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D1 Oils Plc (NEOS)

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Wednesday 27 September, 2006

D1 Oils Plc

Interim Results

D1 Oils Plc
27 September 2006


                                   D1 Oils plc

27th September 2006

             Interim Results for the six months ended 30 June 2006

D1 Oils plc, the UK-based global producer of biodiesel, today announces its
interim results for the six months ended 30 June 2006.

Highlights

   • Planted or obtained rights to approximately 110,000 hectares of
     jatropha: an increase of 68,000 hectares since March 2006
   • Crop science programme on track to deliver elite jatropha seed for 2008
     planting: targeting 50% yield improvement
   • Acquisition of Bromborough site for conversion to biodiesel refining:
     refinery capacity targets increased to 320,000 tonnes (2007) and 420,000
     tonnes (2008)
   • Financing package to fund the roll-out of D1 20 refinery assets being
     finalised
   • Lord Oxburgh joins as Non-Executive Director; to become Chairman in 2007

Elliott Mannis, Chief Executive Officer of D1 Oils said:

'The group has made significant progress over the last six months. The pace of
planting has accelerated and we are planting in new areas such as China. Our
first refineries have been commissioned and we are increasing our refinery
capacity in the UK. The acquisition of the Bromborough site is a signal of our
intent to deliver on our vision to create a leading biodiesel business.'

Karl E. Watkin, Chairman of D1 Oils, said:

'We are delighted that someone of the calibre of Lord Oxburgh has decided to
join our Board with a view to taking over from me as Chairman. It is a great
compliment to the D1 team that we have attracted such a distinguished scientist,
businessman and advocate of action on climate change.

We believe we have built a strong business that will play a key part in meeting
the global need for sustainable transport based on renewable biofuel, and we are
doing so in a way that is making a real difference to developing countries. I am
particularly proud that, by our estimation, our planting work has created the
equivalent of more than 220,000 jobs in some of the world's poorest regions.
This is a business that is making a difference in the world and the presence of
Lord Oxburgh as its Chairman will enhance that capability immensely. I can think
of no better person to lead the Board.'

Contacts 
D1 Oils: 
Graham Prince, Head of Corporate Communications 
Tel: +44 (0) 1642 755580 
Mobile: +44 (0) 7973 323840 

Brunswick Group: 
Kevin Byram / Mark Antelme 
Tel: +44 (0) 20 7404 5959 

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 Karl E. Watkin, Chairman, and
                    Elliott Mannis, Chief Executive Officer

We are pleased to announce our results for the six months ended 30 June 2006 and
to report that we are performing well in all of our three core activities of
agronomy, refining and trading. We are making substantial progress towards
realising our vision of becoming a leading global biodiesel business.

In agronomy, as of 15 September, together with our joint venture partners, we
have either planted or obtained rights to approximately 110,000 hectares of
planted Jatropha curcas, an increase of over 40,000 hectares since our last
quarterly update. Further planting is underway in key locations in the
developing world, and includes significant new planting in China. We have made
substantial advances in the crop science of inedible oil production, and we
expect to be able to deliver a new 'E1' elite jatropha seed with improved yield
potential for planting in 2008.

In refining, we have brought our first four biodiesel refineries in the UK into
full operation. We are finalising the terms of a financing package to fund the
roll-out of our D1 20 refinery assets. We also plan to expand significantly our
UK operations with the acquisition of a new refining and distribution site at
Bromborough in Merseyside scheduled to be completed by year end. Once acquired
and operational, this site will enable us almost to double our targeted UK
refinery capacity from 220,000 tonnes to 420,000 tonnes. We believe that this
will make us one of the leading UK refiners of biodiesel.

In trading, we are in advanced discussions with a number of parties around
possible offtake agreements and we expect to provide further news shortly. We
are also advancing our trading and logistics capabilities to support our
planting and refining as we grow internationally.

We are very pleased to announce the appointment of Lord Oxburgh as a
Non-Executive Director of the Company with the intention of his becoming
Chairman early next year. We believe his decision to join us is a validation of
what has been achieved over the period.

Global context

Global energy policies in the developed and emerging worlds are increasingly
being driven by the imperative of energy security and the need to consider
responses to the environmental challenges of global warming. Transportation is
the second-largest user of fossil fuels, behind the power generation industry,
and accounts for over 20% of global CO2 emissions. Transport fuel is therefore a
key sector being targeted for both greater energy security and reductions in
emissions. We believe biofuel, and in particular biodiesel, is the most
economically realistic means to secure cost effective supplies of sustainable
transport energy in the medium-term. This option is increasingly supported by
policy initiatives around the globe, particularly in the European Union. In the
UK the introduction of a mandatory 5% biodiesel blend under the Renewable
Transport Fuels Obligation (RTFO), to be phased in progressively from 2008 to
2010, will create an annual market, we believe, for at least one million tonnes
of biodiesel assuming a 5% blend.

