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D1 Oils Plc (NEOS)

  Print      Mail a friend       Annual reports

Wednesday 09 April, 2008

D1 Oils Plc

Final Results - Part 1

D1 Oils Plc
09 April 2008

Part 1

                                  D1 Oils plc


9 April 2008


            Preliminary Results for the Year Ended 31 December 2007

D1 Oils plc, the UK-based global producer of biodiesel, today announces its
preliminary results for the year ended 31 December 2007.

                                 Key Highlights
     
•    Successful placing to raise £14.9m net of expenses, subject to
     shareholder approval

•    Strategic re-positioning of D1Oils; 
     •     Ongoing focus on plant science and planting
     •     Withdrawal from refining and trading


                        Operational highlights for 2007

•    Established global planting joint venture with BP to create a world-leading 
     business in jatropha

•    Plant science operations to develop high-yielding varieties of jatropha 
     progressing well

•    Commercial breeding and product placement trials commenced

•    Multiplication of higher-yielding E1 seed underway


                                   Financials

•    Gross cash at 31 December 2007 was £14.3m

•    Loss for the year was £46.1m (2006: £12.6m)


Commenting on the results, Elliott Mannis, Chief Executive Officer, said:

'We are pleased to announce a proposed placing to raise £14.9m net of expenses
to support our continuing development of alternative sustainable feedstocks for
the production of biodiesel. We are particularly pleased that the placing is
being supported by our leading shareholders who together represent approximately
60% of the shareholder base.

2007 brought significant challenges for the biofuels industry, including rising
feedstock prices, growing concerns on sustainability and imports of heavily
subsidised US biodiesel. These challenges have reinforced the imperative at the
heart of D1's business strategy: the need to develop low-cost supplies of
alternative, sustainable raw materials for biofuels that are not subject to the
same price pressures as food-grade cereals and oil seeds.

Refining food-grade vegetable oils into biodiesel in Europe has developed into a
highly competitive market in which only very large scale operations are viable.
We therefore intend to withdraw from this business and propose to close our UK
refining sites. We believe that the best way to deliver value for shareholders
is to leverage our technology and experience in jatropha to focus the business
on the upstream breeding, planting and managing of new varieties of sustainable,
commercial biofuel crops. Our upstream plant science and related technologies,
always core to our vision and business, will now be our main commercial thrust.
Our successful fundraising now enables us to take that business to the next
level.'



Lord Oxburgh of Liverpool, Non-Executive Chairman, added:

'The political momentum to reduce emissions from transport and enhance energy
security remains substantial in the majority of developed economies, and there
is growing recognition of the potential for farmers in the developing world to
meet this demand. Against this background there is real concern that it will not
be possible to meet demand for both fuel and food without threatening forests in
developing countries. In this situation, Jatropha curcas brings the advantages
of reforestation and sequestration of CO2 in the trees and their root systems,
the production of a feedstock oil for biodiesel from the grain, and the creation
of jobs in some of the poorest parts of the world.'

Contacts

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

Brunswick Group:
Kate Holgate
Tel: +44 (0) 20 7404 5959


Notes to Editors:

D1 Oils plc is a biofuels technology company. Our strategy is to develop new
energy crops into sustainable commercial fuels. We provide technology and
services for the breeding, development, planting and harvesting of new varieties
of commercial biofuel crops, focusing on alternative, sustainable feedstocks
that are not subject to the same price pressures as food-grade crops. We have an
established plant science and planting programme for Jatropha curcas, a robust,
tropical oilseed bearing tree. Jatropha produces inedible oil feedstock for
biodiesel and is able to make use of land not suitable for arable agriculture.

Report of the Chairman and the Chief Executive Officer

Lord Oxburgh of Liverpool, Non-Executive Chairman, and Elliott Mannis, Chief
Executive Officer

The following is our report to shareholders of our results for the year ended 31
December 2007.

2007 brought significant challenges for the biofuels industry, including rising
feedstock prices and growing concerns in Europe over the sustainability of some
feedstocks. Imports of heavily subsidised biodiesel from the United States (US)
into the European market exacerbated these issues. These challenges have
reinforced the imperative at the heart of D1's business strategy: the need to
develop low-cost, long-term supplies of alternative, sustainable feedstock for
biofuels that are not subject to the same price pressures as food-grade crops.
BP's decision in 2007 to join D1 in a joint venture to develop global planting
of Jatropha curcas was, we believe, a significant endorsement of this approach
to feedstock supply. It also recognised D1's lead in the plant science and
cultivation practices required for the commercialisation of this new energy
crop. We believe that the development of alternative, sustainable biofuels
feedstocks, of which Jatropha curcas is one of the most promising, offers
significant opportunities for growth in the biofuels sector. In the light of
this potential and the continuing difficulties facing biodiesel refining in
European markets, the Board proposes to cease our refining and trading
operations and to focus the business exclusively on the technology and services
required for the upstream breeding, development and planting of new varieties of
commercial biofuel crops.

We began the year having successfully completed a placing in December 2006
raising £49.2m, enabling us to fund the development of our plant science
programme and to expand our United Kingdom refining capacity. In June 2007, we
announced our 50:50 joint venture with BP. This was approved by our shareholders
at an Extraordinary General Meeting (EGM) in July. The company formed for the
purposes of the joint venture, D1-BP Fuel Crops Limited, began operations in
October 2007.

The establishment of D1-BP Fuel Crops recognises the potential for the
development of biofuels that make use of marginal land. In operational terms, it
is turning the wide range of jatropha planting operations and relationships
established by D1 worldwide since 2005 into a cohesive, integrated and
sustainable production base for the supply of crude jatropha oil at competitive
prices. It also provides, through an exclusive supply arrangement between D1 and
D1-BP Fuel Crops for the supply of jatropha seedlings and other services, a
secure commercial foundation on which to build D1's plant science operations
globally.

In refining and trading, which is based in the United Kingdom, rising food oil
prices and growing volumes of heavily subsidised US imports progressively
favoured only those operators able to refine at the largest scale and at the
lowest unit cost of production. We therefore began to scale back our investment
in capacity and to purchase refined imported material to meet supply contracts.
As a result of a thorough review of operations in this area, the Board's view is
that refining and trading no longer represent the best use of shareholders'
funds. We therefore intend to withdraw from this business segment.

