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D1 Oils Plc (NEOS)

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Tuesday 28 March, 2006

D1 Oils Plc

Final Results

D1 Oils Plc
28 March 2006


28 March 2006


                                  D1 Oils plc

               Full Year Results for year ended 31 December 2005


D1 Oils plc, the UK-based global producer of biodiesel, announces its full year
results for the year ended 31 December 2005.

Highlights

   •Solid performance on key targets for agronomy and refining businesses:
        •Rights obtained to 37,000 hectares planted to 18 March 2006
        •Forecast of 42,000 hectares by 31 March 2006
        •First D1 20 refinery deployed in Middlesbrough on time and within
        budget
        •On track to deliver 9 D1 20 refinery units by December 2006
   •Net cash at 31 December 2005 of £23.4m
   •Organisational clarity enhanced: agronomy, refining, trading
   •Our combination of activities gives us particular strength within a
    fragmented industry
   •Positive market environment for biodiesel driven by high energy prices
    and government support
   •Well positioned to capitalise on growth opportunities in biodiesel market


Key Financials
                                               2005                       2004
Turnover                                       £0.4m              nil previously
Administrative expenses                        £8.1m                      £3.0m
Loss before tax                                £7.5m                      £3.1m
Loss per share                                 28.3p                      47.5p
Net cash at 31 December                       £23.4m                      £9.6m



Karl Watkin, Chairman:

'We have made excellent progress in developing D1's agronomy and refining
strengths against the backdrop of growing worldwide awareness of the potential
of renewable fuels to meet future energy needs. D1's strategy has been built on
an 'earth to engine' approach: our agronomy experience and refining expertise,
the latter now proven across a range of crops, have both strengthened
significantly in the year. We are augmenting this with a third key business
driver - the trading of seeds and seedlings, seedcake, crude vegetable oils and
biodiesel. Our efforts are now focused on building upon this solid foundation to
develop the global business footprint and achieve profitability in 2007.'


Enquiries:
D1 Oils plc   Graham Prince                   07973 323840
              Communications Director         c/o Brunswick on 28/03/06
              Elliott Mannis                  020 7404 5959
              Chief Executive Officer         c/o Brunswick on 28/03/06
              Richard Gudgeon                 020 7404 5959
              Acting Finance Director
Brunswick     Gill Ackers                     020 7404 5959
              Helen Barnes                    020 7404 5959


An interview with Elliott Mannis, CEO, in video, audio and transcript is
available on www.d1plc.com and www.cantos.com.

Notes to editors

D1 Oils plc is a UK-based global producer of biodiesel. We are building a global
supply chain and network that is sustainable and delivers value from
'earth-to-engine'. Our operations cover agronomy, refining and trading. We are
pioneering the science, planting and production of inedible vegetable oils; we
design, build, own, operate and market biodiesel refineries; and we source,
transport and trade seeds and seedlings, seedcake, crude vegetable oils and
biodiesel. Our vision is to be the world's leading biodiesel business.


Report of the Chairman, Karl Watkin, and the

Chief Executive Officer, Elliott Mannis


During 2005, the first full year of D1's operation as a public company, we made
good progress in establishing the foundations on which to build our global
biodiesel business. We achieved our key planting and refining targets and learnt
much about where and how to prioritise our activities. Subsequent to the year
end, our management, led by a new Chief Executive, reaffirmed our intention to
be a global leader in biodiesel. We now strive to take advantage of the growing
international push for renewable fuels. Our strategy is firmly set on delivering
value from earth to engine through our three core activities of agronomy,
refining and trading.


In agronomy, we are pioneering the science, planting and production of inedible
vegetable oils. Our refining business designs, builds, operates and markets our
refinery technology. We are exploring options to put in place a trading business
that will source, transport and trade the commodities necessary to support our
agronomy and refining operations. Our activities in each of these business areas
have clear investment and return hurdles, which require business units to
address both short term profitability and longer term strategic positioning and
returns.


The fundamental strength of the three business units will enable us to deliver
value at each stage from earth to engine. We will report and review our business
results according to this structure henceforth. We begin 2006 with our direction
reaffirmed, and our worldwide operations on a solid footing to build a
profitable and sustainable business over the long term.


Operations

We achieved our key overall goals in agronomy and refining. As of 18 March 2006,
we have planted or obtained the rights to offtake from a total of 37,000
hectares of jatropha planting worldwide, and are forecasting to have 42,000
hectares by 31 March. Our D1 20 refinery successfully completed its initial
trials to produce biodiesel from rapeseed oil in April 2005, and by December had
successfully completed refining tests for soy and palm. On 21 March we announced
that we had successfully processed jatropha oil to EN14214 standard. We began
construction of our first four commercial D1 20 refineries at the end of 2005.
During February 2006 the first unit was deployed to our site in Middlesbrough,
and is currently being commissioned and tested. Our UK refinery deployments are
on time and on budget.


Our business overseas is presently focused on three regional markets: India,
Southern Africa and South East Asia. In India our principal relationships are in
capital efficient joint ventures with local commercial partners. In Southern
Africa we have three target markets, being South Africa, Zambia and Swaziland,
and our work is supported by national government and tribal councils. The
business in South East Asia is at an early stage and we are developing
relationships with substantial partners in a number of key markets.


Finances

During the year we raised additional funding of £24.4m net of expenses. Net cash
at 31 December was £23.4m. The loss for the year was £7.5m and reflects
continuing investment for future growth.


Management

There were a number of management changes during the year, including the
appointment of Elliott Mannis as Chief Financial Officer and Stephen Douty as
Regional Director in July 2005 and the resignation of Mark Quinn as a Director
in September 2005.


Subsequent to the year end we announced the resignation of Philip Wood and the
appointment of Elliott Mannis as Chief Executive Officer. We have today
announced that Alex Worrall, a founder Director of the company, is leaving the
Board to pursue other business interests. We thank Mark, Philip and Alex for
their efforts and support in laying the foundations for D1.


Outlook

During 2005 energy prices and government initiatives worldwide moved the
biofuels market further in our favour. We are well positioned to seize the
opportunities for market growth that exist worldwide, and are focused on our
strategy to develop agronomy, refining and trading operations. Our combination
of these three activities within one global business gives us unique strength in
an industry that continues to be fragmented between agricultural businesses,
process contractors, refiners and commodity traders.

We have made a solid start to 2006. The Board is confident about the prospects
for the coming year. A key objective for the management team is to deliver a 
profit in 2007.

On behalf of the Board we would like to take this opportunity to thank our
executive management, our business teams, our partners and advisors for their
hard work and support over the year.

Karl Watkin                Elliott Mannis
Chairman                   Chief Executive Officer



Agronomy

During 2005 we initiated a major agronomy programme. This was focused on our
Product Development Centre in Coimbatore, India, and our work with leading
international plant breeders and tissue culture specialists in Holland.


The objective of this programme is to identify and produce our own high yielding
proprietary varieties of jatropha. Yields from planting wild seed are expected
to be modest. However, we are making good progress in our agronomy programme to
breed high yielding commercial varieties.

