vendors 30 (476.5) (432.9)
------------------------------------------- ---- ----------- -----------
(476.5) (432.9)
------------------------------------------- ---- ----------- -----------
Total liabilities (1,589.8) (3,455.8)
------------------------------------------- ---- ----------- -----------
Net assets 3,221.0 9,583.1
------------------------------------------- ---- ----------- -----------
Capital and reserves
Equity share capital 22 1,266.8 1,266.8
Share premium 99,290.3 99,290.3
Own shares held (484.0) (484.0)
Other reserves 437.7 437.7
Revenue reserves (97,967.0) (91,919.6)
Share option reserve 1,025.0 1,025.0
Currency translation reserve (347.8) (33.1)
------------------------------------------- ---- ----------- -----------
Equity shareholders' funds 3,221.0 9,583.1
------------------------------------------- ---- ----------- -----------
These financial statements were approved by the Board of
Directors on 27 June 2011.
Martin Jarvis
Chief Executive Officer
Consolidated statement of changes in equity
for the year ended 31 December 2010
Own Share Currency
Share Share shares Merger Profit and option translation
loss
capital premium held reserve reserve reserve reserve Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------- ------- -------- ------- ------- ----------- ---------- ----------- ---------
Group
At 1 January
2009 1,266.3 99,290.3 (484.0) 437.7 (100,079.8) 12,787.0 29.2 13,246.7
Loss for
the year - - - - (5,027.8) - - (5,027.8)
Other
comprehensive
income - - - - - - (62.3) (62.3)
-------------- ------- -------- ------- ------- ----------- ---------- ----------- ---------
Total
comprehensive
income for
the year - - - - (5,027.8) - (62.3) (5,090.1)
Transfer on
cancellation
of BP
options - - - - 12,787.0 (12,787.0) - -
Issue of
shares
- net of
expenses 0.5 - - - - - - 0.5
Amendment
of equity
instruments
- options
granted
to BP - - - - - 1,025.0 - 1,025.0
Share-based
payments - - - - 401.0 - - 401.0
At 31 December
2009 1,266.8 99,290.3 (484.0) 437.7 (91,919.6) 1,025.0 (33.1) 9,583.1
Loss for
the year - - - - (6,088.4) - - (6,088.4)
Other
comprehensive
income - - - - - - (314.7) (314.7)
-------------- ------- -------- ------- ------- ----------- ---------- ----------- ---------
Total
comprehensive
income for
the year - - - - (6,088.4) - (314.7) (6,403.1)
Share-based
payments - - - - 41.0 - - 41.0
-------------- ------- -------- ------- ------- ----------- ---------- ----------- ---------
At 31 December
2010 1,266.8 99,290.3 (484.0) 437.7 (97,967.0) 1,025.0 (347.8) 3,221.0
-------------- ------- -------- ------- ------- ----------- ---------- ----------- ---------
Consolidated cash flow statement
for the year ended 31 December 2010
Year Year
ended ended
31 December 31 December
2010 2009
Restated
GBP000 GBP000
------------------------------------------------ ------------- -----------
Operating activities
Loss for the year (6,088.4) (5,027.8)
Adjustments to reconcile loss for the year to
net cash flow from operating activities:
Depreciation of property, plant and equipment,
and amortisation of intangible assets 135.6 217.4
Impairment of assets held for sale 48.2 64.8
Share-based payments 41.0 401.0
Net gain on transfer of operation from joint
venture - (2,750.6)
Net loss on disposal of science and technology
activities 865.8 -
Loss on disposal of fixed assets 61.6 52.9
Share of post tax losses of joint ventures
accounted for using the equity method 306.1 95.0
Finance income (386.1) (1,134.7)
Finance expense 59.4 104.3
Income tax credit (235.9) (171.6)
Tax paid 4.2 189.5
Increase in inventories (110.5) (20.9)
Decrease in trade and other receivables 889.5 218.7
Decrease in trade and other payables (319.6) (2,979.3)
Decrease in provisions (1,461.9) (4,004.5)
------------------------------------------------ ------------- -----------
Net cash flow from operating activities (6,191.0) (14,745.8)
------------------------------------------------ ------------- -----------
Investing activities
Interest received 48.1 310.4
Payments to acquire property, plant and
equipment, and intangible assets (66.9) (61.0)
Funds transferred to deposits 4,409.5 861.0
Purchase of joint venture investments (100.0) -
Net cash outflow on disposal of science and
technology activities (800.0) -
Net cash acquired from acquisitions - 4,993.1
Proceeds from disposal of assets held for sale 1,696.1 953.0
------------------------------------------------ ------------- -----------
Net cash flow from investing activities 5,186.8 7,056.5
------------------------------------------------ ------------- -----------
Financing activities
Interest paid - (81.3)
Exercise of share options - 0.5
Settlement of leases and mortgages - (2,661.7)
Repayment of mortgage - (30.0)
Repayment of capital element of finance leases - (190.1)
---------------------------------------------------- --------- -----------
Net cash flow from financing activities - (2,962.6)
---------------------------------------------------- --------- -----------
Net decrease in cash and cash equivalents (1,004.2) (10,651.9)
Cash and cash equivalents at the start of the year 4,425.5 15,055.9
Effects of exchange rates on cash at the start
of the year 19.3 21.5
---------------------------------------------------- --------- -----------
Cash and cash equivalents at the end of the year 3,440.6 4,425.5
---------------------------------------------------- --------- -----------
Company statement of comprehensive income
for the year ended 31 December 2010
Year Year
ended ended
31 December 31 December
2010 2009
GBP000 GBP000
---------------------------------------- ----------- -----------
Loss for the year (9,070.8) (2,614.6)
Total comprehensive income for the year (9,070.8) (2,614.6)
---------------------------------------- ----------- -----------
Attributable to:
Equity holders of the parent (9,070.8) (2,614.6)
---------------------------------------- ----------- -----------
Company balance sheet
as at 31 December 2010
As at As at
31 December 31 December
2010 2009
Note GBP000 GBP000
------------------------------------------- ---- ----------- -----------
Assets
Non-current assets
Property, plant and equipment 10 26.1 12.2
Amounts receivable from group undertakings 16 2,879.6 8,017.9
Investments in subsidiaries 12 125.9 125.1
------------------------------------------- ---- ----------- -----------
3,031.6 8,155.2
Current assets
Trade and other receivables 16 353.1 161.5
Other financial assets 17 90.0 4,547.6
Cash and short-term deposits 18 2,983.0 2,600.8
------------------------------------------- ---- ----------- -----------
3,426.1 7,309.9
------------------------------------------- ---- ----------- -----------
Total assets 6,457.7 15,465.1
------------------------------------------- ---- ----------- -----------
Equity and liabilities
Current liabilities
Trade and other payables 19 (315.9) (222.6)
Accruals and deferred income (304.4) (245.3)
Provisions 20 (274.0) (404.0)
------------------------------------------- ---- ----------- -----------
Total liabilities (894.3) (871.9)
------------------------------------------- ---- ----------- -----------
Net assets 5,563.4 14,593.2
------------------------------------------- ---- ----------- -----------
Capital and reserves
Equity share capital 22 1,266.8 1,266.8
Share premium 99,290.3 99,290.3
Own shares held (484.0) (484.0)
Revenue reserves (95,534.7) (86,504.9)
Share option reserve 1,025.0 1,025.0
------------------------------------------- ---- ----------- -----------
Equity shareholders' funds 5,563.4 14,593.2
------------------------------------------- ---- ----------- -----------
These financial statements were approved by the Board of
Directors on 27 June 2011.
Martin Jarvis
Chief Executive Officer
Company statement of changes in equity
for the year ended 31 December 2010
Own Share
Profit
Share Share shares and option
loss
capital premium held reserve reserve Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------- ------- -------- ------- ----------- ---------- ---------
Company
At 1 January
2009 1,266.3 99,290.3 (484.0) (97,078.6) 12,787.0 15,781.0
Loss for the
year - - - (2,614.3) - (2,614.3)
Other
comprehensive
income - - - - - -
-------------- ------- -------- ------- ----------- ---------- ---------
Total
comprehensive
income for
the year - - - (2,614.3) - (2,614.3)
Transfer on
cancellation
of BP
options - - - 12,787.0 (12,787.0) -
Issue of
shares by the
Company - net
of expenses 0.5 - - - - 0.5
Issue of
equity
instruments -
options
granted to
BP - - - - 1,025.0 1,025.0
Share-based
payments - - - 401.0 - 401.0
At 31 December
2009 1,266.8 99,290.3 (484.0) (86,504.9) 1,025.0 14,593.2
Loss for the
year - - - (9,070.8) - (9,070.8)
Other
comprehensive
income - - - - - -
-------------- ------- -------- ------- ----------- ---------- ---------
Total
comprehensive
income for
the year - - - (9,070.8) - (9,070.8)
Share-based
payments - - - 41.0 - 41.0
-------------- ------- -------- ------- ----------- ---------- ---------
At 31 December
2010 1,266.8 99,290.3 (484.0) (95,534.7) 1,025.0 5,563.4
-------------- ------- -------- ------- ----------- ---------- ---------
Company cash flow statement
for the year ended 31 December 2010
Year Year
ended ended
31 December 31 December
2010 2009
GBP000 GBP000
---------------------------------------------------- ----------- -----------
Operating activities
Loss for the year (9,070.8) (2,614.6)
Adjustments to reconcile loss for the year to net
cash flow from operating activities:
Depreciation of property, plant and equipment 7.5 8.0
Share-based payments 41.0 401.0
Loss on disposal of fixed assets 6.9 -
Net gain on transfer of operation from joint venture - 1,025.0
Impairment of amounts owed by Group undertakings 661.5 -
Write-off of amounts owed by Group undertakings 412.9 -
Finance income (32.4) 163.0
Increase in trade and other receivables (191.7) 439.8
Increase/(decrease) in trade and other payments 152.3 (310.6)
(Increase)/decrease in provisions (130.0) 404.0
---------------------------------------------------- ----------- -----------
Net cash flow from operating activities (8,142.8) (484.4)
---------------------------------------------------- ----------- -----------
Investing activities
Interest received 32.4 232.0
Funds transferred to deposits 4,457.8 (1,860.1)
Investment in Group companies (0.8) -
Net repayments from/(loans to) Group companies 4,035.6 (8,017.9)
Net cash flow from investing activities 8,525.0 (9,646.0)
---------------------------------------------------- ----------- -----------
Financing activities
Exercise of share options - 0.5
Net cash flow from financing activities - 0.5
---------------------------------------------------- ----------- -----------
Net increase/(decrease) in cash and cash equivalents 382.2 (10,129.9)
Cash and cash equivalents at the start of the year 2,600.8 12,730.7
---------------------------------------------------- ----------- -----------
Cash and cash equivalents at the end of the year 2,983.0 2,600.8
---------------------------------------------------- ----------- -----------
Notes to the financial statements
for the year ended 31 December 2010
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 summarised
below.
Business planning uncertainty
The Report of the Chief Executive Officer on pages 6 to 9 sets
out the strategy of the business and what it is seeking to achieve
and the milestones it aims to reach. Whilst the Directors believe
these milestones are realistic, there are inevitably uncertainties
as to whether they will be achieved in full and in time. In
addition, following the appointment of Steven Rudofsky and Nicholas
Myerson on 24 June 2011, the Board has commenced a business plan
review process to be concluded no later than mid-August 2011. The
review may or may not result in changes to the existing business
plan. While the Board is confident it can deliver a jatropha based
strategy that is viable and cash generative over the longer term,
until the business plan is finalised the Board cannot assess with
certainty the implications of pursuing a revised business plan.
Funding uncertainty
The Directors informed the market over eighteen months ago that
the Company would require a further injection of funds during 2011
and, as such, have been working on a new fund raising exercise.
