D1 Oils Plc
23 May 2007
Annual General Meeting
23 May 2007
D1 Oils plc (D1), the UK-based global producer of biodiesel, today held its
Annual General Meeting. D1's Chairman, Lord Oxburgh of Liverpool, said:
The year 2006 was one of substantial achievement across the business. At the
start of the year we had only just begun planting of our primary feedstock,
Jatropha curcas, and our refinery technology was not yet in commercial
manufacture. One year on we believe we are an established leader in the
scientific and commercial development of jatropha, and we have achieved
significant planting worldwide. Our refinery technology is in commercial
operation in Teesside, with further capacity expansion underway on Teesside and
on Merseyside. A successful placing in December, despite challenging market
conditions, raised £49.2m before expenses to fully fund the business. The funds
raised will enable us to maintain our growth and development. Over the year and
in the months since we believe we have built the foundations of a business that
will deliver supplies of sustainable, inedible oils for biodiesel production.
2006 began with the January appointment of Elliott Mannis as Chief Executive
Officer and the subsequent redefinition of our organisation and future strategy
around the three core business activities of agronomy, refining and trading.
With our direction and purpose set, we were able to achieve significant progress
throughout the business.
In agronomy, together with our partners, we have a substantial jatropha planting
footprint across our three operational regions of Southern Africa, India and
South East Asia. By the end of 2006 we had planted or obtained rights to offtake
from a total of over 124,000 hectares. As of 31 March 2007 we have increased
this to over 156,000 hectares.
Our plant science programme is progressing very positively. We have gathered a
sufficiently wide range of jatropha material to support the first ever
commercial breeding and product placement trials for the crop. We have now
collected more than 200 accessions of jatropha from three different continents
and over twenty countries. Using field and laboratory data from this material,
we have established a breeding process and global trials network to identify
which individual jatropha cultivars are best adapted to the different
cultivation zones. The first commercial outcome of the plant science programme
is our 'E1' elite seed material, selected for higher yield and good biodiesel
profile. We expect this seed will deliver oil yields of 2.7 tonnes per hectare
under properly managed conditions when the trees attain maturity. E1 seed
multiplication is continuing in all three regions. We expect to be able to plant
50,000 hectares with this material in 2008.
In refining, we brought our first biodiesel refineries in the UK into beneficial
operation, creating a total capacity of 32,000 tonnes at our Teesside site. We
also succeeded in processing crude jatropha oil into European standard biodiesel
in March 2006. During January 2007 we completed the acquisition of a second
refining and distribution site at Bromborough on Merseyside, which we anticipate
will enable us to add a further 100,000 tonnes of capacity by the end of 2007.
Work on the first phase of operations to convert the existing facilities for
production of biodiesel at Bromborough is on track, and the Environment Agency
has now confirmed that biodiesel processing can be undertaken at the site within
our existing permit. We delivered our fifth D1 20 refinery unit to our Teesside
site on 23 April this year. This is the first of our upgraded D1 20 units and
has an enhanced capacity of 10,000 tonnes per year. The commissioning of the
unit will increase our Teesside production capacity to 42,000 tonnes.
In trading, we began the development of a global supply chain to support our
agronomy and refining operations. Having received the first volume shipments of
soya oil in the middle of 2006, we signed our first offtake deal with Petroplus
for supply of soya biodiesel in October last year.
On 1 February 2007 the Board stated that it was continuing negotiations begun in
2006 with certain parties. Negotiations with one of these parties continue. A
non-binding Memorandum of Understanding regarding a strategic collaboration has
been agreed and a further announcement will follow in due course.
During the year we raised additional funding of £49.2m gross (£46.2m net of
expenses). Net cash at 31 December was £48.2m. The loss for the year was £12.6m
and reflects continuing investment for future growth.
Subsequent to the year end, Karl Watkin, a founder of the Company, stood down as
Chairman to be replaced by myself after I joined the Board in September 2006.
Karl Watkin remains with the Company as a Non-Executive Director. Peter
Campbell, also a founder director, stood down from the Board as of 31 March
2007. We would like to thank both for everything they have contributed to the
Transport energy policies across the globe are now increasingly driven by the
challenges of climate change and fuel security. We believe biofuels, and in
particular biodiesel, offer a means to secure cost-effective supplies of
sustainable transport fuel in the medium-term. Biofuels are increasingly
supported by national and regional policy initiatives. In the UK a mandatory
biodiesel blend will be phased in progressively under the Renewable Transport
Fuels Obligation (RTFO).
Meeting UK and European demand without recourse to imported feedstocks is
increasingly challenging. The short-term impact of lower diesel prices and
increased food-grade feedstock costs is now significantly impacting industry
margins, and we believe it prudent to plan for edible vegetable oil prices
remaining relatively high for the foreseeable future. Having protected our
margins by securing supplies of soya at significantly lower prices earlier in
2006, we are exploring alternative avenues to meet our offtake commitments.
We believe this situation validates our strategy to develop supplies of
alternative, inedible oils like jatropha that are not subject to the same demand
pressures as food oils. It is our objective to land crude jatropha oil in the UK
at a target price that is very competitive with the cheaper food-grade
alternatives and to be able to refine it profitably without government subsidy
or support. We expect our first supplies of jatropha oil during 2008.
Our goal is to concentrate on planting and offtake relationships that can
deliver supplies of jatropha oil in commercial volumes, and to develop the range
of logistics capabilities to bring that oil to market, both in producing regions
and in developed markets, including the UK and continental Europe. The Board is
confident that our global team is well placed to realise this goal. On behalf of
the Board we would like to take this opportunity to thank our executive
management, our business teams, and our partners and advisors for their hard
work and support over the year.
Graham Prince, Head of Corporate Communications
Tel: +44 (0) 1642 755580
Mobile: +44 (0) 7973 323840
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
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