Although targets such as the RTFO will encourage both biodiesel and bioethanol,
we believe the prospects for growth in  biodiesel are greater. The growth in the
market share of diesel vehicles, driven by diesel's superior economy and new 
cleaner, better performing engine technologies, has been established for some
years. More than half of new cars sold in  Europe last year were diesel. In
consequence, we believe that diesel refining capacity in Europe has become 
constrained, and we would expect this to encourage further the adoption of
biodiesel. We also believe that the ability  of biodiesel to be integrated into
the existing fuel distribution and retail infrastructure more readily than
ethanol,  which requires different transport and storage regimes, will encourage
the fuel distribution industry to adopt  biodiesel more rapidly.

Similar trends can be recognised in key developing markets. The Indian
government is increasingly looking to develop a home-grown biodiesel industry
based in part on domestically sourced jatropha, and is working on setting
targets of a 5% biodiesel blend in 2012, rising to 10% by 2017 and beyond that
20%. India has also witnessed a significant increase in diesel engine
penetration in transportation and increased demand for both vehicles and fuel.

Fuel versus food

Although in the short term most biodiesel will be produced by turning food crops
into fuel, we believe that long-term advantage lies in the development of
high-yielding inedible oil crops, such as jatropha, to produce feedstock for
biodiesel. According to the International Energy Agency 15% of EU agricultural
land would be required to meet a biodiesel blend of 5% across the member states.
Based on today's global production of the current main biodiesel feedstock
crops, even if all oil crops are used for biodiesel there is currently only
enough resource to displace around 15% of global diesel consumption. Given the
demand for biodiesel feedstocks for food use, we believe it is very unlikely
that existing food crops can meet biodiesel demand in the volumes required.
Furthermore, demand from the food industry for such oils is already rising. As a
result of the increasing demand for both food oils and biodiesel, we are already
seeing the prices for rapeseed, soya and palm increase considerably.

We believe that inedible oils crops, such as jatropha, offer a viable
alternative because they are not subject to the additional demand pressures of
food use. Furthermore these crops do not require the same quality of land as
food crops.

Governments of emerging economies are already focusing on the potential of
inedible oils that use non-arable land. As well as providing employment in
economically disadvantaged rural areas, inedible oil production has the
potential to reverse the impact of deforestation and bring degraded land back
into productive use. Given the increasing concern about the impact of soya and
palm production on vulnerable rainforest habits, we believe the need for
development of inedible oil crops that can take advantage of marginal land is
pressing.

Jatropha and other inedible oil crops have not seen the development in terms of
yields and growing techniques that crops for human consumption have undergone.
We believe that the application of current agronomy techniques to jatropha and
other inedible oil crops, in parallel with improved crop management, irrigation,
fertilisation and weed control, will enable the development of the most
promising wild varieties of jatropha into progressively higher yielding
industrialised crops. This has already been accomplished successfully with food
crops, notably rice, canola and soybean in the US, as well as palm.

Offer period and funding update

On 5 July 2006, we confirmed that the company was in very preliminary
discussions with a number of parties which might  or might not lead to an
acquisition of a substantial shareholding in the company and/or an offer for the
entire issued  share capital of the company. These discussions, which have been
conducted with a view to assisting the company to  accelerate significantly the
roll out of its business plan, are continuing. A further update will be provided
to the  market as appropriate. There is no certainty that an offer will be
forthcoming nor of the terms on which it might be  made. Irrespective of the
outcome of these discussions, the Board aims to secure sufficient funding to
deliver our  existing plans and is confident that it can do so.

Agronomy - planting programme

We are continuing our pioneering work in the planting and production of inedible
vegetable oil crops, particularly jatropha. As of 15 September, together with
our joint venture partners, we have planted or obtained rights to offtake from a
total of approximately 110,000 hectares of jatropha planting worldwide. The
substantial increase in planting is principally due to good progress in South
East Asia and India as well as the establishment of a new planting base in
Southern China.

Our continuing ability to attract large scale commercial agronomy partners is
demonstrated by our joint venture with Williamson Magor, the Indian tea planting
group, which achieved planting of 5,500 hectares by 15 September in North East
India. In Africa, planting is now underway on a new area of 20,000 hectares in
Swaziland in cooperation with the Swazi Government, and in Zambia we have
recently increased our land allocations for future planting to over 174,000
hectares. In South East Asia, we have concluded a series of oil supply
agreements with Setia Group China, with whom we also aim to partner in
Indonesia. To date D1 has secured rights to offtake from approximately 28,000
hectares that Setia Group has planted in Southern China, including a model farm
of 3,000 hectares.

The cumulative planting position at 15 September is summarised in the table
below:

                       Managed      Contract       Seed purchase     Total
                   plantations       farming      and oil supply      
                                                      agreements

India                        -        12,740              26,419    39,159
Southern Africa          5,155             -               2,000     7,155
South East                   -        30,494              32,563    63,057
Asia

Total                    5,155        43,234              60,982   109,371

The scale of planting achieved in the period demonstrates the determination of
the business to deliver new planting and offtake agreements in often challenging
business conditions.