Following the appointment to the Board on 24 June 2011 of Steven
Rudofsky and Nicholas Myerson, the Board now believes it will
secure sufficient shareholder support to pass a resolution to
enable sufficient funds to be raised once a successful business
plan review has been completed. The Board currently intends to seek
sufficient funds to cover the business's activities until key
harvest and animal feed milestones are reached in mid-2012. The
Board believes that the case will be made in time for final follow
on funding for capital investment ahead of the business becoming
cash generative. The Board is encouraged by the feedback it has
received to date on the willingness of existing shareholders to
participate in a future fund raising. However, if the Directors are
unable to secure the appropriate level of shareholder support for
the strategy and associated future fund raising before late 2011
and again by mid-2012, the Company and the Group will be unable to
continue as a going concern.
Directors' view
After making enquiries and considering these uncertainties, the
Directors conclude that the implications of the business plan
review and whether funding can be secured before cash resources are
depleted are material uncertainties which may cast significant
doubt about the Group and Company's ability to continue as a going
concern in its current form. The Directors believe that these
uncertainties can be managed and mitigated and the Directors have a
reasonable expectation that the 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 the strategic milestones not be achieved or the business
plan be changed in a way which restricts the Group's ability to
implement or fund the business plan, 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 2010 were authorised by the Board of
Directors on 27 June 2011 and the balance sheet was signed on the
Board's behalf by Martin Jarvis, Chief Executive Officer. 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 2010 and
applied in accordance with the Companies Act 2006.
The Group financial statements are presented in Sterling and all
values are rounded to the nearest thousand pounds (GBP000) except
where otherwise indicated.
The revision of IAS 1 Presentation of Financial Statements
(revised 2007) has introduced a number of changes in the format and
content of the financial statements. The revised statement has
required the reconciliation of movements in equity, previously
disclosed in the notes, to be presented as a primary statement
entitled 'statement of changes in equity'. In addition, the
statement of recognised income and expense has been replaced by the
'statement of comprehensive income'. The revised standard requires
this statement to include all items of recognised income and
expense either in one single statement or in two linked statements.
The Group has elected to present two statements.
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. Where the non-vesting
conditions are included in the valuation model, the Group
recognises the goods or services received from a counterparty who
satisfies all other vesting conditions irrespective of whether that
market condition is satisfied.
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. Non-controlling 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
non-controlling interest 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.
Breeding and cultivar 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 animal 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.
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 held 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 are 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 over 3-5 years
and equipment
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.
Agricultural assets
The Group grows Jatropha curcas, which meets the classification
of an agriculture asset and is able to be recognised in the balance
sheet if the following criteria are met:
-- the entity controls the asset as a result of past events;
-- it is probable that future economic benefits associated with
the asset will flow to the entity; and
-- the fair value or cost of the asset can be measured
reliably.
The Group passes the first two tests, however, in regard to the
fair value test; it is presumed that fair value can be measured
reliably. This presumption is rebutted on the initial recognition
of the agriculture assets because no market-determined prices or
values are available nor can alternative estimates for fair value
be considered reliable. Therefore, the agriculture assets of the
Group are measured at its cost less any accumulated depreciation
and any accumulated impairment losses.
Agriculture assets include the preparations of previously
untreated ground and the planting of Jatropha seeds and seedlings
and subsequent cultivation. Once mature the Jatropha trees bear
seeds that contain crude Jatropha oil. This crude oil can be
refined to produce biodiesel.
The direct costs of site preparation, planting seedlings and
cultivation to the point at which the trees are mature and
producing seeds, are capitalised and amortised over the useful life
of the trees, which is on average 30 years.
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
The individual financial statements of each Group company are
presented in the currency of the primary economic environment in
which it operates (its functional currency). For the purpose of the
consolidated financial statements, the results and financial
position of each Group company are expressed in Pounds Sterling,
which is the functional currency of the Company, and the
presentation currency for the Group consolidated financial
statements.
In preparing the financial statements of the individual
companies, transactions in currencies other than the entity's
functional currency (foreign currencies) are recognised at the
rates of exchange prevailing on the dates of the transactions. At
each balance sheet date, monetary assets and liabilities that are
denominated in foreign currencies are retranslated at the rates
prevailing at that date. Non-monetary items carried at fair value
that are denominated in foreign currencies are translated at the
rates prevailing at the date when the fair value was determined.
Non-monetary items that are measured in terms of historical cost in
a foreign currency are not retranslated.
Exchange differences are recognised in profit or loss in the
period in which they arise except for:
-- exchange differences on transactions entered into to hedge
certain foreign currency risks; and
-- exchange differences on monetary items receivable from or
payable to a foreign operation for which settlement is neither
planned nor likely to occur (therefore forming part of the net
investment in the foreign operation), which are recognised
initially in other comprehensive income and reclassified from
equity to profit or loss on discontinuation of activities in the
foreign operation or partial disposal of the net investment.
For the purposes of presenting consolidated financial
statements, the assets and liabilities of the Group's foreign
operations are translated at exchange rates prevailing on the
balance sheet date. Income and expense items are translated at the
average exchange rates for the period, unless exchange rates
fluctuate significantly during that period, in which case the
exchange rates at the date of transactions are used. Exchange
differences arising, if any, are recognised in other comprehensive
income and accumulated in equity.
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.
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. The Group elected to adopt the
revised IFRS 3 issued in January 2008 for the 2009 financial
statements. The only material impact of the adoption on the Group's
2009 acquisition was that the revised IFRS 3 required the costs of
acquisition to be recognised as an expense. Other changes include
altering the treatment of non-controlling interests (formerly
minority interests) with an option to recognise these at full fair
value as at the acquisition date and a requirement for previously
held non-controlling interests to be fair valued as at the date
control is obtained, with gains and losses recognised in the income
statement.
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 held 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.
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 on eligible capital projects are capitalised.
Other 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
The accounting policies adopted in the preparation of the
Group's annual financial statements are consistent with those
followed in the preparation of the annual financial statements for
the year ended 31 December 2009, except for the adoption of new
Standards and Interpretations as of 1 January 2010 listed
below:
-- IFRS 2 - Amendment to IFRS 2 - Group cash-settled share-based
payments. The amendments clarified the classification of
share-based payment awards in parent and subsidiary companies and
addressed plans not considered in the original Standard. The
adoption of this amendment has not had a material impact on the
financial position or performance of the Group.
The amendments to the following standards did not have any
impact on the accounting policies, financial position or
performance of the Group:
-- IAS 27 - Amendment - Consolidated and separate financial
statements - effective 1 July 2009.
-- IAS 39 - Amendment - Eligible hedged items - effective 1
January 2010.
-- IFRIC 9 - Reassessment of embedded derivatives - effective 1
January 2010.
-- IFRIC 16 - Hedges of a net investment in a foreign operation
- 1 January 2010.
-- IFRIC 17 - Distribution of non-cash assets to owners -
effective 1 July 2009.
-- IFRIC 18 - Transfers of assets from customers - effective in
EU no later than 1 January 2010.
-- Various - Annual improvements to IFRS - effective various
dates but most 1 January 2010.
The IASB and IFRIC have issued the following standards and
interpretations with an effective date after the date of these
financial statements:
-- IFRS 1 - Amendment - First time adoption of IFRS - effective
1 July 2010.
-- IAS 24 - Amendment - Related party disclosures - effective 1
January 2010.
-- IAS 32 - Amendment - Financial instruments: presentation -
effective 1 February 2010.
-- IFRIC 14 - Amendment - IAS 19 limit on a defined benefit
asset - effective 1 January 2011.
-- IFRIC 19 - Extinguishing financial liabilities with equity
instruments - effective 1 July 2010.
Except for the amended disclosure requirements of IAS 24, 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.
The IASB and IFRIC have issued the following standards and
interpretations with an effective date after the date of these
financial statements that have not yet been endorsed by the
European Union:
-- IFRS 1 - Amendment - First time adoption of IFRS - effective
1 July 2010.
-- IFRS 7 - Amendment - Financial instruments: disclosures -
effective 1 July 2011
-- IFRS 9 - Financial instruments - effective 1 January
2013.
-- IFRS 10 - Consolidated financial statements - effective 1
January 2013.
-- IFRS 11 - Joint arrangements - effective 1 January 2013.
-- IFRS 12 - Disclosure of involvement with other entities -
effective 1 January 2013.
-- IFRS 13 - Fair value measurement - effective 1 January
2013.
-- IAS 12 - Amendment - Income taxes - effective 1 January
2012.
-- IAS 27 - Amendment - Separate financial statements -
effective 1 January 2013.
-- IAS 28 - Amendment - Investment in associates and joint
ventures - effective 1 January 2013.
The Group has not yet assessed the impact of IFRS 9, IFRS 10,
IFRS 11, IFRS 12, IFRS 13, IAS 27 nor IAS 28. The Directors do not
anticipate that the adoption of amendments to IFRS 1, IFRS 7 and
IAS 12 will have a material impact on the Group's financial
statements in the period of initial application.
3. Segmental information
For management purposes, the Group is organised into business
units according to the nature of the products and services and has
the following operating segments:
-- The Operations segment is responsible for the commercial
planting of Jatropha. Its activities include managing the outgrower
network, collecting grain and selling crude Jatropha oil.
-- The Science & Technology segment provided Jatropha plant
science and associated technical consulting services to
third-parties, breeds seeds and seedlings for commercial planting
and undertakes research and development activities on Jatropha and
its co-products. In December 2010, the disposal of a substantial
portion of this segment was effected, with the exception of the
animal feed activity. The effective financial date of disposal was
1 November 2010. For the purposes of segmental reporting, the
agronomy and breeding activities that were disposed of in 2010 are
classified as discontinued while the ongoing animal feed activity
is classified as continuing. Comparatives have been restated on
this basis.
-- The Refining & Trading segment is an operation that was
discontinued in 2008. In 2010, activity in this segment related to
remaining refining and trading sites situated in the UK.
No operating segments have been aggregated to form the above
reportable operating segments.
Management monitors the operating results of its business units
separately for the purpose of making decisions about resource
allocation and performance assessment. Segment performance is
evaluated based on profit or loss which in certain respects, as
explained in the table below, is measured differently from profit
or loss in the consolidated financial statements. Group financing
(including finance costs and finance revenue), taxation and central
administration are managed on a group basis and are not allocated
to operating segments.
The following tables present revenue and profit and certain
asset and liability information regarding the Group's business
segments for the years ended 31 December 2010 and 2009.
