RNS Number:8637N
Biofuels Corporation PLC
14 December 2006
BIOFUELS CORPORATION PLC
("Biofuels" or "the Company")
Interim results for the six months to 30 September 2006
Biofuels, which operates the largest biodiesel plant in the UK and one of the
largest in Europe, announces its interim results, which were impacted by lower
than expected production, and a report on progress since that date.
Highlights
* First shipments of biodiesel from Teesside 1 plant
* Official opening of plant by the Prime Minister
* Significant progress on remedying operational issues; plant capable of
sustained high quality biodiesel output
* Plans advanced to construct additional capacity
* Post period end, trading conditions impacted by lower mineral oil
prices and increased input costs
* On-demand banking facilities rolled over
Commenting on the results, Mike Buzzacott, Chairman, said:
"I am pleased to report that we saw a number of successes during the period.
Teesside 1 is now capable of sustained high levels of biodiesel production.
"The biodiesel market across Europe has recently been impacted by a combination
of lower mineral oil prices and increased input costs. We are confident that
margins will recover from the current unsustainable levels and we believe that
Biofuels can take advantage of such a recovery. The Company's plant, one of the
largest in Europe, is proven, on-stream and ready to increase supply of the
highest quality biodiesel.
"I am also pleased to report that our on-demand facilities have been rolled over
to 30 June 2007. This will enable us to thoroughly investigate a range of
options to restructure the group's current debt. This is welcome news
notwithstanding that, in the absence of significant market recovery, the Company
could require additional funding from the beginning of April. Through the
remainder of 2007, this could potentially amount to approximately #10m over and
above the existing facilities.
"With the introduction of mandation, the Board is optimistic that, in the longer
term, we will see Biofuels achieve its full potential as one of the largest
producers of biodiesel in a growing and vibrant market."
14 December 2006
A presentation to analysts will take place this morning at 09.30 at the offices
of College Hill, 78 Cannon Street, London EC4N 6HH
Biofuels Corporation plc
Unaudited interim financial statements for the six months ended 30 September
2006
CHAIRMAN'S STATEMENT
Business Performance
I am pleased to report that we saw a number of successes during the period.
These included the first shipments of biodiesel leaving Teesside 1 announced at
the beginning of May and the official opening of the plant by the Prime Minister
at the end of June.
We also made significant progress in ramping up biodiesel production rates while
we continued work on the recovery and glycerine refining units. In the first
week of September, during a trial period, the Teesside 1 plant was run at
varying high rates of production capacity achieving 30 tonnes per hour
production levels, approximate to 91% of maximum plant throughput capacity.
We have had to deal with several technical issues on Teesside 1 which have
impacted biodiesel production levels. In addition, during the period, further
design issues with the recovery units and delayed commissioning of the glycerine
columns resulted in the requirement to store intermediate product.
In August we were affected by a number of major operational issues, which were
all resolved, and at the end of September we suffered an equipment failure
resulting in the production of marginally off-spec biodiesel. Whilst this was
quickly rectified and shipments to customers resumed shortly thereafter, the
fault further restricted production levels at that time.
During the period, it became clear that deficiencies in aspects of the plant
design had hampered operational effectiveness and resulted in lost plant
production. In the meantime our own technical team under the leadership of Dr
Alan Keasey has been implementing a remedial engineering programme. He and his
team merit acknowledgement of their hard work and success in bringing Teesside 1
on-stream. I am delighted to report that Teesside 1 is capable of sustained
high quality biodiesel production output and remains the largest biodiesel plant
in the UK and one of the largest in Europe. It is a major achievement of which
we can all be proud.
Following on from the progress with Teesside 1, we have advanced our plans to
expand capacity alongside the existing Teesside 1 plant. We have selected Lurgi
AG, the leading supplier of biodiesel plants, as our technology partner for this
expansion, initially to undertake the necessary detailed front-end engineering
design work. The expansion will benefit from the existing infrastructure in
Teesside.
Since the period end, trading conditions have been impacted by a combination of
lower mineral oil prices and increased input costs, specifically vegetable oils
and methanol which will be affecting the biodiesel sector. Against this
environment, we are limiting production levels and are only taking on contracts
that provide acceptable margins. This enables us to focus on reprocessing
intermediate product and sales of refined glycerine, which commenced during
November.
Results
The group has adopted International Financial Reporting Standards for the first
time, with full details on the adjustments made included in the appendix to the
interim accounts.
Turnover in the period was #28.4m (2005: #0.9m) arising from the sale of 58,000
tonnes of biodiesel. The gross margin, before attributable overheads and
depreciation, was 21%. Gross profit, after allocation of overheads and
depreciation, was #1.4m (2005: loss #0.1m). Exceptional items in the period
were #2.1m, consisting of plant start-up costs, refinancing costs and further
support payments on behalf of our main contractor, with administration costs of
#2.7m, including staff costs, professional fees and storage. At the end of
June, the Company paid the previously announced fee due to Barclays of #2.275m.
The loss for the period was #8.9m (2005: loss #30.6m), which was transferred to
reserves.
The cost of the plant to the end of September after depreciation and net of
grant was #42.7m with net debt at #88.5m. Higher stocks included #2.8m of
off-spec. biodiesel subsequently to be returned to on-spec. and sold to
customers. The group had negative equity of #38.0m (2005: negative #24.7m),
almost the same as negative #38.1m at the end of March 2006.
The group had net cash outflow of #11.0m in the period (2005: inflow #5.1m)
after receiving a net #7.4m from the share placing in May and #0.5m grant
towards expenditure on the plant from One North East. The total expenditure of
#18.9m consisted of #3.0m on the plant, interest and net finance costs of #7.0m
with the balance on working capital financing the operations of the business and
capacity expansion work.