A modest harvest will be collected from existing planting around the turn of the
year and this seed will be used principally as planting material. We will also
be conducting the first end-to-end test of our supply chain, taking harvested
seed from the fields through a local expelling process and on to a
pre-processing and refining facility in the UK.

Agronomy - jatropha crop science programme

We continue to make excellent progress in our jatropha crop science programme
which is focused on developing the most promising wild varieties of jatropha
into progressively higher yielding commercial crops. Working together with
Agriom BV (www.agriom.nl) in the Netherlands, we have identified and collected
more than 130 accessions of jatropha to assess variations and planting quality.
The breeding programme to produce higher yields per tree is being carried out in
the Netherlands and results assessed in field trials in several planting
regions. We are now scaling up a number of promising accessions using vegetative
propagation. Agriom is commencing the cross-fertilisation of the most promising
jatropha sub-varieties to produce hybrids with further enhanced characteristics,
including yield and quality improvement, higher oil content, and drought
resistance. We are also working with SBW International BV (www.stbw.nl), a
leading Dutch tissue culture firm, to scale up the rapid production of selected
varieties.

From October our crop science programme will be headed by Dr Henk Joos who joins
us from Bayer CropScience as Plant Science and Agronomy Director. Dr Joos joins
D1 with considerable experience in the commercial development of corn, soybean,
cotton, canola, rice and various tropical crops in different temperate and
tropical countries.

We plan to undertake the first planting with our 'E1' range of proprietary elite
seeds in 2008. We expect that this seed should deliver oil yields of at least
2.7 tonnes per hectare when the trees attain maturity. These seeds will comprise
a range of varieties to provide adaptation to local micro climates and to reduce
vulnerability to disease. Development of the E1 seed will continue to deliver
new varieties and anticipated higher yields in keeping with the improvements
made in commercial crops over the years.

We expect the first volume harvests from initial planting undertaken with wild
seed in 2006 to produce modest yields of crude jatropha oil in 2008. We expect
the yield from our planting of wild seed to improve such that, after 5-6 years
with a well maintained crop, we can achieve yields of up to 1.7 tonnes per
hectare.

This should compare favourably with the yields from crops that have already
experienced considerable development, including soya (c.0.4 tonnes per hectare)
and rapeseed (c.1.0 tonnes per hectare) and with the potential to head over the
longer-term towards those of palm (c.4-5 tonnes per hectare).

In addition to the work on the scientific breeding and propagation of jatropha,
we believe we are taking a lead role in developing programmes to optimise the
agriculture methods of commercial jatropha production, including irrigation,
pruning methods, planting densities, fertilisers and microclimate control. This
work, begun at our Indian centre in Coimbatore, will also be carried out at the
Regional Development Centres (RDCs) that we intend to establish in Southern
Africa and South East Asia during the next 6-9 months. Early indications are
that substantial improvements can be delivered in oil yield using such methods.
Deployment of training programmes to ensure good agronomic practice have begun
on a large scale.

We continue to explore uses for our jatropha seed cake. We are excited by our
current findings that the seedcake can be economically processed into a high
protein content animal feed with much greater revenue potential than for lower
value uses such as fertiliser. We continue to investigate the commercial
potential of this application.

We are also taking our first steps towards developing a multi feedstock
strategy, including exploring offtake agreements for other inedible oils.

Refining

We aim to capitalise on the structural factors driving biodiesel demand in the
UK and EU, and to use our first mover  advantage to become one of the clear
leaders in the sector. We believe that the attractive economics of our highly 
flexible, modular capacity, using predominantly third party edible oil
feedstocks, will be capable of generating  significant returns as the UK market
responds to the challenges of the RTFO. Our strategy to focus on refining our
own  supplies of higher yielding jatropha and other inedible oils addresses
market exposure to fluctuations in feedstock  prices.

We have made substantial progress on our refinery operations with the deployment
of our first four D1 20 refineries at  our site in Middlesbrough. As planned,
all four units are now in beneficial operation, giving us an interim production 
capacity of 32,000 tonnes per annum.

Bringing these refineries into operation identified certain shortfalls in the
original design and configuration. These  commissioning issues have put pressure
on 2006 production and the volume of biodiesel to be produced in the final 
months of the year will be somewhat less than originally anticipated.
Nonetheless we have been able both to identify  and resolve the commissioning
issues speedily and to use the experience gained to improve performance. The
first unit  has now been run up to 106% of nameplate capacity.

As a result, we believe we are now in a position to improve the performance of
our future D1 20 units, increasing  annual unit capacity by 25% from 8,000 to
10,000 tonnes. The additional five units currently in manufacture will be  built
to the new specification and an extra sixth unit will be added. We had
anticipated that the next five units would  be deployed to Middlesbrough by the
end of the year, but given the time required to implement the design changes we
now  expect deployment to take place in early 2007. This will enable us to add a
further 60,000 tonnes of capacity to the  Middlesbrough site by early 2007,
rather than the expected additional increase of 40,000 by year end 2006.
Irrespective  of the change in the timing of deployment, our production targets
remain unaltered.