Segment revenue and results
Science & Refining & Science &
Technology Continuing Trading Technology Discontinued
Operations (continuing) operations (discontinued) (discontinued) operations Group
Year ended 31
December 2010 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------- ---------- ------------ ---------- -------------- -------------- ------------ ---------
Revenue
Sales to
external
customers 105.2 63.0 168.2 - 165.9 165.9 334.1
Segment revenue 105.2 63.0 168.2 - 165.9 165.9 334.1
--------------- ---------- ------------ ---------- -------------- -------------- ------------ ---------
Results
Depreciation
and
amortisation (67.1) (8.0) (75.1) - (38.7) (38.7) (113.8)
Share of
profit/(loss)
of joint
ventures (306.1) - (306.1) - - - (306.1)
Loss on
disposal of
agronomy and
breeding
business - - - - (865.8) (865.8) (865.8)
Legal
settlement
gain - - - 21.7 - 21.7 21.7
Interest
expense - - - - (1.6) (1.6) (1.6)
Impairment of
assets held
for sale - - - (0.7) - (0.7) (0.7)
Other costs (1,434.6) (284.9) (1,719.5) 902.0 (2,953.4) (2,051.4) (3,770.9)
--------------- ---------- ------------ ---------- -------------- -------------- ------------ ---------
Segment
profit/(loss) (1,702.6) (229.9) (1,932.5) 923.0 (3,693.6) (2,770.6) (4,703.1)
--------------- ---------- ------------ ---------- -------------- -------------- ------------ ---------
Central
administration
costs (1,959.7)
Unallocated
finance
revenue 386.1
Unallocated
finance costs (57.8)
Taxation 246.1
--------------- ---------- ------------ ---------- -------------- -------------- ------------ ---------
Total loss for
the year (6,088.4)
--------------- ---------- ------------ ---------- -------------- -------------- ------------ ---------
Science & Refining & Science &
Technology Continuing Trading Technology Discontinued
Operations (continuing) operations (discontinued) (discontinued) operations Group
Restated Restated Restated Restated Restated Restated Restated
Year ended 31
December 2009 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------- ---------- ------------ ---------- -------------- -------------- ------------ ---------
Revenue
Sales to
external
customers 33.7 73.0 106.7 1.7 1,690.6 1,692.3 1,799.0
Segment revenue 33.7 73.0 106.7 1.7 1,690.6 1,692.3 1,799.0
--------------- ---------- ------------ ---------- -------------- -------------- ------------ ---------
Results
Depreciation
and
amortisation (37.5) (13.5) (51.0) - (132.6) (132.6) (183.6)
Share of
profit/(loss)
of joint
ventures (95.0) - (95.0) - - - (95.0)
Gain on finance
lease
settlement - - - 405.0 - 405.0 405.0
Legal
settlement
gain - - - 692.4 - 692.4 692.4
Interest
expense - - - (81.3) - (81.3) (81.3)
Impairment of
assets held
for sale - - - (64.8) - (64.8) (64.8)
Other costs (1,142.8) (388.9) (1,531.7) (1,913.8) (4,042.3) (5,956.1) (7,487.8)
--------------- ---------- ------------ ---------- -------------- -------------- ------------ ---------
Segment
profit/(loss) (1,241.6) (329.4) (1,571.0) (960.8) (2,484.3) (3,445.1) (5,016.1)
--------------- ---------- ------------ ---------- -------------- -------------- ------------ ---------
Central
administration
costs (3,640.7)
Net gain on
transfer of
operation from
joint venture 2,812.9
Unallocated
finance
revenue 667.5
Unallocated
finance costs (23.0)
Taxation 171.7
--------------- ---------- ------------ ---------- -------------- -------------- ------------ ---------
Total loss for
the year (5,027.7)
--------------- ---------- ------------ ---------- -------------- -------------- ------------ ---------
The accounting policies of the reportable segments are the same
as the Group's accounting policies described in note 2. Segment
profit represents the profit earned by each segment without
allocation of central administration costs, investment gains or
losses, unallocated finance revenue, unallocated finance costs and
taxation. This is the measure used for reporting to the Group's
chief operating decision makers for the purpose of allocation and
assessment of segment performance.
Loss before tax on continuing operations
Year ended Year ended
31 December 31 December
2010 2009
Restated
GBP000 GBP000
-------------------------- ------------ ------------
Operations (1,702.6) (1,241.6)
Science & Technology
(continuing) (229.9) (329.4)
Central administration
costs (1,621.2) (190.3)
-------------------------- ------------ ------------
Total loss before tax
on continuing operations (3,553.7) (1,761.3)
-------------------------- ------------ ------------
Segment assets
Science & Refining & Science &
Technology Continuing Trading Technology Discontinued
Operations (continuing) operations (discontinued) (discontinued) operations Group
Year ended 31
December
2010 GBP000 GBP000 GBP000 GBP000 GBP000
------------- ---------- ------------ ---------- -------------- -------------- ------------ -------
Assets
Operating
assets 487.5 26.1 513.6 401.5 - 401.5 915.1
------------- ---------- ------------ ---------- -------------- -------------- ------------ -------
Segment
assets 487.5 26.1 513.6 401.5 - 401.5 915.1
------------- ---------- ------------ ---------- -------------- -------------- ------------ -------
Unallocated
assets 3,895.7
------------- ---------- ------------ ---------- -------------- -------------- ------------ -------
Consolidated
total
assets 4,810.8
------------- ---------- ------------ ---------- -------------- -------------- ------------ -------
Science & Refining & Science &
Technology Continuing Trading Technology Discontinued
Operations (continuing) operations (discontinued) (discontinued) operations Group
Restated Restated Restated Restated Restated Restated Restated
Year ended 31
December
2009 GBP000 GBP000 GBP000 GBP000 GBP000
------------- ---------- ------------ ---------- -------------- -------------- ------------ --------
Assets
Equity
accounted
investments 206.1 - 206.1 - - - 206.1
Operating
assets 1,242.6 30.8 1,273.4 2,477.2 1,084.0 3,561.2 4,834.6
------------- ---------- ------------ ---------- -------------- -------------- ------------ --------
Segment
assets 1,448.7 30.8 1,479.5 2,477.2 1,084.0 3,561.2 5,040.7
------------- ---------- ------------ ---------- -------------- -------------- ------------ --------
Unallocated
assets 7,998.2
------------- ---------- ------------ ---------- -------------- -------------- ------------ --------
Consolidated
total
assets 13,038.9
------------- ---------- ------------ ---------- -------------- -------------- ------------ --------
For the purposes of monitoring segment performance and
allocating resources between segments, the Group's chief operating
decision makers monitor the tangible, intangible and financial
assets attributable to each segment. All assets are allocated to
reportable segments except assets relating to central
administration.
Segment liabilities
Science & Refining & Science &
Technology Continuing Trading Technology Discontinued
Operations (continuing) operations (discontinued) (discontinued) operations Group
Year ended 31
December
2010 GBP000 GBP000 GBP000 GBP000 GBP000
------------- ---------- ------------ ---------- -------------- -------------- ------------ ---------
Liabilities
Operating
liabilities (105.9) - (105.9) (105.3) (56.2) (161.5) (267.4)
------------- ---------- ------------ ---------- -------------- -------------- ------------ ---------
Segment
liabilities (105.9) - (105.9) (105.3) (56.2) (161.5) (267.4)
------------- ---------- ------------ ---------- -------------- -------------- ------------ ---------
Unallocated
liabilities (1,322.4)
------------- ---------- ------------ ---------- -------------- -------------- ------------ ---------
Consolidated
total
liabilities (1,589.8)
------------- ---------- ------------ ---------- -------------- -------------- ------------ ---------
Science & Refining & Science &
Technology Continuing Trading Technology Discontinued
Operations (continuing) operations (discontinued) (discontinued) operations Group
Restated Restated Restated Restated Restated Restated Restated
Year ended 31
December
2009 GBP000 GBP000 GBP000 GBP000 GBP000
------------- ---------- ------------ ---------- -------------- -------------- ------------ ---------
Liabilities
Operating
liabilities (158.3) - (158.3) (1,471.3) (470.6) (1,941.9) (2,100.2)
------------- ---------- ------------ ---------- -------------- -------------- ------------ ---------
Segment
liabilities (158.3) - (158.3) (1,471.3) (470.6) (1,941.9) (2,100.2)
------------- ---------- ------------ ---------- -------------- -------------- ------------ ---------
Unallocated
liabilities (1,355.6)
------------- ---------- ------------ ---------- -------------- -------------- ------------ ---------
Consolidated
total
liabilities (3,455.8)
------------- ---------- ------------ ---------- -------------- -------------- ------------ ---------
For the purposes of monitoring segment performance and
allocating resources between segments, the Group's chief operating
decision makers monitor the operating and financial liabilities
attributable to each segment. All liabilities are allocated to
reportable segments except liabilities relating to central
administration.
Capital expenditure
Science & Refining & Science &
Technology Continuing Trading Technology Discontinued
Operations (continuing) operations (discontinued) (discontinued) operations Group
Year ended
31 December
2010 GBP000 GBP000 GBP000 GBP000 GBP000
------------ ---------- ------------ ---------- -------------- -------------- ------------ ------
Capital
expenditure 48.0 - 48.0 - 13.3 13.3 61.3
------------ ---------- ------------ ---------- -------------- -------------- ------------ ------
Science & Refining & Science &
Technology Continuing Trading Technology Discontinued
Operations (continuing) operations (discontinued) (discontinued) operations Group
Restated Restated Restated Restated Restated Restated Restated
Year ended
31 December
2009 GBP000 GBP000 GBP000 GBP000 GBP000
------------ ---------- ------------ ---------- -------------- -------------- ------------ --------
Capital
expenditure 27.0 3.7 30.7 - 30.2 30.2 60.9
------------ ---------- ------------ ---------- -------------- -------------- ------------ --------
Geographical information
The Group's revenue from external customers and information
about its segment assets (non-current assets excluding financial
instruments, deferred tax assets, post-employment benefit assets,
and rights arising under insurance contracts) by geographical
location are detailed below:
Year ended Year ended
31 December 31 December
2010 2009
GBP000 GBP000
---------------------- ------------ ------------
Revenue from external
customers
United Kingdom 103.8 1,573.9
India 82.4 -
Belgium 46.5 0.1
Netherlands 26.5 198.1
Cape Verde 44.1 26.9
Other 30.8 -
---------------------- ------------ ------------
Total revenue from
external customers 334.1 1,799.0
---------------------- ------------ ------------
Non-current assets
United Kingdom 34.8 323.1
India 84.9 98.7
Cape Verde - 53.7
Indonesia 20.8 44.8
Zambia 28.7 16.4
Thailand - 50.8
Other - 20.3
---------------------- ------------ ------------
Total non-current
assets 169.2 607.8
---------------------- ------------ ------------
4. Revenue and administrative costs
Revenue recognised in the income statement is analysed as
follows:
Year ended Year ended
31 December 31 December
2010 2009
Restated
GBP000 GBP000
------------------------ ----------- -----------
Continuing operations
Sales of goods 168.2 106.7
Finance revenue 58.8 602.7
------------------------ ----------- -----------
227.0 709.4
------------------------ ----------- -----------
Discontinued operations
Sales of goods - 1,692.3
Finance revenue 12.6 469.8
------------------------ ----------- -----------
12.6 2,162.1
------------------------ ----------- -----------
No revenue was derived from exchanges of goods or services.
Group operating loss is stated after charging/(crediting):
Year ended Year ended
31 December 31 December
2010 2009
GBP000 GBP000
-------------------------------------------------- ----------- -----------
Depreciation of plant, property and equipment 134.9 213.4
Amortisation of intangible assets 0.7 4.0
Impairment of assets held for sale 48.1 64.8
Net foreign currency differences 36.7 (323.7)
Net expenditure on research and development after
tax credits (20.1) 329.4
Auditors' remuneration
- audit fees 73.0 69.6
- interim audit - 31.7
- overseas audit 60.0 60.0
- taxation services 35.4 76.5
- consulting services 2.4 9.7
-------------------------------------------------- ----------- -----------
Total 170.8 247.5
-------------------------------------------------- ----------- -----------
Payment under operating leases
- property 345.7 671.1
- plant and machinery 3.2 4.4
-------------------------------------------------- ----------- -----------
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 Year ended
31 December 31 December
2010 2009
Number Number
------------------------------------- ----------- -----------
Executive Directors 1 2
Technical 45 57
Administration and operational staff 66 50
------------------------------------- ----------- -----------
Total 112 109
------------------------------------- ----------- -----------
Average staff numbers should drop considerably in 2011 following
the disposal of a large portion of the Science & Technology
division.
The costs incurred in respect of these employees (including
Directors) were:
Year ended Year ended
31 December 31 December
2010 2009
GBP000 GBP000
---------------------- ----------- -----------
Wages and salaries 2,000.8 2,168.1
Social security costs 193.3 383.1
Other pension costs 50.6 64.5
---------------------- ----------- -----------
Total 2,244.7 2,615.7
---------------------- ----------- -----------
Other pension costs consist of contributions to defined
contribution pension plans.
