TIDMNEOS
RNS Number : 5721P
Neos Resources PLC
26 October 2012
Financial Report & Accounts for the 18 month period ended 30
June 2012
The audited accounts of NEOS Resources plc for the 18 month
period ended 30 June 2012 are herby released to the market.
Executive Chairman's statement
Introduction
This is the first Annual report and accounts to be issued by
NEOS Resources plc (the "Company") and its subsidiaries (the
"Group") since I was appointed as Executive Chairman in June 2011
and the first in relation to the changed year reporting to 30(th)
June.
There have been a number of significant changes to both the
Board and operational structure of the Group over the last sixteen
months. As announced in the Interim report in December 2011, the
Board has refocused the Group on non-edible oils seeds found in
India. This strategy was initiated in order to develop a pathway
for scalability and with a view to future financial stability for
the Group. In order to reflect these changes the Company's name was
changed from D1 Oils plc to NEOS Resources plc in March 2012.
The Board has also changed the focus of the Group from research
and development towards commodity trading. Over the past sixteen
months, the management team has developed its knowledge regarding
the complexities of the Indian markets including the commodity
market spread pressures and the operational activities. The Board`s
principal objective is for the Group to achieve profitability and
cashflow sustainability within a manageable time horizon.
Ravi Jose was appointed as an executive director in July 2012,
to join Nicholas Myerson and myself who had joined in June 2011.
The executive team conducted a business review which resulted in
the closing down of the Group's operations in Indonesia and Zambia
and the disposal of the remaining Science & Technology research
unit with the sale of the Animal Feed project, as a result of which
the Group now focuses on trading operations in India.
I am pleased to report that the Group has made progress in
developing the business in the core region of India during the
period with relatively significant amounts of non-edible vegetable
oils being produced and sold there.
The Group has now produced initial volumes of crude oil from
Castor, Pongamia and Neem, as well as Jatropha, and has sold its
products into a number of industrial applications. This is the
first step in the implementation of a diversification strategy away
from over reliance on future biofuel legislation.
During the period since June 2011, the Group running costs have
been reduced by 66% from a rate of over GBP220,000 to under
GBP75,000 per month. These reductions have been achieved through
the closure of non-scalable Jatropha plantations in Malawi, Zambia
and Indonesia, the sale of the Animal Feed programme, and overhead
efficiencies achieved within the UK and India.
The Group revenue, whilst still relatively small scale, has
trebled from a monthly average in the first half of 2011 of
GBP30,000 to a current average of circa GBP90,000 per month which
has been generated from approximately GBP450,000 of committed
working capital in India.
Indian operations
Since the commencement of the season in July 2011, the Group has
purchased approximately 3,700 tonnes of a combination of non-edible
seeds, expelled approximately 1,200 tonnes of oil, and produced
over 2,600 tonnes of seedcake. 825 tonnes of oil and 2,600 tonnes
of seedcake were sold for GBP863,000. 400 tonnes of oil and 300
tonnes of seedcake were held in inventory at the period end.
The overhead costs for India have been reduced since June 2011
from a monthly average of GBP35,000 per month to GBP17,000 per
month.
Management is planning to commit increased working capital for
larger storage facilities for the seed, oil and seedcake, as well
as to enter into variable tolling contracts thereby enabling the
Group to withdraw from fixed leased crushing plants. These measures
should assist in opportunities to buy seed and to sell the
requisite oil and seedcake at the lowest and highest points,
respectively, of the seasonal market cycles.
The Group is currently in the process of trial sampling with two
large European based companies for the export of its crude Jatropha
oil for applications in the leather tanning and biofuel markets.
The Group is additionally in discussions with a multinational
trader for the export of the Group's crude castor oil.
In order to drive the scalability of the business, management is
currently in the process of exploring other domestic or export
opportunities for non-edible seed and oil products.
Quinvita sale
In April 2010, the Group sold substantially all of the Jatropha
plant science and technology activities, excluding its animal feed
programme, to Quinvita Limited ("Quinvita"), a company formed by
three previous members of management.
In April 2012, the Group concluded the sale of the remainder of
the Animal Feed intellectual property assets to Quinvita for cash
consideration of GBP300,000 and converted its holding of preference
shares in the capital of Quinvita to a senior loan of GBP372,000.
The loan attracts interest and is repayable by Quinvita at any time
before April 2017.
Principal risks and uncertainties
The attention of shareholders is drawn to the Directors' Report
which sets out the principal risks and uncertainties faced by the
Group.
Going concern
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 material uncertainties that
the Directors have had to consider in deciding to prepare the
financial statements on the going concern basis, which are
summarised below.
Business planning uncertainty
Following the appointment of Steven Rudofsky and Nicholas
Myerson on 24 June 2011, the Board commenced a fundamental review
of the business. The review concluded that a strategy of producing,
procuring and trading oils from multiple non-edible oilseed types
offered the most viable long term prospects for the Group. Whilst
the Board is confident it can deliver a non-edible oilseeds based
strategy that is viable and cash generative over the longer term,
until the business plan is finalised and executed over a number of
harvest cycles, the Board cannot assess with certainty the
implications of pursuing the revised strategy.
Funding uncertainty
The Group concluded a successful fundraising exercise in
November 2011. The Directors informed the market at the time that
they expected an additional fundraising would need to be initiated
during the latter half of 2012. The Directors now believe that
trading in line with the business plan and forecasts show that the
Group will require additional cash funding during the second
quarter of 2013. The Board believes that it retains the support of
major shareholders for its plans. However, if the Directors are
unable to secure the appropriate level of support for the strategy
and associated future fundraising, 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
review and whether funding can be secured before cash resources are
depleted are material uncertainties which may cast significant
doubt about the Group and Company's ability to continue as a going
concern in their current form. The Directors believe that these
uncertainties can be managed and mitigated 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 business strategy not fulfil expectations and not
generate cash for the Group, then the resultant restrictive ability
to implement or fund the Group's business plan would mean 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.
Financial statements for 18 month period ended 30 June 2012
In December 2011, the Board changed the accounting reference
date from 31 December to 30 June to align the accounting year end
of the Group to the Indian Jatropha harvest season.
The financial results for the 18 month period ended 30 June 2012
reflect the activities prior to, during, and following the business
review conducted by the new Board. As part of the review,
operations in Indonesia and Zambia were closed down, and the Animal
Feed business within the remaining Science and Technology sector
was disposed of. All Science and Technology activity was
reclassified as discontinued.
Group revenue was GBP0.9m (2010: GBP0.1m) for the period. The
increase was due to an increased tonnage of vegetable oils sold, to
825 tonnes in the 18 month period.
