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D1 Oils Plc (NEOS)

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Tuesday 13 March, 2012

D1 Oils Plc

Interim Statement 31 Dec 2011

RNS Number : 1802Z
D1 Oils Plc
13 March 2012
 



 

D1 Oils plc

Interim results

The unaudited interim results for the six months ended 30 December 2011 are hereby released to the market.

 Chairman's Report

 

I am pleased to be able to provide an update to shareholders in respect of the 6 month period to 31 December 2011, and other developments following the period end.

 

As announced in October 2011, the Board has focused D1 Oils plc (the "Company") and its subsidiaries (the "Group") on its operations in India, where there is considerable demand for Crude Jatropha Oil (CJO) and for oil produced from other non-edible oil seeds that are used in a number of industrial applications.  Accordingly, the Group has committed an increasing proportion of its working capital to operations in India, which has enabled larger scale consolidation of grain storage and processing to be achieved than previously.  In addition, the Group is in the process of seeking to obtain commodity trade financing of its seed stock for the 2012/2013 harvest season.  Obtaining such finance is facilitated by the operation of centralised storage and processing facilities and is expected to enhance the return on capital committed by the Group.

 

The Board remains confident that the Group is on track to achieving the targeted volume for this calendar year. Since the commencement of the season in September 2011, the Group has purchased, processed and sold oil and seed cake derived from over 1,268 tonnes of Jatropha seed and has purchased a further 300 tonnes for processing and sale.  Revenues are supported by continuing upward price pressure in the market for CJO and Jatropha Seed Cake (JSC) beyond that anticipated last year, with prices achieved (ex works) currently exceeding $1,160 per tonne, and $130 per tonne respectively.

 

The Board has implemented the cost reduction plans announced in December 2011, with a direct impact on the Group's expenditure in the UK, Zambia, Malawi and Indonesia, reducing the Group monthly overhead cost base by over 65% since June 2011, to below £90,000 per month.  The Board has suspended, until further notice, the Group's animal feed development programme, together with the related cattle trials, as JSC has achieved higher selling prices as an organic fertiliser than previously expected, thereby also achieving an attractive gross margin on the product without the cost of further enhancement.

 

As part of its review of the business, the Group has trialled the procuring and processing other non-edible oil seeds in India that can be developed into organic bio-chemicals and feed stocks that have multiple applications including bio-diesel production.  Most of these oil seeds are similar to Jatropha and do not compete with food crops or feed crops.  These other non-edible oil seeds include: Pomgamia, Neem and Castor. The Group has procured, processed and sold oil and seed cake from over 100 tonnes of Pomgamia seed, achieving prices for Crude Pomgamia Oil and Pomgamia Seed Cake in excess of $1,060 per tonne and $200 per tonne, respectively. The Group has additionally collected initial tonnages of Neem and anticipates achieving sales prices for Crude Neem Oil and Neem Seed Cake in excess of $1,500 per tonne and $200 per tonne, respectively.

 

In light of these trials the Board believes that the Group can become a producer and supplier of crude oil and seed cake from multiple non-edible oil seeds in addition to Jatropha. The Board believes this will diversify and enhance the future growth in sales volumes of the business, and widen the market opportunities for the crude oil that is produced. Currently the Group has sold CJO as a feedstock for pharmaceutical and personal care applications as well as a biofuel feedstock.  Additionally Pomgamia, Neem and Castor can be refined into biofuel or be used as a pharmaceutical feedstock in India. The Board has therefore determined that a key element to its strategy will be to diversify from its reliance on Jatropha to a wider variety of non-edible oil seeds, with a view to achieving high volume usage of available storage and processing facilities, and creating a wider supplier base and end product output capability.

 

It was announced in December 2011 that Martin Jarvis had resigned as the Chief Operating Officer and Director of the Company. I would like to thank Martin for his contribution to the Company during the transition period following the appointment of the new members of the management team and Board last year. Nicholas Myerson, a current executive director, was duly appointed as the Chief Operating Officer.

 

 

Finance

 

Group revenue from continuing operations was £141.5k (6 months to December 2010: £90.0k). The net loss from continuing operations was £1.5m (6 months to December 2010: £0.5m). The loss, compared to 6 months ended December 2010, reflects restructuring of the Group resulting from the business review by the Board. 