6. Key management remuneration
Year ended Year ended
31 December 31 December
2010 2009
Restated
GBP000 GBP000
--------------------------- ----------- -----------
Executive Directors
Benjamin Richard
Good (a) 139.5 180.0
Henk Jean Pierre
Joos 154.1 190.6
Martin John Jarvis
(b) 167.4 27.0
Non-Executive Directors
John Barclay Forrest 64.6 50.0
Moira Elizabeth
Black 3.8 42.0
Charles John Nicholas
Ward 52.1 -
--------------------------- ----------- -----------
581.5 489.6
--------------------------- ----------- -----------
Fees paid to third parties
(c) 7.2 35.0 35.0
----------- -----------
(a) In 2010, in addition to remuneration of GBP139,500, Ben Good received GBP158,800 in termination benefits. In 2010, post employment benefits for Ben Good consisted of GBP10,300 in contributions to the defined contribution pension scheme operated by the Group (2009: GBP7,200).
(b) In 2010, post employment benefits for Martin Jarvis consisted of GBP12,600 in contributions to the defined contribution pension scheme operated by the Group (2009: GBP1,100).
(c) Fees paid to third parties in respect of the directorship of Brian Myerson.
The value of short-term employee benefits for key management
personnel as measured in accordance with IAS 24 (which includes
employer's national insurance contributions) is GBP633,700 (2009:
GBP525,600).
The people identified as key management in the table above were
also the directors of D1 Oils plc.
( )
Options Options
Lapsed 31
1 January Granted Exercised in December Exercise Exercisable
Expiry
2010(a) 2010 2010 2010 (c) 2010 price date date
--------- --------- ------- --------- ----------- -------- -------- ----------- ------------
John
Barclay
Forrest 78,125 - - - 78,125 GBP1.28 October-05 October-14
Henk Jean
Pierre
Joos 170,915 - - (170,915) - GBP2.30 (b) October-16
Henk Jean
Pierre
Joos 56,250 - - (56,250) - GBP1.73 (b) March-17
Benjamin
Richard
Good 208,696 - - (208,696) - GBP1.73 (b) March-17
Benjamin
Richard
Good 1,284,000 - - (1,284,000) - GBP0.21 (b) May-18
Henk Jean
Pierre
Joos 1,417,000 - - (1,417,000) - GBP0.21 (b) May-18
Martin
John
Jarvis 412,500 - - - 412,500 GBP0.10 (b) September-19
Benjamin
Richard
Good 467,500 - - (467,500) - GBP0.10 (b) September-19
Henk Jean
Pierre
Joos 450,000 - - (450,000) - GBP0.10 (b) September-19
4,544,986 - - (4,054,361) 490,625
--------- --------- ------- --------- ----------- -------- -------- ----------- ------------
(a) Options in issue at 1 January 2010 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 GBPnil (2009:
GBP2,125). This represents the market price of the shares in excess
of the exercise price on the date the options were exercised.
(c) Share option lapsed upon cessation of employment or
engagement with the Group.
7. Finance revenue and costs
Year ended Year ended
31 December 31 December
Continuing operations 2010 2009
Restated
GBP000 GBP000
---------------------------------------------------- ----------- -----------
Interest received on bank deposits 34.6 176.6
Net foreign exchange movements 338.9 488.4
---------------------------------------------------- ----------- -----------
Finance revenue 373.5 665.0
---------------------------------------------------- ----------- -----------
Other finance charges (47.7) (21.7)
Interest accretion on deferred consideration payable (10.1) -
---------------------------------------------------- ----------- -----------
Finance costs (57.8) (21.7)
---------------------------------------------------- ----------- -----------
8. Taxation
Tax recognised in the income statement
Continuing Discontinued
operations operations Total
------------------ ------------------- ----------------
Year
Year ended Year ended Year ended Year ended Year ended ended
31 31 31 31 31
December December December 31 December December December
2010 2009 2010 2009 2010 2009
Restated Restated Restated
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------------- ---------- ---------- ---------- ----------- ---------- --------
Current tax credit -
UK (250.0) (22.6) - (47.9) (250.0) (70.5)
Current tax expense/
(credit) - overseas 14.1 (108.2) (10.2) 7.0 3.9 (101.2)
--------------------- ---------- ---------- ---------- ----------- ---------- --------
Tax reported in
consolidated income
statement (235.9) (130.8) (10.2) (40.9) (246.1) (171.7)
--------------------- ---------- ---------- ---------- ----------- ---------- --------
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 2010 and 31 December 2009 is as follows:
Year ended Year ended
31 December 31 December
2010 2009
GBP000 GBP000
-------------------------------------------------- ----------- -----------
Loss on continuing activities before taxation (3,553.7) (1,761.3)
Loss on discontinued activities before taxation (2,780.8) (3,438.2)
Total loss on ordinary activities before taxation (6,334.5) (5,199.5)
At United Kingdom tax rate of 28% (1,773.7) (1,455.9)
Expenditure not allowable for tax purposes (173.8) 73.4
Unrecognised deferred tax asset on impairment of
assets - 13.2
Share option charge 11.5 112.3
Share of loss of joint venture 85.7 26.6
Effect of different tax rates of subsidiaries in
other jurisdictions (1.3) (2.3)
Non-taxable net gain on transfer of operations
from joint venture - (770.2)
Unrecognised tax losses 1,883.5 2,258.0
Utilisation of prior year losses (5.7) (152.8)
Write back of investment impairment - (41.5)
Research and development tax credits (263.9) (232.5)
Disallowed loss on disposal of investments (8.4) -
-------------------------------------------------- ----------- -----------
Total tax income reported in consolidated income
statement (246.1) (171.7)
-------------------------------------------------- ----------- -----------
The Group has trading tax losses of GBP57.2m (2009: GBP39.9m)
that are available indefinitely for offset against future taxable
profits of the same trade in the companies in which they arose. The
value of the unrecognised trading tax losses at the current tax
rate is GBP15.4m (2009: GBP11.2m). Deferred tax assets have not
been recognised in respect of these trading losses as the companies
with losses are not forecast to generate taxable profits for
several years and the losses are not transferrable. In addition,
the Group has capital tax losses of GBP13.4m (2009: GBP17.6m)
available for offset against future capital gains. Deferred tax
assets have not been recognised in respect of these capital losses
as they are not expected to be utilised in the foreseeable future.
The UK Government has announced that the future rate of Corporation
Tax will fall to 23% by 2014. If enacted, this would have no
material affect as no deferred tax asset is recognised.
9. Loss per ordinary share
Year ended Year ended
31 December 31 December
2010 2009
For Group Number Number
------------------------------------------- ----------- -----------
Weighted average number of shares in issue 126,481,574 126,438,697
------------------------------------------- ----------- -----------
Pence Pence
-------------------------------------------- ------ ------
Loss per ordinary share - basic and diluted (4.81) (3.98)
-------------------------------------------- ------ ------
Year ended Year ended
31 December 31 December
2010 2009
Restated
For Group from continuing operations Number Number
------------------------------------------- ----------- -----------
Weighted average number of shares in issue 126,481,574 126,438,697
------------------------------------------- ----------- -----------
Pence Pence
-------------------------------------------- ------ ------
Loss per ordinary share - basic and diluted (2.62) (1.29)
-------------------------------------------- ------ ------
The number of shares in issue at 31 December 2010 was
126,675,219 (2009: 126,675,219). For the purposes of calculating
the loss per ordinary share the weighted average number of shares
excludes 193,645 shares (2009: 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 Year ended
31 December 31 December
2010 2009
Restated
GBP000 GBP000
--------------------------------------------------- ----------- -----------
Loss for the period attributable to equity holders
of the parent from continuing operations (3,317.8) (1,630.5)
Loss for the period attributable to equity holders
of the parent from discontinued operations (2,770.6) (3,397.2)
--------------------------------------------------- ----------- -----------
Total loss for the period attributable to equity
holders of the parent (6,088.4) (5,027.7)
--------------------------------------------------- ----------- -----------
10. Property, plant and equipment
Motor Plant and Fixtures
vehicles machinery and fittings Total
Group GBP000 GBP000 GBP000 GBP000
--------------------------- -------- --------- ------------ -------
Cost
At 1 January 2009 33.6 387.9 200.2 621.7
Additions 11.8 37.2 12.0 61.0
Acquired from D1-BP
Fuel Crops 29.6 68.0 5.1 102.7
Disposal (0.4) (23.9) (133.2) (157.5)
Reclassify assets
between categories - 7.9 (7.9) -
Foreign exchange movements 0.8 (2.3) (1.4) (2.9)
--------------------------- -------- --------- ------------ -------
At 31 December 2009 75.4 474.8 74.8 625.0
--------------------------- -------- --------- ------------ -------
Additions 25.5 41.2 0.2 66.9
Disposal (42.2) (221.4) (48.9) (312.5)
Foreign exchange movements 3.5 12.4 0.6 16.5
--------------------------- -------- --------- ------------ -------
At 31 December 2010 62.2 307.0 26.7 395.9
--------------------------- -------- --------- ------------ -------
Accumulated depreciation
At 1 January 2009 29.6 55.8 34.0 119.4
Charge for the year 10.6 174.2 28.6 213.4
Reclassify between
categories - (20.1) 20.1 -
Elimination on disposal (12.2) (51.8) (40.6) (104.6)
Foreign exchange movements - (1.1) (1.3) (2.4)
--------------------------- -------- --------- ------------ -------
At 31 December 2009 28.0 157.0 40.8 225.8
--------------------------- -------- --------- ------------ -------
Charge for the year 22.8 101.3 10.8 134.9
Elimination on disposal (27.3) (79.5) (36.9) (143.7)
Foreign exchange movements 1.2 7.3 1.2 9.7
--------------------------- -------- --------- ------------ -------
At 31 December 2010 24.7 186.1 15.9 226.7
--------------------------- -------- --------- ------------ -------
Net book value
At 31 December 2010 37.5 120.9 10.8 169.2
--------------------------- -------- --------- ------------ -------
At 31 December 2009 47.4 317.8 34.0 399.2
--------------------------- -------- --------- ------------ -------
At 1 January 2009 4.0 332.1 166.2 502.3
--------------------------- -------- --------- ------------ -------
Plant Fixtures
and and
machinery fittings Total
Company GBP000 GBP000 GBP000
--------------------------------------- --------- -------- ------
Cost
At 1 January 2009 and 31 December 2009 5.8 18.0 23.8
Additions 28.3 - 28.3
Disposals (5.8) (18.0) (23.8)
--------------------------------------- --------- -------- ------
At 31 December 2010 28.3 - 28.3
--------------------------------------- --------- -------- ------
Accumulated depreciation
At 1 January 2009 1.0 2.6 3.6
Charge for the year 1.9 6.1 8.0
--------------------------------------- --------- -------- ------
At 31 December 2009 2.9 8.7 11.6
--------------------------------------- --------- -------- ------
Charge for the year 3.5 4.0 7.5
Disposals (4.2) (12.7) (16.9)
--------------------------------------- --------- -------- ------
At 31 December 2010 2.2 - 2.2
--------------------------------------- --------- -------- ------
Net book value
At 31 December 2010 26.1 - 26.1
--------------------------------------- --------- -------- ------
At 31 December 2009 2.9 9.3 12.2
--------------------------------------- --------- -------- ------
At 1 January 2009 4.8 15.4 20.2
--------------------------------------- --------- -------- ------
11. Intangible assets
Group Software
licences Goodwill Total
GBP000 GBP000 GBP000
--------------------------- -------- -------- ------
Cost
At 1 January 2009 91.4 64.1 155.5
Disposals (56.7) - (56.7)
Foreign exchange movements (0.1) - (0.1)
--------------------------- -------- -------- ------
At 31 December 2009 34.6 64.1 98.7
--------------------------- -------- -------- ------
Disposals (7.5) - (7.5)
Foreign exchange movements (0.7) - (0.7)
--------------------------- -------- -------- ------
At 31 December 2010 26.4 64.1 90.5
--------------------------- -------- -------- ------
Accumulated amortisation
At 1 January 2009 84.8 64.1 148.9
Charge for the year 4.0 - 4.0
Disposals (56.7) - (56.7)
At 31 December 2009 32.1 64.1 96.2
--------------------------- -------- -------- ------
Charge for the year 0.7 - 0.7
Disposals (6.0) - (6.0)
Foreign exchange movements (0.4) - (0.4)
--------------------------- -------- -------- ------
At 31 December 2010 26.4 64.1 90.5
--------------------------- -------- -------- ------
Net book value
At 31 December 2010 - - -
--------------------------- -------- -------- ------
At 31 December 2009 2.5 - 2.5
--------------------------- -------- -------- ------
At 1 January 2009 6.6 - 6.6
--------------------------- -------- -------- ------
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 took the decision to impair the
carrying value of the goodwill in 2008 in light of the decision to
cease refining and trading operations in the UK.