The business achieved a positive throughput margin on all
varieties of oil. Average processing costs were, however, in excess
of throughput margin. This was due to two onerous fixed lease mills
contracts which will have been terminated by the end of 2012,
historical committed costs from previous management, and an adverse
movement in castor prices, resulting in an impairment charge to
cost of sales from inventory during the period. The knowledge
gained from this season's expelling has resulted in improved
practices amongst staff and the sourcing of favourable tolling
contracts on a per kilogram of grain basis. The Directors are
confident that concepts learned and changes applied to the business
will generate gross profits.
Administration expenses were GBP3.0m for the 18 month period
compared with GBP3.4m for the 12 month period in 2010 as a result
primarily of withdrawing from the Indonesian and Zambian
operations, and reducing the numbers of staff in the UK and
India.
Interest received of GBP26,000 (2010: GBP35,000) relates to cash
held on deposit in the UK (GBP13,400) and India (GBP6,000) plus
GBP6,200 of accrued interest from the Quinvita receivable.
Group policy is to charge foreign exchange fluctuations on long
term loans and equity in foreign subsidiaries with continuing
operations to a foreign exchange equity reserve. Once an overseas
subsidiary becomes discontinued, the foreign exchange reserve is
released to the income statement. As a result of withdrawing from
Indonesia and Zambia, finance costs include GBP0.3m in foreign
exchange costs from impairment of loans in local currency and in
foreign exchange equity reserves being charged to the income
statement.
The loss on continuing activities before taxation was GBP3.7m
(2010: GBP3.3m) and the loss per ordinary share was 2.3p (2010:
4.8p).
The Board
Barclay Forrest and Martin Jarvis left the Board on 14 July 2011
and 22 December 2011, respectively. The Board would like to thank
them for their contribution to the business.
Nicholas Myerson and I joined the board as Executive Directors
on 24 June 2011.
Ravi Jose joined the Board as an Executive Director on 26 July
2012. Graham Woolfman and Michael Moquette joined the Board as
Non-Executive Directors on 14 July 2011 and 4 May 2012,
respectively.
Staff
The period since June 2011 has been a time of very significant
change for the Group. Operationally things remain challenging as
the Group finalises the business model which the Board expects will
enable profitability to be achieved. The Board would like to thank
all of the staff for the capability, commitment and hard work that
they have shown in what has been a challenging and fast-moving
corporate environment.
Conclusion
The Board believes the Group is progressing towards achieving
financial stability. This is dependent on developing and
implementing a business plan that can result in scalability of the
Group`s operations and a pathway to profitability.
There has been a significant shift in the focus of the Group and
it is no longer dependent on biofuel legislation and the successful
planting of one oilseed crop.
However, the business plan will require further funding in order
for the Group to ultimately achieve profitability. The Board
remains confident regarding procuring future funding based in part
on the progress achieved by the Group over the last sixteen
months.
I would like to thank our shareholders for their interest and
support through a difficult, challenging and exciting time for the
business.
Steven Rudofsky
Executive Chairman
25 October 2012
Directors and advisors
Steven Rudofsky
Executive Director, 50
Steven began his career working for Marc Rich & Co. AG and
Glencore AG where he traded both soft commodities and Ferro Alloys
in Rotterdam and Zug. Thereafter he held senior management
positions in London at Aletri Limited (Motor Oil Hellas),
TransCanada Pipeline Ltd, Credit Agricole CIB and Crown Resources
(Alfa Group of Russia). Since 2003, Steven has been focused on
property development in Poland through Huntington Polska whilst
also consulting on various commodity projects in Europe, North
America, Middle East and Asia. Steven holds a BA cum laude in
History and International Relations from Clark University and a JD
from Emory University. He has been a member of the New York Bar
since 1988.
Nicholas Myerson
Executive Director, 27
Nicholas began his career as part of the corporate finance team
at Dubai World, focusing on real estate and infrastructure
investments in the Chinese, Indian, and Polish markets. Nicholas
was until recently head analyst for Salamanca Capital, a London
based private equity group, where he was responsible for the firm's
infrastructure, commodity and mining investment portfolios.
Nicholas holds a MA in Law from Cambridge University. Nicholas is
the son of former NEOS Resources plc Chairman, Brian Myerson, who
is Executive Chairman of Principle Capital Group whose managed
funds hold 25.4% of NEOS's ordinary shares. However, Nicholas
confirms he is not a representative of the Principle Capital Group
or its managed funds.
Ravi Jose
Executive Director, 32
Ravi was engaged by NEOS as a consultant in September 2011 with
a mandate to assist the Board of Directors in assessing the
strategic options of its Indian operations. He is a Swiss national
of Indian origin and is fluent in several languages including Hindi
and Malayalm. Prior to joining NEOS, he worked in Corporate
Treasury at McCain Foods and Specsavers, and in various Corporate
Strategy roles at SICPA and Siegwerk. He is a Chartered Financial
Analyst (CFA) charter holder.
Graham Woolfman
Non-executive Director, 55
Graham is a Fellow of the Institute of Chartered Accountants in
England and Wales, and previously a partner and head of Corporate
Finance at a major medium size UK firm. His investment management
and Board activities have included companies across a range of
sectors, including technology related, clean tech recycling and
renewables, general service based, and financial services sectors.
He is a director of a number of unquoted companies, and has served
as a director of publicly quoted and listed companies. Graham is
currently Managing Director of Intrust Corporate Finance Limited, a
corporate finance advisory and consulting company.
Michael Moquette
Non-executive Director, 60
Michael Moquette has over 20 years experience in commercial and
investment banking in Europe and North America, including, most
recently, CIBC. He is currently Trustee and Chairman of the
Investment Committee of two major family trusts and Managing
Partner for Equinoxe Investments SA, a family office active in
private wealth management and real-estate development. He is a
director of Equinoxe Real Estate Partners SA, Trois Perles S.A.,
CSTS Sarl, GC Chart Ltd and Domaine d'Orsay S.A. In addition, he
has acted as a specialist investment advisor to IRR Capital,
Universal Management Services and Dombes S.A.
Company Secretary
Marie Edwards
Registered office
16 Great Queen Street
London WC2B 5DG
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 LLP
16 Great Queen Street
London WC2B 5DG
Registrars
Capita IRG plc
The Registry
34 Beckenham Road
Kent BR3 4TU
Directors' report
The Directors present their report and the audited financial
statements for NEOS Resources plc for the 18 month period ended 30
June 2012.
Principal activity
The Company's principal activity is that of a holding company.
The Company is the parent company of a group of companies engaged
in the procurement, production and trading of non-edible oilseed
grains and oils.
Review of business
A review of the year's activities, financial performance and
future prospects are contained in the Executive Chairman's
Statement which forms part of this Directors' Report
During the period, the ongoing business consisted principally of
one business group - Operations. During the period, the remaining
Science & Technology Animal Feed project was sold.
In the 18 months ending 30 June 2012, the Group made significant
progress towards establishing itself as a producer, supplier and
trader of non-edible oilseed oils and the seedcake by-product. The
Group, now concentrating in India, collected 3,706 tonnes of grain,
produced 1,198 tonnes of non-edible vegetable oil and 2,666 tonnes
of seedcake.