Up to 18 March 2006 we have planted or obtained the rights to offtake from
plantings of a total of 37,000 hectares of jatropha worldwide, and are
forecasting to have 42,000 hectares by 31 March. The position at 18 March is
summarised in the table below:

                Managed Plantations Contract Farming Seed Purchase and Oil Supply Agreements  Total
India                           -           10,000                                  15,000   25,000
Africa                      4,000                -                                       -    4,000
South East Asia                 -            6,000                                   2,000    8,000
Total

(hectares)                  4,000           16,000                                  17,000   37,000

Managed plantations are those farms where the land and labour is directly
controlled by D1. In contract farming individual farmers purchase seed and
seedlings from and enter into offtake agreements with D1. Trees are planted on
the farmers' own land. Typically planting is supported by bank finance without
recourse to D1 but facilitated by D1's offtake arrangements. Seed purchase and
oil supply agreements represent offtake contracts over existing jatropha 
planting.

The business anticipates further planting under existing arrangements each year.
In some instances pre-existing planting agreements have not been progressed. 
However, we continue to enter into new agreements for further planting that will
deliver greater value. We have recently concluded agronomy agreements including 
Williamson Magor in India, the Kachumu Tribal Council in Zambia and Petrotek in 
Indonesia. We are also exploring new markets including China, where we have
recently signed a Memorandum of Understanding (MOU) for a model farm.

Refining

Central to our refinery strategy is our modular biodiesel refinery, the D1 20.
The D1 20 is a stand-alone skid-mounted unit, capable of producing 8,000 tonnes
of biodiesel per year from a range of vegetable oil feedstocks using a
continuous process. The D1 20's technology and processes are proprietary and are
the result of several years' research and development in the UK.

During 2005 we commenced manufacturing of the first four D1 20 production units.
We delivered the first of these for commissioning to our new refinery centre in
Middlesbrough in February 2006 on time and within budget. We expect to deliver a
further three units to Middlesbrough by the end of June 2006. These units are 
now substantially complete. We are confident that we will produce a further five
units to meet our target of nine by December 2006.

The D1 20 has a capacity of 8,000 tonnes per annum, and the deployment of the
first cluster of four units will give our Middlesbrough site a total annual
production capacity of 32,000 tonnes. We purchased the site in Middlesbrough in
late 2005. The nine acre site is 800m from wharfs on the Tees and is located
close to existing rail sidings. The site has significant potential for expanding
refinery operations and clustering enables significant cost efficiencies. It
will be a showcase for our refinery technology, housing research and
development, final assembly and testing facilities for refinery units for
export, and training facilities for refinery crews from D1's international
operations and overseas partners and customers. The D1 20 refinery previously
situated in the North West of England will also be located at the site.

Having successfully completed 24x7 trials of our D1 20 test refinery in April
2005 to produce biodiesel from rapeseed oil meeting the European Union's EN14214
standard, we announced our intention in May to accelerate our refinery
development programme to enable the refinery to process a broader range of crude
vegetable oils. By the end of the year we successfully completed refining tests
for soy and palm, and on 21 March we announced the successful processing of 
jatropha to EN14214 standard biodiesel. These trials have demonstrated that our
proprietary refining and pre-processing technology is capable of dealing with a
range of potential food and non-food grade feedstocks.

Having conducted detailed refinery modeling, we believe that our D1 20s are best
deployed in clusters, thereby offering considerable economies of scale over
single unit operation. We have also embarked on a programme to deliver
production efficiencies by combining four or five D1 20s in order to deliver
higher production volumes. We believe that multiple deployment of the combined
units offers greater potential than the development of a D1 200.

Going forward we will both own and operate our refineries in our own right, and 
we will seek to project finance any such assets. We will also seek to market, 
licence and sell our refinery technology to others.


Trading

A world-class trading capability will be an important factor in our future
growth. Building capabilities in the transport and trade of seeds, seedlings,
and seedcake will underpin our expanding agronomy business. Similarly our
refinery business will not reach its full potential unless we have the
mechanisms and skills in place to obtain crude vegetable oil at the most
competitive prices and to secure offtake agreements for the sale of biodiesel on
the most advantageous terms. We are exploring a number of options to put a
trading capability in place.

During 2005 we began to build our experience in logistics and quality control
through a pilot toll processing programme with Dow Haltermann in Belgium,
whereby EN 14214 biodiesel was produced from rapeseed and sold to German
customers. The principal objective for the trading business in 2006 is to create
the global supply chain for nurseries, crude vegetable oil feedstocks and
biodiesel.

One additional area of focus for the trading business is that of carbon credits.
We are working with leading technical advisors to ensure that when D1 refineries
operate in developing countries these credits are secured. D1 should qualify for
credits by enabling fuel switching from fossil fuel to biodiesel. In addition
our jatropha agroforestry and planting programmes have the potential to produce
carbon credits through the CO2 absorbed by the jatropha trees.

Financial Review

The significant progress and development in the business is reflected in the
financial results for the year ended 31 December 2005.

The financial results have been prepared on a basis consistent with previous
periods according to United Kingdom Generally Accepted Accounting Principles (UK
- GAAP). The Group has adopted a new accounting policy related to its managed
plantations. The direct costs of site preparation and planting are being
capitalised into tangible fixed assets and then amortised over the useful life
of the trees, which is estimated at 30 years.

Total Group turnover of £0.4m (2004 - £nil) in the year to 31 December 2005
arose from the sale of biodiesel produced by the toll processing trial with Dow
Haltermann and by the D1 20 refinery during trials. Sales of biodiesel generated
a gross loss of £0.1m reflecting the high costs of trading in very small
quantities.

Administrative expenses of £8.1m (2004 - £3.0m) reflect the growth in the
operational team and efforts expended on business development. The cost of
feedstock and chemicals purchased for refinery testing, from which the biodiesel
produced was not subsequently sold, has been reflected as a development cost
within operating expenses. Interest earned of £0.7m relates to the monies on
deposit and arising from the share placing completed in June.

The loss on ordinary activities before and after taxation was £7.5m (2004 -
£3.1m) and the loss per ordinary share was 28.3p (2004 - 47.5p). As losses were
incurred, no corporation tax was payable.

Net cash '(Defined as Gross cash less mortgage)' on hand at 31 December was
£23.4m (2004 - £9.6m). Gross cash was £24.2m and there was a mortgage loan
payable of £0.8m. The net inflow in the year to 31 December was £14.7m (2004 -
£9.6m). The most significant element in the cash flow was the proceeds from the
share placing which was completed in June. £25.8m was raised before expenses of
£1.4m.

In addition to operating expenses, significant investment is being devoted to
the D1 20 refinery manufacturing programme. We are intending to project finance
our refinery investments and a debt marketing process is in hand. Total funds
invested into the construction of D1 20's as at 31 December 2005 amounted to
£1.4m.

CONSOLIDATED PROFIT AND LOSS ACCOUNT

For the year ended 31 December 2005

                                      Note       Year ended           Year ended
                                            31December 2005      31December 2004
                                                     £000                   £000
Turnover:
group and share of joint venture                    461.7                    -
Less: Share of joint venture                         (6.2)                   -
------------------------------     -------        ---------            ---------
Group turnover                                      415.5                    -
Cost of sales                                      (501.1)                   -
------------------------------     -------        ---------            ---------
Gross loss                                          (85.6)                   -
Administrative expenses                          (8,083.8)            (3,024.8)
------------------------------     -------        ---------            ---------
Operating loss                         3         (8,169.4)            (3,024.8)
Joint venture and associate:
Share of operating losses and goodwill
amortisation                          11            (51.6)                   -
Bank interest receivable                            764.1                 77.2
Bank interest payable                                   -               (116.7)
------------------------------     -------        ---------            ---------
Loss on ordinary activities
before taxation                                  (7,456.9)            (3,064.3)
Tax on loss on ordinary
activities                             6                -                    -
------------------------------     -------        ---------            ---------
Retained loss for the
financial year withdrawn from
reserves                             7, 17       (7,456.9)            (3,064.3)
------------------------------     -------        ---------            ---------
Loss per ordinary share
Basic and diluted loss
per ordinary share                      8            28.35p               47.53p
------------------------------     -------        ---------            ---------


All results derive from continuing operations.