Sales
Since the return to on-spec. production in October, the Company has focussed on
meeting the requirements of existing contracts.
More recently, we have sought to extend the customer base but this is being
hampered by current pricing levels and a demand by some potential customers for
uneconomic fixed prices for extended periods.
In the current climate, the Company is agreeing only to shorter term contracts,
both with existing and new customers, which offer acceptable margins. Until
there is a market recovery, it is not in the company's interests to put in place
longer term agreements.
Finance
In May 2006 the Company raised #7.4m through a placing of 4.4m shares. This
funding provided it with funds in the anticipation of a refinancing later in the
year and to start the front-end engineering design work for the capacity
expansion referred to above. Due to lower volumes of production and the ongoing
impact of tighter margins, cash generation has not been as expected and
therefore the Board has taken action, including tightly managing its working
capital and especially its stock levels of oil, biodiesel and intermediate
product to manage the business within the Group's tight headroom constraints.
We have agreed with our bankers, Barclays, that our existing on-demand
facilities of #95.175m, in place until 31 December 2006, will be extended to 30
June 2007, in return for a fee of #476k payable at the end of June 2007. This
will allow the Board, working with JPMorganCazenove, sufficient time to
thoroughly investigate a broad range of financing options with a view to
restructuring the company's current debt profile. It is intended that this will
put the company on a more sustainable footing through to UK mandation in 2008
and provide the platform for financing future expansion of the company.
We expect to see market recovery during 2007. However without substantial
recovery back towards the levels seen over the last two years, to allow the
company to continue as a going concern, additional funding could be required
from the beginning of April. Through the remainder of 2007, this could amount to
approximately #10m over and above the existing facilities, primarily to cover
financing costs and working capital as output is increased.
A key factor in this recovery and the Company's prospects will be the
introduction of mandatory requirements in Germany from 1 January 2007 - Europe's
largest biodiesel market - and in the UK from April 2008. We believe that
mandation, combined with the obligations of the Renewable Transport Fuel
Obligation, will generate a strong and sustainable biodiesel market going
forward.
Outlook
In recent weeks, crude oil prices have risen but not sufficiently to offset
ongoing increases in the costs of soya, palm and methanol prices. We are seeing
gross margins of half those achieved over the last year.
However, with the imposition of mandation in Germany in January 2007, followed
by the UK in 2008, and with underlying demand for biodiesel set to grow rapidly,
we believe that current margins are unsustainable and that we will see an
improvement during 2007. In the meantime, the business will remain tightly
managed, focussing on managing working capital and running the plant at levels
which optimise cash flow.
The importance of mandation to the biofuels industry cannot be overstated. It
will underpin demand for biodiesel, especially in two of the largest European
markets. It is a pity therefore that we have to wait a further 16 months before
mandation arrives in the UK. Nevertheless, we will be looking to work where
possible with major UK fuel suppliers to put in place supply chains to meet
these obligations well in advance of April 2008.
As and when levels of economic demand recover, Biofuels is well placed to take
immediate advantage of such a recovery. The company's plant, one of the largest
in Europe, is proven, on-stream and ready to increase supply of the highest
quality biodiesel. Furthermore, our expansion plans will then ensure that we
will be able to meet significant new and long-term orders from major blue-chip
customers.
There is no disputing that the current environment is challenging. We are,
however, optimistic for the longer-term outlook and, with the support of all our
stakeholders, believe we will see Biofuels achieve its potential as one of the
largest producers of biodiesel in a growing and vibrant market.
MICHAEL BUZZACOTT
Chairman
14 December 2006
Enquiries:
Biofuels Corporation plc 01642 371 600
Sean Sutcliffe, Chief Executive
Bob Green, Finance Director
College Hill 020 7457 2020
Mark Garraway
Gareth David
Biofuels Corporation plc
Unaudited interim financial statements for the six months ended 30 September
2006
Report of the independent auditors
Independent review report to Biofuels Corporation plc
Introduction
We have been instructed by the company to review the financial information for
the six months ended 30 September 2006 on pages 7 to 29. We have read the other
information contained in the interim report and considered whether it contains
any apparent misstatements or material inconsistencies with the financial
information.
Our report has been prepared in accordance with the terms of our engagement to
assist the company in meeting the requirements of the rules of the London Stock
Exchange for companies trading securities on the Alternative Investment Market
and for no other purpose.
No person is entitled to rely on this report unless such a person is a person
entitled to rely upon this report by virtue of and for the purpose of our terms
of engagement or has been expressly authorised to do so by our prior written
consent. Save as above, we do not accept responsibility for this report to any
other person or for any other purpose and we hereby expressly disclaim any and
all such liability.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The directors are
responsible for preparing the interim report in accordance with the rules of the
London Stock Exchange for companies trading securities on the Alternative
Investment Market which require that the half-yearly report be presented and
prepared in a form consistent with that which will be adopted in the company's
annual accounts having regard to the accounting standards applicable to such
annual accounts.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom by auditors
of fully listed companies. A review consists principally of making enquiries of
group management and applying analytical procedures to the financial information
and underlying financial data and based thereon, assessing whether the
accounting policies and presentation have been consistently applied unless
otherwise disclosed. A review excludes audit procedures such as tests of
controls and verification of assets, liabilities and transactions. It is
substantially less in scope than an audit performed in accordance with United
Kingdom Auditing Standards and therefore provides a lower level of assurance
than an audit. Accordingly we do not express an audit opinion on the financial
information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 September 2006.