 

Administrative costs of £1.1m (6 months to December 2010 £1.0m) included costs incurred in Zambia and Indonesia of £0.21m prior to the decision of the Board to withdraw from these regions.  India incurred costs of £0.22m.  The UK incurred costs of £0.40m including £0.24m of salaries.  During the period, there was a change over to the new Board and, late in the period, two members of UK staff were made redundant.  Restructuring costs amounted to £0.06m and professional and legal fees amounted to £0.05m.  Post year end the number of UK staff was further reduced by four.  Overheads for the Group have been reduced from £0.26m per month in H2 2011, to an underlying rate of £0.09m per month.  This has allowed more working capital to be directed to India to enable more seed collection.

 

There were additional one off costs incurred within finance expenses, of £0.3m, consisting of £0.3m foreign exchange previously held in equity associated with countries that are no longer active being released to the income statement, and £0.1m of foreign exchange cost as a result of impairing intra-group loans for operations in countries that are no longer active also being released to the income statement.  Additional finance expense included an ongoing foreign exchange gain of £0.1m.  In comparison, during the 6 months to 2010, there was a net gain on foreign exchange of £0.2m and additional income of £0.2m for tax credits received for research and development carried out in 2008 and 2009.  As part of the business review, the Group no longer carries out work which would qualify for such tax credits.

 

The overall loss for the period was £1.6m (6 months to December 2010: £3.0m) and the basic loss per share was 1.15p (6 months to December 2010: 2.37p).

 

The Group's cash and cash equivalents and term deposits at 31 December 2011 amounted to £2.2m (December 2010: £3.5m).  During the period £1.2m net of costs was raised from a share placing.

 

Since the period end, ongoing seed processing and sale in the Indian harvest season has enabled the Group to trade on a cash positive basis.

 

In October 2011 the Board announced that the Company may seek to raise further funds from shareholders during the latter half of 2012 to enable the Group to finance its development until it becomes cash flow self sufficient.  In light of the positive impact of the restructuring and cost reduction plan which has been achieved to date, and  the ongoing review of future development plans, the Board will over the coming months be considering this matter further and whether it would be  appropriate  to proceed with a shareholder funding process this year.

 

Outlook

 

The Board is enthusiastic and cautiously optimistic for the development of the Group going forward.  This is based on the confidence in the strategy of procuring, processing and selling multiple non-edible oil seeds in India and South East Asia,

 

The Group is still in the early stages of its commercial development, and there are many ongoing commercial challenges to be addressed.  However, I believe the Company is now well positioned for the future; firstly by investing and building infrastructure in India, a high growth region; and secondly by developing the scale and growth of multiple non-edible oil seed production with multiple sales applications for the crude oil that is produced. The Board firmly believes that the Group has very good opportunities within the agricultural, pharmaceutical, personal care, and energy sectors which will allow it to strengthen and expand through profitable trading, with reduced reliance on the demand for biofuels and the impact of biofuel legislation.

 

 

 

Steven Rudofsky

Executive Chairman

 

 

12 March 2012

 

Consolidated interim income statement

Unaudited results for the six months ended 31 December 2011

 



Six months

Six months

Year



ended

ended

ended



31 December

31 December

31 December



2011

2010

2010



Unaudited

Unaudited

Audited


Note

£000

£000

£000

Revenue

2

141.5

89.8

105.2

Cost of sales


(131.8)

(77.8)

(85.4)

Gross profit


9.7

12.0

19.8

Administrative expenses


(1,143.5)

(996.1)

(3,353.2)

Operating loss


(1,133.8)

(984.1)

(3,333.4)

Share of losses of joint ventures accounted for using the equity method


-

(96.5)

(306.1)

Impairment due to restructuring


(56.7)

-

-

Loss from continuing operations


(1,190.5)

(1,080.6)

(3,639.5)

Finance income


14.8

240.7

373.5

Finance costs


(311.2)

69.1

(57.8)

Loss for the period from continuing operations before taxation


(1,486.9)

(770.8)

(3,323.8)

Tax (expense) / credit


(7.0)

240.7

235.9

Loss for the period from continuing operations


(1,493.9)

(530.1)

(3,087.9)