Plant science and technology programme

Plant science operations made solid progress throughout the year. Having built
up our collection of accessions of Jatropha curcas from around the globe, we
began commercial breeding and product placement trials for the crop. We started
multiplication of our first generation E1 seed material, selected for higher
yield and good biodiesel profile, and introduced our Sustainable Oil Supply
Programme (SOSP) to enable oil production forecasting and to monitor
implementation of sustainability policies.

We stepped up the pace of these activities following the creation of D1-BP Fuel
Crops. D1's plant science operation now acts as the exclusive supplier of elite
planting material to the joint venture. We have expanded our plant science
activities to support joint venture planting in each region. D1-BP Fuel Crops is
expected to plant up to 50,000 hectares of E1 jatropha seedlings in 2008.

D1's established plant science infrastructure for the development of jatropha as
a commercial crop also enables the exploration of opportunities to develop a
range of alternative, sustainable, energy crops into new commercial biofuels. We
are currently undertaking early stage investigation into several of these crops.
In addition, our plant science team is also developing a processing technology
to enable the seedcake remaining after the extraction of oil from jatropha grain
to be processed into animal feed.

Relationships with established plant science and agricultural research
institutions are essential to the development of both our breeding programme and
planting practices. We are pleased to announce that D1 has recently concluded an
agreement with the International Crops Research Institute for the Semi-Arid
Tropics (ICRISAT) to undertake research into jatropha in Andhra Pradesh in
India.

D1-BP Fuel Crops

Planting operations principally comprise D1-BP Fuel Crop's efforts to encourage
third parties to undertake the planting of jatropha across many global locations
and also to secure offtake agreements in respect of that planting. Our efforts
in this regard have continued to increase and the estimated planted area has
grown accordingly over the last 12 months. With effect from 1 October 2007, all
of D1's existing planting of Jatropha curcas transferred to our joint venture
with BP, D1-BP Fuel Crops Limited, and all subsequent jatropha planting is
conducted through the joint venture.

Jatropha planting expanded significantly throughout the year, particularly in
North East India where the partnership with Williamson Magor, one of India's
leading tea companies, planted more than 50,000 hectares in the current season.
Total planting by Williamson Magor now stands at over 62,000 hectares. Planting
in South East Asia also expanded steadily during the year, and new relationships
were established with new partners, including PT Astra Agro Lestari, part of the
Jardine Matheson Group. Progress in Africa was slower, and flooding and low
germination rates due to the poor storage and transportation of seed led to the
failure of a proportion of planting in Zambia.

The experience of poor germination and other general agricultural risks had led
to a thorough review of existing assets and their likely performance now that
growing conditions are better understood and planting is more mature. As
experience has increased it is possible to assess more accurately the quantity
and quality of successful jatropha planting and recognise where planting has
failed or where suppliers lack sufficient reliability. As a result, provisions
have been recorded against planting, the majority with third parties with whom
there are arm's length supply agreements for grain and oil, that is either
unlikely to deliver the requisite quantity and quality, or which is too far from
available logistics facilities to make harvest and transport viable.

Following these provisions, total planting and rights to offtake at 31 March is
192,016 hectares worldwide. This is lower than original expectations for the end
of the current planting year, but as D1-BP Crops strengthens its planting and
crop management in the light of improving plant science expertise and greater
experience on the ground, it has been necessary to slow the pace of planting as
locations and partners are reviewed for performance. It has not therefore been
possible to replace all of the areas provided against with new planting
elsewhere. D1-BP Fuel Crops is evaluating a range of options for organising
planting operations along with different models to optimise the future delivery
of oil to market. D1-BP Fuel Crops will produce its first modest volumes of
jatropha oil during the second half of 2008.

Refining and trading

Our refining and trading activities in 2007 were adversely impacted by a
combination of high feedstock prices and imports of heavily subsidised biodiesel
from the US, so-called B99. Although we believe that B99 will eventually be
addressed, its impact has undermined the European biodiesel refining industry in
general, including D1's operations.

We fully support the decision of the European Biodiesel Board (EBB) taken in
November 2007 to lodge a complaint to the European Commission against B99
exports from the US. This comprehensive legal action will take the form of a
joint anti-dumping and anti-subsidy complaint, possibly supported by WTO
measures at a later stage. However, we do not expect the issue to be resolved
quickly.

Although the introduction of the Renewable Transport Fuels Obligation (RTFO) in
the UK from April 2008 will create a market for biodiesel, we believe that UK
demand will largely be met by subsidised US imports. We do not see the UK as
offering a viable location for refining and trading to meet domestic demand for
the foreseeable future. We therefore intend to cease our refining and trading
operations. As announced on 7 March 2008, we have commenced a consultation
process with employees at both our Middlesbrough and Bromborough sites. We will
consult with employees in relation to the future of the sites, including their
potential closure and sale.

We believe, however, that Jatropha curcas presents a solution to the situation
currently confronting the European biodiesel market. Jatropha will be available
at sufficiently low cost to compete advantageously with subsidised feedstocks
such as B99 in developed markets. It will also address concerns around
sustainability, particularly land use change, by enabling farmers in the
developing world to become more productive through mixed cropping models that
can produce food, animal feed and fuel.



Offer period update

On 20 March 2008, Karl Watkin announced that he was at a very preliminary stage
in evaluating all options with regard to his shareholding in the Company,
including an increase or decrease in his interest, and whether or not to make an
offer for the Company. Consequently, the Company is currently in an offer
period.

Finances

Net Cash at 31 December 2007 was £7.8m. Gross cash was £14.3m. The loss for the
year was £46.1m (2006: £12.6m) and reflects both the poor trading conditions in
the second half of the year and the impairment of assets at Bromborough by
£10.2m and at Middlesbrough by £12.6m.

Concurrent with the release of these results, the Company is announcing a
proposed placing of ordinary shares at 25 pence per share to realise £14.9
million, net of expenses.  Based on the Board's revised business plan, the net
funds raised of £14.9 million are expected to allow the Company to remain cash
positive through to the end of 2009.