During the previous period the holding company, D1 Oils plc, acquired a new
subsidiary D1 Oils Trading Limited. The profit and loss account has been
prepared using merger accounting and is presented on a pro forma basis as if the
group had been in existence throughout both the current and prior periods.
Further information is given in note 1.

A consolidated profit and loss account from the date of incorporation of the
holding company is given in note 23.


CONSOLIDATED STATEMENT OF TOTAL RECOGNISED

GAINS AND LOSSES

For the year ended 31 December 2005

                                                Year ended            Year ended
                                           31December 2005       31December 2004
                                                    £000                  £000
Loss for the
financial year -
Group                                           (7,405.3)             (3,064.3)
  - Associates and
    joint ventures                                 (51.6)                    -
Currency translation
difference on foreign currency net
investments                                        (29.9)                    -
------------------------------                   ---------             ---------
Total recognised
losses relating to the year                     (7,486.8)             (3,064.3)
------------------------------                   ---------             ---------

CONSOLIDATED BALANCE SHEET

As at 31 December 2005

                                          Note  31December 2005  31December 2004
                                                         £000             £000
Fixed assets
Intangible assets                          9             64.1             67.6
Tangible assets                           10          4,170.0            831.1
Other investments                         11             14.0                -
------------------------------         -------        ---------        ---------
                                                      4,248.1            898.7
------------------------------         -------        ---------        ---------
Current assets
Debtors                                   12            725.3             79.3
Raw material stock                                      126.3                -
Cash at bank and in hand                             24,281.4          9,562.4
------------------------------         -------        ---------        ---------
                                                     25,133.0          9,641.7
Creditors: amounts falling due
within one year                           13         (1,823.2)          (816.3)
------------------------------         -------        ---------        ---------
Net current assets                                   23,309.8          8,825.4
------------------------------         -------        ---------        ---------
Total assets less current
liabilities                                          27,557.9          9,724.1
Creditors: amounts falling due
after more than one year                  14           (840.0)           (31.8)
Provisions for liabilities and
charges:
Share of gross assets in joint
venture                                   11             75.0                -
Share of gross liabilities in joint
venture                                   11            (96.0)               -
Share of net liabilities in
associate                                 11             (5.6)               -
------------------------------         -------        ---------        ---------
                                                        (26.6)               
------------------------------         -------        ---------        ---------
Net assets                                           26,691.3          9,692.3
------------------------------         -------        ---------        ---------

Capital and reserves
Share capital                             16            312.3            214.9
Share premium                             17         37,104.7         12,808.4
Shares to be issued                       17            110.0                -
Merger reserve                            17            437.7            437.7
Own shares held                           17           (484.0)               -
Profit and loss account                17,18        (10,789.4)        (3,768.7)
------------------------------         -------        ---------        ---------
Total equity shareholders' funds                     26,691.3          9,692.3
------------------------------         -------        ---------        ---------

These financial statements were approved by the Board of Directors on 27 March
2006.

K E Watkin                      E M Mannis

Chairman                        Chief Executive Officer



COMPANY BALANCE SHEET

As at 31 December 2005

                                       Note  31December 2005     31December 2004
                                                      £000                £000
Fixed assets
Investments                            11            139.0               125.0
------------------------------      -------        ---------           ---------
Current assets
Debtors                                12         11,716.6             3,421.5
Cash at bank and in hand                          23,685.8             9,381.6
------------------------------      -------        ---------           ---------
                                                  35,402.4            12,803.1
Creditors: amounts falling due
within one year                        13           (388.4)             (360.6)
------------------------------      -------        ---------           ---------
Net current assets                                35,014.0            12,442.5
------------------------------      -------        ---------           ---------
Total assets less current
liabilities                                       35,153.0            12,567.5
------------------------------      -------        ---------           ---------
Net assets                                        35,153.0            12,567.5
------------------------------      -------        ---------           ---------

Capital and reserves
Called up share capital                16            312.3               214.9
Share premium                          17         37,104.7            12,808.4
Shares to be issued                    17            110.0                   -
Own shares held                        17           (484.0)                  -
Profit and loss account              17, 18       (1,890.0)             (455.8)
------------------------------      -------        ---------           ---------
Total equity shareholders' funds                  35,153.0            12,567.5
------------------------------      -------        ---------           ---------

These financial statements were approved by the Board of Directors on 27 March
2006.

K E Watkin                      E M Mannis

Chairman                        Chief Executive Officer


CONSOLIDATED CASH FLOW STATEMENT

For the year ended 31 December 2005

                                      Note       Year ended           Year ended
                                            31December 2005      31December 2004
                                                     £000                 £000
Net cash
outflow from
operating
activities                               I       (7,747.2)            (3,064.9)
Return on
investments
and servicing
of finance                              ii          764.1                (39.5)
Capital
expenditure
and financial
investment                              ii       (3,445.0)               (38.3)
Acquisitions                            ii          (25.0)                   -
------------------------------     -------        ---------            ---------
Cash outflow
before
financing                                       (10,453.1)            (3,142.7)
Financing                               ii       25,172.1             12,702.1
------------------------------     -------        ---------            ---------
Increase in
cash in the
period                             iii, iv       14,719.0              9,559.4
------------------------------     -------        ---------            ---------

The consolidated cash flow statement should be read in conjunction with the
notes to the consolidated cash flow statement on page 10.


NOTES TO THE CASH FLOW STATEMENTS

For the year ended 31 December 2005


i) RECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW FROM OPERATING
ACTIVITIES

                                                Year ended            Year ended
                                           31December 2005       31December 2004
                                                    £000                  £000
Operating loss                                  (8,169.4)             (3,024.8)
Depreciation on
tangible fixed
assets                                              92.1                  12.0
Amortisation of
goodwill                                             3.5                   2.6
(Increase)/Decrease
in debtors                                        (646.0)                 64.5
Increase/(Decrease)
in creditors                                       988.9                (119.2)
(Increase)/Decrease
in Stock                                          (126.3)                    -
UITF 17 Expenses                                   110.0                     -
------------------------------                   ---------             ---------
Net cash outflow
from operating
activities                                      (7,747.2)             (3,064.9)
------------------------------                   ---------             ---------


ii) GROSS CASH FLOWS
                                                     Year ended       Year ended
                                                31December 2005  31December 2004
                                                         £000             £000
Returns on investment and servicing of finance
Interest received                                       764.1             77.2
Interest element of
finance leases                                              -           (116.7)
------------------------------                        ---------        ---------
                                                        764.1            (39.5)
------------------------------                        ---------        ---------
Capital expenditure
Payments to acquire
tangible fixed
assets                                               (3,461.2)           (38.3)
Proceeds on disposal
of leased assets                                         30.2                -
Purchase of trade
investments                                             (14.0)               -
------------------------------                        ---------        ---------
                                                     (3,445.0)           (38.3)
------------------------------                        ---------        ---------
Acquisitions
Payment to acquire
share of associated
company                                                 (25.0)               -
------------------------------                        ---------        ---------
Financing
Issue of ordinary
share capital                                        25,791.2         14,951.3
Costs of raising
finance                                              (1,397.5)        (1,490.2)
Purchase of own
shares                                               (3,479.9)               -
Proceeds on disposal
of own shares                                         3,462.0                -
Capital element of
finance lease                                           (43.7)          (759.0)
Mortgage                                                840.0                -
------------------------------                        ---------        ---------
                                                     25,172.1         12,702.1 
------------------------------                        ---------        ---------