Biofuels Corporation plc
Unaudited interim financial statements for the six months ended 30 September
2006
Emphasis of matter - going concern
In forming our opinion, which is not qualified, we have considered the adequacy
of the disclosures made in note 1 to the unaudited interim financial information
concerning the Group's ability to continue as a going concern. At 30 September
2006, the Group had net current liabilities of #80.8m and a deficit in equity
shareholders funds of #38.0m. As a result of changes in commodity prices, it is
likely that the Group will require additional funding in 2007. The Group is
currently in negotiations to secure this additional funding. These conditions
along with the other matters described in note 1 to the interim financial
information indicate the existence of a material uncertainty which may cast
doubt on the Group's ability to continue as a going concern. The interim
financial information does not include any adjustments that would result if the
Group was unable to continue as a going concern.
BDO STOY HAYWARD LLP
Chartered Accountants
Leeds
Biofuels Corporation plc
Unaudited interim financial statements for the six months ended 30 September
2006
Consolidated interim income statement
Note 6 months to 6 months to 12 months to
30 September 30 September 31 March
2006 2005 2006
#'000 #'000 #'000
Revenue 2 28,434 948 1,915
Cost of sales 3 (27,045) (1,011) (1,972)
Gross profit/(loss) 1,389 (63) (57)
Commodity hedge costs - (28,381) (44,839)
Other exceptional items 4 (2,146) 1,460 (8,887)
Other administration costs (2,705) (3,782) (9,248)
Total administration costs (4,851) (30,703) (62,974)
Operating loss (3,462) (30,766) (63,031)
Finance income 93 293 330
Bank arrangement fees (2,275) - (8,745)
Other finance costs (3,216) (173) (2,975)
Total finance costs (5,491) (173) (11,720)
Loss for the period before tax 4 (8,860) (30,646) (74,421)
Tax expense - - 5
Loss for the period attributable to equity share
holders of the company (8,860) (30,646) (74,416)
(Loss) per share
Basic and diluted 5 (15.8p) (69.0p) (166.4p)
Biofuels Corporation plc
Unaudited interim financial statements for the six months ended 30 September
2006
Consolidated interim balance sheet
30 September 30 September 31 March
2006 2005 2006
#'000 #'000 #'000
Assets
Non-current
Property, plant and equipment 42,712 30,208 42,331
Current
Inventories 8,210 6,082 6,146
Trade and other receivables 3,350 2,040 1,686
Cash flow hedge 1,125 - -
Other financial assets 10 2,026 -
Cash and cash equivalents 5,600 1,248 739
18,295 11,396 8,571
Total assets 61,007 41,604 50,902
Equity
Called up share capital 495 450 451
Share premium 51,817 44,347 44,431
Other reserve 842 842 842
Cash flow hedge reserve 1,125 (29,570) -
Retained earnings (92,321) (40,770) (83,838)
Total equity (38,042) (24,701) (38,114)
Liabilities
Non-current
Term loan - 2,352 -
- 2,352 -
Current
Term loan 77,900 - 77,900
Bank overdraft 16,152 66 2,862
Trade and other payables 4,997 15,676 8,239
Cash flow hedge - 29,570 -
Other financial liabilities - 18,626 -
Provisions - 15 15
99,049 63,953 89,016
Total liabilities 99,049 66,305 89,016
Total equity and liabilities 61,007 41,604 50,902
Biofuels Corporation plc
Unaudited interim financial statements for the six months ended 30 September
2006
Consolidated interim cash flow statement
6 months to 6 months to 12 months to
30 September 30 September 31 March
2006 2005 2006
#'000 #'000 #'000
Operating activities
Loss for the period before tax (8,860) (30,646) (74,421)
Adjustments for: Depreciation 1,465 12 36
Finance income (93) (293) (330)
Finance costs 5,491 173 11,720
Loss on sale of - - 1
assets
Commodity and other - 37,900
hedge contracts -
Sub-total (1,997) (30,754) (25,094)
Change in inventories (2,063) (6,082) (6,146)
Change in trade and other receivables (1,670) (996) (639)
Changes in liquid resources: cash held as (2,541) - (726)
guarantees
Change in trade and other payables (958) (18) (2,907)
Share option charge 377 771 1,473
Other financial assets (10) (2,026) -
Other financial liabilities - 18,626 -
Taxation received/(paid) 5 - (27)
Cash generated from operations (8,857) (20,479) (34,066)
Interest received 93 293 330
Interest paid (4,822) (42) (310)
Bank arrangement fees (2,275) - (220)
Net cash from operating activities (15,861) (20,228) (34,266)
Cash flows from investing activities
Purchase of property, plant and equipment (3,040) (12,748) (27,757)
Cash flows from financing activities
Proceeds from issue of share capital 7,430 30,819 30,904
Increase in borrowings - 6,544 31,475
Grant income 500 750 750
7,930 38,113 63,129
Net change in cash and cash equivalents (10,971) 5,137 1,106
Cash and cash equivalents, beginning of period (2,849) (3,955) (3,955)
Cash and cash equivalents, end of period (13,820) 1,182 (2,849)
Biofuels Corporation plc
Unaudited interim financial statements for the six months ended 30 September
2006
Consolidated interim statement of changes in equity
Called up Share Other Cash flow Retained Total
share premium reserves hedge earnings Equity
capital reserve
#'000 #'000 #'000 #'000 #'000 #'000
Balance at 1 April 2005 308 13,670 842 (39,567) (10,895) (35,642)
Shares issued 143 30,761 - - - 30,904
Loss for the period - - - - (74,416) (74,416)
Transfer from cash flow hedge reserve - - - 39,567 - 39,567
Total recognised losses - - - 39,567 (74,416) (34,849)
Employee share option transfer to reserve - - - - 1,473 1,473
Balance at 31 March 2006 451 44,431 842 - (83,838) (38,114)
Shares issued 44 7,386 - - - 7,430
Loss for the period - - - - (8,860) (8,860)
Transfer to cash flow hedge reserve - - - 1,125 - 1,125
Total recognised losses - - - 1,125 (8,860) (7,735)
Employee share option transfer to reserve - - - - 377 377
Balance 30 September 2006 495 51,817 842 1,125 (92,321) (38,042)
Called up Share Other Cash flow Retained Total
share premium reserves hedge earnings Equity
capital reserve
#'000 #'000 #'000 #'000 #'000 #'000
Balance at 1 April 2005 308 13,670 842 (39,567) (10,895) (35,642)
Shares issued 142 30,677 - - - 30,819
Loss for the period - - - - (30,646) (30,646)
Transfer from cash flow hedge reserve - - - 9,997 - 9,997
Total recognised losses - - - 9,997 (30,646) (20,649)
Employee share option transfer to reserve - - - - 771 771
Balance 30 September 2005 450 44,347 842 (29,570) (40,770) (24,701)
Biofuels Corporation plc
Unaudited interim financial statements for the six months ended 30 September
2006
Notes to the interim financial statements
1 Basis of preparation
The interim financial statements and all the comparative information are
unaudited and have been prepared under International Financial Reporting
Standards as adopted by the EU (IFRS). The restatement of 2005 and 2006
financial information from UK Generally Accepted Accounting Principles (UK GAAP)
to IFRS and the accounting policies of the group under IFRS have been applied to
all three periods reported. The reconciliation from UK GAAP to IFRS and the
principal accounting policies under IFRS are included in the Appendix to these
interim financial statements.