The remaining Animal Feed section of the Science &
Technology business group was sold in April 2012 to Quinvita
Limited. Quinvita Limited had bought the original Science &
Technology business, the approval given by shareholders at a
general meeting held in December 2010.
The decision to focus solely on production of oil and its
co-products means the business still retains the primary activities
to deliver shareholder value. Further details of the ongoing
business and the disposal are in the Chairman's Statement and the
Report of the Chief Executive Officer.
Principal risks and uncertainties
The principal risks and uncertainties facing the Group are
assessed as funding risk, commercial risk, biological risk,
contractual risk, lease reversion risk, political and legislative
risk, and nancial risk.
Funding risk
The Group will continue to have a cash requirement until it
becomes cash generating. The Group has restructured its activities
to concentrate on non-edible oilseed operations that are likely to
generate short to medium term revenue. The Group anticipates that
this activity will position the business more attractively for
investors to raise new funds during 2012-13. However, there is a
risk that future funding will not materialise, in which case the
activities of the Group may no longer be sustainable. The directors
are currently working on fundraising plans, and communicating with
shareholders and investors. This process is ongoing and under
review.
Commercial risk
Business volumes are anticipated to increase as a result of
increasing working capital turnover. New technical, operational and
commercial challenges may arise as a result of this increase in
scale. There is a substantial challenge to put in place or access
further the infrastructure needed to collect, process, ship and
distribute the products in viable quantities. The Group manages
these risks by employing staff and engaging third parties with
relevant skills to address these issues when they arise.
The Group has seen large fluctuations in market prices for its
feedstock products (non-edible oilseed grains) and for its output
products (non-edible oils and the by-product seedcake). The Group
is developing strategies to mitigate the risk of excessive price
movements and to take advantage of price movements which work in
favour of the Group.
Biological risk
There are inherent biological risks associated with any
agricultural dependant activity, including pests, disease, drought,
excessive rainfall and other stress factors. The Group continues to
learn from experience and apply the lessons to manage biological
risk.
Contractual risk
There are inherent uncertainties and risks associated with
entering into contracts with suppliers, customers, financial
institutions, landowners and employees. It is possible that such
contracts may become unenforceable and financial commitments may
become onerous if circumstances change. The Group attempts to
manage this risk through establishing good working relationships
and dialogue with contracted parties.
Lease reversion risk
The Group has disclosed a contingent liability related to the
Bromborough refining site sold in July 2010. Specifically, the
group will be liable for lease costs on two sites adjacent to the
Bromborough property if the purchaser of the Bromborough sites
defaults on the leases. If lease reversion occurs, any liability
could be mitigated by sub-letting the leased sites.
Political and legislative risk
The Group operates on a global basis and must comply with a
range of local legislative requirements and regulations that
include: legal, regulatory and taxation requirements; trade
standards; trade and transportation restrictions; and tariffs.
Furthermore, the Group depends on the position and continued
support of various third parties, including national governments.
Any of these factors may be subject to changes which could
adversely affect the Group's ability to do business, or the
performance of its business.
A significant number of the world's key economies either have or
are in the process of implementing mandatory biodiesel blends and
other policies to encourage the use of greener road transport fuel.
In addition, many countries have incentives for renewable
electricity generation, including generation using vegetable oil as
a feedstock. However, these policies continue to be opposed by
environmental pressure groups concerned about the sustainability of
biofuels. The policies that encourage the adoption of vegetable
oil-based biofuels in national markets may be subject to policy
change. The Group has expanded its outlet portfolio to encompass
different uses of non-edible oilseed products to mitigate against
the over reliance of sales into the biofuel industry.
Financial risk
The Group's results from its operations overseas could be
adversely affected by currency fluctuations and dividend and
exchange controls. The Group looks to limit undue counterparty
exposure, ensure sufficient working capital exists and monitor the
management of risk at a country level. This is achieved by
negotiating contracts in our regions of operation using local
currencies and regulations.
Operation key performance indicators (KPI's)
The Group manage the business by monitoring key performance
indicators. The key performance indicators are quantity of grain
collected, percentage oil yield from the grain, quantity of oil
produced, grain price achieved, oil price achieved, and unit cost
of production of oil.
Safety, health and environment (SHE)
The Board considers managing the safety and health of our people
and protecting the environment as a corporate governance
priority.
Nicholas Myerson, Chief Operating Officer, is ultimately
responsible for SHE performance in the Group and also has
functional responsibility. Fundamental to our management of SHE is
the recognition that it is a line management responsibility and
should not be delegated to a function. It is a responsibility of
all managers and employees and this is regularly communicated and
reinforced. We aim to continually test and improve SHE performance
across our business.
During 2011-12 there were two incidents. Communications and
instructions were forwarded to staff to ensure repeat incidents do
not occur.
The key features of SHE include: a formal regime for reporting
all incidents, including "near hits"; local investigation and
measurement of performance to international standards; and
assessment of key risks for each locality, in particular travel
issues, field work and wildlife.
Corporate and social responsibility
The Group is committed to acting ethically and to contributing
to the economic development of the regions where we operate. We
believe strongly in the need to improve the quality of life of
farmers and farming communities in the developing world.
Disabled employees
Applications for employment by disabled persons are always fully
considered, bearing in mind the aptitudes of the applicant
concerned. In the event of members of staff becoming disabled every
effort is made to ensure that their employment with the Group
continues and that appropriate training is arranged. It is the
policy of the Group that the training, career development and
promotion of disabled persons should, as far as possible, be
identical with that of other employees.
Directors
The current Directors are listed in the Directors and Advisors
section of this report. Barclay Forrest and Martin Jarvis left the
Board on 14 July 2011 and 22 December 2011, respectively. Steven
Rudofsky and Nicholas Myerson joined the board as Executive
Directors on 24 June 2011 with Steven Rudofsky replacing Barclay
Forrest as Chairman on 14 July 2011. Ravi Jose joined the Board as
Executive Director on 26 July 2012. Graham Woolfman and Michael
Moquette joined the Board as Non-Executive Directors on 14 July
2011 and 4 May 2012 respectively.
Dividends and transfers to reserves
No dividend has been paid or proposed for the period (2010 -
GBPnil).
Corporate governance
As an AIM-listed company, there is no requirement to comply with
the revised UK Corporate Governance Code, issued by the Financial
Reporting Council in 2010 (the "Code"). However, the Directors
recognise the value of the provisions set out in the Code and have
decided to provide limited corporate governance disclosures based
on certain of the disclosures required of a fully listed
company.
The Board has established an Audit Committee, a Remuneration
Committee, and a Nominations Committee, each with formally
delegated duties and responsibilities. Each committee comprises
Graham Woolfman (Chairman), Steven Rudofsky and Michael Moquette.