Discontinued operations





Loss for the period from discontinued operations


(145.5)

(2,461.5)

(3,000.5)

Total loss for the period


(1,639.4)

(2,991.6)

(6,088.4)






Loss for the period attributable to equity holders of the parent


(1,639.4)

(2,991.6)

(6,088.4)






Loss per ordinary share





Basic and diluted loss per ordinary share (pence)

4

(1.15)

(2.37)

(4.81)

Basic and diluted loss per ordinary share from continuing operations (pence)

4

(1.04)

(0.58)

(2.44)

 

 

Consolidated interim statement of comprehensive income

Unaudited results for the six months ended 31 December 2011

 



Six months

Six months

Year



ended

ended

ended



31 December

31 December

31 December



2011

2010

2010



Unaudited

Unaudited

Audited


£000

£000

£000

Loss for the period


(1,639.4)

(2,991.6)

(6,088.4)

Exchange difference on retranslation of foreign operations flowing through foreign exchange reserves.


(44.1)

(373.8)

(302.2)

Transfer of foreign exchange reserves to income statement *

296.1

(12.5)

(12.5)

Total recognised income and expense for the period


(1,387.4)

(3,377.9)

(6,403.1)

Attributable to:





Equity holders of the parent


(1,387.4)

(3,377.9)

(6,403.1)

 

*  This represents the recycling of the cumulative currency translation reserves in respect of the region's the Group withdrew from during the period in accordance with IAS 21 'The Effects of Changes in Foreign Exchange Rates'.

 


Consolidated interim statement of changes in equity

Unaudited results for the six months ended 31 December 2011

 

 




Own



Share

Currency



Share

Share

shares

Merger

Revenue

option

translation



capital

premium

held

reserve

reserve

reserve

reserve

Total


Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited


£000

£000

£000

£000

£000

£000

£000

£000

At 1 January 2010

1,266.8

99,290.3

(484.0)

437.7

(91,919.6)

1,025.0

(33.1)

9,583.1

Share-based payments

-

-

-

-

41.0

-

-

41.0

Transactions with owners

-

-

-

-

41.0

-

-

41.0










Total recognised income and expense

-

-

-

-

(6,088.4)

-

(314.7)

(6,403.1)

At 1 January 2011

1,266.8

99,290.3

(484.0)

437.7

(97,967.0)

1,025.0

(347.8)

3,221.0

Share-based payments

-

-

-

-

28.0

-

-

28.0

Transactions with owners

-

-

-

-

28.0

-

-

28.0










Total recognised income and expense

-

-

-

-

(1,777.2)

-

57.1

(1,720.1)

At 1 July 2011

1,266.8

99,290.3

(484.0)

437.7

(99,716.2)

1,025.0

(290.7)

1,528.9

Equity issue

516.4

666.2

-

-

-

-

-

1,182.6

Share-based payments

-

-

-

-

28.0

-

-

28.0

Transactions with owners

516.4

666.2

-

-

28.0

-

-

1,210.6










Total recognised income and expense

-

-

-

-

(1,639.4)

-

252.0

(1,387.4)

At 31 December 2011

1,783.2

99,956.5

(484.0)

437.7

(101,327.6)

1,025.0

(38.7)

1,352.1

 

Consolidated interim balance sheet

Unaudited results at 31 December 2011

 



At

At

At



31 December

30 June

31 December



2011

2011

2010



Unaudited

Unaudited

Audited


Note

£000

£000

£000

Assets





Non-current assets





Property, plant and equipment


41.6

84.8

169.2






Current assets





Inventories


71.1

148.5

211.4

Trade and other receivables


107.6

195.9

899.7

Other financial assets

5

-

-

90.0

Cash and short-term deposits


2,214.5

2,412.0

3,440.5



2,393.2

2,756.4

4,641.6

Total assets


2,434.8

2,841.2

4,810.8






Equity and liabilities





Current liabilities





Trade and other payables


(84.4)

(63.0)

(336.7)

Accruals and deferred income


(214.4)

(467.8)

(498.5)

Deferred consideration


(47.2)

(47.2)

(4.1)

Provisions


(250.0)

(274.0)

(274.0)



(596.0)

(852.0)

(1,113.3)

Non-current liabilities





Deferred consideration


(486.7)