Subsidiaries
The wholly owned subsidiary undertakings at the end of the period, all of which
are incorporated in England and Wales were as follows:
Subsidiary undertaking Principal activities
Biofuels Corporation Trading Limited Operation of a biodiesel plant
Biofuels Corporation Trustees Limited Trustee company
Biocine Limited Non trading
Going concern
As at 30 September 2006, the Group had net current liabilities of #80.8m and a
deficit in equity shareholders funds of #38.0m. The on-demand banking facilities
of #95.2m have been extended to 30 June 2007.
The European biodiesel market is currently experiencing tight margins due to a
combination of lower mineral oil prices and increased input costs, specifically
vegetable oils and methanol. Due to lower volumes of production and the ongoing
impact of tighter margins, the Group is faced with very tight headroom
constraints.
The Group expects to see market recovery during 2007. However without
substantial recovery back towards the levels seen over the last two years, to
allow the Group to continue as a going concern, additional funding could be
required from the beginning of April. Through the remainder of 2007, this could
amount to approximately #10m over and above the existing facilities, primarily
to cover financing costs and working capital as output is increased.
The directors consider that preparing the financial statements on the going
concern basis is appropriate. This assumes that new facilities, including if
appropriate additional funding of in the region of #10m, will be agreed when
required and in any event new facilities will be agreed before 30 June 2007 when
the current facilities expire and therefore that the company will have adequate
funding for the foreseeable future. The financial statements do not include any
adjustments that would result if new banking facilities were not agreed.
Exemptions under IFRS1
The Group is adopting IFRS for the first time and under IFRS 1 has elected not
to apply IFRS 3 to business combinations that occurred prior to the date of
transition.
Biofuels Corporation plc
Unaudited interim financial statements for the six months ended 30 September
2006
2 Segment analysis
The directors consider that the primary reporting format is by business segment
and that there is only one such segment being the production and sale of
biodiesel and its by-products. This disclosure has already been provided in
these financial statements.
The secondary reporting format is by geographical analysis by destination,
revenue from own production by destination is shown below:
Six months to Six months to Twelve months to
30 September 2006 30 September 2005 31 March 2006
#'000 #'000 #'000
United Kingdom 6,540 - -
Mainland Europe 21,894 - -
28,434 - -
Revenue reported in previous periods did not relate to own production and
consisted of vegetable oil and biodiesel trades.
3 Cost of sales
Cost of sales from own production comprises the following:
Six months to Six months to Twelve months to
30 September 2006 30 September 2005 31 March 2006
#'000 #'000 #'000
Raw material costs 22,317 - -
Manufacturing costs 1,721 - -
Production overheads 1,579 - -
Depreciation on biodiesel plant and
machinery 1,428 - -
27,045 - -
Cost of sales reported in previous periods did not relate to own production and
consisted of vegetable oil and biodiesel trades.
Biofuels Corporation plc
Unaudited interim financial statements for the six months ended 30 September
2006
4 Loss for the period
Six months to Six months to Twelve months to
30 September 2006 30 September 2005 31 March 2006
#'000 #'000 #'000
This is arrived at after charging:
Other exceptional items
Professional fees connected to 403 1,986
refinancing
601
Forward exchange contracts (10) (2,026) 436
Contractor payments 592 - 3,882
Plant start up and delay costs 963 - 2,187
Interest rate swaps - 163 396
2,146 (1,460) 8,887
Professional fees
The professional fees relate to costs incurred with the raising of additional
working capital facilities and refinancing the business.
Forward exchange contracts
Forward exchange contracts are entered into to reduce the risk of changes in
foreign currencies which would have otherwise have introduced volatility to the
company's income statement. At 30 September 2006 the Group had a forward
exchange contract in place due to expire on 31 December 2006 which was entered
into to exchange Euros into US dollars on a monthly basis and is explained in
more detail in post balance sheet events (note 7 below).
Contractor payments
The Group has made additional payments to sub-contractors on behalf of the main
contractor for the provision of the first plant. The Group considers that these
amounts are also unlikely to be recovered in the short term and therefore
provision has also been made against these further sums.
Plant start up and delay costs
Plant start up and delay costs consists primarily of additional storage costs to
store intermediate by-products and wet commissioning costs of the biodiesel
plant.