Management

We welcomed two new Non-Executive Directors to the Board in 2007. Professor
Chris Leaver, Emeritus Professor of Plant Science at Oxford University, joined
the Board in July and brings significant and relevant scientific expertise.
Moira Black, who has had an active and distinguished career in accountancy and
public services, joined the Board in September.

Chris Tawney, Group Finance Director, joined the Board in September 2007. His
predecessor, Richard Gudgeon left the Board in September, but remains with the
business. Peter Davidson, a founder Non-Executive Director, also stepped down in
September when he left the business, as did Steve Douty, who stepped down in
order to join D1-BP Fuel Crops. Finally, Karl Watkin, founder and former
Chairman, left the Board in March 2008. We thank all four for their
contributions to the business.

Outlook

Despite the difficulties in European biodiesel refining, the biofuels sector is
experiencing strong growth worldwide. The political momentum to reduce emissions
from transport and enhance energy security remains substantial in the majority
of developed economies, and there is growing recognition of the potential for
farmers in the developing world to meet this demand. Against this background,
rising prices for food commodities highlight the concern that increased
production of grains and vegetable oils will not meet demand for both fuel and
food without threatening forests and other regions of environmental importance
in developing countries. As a result, D1 sees increasing recognition of the need
for alternative, low-cost, sustainable feedstocks that can enable developing
world farmers to use marginal and unproductive land to co-produce both food and
fuel. 

We believe that our primary feedstock, Jatropha curcas, can answer these
concerns and is one of the most significant new oilseed crops for biofuels. It
therefore offers D1 a major global market opportunity. The delivery in late 2008
of the first quantities of jatropha oil from our planting will be a
demonstration of our ability to deliver a sustainable biofuels business. We
believe that the fundamentals of the biofuels market increasingly favour the
alternative, sustainable feedstock approach that D1 has developed and which
differentiates us from the rest of the sector. We believe that the best way to
deliver value for shareholders is to leverage our technology and experience in
jatropha to focus the business on the upstream breeding, planting and managing
of new varieties of sustainable, commercial biofuel crops. Our upstream plant
science and related technologies, always core to our vision and business, will
now be the singular focus of our activities. Going forward D1 will comprise 100%
of D1 Oils Plant Science plus our 50% investment in D1-BP Fuel Crops.


Lord Oxburgh of Liverpool
Non-Executive Chairman


Elliott Mannis
Chief Executive Officer


Operational review

Plant science and technology

Because they are environmentally elastic and bring unproductive land into
cultivation, alternative biofuel feedstocks such as jatropha have the potential
to meet demand for biofuels without putting at risk food supplies or important
carbon-rich or biodiverse environments. D1's position as a leading developer of
one of the most significant new oilseed crops for biofuels, Jatropha curcas,
differentiates us significantly in a market that requires sustainable fuels at a
competitive price. We believe the growing public debate about the sustainability
of biofuels reinforces and validates our strategy to build a business on
alternatives to biodiesel derived from food oils.

We made solid progress in our plant science programme during the year. We
expanded our collection of Jatropha curcas accessions from around the globe, and
began putting the most promising varieties from our already significant
collection through commercial breeding and product placement trials to identify
optimal adaptation to different cultivation conditions. By the end of the year,
we had a total of 33 product placement and research trial sites for jatropha in
operation worldwide.

During the year the D1 plant science programme established a central breeding
and development facility in Cape Verde and we transferred our global collection
of Jatropha curcas material to this site. We selected Cape Verde because of its
geographical position within the equatorial band in which jatropha flourishes.
We also expanded our research and testing infrastructure worldwide in
anticipation of the growth in business from the D1-BP Fuel Crops joint venture.
We have begun to establish new plant science development centres, and further
facilities are planned for other countries where D1-BP Fuel Crops will operate,
enabling D1 to support fully the joint venture's planting activities. 

We continued the development of our breeding programme to create the first
cultivars for future selection of high-yielding jatropha varieties.
Multiplication of our first generation E1 material, selected for higher yield
and good biodiesel profile, has begun in all three operating regions. D1-BP Fuel
Crops has already commenced planting of E1 material and intends to plant up to
50,000 hectares with E1 seedlings in 2008. All of D1's seed orchards are now
operational and have to date delivered some 20 tonnes of planting seed,
sufficient to plant approximately 10,000 hectares of the E1 planting planned for
2008. 

D1 is also building relationships with leading agricultural and plant science
research institutions in operating regions. We recently signed an agreement with
the International Crops Research Institute for the Semi-Arid Tropics (ICRISAT)
to undertake research into Jatropha curcas in Andhra Pradesh in India. ICRISAT
(www.icrisat.org) undertakes agricultural research and capacity building for
sustainable development in the dry tropics through better agriculture. D1 Oils
plant science will work with ICRISAT to collect, screen and identify  jatropha
with high yield potential and oil content, develop suitable agronomy practices
for sole cropping and identify the most profitable food and feed crops for
intercropping with jatropha. ICRISAT will also train farmers and NGO workers and
trainers in nursery raising and cultivation of jatropha and assess the potential
of other other oil seeds in the region. We have also agreed a collaborative
project with Katetsart University in Thailand to evaluate the growth and yield
of Chinese cabbage, tomato and sweet potato when using Jatropha curcas seedcake
as a fertilizer.

A significant development in 2007 was D1's exclusive worldwide service agreement
with Keygene NV of the Netherlands (www.keygene.com). Keygene is one of the
global leaders in the science of genetic fingerprinting, in particular molecular
markers and marker-assisted breeding approaches. The agreement provides D1 with
exclusive rights to contract research and molecular services carried out by
Keygene on Jatropha curcas. Keygene's genetic fingerprinting technology enables
the identification of different jatropha cultivars through genetic markers. This
technology has the potential to increase significantly the effectiveness of D1's
breeding programme for jatropha.

During the year, we introduced our Sustainable Oil Supply Programme (SOSP) to
implement optimal agronomy practices based on sound science for the development
of Jatropha curcas as a sustainable feedstock. Central to the programme is the
surveying of jatropha plantations to identify key success and risk factors for
sustainable jatropha planting. Survey activity was begun by D1 in the first half
of the year in co-operation with joint venture partners and farmers, and
continues in co-operation with D1-BP Fuel Crops. The surveys record performance
data to enable more accurate grain and oil production forecasts and also gather
wider information on planting and stewardship practices. The latter form the
basis of the ongoing development of recommended planting and maintenance
methods, training manuals and guidance for the optimisation of oil yields.
Initially focusing on planting and cultivation, the surveys will also extend to
harvesting and expelling techniques, logistics and storage.  The programme also
monitors the implementation of policies for social, economic and environmental
sustainability.