iii) RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS

                                                Year ended            Year ended
                                           31December 2005       31December 2004
                                                    £000                  £000
Increase in cash in
the year                                        14,719.0               9,559.4
Cashflow from
movement in debt and
lease financing                                   (796.3)                759.0
------------------------------                   ---------             ---------
Change in net funds
resulting from cash
flows                                           13,922.7              10,318.4
New finance leases                                     -                (750.0)
New finance leases
obtained on acquisition of
subsidiary                                             -                 (52.7)
------------------------------                   ---------             ---------
Increase in net
funds in year                                   13,922.7               9,515.7
Net funds at 1
January                                          9,518.7                   3.0
------------------------------                   ---------             ---------
Net funds at 31
December 2005                                   23,441.4               9,518.7
------------------------------                   ---------             ---------


iv) ANALYSIS OF CHANGES IN NET FUNDS

                        At 1 January  Cash flows Other non-cash       Year ended
                                2005                    changes  31December 2005
                              £000        £000           £000             £000
Cash at bank
and in hand                9,562.4    14,719.0              -         24,281.4
Long term loans                  -      (840.0)             -           (840.0)
Finance leases               (43.7)       43.7              -                -
----------------------      --------    --------       --------       ----------
                           9,518.7    13,922.7              -         23,441.4
----------------------      --------    --------       --------       ----------



NOTES TO THE FINANCIAL STATEMENTS

For the year ended 31 December 2005


1. ACCOUNTING POLICIES


The principal accounting policies adopted are described below.

Basis of preparation


The Group financial statements consolidate the financial statements of the
company and its subsidiary undertakings as at 31 December 2005.

Accounting convention


The financial statements are prepared under the historical cost convention. The
financial statements are prepared in accordance with United Kingdom applicable
accounting standards.


During the previous period the holding company, D1 Oils plc, acquired a new
subsidiary D1 Oils Trading Limited. The pro forma consolidated profit and loss
are presented as if the merger of D1Oils plc with D1 Oils Trading Limited took
place on the first day of each financial period presented and as though the
Group, as presently constituted, had been in existence throughout those periods.
The pro forma cash flow and balance sheet has been prepared on the same basis.
All other acquisitions are accounted for under the acquisition method.

New Accounting Policies


The following policies have been adopted during the year in response to new
transactions and are not changes to existing policies.

Turnover:


Turnover represents amounts receivable for goods and services provided in the
normal course of business, net of trade discounts, VAT and other sales related 
taxes.


Plantation Accounting:

A major activity of the Group is to prepare previously untreated ground and to
plant jatropha seeds and seedlings. Once mature the jatropha trees bear seeds
that contain crude jatropha oil. This crude oil can be refined to produce bio
diesel. The direct costs of site preparation and planting seedlings, 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.

Stock:

Stocks are stated at the lower of cost or net realisable value. Stock, including
seeds and seedlings, also contains direct labour and appropriate overheads where
applicable. Net realisable value is based on estimated selling price, less other
costs expected to be incurred to completion and disposal. Provision is made for
obsolete, slow-moving or defective items as appropriate.

Joint Ventures:

Entities in which the Group holds an interest on a long term basis, and which
are jointly controlled by the Group with one or more other parties under a
contractual agreement, are treated as joint ventures and are accounted for using
the gross equity method. The consolidated profit and loss account includes the
group's share of joint venture profits less losses while the group's share of
both the gross assets and the gross liabilities of the joint venture are shown
in the consolidated balance sheet. Goodwill arising on the acquisition of
associates, representing any excess of the fair value of the share of
identifiable assets and liabilities acquired, is capitalised and written off on
a straight line basis over its useful economic life of 20 years. Any unamortised
balance of goodwill is included in the carrying value of the investment in joint
ventures.

Employee Benefit Trust:

In accordance with UITF38 'Accounting for ESOP Trusts' own shares held by the
Employee Benefit Trust are treated as a reduction to shareholders funds. These
are held at cost until disposed of. Any profit or loss on disposal is treated as
a movement in reserves.


Associates:

In the group financial statements investments in associates are accounted for
using the equity method. The consolidated profit and loss account includes the
group's share of associates' profits less losses while the group's share of the
net assets of the associates is shown in the consolidated balance sheet.
Goodwill arising on the acquisition of associates, representing any excess of
the fair value of the share of identifiable assets and liabilities acquired, is
capitalised and written off on a straight line basis over its useful economic
life of 20 years. Any unamortised balance of goodwill is included in the
carrying value of the investment in associates.

Existing Accounting Policies


The following policies have been applied consistently throughout the year and
the preceding year.

Investments:

Investments held as fixed assets are stated at cost less provision for any
impairment.

Tangible fixed assets and depreciation:

Depreciation on fixed assets is calculated to write off their cost, less
estimated residual value, over their expected useful lives at the following
annual rates using the straight line method.

Freehold property:
Land                                                  not depreciated
Buildings                                             20 years
Plantations                                           30 years
Plant and machinery                                   3 - 10 years
Motor vehicles                                        3 - 5 years
Fixtures, fittings and equipment                      3 - 5 years


Foreign currencies:


Monetary assets and liabilities denominated in overseas currencies are
translated into sterling at the rate of exchange ruling at the balance sheet
date. Individual transactions are translated at the rate of exchange ruling on
the date of transaction. All exchange differences are included in the profit and
loss account.

The results of overseas operations are translated at the closing rates of
exchange during the period and their balance sheets at the rates ruling at the
balance sheet date. Exchange differences arising on translation of the opening
net assets and on foreign currency borrowings, to the extent that they hedge the
group's investment in such operations, are reported in the statement of total
recognised gains and losses. All other exchange differences are included in the
profit and loss account.

Current tax:

Current tax, including UK corporation tax and foreign tax, is provided at
amounts expected to be paid (or recovered) using the tax rates and laws that
have been enacted or substantively enacted by the balance sheet date.

Deferred taxation:

Deferred taxation is provided in full on timing differences that result in an
obligation at the balance sheet date to pay more tax, or a right to pay less
tax, at rates expected to apply when they crystallise based on current tax rates
and law. Timing differences arise from the inclusion of items of income and
expenditure in taxation computations in periods different from those in which
they are included in financial statements. Deferred tax assets are recognised to
the extent that it is regarded as more likely than not that they will be
recovered. Deferred tax assets and liabilities are not discounted.

Finance leases and hire purchase contracts:


Assets held under finance leases and hire purchase contracts are capitalised at
their fair value on the inception of the leases and depreciated over the shorter
of the period of the lease and the estimated useful economic lives of the
assets. The finance charges are allocated over the period of the lease in
proportion to the capital amount outstanding and are charged to the profit and
loss account. Operating lease rentals are charged to profit and loss in equal
annual amounts over the lease term.


Research and development:

Research and development expenditure is charged to the profit and loss account
as incurred.