5 Earnings per share
Earnings per ordinary share have been calculated using the weighted average
number of shares in issue during the relevant financial periods. The weighted
average number of equity shares in issue is 56,222,258 (September 2005:
44,396,832; March 2006: 44,734,260). The share options are not dilutive. The
earnings, being the loss after tax, are #8,860,000 (September 2005: #30,646,000;
March 2006: #74,416,000).
6 Statement of changes in equity
Amounts shown under other reserves at the end of each period is the difference
between the aggregate of the issued share capital and the share premium account
of Biofuels Corporation Trading Limited and the nominal value of shares issued
by the Company in consideration for the acquisition on 12 January 2004 of the
entire share capital of Biofuels Corporation Trading Limited.
The movement during the current reporting period on the called up share capital
and share premium account, net of issue costs of #493,292, arose from the issue
of 4,401,804 shares at 180p per share.
The cash flow hedge reserve movement in the current period relates to the
movement in the fair value of the derivative instruments which have been
designated as cash flow hedges.
Biofuels Corporation plc
Unaudited interim financial statements for the six months ended 30 September
2006
7 Post balance sheet events
Forward exchange contracts
In July 2006 a sizeable proportion of future sales to December 2006 denominated
in Euros were not matched by equivalent expenditures in the same currency.
Therefore the Company entered into a forward exchange contract to convert Euros
into US dollars which was required to meet certain costs (predominantly
vegetable oils). After 30 September 2006 it became clear that the foreign
exchange exposure of the business had changed to a significant extent and future
expected currency flows no longer matched the notional value of the hedging
instrument. The remaining components of the forward exchange contract were
therefore cancelled. The company made a gain on cancellation.
Cash flow hedge
In July 2006 the Company entered into a sales contract covering the period July
to December 2006 which had a variable price component linked to the price of
ULSD (Ultra Low Sulphur Diesel). Consequently the Company entered into a
commodity swap contract to hedge the ULSD price associated with the contract
volumes. After 30 September 2006 the remaining components of the swap contract
were cancelled (for the period November to December 2006) with the gain and
guarantee deposit for this hedging facility being returned to the Company to
provide additional short term cash headroom.
Financing
The Group has agreed with its Bankers that the existing on-demand facilities of
#95.2m, in place until 31 December 2006, will be extended to 30 June 2007, in
return for a fee of #476,000 payable at the end of June 2007. The Group expects
to see market recovery during 2007. However without substantial recovery back
towards the levels seen over the last two years, to allow the Group to continue
as a going concern, additional funding could be required from the beginning of
April. Through the remainder of 2007, this could amount to approximately #10m
over and above the existing facilities, primarily to cover financing costs and
working capital as output is increased.
8 Publication of non-statutory accounts
The financial information contained in this interim statement does not
constitute statutory accounts as defined in sections 240 of the Companies Act
1985. All information is unaudited.
The statutory accounts for the financial year ended 31 March 2006 were prepared
under UK GAAP. These accounts, upon which the auditors issued an unqualified
opinion did not include references to any matters to which the auditors drew
attention by way of emphasis without qualifying their report and did not contain
statements under 237(2) or (3), (accounting records or returns inadequate,
accounts not agreeing with records and returns or failure to obtain necessary
information and explanations) of the Companies Act 1985, have been delivered to
the Registrar of Companies.
This interim statement will be made available at the Company's registered office
at 16 Earls Nook, Belasis Hall Technology Park, Billingham, Teesside, TS23 4EF.
Biofuels Corporation plc
Unaudited interim financial statements for the six months ended 30 September
2006
Appendix
31 March 2005 Balance Sheet reconciliation of UK GAAP to IFRS
Balance Sheet 31 March 2005
#'000 #'000 #'000
UK GAAP IFRS IFRS
adjustments
Assets
Non-current
Property, plant and equipment 16,653 - 16,653
Current
Trade and other receivables 1,553 - 1,553
Cash and cash equivalents 34 - 34
1,587 - 1,587
Total assets 18,240 - 18,240
Equity
Called up share capital 308 - 308
Share premium 13,230 440 13,670
Other reserve 842 - 842
Share option reserve 440 (440) -
Cash flow hedge reserve - (39,567) (39,567)
Retained earnings (10,895) - (10,895)
Total equity 3,925 (39,567) (35,642)
Liabilities
Current
Bank overdraft 3,989 - 3,989
Trade and other payables 10,311 - 10,311
Cash flow hedge - 39,567 39,567
Other financial liabilities - - -
Provisions 15 - 15
14,315 39,567 53,882
Total liabilities 14,315 39,567 53,882
Total equity and liabilities 18,240 - 18,240
Biofuels Corporation plc
Unaudited interim financial statements for the six months ended 30 September
2006
Appendix
Summary of IFRS adjustments to 31 March 2005 Balance Sheet
Balance Sheet 31 March 2005
#'000 #'000 #'000
Financial Share options Total IFRS
instruments adjustments
Assets (a) (b)
Non-current
Property, plant and equipment - - -
Current
Trade and other receivables - - -
Cash and cash equivalents - - -
- - -
Total assets - - -
Equity
Called up share capital - - -
Share premium - 440 440
Other reserve - - -
Share option reserve - (440) (440)
Cash flow hedge reserve (39,567) - (39,567)
Retained earnings - - -
Total equity (39,567) - (39,567)
Liabilities
Current
Bank overdraft - - -
Trade and other payables - - -
Cash flow hedge 39,567 - 39,567
Other financial liabilities - - -
Provisions - - -
39,567 - 39,567
Total liabilities 39,567 - 39,567
Total equity and liabilities - - -
Notes to the IFRS adjustments are on page 25.