D1 Oils plant science is the exclusive supplier to D1-BP Fuel Crops, on a
cost-plus basis, of selected, high-yielding jatropha seedlings. It also provides
technical agronomy support and expertise to support and implement the SOSP
programme. D1-BP Fuel Crops will pay D1 an annual royalty fee for the high yield
performance of the seedlings it has supplied.

In addition to focusing on Jatropha curcas, we are undertaking early stage
investigation into a range of alternative, sustainable crops for the production
of biofuel. Under the terms of our joint venture arrangements, D1-BP Fuel Crops
has a right to access (with the agreement of its shareholders) any new biodiesel
crops that D1 may develop.

The plant science team is also leading D1's feed programme to develop a
commercial technology for the removal of anti-nutritional compounds present in
jatropha meal after oil extraction. Having quantified the compounds present in
the meal and measured their bioactivity, a laboratory extraction method has been
developed to test extracted fractions and ensure the removal of unwanted
elements. We are now moving to the next stage of the development process to
create a large-scale extraction method.

D1-BP Fuel Crops

D1-BP Fuel Crops Limited began operations on 1 October 2007. The new company is
expanding its international team to handle the range of new functions that will
be required for the delivery of crude jatropha oil to the market, including
sustainability and supply chain management. These new areas of expertise are
being added to the core group of experienced D1 managers and field staff in the
regions.

D1-BP Fuel Crops has commenced a strategic review of its business and is
evaluating a range of options for organising planting operations, logistics and
processing to optimise the future delivery of oil to the developing
international market for biofuels. Key to this planning process is establishing
oil forecasts. Based on data gathered to date through surveys on the cropped
area being undertaken through the SOSP provided by D1, the joint venture is on
track to deliver the first quantities of jatropha oil during the second half of
2008. Initial quantities of oil are expected to be modest but should increase
year on year as existing trees mature and as new trees become productive.

Planting and planting relationships transferred by D1 into the D1-BP Fuel Crops
included the significantly expanded jatropha footprint achieved by D1 during the
first half of 2007. This included planting in North East India in partnership
with Williamson Magor, one of India's leading tea companies, which now stands at
over 62,000 hectares. Planting in South East Asia, which expanded steadily
during the year, includes relationships established with new partners in
Indonesia, including PT Astra Agro Lestari, part of the Jardine Matheson Group,
for the creation of a 500 hectare pilot jatropha plantation.

As knowledge and experience of the performance of Jatropha curcas in different
climate and soil conditions and under different planting and maintenance regimes
increases, D1-BP Fuel Crops is assessing the performance and commercial
viability of the area planted to date and the viability of planting areas in
terms of logistics and access to markets. Greater rigour is being introduced
into relationships with third-party oil and seed suppliers. Relationships with
suppliers and the reliability of their planting and ability to deliver grain are
regularly assessed. Where appropriate, D1-BP Fuel Crops is remeasuring the
quantity of planting achieved as well as developing new ways to better measure
and monitor planted areas in future. Relationships with suppliers whose planting
is unlikely to be viable or who are unable to deliver grain will likely be
replaced, subject to terms, with agreements with new partners whom the joint
venture judges to be better positioned to deliver over the longer term.

The table below indicates the broad geographic locations and types of
arrangements associated with jatropha planting worldwide in which D1-BP Fuel
Crops has an interest. The level of investment costs and security of future oil
supply are proportional to the degree of direct involvement by D1-BP Fuel Crops
and its joint venture partners. It is the policy of D1-BP Fuel Crops that where
trees are lost due to natural wastage or mortality, or where planting has not
taken, such agricultural losses are reflected in the planting table as soon as
they are identified. This is in contrast to the previous policy of D1 Oils
whereby either replanting or new planting was undertaken in the following
planting season and only the net increase in planting recorded. Where D1-BP Fuel
Crops considers replanting inappropriate or not possible, a provision is made
and the planting is reported net. The policy adopted by D1-BP Fuel Crops, which
will also be adopted by D1 from Hereon, will lead to greater volatility in
reported planting. 

Accordingly, D1-BP Fuel Crops has made provisions against planting that is
either unlikely to deliver the requisite quantity and quality, or which is too
far from available logistics facilities to make harvest and transport viable. D1
has entered into discussions with D1-BP Fuel Crops and BP as to whether or not
there was a planting shortfall as at 31 July 2007, for purposes of the relevant
provisions of the joint venture agreement. A provision has been made in relation
to this matter and the Directors' current assessment is that there will be no
further financial obligation arising in this regard and they expect to reach a
satisfactory agreement with their joint venture partner.

Following these provisions, total planting and rights to offtake at 31 March
2008 is assessed at 192,016 hectares. This is lower than original expectations
for the end of the current planting year, but as D1-BP strengthens its planting
and crop management in the light of improving plant science expertise and
greater experience on the ground, it has been necessary to slow the pace of
planting as locations and partners are reviewed for performance. It has not yet
therefore been possible to replace all of the areas provided against with new
planting elsewhere.