Share options:

In accordance with the provisions of UITF17, the difference between the exercise
price and nominal value of share options granted is credited to the shares to be
issued reserve. Charges are made to the profit and loss account in the period in
which the options are granted.

2. SEGMENTAL INFORMATION


The Group operates in only one class of business in those areas of the world
where the Group is represented. A geographical split of the business is as
follows:

                     United Kingdom    Africa  Asia Pacific     India      Group
                             £000      £000          £000      £000       £000

Turnover:
Group and
share of joint
venture                     372.9         -           7.0      81.8      461.7
                                          
Less: Share of
joint venture                   -         -             -     (46.2)     (46.2)
                          ---------  --------      --------  --------   --------
Group turnover              372.9         -           7.0      35.6      415.5
                          ---------  --------      --------  --------   --------

Loss on ordinary
activities before         ---------  --------      --------  --------   --------
taxation
Year ended 31
December 2005            (6,117.8)   (682.5)       (298.3)   (358.3)  (7,456.9)
                          ---------  --------      --------  --------   --------
                          ---------  --------      --------  --------   --------
Year ended 31
December 2004            (2,888.6)   (131.0)        (44.7)        -   (3,064.3)
                          ---------  --------      --------  --------   --------

Net assets/
(liabilities)             ---------  --------      --------  --------   --------
At 31 December
2005                     28,258.1    (940.7)       (278.2)   (347.9)  26,691.3
                          ---------  --------      --------  --------   --------
                          ---------  --------      --------  --------   --------
At 31 December
2004                      9,886.4    (151.7)        (42.4)        -    9,692.3
                          ---------  --------      --------  --------   --------


The group generated no turnover in the period ended 31 December 2004.


Net finance income of £764,100 (2004: expense of £39,500) on central Group
borrowings has been included within the United Kingdom segment.

The geographic regions of the Group have been renamed to reflect the group
operating divisions.. This has not amended the prior year figures. Additionally,
comparatives in the table above in respect of operating loss have been amended
to correct a typographical error in the previous year's financial statements.



                                                         Year ended   Year ended
                                                        31 December  31 December
                                                             2005         2004
                                                             £000         £000
Operating loss is stated after charging (crediting):
Directors' remuneration (see
note 5)                                                  1,023.2        254.8
Bad debts                                                      -        149.8
Depreciation:
- owned assets                                              92.1          1.5
- leased assets                                                -         10.4
                                                        -----------   ----------
                                                             92.1         11.9
                                                        -----------   ----------
Amortisation of goodwill                                      3.5          2.6
Research and development                                    580.3        484.7
Auditors' remuneration
Audit services
Group                                                        45.0         28.0
Company                                                      30.0         15.0
Non audit services:
Taxation advisory                                            67.5         76.4
Other advisory services                                     190.9        124.1
Charged to share premium                                   (190.9)      (200.5)
                                                        -----------   ----------
                                                             67.5            -
                                                        -----------   ----------


4. INFORMATION REGARDING EMPLOYEES

                                                         Year ended   Year ended
                                                        31 December  31 December
                                                             2005         2004
                                                             £000         £000
Total average number employed by the group including
executive directors was:
Executive directors                                             5            7
Technical                                                       5            -
Administration                                                 45            -
                                                        -----------   ----------
                                               Total           55            7
                                                        -----------   ----------

The costs incurred in respect of
these employees (including directors)
were:                                                        £000         £000

Wages and salaries                                        1,701.0        377.9
Social security costs                                       951.1         41.5
                                                        -----------   ----------
                                                          2,652.1        419.4
                                                        -----------   ----------

Total average by the company including
executive directors was:

Executive directors                                             5            7
Technical                                                       -            -
Administration                                                  -            -
                                                        -----------   ----------
                                               Total            5            7
                                                        -----------   ----------
                                                               
The costs incurred in respect of
these employees (including directors)
were:                                                        £000         £000
Wages and salaries                                          750.9        377.9
Social security costs                                       382.0         41.5
                                                        -----------   ----------
                                                          1,132.9        419.4
                                                        -----------   ----------

5. DIRECTORS' REMUNERATION



                                                         Year ended   Year ended
                             Basic            Benefits  31 December  31 December
                                               in kind
                          salaries      Fees   & other       2005         2004
                            £000      £000      £000         £000         £000
Executive directors
Karl Eric Watkin (i)       112.5         -         -        112.5         50.0
Mark Lockhart Muir Quinn
(ii)                       125.0         -     158.2        283.2         54.0
Alec David Worrall (i)      75.0         -         -         75.0         33.3
Philip Kenneth Wood (iv)   150.0         -       0.6        150.6         50.0
Elliott Michael Mannis      67.7         -       5.6         73.3            -
(iii)
Stephen Peter Douty         67.7         -       0.6         68.3            -
(iii)
William Peter Campbell     120.0         -       6.6        126.6         40.0

Non-executive directors
John Barclay Forrest        12.0      15.5         -         27.5          9.2
Clive Neil Morton           12.0      16.3         -         28.3          9.2
Peter John Davidson         12.0      15.3         -         27.3          9.2
Karl Eric Watkin (i)        31.2         -         -         31.2            -
Alec David Worrall (i)      17.7       1.2       0.5         19.4            -
                           -------  --------  --------     --------     --------
                           802.8      48.3     172.1       1,023.2        254.8
                           -------  --------  --------     --------     --------



i.         On 28th September 2005 Karl Eric Watkin and Alec David Worrall
changed status from executive to non executive directors

ii.        Mark Lockhart Muir Quinn resigned from the company on the 26th
September 2005. His contract entitled him to a payment of £75,000 on leaving
office with provision for a further £75,000 subject to the satisfaction of
certain criteria which were subsequently met. This amount is included above
within benefits in kind and other.

iii.      Elliott Michael Mannis and Stephen Peter Douty were appointed as
executive directors on 19th July 2005.

iv.      Philip Kenneth Wood resigned as a director of the company on 16th
January 2006. His contract entitled him to a payment of £150,000 on leaving
office. This charge will be recognised in the year to 31 December 2006 and is
excluded from the table above accordingly. Further, on 2 February 2006 he
exercised 78,125 ordinary shares at £1.28 per share and 150,000 ordinary shares
at £1.60 per share. At this time options over 294,187 ordinary shares lapsed.
Philip Kenneth Wood still retains options over 444,186 ordinary shares at £1.60
per share until 31 July 2007.


During the year ended 31 December 2005 the group incurred consultancy costs of
£55,800 to The Morton Partnership, (2004: £nil) a company in which Clive Neil
Morton is a director and shareholder, £129,000 of consultancy costs to Davidson
Technology Limited, (2004: £nil) a company in which Peter John Davidson has
indirect control, £1,900 of consultancy costs to Walworth Gardens Limited,
(2004: £nil) a company in which Alec David Worrall is a director and
shareholder. There were no outstanding balances with the above companies at 31
December 2005.


Additionally, the Group incurred consultancy costs of £nil to RedComm Limited,
(2004: £100,000) a company in which Karl Eric Watkin was a director and
shareholder, £nil consultancy costs to Global Trading Group Limited, (2004:
£100,000) a company in which Mark Lockhart Muir Quinn was a director and
shareholder and £nil consultancy costs to Almegar Solutions, (2004: £66,667) a
company in which Alec David Worrall was a director and shareholder. All
transactions were at arms length. At the year end RedComm Limited owed the
Group, £nil (2004: £5,512), Almegar Solutions Limited owed the Group £nil (2004:
£5,502) and Global Trading Group Limited owed the Group £nil (2004: £22,055).
All interests in the aforementioned companies were disposed of during 2005.