Biofuels Corporation plc
Unaudited interim financial statements for the six months ended 30 September
2006
Appendix
30 September 2005 Balance Sheet reconciliation of UK GAAP to IFRS
Balance Sheet 30 September 2005
#'000 #'000 #'000
UK GAAP IFRS IFRS
adjustments
Assets
Non-current
Property, plant and equipment 30,958 (750) 30,208
Current
Inventories 6,082 - 6,082
Trade and other receivables 2,040 - 2,040
Other financial assets - 2,026 2,026
Cash and cash equivalents 1,248 - 1,248
9,370 2,026 11,396
Total assets 40,328 1,276 41,604
Equity
Called up share capital 450 - 450
Share premium 43,907 440 44,347
Other reserve 842 - 842
Share option reserve 440 (440) -
Cash flow hedge reserve - (29,570) (29,570)
Retained earnings (24,170) (16,600) (40,770)
Total equity 21,469 (46,170) (24,701)
Liabilities
Non-current
Term loan 2,352 - 2,352
2,352 2,352
Current
Bank overdraft 66 - 66
Trade and other payables 15,732 (56) 15,676
Cash flow hedge - 29,570 29,570
Other financial liabilities - 18,626 18,626
Provisions 709 (694) 15
16,507 47,446 63,953
Total liabilities 18,859 47,446 66,305
Total equity and liabilities 40,328 1,276 41,604
Biofuels Corporation plc
Unaudited interim financial statements for the six months ended 30 September
2006
Appendix
Summary of IFRS adjustments to 30 September 2005 Balance Sheet
Balance Sheet 30 September 2005
#'000 #'000 #'000 #'000
Financial Share options Presentation of Total IFRS
instruments deferred grant Adjustments
income
(a) (b) (c)
Assets
Non-current
Property, plant and equipment - - (750) (750)
Current
Inventories - - - -
Trade and other receivables - - - -
Other financial assets 2,026 - - 2,026
Cash and cash equivalents - - - -
2,026 - - 2,026
Total assets 2,026 - (750) 1,276
Equity
Called up share capital - - - -
Share premium - 440 - 440
Other reserve - - - -
Share option reserve - (440) - (440)
Cash flow hedge reserve (29,570) (29,570)
Retained earnings (16,600) - - (16,600)
Total equity (46,170) - - (46,170)
Liabilities
Non-current
Term loan - - - -
Current
Bank overdraft - - - -
Trade and other payables - - (56) (56)
Cash flow hedge 29,570 - - 29,570
Other financial liabilities 18,626 - - 18,626
Provisions - - (694) (694)
48,196 - (750) 47,446
Total liabilities 48,196 - (750) 47,446
Total equity and liabilities 2,026 - (750) 1,276
Notes to the IFRS adjustments are on page 25.
Biofuels Corporation plc
Unaudited interim financial statements for the six months ended 30 September
2006
Appendix
30 September 2005 Income Statement reconciliation of UK GAAP to IFRS
Six months to 30 September 2005
Income Statement #'000 #'000 #'000
UK GAAP IFRS IFRS
adjustments
Revenue 948 - 948
Cost of sales (1,011) - (1,011)
Gross profit/(loss) (63) - (63)
Commodity hedge costs (9,917) (18,464) (28,381)
Other exceptional items (404) 1,864 1,460
Other administration costs (3,011) (771) (3,782)
Total administration costs (13,332) (17,371) (30,703)
Operating loss (13,395) (17,371) (30,766)
Finance income 293 - 293
Bank arrangement fees - - -
Other finance costs (173) - (173)
Total finance costs (173) - (173)
Loss for the period before tax (13,275) (17,371) (30,646)
Tax expense - - -
Loss for the period attributable to equity share (17,371) (30,646)
holders of the company
(13,275)
Biofuels Corporation plc
Unaudited interim financial statements for the six months ended 30 September
2006
Appendix
Summary of IFRS adjustments to 30 September 2005 Income Statement
Six months to 30 September 2005
Income Statement #'000 #'000 #'000
Financial Share IFRS
instruments options adjustments
(a) (b)
Revenue - - -
Cost of sales - - -
Gross profit/(loss) - - -
Commodity hedge costs (18,464) - (18,464)
Other exceptional items 1,864 - 1,864
Other administration costs - (771) (771)
Total administration costs (16,600) (771) (17,371)
Operating loss (16,600) (771) (17,371)
Finance income - - -
Bank arrangement fees - - -
Other finance costs - - -
Total finance costs - - -
Loss for the period before tax (16,600) (771) (17,371)
Tax expense - - -
Net loss for the period (16,600) (771) (17,371)
Notes to the IFRS adjustments are on page 25.
Biofuels Corporation plc
Unaudited interim financial statements for the six months ended 30 September
2006
Appendix
31 March 2006 Balance Sheet reconciliation of UK GAAP to IFRS
31 March 2006
#'000 #'000 #'000
IFRS
UK GAAP adjustments IFRS
Assets
Non-current
Property, plant and equipment 43,081 (750) 42,331
Current
Inventories 6,146 - 6,146
Trade and other receivables 1,695 (9) 1,686
Cash and cash equivalents 739 - 739
8,580 (9) 8,571
Total assets 51,661 (759) 50,902
Equity
Called up share capital 451 - 451
Share premium 44,000 431 44,431
Other reserve 842 - 842
Share option reserve 431 (431) -
Retained earnings (83,829) (9) (83,838)
Total equity (38,105) (9) (38,114)
Liabilities
Current
Term loan 77,900 - 77,900
Bank overdraft 2,862 - 2,862
Trade and other payables 8,989 (750) 8,239
Cash flow hedge - - -
Other financial liabilities - - -
Provisions 15 - 15
89,766 (750) 89,016
Total liabilities 89,766 (750) 89,016
Total equity and liabilities 51,661 (759) 50,902
Biofuels Corporation plc
Unaudited interim financial statements for the six months ended 30 September
2006
Appendix
Summary of IFRS adjustments to 31 March 2006 Balance Sheet
Balance Sheet 31 March 2006
#'000 #'000 #'000 #'000
Share options Presentation of Deferred tax Total IFRS
deferred grant adjustments
income
(b) (c) (d)
Assets
Non-current
Property, plant and equipment - (750) - (750)
Current
Inventories - - - -
Trade and other receivables - - (9) (9)
Cash and cash equivalents - - - -
- - (9) (9)
Total assets - (750) (9) (759)
Equity
Called up share capital - - - -
Share premium 431 - - 431
Other reserve - - - -
Share option reserve (431) - - (431)
Retained earnings - - (9) (9)
Total equity - - (9) (9)
Liabilities
Current
Term loan - - - -
Bank overdraft - - - -
Trade and other payables - (750) - (750)
Cash flow hedge - - - -
Other financial liabilities - - - -
Provisions - - - -
- (750) - (750)
Total liabilities - (750) - (750)
Total equity and liabilities - (750) (9) (759)
Notes to the IFRS adjustments are on page 25.