The table below summarises the total gross quantity of hectares of jatropha
planting worldwide, over which D1 BP Fuel crops or joint venture or partnership
arrangements involving D1 BP Fuel Crops have rights:

                                                                             Seed purchase             
                                              Managed          Contract     and oil supply             Total
                                          plantations           farming         agreements          hectares
______________________________________________________________________________________________________________
India                North East                     -            62,455                  -            62,455
                     South                          -             5,922                  -             5,922
                     Rest                           -             2,860             23,833            26,693
______________________________________________________________________________________________________________
                                                    -            71,237             23,833            95,070
______________________________________________________________________________________________________________
Africa               Zambia                     2,276                70             23,179            25,525
                     Swaziland                  1,064               210              6,112             7,386
                     Rest                          50               879             13,638            14,567
______________________________________________________________________________________________________________
                                                3,390             1,159             42,929            47,478
South East Asia      Indonesia                     18            19,250             20,132            39,400
                     Rest                           -             2,212              7,856            10,068
______________________________________________________________________________________________________________
                                                   18            21,462             27,988            49,468
______________________________________________________________________________________________________________
Total                                           3,408            93,858             94,750           192,016
______________________________________________________________________________________________________________


Managed plantations are those farms where land and labour is controlled by D1-BP
Fuel Crops, either through its subsidiaries or joint venture partners. Under
contract farming, the farmer plants his own trees on his own land. D1-BP Fuel
Crops and its partners assist with the provision of seedlings and the
arrangement of bank finance for planting, and offer a buyback of harvested
grains with an offtake agreement, subject to a floor price and the achievement
of agreed quality standards, and  provide support and advice during cultivation,
and monitor the condition of the crops. Seed and oil supply agreements are arm's
length supply contracts with third parties whereby D1-BP Fuel Crops, either
directly or through joint venture partners, has offtake arrangements in place
over future output from jatropha plantations which the third party is
developing. D1-BP Fuel Crops has limited involvement in this planting and relies
on third parties to measure and manage the crop effectively.

The rights to some planting is shared with third parties, such as joint venture
partners, with whom D1 and D1-BP Fuel Crops have worked to achieve rights to
planting of jatropha. As such, offtake from these areas of planting may well be
shared with those third parties.

Based on the forecasts for oil delivery, D1-BP Fuel Crops is now reviewing where
best to place crushing, expelling and preprocessing assets. As plantations
mature and we move closer to harvest and the crushing of grain for oil, D1-BP
Fuel Crops is preparing to deploy operational crushing and expelling units in
Zambia, North East India and Indonesia.

Refining and trading

Our activities in refining and trading during 2007 were impacted by the ongoing
challenges of high feedstock prices and by subsidised biodiesel imports from the
US. Refining margins across the industry came under increasing pressure from
rising vegetable oil prices at the beginning of the year. Although we were
cushioned by stocks of vegetable oil previously purchased at lower prices, we
were forced to run our refineries below capacity. Prices continued to rise,
however, and having processed existing stocks we ceased refining of virgin oil
during the third quarter of 2007. We were, however, able to take advantage of
the flexibility of our modular D1 20 refinery units by refining parcels of '
off-spec' material purchased from other suppliers.

The import of heavily subsidised US biodiesel exacerbated the impact of rising
feedstock prices. Subsidised soya methyl ester began to enter the EU in volume
in the form of a 99% soya biodiesel and a 1% mineral diesel blend, so-called
B99, around the middle of the year. US producers are currently eligible for
subsidies of US$1 for every gallon (approximately 13p per litre) of biodiesel
blended with mineral diesel, which then receives further subsidy in EU markets.
As a result, we believe this largely set market prices in the EU and further
eroded refinery margins. It is estimated that up to one million tonnes of B99
entered the EU during 2007.

During 2007 we switched from refining virgin oil to purchasing and selling
quantities of B99 to meet obligations to our principal offtaker, Petroplus. Our
experience by the end of 2007 was that, given higher feedstock prices and
subsidised imports, prices bid for such contracts were not at a level where
there could be an adequate return. Consequently, our offtake agreement with
Petroplus was not renewed when it ended in December 2007.

We began 2007 with the intention to increase UK refining capacity in advance of
the introduction of the RTFO in 2008. We increased the capacity of our Teesside
site to 42,000 tonnes in the first half of the year with the addition of a fifth
refinery unit. This was the first upgraded D1 30 unit with an enhanced capacity
of 10,000 tonnes per year. Final commissioning was completed by the third
quarter of 2007. However, as market conditions deteriorated, we held capacity at
Teesside at 42,000 tonnes. Having completed the acquisition of our Bromborough
site in January 2007, we began the conversion of the existing facilities, which
formerly produced fuel and lubricant additives, to create 100,000 tonnes of
initial biodiesel refining capacity. As conditions changed, we slowed the
timetable for commissioning the first 50,000 tonnes of this capacity, and
finally suspended the addition of the second 50,000 tonnes.

As a result of the fundamental changes underway in the European refining market,
we intend to stop refining and trading and to concentrate our efforts
exclusively on developing the upstream plant science services to breed, plant
and manage new commercial biofuels crops. As announced on 7 March 2008, we have
already started a consultation process with employees at both our Middlesbrough
and Bromborough sites. In so far as we have not done so already, we will
continue to consult with employees in relation to the future of the sites,
including their potential closure and sale.



Safety, health and environment (SHE)

During 2007 we enhanced our existing SHE polices, tested and improved our
performance and raised internal awareness of behavioural safety. We undertook a
major programme of work to understand the potential for Jatropha curcas plants
and products to affect human health, and to ensure jatropha plants and products
comply with applicable European REACH (Regulation Evaluation and Authorisation
of Chemicals) regulations. The programme, which is run jointly with BP, is
expected to continue through 2010 and will include formal occupational health
monitoring and hygiene schemes. There were no reportable injuries or breaches of
environmental consents in 2007.

Finance review

The financial results for the year ended 31 December 2007 reflect the continuing
development of the business in challenging market conditions, particularly for
downstream refining and trading activities.

The financial results have been prepared under International Financial Reporting
Standards (IFRS). The new accounting policies adopted, and the detail of the
impact of moving to IFRS, are set out in IFRS transition notes on Note 30 of
these financial statements.

Total Group revenue of £10.6m (2006: £1.6m) in the year to 31 December 2007
arose from the sale of 20,632 tonnes of biodiesel primarily to Petroplus and
Conoco Philips. These sales generated a gross operating loss after the cost of
refining of £5.1m (2006: £0.8m).

Administrative expenses of £15.2m (2006: £12.2m) reflect the ongoing development
of the business, particularly in plant science and agronomy. Included in this
total are spending on plant science of £2.0m; on regional operations of £3.4m;
on business development of £1.0m and on refinery technology and research of
£0.4m.

Interest received of £1.6m (2006: £0.6m) relates to cash deposits held during
the year.

The loss on ordinary activities before taxation was £46.1m (2006: £12.6m) and
the loss per ordinary share was 74.85p (2006: 39.98p).