In 2008, software licences used in the refining and trading
activities were impaired following the decision to close this
operation.
The Company had no recognised intangible assets in 2009 or
2010.
12. Investments in subsidiaries and jointly controlled
entities
The Company ultimately owns more than 10% of the share capital
of the following companies:
Holding
Nature of Country of Shareholder by D1
Name business incorporation class Oils plc Percentage
-------------- ----------- -------------- ------------ --------- ----------
D1 (UK)
Limited Biofuels UK Ordinary Indirect 100%
D1 Oil
Subsidiary
Limited Biofuels UK Ordinary Direct 100%
D1 Oils Africa
(Pty)
Limited Biofuels Swaziland Ordinary Indirect 100%
D1 Oils Ghana
Pty Limited Dormant Ghana Ordinary Indirect 100%
D1 Oils India
Private
Limited Biofuels India Ordinary Indirect 100%
D1 Oils
Madagascar
SARL Biofuels Madagascar Ordinary Indirect 99%
D1 Oils
Malaysia Sdn
Bhd Dormant Malaysia Ordinary Indirect 50%
D1 Oils
Philippines
Inc Biofuels Philippines Ordinary Indirect 100%
D1 Oils Plant
Science
(Zambia)
Limited Biofuels Zambia Ordinary Indirect 100%
D1 Oils Plant
Science
Africa (Pty)
Limited Biofuels South Africa Ordinary Indirect 100%
D1 Oils South
Africa (Pty)
Limited Biofuels South Africa Ordinary Indirect 95%
PT D1 Oils
Plant Science
Indonesia Dormant Indonesia Ordinary Direct 100%
D1 Oils
Trading
Limited Biofuels UK Ordinary Direct 100%
D1 Oils Ltd
(Malawi) Biofuels Malawi Ordinary Indirect 100%
D1 Oils Fuel
Crops Biofuels
Limited investment UK Ordinary Indirect 100%
Fuel Crops
Limited Dormant UK Ordinary Indirect 100%
Middlesbrough
Oils UK
Limited Biofuels UK Ordinary Indirect 100%
D1 Mohan Bio
Oils Limited Biofuels India Ordinary Indirect 50%
D1 Williamson
Magor Bio
Fuel Limited Biofuels India Ordinary Indirect 50%
D1-BP Fuel
Crops South
Africa (Pty)
Limited Biofuels South Africa Ordinary Indirect 95%
D1-BP Fuel
Crops Zambia
Limited Biofuels Zambia Ordinary Indirect 100%
D1 Oils Fuel
Crops India
Private
Limited Biofuels India Ordinary Indirect 100%
D1-BP Fuel
Crops Asia
Pacific Pte
Limited Biofuels Singapore Ordinary Indirect 100%
PT D1 Oils
Indonesia Biofuels Indonesia Ordinary Indirect 100%
D1-BP Fuel
Crops
Malaysia SDN
BHD Dormant Malaysia Ordinary Indirect 100%
D1-BP Fuel
Crops
Philippines,
Inc Dormant Philippines Ordinary Indirect 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.
D1-BP
Fuel Crops Other
joint joint
venture ventures Total
Group GBP000 GBP000 GBP000
-------------------------------------- ---------- --------- -------
Cost
1 January 2009 - - -
Acquired through acquisition of D1-BP
Fuel Crops Limited - 301.1 301.1
Additional investment - - -
Share of joint ventures' results - (95.0) (95.0)
-------------------------------------- ---------- --------- -------
31 December 2009 - 206.1 206.1
-------------------------------------- ---------- --------- -------
Additional investment - 100.0 100.0
Share of joint ventures' results - (306.1) (306.1)
-------------------------------------- ---------- --------- -------
31 December 2010 - - -
-------------------------------------- ---------- --------- -------
At 1 January 2009, the Group was a 50% shareholder in D1-BP Fuel
Crops, a joint venture valued at GBPnil in the Group accounts. On
27 July 2009, the Group purchased BP International's 50% holding in
the share capital of D1-BP Fuel Crops.
Part of the activities the Group acquired as part of the
acquisition of the whole of the D1-BP Fuel Crops share capital was
a joint venture. The joint venture is a 50:50 partnership with
Williamson Magor to undertake plantation activities in India. The
Group equity accounts for the joint venture.
Subsidiary
undertakings
Company GBP000
---------------------- ------------
Cost
1 January 2009 125.1
31 December 2009 125.1
---------------------- ------------
Additional investment 0.8
---------------------- ------------
31 December 2010 125.9
---------------------- ------------
The Group's share of the joint ventures' assets and liabilities
are as follows:
2010 2009
GBP000 GBP000
---------------------------------------------------------- ------- -------
Current assets 1,970.1 483.5
Non-current assets 31.8 32.2
Current liabilities (320.6) (309.6)
Non-current liabilities - -
---------------------------------------------------------- ------- -------
Share of net assets of joint ventures (before impairment) 1,681.3 206.1
---------------------------------------------------------- ------- -------
The Group's share of the joint ventures' losses is as
follows:
2010 2009
GBP000 GBP000
---------------------------------- ------- -------
Revenue 42.9 58.9
Net operating costs (616.3) (168.4)
---------------------------------- ------- -------
Operating loss (573.4) (109.5)
Net finance income 7.5 11.8
Loss before tax (565.9) (97.7)
Income tax credit - 2.7
Cap on joint venture losses 259.8 -
---------------------------------- ------- -------
Share of losses of joint ventures (306.1) (95.0)
---------------------------------- ------- -------
The Group did not recognise joint venture losses that would have
reduced the joint venture investment below GBPnil. The Group is not
exposed to joint venture liabilities in excess of its investment in
the joint venture.
The D1-Williamson Magor joint venture had no capital commitments
as at 31 December 2010.
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. On 2 July 2010, the Group sold the Bromborough
site and associated prepaid insurance for GBP2.2m. The sale price
net of selling costs was GBP48,100 below the carrying value of the
Bromborough site at 31 December 2009 and was recognised as an
impairment to the asset in 2010. The Group is also due to receive
up to GBP0.4m based on future production volumes from the site. The
royalty has been classified as a contingent asset due to
uncertainty about its timing and amount.
Freehold Prepaid
land insurance Total
As at 31 December 2010 GBP000 GBP000 GBP000
---------------------- -------- --------- ------
Bromborough - site - - -
---------------------- -------- --------- ------
Freehold Prepaid
land insurance Total
As at 31 December 2009 GBP000 GBP000 GBP000
----------------------- -------- --------- -------
Bromborough - site 2,000.0 124.0 2,124.0
----------------------- -------- --------- -------
14. Discontinued operations
By the end of 2010, the Group had two discontinued operations:
i) Refining & Trading; and ii) the agronomy and breeding
activities in Science & Technology.
Refining & Trading
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. The Middlesbrough site and
associated assets were sold in June 2009. On 2 July 2010, the Group
sold the Bromborough site and associated prepaid insurance for
GBP2.2m. The Group is also due to receive up to GBP0.4m based on
future production volumes from the site. The royalty has been
classified as a contingent asset due to uncertainty about its
timing and amount. At 31 December 2010, the refining and trading
operations remained classified as discontinued operations.
The results of the refining and trading activities of the Group
for the year are presented below:
Year ended Year ended
31 December 31 December
2010 2009
GBP000 GBP000
---------------------------------------------------- ----------- -----------
Revenue - 1.7
Expenses 971.1 (1,221.4)
---------------------------------------------------- ----------- -----------
Gross profit/(loss) 971.1 (1,219.7)
Asset impairment (48.1) (64.8)
---------------------------------------------------- ----------- -----------
Operating loss 923.0 (1,284.5)
Finance income - 405.0
Finance costs - (81.3)
---------------------------------------------------- ----------- -----------
Profit/(loss) before tax from discontinued operation 923.0 (960.8)
---------------------------------------------------- ----------- -----------
Tax income - 47.9
---------------------------------------------------- ----------- -----------
Profit/(loss) from discontinued operation 923.0 (912.9)
---------------------------------------------------- ----------- -----------
The 2009 expenses include the recovery of costs of GBP0.7m from
a settlement with a US company.
The assets and liabilities of the refining and trading
operations held for sale at 31 December are as follows:
As at As at
31 December 31 December
2010 2009
GBP000 GBP000
--------------------- ----------- -----------
Assets held for sale - 2,124.0
--------------------- ----------- -----------
The net cash flows incurred by the refining and trading
operations are as follows:
Year ended Year ended
31 December 31 December
2010 2009
GBP000 GBP000
-------------------------- ----------- -----------
Operating (244.0) (374.3)
Investing 1,695.4 953.0
Financing - (3,368.1)
-------------------------- ----------- -----------
Net cash inflow/(outflow) 1,451.4 (2,789.4)
-------------------------- ----------- -----------
Agronomy and breeding activities in Science & Technology
In December 2010, the Group completed the disposal of the
agronomy and breeding activities within the Science &
Technology division with an effective financial date of 1 November
2010. The disposed entities are known as 'Quinvita'. The disposal
was made on, inter alia, the following terms:
1. Retention by the Company of all agronomy and breeding
intellectual property developed to 1 November 2010;
2. The Company provided Quinvita with GBP0.8m working
capital;
3. Issue of GBP0.8m in redeemable preference shares by Quinvita
to the Company with a 5% coupon plus future royalties on Jatropha
related sales on a sliding scale over 10 years (15% to year 5; 10%
years 6 - 8; 5% years 9 - 10); and
4. The Group became a member of Quinvita's agronomy and breeding
platforms for a minimum of three years (subject to certain
conditions) giving the Group access to ongoing Jatropha
developments.
No value has been ascribed to the Redeemable Preference Shares
or the royalty entitlements at the year end on the basis that their
fair value is assessed as nil at this point in time.