Barclay Forrest and Martin Jarvis stepped down from the three
committees when they left the Board. Nicholas Myerson stepped down
from the three committees upon the appointment of Michael Moquette
in May 2012.
The Audit Committee receives and reviews reports from management
and the Group's auditors relating to the interim and annual
financial statements and the accounting and internal control
systems in use throughout the Group. The Audit Committee has
unrestricted access to the Group's auditors.
The Remuneration Committee reviews the scale and structure of
the Executive Directors' remuneration and the terms of their
service contracts. The remuneration and terms and conditions of
appointment of the Non-Executive Directors are set by the Board.
The Remuneration Committee also administers the Group's share
option scheme.
Supplier payment policy
It is Group policy to agree and clearly communicate the terms of
payment as part of the commercial arrangements negotiated with
suppliers and then to pay in accordance with those terms based upon
the timely receipt of an accurate invoice. The holding company does
not trade. The trade creditors' days of the Group for the 18 month
period ended 30 June 2012 were 7 days calculated in accordance with
the requirements set down in the Companies Act 2006.
Political and charitable donations
During the period the Group has made no political or charitable
donations (2010: GBPnil)
Serious loss of capital requirement
Under the Companies Act 2006, where the Group's net assets are
half or less of its called-up share capital, the Directors are
required to convene a general meeting to consider whether any, and
if so what, steps should be taken to deal with the situation.
Accordingly, a general meeting was held on 29 June 2010 to discuss
this matter. The Board presented its ongoing plans for the
business. No resolutions were proposed at the meeting.
Auditors
Grant Thornton UK LLP was appointed during the year to fill a
casual vacancy and will be proposed for reappointment at the
forthcoming Annual General Meeting in accordance with Section
489(4) of the Companies Act 2006.
Approved by the Board of Directors and signed on behalf of the
Board.
Steven Rudofsky
Executive Chairman
25 October 2012
Company number 5212852
Statement of Directors' responsibilities
The directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law and
regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the directors
have elected to prepare the financial statements in accordance with
International Financial Reporting Standards (IFRSs) as adopted by
the European Union. Under company law the directors must not
approve the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs and profit
or loss of the company and group for that period. In preparing
these financial statements, the directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgments and accounting estimates that are reasonable and prudent;
-- state whether applicable IFRSs have been followed, subject to
any material departures disclosed and explained in the financial
statements;
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume the Company will continue in
business.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the company's
transactions and disclose with reasonable accuracy at any time the
financial position of the company and enable them to ensure that
the financial statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the company and
hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
The directors confirm that:
-- so far as each director is aware, there is no relevant audit
information of which the company's auditor is unaware; and
-- the directors have taken all the steps that they ought to
have taken as directors in order to make themselves aware of any
relevant audit information and to establish that the auditors are
aware of that information.
The directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
company's website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
Cautionary statement regarding forward-looking statements
This Annual Report has been prepared for the members of the
Company and no one else. The Company, its Directors, employees or
agents do not accept or assume responsibility to any other person
in connection with this document and any such responsibility or
liability is expressly disclaimed.
This Annual Report contains certain forward-looking statements
with respect to the principal risks and uncertainties facing NEOS
Resources plc. By their nature, these statements and forecasts
involve risk and uncertainty because they relate to events and
depend on circumstances that may or may not occur in the future.
There are a number of factors that could cause actual results or
developments to differ materially from those expressed or implied
by these forward-looking statements and forecasts. The
forward-looking statements reflect the knowledge and information
available at the date of preparation of this Annual Report, and
will not be updated during the year. Nothing in this Annual Report
should be construed as a profit forecast.
Independent auditor's report
to the members of NEOS Resources plc
We have audited the financial statements of NEOS Resources plc
for the period ended 30 June 2012 which comprise the consolidated
income statement, the consolidated statement of comprehensive
income, the consolidated and parent company balance sheets, the
consolidated and parent company statements of changes in equity,
the consolidated and parent company statements of cash flow and the
related notes. The financial reporting framework that has been
applied in their preparation is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the European
Union.
This report is made solely to the company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the company and the company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Respective responsibilities of directors and auditor
As explained more fully in the Statement of Directors'
Responsibilities, the directors are responsible for the preparation
of the financial statements and for being satisfied that they give
a true and fair view. Our responsibility is to audit and express an
opinion on the financial statements in accordance with applicable
law and International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Auditing Practices Board's
(APB's) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements
is provided on the APB's website at
www.frc.org.uk/apb/scope/private.cfm.
Opinion on financial statements
In our opinion:
-- the financial statements give a true and fair view of the
state of the group's and of the parent company's affairs as at 30
June 2012 and of the group's and the parent company's loss for the
period then ended;
-- the financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union; and
-- the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
Emphasis of matter - Going concern
In forming our opinion on the financial statements, which is not
modified, we have considered the adequacy of the disclosure made in
note 1 to the financial statements concerning the group and parent
company's ability to continue as a going concern. The group and
parent company incurred net losses of GBP3.7m and GBP5.6m
respectively, during the period ended 30 June 2012. As explained in
note 1, the company intends to initiate additional fund raising
before the second quarter of 2013 in pursuance of, among other
matters, a revised strategy of producing, procuring and trading
oils from non-edible oilseed types. These conditions, along with
the other matters explained in note 1 to the financial statements,
indicate the existence of a material uncertainty which may cast
significant doubt about the group's ability to continue as a going
concern. The financial statements do not include the adjustments
that would result if the company was unable to continue as a going
concern.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Directors' Report
for the financial year for which the financial statements are
prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters
where the Companies Act 2006 requires us to report to you if, in
our opinion:
-- adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been received
from branches not visited by us; or
-- the parent company financial statements are not in agreement
with the accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit.
Paul Creasey
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Reading
25 October 2012
Consolidated income statement
for the 18 month period ended 30 June 2012
18 month
period Year
ended ended
30 June 31 December
2012 2010
Restated
Note GBP000 GBP000
------------------------------------ ---- --------- -----------
Revenue 3, 4 862.9 105.2
Cost of sales (1,048.1) (85.4)
------------------------------------ ---- --------- -----------
Gross (loss) / profit (185.2) 19.8
Administrative expenses (3,003.5) (3,353.2)
------------------------------------ ---- --------- -----------
Trading loss (3,188.7) (3,333.4)
Share of post tax losses of joint
ventures accounted for using the
equity method 12 - (306.1)
Impairment of investments 12 (100.0) -
------------------------------------ ---- --------- -----------
Loss from continuing operations (3,288.7) (3,639.5)
Finance income 4,7 26.3 373.5
Finance costs 7 (428.3) (57.8)
------------------------------------ ---- --------- -----------
Loss for the period from continuing
operations before taxation (3,690.7) (3,323.8)
Tax (expense) / credit 8 (7.1) 235.9
------------------------------------ ---- --------- -----------
Loss for the period from continuing
operations after taxation (3,697.8) (3,087.9)
------------------------------------ ---- --------- -----------
Discontinued operations
Profit/(loss) for the period from
discontinued operations 13 345.6 (3,000.5)
------------------------------------ ---- --------- -----------
Total loss for the period and
loss attributable to the equity
holders of the parent (3,352.2) (6,088.4)
------------------------------------ ---- --------- -----------
Loss per ordinary share
Basic and diluted loss per ordinary
share (pence) 9 (2.28) (4.81)
Basic and diluted loss per ordinary
share from continuing operations
(pence) 9 (2.51) (2.62)
------------------------------------ ---- --------- -----------
No profit and loss account is presented by the Company as
permitted by Section 408 of the Companies Act 2006. The Company's
loss for the period was GBP5,580,400 (2010: GBP9,070,800).