Gross cash in hand (defined as cash held in bank accounts and on deposit) as at
31 December 2007 was £14.3m (2006: £51.4m). Net cash (defined as gross cash less
mortgage and cash held as collateral) as at 31 December 2007 amounted to £7.8m
(2006: £48.3m). The differences between gross and net cash relate to the
mortgage on the Middlesbrough site of £0.8m (2006: £0.8m) and cash held as
collateral of £5.7m (2006: £2.3m).

Cash held as collateral comprised £2.3m with Allied Irish Bank in respect of
finance leases for the D1 20 modular refineries (2006: £2.3m), £2.0m in respect
of a swap arrangement (2006: £nil), £1.1m against letters of credit (2006: £nil)
and £0.3m against guarantees given to third parties (2006: £nil), all with
Barclays Bank. The cash collateral held by Allied Irish Bank was reduced to
£1.9m shortly after the year end. The cash collateral held by Barclays in
respect of the swap arrangement will be released when the swap terminates in
April 2008. As a result of the Board's intention to stop trading activities, the
letter of credit facility will no longer be needed and the related cash
collateral has now been released.

Concurrent with the release of these results the Company is announcing a
proposed placing of ordinary shares at 25 pence per share to realise £14.9
million, net of expenses.  Based on the Board's revised business plan, the net
funds raised of £14.9 million are expected to allow the Company to remain cash
positive through to the end of 2009.

On 1 October 2007, D1 established a 50/50 joint venture with BP, D1-BP Fuel
Crops Limited. Under the terms of the Joint Venture, D1 transferred all its
existing planting and substantially all of its overseas operations into D1-BP
Fuel Crops and granted BP options over ordinary shares in D1 Oils plc as set out
in note 13 to the accounts. In consideration BP has undertaken to fund the first
£31.75m of the joint venture's working capital requirements; thereafter both
partners will fund additional working capital requirements equally. D1's
investment in D1-BP Fuel Crops has been accounted for using the equity method in
accordance with IAS 31.

International Accounting Standards require that a 'fair value' be calculated for
the options granted to BP and recorded as a reduction in the gain on the
transaction. The calculation of fair value utilises the share price of D1 Oils
plc at the date the options were irrevocably granted (the 'effective date') and
the historic volatility of the share price as key inputs. The effective date for
the options granted to BP was the date of D1 shareholder approval of the
prospective transaction at the EGM on 27 July 2007. The D1 share price was £2.42
at close on that date, and this, together with the above average volatility of
D1's share price, has produced a fair value for the options granted to BP of
£12.8m. By way of illustration of the impact of changes in the share price on
the calculation, a share price of £2.00, typical of the period prior to the
announcement of the joint venture, would give a fair value for the options of
£9.2m. A share price of £0.42, which was the share price on 31 March 2008, would
give a fair value of less than £0.5m.

In view of the Board's intention to cease refining and trading operations and
the consultation with employees with regard to the possible closure of the
refining sites at Middlesbrough and Bromborough, a decision has been made to
impair the assets at both sites down to their estimated net realisable values.
In the case of the Middlesbrough site this is £4.8m based on the Board's best
estimates of the resale value of the modular refineries and of the market value
of the land and buildings at the site and in the case of Bromborough, this is
£2.0m based on a recently updated third party professional valuation report on
the site. The total impairment charge for the year for both sites amounted to
£22.8m.

During the year, the Group secured overdraft facilities of £1.5m (2006: £nil)
which have not been utilised at any time during the year and letter of credit
facilities of £3.0m (2006: £nil), both with Barclays Bank.


Christopher Tawney
Group Finance Director

Consolidated income statement
for the year ended 31 December 2007


                                                                                              Year           Year
                                                                                             ended          ended
                                                                                       31 December    31 December
                                                                                              2007           2006
                                                                               Note           £000           £000
___________________________________________________________________________________________________________________
Group revenue                                                                   3.4       10,579.7        1,560.3
Cost of sales                                                                           (15,677.7)      (2,366.7)
___________________________________________________________________________________________________________________
Gross loss                                                                               (5,098.0)        (806.4)
Administrative expenses                                                           4     (15,207.5)     (12,212.9)
___________________________________________________________________________________________________________________
Gross trading loss                                                                      (20,305.5)     (13,019.3)
Fixed asset impairment                                                           10     (22,778.9)              -
Share of post tax losses of associates and joint ventures accounted for          
using the equity method                                                          12      (1,516.5)        (121.5)
Exceptional item - net deficit on transfer of operation to joint venture         13      (2,764.3)              -
Impairment of goodwill arising on acquisition                                                    -          (6.3)
___________________________________________________________________________________________________________________
Group operating loss from continuing operations                                         (47,365.2)     (13,147.1)
Finance revenue                                                                   7        1,572.5          566.4
Finance costs                                                                     7        (306.8)         (46.9)
___________________________________________________________________________________________________________________
Loss from continuing operations before taxation                                         (46,099.5)     (12,627.6)
Tax expense                                                                       8         (36.7)              -
___________________________________________________________________________________________________________________
Loss for the year from continuing operations                                            (46,136.2)     (12,627.6)
___________________________________________________________________________________________________________________


Loss per ordinary share
Basic and diluted loss per ordinary share (pence)                                 9          74.85          39.98
___________________________________________________________________________________________________________________

No profit and loss account is presented by the Company as permitted by Section
230 of the Companies Act 1985. The Company's loss for the year was £72,266,700
(2006: £2,774,400).