The results of the discontinued portion of the Science &
Technology division for the year are presented below:
Year ended Year ended
31 December 31 December
2010 2009
GBP000 GBP000
---------------------------------------------------- ----------- -----------
Revenue 165.8 1,690.6
Expenses (3,014.8) (4,231.4)
---------------------------------------------------- ----------- -----------
Operating loss (2,849.0) (2,540.8)
Finance income 12.6 64.8
Finance costs (1.6) (1.3)
---------------------------------------------------- ----------- -----------
Trading loss before tax from discontinued operation (2,838.0) (2,477.3)
---------------------------------------------------- ----------- -----------
Tax income / (expense) 10.2 (7.0)
---------------------------------------------------- ----------- -----------
Trading loss from discontinued operation (2,827.8) (2,484.3)
---------------------------------------------------- ----------- -----------
Loss on disposal of agronomy and breeding business (865.8) -
Loss from discontinued operation (3,693.6) (2,484.3)
---------------------------------------------------- ----------- -----------
The net cash flows incurred by the discontinued portion of the
Science & Technology division are as follows:
Year ended Year ended
31 December 31 December
2010 2009
GBP000 GBP000
----------------- ----------- -----------
Operating (1,534.6) (2,425.5)
Investing (800.0) -
Financing - -
----------------- ----------- -----------
Net cash outflow (2,334.6) (2,425.5)
----------------- ----------- -----------
Losses and loss per share for the discontinued operations
The losses from discontinued operations are as follows:
Year ended Year ended
31 December 31 December
2010 2009
GBP000 GBP000
---------------------------------------------------- ----------- -----------
Profit/(loss) from discontinued Refining & Trading
operations 923.0 (912.9)
Loss from discontinued portion of Science &
Technology operations (3,693.6) (2,484.3)
Total loss from discontinued operations (2,770.6) (3,397.2)
---------------------------------------------------- ----------- -----------
The losses per share for the discontinued operations are as
follows:
Restated
Year ended Year ended
31 December 31 December
2010 2009
pence pence
----------------------------------------------- ----------- -----------
Basic and diluted from discontinued operations (2.19) (2.69)
----------------------------------------------- ----------- -----------
15. Inventories
Group Group Company Company
2010 2009 2010 2009
GBP000 GBP000 GBP000 GBP000
------------------- ------ ------ ------- -------
Raw material stock 163.0 77.6 - -
Work in progress - - - -
Finished product 48.4 23.3 - -
------------------- ------ ------ ------- -------
Total 211.4 100.9 - -
------------------- ------ ------ ------- -------
16. Trade and other receivables
Group Group Company Company
2010 2009 2010 2009
GBP000 GBP000 GBP000 GBP000
----------------------------------- ------ ------- ------- -------
Non-current
Amounts owed by Group undertakings - - 2,879.6 8,017.9
- - 2,879.6 8,017.9
----------------------------------- ------ ------- ------- -------
Current
Trade receivables 0.9 42.0 - -
Other receivables 788.4 661.9 301.6 48.7
Prepayments and accrued income 62.9 269.8 28.5 92.7
Taxation and social security 47.5 259.4 23.0 20.1
----------------------------------- ------ ------- ------- -------
899.7 1,233.1 353.1 161.5
----------------------------------- ------ ------- ------- -------
As at 31 December 2010 there were no impairments of trade
receivables with a nominal value of GBPnil (2009: GBP42,000). There
were no movements in provision for the impairment of receivables in
2010.
Individually Collectively
impaired impaired Total
GBP000 GBP000 GBP000
------------------- ------------ ------------ ------
At 1 January 2009 - - -
At 1 January 2010 - - -
------------------- ------------ ------------ ------
At 31 December 2010 - - -
------------------- ------------ ------------ ------
The Company had no impairment provisions at any time during 2010
or 2009.
As at 31 December 2010, the ageing of receivables is as
follows:
Group at 31 December 2010
Not yet Overdue Overdue Overdue
31-60
due <30 days days >60 days Total
GBP000 GBP000 GBP000 GBP000 GBP000
---------------------------- ------- -------- ------- -------- ------
Gross trade receivables as
at 31 December 2010 0.9 - - - 0.9
Other receivables 408.6 - - 379.8 788.4
Impairment - - - - -
---------------------------- ------- -------- ------- -------- ------
Net trade receivables as at
31 December 2010 409.5 - - 379.8 789.3
---------------------------- ------- -------- ------- -------- ------
Group at 31 December 2009
Not yet Overdue Overdue Overdue
31-60
due <30 days days >60 days Total
GBP000 GBP000 GBP000 GBP000 GBP000
---------------------------- ------- -------- ------- -------- ------
Gross trade receivables as
at 31 December 2009 11.0 - 25.3 5.7 42.0
Other receivables 661.9 - - - 661.9
Impairment - - - - -
---------------------------- ------- -------- ------- -------- ------
Net trade receivables as at
31 December 2009 672.9 - 25.3 5.7 703.9
---------------------------- ------- -------- ------- -------- ------
Company at 31 December 2010
Not yet Overdue Overdue Overdue
31-60
due <30 days days >60 days Total
GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------- ------- -------- ------- -------- -------
Amounts owed by Group
undertakings 2,879.6 - - - 2,879.6
Other receivables 353.1 - - - 353.1
------------------------------- ------- -------- ------- -------- -------
Net trade receivables as at
31 December 2010 3,232.7 - - - 3,232.7
------------------------------- ------- -------- ------- -------- -------
Company at 31 December 2009
Not yet Overdue Overdue Overdue
31-60
due <30 days days >60 days Total
GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------- ------- -------- ------- -------- -------
Amounts owed by Group
undertakings 8,017.9 - - - 8,017.9
Other receivables 48.7 - - - 48.7
Net trade receivables as at
31 December 2009 8,066.6 - - - 8,066.6
------------------------------- ------- -------- ------- -------- -------
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. Amounts
owed by Group companies that are not part of the ongoing plans for
the Group have been impaired to their estimated realisable amount.
The balance of amounts owed by Group undertakings of GBP3.2m
represents the balances due from various group companies 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 received payment of
all past due receivables in January 2011
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. The Group does not hold any collateral or other credit
enhancements over these balances nor does it have a legal right to
offset against any amounts owed by the Group to the counterparty.
Given the small number of debtors, the Group assesses the credit
risk from each debtor through scrutiny of the debtor's finances in
a manner commensurate with the level of credit exposure. The Group
has no specific concerns about its receivables that are neither
past due nor impaired.
17. Other financial assets
Group Group Company Company
2010 2009 2010 2009
GBP000 GBP000 GBP000 GBP000
------------------------ ------ ------- ------- -------
Other cash deposits - 4,534.1 - 4,534.1
Accrued bank interest - 13.5 - 13.5
Euro forward deposit(a) 90.0 - 90.0 -
------------------------ ------ ------- ------- -------
90.0 4,547.6 90.0 4,547.6
------------------------ ------ ------- ------- -------
(a) The Company deposited GBP90,000 with its foreign exchange
supplier as part of an arrangement to purchase Euro's at a fixed
price.
18. Cash and short-term deposits
Group Group Company Company
2010 2009 2010 2009
GBP000 GBP000 GBP000 GBP000
------------------------- ------- ------- ------- -------
Cash at bank and in hand 2,439.4 2,425.5 1,981.9 600.8
Short-term deposits 1,001.1 2,000.0 1,001.1 2,000.0
------------------------- ------- ------- ------- -------
3,440.5 4,425.5 2,983.0 2,600.8
------------------------- ------- ------- ------- -------
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. In practice these deposits are returnable on an at
call basis. The fair value of Group cash and cash equivalents at 31
December 2010 is GBP3,440,500 (2009: GBP4,425,500). The fair value
of Company cash and cash equivalents at 31 December 2010 is
GBP2,983,000 (2009: GBP2,600,800).
19. Trade and other payables
Group Group Company Company
2010 2009 2010 2009
GBP000 GBP000 GBP000 GBP000
----------------------------- ------ ------ ------- -------
Current
Trade payables 96.1 364.4 87.4 174.6
Other payables 214.4 91.5 198.9 -
Taxation and social security 26.2 167.3 29.6 48.0
----------------------------- ------ ------ ------- -------
336.7 623.2 315.9 222.6
----------------------------- ------ ------ ------- -------
Trade payables are non-interest bearing and the average creditor
days is 22.
20. Provisions
Group Contract Group
Redundancy settlement Onerous contractual
provision provision
(a) (b) Contracts(c) commitments
GBP000 GBP000 GBP000 GBP000
---------------------- ---------- ---------- ------------ -----------
Current
At 1 January 2010 154.0 310.3 1,332.2 1,796.5
Used in the year (130.0) (60.3) - (190.3)
Additions in the year - - - -
Released in the year - - (1,332.2) (1,332.2)
---------------------- ---------- ---------- ------------ -----------
At 31 December 2010 24.0 250.0 - 274.0
---------------------- ---------- ---------- ------------ -----------
(a) (The redundancy provision covers redundancy plans announced in 2009 but yet to be finalised.)
(b) (The contract settlement provision covers possible settlement of various contracts. The details are not disclosed as they are commercially sensitive and may influence the outcome of the matters.)
(c) (The onerous contract provision related to the Bromborough site. It was released following the sale of the site.)
Company Contract Company
Redundancy settlement contractual
provision
(a) Provision(b) commitments
GBP000 GBP000 GBP000
-------------------- ---------- ------------ -----------
Current
At 1 January 2010 154.0 250.0 404.0
Used in the year (130.0) - (130.0)
-------------------- ---------- ------------ -----------
At 31 December 2010 24.0 250.0 274.0
-------------------- ---------- ------------ -----------
(a) The redundancy provision covers redundancy plans announced in 2009 but yet to be finalised.
(b) The contract settlement provision covers possible settlement of various contracts.
21. Operating lease commitments
Future minimum rentals payable under non-cancellable operating
leases as at 31 December 2010 are as follows:
Group Group Group Group
Plant Plant
Land and and Land and and
buildings equipment buildings equipment
2010 2010 2009 2009
GBP000 GBP000 GBP000 GBP000
--------------------------------- --------- --------- --------- ---------
Within one year 158.4 1.1 410.1 2.2
After one year but not more than
five years 102.5 0.3 720.3 3.5
After more than five years 15.7 - 1,185.2 -
--------------------------------- --------- --------- --------- ---------
276.6 1.4 2,315.6 5.7
--------------------------------- --------- --------- --------- ---------
The Group had entered into commercial leases on certain property
and items of equipment. 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 equipment 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 Land and
buildings buildings
2010 2009
GBP000 GBP000
-------------------------------------------- --------- ---------
Within one year 21.8 24.5
After one year but not more than five years - -
After more than five years - -
-------------------------------------------- --------- ---------
21.8 24.5
-------------------------------------------- --------- ---------
22. Issued share capital
Group Group Group
Group and and and and
Company Company Company Company
2010 2009 2010 2009
No. of No. of
shares shares GBP000 GBP000
---------------------------------- ----------- ----------- ------- -------
Called up, allotted and fully paid
At 1 January 126,675,219 126,625,219 1,266.8 1,266.3
Issued on exercise of share
options - 50,000 - 0.5
At 31 December 126,675,219 126,675,219 1,266.8 1,266.8
---------------------------------- ----------- ----------- ------- -------
The Company has one class of ordinary shares which carry no
rights to fixed income.
23. Equity
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 GBP484,000. Shares held
by the trust can be purchased by employees exercising options under
the Group's option scheme. At 31 December 2010, the shares had a
market value of GBP10,670.
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 at 31 December 2009 arose on the
Group's acquisition of BP International's 50% of the D1-BP Joint
Venture. Existing share options were replaced with 24,119,088 share
options with exercise prices of between 13p and 18.5p as part of
the consideration for the acquisition.
Currency translation reserve
The currency translation reserve captures currency movements
between the presentation currency of the Group, British Pounds, and
the functional currencies used by the Group.
24. Related party disclosures and principal subsidiary
undertakings
Intra-group loans with subsidiary companies
During the year, the Company provided net funding to subsidiary
companies or received net funding from subsidiary companies within
the Group as follows:
2010 2009
GBP000 GBP000
--------------------------------------- --------- -------
D1 Oils Trading Limited (1,352.3) 5,330.2
D1 Oils Plant Science Limited 2,704.6 2,425.5
D1 (UK) Limited (144.0) -
D1 Oil Subsidiary Limited (1,256.7) 491.4
PT D1 Oils Indonesia 28.6 -
D1 Oils Plant Science (Zambia) Limited 605.2 -
Fuel Crops Limited (165.0) -
--------------------------------------- --------- -------
Total 420.4 8,247.1
--------------------------------------- --------- -------
During the year, D1 Oils Plant Science Limited repaid
GBP5,095,098 of its loan to D1 Oils plc, primarily through the
transfer of animal feed assets to D1 Oils plc. Prior to the
disposal of the agronomy and breeding business, the remaining
intra-group loans to D1 Oils Plant Science Limited totalling
GBP412,880 were written off. D1 Oils Plant Science Limited was one
of the companies sold.