Biofuels Corporation plc
Unaudited interim financial statements for the six months ended 30 September
2006
Appendix
31 March 2006 Income Statement reconciliation of UK GAAP to IFRS
Twelve months ended 31 March 2006
#'000 #'000 #'000
UK GAAP IFRS IFRS
adjustments
Revenue 1,915 - 1,915
Cost of sales (1,972) - (1,972)
Gross profit/(loss) (57) - (57)
Commodity hedge costs (44,839) - (44,839)
Other exceptional items (8,491) (396) (8,887)
Other administration costs (7,775) (1,473) (9,248)
Total administration costs (61,105) (1,869) (62,974)
Operating loss (61,162) (1,869) (63,031)
Finance income 330 - 330
Bank arrangement fees (9,141) 396 (8,745)
Other finance costs (2,975) - (2,975)
Total finance costs (12,116) 396 (11,720)
Loss for the period before tax (72,948) (1,473) (74,421)
Tax expense 14 (9) 5
Net loss for the period (72,934) (1,482) (74,416)
Biofuels Corporation plc
Unaudited interim financial statements for the six months ended 30 September
2006
Appendix
Summary of IFRS adjustments to 31 March 2006 Income Statement
Twelve months ended 31 March 2006
Income Statement #'000 #'000 #'000 #'000
Financial Share Deferred Total IFRS
instruments options tax adjustments
(a) (b) (d)
Revenue - - - -
Cost of sales - - - -
Gross profit/(loss) - - - -
Commodity hedge costs - - - -
Other exceptional items (396) - - (396)
Other administration costs - (1,473) - (1,473)
Total administration costs (396) (1,473) - (1,869)
Operating loss (396) (1,473) - (1,869)
Finance income - - - -
Bank arrangement fees 396 - - 396
Other finance costs - - - -
Total finance costs 396 - - 396
Loss for the period before tax - (1,473) - (1,473)
Tax expense - - (9) (9)
Loss for the period attributable to - (1,473) (9) (1,482)
equity share holders of the company
Notes to the IFRS adjustments are on page 25.
Biofuels Corporation plc
Unaudited interim financial statements for the six months ended 30 September
2006
Appendix
Details of adjustments
(a) Financial instruments
In accordance with IAS 39, the derivative financial instruments (including
commodity hedges) held by the group are carried at fair value at each balance
sheet date and movements in the fair values are taken directly to the income
statement unless the investment has been designated as a cash flow hedge. In
this case the movements in fair value are taken to the cash flow hedge reserve
until the time that the hedged cash flow occurs.
In accordance with UK GAAP, gains and losses on derivative financial instruments
arising on the difference between the hedged rate and the spot rate are
recognised when the related transaction occurs.
At the date of transition (31 March 2005), cash flow hedging relationships under
UK GAAP where the forecast transaction was expected to occur are reflected at
fair value of #39.6m with a corresponding entry to a cash flow hedging reserve
in accordance with IFRS 1. From the date of transition these were not effective
hedges under IAS 39 and hedge accounting did not apply. The cash flow hedging
reserve is reflected in the income statement in accordance with the rules for
discontinuation of hedge accounting under IAS 39.
Summary impact of all hedge contracts up to 31 March 2006:
UK GAAP IFRS
#'000 #'000
Charged to income statement
Prior to 1 April 2005 4,621 4,621
6 months to 30 September 2005 9,998 26,598
6 months to 31 March 2006 35,744 19,144
50,363 50,363
The amount charged to the income statement under IFRS in relation to commodity
hedge costs are shown separately on the face of the income statement by virtue
of their size.
(b) Share options
In accordance with IFRS 2 the fair value of share options, calculated when the
share options were granted has been recognised as an expense over the vesting
period of the grants. Once calculated these fair values cannot be reassessed.
The credit entry for this charge is taken to the income statement reserve and
reported in the statement of changes in equity.
In accordance with UK GAAP, when shares and share options are awarded to
employees a charge is made to the income statement based on the difference
between the market value of the Company's shares at the date of the grant and
the option exercise price in accordance with UITF Abstract 17 (revised 2003) '
Employee Share Schemes.'
Biofuels Corporation plc
Unaudited interim financial statements for the six months ended 30 September
2006
Appendix
(c) Grant income
In accordance with the option conferred by IAS 20, the deferred grant income has
been netted off the cost of the fixed assets to which it relates.
In accordance with UK GAAP, the grant income was included in creditors as
deferred income.
(d) Deferred tax
Under IAS 19, the net deferred tax position is an asset at each of the balance
sheet dates. As the directors are unable to determine with reasonable certainty
the likelihood and timing of recovery of these assets they have not been
recognised at any of the balance sheet dates.