The accompanying notes from an integral part of these financial
statements.
Consolidated statement of comprehensive income
for the 18 month period ended 30 June 2012
18 month
period Year
ended ended
30 June 31 December
2012 2010
GBP000 GBP000
-------------------------------------------- --------- -----------
Loss for the period / year (3,352.2) (6,088.4)
Exchange difference on retranslation
of foreign operations (48.1) (302.2)
Exchange differences on disposed operations
recognised in income statement 315.6 (12.5)
Total comprehensive income for the
period / year attributable to the equity
holders of the parent (3,084.7) (6,403,1)
-------------------------------------------- --------- -----------
The accompanying notes from an integral part of these financial
statements.
Consolidated balance sheet
at 30 June 2012
At At
30 June 31 December
2012 2010
Note GBP000 GBP000
Restated
-------------------------------- ---- ----------- -----------
Assets
Non-current assets
Property, plant and equipment 10 20.9 143.1
Intangible assets 11 - -
Investments accounted for using
the equity method 12 - -
-------------------------------- ---- ----------- -----------
20.9 143.1
Current assets
Inventories 14 353.5 211.4
Trade and other receivables 15 494.4 498.2
Other financial assets 16 - 90.0
Cash and short-term deposits 17 1,533.8 3,440.5
-------------------------------- ---- ----------- -----------
2,381.7 4,240.1
Assets held for sale - 427.6
-------------------------------- ---- ----------- -----------
Total assets 2,402.6 4,810.8
-------------------------------- ---- ----------- -----------
Equities and liabilities
Current liabilities
Trade and other payables 18 (92.4) (280.5)
Accruals and deferred income (140.1) (393.2)
Payments due to vendors 19 - (4.1)
Provisions 20 (250.0) (274.0)
-------------------------------- ---- ----------- -----------
(482.5) (951.8)
Liabilities held for sale - (161.5)
Non-current liabilities
Payments due to vendors 19 (561.5) (476.5)
-------------------------------- ---- ----------- -----------
(561.5) (476.5)
Total liabilities (1,044.0) (1,589.8)
-------------------------------- ---- ----------- -----------
Net assets 1,358.6 3,221.0
-------------------------------- ---- ----------- -----------
Capital and reserves
Equity share capital 22 1,783.2 1,266.8
Share premium 99,956.5 99,290.3
Own shares held (484.0) (484.0)
Other reserves 437.7 437.7
Revenue reserves (101,279.5) (97,967.0)
Share option reserve 1,025.0 1,025.0
Currency translation reserve (80.3) (347.8)
-------------------------------- ---- ----------- -----------
Equity shareholders' funds 1,358.6 3,221.0
-------------------------------- ---- ----------- -----------
These financial statements were approved by the Board of
Directors on 25 October 2012.
Steven Rudofsky
Executive Chairman
The accompanying notes from an integral part of these financial
statements.
Consolidated statement of changes in equity
for the 18 month period ended 30 June 2012
Own Share Currency
Share Share shares Merger option translation
Revenue
capital premium held reserve reserve reserve reserve Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------- --------- ---------- -------- ------- ----------- -------- ----------- ----------
Group
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
Loss
for the
period - - - - (6,088.4) - - (6,088.4)
Total
comprehensive
income - - - - - - (314.7) (314.7)
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
Equity
issue 516.4 666.2 - - - - - 1,182.6
Share
based
payments - - - - 39.7 - - 39.7
Transactions
with
owners 516.4 666.2 - - 39.7 - - 1,222.3
Loss
for the
period - - - - (3,352.2) - - (3,352.2)
Total
comprehensive
income - - - - - - 267.5 267.5
--------------- --------- ---------- -------- ------- ----------- -------- ----------- ----------
At 30
June
2012 1,783.2 99,956.5 (484.0) 437.7 (101,279.5) 1,025.0 (80.3) 1,358.6
--------------- --------- ---------- -------- ------- ----------- -------- ----------- ----------
The accompanying notes from an integral part of these financial
statements.
Consolidated cash flow statement
for the 18 month period ended 30 June 2012
18 month Year
period
ended ended
30 June 31 December
2012 2010
Restated
GBP000 GBP000
-------------------------------------------- --------- -----------
Operating activities
Loss for the period / year (3,352.2) (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 57.0 135.6
Impairment of assets held for sale 24.2 48.1
Impairment of net current assets 34.4 -
Impairment of investments 100.0 -
Share-based payments 39.7 41.0
Net (profit) / loss on disposal of
science and technology activities (750.6) 865.8
Loss on disposal of property, plant
and equipment 32.7 55.1
Share of post tax losses of joint
ventures accounted for using the equity
method - 306.1
Finance income (26.3) (386.1)
Finance expense 421.1 59.4
Income tax credit - (235.9)
Tax paid (7.1) 4.2
Increase in inventories (203.6) (110.5)
Decrease in trade and other receivables 748.4 843.9
Decrease in trade and other payables (523.5) (319.6)
Decrease in provisions (24.0) (1,461.9)
Exchange released to Income Statement
upon impairment of Group loans (109.1) -
Retranslation of revenue reserves (34.7) (334.0)
-------------------------------------------- --------- -----------
Net cash flow from operating activities (3,573.6) (6,577.2)
-------------------------------------------- --------- -----------
Investing activities
Interest received 26.3 34.8
Payments to acquire property, plant
and equipment, and intangible assets (11.9) (66.9)
Funds transferred from deposits 90.0 4,457.6
Purchase of joint venture investments (100.0) (100.0)
Net cash inflow / (outflow) on disposal
of science and technology activities 300.0 (800.0)
Proceeds from disposal of assets 103.0 1,696.1
-------------------------------------------- --------- -----------
Net cash flow from investing activities 407.4 5,221.6
-------------------------------------------- --------- -----------
Financing activities
Proceeds of share issues (net of expenses) 1,182.6 -
-------------------------------------------- --------- -----------
Net cash flow from financing activities 1,182.6 -
-------------------------------------------- --------- -----------
Net decrease in cash and cash equivalents (1,983.6) (1,355.6)
Cash and cash equivalents at the start
of the period / year 3,440.5 4,425.5
Effects of exchange rates on cash
at the start of the period (13.4) 19.3
Exchange effects on operating costs 90.3 351.3
-------------------------------------------- --------- -----------
Cash and cash equivalents at the end
of the period / year 1,533.8 3,440.5
-------------------------------------------- --------- -----------
The accompanying notes from an integral part of these financial
statements.