One of the advantages of D1's modular technology is that it enables us to build
and commission refineries much faster  than competing technologies in an
expanding market. We would expect this to reduce as we deliver manufacturing 
improvements and economies. The ability of the D1 20 to refine different mixes
of oils and oils of differing qualities  is a key competitive advantage over
large scale refining solutions.

The experience gained in improving the D1 20 will also contribute to enhancing
the design, now underway, of the 50,000  tonne per annum refinery units. Our
plans for further capacity expansion include the deployment of these units in
2007.  We believe these will deliver at least five times the output at less than
five times the capital cost of operation. The  availability of both the 10,000
tonne and 50,000 tonne refineries increases our market flexibility and coverage.
The acquisition of a further site for both conversion to biodiesel production
and for deployment of the 10,000 and  50,000 tonne units is central to our
ambition to be a leader in UK and global biodiesel refining capacity. We have 
therefore recently exchanged contracts to acquire a 47 acre site complete with
production and storage facilities at  Bromborough on Merseyside for £3m.
Bromborough represents a second major biodiesel production, storage and
distribution  centre to complement that already established in Middlesbrough.
Once acquired and operational, the new site is expected  during 2007 to have an
initial production capacity of 100,000 tonnes, with a further 100,000 tonnes of
planned refinery  capacity to be added in 2008.

Conversion of the existing site to biodiesel production will enable us to
increase production capacity in 2007 at an  estimated capital cost which is
significantly lower than construction of a new-built site. The site offers
distribution  access within a 70 mile radius to large UK urban markets in the
North and Midlands, as well as seaborne delivery to  potential UK west coast
refinery customers and to Ireland.

Combined with the planned production capacity from our Middlesbrough plant, the
Bromborough acquisition has the potential to increase our installed biodiesel
production capacity from our existing target of 220,000 tonnes by the end of
2007 to 320,000 tonnes, rising to 420,000 tonnes by the end of 2008. We believe
that D1 has the opportunity to become the one of the leading players in the UK
and global markets by 2008.

Internationally, we expect that approximately half of the vegetable oil we
harvest from jatropha planting in developing  countries will be refined and used
locally with the balance exported. We expect to deploy our modular D1 20
refineries  into our regional operations in combinations of the same semi-
permanent clusters of four that we are currently  operating on Teesside. The
50,000 tonne refinery units are also likely to feature in overseas deployments.
In addition  to utilising our proprietary refining technology, we are also open
to overseas expansion of our refining activities via  either the acquisition of
existing plant for conversion or immediate use or investment into new biodiesel
refining  projects. Ports, refineries and other major industrial locations are
likely to be the prime locations for refinery  installation.

Trading

We are in advanced discussions with a number of UK parties around possible
offtake agreements which will enable us to  sell out the full production
capacity of the Teesside site. We expect to announce the outcome of these
discussions  shortly. We have also recently hired a sales and marketing manager
to target new customer sectors. No substantial  quantities of biodiesel have yet
been sold as the existing refining capacity has just recently attained
beneficial  operation.

We continue to build our trading and logistics capabilities to meet the needs of
the business globally. Our current soya oil feedstock is purchased on
international markets and delivered to Teesside by marine tanker. Globally, we
are exploring opportunities to deal in physical commodities, such as palm methyl
ester. In Southern Africa, we have recently formed a joint venture with Southern
Alliance, a major grain and commodity trader in the region, for the trading of
agricultural commodities for the biofuels market. The joint venture will expand
D1's capabilities in South Africa, Swaziland and Zambia in the transport and
trade of seeds, seedlings and seedcake and expelling and supply of oil to
biodiesel refineries.

Finances

Our ongoing investment in the development of our agronomy, refining and trading
strategy is reflected in the financial  results for the six months ended 30
June, 2006.

The financial results have been prepared on a basis consistent with previous
periods except that the Group has adopted  one new accounting policy. During the
period the Group adopted FRS20, Share Based Payments, and accordingly has 
recognised a charge in the current and preceding periods equivalent to the fair
value of share options in issue.

Total Group turnover of £32,000 (2005: £32,000) relates to sales of biodiesel
generated through testing of the first D1  20 and also the sale of seedlings to
farmers in India.

Administrative expenses of £4.7m (2005: £3.4m restated) reflect the continued
investment in our internal resources and  the development of Middlesbrough as
our global headquarters. Significant investment has also been made in the 
operational teams in Southern Africa and South East Asia in order to facilitate
the delivery of our regional strategy.  Interest earned of £0.4m (2005: £0.2m)
relates to monies held on deposit.

The loss on ordinary activities before and after taxation was £4.7m (2005: £3.3m
restated) and the loss per ordinary  share was 15.17p (2005: 15.20p restated).
As the Group has brought forward tax losses and losses were incurred in the 
period, there was no corporation tax payable.

Cash in hand as of 30 June was £13.7m (2005: £26.4m) and net cash was £12.8m
(2005: 26.4m). The difference between  gross and net cash relates to the
mortgage on the Middlesbrough site of £0.8m (2005: £nil). The net cash outflow
in the  period reflects the investment of £4.8m in the manufacture and
commissioning of the first four D1 20's together with  the associated tankage
and infrastructure for both these and further units. There has also been an
investment of £0.8m  in working capital reflecting the building of our stock of
vegetable oils for future processing.

