RNS Number : 9402U
D1 Oils Plc
21 May 2008
21 May 2008
D1 Oils plc (D1), the biofuels technology company, will today hold its Annual General Meeting.
D1's Chairman, Lord Oxburgh of Liverpool, will make the following statement to shareholders:
2007 brought significant challenges for the biofuels industry. However, the key issues of rising vegetable oil prices and concerns over sustainability reinforce the D1 business strategy - the world needs low-cost, long-term supplies of alternative, sustainable biofuel feedstocks that can make use of marginal and unproductive land and are not subject to the same price pressures as food crops.
At the beginning of the year the Company had operations in refining, trading, planting and in plant science. Given the present difficulties facing biodiesel refining in Europe due to subsidised US biodiesel imports, the Board took the strategic decision to focus the business exclusively on planting and plant science. We believe alternative biofuel feedstocks, of which Jatropha curcas is one of the most promising, offer significant opportunities for growth in the biofuels sector.
We are pleased to have received the backing of our shareholders for our refocused strategy and to have successfully raised net funds of £14.9m in our recent placing.
D1 Plant science and technology programme
Plant science operations made solid progress throughout 2007. We began the first commercial breeding and product placement trials for Jatropha curcas, and started large scale production of our first generation of improved seed material selected for higher yield and good biodiesel profile. We also introduced our Sustainable Oil Supply Programme (SOSP) to enable oil production forecasting and to monitor implementation of sustainability policies.
D1 plant science is also developing a network of strategic research and development partnerships with plant science and agricultural research institutions in a number of countries. This plant science infrastructure broadens our expertise and may also enable us to explore the commercial development of other alternative, sustainable biofuel crops.
Furthermore, we are also developing the technology to process the seedcake byproduct, left after the extraction of oil from jatropha grain, into animal feed.
D1-BP Fuel Crops
In June 2007, we announced our 50:50 joint venture with BP, D1-BP Fuel Crops Limited, to develop global planting of Jatropha curcas. This will have the effect of significantly increasing the scale of planting and will strengthen the operational and logistical base for biofuel production. In operational terms, it turns D1's existing planting operations and relationships into a sustainable global production base for the supply of crude jatropha oil. D1's wholly-owned plant science operations act as the exclusive supplier of planting material to the joint venture. D1-BP Fuel Crops began operations in October 2007, and all jatropha planting is now conducted through the joint venture.
During 2007, we expanded jatropha planting operations significantly in Africa, India and South East Asia. At 31 March 2008 total planting and rights to offtake stood at 192,016 hectares worldwide. D1-BP Fuel Crops is evaluating a range of planting strategies along with different models to optimise the future delivery of oil to market. The first modest quantities of jatropha oil are due in the second half of 2008.
Refining and trading
UK 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 the introduction of the Renewable Transport Fuels Obligation (RTFO) in the UK from April this year has created a market for biodiesel, we believe that current UK demand will largely be met by imports. As long as the subsidised imports continue the UK is not a viable location for refining and trading biofuel to meet domestic demand.
We have now ceased our refining and trading operations in the UK, resulting in a significant reduction in our total workforce. We are currently reviewing options for the disposal of our assets and sites at Middlesbrough and Bromborough.
An Extraordinary General Meeting on 9 May 2008 approved a placing of ordinary shares at 25 pence per share to raise £14.9 million, net of expenses. Based on our revised business plan, which is focused solely on plant science and planting, the funds raised are expected to allow the Company to remain cash positive through to the end of 2009. We thank our shareholders for their support.
We welcomed two new Non-Executive Directors to the Board in 2007: Professor Chris Leaver, Emeritus Professor of Plant Science at Oxford University; and Moira Black, who has had an active and distinguished career in accountancy and public services. Four Directors have left the Board since the last AGM: Richard Gudgeon, formerly Group Finance Director, who remains with the business; Steve Douty, who stepped down to join D1-BP Fuel Crops; Peter Davidson, a founder Non-Executive Director, and Karl Watkin, founder and former Chairman, who have both left the business. We thank all four for their Board contributions.
As part of the ongoing restructuring of the business, we are announcing today that Chris Tawney, Group Finance Director, has stepped down from the Board and will shortly be leaving the Company. We thank him for his contribution to the business. He will be replaced by Ben Good, Group Strategy Director, who led our negotiations for the joint venture with BP. Ben will be appointed to the Board shortly, as will Henk Joos, Group Plant Science Director. Having taken the strategic decision to focus on the upstream breeding, development and planting of new varieties of biofuel crops, it is an appropriate time to bring Henk's expertise on to the Board.
The biofuels sector is experiencing strong growth worldwide. We see an increasing recognition globally of the need for alternative, low-cost, sustainable feedstocks that can enable farmers, particularly in the developing world, to use marginal and unproductive land for biofuel production. We believe that Jatropha curcas presents a major global market opportunity and that our strategy continues to differentiate us from the rest of the biofuels sector. We believe that the best way to deliver value for shareholders is to leverage our technology and experience in breeding, planting and managing jatropha curcas. For the future there are possibilities of other sustainable biofuel feedstocks. Our plant science and related technologies, and our 50% planting investment in D1-BP Fuel Crops, will now be the singular focus of our activities.
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 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. D1 has a 50:50 joint venture with BP for the global planting of jatropha.
This information is provided by RNS
The company news service from the London Stock Exchange