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D1 Oils Plc (NEOS)

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Thursday 01 February, 2007

D1 Oils Plc

Q4 2006 Business Update

D1 Oils Plc
01 February 2007

Press Release


                        D1 Oils Q4 2006 Business Update


1 February, 2007


D1 Oils plc (D1), the UK-based global producer of biodiesel, today announces its
quarterly business update for the fourth quarter ended 31 December 2006.


Agronomy

Up to 31 December 2006, D1 has planted or obtained the rights to offtake from

a total of over 124,000 hectares of jatropha worldwide. This represents an
increase of 10,000 hectares on the total of 114,000 hectares as at 30 September
2006.


In Southern Africa, we were pleased with the increase in jatropha planting by
communities in Zambia under oil and seed supply agreements. In South East Asia,
where we have experienced rapid increases in planting over previous quarters, we
have concentrated on consolidating our new planting relationships in preparation
for expanding planting in 2007. Rainfall patterns in India during this quarter
were not conducive to extensive planting, and project teams focused on
preparation for the 2007 season. We anticipate strong planting activity in the
first quarter of 2007.



The cumulative position at 31 December 2006 is summarised in the table below:

           Managed          Contract           Seed purchase and oil     Total
           plantations       farming           supply agreements

India       -               12,740             36,361                    49,101

Southern    5,155           -                  6,046                     11,201
Africa

South       -               30,494             33,260                    63,754
East Asia

Total      5,155            43,234             75,667                    124,056



Our jatropha plant science and agronomy programme is making strong progress. We
have now collected over 180 accessions of jatropha material, including new
material from Central America. We are in possession of the first grain and oil
yield data, which we will use to steer our international breeding programme and
as a guide for an international network of product placement trials. In these
trials we intend to identify individual jatropha cultivars optimally adapted to
different cultivation zones in our target planting areas. Meanwhile,
multiplication of our first selected E1 seed is underway in Southern Africa,
India and South East Asia, and we are on track for planting out a significant
quantity of this material in 2008. We have established a new Regional
Development Centre (RDC) in Swaziland. We are also initiating the design of our
sustainability policies for the crop.


Refining

We completed the purchase of a second major biodiesel site at Bromborough on
Merseyside in early January to access a cost-effective means to expand
production capacity. The first phase of operations is now underway to convert
the existing facilities to add 100,000 tonnes of biodiesel capacity during 2007.


Refining margins across the industry were affected during the quarter by the
continuing combination of lower diesel prices and increased feedstock costs,
particularly the high cost of soya oil which has remained above $750 per tonne
for over 3 months. Having made the decision to secure supplies of soya for our
Middlesbrough refinery at significantly lower prices earlier in 2006, we are
actively managing stocks to ensure that they last as long as possible consistent
with producing positive margins and meeting our contractual obligations. As a
result we ran our refineries below capacity during the quarter producing less
biodiesel than originally planned. Sales of biodiesel for the quarter totalled
3,286 tonnes.


Under the circumstances, we believe that it is now prudent to plan for edible
vegetable oil prices remaining relatively high for the immediately foreseeable
future. However, we believe that the introduction in the UK of a mandatory 5%
biodiesel blend to be phased in progressively from April 2008 under the
Renewable Transport Fuels Obligation (RTFO), supported by a continuation of the
20 pence duty derogation and the addition of a 15 pence per litre penalty,
should make a significant and positive difference to margins. Furthermore, we
believe the persistence of higher prices of edible vegetable oils reconfirms and
reinforces our strategy to land crude jatropha oil in the UK at a target price
of $475 to $500 per tonne.


Accordingly the Board now plans to extend the phasing for the full rollout of
our target of 320,000 tonnes of refining capacity from the end of 2007 to the
end of 2008. We are confident that the programme can be accelerated prior to the
implementation of the RTFO, should there be a sustained return to increased
diesel prices and to historic levels for commodity prices.



Trading

The first delivery of product to Petroplus, under our first major UK biodiesel
offtake contract, was made on 26 October 2006.



Offer period update

As announced on 21 November 2006, the Board has ceased discussions regarding a
possible offer, but is continuing negotiations with certain of the parties
regarding the possible acquisition of a substantial, but less than a
controlling, shareholding in the Company. These negotiations are continuing with
a view to assisting the Company to accelerate significantly the roll out of its
business plan.


Elliott Mannis, Chief Executive Officer of D1 Oils, commented:

'Whilst the current high prices for traditional food-grade feedstocks are a 
challenge, we believe they are a validation of our strategy of creating, in 
jatropha, a low-cost, long-term supply of inedible feedstock, the price of which should 
be driven solely by its fuel value.  We also believe that our modular approach to 
refining is a significant advantage in providing flexibility in uncertain markets.

We made steady progress in planting in the last quarter and our plant science and 
agronomy programme is developing strongly. We are very pleased to see planting 
gaining traction in Southern Africa. Our planting plans for 2007 remain on track.

Having successfully completed our placing, we are well positioned to respond to
the current challenges that the industry is facing and to seize the
opportunities that are clearly on the horizon.'


Contacts:


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


Brunswick Group:
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.






                      This information is provided by RNS
            The company news service from the London Stock Exchange