A lease finance package to be provided by Allied Irish Bank and Investec for the
roll out of our D1 20 units is being  finalised. The proposed terms of the
agreement include the sale and leaseback of the first four D1 20 units for a
value  of £850,000 plus VAT per unit, with a facility to finance a further two
of the new 10,000 tonne units once completed.  The facility will allow for an
initial cash release of 35%, with further annual cash releases scheduled over
the five  year term of the agreement. We are confident that we can duplicate
these terms against further deployments.

Additionally, in order to support the ambitions of the trading business we have
organised appropriate lines of credit  totaling $5m.

Management

We are delighted to announce the appointment of Lord Oxburgh as a Non-Executive
Director of the Company with the intention of his becoming Chairman early next
year. It is intended that when Lord Oxburgh succeeds to the Chairmanship, the
present Chairman, Karl Watkin, will remain as a Non-Executive Director. We
believe the involvement in the business of a scientist, businessman and advocate
of action on climate change of the calibre and reputation of Ron Oxburgh affirms
not only the progress which the company has made but also demonstrates the
growing importance and maturity of the biofuels sector.

Operational Summary

These interim results mark a very important milestone in the development of D1.
We have substantial planting underway, our agronomy research is progressing
rapidly and our UK refineries are now operational. D1 has delivered very
substantial progress in the first of half of 2006 and we are now integrating our
operations into a single, sustainable business delivering value from
earth-to-engine.

In creating this business we are not only doing something tangible to reduce the
impact of climate change through the development of sustainable biodiesel, but
we are doing it in a way that we believe will benefit many of the world's poorer
countries through the growing of jatropha. We are very proud that our current
planting operations have already created many thousands of new jobs for the
rural poor, particularly in Africa and India.

Outlook

The Board is pleased with the progress that the business has made in the first
half of the year, and is looking forward  to continuing development in the
second half. We believe that the shift to renewable fuels for transport offers 
opportunities for substantial business growth globally. Our strategy continues
to be set firmly on delivering value  from earth-to-engine through agronomy,
refining and trading.

CONSOLIDATED PROFIT AND LOSS ACCOUNT
Unaudited results for the six months ended 30 June 2006

                                      Six months    Six months   Year ended 31
                                   ended 30 June ended 30 June        December 
                                            2006          2005            2005
                                       Unaudited     Unaudited         Audited
                              Note          £000          £000            £000
                                                      Restated        Restated
Turnover:
Group and share of joint
venture                                     32.6          32.1           461.7
Less: Share of joint venture                   -          (0.9)          (46.2)
                                        --------      --------       ---------
Group turnover                              32.6          31.2           415.5
Cost of sales                             (389.8)        (24.5)         (501.1)
                                        --------      --------       ---------
GROSS (LOSS)/PROFIT                       (357.2)          6.7           (85.6)
Administrative expenses                 (4,675.6)     (3,441.2)       (8,553.8)
                                        --------      --------       ---------
OPERATING LOSS                          (5,032.8)     (3,434.5)       (8,639.4)
Joint venture and associate:
Share of operating
losses and goodwill
amortization                               (31.7)        (17.0)          (51.6)
                                        --------      --------       ---------
Share of operating loss
of joint venture                           (31.7)        (17.0)          (51.6)
                                        --------      --------       ---------
GROUP OPERATING LOSS                    (5,064.5)     (3,451.5)       (8,691.0)
Interest receivable and
similar income                             353.0         168.6           764.1
Interest payable and similar
charges                                    (26.8)            -               -
                                        --------      --------       ---------
LOSS ON ORDINARY ACTIVITIES
BEFORE TAXATION                         (4,738.3)     (3,282.9)       (7,926.9)
Tax on loss on ordinary                        
activities                                     -             -               -
                                        --------      --------       ---------
LOSS ON ORDINARY ACTIVITIES
AFTER TAXATION                   3      (4,738.3)     (3,282.9)       (7,926.9)
Equity minority interests                      -             -               -
                                        --------      --------       ---------
LOSS FOR THE FINANCIAL PERIOD
WITHDRAWN FROM RESERVES                 (4,738.3)     (3,282.9)       (7,926.9)
                                        --------      --------       ---------

LOSS PER ORDINARY SHARE
                                        --------      --------       ---------
Basic and diluted loss
per ordinary share               4         15.17p        15.20p          30.14p
                                        --------      --------       ---------

Consolidated statement of total recognised gains and losses
Unaudited results for the six months ended 30 June 2006

                                   Six months        Six months     Year ended
                                ended 30 June     ended 30 June    31 December
                                         2006              2005           2005
                                    Unaudited         Unaudited        Audited
                                         £000              £000           £000
                                                       Restated       Restated
Loss for the financial period
Loss for the financial period 
- Group                              (4,738.3)         (3,282.9)      (7,926.9)
- associates and joint ventures             -                 -          (51.6)
Currency translation difference          31.9               1.0          (29.9)
                                     --------          --------      ---------
Total recognised loss for the
financial period                     (4,706.4)         (3,281.9)      (8,008.4)
                                     --------          --------      ---------