(460.3)

(476.5)



(486.7)

(460.3)

(476.5)

Total liabilities


(1,082.7)

(1,312.3)

(1,589.8)

Net assets


1,352.1

1,528.9

3,221.0

 

Capital and reserves





Equity share capital


1,783.2

1,266.8

1,266.8

Share premium


99,956.5

99,290.3

99,290.3

Own shares held


(484.0)

(484.0)

(484.0)

Other reserves


437.7

437.7

437.7

Revenue reserves


(101,327.6)

(99,716.2)

(97,967.0)

Share option reserve


1,025.0

1,025.0

1,025.0

Currency translation reserve


(38.7)

(290.7)

(347.8)

Equity shareholders' funds


1,352.1

1,528.9

3,221.0

 

Consolidated interim statement of cash flows

Unaudited results for the six months ended 31 December 2011

 



Six months

Six months

Year



ended

ended

ended



31 December

31 December

31 December



2011

2010

2010



Unaudited

Unaudited

Restated Audited



£000

£000

£000

Operating activities





Loss for the period


(1,639.4)

(2,991.6)

(6,088.4)

Adjustments to reconcile loss for the period to net cash flow from operating activities:





Depreciation of property, plant and equipment, and amortisation of intangible assets


21.3

43.4

135.6

Impairment of property, plant and equipment


24.2

(8.2)

48.1

Impairment of net current assets


32.5

-

-

Share-based payments


28.0

(37.0)

41.0

Net loss on disposal of agronomy and breeding activities


-

865.8

865.8

Loss on disposal of property, plant and equipment


5.2

48.0

55.1

Share of post-tax losses of joint ventures accounted for using the equity method


-

96.5

306.1

Finance income


(14.8)

(257.5)

(386.1)

Finance expense


311.5

(68.6)

59.4

Income tax credit


-

(229.1)

(235.9)

Tax (paid) / received


(7.0)

(2.6)

4.2

Decrease / (increase) in inventories


15.9

(50.5)

(110.5)

Decrease / (increase) in trade and other receivables


59.3

569.0

843.9

Increase / (decrease) in trade and other payables


(166.9)

(151.2)

(319.6)

Increase / (decrease) in provisions


(24.0)

(560.9)

(1,461.9)

Effects of exchange rates on cash at the start of the period


(19.6)

6.3

19.3

Exchange effects on operating costs


122.5

193.0

351.3

Exchange released to Income Statement upon impairment of Group loans


(109.1)

-

-

Retranslation of revenue reserves


(24.5)

(249.3)

(334.0)

Net cash flow from operating activities


(1,384.9)

(2,784.5)

(6,206.6)

Investing activities





Interest received


14.8

(7.1)

34.8

Payments to acquire property, plant and equipment, and intangible assets


(7.5)

(27.0)

(66.9)

Funds transferred to deposits


-

4,026.7

4,457.6

Purchase of joint venture investments


-

(88.6)

(100.0)

Net cash out flow on disposal of agronomy and breeding activities


-

(800.0)

(800.0)

Proceeds from disposal of assets held for sale


-

1,696.1

1,696.1

Net cash flow from investing activities


7.3

4,800.1

5,221.6






Financing activities





Interest paid


(2.5)

-

-

Exercise of share options


1,182.6

-

-

Net cash flow from financing activities


1,180.1

-

-






Net (decrease) / increase in cash and cash equivalents


(197.5)

2,015.6

(985.0)

Cash and cash equivalents at the start of the period


2,412.0

1,424.9

4,425.5

Cash and cash equivalents at the end of the period


2,214.5

3,440.5

3,440.5

 

 

Notes to the interim financial statements

 

1. Basis of preparation

 

This interim report, which does not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006, was approved by the Board on 12 March 2012. The condensed set of financial statements of this interim report has been prepared in accordance with accounting policies which were adopted in presenting the full year annual report and accounts for the year ending 31 December 2010.

 

As announced in December 2011, the Company changed its accounting reference date from 31 December to 30 June.  Accordingly, the 18 month period report and accounts to 30 June 2012 will be prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. The Group has not applied International Accounting Standard (IAS) 34 Interim Financial Reporting in the preparation of these condensed interim financial statements, as it is not mandatory for AIM-listed companies.