Directors'share
options:
Directors          Options     Granted     Options  Exercise      Date       Expiry date
                     1 Jan      2005        31 Dec     Price   Exercisable
Karl Eric
Watkin            39,062           -      39,062    £1.280    October 2005  October 2014
Mark Lockhart
Muir Quinn        39,062           -      39,062    £1.280    October 2005  October 2014
Alec David
Worrall           39,062           -      39,062    £1.280    October 2005  October 2014
Philip Kenneth
Wood             234,374           -     234,374    £1.280    October 2005  October 2014
William Peter
Campbell          39,062           -      39,062    £1.280    October 2005  October 2014
John Barclay
Forrest           78,125           -      78,125    £1.280    October 2005  October 2014
Peter John
Davidson         156,250           -     156,250    £1.280    October 2005  October 2014
Clive Neil
Morton           156,250           -     156,250    £1.280    October 2005  October 2014
Philip Kenneth
Wood                   -     888,373     888,373    £1.600    January 2006  January 2015
William Peter
Campbell               -     106,897     106,897    £2.900              a)  October 2015
Elliott
Michael Mannis         -      33,613      33,613    £2.975              a)      May 2015
Elliott
Michael Mannis         -     132,075     132,075    £2.650              a)      May 2015
Stephen Peter
Douty                  -      56,497      56,497    £1.770              a)  January 2015
Stephen Peter
Douty                  -     132,075     132,075    £2.650              a)      May 2015
                   -------     -------    --------
                 781,247   1,349,530   2,130,777
                   -------     -------    --------


a)        These options have been granted as one third exercisable on the first
anniversary of the date of grant. Thereafter a further 1/36
accrues monthly over the next 24 months so that the full amount granted is
capable of exercise after 3 years.



6. TAX ON LOSS ON ORDINARY ACTIVITIES


The tax credit during the year was £nil (2004: £nil).

(i) Factors affecting tax credit for the current year

The tax credit assessed for the year is lower than that resulting from applying
the standard rate of corporation tax in the UK of 30%. The differences
are explained below.

                                                       Year ended     Year ended
                                                      31 December    31 December
                                                           2005           2004
                                                           £000           £000
Loss on ordinary activities before tax                 (7,456.9)      (3,064.3)
                                                    -------------   ------------
Tax at 30% thereon                                     (2,237.1)        (919.3)
                                                    -------------   ------------
Expenses not deductible for tax purposes                   84.4          213.7
Capital allowances greater than depreciation               16.1              -
Losses for which no tax relief available                1,709.9          653.8
Losses of overseas subsidiaries for which no tax
relief available                                          426.7           51.8
                                                    -------------   ------------
Current tax credit for the period                               -              -
                                                    -------------   ------------



At 31 December 2005 the Group has estimated management expenses of £2,097,000
(2004: £330,000) to carry forward to set off against future income and gains of
the parent company and has estimated expenditure of £6,534,000 (2004:
£2,264,000) which will be available to set against future trading profits of UK
subsidiary companies. In addition overseas subsidiary companies have estimated
expenditure of £1,620,000 (2004: £198,000) to set against future trading
profits. A UK deferred tax asset of £2,605,000 (2003: £778,000) has not been
recognised in respect of accelerated capital allowances, management expenses and
expenditure carried forward as there is insufficient evidence that the asset
will be recovered.

7. LOSS OF PARENT COMPANY

As permitted by Section 230 of the Companies Act, the profit and loss account
for the parent company is not presented as part of these financial statements.
The parent company's loss for the year ended 31st December 2005 amounted to
£1,900,300 (18 weeks ended 31 December 2004: £455,874).

8. LOSS PER ORDINARY SHARE


Loss per share has been calculated using the weighted average number of shares
in issue during the relevant financial periods in accordance with FRS 14 for
merged results. For the purposes of calculating the loss per ordinary share the
weighted average number of shares excludes 193,645 shares held by the D1Oils
Employee Benefit Trust as disclosed in note 16.

The weighted average number of shares in issue is as detailed below and the
earnings, being loss on ordinary activities after taxation, are £7,456,900
(2004: £3,064,277).

No separate diluted loss per share has been disclosed as the share options are
anti-dilutive.

                                              Year ended              Year ended
                                             31 December             31 December
                                                    2005                    2004
                                                     No.                     No.
Weighted average
number of shares                            26,297,460               6,447,640

                                                  2005                    2004
                                                 Pence                   Pence
Loss per ordinary
share - basic and
diluted                                          28.35p                  47.53p


9.        INTANGIBLE ASSETS
                                                                        Goodwill
                                                                          £000
Cost
At 1 January 2005                                                         70.2
Additions during the year                                                    -
                                                                     -----------
At 31 December 2005                                                       70.2
                                                                     -----------

Accumulated depreciation
At 1 January 2005                                                          2.6
Charge for the year                                                        3.5
                                                                  --------------
At 31 December 2005                                                        6.1
                                                                  --------------

Net book value
At 31 December 2005                                                       64.1
At 31 December 2004                                                       67.6





10.     TANGIBLE FIXED ASSETS

               Freehold                  Motor  Plant and      Fixtures
               Property  Plantations  vehicles  machinery  and fittings    Total
                 £000         £000      £000       £000          £000       £000
Cost
At 1 January
2005                -            -      57.0      769.9          16.2      843.1
Additions     1,283.2        650.7      20.8    1,449.0          57.5    3,461.2
Disposals           -            -     (53.4)         -             -      (53.4)
              ---------     --------  --------   --------      --------    -------
At 31
December      1,283.2        650.7      24.4    2,218.9          73.7    4,250.9
2005          ---------     --------  --------   --------      --------    -------

Accumulated
depreciation
At 1 January
2005                -            -      10.5          -           1.5       12.0
Charge for
the                 -            -      17.6       60.8          13.7       92.1
year
Disposals           -            -     (23.2)         -             -      (23.2)
              ---------     --------  --------   --------      --------    -------
At 31
December            -            -       4.9       60.8          15.2       80.9
2005          ---------     --------  --------   --------      --------    -------

Net book
value         ---------     --------  --------   --------      --------    -------
At 31
December      1,283.2        650.7      19.5    2,158.1          58.5    4,170.0
2005          ---------     --------  --------   --------      --------    -------
              ---------     --------  --------   --------      --------    -------
At December
2004                -            -      46.5      769.9          14.7      831.1
              ---------     --------  --------   --------      --------    -------


Included within plant and machinery are leased assets with a net book value of
£nil (2004: £43,700).