Consolidated balance sheet
as at 31 December 2007


                                                                                             As at          As at
                                                                                       31 December    31 December
                                                                                              2007           2006
                                                                               Note           £000           £000
___________________________________________________________________________________________________________________
Assets
Non-current assets
Property, plant and equipment                                                    10        6,984.3       14,486.3
Biological assets                                                                                -           74.5
Intangible assets                                                                11           41.3          119.1
Trade and other receivables                                                                      -          948.9
Investments accounted for using the equity method                                12       15,180.5              -
Other investments                                                                12              -           18.2
___________________________________________________________________________________________________________________
                                                                                          22,206.1       15,647.0

Current assets
Inventories                                                                      15        2,220.3        3,023.3
Trade and other receivables                                                      16        4,118.7          898.3
Other financial assets                                                           17       11,021.6        2,317.3
Cash and short-term deposits                                                     18        3,596.6       49,066.3
___________________________________________________________________________________________________________________
                                                                                          20,957.2       55,305.2
Assets held for resale                                                           14          100.0          100.0
___________________________________________________________________________________________________________________
Total assets                                                                              43,263.3       71,052.2
___________________________________________________________________________________________________________________


Equity and liabilities
Current liabilities
Trade and other payables                                                         19      (2,367.4)      (2,811.9)
Interest-bearing loans and borrowings                                            20        (492.9)        (476.1)
Accruals and deferred income                                                             (1,678.9)      (2,208.9)
Other financial liabilities                                                      22      (1,135.3)              -
Provisions                                                                       23      (3,000.0)              -
___________________________________________________________________________________________________________________
                                                                                         (8,674.5)      (5,496.9)
Non-current liabilities
Interest-bearing loans and borrowings                                            20      (3,307.2)      (3,763.6)
Investments accounted for using the equity method                                12              -        (154.6)
___________________________________________________________________________________________________________________
                                                                                         (3,307.2)      (3,918.2)
___________________________________________________________________________________________________________________
Total liabilities                                                                       (11,981.7)      (9,415.1)
___________________________________________________________________________________________________________________
Net assets                                                                                31,281.6       61,637.1
___________________________________________________________________________________________________________________


                                                                                             As at          As at
                                                                                       31 December    31 December
                                                                                              2007           2006
                                                                               Note           £000           £000
___________________________________________________________________________________________________________________
Capital and reserves
Equity share capital                                                         25, 26          622.4          614.8
Share premium                                                                    26       85,051.4       83,832.2
Own shares held                                                                  26        (484.0)        (484.0)
Other reserves                                                                   26          437.7          437.7
Revenue reserves                                                                 26     (66,451.2)     (22,172.0)
Share option reserve                                                             26       12,787.0              -
Currency translation reserve                                                     26        (681.7)        (591.6)
___________________________________________________________________________________________________________________
Equity shareholders' funds                                                                31,281.6       61,637.1
___________________________________________________________________________________________________________________

These financial statements were approved by the Board of Directors on 8 April 
2008.





Lord Oxburgh of Liverpool                                 Christopher Tawney
Chairman                                                  Group Finance Director



Consolidated statement of recognised income and expense
for the year ended 31 December 2007

                                                                                              Year           Year
                                                                                             ended          ended
                                                                                       31 December    31 December
                                                                                              2007           2006
                                                                                              £000           £000
___________________________________________________________________________________________________________________
Income and expense recognised directly in equity
Losses on cash flow hedges taken to equity                                               (1,100.6)              -
Exchange difference on retranslation of foreign operations                                  (90.1)        (591.6)
___________________________________________________________________________________________________________________
Net income recognised directly in equity                                                 (1,190.7)        (591.6)


Transfers to the income statement
Losses on cash flow hedges taken to cost of sales                                          1,100.6              -
___________________________________________________________________________________________________________________
Net transfers to the income statement                                                      1,100.6              -


Loss for the year                                                                       (46,136.2)     (12,627.6)
___________________________________________________________________________________________________________________
Total recognised income and expense for the year                                        (46,226.3)     (13,219.2)
___________________________________________________________________________________________________________________


Attributable to:
  Equity holders of the parent                                                          (46,226.3)     (13,219.2)
___________________________________________________________________________________________________________________



Consolidated cash flow statement
for the year ended 31 December 2007

                                                                                              Year           Year
                                                                                             ended          ended
                                                                                       31 December    31 December
                                                                                              2007           2006
                                                                                              £000           £000
___________________________________________________________________________________________________________________
Operating activities
Loss for the year before tax                                                            (46,099.5)     (12,627.6)
Adjustments to reconcile loss for the year before tax to net cash flow
from operating activities:
Depreciation of property, plant and equipment, and intangible assets                         863.8          367.6
Impairment of fixed assets                                                                22,778.9              -
Impairment of goodwill on acquisition of joint ventures                                          -            6.3
Impairment of goodwill                                                                        64.1              -
Impairment of investments                                                                     60.0              -
Share-based payments                                                                       1,857.0        1,135.0
Profit on disposal of investments                                                            (7.0)              -
Loss on disposal of fixed assets                                                                 -           17.7
Exceptional item                                                                           2,764.3              -
Cash items within exceptional item                                                       (2,393.9)              -
Share of post tax losses of joint ventures accounted for using the equity method           1,516.5          121.5
Finance income                                                                           (1,286.9)        (566.4)
Finance expense                                                                              306.8           46.9
Decrease/(increase) in inventories                                                           803.3      (2,897.1)
Increase in trade and other receivables                                                  (1,992.7)      (1,062.1)
Increase in other financial assets                                                          (56.3)              -
Decrease in trade and other payables                                                       1,510.9        3,210.8
Increase in other financial liabilities                                                    1,135.3              -
Increase in provisions                                                                   (3,000.0)              -
___________________________________________________________________________________________________________________
Net cash flow from operating activities                                                 (21,175.4)     (12,247.4)
___________________________________________________________________________________________________________________
Investing activities
Interest received                                                                          1,286.9          566.4
Payments to acquire property, plant and equipment                                       (16,580.4)     (11,582.6)
Payments to acquire intangible fixed assets                                                  (4.7)              -
Funds transferred to deposits                                                            (8,362.4)      (2,317.3)
Purchase of joint venture investments                                                      (903.5)              -
Purchase of trade investments                                                               (60.0)          (4.2)
Sale of trade investments                                                                     25.2              -
___________________________________________________________________________________________________________________
Net cash flow from investing activities                                                 (24,598.9)     (13,337.7)
___________________________________________________________________________________________________________________