At 31 December, net funding balances due to the Company from
subsidiary undertakings or by the Company to subsidiary
undertakings were as follows:
2010 2009
GBP000 GBP000
--------------------------------------- ---------- ----------
D1 Oils Trading Limited 55,445.7 56,798.0
D1 Oils Plant Science Limited - 2,803.4
D1 (UK) Limited 15,809.9 15,953.9
D1 Oil Subsidiary Limited 9,666.5 10,923.2
PT Oils Indonesia 28.6 -
D1 Oils Plant Science (Zambia) Limited 605.2 -
Fuel Crops Limited (165.0) -
Middlesbrough Oils UK Limited (2,500.0) (2,500.0)
Impairment of receivables (72,326.1) (77,853.5)
--------------------------------------- ---------- ----------
Total 6,564.8 6,125.0
--------------------------------------- ---------- ----------
The Company does not anticipate any repayments being made within
one year. Balances in excess of expected repayments have been
impaired. The funding is not subject to any interest charge. The
impairment charge in 2010 was GBPnil (2009: GBPnil).
Disposal of agronomy and breeding business
Background
In December 2010, the Group disposed of its agronomy and
breeding research business following the conclusion by the Board
that the Group was unable to afford the ongoing costs of
approximately GBP1.5m per annum in the absence of substantial
revenue generation.
The agronomy and breeding business was acquired by entities
controlled by three key management personnel, including Henk Joos,
a director D1 Oils plc, and Vincent Volckaert, a director of a
subsidiary of D1 Oils plc. Post disposal, the agronomy and breeding
business was renamed "Quinvita".
Along with the disposal of the assets relating to the agronomy
and breeding business, this business was sold with cash or an
entitlement to receive cash of GBP0.8m in exchange for Redeemable
Preference Shares in the head entity of the Quinvita Group. The
Board estimated that an orderly wind up of these activities would
cost at least GBP1.1m and create substantial challenges to access
to comparable know-how.
Immediately prior to the disposal to Quinvita, all loans between
continuing group companies and exiting companies were written
off.
Transfer of animal feed activities from D1 Oils Plant Science
Limited to D1 Oils plc
One of the entities disposed of to Quinvita, D1 Oils Plant
Science Limited, owned and operated the Group's animal feed
research activity. Prior to the disposal, all assets and agreements
relating to the animal feed activity were sold by D1 Oils Plant
Science Limited to D1 Oils plc in exchange for a reduction in the
loan owed by D1 Oils Plant Science Limited to D1 Oils plc as
consideration. In addition to intangible assets, the following
assets were transferred at:
GBP000
------------------------------ ------
Property, plant and equipment 22.8
Other receivables 252.9
Total 275.7
------------------------------ ------
Disposal of agronomy and breeding business to key management
personnel
Under the terms of the transaction, the Group companies in
Belgium, the Netherlands, Cape Verde, Thailand and Malawi solely
undertaking agronomy and breeding activities were sold along with
certain other related assets in India and Indonesia (hereafter "the
A&B Business"). The transaction was approved by shareholders on
10 December 2010 with the financial handover effective on 1
November 2010.
In consideration for the purchase of the A&B Business,
Quinvita issued GBP0.8m in nominal value of Redeemable Preference
Shares to the Company. At 31 December 2010, the Redeemable
Preference Shares were fair valued at GBPnil. The Redeemable
Preference Shares are redeemable by 1 November 2015. A cumulative
annual compound dividend of 5 per cent is payable by no later than
1 November 2015 based on the outstanding par value of the
Redeemable Preference Shares.
The Redeemable Preference Shares will also become redeemable, in
the event there is a change of control in either the voting rights
or shareholding of Quinvita. On a change of control, in addition to
redemption of the Redeemable Preference Shares, Quinvita will also
pay the Company two times the outstanding par value of the
Redeemable Preference Shares.
In the event of an equity fund raising which results in a third
party holding more than 50 per cent of the shares in Quinvita, but
(inter alia) total funds raised are less then GBP15m, Quinvita will
redeem a part or all of the Redeemable Preference Shares. At least
50 per cent of the outstanding Redeemable Preference Shares
(including the accrued dividends) in the case of a GBP5m
fundraising, 75 per cent of the same where GBP10m is raised, 100
per cent in the case of a GBP15m fundraising and pro-rata for any
amount in between.
In exchange for the issue of the Redeemable Preference Shares,
the Company provided Quinvita with GBP0.8m of working capital cash.
This included the cash balances of the A&B Business of GBP0.7m
with the remainder payable in two further tranches - the last of
which was paid to Quinvita in March 2011. At 31 December 2010, the
Company owed GBP0.1m to Quinvita. Including the cash, the companies
sold in this transaction contained the following assets and
liabilities at 1 November 2010.
GBP000
------------------------------ -------
Property, plant and equipment 164.4
Intangible assets 0.5
Trade and other receivables 101.1
Cash 800.0
Trade and other payables (131.6)
Accruals and deferred income (8.0)
Provisions (60.6)
Net assets 865.8
------------------------------ -------
Quinvita is required to pay the Company royalties on all
Jatropha revenues generated by Quinvita at rates of:
-- 15 per cent from 1 November 2010 to 31 October 2015
-- 10 per cent from 1 November 2015 to 31 October 2018
-- 5 per cent from 1 November 2018 to 31 October 2020
The Company has not recognised assets in relation to the
Redeemable Preference Shares or the royalties due to uncertainty of
timing and amount of cash flows from these assets while Quinvita is
a fledgling business. These items are disclosed as contingent
assets.
With no consideration recognised by the Group for Redeemable
Preference Shares or revenue royalties, the loss incurred by the
Group on disposal of the A&B Business was GBP0.9m.
The Group has retained ownership of all intellectual property
which has been developed across the Group up to 1 November 2010,
where this intellectual property is used by the Group's retained
businesses. The Group has given customary non-compete undertakings
in relation to the agronomy and breeding activities.
The Company has retained the animal feed programme including all
associated tangible assets and intellectual property. Quinvita is
exclusively licensed to sub-license the use of the animal feed
technology globally, subject to the Group retaining the right to
use the technology for its own business purposes (including for
purposes of the Group building and operating its own animal feed
extraction plants). Quinvita's license lasts for a period of 15
years after the first extraction plant becomes operational, or
until 31 December 2027 (whichever is earlier). The sub-licences
that Quinvita grants to third parties will themselves be valid for
up to 20 years. Quinvita will pay the company a royalty on all
sub-licensing revenue received by Quinvita at the rate of 20 per
cent for the first 5 years of each sub-licence and 15 per cent
thereafter.
The Group has joined Quinvita's membership platforms for a
minimum of three years (subject to certain conditions) to maintain
access to agronomy knowledge, developments and new seed varieties
developed in the future by Quinvita. The Group is able to purchase
seeds from Quinvita at preferential rates.
In order to secure funding for continued research, the A&B
Business successfully submitted a proposal to the Dutch government
for a grant of up to GBP200,000 in relation to a project in Cape
Verde for the selection and production of superior Jatropha curcas
seed. The Group supported this application by providing an
indemnity and certain security in favour of Agriom BV (the A&B
Business's partner in the proposed project) (the "Agriverde
Guarantee"). In return for keeping the Agriverde Guarantee in
place, Quinvita has agreed to provide its platform services at no
cost for a period of 18 months following completion of the Disposal
or, if earlier, until the Agriverde Guarantee ceases to be a
contingent liability of the Group. However, in the event the
Agriverde Guarantee is enforced and the Group suffers or incurs any
loss or liability, Quinvita shall issue to the Company an
additional number of Redeemable Preference Shares at par as is
equivalent in value to the loss or liability so incurred.
Director remuneration
Any other related party transaction involving Directors related
to remuneration and is shown in note 6.
25. 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, 70% for awards
granted after 1 January 2008 but before 1 January 2009 and 95% for
awards granted after 1 January 2009. Appropriate risk free rates
(as defined by the Bank of England) between 2.1% 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 2010 is GBP41,200
(2009: GBP401,000). 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.
2010 2010 2009 2009
Number WAEP Number WAEP
--------------------------- ----------- ---- ----------- ----
Outstanding at 1 January 11,419,985 0.57 12,171,570 0.77
Granted during the year - - 1,917,500 0.10
Forfeited during the year (5,586,807) 0.34 (2,619,085) 1.13
Exercised - - (50,000) 0.01
--------------------------- ----------- ---- ----------- ----
Outstanding at 31 December 5,833,178 0.79 11,419,985 0.57
--------------------------- ----------- ---- ----------- ----
Exercisable at 31 December 5,060,151 0.88 6,195,550 0.89
--------------------------- ----------- ---- ----------- ----
The range of exercise prices for options outstanding at the end
of the year was 10p - 297.5p. The weighted average remaining
contractual life of the options in issue at 31 December 2010 is 6.8
years.
No options were granted in 2010.
BP International Limited share options
As part of the agreement to acquire the remaining of D1-BP Fuel
Crops Limited from BP International Limited on 27 July 2009, the
Company brought BP up to the 16 per cent entitlement of the issued
share capital of the Company. The options are exercisable at the
following prices:
Options Exercise price
------------------------- ---------------
6,029,772 ordinary shares 13p per share
6,029,772 ordinary shares 14p per share
6,029,772 ordinary shares 16p per share
6,029,772 ordinary shares 18.5p per share
------------------------- ---------------
These options are exercisable at any time between 27 July 2009
and 27 July 2019.
The fair value of the awards was calculated using the
Black-Scholes model. A volatility assumption of 87% was included in
the calculation and considered appropriate for the sector and age
of the Group. In forming the volatility assumption the Directors
considered the volatility of the share price over the three years
to the date of grant. An appropriate risk free rate as defined by
the Bank of England of 3.75% and a zero dividend yield are applied
to the calculation.
The total fair value of these options for the Group and the
Company was GBP1.0m and was all recognised in equity in the year to
31 December 2009.The following table illustrates the number and
weighted average exercise prices (WAEP) of, and movements in, these
options during the year.
2010 2010 2009 2009
Number WAEP Number WAEP
--------------------------- ---------- ---- ---------- ----
Outstanding at 1 January 24,119,088 0.15 - -
Granted during the year - - 24,119,088 0.15
--------------------------- ---------- ---- ---------- ----
Outstanding at 31 December 24,119,088 0.15 24,119,088 0.15
--------------------------- ---------- ---- ---------- ----
Exercisable at 31 December 24,119,088 0.15 24,119,088 0.15
--------------------------- ---------- ---- ---------- ----
The weighted average fair value per option of options granted to
BP International Limited during the year was 15p. The range of
exercise prices for options outstanding at the end of the year was
13p - 18.5p. The weighted average remaining contractual life of the
options in issue at 31 December 2010 is 8.6 years.
26. Financial risk management objectives and policies
The main risks arising from the Group's 2010 operations were
interest rate risk, liquidity risk, foreign currency translation
risk and certain commodity price risks. The main risk arising from
the Company's 2010 operations is interest rate risk.
Interest rate risk
'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 2010 totalled GBP2,439,400
(2009: GBP2,425,500) in the Group and GBP1,981,900 (2009:
GBP600,800) 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.
Increase/ Group Group Company Company
Effect Effect Effect Effect
decrease on loss on on loss on
before before
in floating tax equity tax equity
interest
rate GBP000 GBP000 GBP000 GBP000
----- ----------- -------- ------ -------- -------
2010 +0.5% 12.1 12.1 9.9 9.9
-0.5% (12.1) (12.1) (9.9) (9.9)
----- ----------- -------- ------ -------- -------
2009 +0.5% 12.1 12.1 3.0 3.0
-0.5% (12.1) (12.1) (3.0) (3.0)
----- ----------- -------- ------ -------- -------
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 2010 totalled GBP1,001,100 (2009: GBP6,534,100).