Company balance sheet
as at 30 June 2012
As at As at
30 June 31 December
2012 2010
Note GBP000 GBP000
------------------------------ ---- ----------- -----------
Assets
Non-current assets
Property, plant and equipment 10 0.6 26.1
Amounts receivable from group
undertakings 15 - 2,879.6
Investments in subsidiaries 12 125.0 125.9
------------------------------ ---- ----------- -----------
125.6 3,031.6
Current assets
Trade and other receivables 15 428.2 353.1
Other financial assets 16 - 90.0
Cash and short-term deposits 17 1,088.1 2,983.0
------------------------------ ---- ----------- -----------
1,516.3 3,426.1
------------------------------ ---- ----------- -----------
Total assets 1,641.9 6,457.7
------------------------------ ---- ----------- -----------
Equity and liabilities
Current liabilities
Trade and other payables 18 (73.9) (315.9)
Accruals and deferred income (112.8) (304.4)
Provisions 20 (250.0) (274.0)
------------------------------ ---- ----------- -----------
Total liabilities (436.7) (894.3)
------------------------------ ---- ----------- -----------
Net assets 1,205.2 5,563.4
------------------------------ ---- ----------- -----------
Capital and reserves
Equity share capital 22 1,783.2 1,266.8
Share premium 99,956.5 99,290.3
Own shares held (484.0) (484.0)
Revenue reserves (101,075.5) (95,534.7)
Share option reserve 1,025.0 1,025.0
------------------------------ ---- ----------- -----------
Equity shareholders' funds 1,205.2 5,563.4
------------------------------ ---- ----------- -----------
These financial statements were approved by the Board of
Directors on 25 October 2012.
Steven Rudofsky
Executive Chairman
The accompanying notes from an integral part of these financial
statements.
Company statement of changes in equity
for the 18 month period ended 30 June 2012
Own Share
Share Share shares Revenue option
capital premium held reserve reserve Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------- ------- -------- ------- ----------- ------- ---------
Company
At 1 January
2010 1,266.8 99,290.3 (484.0) (86,504.9) 1,025.0 14,593.2
Share based payments - - - 41.0 - 41.0
Transactions
with owners - - - 41.0 - 41.0
Loss for the
financial period
and total comprehensive
income - - - (9,070.8) - (9,070.8)
At 1 January
2011 1,266.8 99,290.3 (484.0) (95,534.7) 1,025.0 5,563.4
Equity issue 516.4 666.2 - - - 1,182.6
Share based payments - - - 39.7 - 39.7
Transactions
with owners 516.4 666.2 - 39.7 - 1,222.3
Loss for the
financial period
and total comprehensive
income - - - (5,580.5) - (5,580.5)
At 30 June 2012 1,783.2 99,956.5 (484.0) (101,075.5) 1,025.0 1,205.2
------------------------- ------- -------- ------- ----------- ------- ---------
The accompanying notes from an integral part of these financial
statements.
Company cash flow statement
for the 18 month period ended 30 June 2012
18 month
period Year
ended ended
30 June 31 December
2012 2010
GBP000 GBP000
----------------------------------------- --------- -----------
Operating activities
Loss for the period / year (5,580.5) (9,070.8)
Adjustments to reconcile loss for the
year to net cash flow from operating
activities:
Depreciation of property, plant and
equipment 13.6 7.5
Share-based payments 39.7 41.0
(Profit) / loss on disposal of property,
plant and equipment (36.7) 6.9
Impairment of amounts owed by Group
undertakings 3,991.7 661.5
Write-off of amounts owed by Group
undertakings - 412.9
Impairment of investments 0.9 -
Finance income - (32.4)
Increase in trade and other receivables (75.1) (191.7)
(Decrease) / increase in trade and
other payments (433.6) 152.3
Decrease in provisions (24.0) (130.0)
----------------------------------------- --------- -----------
Net cash flow from operating activities (2,104.0) (8,142.8)
----------------------------------------- --------- -----------
Investing activities
Interest received - 32.4
Payments to acquire property, plant
and equipment (0.9) -
Proceeds from disposal of assets 49.5 -
Funds transferred from deposits 90.0 4,457.8
Investment in Group companies - (0.8)
Net repayments (from) / loans to Group
companies (1,112.1) 4,035.6
Net cash flow from investing activities (973.5) 8,525.0
----------------------------------------- --------- -----------
Financing activities
Proceeds of share issue 1,182.6 -
Net cash flow from financing activities 1,182.6 -
----------------------------------------- --------- -----------
Net (decrease) / increase in cash and
cash equivalents (1,894.9) 382.2
Cash and cash equivalents at the start
of the period / year 2,983.0 2,600.8
----------------------------------------- --------- -----------
Cash and cash equivalents at the end
of the period / year 1,088.1 2,983.0
----------------------------------------- --------- -----------
The accompanying notes from an integral part of these financial
statements.
Notes to the financial statements
for the 18 month period ended 30 June 2012
1. Authorisation of financial statements
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 material uncertainties that
the Directors have had to consider in deciding to prepare the
financial statements on the going concern basis, which are
summarised below.
Business planning uncertainty
The Executive Chairman's Report sets out the strategy of the
business and what it is seeking to achieve. Following the
appointment of Steven Rudofsky and Nicholas Myerson on 24 June
2011, the Board commenced a fundamental review of the business. The
review concluded that a strategy of producing, procuring and
trading oils from multiple non-edible oilseed types offered the
most viable long term prospects for the Group. Whilst the Board is
confident it can deliver a non-edible oilseeds based strategy that
is viable and cash generative over the longer term, until the
business plan is finalised and executed over number of harvest
cycles, the Board cannot assess with certainty the implications of
pursuing the revised strategy.
Funding uncertainty
The Group concluded a successful fund-raising exercise in
November 2011. The Directors informed the market at the time that
an additional fund raising would need to be initiated during the
latter half of 2012. Whilst the Directors believe there are
sufficient funds to cover overheads until the end of 2013, in order
to expand the business, final follow on funding for capital
investment ahead of the business becoming cash generative will need
to be concluded prior to then. The Board is encouraged by the
feedback it has received to date on the willingness of some
existing shareholders to participate in a future fund raising.
However, if the Directors are unable to secure the appropriate
level of shareholder support for the strategy and associated future
fund raising, 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
review and whether funding can be secured before cash resources are
depleted are material uncertainties which may cast significant
doubt about the Group and Company's ability to continue as a going
concern in its current form. The Directors believe that these
uncertainties can be managed and mitigated 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 business strategy not fulfil expectations and not
generate cash for the Group, then the resultant restrictive ability
to implement or fund the Groups business plan would mean the going
concern basis 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.