Reconciliation of movement in equity shareholders' funds
Unaudited results for the six months ended 30 June 2006

                                   Six months        Six months     Year ended
                                ended 30 June     ended 30 June    31 December
                                         2006              2005           2005
                                    Unaudited         Unaudited        Audited
                                         £000              £000           £000
                                                     
Loss for the financial period        (4,738.3)         (3,282.9)      (7,926.9)
Issue of shares by the
company (net of expenses)               395.1          24,425.1       24,393.7
Purchase of own shares                      -          (3,479.8)      (3,479.9)
Proceeds on sale of own shares              -                 -        3,462.0
Share option charge (FRS 20)            505.0             205.0          580.0
Currency translation difference          31.9               1.0          (29.9)
                                     --------          --------      ---------
Net (decrease)/increase in
equity shareholders' funds           (3,806.3)         17,868.4       16,999.0
Opening equity shareholders' 
funds                                26,691.3           9,692.3        9,692.3
                                     --------          --------      ---------
Closing equity shareholders'
funds                                22,885.0          27,560.7       26,691.3
                                     --------          --------      ---------


CONSOLIDATED BALANCE SHEET
Unaudited results for the six months ended 30 June 2006

                                         As at         As at             As at
                                       30 June       30 June                31
                                          2006          2005     December 2005
                                     Unaudited     Unaudited           Audited
                              Note        £000          £000              £000
                                                    Restated          Restated
FIXED ASSETS
Intangible                                62.3          65.8              64.1
Tangible                               9,998.6       1,421.6           4,170.0
Other Investments                         14.0             -              14.0
                                      --------      --------         ---------
                                      10,074.9       1,487.4           4,248.1
                                      --------      --------         ---------
CURRENT ASSETS
Debtors                                1,204.6         793.9             725.3
Stock                                  1,163.6         308.0             126.3
Cash at bank and in hand              13,722.5      26,449.9          24,281.4
                                      --------      --------         ---------
                                      16,090.7      27,551.8          25,133.0
CREDITORS: amounts
falling due within one
year                                  (2,387.6)     (1,376.8)         (1,823.2)
                                      --------      --------         ---------
NET CURRENT ASSETS                    13,703.1      26,175.0          23,309.8
                                      --------      --------         ---------
TOTAL ASSETS LESS CURRENT
LIABILITIES                           23,778.0      27,662.4          27,557.9
CREDITORS: amounts falling 
due after more than one year            (840.0)        (84.7)           (840.0)
Provisions for liabilities
and charges:
Share of gross assets in
joint venture                             75.0          28.1              75.0
Share of gross liabilities 
in joint venture                        (128.0)        (45.1)            (96.0)
Share of net liabilities in
associate                                    -             -              (5.6)
                                      --------      --------         ---------
                                         (53.0)        (17.0)            (26.6)
                                      --------      --------         ---------
NET ASSETS                       3    22,885.0      27,560.7          26,691.3
                                      --------      --------         ---------

CAPITAL AND RESERVES
Share capital                    5       318.7         312.4             312.3
Share premium                    5    37,493.8      37,136.0          37,104.7
Merger reserve                   5       437.7         437.7             437.7
Own shares held                  5      (484.0)     (3,479.8)           (484.0)
Profit & loss reserve            5   (14,881.2)     (6,845.6)        (10,679.4)
                                      --------      --------         ---------
TOTAL EQUITY SHAREHOLDERS'
FUNDS                                 22,885.0      27,560.7          26,691.3
                                      --------      --------         ---------

CONSOLIDATED CASH FLOW STATEMENT
Unaudited results for the six months ended 30 June 2006

                                  Six months      Six months     Year ended 31
                               ended 30 June   ended 30 June          December 
                                        2006            2005              2005
                                   Unaudited       Unaudited           Audited
                          Note          £000            £000              £000
Net cash
(outflow) from
operating activities         a      (5,344.4)       (3,678.9)         (7,747.2)
                                    --------        --------         ---------
Returns on investments and
servicing of finance
Interest received                      326.2           168.6             764.1
                                    --------        --------         ---------
Net cash inflow from
returns on investments                 326.2           168.6             764.1
                                    --------        --------         ---------
Capital expenditure and
financial investments
Payments to acquire share
of associated company                      -               -             (25.0)
Payments to acquire
tangible fixed assets               (5,936.2)         (600.4)         (3,445.0)
                                    --------        --------         ---------
Net cashflow from capital
expenditure                         (5,936.2)         (600.4)         (3,470.0)
                                    --------        --------         ---------
Financing
Issue of ordinary share
capital                                    -        25,791.4          25,791.2
Costs of raising finance                   -               -          (1,397.5)
Expenses paid in 
connection with share
issues                                     -        (1,366.3)                -
Purchase of own shares                     -        (3,479.8)         (3,479.9)
Proceeds on disposal of
own shares                                 -               -           3,462.0
Proceeds from share sales              395.5               -                 -
New long term loans                        -            58.9                 -
Working capital element of
finance lease                              -            (6.0)            (43.7)
Mortgage                                   -               -             840.0
                                    --------        --------         ---------
Net cashflow from financing            395.5        20,998.2          25,172.1
                                    --------        --------         ---------
(Decrease)/increase in cash
in the period                b     (10,558.9)       16,887.5          14,719.0
                                    --------        --------         ---------