 

The financial information for the full preceding year does not constitute statutory accounts as defined in Section 435 of the Companies Act 2006 and has been extracted from the statutory accounts for the financial year ended 31 December 2010 which have been delivered to the Registrar of Companies. Those accounts, which included an auditors' report which contained a 'disclaimer on opinion' qualification, did not contain a statement under Section 498(2) nor Section 498(3).

 

Fundamental accounting concept

The financial statements have been prepared on a going concern basis which assumes that the Company and the Group will continue in operating existence for the foreseeable future and meet its liabilities as they fall due. There are uncertainties that the Directors have had to consider in deciding to prepare the financial statements on the going concern basis which are set out below.

 

Business planning uncertainty

The Report of the Chairman on pages 1 and 2 sets out the strategy of the business and what it is seeking to achieve.  Whilst the Directors believe the strategy is realistic, there are inevitably uncertainties as to whether they will be achieved in full and in time.  While the Board is confident it can deliver a non-edible oil based strategy that is viable over the long term, until the execution of the business plan becomes more certain the Board cannot assess with certainty the implications for the Company.

 

Funding uncertainty

The Company's Board informed the market during the last fund raising in October 2011 that the Company would require a further injection of funds during 2012. The Board believes that the case can be made for further funding for capital and working capital investment ahead of the business becoming cash stable. The Board is encouraged by the feedback it has received to from existing shareholders to participate in a fund raising. However, if the Directors are unable to secure the appropriate level of shareholder support for the strategy and associated future fund raising before late 2012, the Company and the Group will be unable to continue as a going concern.

 

Directors' view

After making enquiries and considering these uncertainties, the Directors conclude that the implications of the business plan uncertainty and whether funding can be secured before cash resources are depleted are material uncertainties which may cast doubt about the Group and Company's ability to continue as a going concern in its current form. The Directors believe that the impact of these uncertainties should be manageable and the Directors have a reasonable expectation that the Group and the Company have adequate resources to continue in operational existence for the foreseeable future. Consequently the Directors believe that it is appropriate to prepare the financial statements on a going concern basis.  

 

Should the proposed fund raising not be successful, then the going concern basis would be invalid and adjustments may have to be made to reduce the value of the assets to their recoverable amount, to provide for any further liabilities which might arise and to reclassify fixed assets and long term liabilities to current assets and current liabilities.

 

Significant accounting policies

 

The accounting policies adopted in the preparation of the Group's interim financial statements are consistent with those followed in the preparation of the annual financial statements for the year ended 31 December 2010, except for the adoption of new Standards and Interpretations as of 1 January 2011 listed below:

·      IFRS 2 - Amendment to IFRS 2 - Group Cash-settled Share-based Payments. The amendments clarified the classification of share-based payment awards in parent and subsidiary companies and addressed plans not considered in the original Standard. The adoption of this amendment has not had a material impact on the financial position or performance of the Group.

The IASB and IFRIC have issued the following standards and interpretations with an effective date after the date of these financial statements:

 

·      IFRIC 14 - Amendment - IAS 19 limit on a defined benefit asset - effective 1 January 2011.

 

The Directors do not anticipate that the adoption of these standards will have a material impact on the Group's financial statements in the period of initial application.

 

The IASB and IFRIC have issued the following standards and interpretations with an effective date after the date of these financial statements that have not yet been endorsed by the European Union:

 

·      IFRS 1 - Amendment - First time adoption of IFRS - effective 1 July 2010.

·      IFRS 7 - Amendment - Financial instruments: disclosures - effective 1 July 2011

·      IFRS 9 - Financial instruments - effective 1 January 2013.

·      IFRS 10 - Consolidated financial statements - effective 1 January 2013.

·      IFRS 11 - Joint arrangements - effective 1 January 2013.

·      IFRS 12 - Disclosure of involvement with other entities - effective 1 January 2013.

·      IFRS 13 - Fair value measurement - effective 1 January 2013.

·      IAS 12 - Amendment - Income taxes - effective 1 January 2012.

·      IAS 27 - Amendment - Separate financial statements - effective 1 January 2013.

·      IAS 28 - Amendment - Investment in associates and joint ventures - effective 1 January 2013.