11.     INVESTMENTS IN GROUP UNDERTAKINGS

                              Group           Group       Company       Company
                             2005            2004          2005          2004
                             £000            £000          £000          £000
Subsidiary undertakings         -               -         125.0         125.0
Other investments            14.0               -          14.0             -
                          ---------      ----------     ---------     ---------
Included in investments      14.0               -         139.0         125.0
                          ---------      ----------     ---------     ---------
Associates                   (5.6)              -             -             -
Joint ventures              (21.0)              -             -             -
                          ---------      ----------     ---------     ---------
Included in provisions      (26.6)              -             -             -
                          ---------      ----------     ---------     ---------




Company subsidiary undertakings:                                          £000

Cost
At 1 January and 31 December 2005                                        125.0
                                                                         -------

Provisions for impairment
At 1 January and 31 December 2005                                            -
                                                                         ------

Net book value
At 1 January and 31 December 2005                                        125.0
                                                                         -------

Other investments:                                                         Group
                                                                          £000
Cost
At 1 January 2005                                                            -
Additions                                                                 14.0
                                                                          ------
At 31 December 2005                                                       14.0
                                                                          ------

Provisions for impairment
At 1 January 2005                                                            -
Provided in the year                                                         -
                                                                          ------
At 31 December 2005                                                          -
                                                                          ------

Net book value
At 31 December 2005                                                       14.0
                                                                          ------

Group associates and joint ventures:                                      2005
                                                                          £000
Share of net assets/cost
At 1 January 2005                                                            -
Additions                                                                    -
Share of retained loss in the year                                       (32.9)
                                                                        --------
At 31 December 2005                                                      (32.9)
                                                                        --------
Provisions for impairment
                                                                        --------
At 1 January and 31 December 2005                                            -
                                                                        --------
Goodwill
                                                                            
At 1 January 2005                                                            -
Additions                                                                 25.0
Written off                                                              (18.7)
                                                                         -------
At 31 December 2005                                                        6.3
                                                                         -------
Net book value
                                                                             
At 31 December 2005                                                      (26.6)
                                                                        --------
                                                                             

The company owns more than 10% of the share capital of the following subsidiary
companies:
                         Nature of         Country of    Shareholder
Name                     business          registration        class  Percentage
D1 Oils Trading Limited  Biodiesel trading UK               Ordinary       100%
D1 Oil Subsidiary        Biodiesel trading UK               Ordinary       100%
Limited
D1 (UK) Limited          Biodiesel trading UK               Ordinary       100%
D1 Oils Asia Pacific Inc Biodiesel trading Philippines      Ordinary       100%
D1 Oils South Africa
(PTY)                    Biodiesel trading South Africa     Ordinary        75%
Limited
D1 Oils Mohan Pvt        Biodiesel trading India            Ordinary        50%
Limited
D1 Oils Ghana (PTY)      Biodiesel trading Ghana            Ordinary       100%
Limited
D1 Oils Malaysia SBN BHD Biodiesel trading Malaysia         Ordinary      99.8%
D1 Oils India Pvt        Biodiesel trading India            Ordinary       100%
Limited
GroupBio Limited         Engine            UK               Ordinary        25%
                         development
D1 Oils Africa (PTY)
Limited                  Dormant           South Africa     Ordinary       100%
D1 Oils Madagascar       Biodiesel trading Madagascar       Ordinary       100%
Limited
D1 Oils Zambia Limited   Biodiesel trading Zambia           Ordinary       100%
D1 Oils Tanzania Limited Dormant           Tanzania         Ordinary        90%


12. DEBTORS
                                           Group     Group     Company    Company
                                          2005      2004        2005       2004
                                          £000      £000        £000       £000
Debtors                                  170.8      78.1           -       11.7
Taxation and social security             267.1         -       267.1          -
Amounts owed by subsidiary                   -         -    11,392.6    3,409.8
undertakings
Prepayments                              287.4       1.2        56.9          -
                                        --------  --------    --------   --------
                                         725.3      79.3    11,716.6    3,421.5
                                        --------  --------    --------   --------


13. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR


                                     Group       Group     Company     Company
                                    2005        2004        2005        2004
                                    £000        £000        £000        £000
Obligations under finance leases
(note 15)                              -        11.9           -           -
Trade creditors                    882.8       555.4        47.5           -
Directors loans                        -        55.2           -        27.1
Other loans                          3.2        65.8           -           -
Taxation and social security        72.4        84.1           -       333.5
Accruals and deferred income       864.8        43.9       340.9           -
                                  --------    --------    --------    --------
                                 1,823.2       816.3       388.4       360.6
                                  --------    --------    --------    --------


14. CREDITORS: AMOUNTS FALLING DUE AFTER ONE YEAR


                       Group            Group           Company          Company
                       2005             2004             2005             2004
                       £000             £000             £000             £000
Mortgage
payable (note
15)                   840.0                -                -                -
Obligations
under finance
leases                    -             31.8                -                -
                     --------         --------         --------         --------
                      840.0             31.8                -                -
                     --------         --------         --------         --------


15. BORROWINGS

                                             Group     Group   Company   Company
                                            2005      2004      2005      2004
                                            £000      £000      £000      £000

Amounts due within one year or on demand       -         -         -         -
Between one
and two years                               60.0      11.9         -         -
Between two
and five years                             180.0      11.9         -         -
Over five years                            600.0      19.9         -         -
                                          --------  --------  --------  --------
                                           840.0      43.7         -         -
                                          --------  --------  --------  --------


The Group borrowings in 2005 relate to the mortgage at the Forty Foot Road site
in Middlesbrough, TS2 1HG. The mortgage is secured by a fixed charge over the
property. The interest rate payable on the loan is fixed at 1.75% over LIBOR for
the period of the mortgage which is repayable in 56 quarterly instalments
commencing March 2007.


The borrowings in 2004 related to obligations under finance leases which were
discharged during 2005. Obligations under the finance leases were secured on the
assets to which they related.




16. CALLED UP SHARE CAPITAL
                                                          2005            2004
                                                          £000            £000
Authorised
                                                       ---------       ---------
52,000,000 (2004:
52,000,000) ordinary
shares of 1p each                                        520.0           520.0
                                                       ---------       ---------

Called up, allotted and fully paid
                                                       ---------       ---------
31,225,481 (2004: 21,492,864) ordinary
shares of 1p each                                        312.3           214.9
                                                       ---------       ---------

On 14th June 2005, the company completed the placing of 9,732,617 new ordinary
shares. The company received cash consideration of £25,791,200 for this placing
prior to expenses of £1,397,500.


Also during the period, the company purchased 1,385,000 of its own ordinary
shares of 1p, representing 4.4% of the issued share capital of the company at 30
June 2005. This was also the maximum number of such shares held during the year.
These shares, which are held in an Employee Benefit Trust established for the
purpose, were purchased on the open market with financing provided by the
company and in accordance with UITF 38 are shown in reserves as own shares held.


On 19th July 2005, D1 Oils plc disposed of 1,191,355 ordinary shares each at
£2.95. At 31 December 2005 the remaining shareholding in the company held by the
Employee Benefit Trust was 193,645 (2004: nil) ordinary shares and the market
value of these shares was £339,847 (2004: £ nil).