Prior year restatement
The prior period balance sheet has been restated to reflect
assets and liabilities held for sale. The Directors do not consider
it appropriate to include a third balance sheet as the numbers
stated would not alter from those previously reported.
Authorisation of financial statements
The financial statements of the Company and its subsidiaries for
the 18 month period ending 30 June 2012 were authorised by the
Board of Directors on 25 October 2012 and the balance sheet was
signed on the Board's behalf by Steven Rudofsky, Executive
Chairman. The Company is a public limited company registered in
England and Wales. The Company's ordinary shares are traded on
AIM.
2. Summary of significant accounting policies
Basis of preparation
The Group's financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRS)
as adopted by the European Union as they apply to the financial
statements of the Group for the 18 month period ended 30 June 2012
and applied in accordance with the Companies Act 2006.
The Group financial statements are presented in Sterling and all
values are rounded to the nearest thousand pounds (GBP000) except
where otherwise indicated.
Key sources of estimation uncertainty
The preparation of financial statements requires management to
make estimates and assumptions that affect the amounts reported for
assets and liabilities as at the balance sheet date and the amounts
reported for revenues and expenses during the year. The nature of
estimation means that actual outcomes could differ from those
estimates. The key sources of estimation uncertainty that have a
significant risk of causing material adjustment to the carrying
amounts of assets and liabilities within the next financial year
are discussed below.
Impairment of non-financial assets
The Group assesses whether there are any indicators of
impairment for all non-financial assets at each reporting date.
Goodwill and other indefinite life tangible and intangible assets
are tested for impairment annually and at other times when there
are indicators that the carrying amounts may not be recoverable.
When value in use calculations are undertaken, management must
estimate the expected future cash flows from the asset or
cash-generating unit and choose a suitable discount rate in order
to calculate the present value of those cash flows. Where
realisable value is used as the basis of valuation, management must
estimate the net income realisable from the sale of the asset and
apply an appropriate discount rate to the cash flows arising.
Basis of consolidation
The Group financial statements consolidate the financial
statements the Company and the entities it controls drawn up to 30
June each year. Prior to December 2011, the accounting reference
date was 31 December.
Subsidiaries are consolidated from the date of their
acquisition, being the date on which the Group obtains control, and
continue to be consolidated until the date that such control
ceases. Control comprises the power to govern the financial and
operating polices of the investee so as to obtain benefit from its
activities and is achieved through direct or indirect ownership of
voting rights, currently exercisable or convertible voting rights,
or by way of contractual agreement.
The financial statements of subsidiaries are prepared for the
same reporting date as the parent company and are based on
consistent accounting policies. All inter-company balances and
transactions, including unrealised profits arising from intra-group
transactions, are eliminated. Non-controlling interests represent
the portion of profit or loss and net assets in subsidiaries that
is not held by the Group and is presented within equity in the
consolidated balance sheet, separately from the parent company's
shareholders' equity. When a subsidiary is not wholly owned by the
Group and it incurs losses, amounts allocated to the minority are
recognised even if this results in the non-controlling interests
having a deficit balance.
Interests in joint ventures
A joint venture is defined in IAS 31 as a 'contractual
arrangement whereby two or more parties undertake an economic
activity that is subject to joint control'.
Where the joint venture is established through an interest in a
company, partnership or other entity (a jointly controlled entity),
the Group recognises its interest in the entity's assets and
liabilities using the equity method of accounting. Under the equity
method, the interest in the joint venture is carried in the balance
sheet at cost plus post-acquisition changes in the Group's share of
its net assets, less distributions received and less any impairment
in value of individual investments. The Group income statement
reflects the share of the jointly controlled entity's results after
tax. The Group statement of recognised income and expense reflects
the Group's share of any income and expense recognised by the
jointly controlled entity outside profit and loss.
Any goodwill arising on the acquisition of a jointly controlled
entity, representing the excess of the cost of the investment
compared to the Group's share of the net fair value of the entity's
identifiable assets, liabilities and contingent liabilities, is
included in the carrying amount of the jointly controlled entity
and is not amortised. To the extent that the net fair value of the
entity's identifiable assets, liabilities and contingent
liabilities is greater than the cost of the investment, a gain is
recognised and added to the Group's share of the entity's profit or
loss in the period in which the investment is acquired.
Financial statements of jointly controlled entities are prepared
for the same reporting period as the Group. Where necessary,
adjustments are made to bring the accounting policies into line
with those of the Group to take into account fair values assigned
at the date of acquisition and to reflect impairment losses where
appropriate. Adjustments are also made in the Group's financial
statements to eliminate the Group's share of unrealised gains and
losses on transactions between the Group and its jointly controlled
entities.
The Group ceases to use the equity method on the date from which
it no longer has joint control over, or significant influence in,
the joint venture.
Where the financial statements of a jointly controlled entity
used in the preparation of the financial statements are prepared as
of a reporting date that is different from that of the Group,
interim accounts are drawn up as at the Group reporting date and
adjustments are made for the effects of significant transactions or
events falling within the Group reporting period.
Financial assets
Financial assets are recognised when the Group becomes party to
the contracts that give rise to them and are classified as loans
and receivables, held-to-maturity investments or fair value through
the income statement as appropriate. Financial assets also include
cash and cash equivalents, trade and other receivables, other
investments and derivative financial instruments. The Group
determines the classification of its financial assets at initial
recognition. When financial assets are recognised initially, they
are measured at fair value, being the transaction price plus, in
the case of financial assets not at fair value through profit or
loss, directly attributable transaction costs.
The subsequent measurement of financial assets classified as
fair value financial assets is as follows:
The fair value of quoted investments is determined by reference
to bid prices at the close of business on the balance sheet date.
When there is no active market, fair value is determined using
valuation techniques. These include using recent arm's length
market transactions, reference to the current market value of
another instrument which is substantially the same discounted cash
flow analysis and pricing models. Where fair value cannot be
reliably estimated, assets are carried at cost.
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market, do not qualify as trading assets and have not been
designated as either fair value through profit and loss or
available for sale. Such assets are carried at amortised cost using
the effective interest method if the time value of money is
significant. Gains and losses are recognised in income when the
loans and receivables are derecognised or impaired, as well as
through the amortisation process.
Derecognition of financial assets and liabilities
A financial asset or liability is generally derecognised when
the contract that gives rise to it is settled, sold, cancelled or
expires.
Where an existing financial liability is replaced by another
from the same lender on substantially different terms, or the terms
of an existing liability are substantially modified, such an
exchange or modification is treated as a derecognition of the
original liability and the recognition of a new liability, such
that the difference in the respective carrying amounts together
with any costs or fees incurred are recognised in profit or
loss.
Impairment of financial assets
The Group assesses at each balance sheet date whether a
financial asset or group of assets is impaired.