 

The Group has not yet assessed the impact of IFRS 9, IFRS 10, IFRS 11, IFRS 12, IFRS 13, IAS 27 nor IAS 28. The Directors do not anticipate that the adoption of amendments to IFRS 1, IFRS 7 and IAS 12 will have a material impact on the Group's financial statements in the period of initial application.

 

2. Segmental information

 

For management purposes, the Group is organised into business units according to the nature of the products and services and has the following operating segments:

 

·      The Operations segment is responsible for managing the out-grower network, collecting grain and selling CJO and other non-edible oil seeds.

·      The Science & Technology segment provided Jatropha plant science and associated technical consulting services to third-parties, breeding seeds and seedlings for commercial planting and undertakes research and development activities on Jatropha and its co-products. In December 2010, the disposal of a substantial portion of this segment was effected, with the exception of the animal feed activity. The effective financial date of disposal was 1 November 2010. For the purposes of segmental reporting, the agronomy and breeding activities that were disposed of in 2010 are classified as discontinued.  As a result of a business review conducted during the period, the Board took the view to place the Animal feed programme on hold.  The animal feed activity has been reclassified as discontinuing and the comparatives have been restated on this basis.

 

No operating segments have been aggregated to form the above reportable operating segments.

 

Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss which in certain respects, as explained in the table below, is measured differently from profit or loss in the consolidated financial statements. Group financing (including finance costs and finance revenue), taxation and central administration are managed on a group basis and are not allocated to operating segments.

 


Six months

Six months

Year


ended

ended

ended


31 December

31 December

31 December


2011

2010

2010


Unaudited

 Unaudited

Restated Audited


£000

£000

£000

Revenue




Operations (continued operations)

141.5

89.8

105.2

Science and Technology (discontinued operations)

-

142.2

228.9

Group total

141.5

232.0

334.1

Loss




Operations

(599.4)

(935.9)

(1,702.6)

Science and Technology (discontinued operations)

(187.0)

(2,756.3)

(3,923.5)

UK Refining and Trading (discontinued operation)

41.5

294.8

923.0


(744.9)

(3,397.4)

(4,703.1)

Corporate

(894.5)

405.8

(1,385.3)

Group total

(1,639.4)

(2,991.6)

(6,088.4)

 

3. Discontinued operations

At 31 December 2011, the Group had two discontinued operations: i) Refining & Trading; and ii) Science & Technology.

 

 Refining & Trading

 

On 9 April 2008, the Group announced the decision of its Board to cease biodiesel refining and trading operations. The two refining sites at Middlesbrough and Bromborough in the UK were closed.  The Middlesbrough site and associated assets were sold in June 2009. On 2 July 2010, the Group sold the Bromborough site and associated prepaid insurance for £2.2m. The Group is also due to receive up to £0.4m based on future production volumes from the site. The royalty has been classified as a contingent asset due to uncertainty about its timing and amount. At 31 December 2011, the refining and trading operations remained classified as discontinued operations.

 

The results of the refining and trading activities of the Group for the period are presented below:


 Six months ended

 Six months ended

Restated

Year ended


31 December

31 December

31 December


2011

 

 

2010

 2010


 £000

 

 

£000

 £000

Revenue

-

-

-

Expenses (a)

41.5

294.9

971.1

Gross profit

41.5

294.9

971.1

Asset impairment

-

(0.1)

(48.1)

Operating profit

41.5

294.8

923.0

Finance income

-

-

-

Finance costs

-

-

-

Profit before tax from discontinued operation

41.5

294.8

923.0

Tax income

-

-

-

Profit from discontinued operation

41.5

294.8

923.0

 

(a)   Administrative expenses in 2011 includes the settlement of an outstanding liability plus the release of a contracts provision in relation to the Bromborough site.