17. MOVEMENT ON RESERVES

                        Share Share Premium        Shares    Merger  Own Shares Held  Profit & Loss
                                     Issued                 Reserve
                      Capital                To be Issued    Issued
                       £000          £000          £000      £000             £000           £000
Group
At 1 January
2005                  214.9      12,808.4             -     437.7                -       (3,768.7)
Loss for the
year                      -             -                       -                -       (7,456.9)
Share issue            97.4      25,693.8                       -                -              -
Share issue
costs                     -      (1,397.5)            -         -                -              -
Shares to be
issued                    -             -         110.0         -                -              -
Currency
translation
difference on
foreign
currency net
investments               -             -             -         -                -          (29.9)
Gain on own
shares held                             -             -         -           (466.1)         466.1
Purchase of
own shares                -             -             -                   (3,479.9)             -
Proceeds on
sale of own
shares                    -             -             -         -          3,462.0              -
 -------------------  -------      --------       -------  --------          -------        -------
At 31 December
2005                  312.3      37,104.7         110.0     437.7           (484.0)     (10,789.4)
-------------------   -------      --------       -------  --------          -------        -------
                       Share Share Premium        Shares    Merger  Own Shares Held  Profit & Loss
                                     Issued                 Reserve
                      Capital                To be Issued    Issued
                       £000          £000          £000      £000             £000           £000
Company
At 1 January
2005                    214.9    12,808.4         -            -                  -        (455.8)
Loss for the
year                        -           -         -            -                  -       (1,900.3)
Share issue              97.4    25,693.8         -            -                  -             -
Share issue
costs                       -    (1,397.5)        -            -                  -             -
Shares to be
issued                      -           -     110.0            -                  -             -
Currency translation        -           -         -            -                  -             -
difference on foreign
currency net
investments
Gain on own
shares held                  -         -         -             -                (466.1)     466.1
Purchase of
own shares                  -           -         -            -              (3,479.9)         -
Proceeds on
sale of own
shares                      -           -         -           -                3,462.0          -
 --------------------   --------     -------  --------     -------             -------     -------
At 31 December
2005                    312.3       37,104.7   110.0          -                (484.0)   (1,890.0)
--------------------   --------     -------  --------      -------             -------     -------



18.     RECONCILIATION OF MOVEMENT IN CONSOLIDATED EQUITY SHAREHOLDERS' FUNDS

                                                   Year ended         Year ended
                                                  31 December        31 December
                                                       2005               2004
                                                       £000               £000
Loss for the year                                  (7,456.9)          (3,064.3)
Shares issued in the year
(net of issue costs)                               24,393.7           13,023.3
Merger reserve adjustment                                 -              437.7
Purchase of own shares                             (3,479.9)                 -
Proceeds on sale of own
shares                                              3,462.0                  -
Shares to be issued                                   110.0                  -
Foreign exchange reserve                              (29.9)                 -
Net addition to
shareholders' funds                                16,999.0           10,396.7
Opening equity shareholders'
funds /(deficit)                                    9,692.3             (704.4)
----------------------------------                -----------       ------------
Closing equity shareholders'
funds                                              26,691.3            9,692.3
----------------------------------                -----------       ------------


19. NON CASH TRANSACTIONS

During the year ended 31 December 2005 the Group entered into finance lease
arrangements in respect of assets with a total capital value of £nil (2004:
£52,700).

20. FINANCIAL INSTRUMENTS

The main risks arising from the Group's operations are interest rate risk,
liquidity risk, foreign currency translation risk and certain commodity price
risks. The group does not trade in financial instruments. In the opinion of the
directors the fair value of the group's financial instruments are not materially
different to the book value.

The Group's financial assets predominantly comprise cash which earns interest at
a floating rate based on LIBOR. At 31 December 2005 the average interest earned
on the cash balance was 4.48% (2004: - 3.5%).

Liquidity Risk

The Group seeks to manage financial risk, to ensure sufficient liquidity is
available to meet foreseeable needs while investing cash assets safely and
profitably.

Interest Rate Risk

The Group has one mortgage obligation the terms of which include a floating
interest rate of 1.75% above LIBOR. The capital outstanding at 31 December 2005
was £840,000. (2004 : £43,787 at 8%.)

Foreign Currency Translation Risk

The main functional currency of the Group is sterling. From time to time the
company enters into supply commitments for the supply of jatropha oil and seeds.
All of these contracts are denominated in US Dollars. The approximate value of
these contracts is $412m (2004: $473m) over 20 years and are to supply jatropha
oil for processing through the group's own refineries.

No significant currency risks arise through the consolidation of overseas
subsidiaries at 31 December 2005. The directors are actively developing an
appropriate means of mitigating the risk of these entities as they become a more
significant element of the business.

The Group cash balances split by currency and shown as a sterling equivalent,
converted at Bank of England exchange rates at 31 December are:

                                                     2005                 2004
                                                     £000                 £000
British Pounds                                   23,691.3              9,545.1
US Dollars                                          287.8                    -
Indian Rupees                                       138.8                    -
South African
Rand                                                 35.4                 11.1
Swaziland
Lilangeni                                            30.3                    -
Euros                                                64.8                    -
Malaysian
Ringgits                                             30.1                    -
Ghanaian Cedi                                         1.9                    -
Filipino Peso                                         1.0                  6.2
----------------                             --------------             --------
Total                                            24,281.4              9,562.3
 ----------------                            --------------             --------

Commodity Price Risks

During 2005 the group did not engage in commodity related financial instruments,
including hedging.


21. FINANCIAL COMMITMENTS

Capital commitments

As at 31 December 2005 expenditure contracted for but not provided in these
financial statements was £nil. (2004: nil)


Purchase commitments

From time to time the company enters into supply commitments for the supply of
jatropha oil and seeds as described in the foreign currency translation risk
section of note 20. All of these contracts are denominated in US Dollars.


22. RELATED PARTY TRANSACTIONS

The Group has a 50:50 joint venture agreement with a joint venture partner,
Mohan Breweries and Distilleries Limited relating to D1 Oils Mohan Pvt Limited.
The agreement requires Mohan Breweries and Distilleries Limited to lead on
planting and for D1Oils Trading Limited to lead on design and technology. D1
Oils Trading Limited did not introduce any working capital into the joint
venture during the year. There were no amounts outstanding at 31 December 2005.

The Group also has an associate agreement with GroupBio Limited to provide
sponsorship funding to develop and race a biofuel racing car. During the year
ended 31 December 2005 D1 Oils Trading Limited introduced £25,000 (2004: nil) of
share capital and £65,000 (2004: nil) of sponsorship funding. There were no
amounts outstanding at 31 December 2005.

Any related party transactions which apply to company directors are shown in
note 5 above.

During the previous year the group reached an agreement to acquire intellectual
property rights relating to refineries from Steve Davis, a shareholder in the
company, for nil value and the group agreed to forego a debt of £149,770 owed to
Safety Issues (Fabrication) Limited, a company in which Steve Davis is a
director and shareholder. There were no similar transactions during the current
period.


23. STATUTORY CONSOLIDATED PROFIT AND LOSS

                                                      18 week
                                                   period ended
                                                   31 December
                                                      2004
Operating expenses                                  (987.9)
-------------------------                        -----------
Operating loss                                      (987.9)
-------------------------                        -----------
Bank interest receivable                             76.9
Bank interest payable                              (116.6)
-------------------------                       -----------
Loss on ordinary activities before               (1,027.6)
taxation                                       
-------------------------                      -----------
Tax on loss on ordinary activities                       -
-------------------------                      -----------
Retained loss for the financial year             (1,027.6)
withdrawn from reserves                       
-------------------------                     -----------


The profit and loss account above is required by the Companies Act 1985 and
covers the first statutory accounting reference period of D1 Oils plc from its
date of incorporation on 24 August 2004 to 31 December 2004.

Disclosure notes for this period are not presented as the directors do not
believe they would provide meaningful information to users of the financial
statements.

Directors' remuneration for this period is included within the amounts disclosed
in Note 5 which presents remuneration for the 52 weeks to 31 December 2004.
Amounts for the period 24 August 2004 to 31 December 2004 in respect of salaries
and other time related costs can be derived by apportioning the annual amounts.





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