                                                                                              Year           Year
                                                                                             ended          ended
                                                                                       31 December    31 December
                                                                                              2007           2006
                                                                                              £000           £000
___________________________________________________________________________________________________________________
Financing activities
Interest paid                                                                              (306.8)         (46.9)
Exercise of share options                                                                  1,008.2       47,030.0
Bonus shares                                                                                 136.5              -
New borrowings                                                                                36.4        3,400.0
Settlement of non-current liabilities 2006                                                  (12.8)              -
Repayment of mortgage                                                                       (60.0)              -
Repayment of capital element of finance leases                                             (361.3)         (55.0)
___________________________________________________________________________________________________________________
Net cash flow from financing activities                                                      440.2       50,328.1
___________________________________________________________________________________________________________________
Net (decrease)/increase in cash and cash equivalents                                    (45,334.1)       24,743.0
Cash and cash equivalents at the start of the year                                        49,024.4       24,281.4
Effects of exchange rates                                                                   (93.7)              -
___________________________________________________________________________________________________________________
Cash and cash equivalents at the end of the year                                           3,596.6       49,024.4
___________________________________________________________________________________________________________________


Cash and cash equivalents comprises the following:

                                                                                              Year           Year
                                                                                             ended          ended
                                                                                       31 December    31 December
                                                                                              2007           2006
                                                                               Note           £000           £000
___________________________________________________________________________________________________________________

Cash at bank and in hand                                                         18        3,206.3        2,261.8
Short-term deposits                                                              18          390.3       46,804.5
Short-term borrowings and overdrafts                                             20              -         (41.9)
___________________________________________________________________________________________________________________
                                                                                           3,596.6       49,024.4
___________________________________________________________________________________________________________________

Company balance sheet
as at 31 December 2007

                                                                                             As at          As at
                                                                                       31 December    31 December
                                                                                              2007           2006
                                                                               Note           £000           £000
___________________________________________________________________________________________________________________
Assets
Non-current assets
Other investments                                                                12       12,912.0          143.2
___________________________________________________________________________________________________________________
                                                                                          12,912.0          143.2
Current assets
Trade and other receivables                                                      16          457.7       33,160.9
Other financial assets                                                           17        8,704.3              -
Cash and short-term deposits                                                     18        3,025.8       48,569.3
___________________________________________________________________________________________________________________
                                                                                          12,187.8       81,730.2
___________________________________________________________________________________________________________________
Total assets                                                                              25,099.8       81,873.4
___________________________________________________________________________________________________________________

Equity and liabilities
Current liabilities
Trade and other payables                                                         19        (377.0)        (224.3)
Accruals and deferred income                                                               (541.5)      (1,105.5)
Financial liabilities                                                            22         (33.6)              -
___________________________________________________________________________________________________________________
Total liabilities                                                                          (952.1)      (1,329.8)
___________________________________________________________________________________________________________________
Net assets                                                                                24,147.7       80,543.6
___________________________________________________________________________________________________________________
Capital and reserves
Equity share capital                                                         25, 26          622.4          614.8
Share premium                                                                    26       85,051.4       83,832.2
Own shares held                                                                  26        (484.0)        (484.0)
Revenue reserves                                                                 26     (73,829.1)      (3,419.4)
Share option reserve                                                                      12,787.0              -
___________________________________________________________________________________________________________________
Equity shareholders' funds                                                                24,147.7       80,543.6
___________________________________________________________________________________________________________________


These financial statements were approved by the Board of Directors on 8 April 
2008.





Lord Oxburgh of Liverpool                     Christopher Tawney
Chairman                                      Group Finance Director



Company statement of recognised income and expense
for the year ended 31 December 2007

                                                                                              Year           Year
                                                                                             ended          ended
                                                                                       31 December    31 December
                                                                                              2007           2006
                                                                                              £000           £000
___________________________________________________________________________________________________________________
Loss for the period                                                                     (72,266.7)      (2,774.4)
___________________________________________________________________________________________________________________
Total recognised income and expense for the period                                      (72,266.7)      (2,774.4)
___________________________________________________________________________________________________________________


Attributable to:
  Equity holders of the parent                                                          (72,266.7)      (2,774.4)
___________________________________________________________________________________________________________________



Company cash flow statement
for the year ended 31 December 2007

                                                                                              Year           Year
                                                                                             ended          ended
                                                                                       31 December    31 December
                                                                                              2007           2006
                                                                                              £000           £000
___________________________________________________________________________________________________________________
Operating activities
Loss for the year before tax                                                            (72,266.7)      (2,774.4)
Adjustments to reconcile loss for the year before tax to net cash flow
from operating activities:
Share-based payments                                                                       1,857.0        1,135.0
Profit on disposal of investments                                                            (7.0)              -
Impairment of amounts owed by Group undertakings                                          70,890.1              -
Finance income                                                                           (1,451.5)        (564.1)
Increase in trade and other receivables                                                 (38,529.3)     (21,444.3)
Increase in trade and other payables                                                       (295.1)          941.4
___________________________________________________________________________________________________________________
Net cash flow from operating activities                                                 (39,802.5)     (22,706.4)
___________________________________________________________________________________________________________________
Investing activities
Interest received                                                                          1,451.5          564.1
Funds transferred to deposits                                                            (8,362.4)
Purchase of trade investments                                                                    -          (4.2)
Sale of trade investments                                                                     25.2              -
___________________________________________________________________________________________________________________
Net cash flow from investing activities                                                  (6,885.7)          559.9
___________________________________________________________________________________________________________________
Financing activities
Exercise of share options                                                                  1,008.2       47,030.0
Bonus shares                                                                                 136.5              -
___________________________________________________________________________________________________________________
Net cash flow from financing activities                                                    1,144.7       47,030.0
___________________________________________________________________________________________________________________
Net (decrease)/increase in cash and cash equivalents                                    (45,543.5)       24,883.5
Cash and cash equivalents at the start of the period                                      48,569.3       23,685.8
___________________________________________________________________________________________________________________
Cash and cash equivalents at the end of the year                                           3,025.8       48,569.3
___________________________________________________________________________________________________________________



                                                                                              Year           Year
                                                                                             ended          ended
                                                                                       31 December    31 December
                                                                                              2007           2006
                                                                               Note           £000           £000
___________________________________________________________________________________________________________________
Cash and cash equivalents is comprised as follows:
Cash at bank and in hand                                                         18        2,635.5        1,764.8
Short-term deposits                                                              18          390.3       46,804.5
___________________________________________________________________________________________________________________
                                                                                           3,025.8       48,569.3
___________________________________________________________________________________________________________________


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