Notes to the consolidated cash flow statement
Unaudited results for the six months ended 30 June 2006

a) Reconciliation of operating loss to operating cash flow

                                  Six months      Six months     Year ended 31
                               ended 30 June   ended 30 June          December 
                                        2006            2005              2005
                                   Unaudited       Unaudited           Audited
                                        £000            £000              £000
                                                    Restated          Restated
                                              
Operating loss                      (5,032.8)       (3,434.5)         (8,639.4)
Depreciation                           109.3            10.9              92.1
Amortisation of goodwill                   -             1.8               3.5
Increase in debtors                   (479.3)         (714.6)           (646.0)
Increase in stock                   (1,037.3)         (308.0)           (126.3)
Increase in creditors                  590.7           560.5             988.9
Share option charge (FRS 20)           505.0           205.0             580.0
                                    --------        --------         ---------
Operating cash flow                 (5,344.4)       (3,678.9)         (7,747.2)
                                    --------        --------         ---------


b) Reconciliation of net cash flow to movement in net funds

                                  Six months      Six months     Year ended 31
                               ended 30 June   ended 30 June          December 
                                        2006            2005              2005
                                   Unaudited       Unaudited           Audited
                                        £000            £000              £000

Reconciliation of net cash
flow to movement in net funds         
(Decrease)/increase in cash
in the period                      (10,558.9)       16,887.5          14,719.0
Cash inflow from the increase in
debt and lease financing                   -           (52.9)           (796.3)
                                    --------        --------         ---------
Change in net funds resulting 
from cash flows                    (10,558.9)       16,834.6          13,922.7
(Decrease)/increase in net
funds in period                    (10,558.9)       16,834.6          13,922.7
Net funds at beginning of
period                              23,441.4         9,518.7           9,518.7
                                    --------        --------         ---------
Net funds at end of period          12,882.5        26,353.3          23,441.4
                                    --------        --------         ---------


c) Analysis of changes in net funds

                           At 1 January       Cash flows            At 30 June 
                                   2006                                   2006
                                   £000             £000                  £000
Cash at bank and in hand       24,281.4        (10,558.9)             13,722.5
Long term loans                  (840.0)               -                (840.0)
                               --------         --------              --------
                               23,441.4        (10,558.9)             12,882.5
                               --------         --------              --------

NOTES
Unaudited results for the six months ended 30 June 2006

1.        Basis of preparation

The interim results for the six months ended 30th June 2006 have not been
audited, nor have the results for the equivalent period in 2005. The financial
information contained in this interim report does not constitute statutory
accounts within the meaning of s240 of the Companies Act 1985. Financial
information has been prepared on a consistent basis using accounting policies
set out in the 2005 Annual Report except for the newly adopted policies below.
The figures for the 12 months ended 31st December 2005 do not constitute the
company's statutory accounts as defined in Section 240 of the Companies Act 1985
for that period but have been extracted from the statutory accounts, which have
been filed with the Registrar of Companies. The auditors have reported on those
accounts and that report was unqualified and did not contain a statement under
Sections 237(2) or 237(3) of the Companies Act 1985.

2.        Accounting Policies

New accounting policy

These interim statements have been prepared on a basis consistent with the
financial statements for the year ended 31 December 2005 except for the adoption
of FRS 20 noted below.

The company has adopted FRS 20 - Share Based Payments for the year ending 31
December 2006.  In accordance with this standard, the cost of share options
awarded to employees under the Group's share option schemes is measured by
reference to their fair value at the date of grant.  This cost is recognised
over the vesting period of the options based on the number of options which in
the opinion of the directors will ultimately vest.  The impact on the six months
to 30 June 2006 is a charge of £505k and the impact on the prior periods is
described further below.  The Group has taken advantage of the transitional
provisions contained within FRS 20 and has applied FRS 20 only to share options
granted after 7th November 2002 which had not vested at 1 January 2006.

Comparative figures for the 6 months ended 30 June 2005 and the year ended 31
December 2005 have been restated to apply the provisions of FRS 20, increasing
administrative expenses and consequently increasing losses for those periods, as
follows:

                                       Six months       Year ended 
                                    ended 30 June      31 December 
                                             2005             2005
                                             £000             £000
Loss on Ordinary activities after
taxation prior to adjustment             (3,077.9)        (7,456.9)
FRS20 Share option charge                  (205.0)          (470.0)
Loss on Ordinary activities after
taxation restated                        (3,282.9)        (7,926.9)

The implementation of FRS 20 has no impact on net assets or cash flows in any
period.