 

The net cash flows incurred by the refining and trading operations are as follows:


 Six months ended

 Six months ended

Restated

Year ended


31 December

31 December

31 December


2011

 

 

2010

 2010


 £000

 

 

£000

 £000

Operating

(58.1)

(236.5)

(244.0)

Investing

-

-

1,695.4

Financing

-

-

-

Net cash (outflow)/inflow

(58.1)

(236.5)

1,451.4

 

Science & Technology

 

In December 2010, the Group completed the disposal of the agronomy and breeding activities within the Science & Technology division with an effective financial date of 1 November 2010. The disposed entities are known as 'Quinvita'. The disposal was made on, inter alia, the following terms:

1.     Retention by the Company of all agronomy and breeding intellectual property developed to 1 November 2010;

2.     The Company provided Quinvita with £0.8m working capital;

3.     Issue of £0.8m in Cumulative Redeemable Preference Shares by Quinvita to the Company with a 5% coupon plus future royalties on Jatropha related sales on a sliding scale over 10 years (15% to year 5; 10% years 6 - 8; 5% years 9 - 10); and

4.     The Group became a member of Quinvita's agronomy and breeding platforms for a minimum of three years (subject to certain conditions) giving the Group access to ongoing Jatropha developments.

 

No value has been ascribed to the Cumulative Redeemable Preference Shares or the royalty entitlements at the year end on the basis that their fair value is assessed as £nil at this point in time.

 

As part of the overall Group business review conducted during the period, the Board decided to place the retained Animal Feed sector on hold indefinitely.  As such, this sector has now been classified as discontinued.

 

The results of the Science & Technology division for the period are presented below:

 


 Six months ended

 Six months ended

Restated

Year ended


31 December

31 December

31 December


2011

 

 

2010

 2010


£000

 

 

£000

 £000

Revenue

-

142.1

228.8

Expenses

(187.0)

(2,053.8)

(3,307.7)

Operating loss

(187.0)

(1,911.7)

(3,078.9)

Finance income

-

12.6

12.6

Finance costs

-

(1.6)

(1.6)

Trading loss before tax from discontinued operation

(187.0)

(1,900.7)

(3,067.9)

Tax income

-

10.2

10.2

Trading loss from discontinued operation

(187.0)

(1,890.5)

(3,057.7)





Loss on disposal of agronomy and breeding business

-

(865.8)

(865.8)





Loss from discontinued operation

(187.0)

(2,756.3)

(3,923.5)

 

 

The net cash flows incurred by the Science & Technology division are as follows:


Six months ended

 Six months ended

Restated

Year ended


31 December

31 December

31 December


2011

 

 

2010

 2010


 £000

 

 

£000

 £000

Operating

(189.6)

(1,167.0)

(1,756.5)

Investing

-

-

(800.0)

Financing

-

-

-

Net cash outflow

(189.6)

(1,167.0)

(2,556.5)

 

Losses and loss per share for the discontinued operations

 

The losses from discontinued operations are as follows:

 


Six months ended

 Six months ended

Restated

Year ended


31 December

31 December

31 December


2011

2010

 2010


 £000

£000

 £000

(Loss)/profit from discontinued Refining & Trading operations

(187.0)

294.8

923.0

Profit/(loss) from discontinued portion of Science & Technology operations

41.5

(2,756.3)

(3,923.5)

Total loss from discontinued operations

(145.5)

(2,461.5)

(3,000.5)

 



 

The losses per share for the discontinued operations are as follows:


Six months ended

 Six months ended

Restated

Year ended


31 December

31 December

31 December


2011

 

 

2010

 2010


 pence

 

 

pence

pence

Basic and diluted from discontinued operations

(0.11)

(1.95)

(2.37)

 

4. Loss per ordinary share


Six months

Six months

Year


ended

ended

ended


31 December

31 December

31 December


2011

2010

2010


Unaudited

 unaudited

Audited


Number

Number

Number

Weighted average number of shares in issue

143,040,052

126,481,574

126,481,574






Pence

Pence

Pence

Basic loss per ordinary share for the period

(1.15)

(2.37)

(4.81)

Basic loss per ordinary share from continuing operations

(1.04)

(0.42)

(2.44)

The number of shares in issue at 31 December 2011 was 178,315,219 and at 31 December 2010 was 126,675,219. For the purposes of calculating the loss per ordinary share the weighted average number of shares excludes 193,645 shares held by the D1 Oils plc Employee Benefit Trust. The diluted loss per share does not differ from the basic loss per share as the share options are anti-dilutive.