Biofuels Corporation plc
Unaudited interim financial statements for the six months ended 30 September
2006
Principal accounting policies
Accounting policies
These financial statements have been prepared under International Financial
Reporting Standards (IFRS) as adopted by the EU.
The financial statements have been prepared under the historical cost convention
modified by the revaluation of derivative instruments held at fair value.
Basis of consolidation
Where the company has the power, either directly or indirectly, to govern the
financial and operating policies of another entity or business so as to obtain
benefits from its activities, it is classified as a subsidiary. The consolidated
financial statements present the results of the company and its subsidiaries ("
the group") as if they formed a single entity. Intercompany transactions and
balances between group companies are eliminated in full.
Under the group's previous accounting framework, United Kingdom Generally
Accepted Accounting Practice (UK GAAP), the business acquisition between
Biofuels Corporation plc and its subsidiary undertaking, Biofuels Corporation
Trading Limited was accounted for using the merger method of accounting. As
this transaction occurred prior to the group's date of transition to IFRS, this
business acquisition has not been restated in these financial statements.
Revenue
Revenue represents sales to external customers at invoiced amounts less value
added tax and selling expenses. Revenue is recognised when the risks and
rewards of owning the goods has passed to the customer which is generally on
delivery.
Property, plant and equipment
Property, plant and equipment are stated at cost less provision for
depreciation.
Depreciation is provided to write off the cost, less estimated residual values,
of all property, plant and equipment on a straight line basis over their
expected useful lives. It is calculated at the following rates:
Motor vehicles - 20% per annum
Computer equipment - 33 1/3 % per annum
Furniture and fittings - 25% per annum
Biodiesel plant and machinery - 5%, 6.7% or 20% per
annum
(The majority of the cost of the biodiesel plant and machinery are depreciated
by 5% and 6.7% per annum)
Sundry plant and machinery - 10% per annum
Government grants
Grants relating to property, plant and equipment are credited to the income
statement at the same rate as the depreciation on the assets to which the grant
relates. The deferred element of grants is included within property, plant and
equipment as a reduction in the cost of the asset.
Inventories
Inventories are recognised at the lower of cost (based on weighted average cost
of purchase) and net realisable value. Cost comprises costs of purchase,
conversion and other items incurred in bringing the inventories to their present
location and condition.
Biofuels Corporation plc
Unaudited interim financial statements for the six months ended 30 September
2006
Principal accounting policies
Foreign currency translation
Foreign currency transactions are translated into sterling at the rates ruling
when they occurred. Foreign currency monetary assets and liabilities are
translated at the rates ruling at the balance sheet dates. Any differences are
taken to the income statement.
Pension costs
Contributions to the Group's defined contribution pension scheme are charged to
the income statement in the period in which they become payable.
Deferred taxation
Deferred taxation is provided on taxable temporary differences between the
carrying amounts of assets and liabilities in the financial statements and their
corresponding tax bases. Deferred tax assets are recognised to the extent that
it is probable that taxable profits will be available against which temporary
differences can be utilised. Deferred tax is measured using the tax rates
expected to apply when the asset is realised or the liability settled based on
tax rates enacted or substantially enacted by the balance sheet date.
Leases
Operating lease rentals are charged to the income statement on a straight-line
basis over the term of the lease.
Financial assets
Trade and other receivables
Trade and other receivables are carried at the invoiced or contractually agreed
amount less any required allowances for uncollectible amounts.
Financial derivatives
Derivative financial instruments are measured at fair value. The group uses
forward commodity contracts, forward foreign exchange contracts and interest
rate swaps to manage the relevant exposures where appropriate. Unless
designated as a hedge, these derivative financial instruments are recognised at
fair value through the income statement and all changes in fair value are
recognised in the consolidated income statement.
Certain of the group's derivative instruments are designated as cash flow
hedges.
Changes in the carrying amount of cash flow hedges are charged to the "cash flow
hedge reserve" in equity. Amounts accumulated in equity are recycled to the
income statement in the periods when the hedged item affects profit or loss.
When the hedged transaction results in the recognition of a non-financial asset
or liability, the gains and losses previously deferred in equity are transferred
from equity and included in the initial measurement of the cost of the asset or
liability.
When a cash flow hedging instrument expires or is sold, or when a hedge no
longer meets the criteria for hedge accounting, any cumulative gain or loss
existing in equity at that time remains in equity and is recognised when the
forecast transaction is ultimately recognised in the income statement. When a
forecast transaction is no longer expected to occur, the cumulative gain or loss
reported in equity is immediately transferred to the income statement.
Cash and cash equivalents
Cash and cash equivalents comprise cash at hand, demand deposits and short-term
highly liquid investments that are easily convertible into known amounts of
cash.
Financial liabilities
Bank borrowings
Bank borrowings are carried at the amounts payable at the balance sheet date.
Biofuels Corporation plc
Unaudited interim financial statements for the six months ended 30 September
2006
Principal accounting policies
Trade payables
Trade payables are carried at the amounts expected to be paid to counterparties.
Share based payments
The fair values at the date of grant of share based remuneration, principally
share options, were calculated using a binomial pricing model and fixed at the
time of vesting. The fair value is charged to the income statement on a straight
line basis over the vesting period of the award. The charge to the income
statement takes account of the estimated number of shares that will vest. All
share based remuneration is equity settled.
National insurance on share options
To the extent that the share price at the balance sheet date is greater than the
exercise price on options granted under unapproved schemes, provision for any
National Insurance contributions has been made based on the prevailing rate of
National Insurance. The provision is accrued over the performance period
attaching to the award.
Segment reporting
The group's primary reporting format is business segments and its secondary
format is geographical segments.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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