3.        Segmental Reporting

Although all results derive from a single class of business the Group operates
in a number of different countries. An analysis of turnover, loss for the
financial period, and net assets/(liabilities) by geographical area is set out
below. The analysis by geographical area reflects the principal regions in which
the Group is active.

                                      Six months    Six months   Year ended 31
                                   ended 30 June ended 30 June        December 
                                            2006          2005            2005
                                       Unaudited     Unaudited         Audited
                                            £000          £000            £000
                                                      Restated        Restated
Loss on ordinary activities before
tax
UK                                      (3,744.6)     (2,914.0)       (6,587.8)
India                                     (154.8)        (40.0)         (306.7)
Joint Venture (India)                      (31.7)        (17.0)          (51.6)
Africa                                    (628.6)       (237.8)         (682.5)
Asia Pacific                              (178.6)        (74.1)         (298.3)
                                        --------      --------        --------
Loss on ordinary activities before tax  (4,738.3)     (3,282.9)       (7,926.9)
                                        --------      --------        --------

Net Assets/(Liabilities)
UK                                      25,769.4      27,996.9        28,258.1
India                                     (445.9)        (42.4)         (326.9)
Joint Venture (India)                      (53.0)        (17.0)          (21.0)
Africa                                  (1,937.9)       (304.1)         (940.7)
Asia Pacific                              (447.6)        (72.7)         (278.2)
                                        --------      --------        --------
Net assets/(liabilities)                22,885.0      27,560.7        26,691.3
                                        --------      --------        --------

4.        Loss per Ordinary share

                                      Six months    Six months   Year ended 31
                                   ended 30 June ended 30 June        December 
                                            2006          2005            2005
                                       Unaudited     Unaudited         Audited
                                             No.           No.             No.
                                                      Restated        Restated
Weighted average number of shares in
issue                                31,231,472      21,603,108     26,297,460
                                     ----------      ----------     ----------

                                          Pence           Pence          Pence
Loss per ordinary share
- basic and diluted                      15.17p           15.20         30.14p
                                       --------        --------       --------


The number of shares in issue at 31 December 2005 was 31,255,481. The total
number of shares in issue at 30 June 2006 was 31,601,730. For the purposes of
calculating the loss per ordinary share the weighted average number of shares
excludes 193,665 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.

5.        Movement on Reserves

          Share Capital   Share Premium   Merger Reserve   Own Shares Held   P&L Reserve      Total
                   £000            £000             £000              £000          £000       £000
                                                                                Restated   Restated
Opening
balance
as at             
1 January
2006              312.3        37,104.7            437.7            (484.0)    (10,679.4)  26,691.3
Retained
loss                  
for the
period                -               -                -                 -      (4,738.3)  (4,738.3)
Issue of
shares by
the                 
company             6.4           389.1                -                 -             -      395.5
Share
option                
charge                -               -                -                 -         505.0      505.0
Exchange
movements             -               -                -                 -          31.5       31.5
                -------         -------          -------           -------       -------    -------
At 30
June              
2006              318.7        37,493.8            437.7            (484.0)    (14,881.2)  22,885.0
                -------         -------          -------           -------       -------    -------


6.        Approval by the Board of Directors

The interim report was approved by the Board of Directors on the 26th September
2006.

INDEPENDENT REVIEW REPORT TO D1 OILS plc

Introduction

We have been instructed by the company to review the financial information for
the six months ended 30 June 2006 which comprises the Consolidated Profit and
Loss Account, Consolidated Balance Sheet, Consolidated Cash Flow Statement and
the related notes 1 to 5. We have read the other information contained in the
interim report which comprises only the report of the Chairman and Chief
Executive Officer and considered whether it contains any apparent misstatements
or material inconsistencies with the financial information. Our responsibilities
do not extend to any other information.

This report is made solely to the company in accordance with guidance contained
in Bulletin 1999/4 'Review of interim financial information' issued by the
Auditing Practices Board. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the company, for our work,
for this report, or for the conclusions we have formed.

Directors' responsibilities

The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.

Review work performed

We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom. A review
consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial data
and based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with International Standards on Auditing (UK and
Ireland) and therefore provides a lower level of assurance than an audit.
Accordingly we do not express an audit opinion on the financial information.

Review conclusion

APB Bulletin 1999/4 requires that we notify you that we have not reviewed the
comparative figures included in the interim report.

On the basis of our review, with the exception of the matter described in the
preceding paragraph, we are not aware of any material modifications that should
be made to the financial information as presented for the six months ended 30
June 2006.

Ernst & Young LLP
Newcastle upon Tyne
27 September 2006

Notes:

1. The maintenance and integrity of the D1 Oils plc web site is the
responsibility of the directors; the work carried out by Ernst & Young LLP does
not involve consideration of these matters and, accordingly, Ernst & Young LLP
accept no responsibility for any changes that may have occurred to the financial
statements since they were initially presented on the web site.
2. Legislation in the United Kingdom governing the preparation and dissemination
of financial statements may differ from legislation in other jurisdictions




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