For the purposes of calculating earnings per share, the following loss figures were used:


Six months

Six months

Year


ended

ended

ended


31 December

31 December

31 December


2011

2010

2010


Unaudited

Unaudited

Restated Audited


£000

£000

£000

Loss for the period attributable to equity holders of the parent from continuing operations

(1,493.9)

(530.1)

(3,087.9)

Loss for the period attributable to equity holders of the parent from discontinued operations

(145.5)

(2,461.5)

(3,000.5)

Total loss for the period attributable to equity holders of the parent

(1,639.4)

(2,991.6)

(6,088.4)

 

5. Other financial assets

Other financial assets comprise the following:


Six months

Six months

Year


ended

ended

ended


31 December

31 December

31 December


2011

2010

2010


Unaudited

Unaudited

Audited


£000

£000

£000

Other cash deposits

-

-

-

Accrued bank interest

-

-

-

Euro forward deposit

-

-

90.0


-

-

90.0

 

6. Contingent assets

 

At 31 December 2011, the Group had three contingent assets:

 

1.     D1 Oils Trading Limited has commenced proceedings to recover amounts due under a note, beneficial entitlement of which was assigned to the company as a result of a previous settlement. The note issuer has delayed payment of the note. D1 Oils Trading Limited has not recognised an asset in relation to this note as the amount and timing of cash flows from the note were uncertain. Post 31 December 2011, a cash amount was received by D1 Oils Trading Ltd in part settlement of the amounts owed. 

 

2.     In addition to the sale of the Bromborough refining site, the buyer of the site agreed to pay D1 Oils Trading Limited a net royalty of £0.4m plus VAT based on Bromborough's future production volumes of biodiesel. The Group has not recognised an asset in relation to this entitlement as the amount and timing of cash flows are uncertain.

 

3.     As part of the disposal of the agronomy and breeding activities in the Science & Technology division in December 2010, the Company received Cumulative Redeemable Preference Shares (CRPS) with a nominal value of £0.8m and a 5% coupon due for repayment in 2015. In addition, the Company is entitled to future royalties on Jatropha related sales on a sliding scale over 10 years (15% to year 5; 10% years 6 - 8; 5% years 9 - 10). The Group has not recognised an asset in relation to the CRPS or the royalties as the amount and timing of cash flows are uncertain.  Post 31 December 2011, the Group entered into discussions with Quinvita for the early settlement of the CRPS and royalties.  The outcome of the discussions are currently ongoing.

 

7. Contingent liabilities

 

At 31 December 2011, the Group had one contingent liability:

 

1.     As part of the sale of the Bromborough site, the lease obligations for two parcels of land adjacent to the Bromborough site were passed to the buyers. The two leases are first cancellable in 2021. If the buyer defaults on these lease obligations, the obligation may fall to D1. The maximum exposure is £2.0m but various mitigations, such as sub-lets, are available. This obligation remains contingent on the buyer defaulting and the Board does not consider the risk sufficiently likely to recognise a liability.

 

8. Approval by the Board of Directors

 

The Interim Report was approved by the Board of Directors on 12 March 2012.

 

Directors and advisors

 

Steven Rudofsky

Executive Chairman

 

Company Secretary

Marie Edwards

 

Nicholas Myerson

Chief Operating Officer

 

 

Registered office

16 Great Queen Street

London WC2B 5DG

 Graham Woolfman

Non-Executive Director

 

Registered number

5212852

 


Broker and nominated advisor

WH Ireland Limited

24 Martin Lane

London EC4R 0DR

 


Bankers

Barclays Bank plc

PO Box 378
71 Grey Street
Newcastle upon Tyne NE99 1JP

 

Auditors

Grant Thornton UK LLP

1020 Eskdale Road

IQ Winnersh

Wokingham

Berkshire RG41 5TS



 

Solicitors

Fladgate

16 Great Queen Street

London WC2B 5DG

 


 

Registrars

Capita IRG plc

The Registry
34 Beckenham Road
Kent BR3 4TU

 

 

 

 

The Directors of D1 confirm that the interim results of the Group for the six months ended 31 December 2011 have been posted to shareholders today and are available at www.d1plc.com.

 

 

For further information please contact:-

 

D1 Oils plc +44 (0) 20 7936 9104

 

Steven Rudofsky

 

Executive Chairman

 

 

 

 

 

WH Ireland + 44 (0) 20 7220 0470

 

Chris Fielding

 


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