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/
Effect Effect
decrease on on
in term loss before
deposit tax equity
interest
rate GBP000 GBP000
----- --------- ----------- ------
2010 +1% 10.0 10.0
-1% (10.0) (10.0)
----- --------- ----------- ------
2009 +1% 65.3 65.3
-1% (65.3) (65.3)
----- --------- ----------- ------
Foreign exchange risk
During 2010, the Group entered into a forward contract for Euros
to cover the expenditure of its Belgian and Netherlands operations.
The forward contract was to purchase EUR1.0m at EUR1.1075/GBP1.00
during the year to 29 March 2011. In 2010, an expense of GBP31,800
was recognised to reflect the impact of the strengthened British
Pound against the Euro in relation to the outstanding forward
contract at 31 December 2010 (2009: GBPnil).
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.
The Group is almost solely financed by equity. The Group manages
liquidity risk by maintaining adequate reserves to meet short-term
funding requirements while investing excess funds in bank term
deposits. If required, these deposits can be recalled
immediately.
The table below summarises the maturity profile of the Group's
financial liabilities at 31 December 2010 and 2009 based on
contractual undiscounted payments. Interest rates on variable rate
loans are based on the rate prevailing at the balance sheet
date.
Less than
3 to 12 1 to 5
On demand 3 months months years > 5 years Total
Year ended 31
December 2010 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------------- --------- --------- ------- ------ --------- ------
Trade and other
payables - 96.1 - - - 96.1
-------------------- --------- --------- ------- ------ --------- ------
Less than
3 to 12 1 to 5
On demand 3 months months years > 5 years Total
Year ended 31
December 2009 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------------- --------- --------- ------- ------ --------- ------
Trade and other
payables - 364.4 - - - 364.4
-------------------- --------- --------- ------- ------ --------- ------
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 biofuels
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 Year ended
31 December 31 December
2010 2009
GBP000 GBP000
-------------------------------------- ----------- -----------
Loans and borrowings
Obligations under finance leases - -
Instalments due on mortgage - -
-------------------------------------- ----------- -----------
Total loans and borrowings - -
Equity 2,590.1 8,637.5
-------------------------------------- ----------- -----------
Total equity and loans and borrowings 2,590.1 8,637.5
-------------------------------------- ----------- -----------
Gearing ratio 0.0% 0.0%
-------------------------------------- ----------- -----------
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.
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 and Company's financial
instruments that are carried in the financial statements.
Group Book value Fair value Book value Fair value
2010 2010 2009 2009
GBP000 GBP000 GBP000 GBP000
------------------------------ ---------- ---------- ---------- ----------
Financial assets
Cash and short-term deposits 3,440.5 3,440.5 4,425.5 4,425.5
Long-term deposits and cash
collateral 90.0 90.0 4,547.6 4,547.6
Financial liabilities
Interest-bearing loans and - - - -
borrowings
Finance lease and hire - - - -
purchase agreements
------------------------------ ---------- ---------- ---------- ----------
Company Book value Fair value Book value Fair value
2010 2010 2009 2009
GBP000 GBP000 GBP000 GBP000
------------------------------ ---------- ---------- ---------- ----------
Financial assets
Cash and short-term deposits 2,983.0 2,983.0 2,600.8 2,600.8
Long-term deposits and cash
collateral 90.0 90.0 4,547.6 4,547.6
------------------------------ ---------- ---------- ---------- ----------
The fair value of the financial assets and financial liabilities
with standard terms and conditions and traded on active liquid
markets are determined with reference to quoted market prices. The
fair value of all the financial assets and financial liabilities
above were determined on this basis.
27. Contingent assets
At 31 December 2010, the Group had three contingent assets:
1. D1 Oils Trading Limited has commenced proceedings to recover
amounts due under a note, beneficial entitlement of which was
assigned to the company as a result of a previous settlement. The
note issuer has delayed payment of the note. D1 Oils Trading
Limited has not recognised an asset in relation to this note as the
amount and timing of cash flows from the note are uncertain. The
maximum amount recoverable by D1 under the note before interest is
US$1.2m.
2. In addition to the sale of the Bromborough refining site, the
buyer of the site agreed to pay D1 Oils Trading Limited a net
royalty of GBP0.4m plus VAT based on Bromborough's future
production volumes of biodiesel. The Group has not recognised an
asset in relation to this entitlement as the amount and timing of
cash flows are uncertain.
3. As part of the disposal of the agronomy and breeding
activities in the Science & Technology division in December
2010, the Company received Redeemable Preference Shares with a
nominal value of a GBP0.8m and a 5% coupon due for repayment in
2015. In addition, the Company is entitled to future royalties on
Jatropha related sales on a sliding scale over 10 years (15% to
year 5; 10% years 6 - 8; 5% years 9 - 10). The Group has not
recognised an asset in relation to Redeemable Preference Shares or
the royalties as the amount and timing of cash flows are
uncertain.
28. Contingent liabilities
At 31 December 2010, the Group had two contingent
liabilities:
1. As part of the sale of the Bromborough site, the lease
obligations for two parcels of land adjacent to the Bromborough
site were passed to the buyers. The two leases are first
cancellable in 2021. If the buyer defaults on these lease
obligations, the obligation may fall to D1 Oils plc. The maximum
exposure is GBP2.0m but various mitigations, such as sub-lets, are
available. This obligation remains contingent on the buyer
defaulting and the Board does not consider the risk sufficiently
likely to recognise a liability.
2. The Science & Technology division successfully submitted
a proposal to the Dutch government for a grant of up to GBP200,000
in relation to a project in Cape Verde for the selection and
production of superior Jatropha curcas seed. The Group supported
this application by providing an indemnity and certain security in
favour of Agriom BV (the partner in the proposed project) (the
"Agriverde Guarantee"). Upon disposal of the agronomy and breeding
business in the Science & Technology division, the Group
continued to secure the Agriverde Guarantee in exchange for
membership of the platform services provided by the disposed
business at no cost for a period of 18 months or, if earlier, until
the Agriverde Guarantee ceases to be a contingent liability of the
Group. In the event the Agriverde Guarantee is enforced and the
Group suffers or incurs any loss or liability, the disposed
agronomy and breeding business shall issue to the Company equity
equivalent in value to the loss or liability so incurred.
29. Capital commitments
At the end of the year capital commitments were:
2010 2009
GBP000 GBP000
----------------------------------------------- ------ ------
Contracted but not provided for in the accounts - -
----------------------------------------------- ------ ------
30. Acquisition of subsidiary
Note 30 provides an explanation of the 2009 comparative net gain
on transfer of operation from joint venture in the Consolidated
Income Statement and the payments due to vendors.
On 27 July 2009, the Group acquired 50% of the issued share
capital of D1-BP Fuel Crops Limited from BP International Limited
to bring the Group's total interest in the issued share capital of
D1-BP Fuel Crops Limited to 100%. D1-BP Fuel Crops Limited
(subsequently renamed D1 Fuel Crops Limited) is the parent company
of a group of companies involved in Jatropha plantation activities.
The transaction has been accounted for by the purchase method of
accounting.
At the time of the acquisition of the remaining 50% of issued
share capital in D1-BP Fuel Crops Limited on 27 July 2009, the
Group is also required to reassess the fair value of its original
50% investment in the Group. The carrying value of the original
investment was nil.
The accounting for the business combination is provisional. Due
to the nature and location of many of D1-BP Fuel Crops Limited's
operations, valuations of non-European acquired group's assets and
liabilities are yet to be finalised.
Prior to the acquisition of D1-BP Fuel Crops Limited by the
Group, the assets were written down to recoverable value by the
management of D1-BP Fuel Crops Limited.
2009 Book value Fair value
GBP000 GBP000
------------------------------------ ---------- ----------
Non-current assets
Property, plant and equipment 96.6 96.6
Investments accounted for using the
equity method 301.1 301.1
------------------------------------ ---------- ----------
397.7 397.7
Current assets
Inventories 59.7 59.7
Trade and other receivables 654.5 654.5
Cash and short-term deposits 5,493.1 5,493.1
------------------------------------ ---------- ----------
6,207.3 6,207.3
------------------------------------ ---------- ----------
Total assets 6,605.0 6,605.0
------------------------------------ ---------- ----------
Equities and liabilities
Current liabilities
Trade and other payables (989.3) (989.3)
Accruals and deferred income (878.8) (878.8)
------------------------------------ ---------- ----------
(1,868.1) (1,868.1)
------------------------------------ ---------- ----------
Total liabilities (1,868.1) (1,868.1)
------------------------------------ ---------- ----------
Net assets 4,736.9 4,736.9
------------------------------------ ---------- ----------
Consideration GBP000
------------------------------------ ---------- ----------
Cash 500.0
Deferred consideration (a) 461.4
Share options (b) 1,025.0
------------------------------------ ---------- ----------
Total consideration 1,986.4
------------------------------------ ---------- ----------
GBP000
---------------------------------- -------
Fair value of original investment 2,368.5
Negative goodwill on acquisition 382.1
---------------------------------- -------
Gain on original investment GBP000
----------------------------------- -------
Fair value of original investment 2,368.5
Investment carrying value prior to
27 July 2009 acquisition -
----------------------------------- -------
Gain on original investment 2,368.5
----------------------------------- -------
Total investment GBP000
----------------------------------- -------
Total gain on acquisition of D1-BP
Fuel Crops 2,750.6
----------------------------------- -------
(a) Deferred consideration is a payment of GBP30 for every tonne of the first 20,000 tonnes of crude Jatropha oil, up to maximum of 600,000, produced by the D1 group and sold to third parties. To the extent not already paid, the 600,000 deferred consideration is payable by D1 at the latest by 31 December 2014.
(b) Share option consideration consisted of four tranches of 6,029,772 share options with respective exercise prices of 13p, 14p, 16p and 18.5p. The share options are exercisable at any time up to 27 July 2019. The fair value of the awards was calculated using the Black-Scholes model. A volatility assumption of 87% was included in the calculation and considered appropriate for the sector and age of the Group. In forming the volatility assumption the Directors considered the volatility of the share price over the three years to the date of grant. An appropriate risk free rate as defined by the Bank of England of 3.75% and a zero dividend yield are applied to the calculation.
The Group acquired BP's 50% share of the D1-BP Fuel Crops group
to integrate its plantation activities into the Group and benefit
from its synergies with the existing plant science operation.
The excess of fair value over consideration resulted in a gain
on the acquisition of GBP2.8m (negative goodwill of GBP0.4m and
gain on investment GBP2.4m). The gain reflects the different
valuations and plans the joint venture partners had for the
business.
Of the acquired receivables, the gross amount receivable and
fair value was GBP654,500 with all amounts expected to be
collected.
As a result of the business combination, the pre-existing
contract for provision of plant science services from the Group to
the D1-BP Fuel Crops Limited group was terminated. Under this
arrangement, in 2009 prior to the 27 July 2009 acquisition, the
Group recognised revenue for services to the D1-BP Fuel Crops
Limited joint venture of GBP1,495,834.
The acquired D1-BP Fuel Crops Limited group contributed GBP0.05
to revenue and GBP0.9m loss to loss before tax for the period
between the date of acquisition and 31 December 2009.
If the acquisition of the company had been completed on 1
January 2009, Group revenues for the period would have been
GBP1.8m. The Group loss would not have changed as the 2009
pre-acquisition loss of the D1-BP Fuel Crops Limited group of
GBP7.9m would have been offset by an additional gain on acquisition
of the same amount.
The amounts payable to vendors is discounted to present value.
The amounts payable will unwind to GBP600,000 by 31 December 2014
at the latest. At the balance sheet date, the discounted amounts
payable to BP were as follows:
2010 2009
GBP000 GBP000
--------------------------------- ------- -------
Payable to vendors - current (4.1) (51.0)
Payable to vendors - non current (476.5) (432.9)
Total (480.6) (483.9)
--------------------------------- ------- -------
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR LLFLRRAIDFIL
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