Assets carried at amortised cost
If there is objective evidence that an impairment loss on loans
and receivables carried at amortised cost has been incurred, the
amount of the loss is measured as the difference between the
asset's carrying amount and the present value of estimated future
cash flows (excluding future credit losses that have not been
incurred) discounted at the financial asset's original effective
interest rate (i.e. the effective interest rate computed at initial
recognition). The carrying amount of the asset is reduced with the
amount of the loss recognised in administration costs.
If, in a subsequent period, the amount of the impairment loss
decreases and the decrease can be related objectively to an event
occurring after the impairment was recognised, the previously
recognised impairment loss is reversed. Any subsequent reversal of
an impairment loss is recognised in the income statement, to the
extent that the carrying value of the asset does not exceed its
amortised cost at the reversal date.
Intangible assets
Research and development expenditure
The animal feed programme investigates alternative uses for and
the removal of anti-nutritional substances from the seedcake (meal)
co-product created when oil is extracted from the Jatropha kernel.
Any costs incurred in the design and construction of prototype
processes and equipment are capitalised as intangible assets and
charged against income over the useful economic life of the
process. Otherwise costs are expensed to the income statement as
incurred.
Software
Software is initially carried at cost and thereafter stated at
cost less accumulated amortisation and accumulated impairment
losses. Intangible assets with a finite life have no residual value
and are amortised on a straight-line basis over their expected
useful economic lives of 3-5 years.
The carrying value of intangible assets is reviewed for
impairment whenever events or changes in circumstances indicate the
carrying value may not be recoverable. In addition, the carrying
value of capitalised development expenditure is reviewed for
impairment annually before being brought into use.
Leases
Assets held under finance leases, which transfer to the Group
substantially all of the risks and benefits incidental of ownership
of the leased item, are capitalised at the inception of the lease,
with a corresponding liability being recognised for the lower of
the fair value of the leased asset and the present value of minimum
lease payments. Lease payments are apportioned between reduction of
the lease liability and finance charges in the income statement so
as to achieve a constant rate of interest on the remaining balance
of the liability. Assets held under finance leases are depreciated
over the shorter of the estimated useful life of the asset and the
lease term.
Leases where the lessor retains a significant portion of the
risks and benefits of ownership of the asset are classified as
operating leases and rentals payable are charged in the income
statement on a straight-line basis over the lease term.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and
short-term deposits with an original maturity of three months or
less. Restricted deposits held as security are classified as
financial assets rather than cash where the terms of the deposit
mean that the balance cannot be readily converted to finance the
day-to-day operations of the Group.
For the purpose of the consolidated cash flow statement, cash
and cash equivalents are as defined above, net of outstanding bank
overdrafts.
The Group endeavours to maintain sufficient cash at bank and in
hand to fund operations in the short-term and invests surplus funds
in term deposits to maximise interest revenue.
Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated
depreciation and impairment losses. Cost comprises the aggregate
amount paid and the fair value of any other consideration given to
acquire the asset and includes costs directly attributable to
making the asset capable of operating as intended. Borrowing costs
attributable to assets under construction are recognised as an
expense as incurred.
Depreciation is provided on all property, plant and equipment,
other than land, on a straight-line basis over the expected useful
life as follows:
Buildings over 20
years
Plant and machinery over 3-10
years
Motor vehicles over 3-10
years
Fixtures, fittings over 3-5
and equipment years
The carrying value of property, plant and equipment is reviewed
for impairment and are written down immediately to their
recoverable amount if events or changes in circumstance indicate
the carrying value may not be recoverable. Useful lives and
residual values are reviewed annually and where adjustments are
required these are made prospectively.
An item of property, plant and equipment is derecognised upon
disposal or when no future economic benefits are expected to arise
from the continued use of the asset. Any gain or loss arising on
the derecognition of the asset is included in the income statement
in the period of derecognition.
Where assets are held under finance leases and there is
reasonable certainty that the Group will obtain ownership of the
asset by the end of the lease term (based on best estimates as at
the balance sheet date), the asset is depreciated over its expected
useful economic life. Otherwise, assets held under finance lease
are depreciated over the shorter of the lease term and its useful
economic life.
Employee benefits
Defined contribution plans
The Group's funding of the defined contribution plans is charged
to the income statement in the same year as the related service is
provided.
Leave benefits
Annual leave is provided for over the period that the leave
accrues.
Foreign currency translation
The individual financial statements of each Group company are
presented in the currency of the primary economic environment in
which it operates (its functional currency). For the purpose of the
consolidated financial statements, the results and financial
position of each Group company are expressed in Pounds Sterling,
which is the functional currency of the Company, and the
presentation currency for the Group consolidated financial
statements.
In preparing the financial statements of the individual
companies, transactions in currencies other than the entity's
functional currency (foreign currencies) are recognised at the
rates of exchange prevailing on the dates of the transactions. At
each balance sheet date, monetary assets and liabilities that are
denominated in foreign currencies are retranslated at the rates
prevailing at that date. Non-monetary items carried at fair value
that are denominated in foreign currencies are translated at the
rates prevailing at the date when the fair value was determined.
Non-monetary items that are measured in terms of historical cost in
a foreign currency are not retranslated.
Exchange differences are recognised in profit or loss in the
period in which they arise except for:
-- exchange differences on transactions entered into to hedge
certain foreign currency risks; and
-- exchange differences on monetary items receivable from or
payable to a foreign operation for which settlement is neither
planned nor likely to occur (therefore forming part of the net
investment in the foreign operation), which are recognised
initially in other comprehensive income and reclassified from
equity to profit or loss on discontinuation of activities in the
foreign operation or partial disposal of the net investment.
For the purposes of presenting consolidated financial
statements, the assets and liabilities of the Group's foreign
operations are translated at exchange rates prevailing on the
balance sheet date. Income and expense items are translated at the
average exchange rates for the period, unless exchange rates
fluctuate significantly during that period, in which case the
exchange rates at the date of transactions are used. Exchange
differences arising, if any, are recognised in other comprehensive
income and accumulated in equity.
Business combinations and goodwill
Business combinations on or after 1 January 2006 are accounted
for under IFRS 3 using the purchase method. Any excess of the cost
of the business combination over the Group's interest in the net
fair value of the identifiable assets, liabilities and contingent
liabilities is recognised in the balance sheet as goodwill and is
not amortised. To the extent that the net fair value of the
acquired entity's identifiable assets, liabilities and contingent
liabilities is greater than the cost of the investment, a gain is
recognised immediately in the income statement. Any goodwill asset
arising on the acquisition of equity accounted entities is included
within the cost of those entities. The Group elected to adopt the
revised IFRS 3 issued in January 2008 for the 2009 financial
statements. The only material impact of the adoption on the Group's
2009 acquisition was that the revised IFRS 3 required the costs of
acquisition to be recognised as an expense. Other changes include
altering the treatment of non-controlling interests (formerly
minority interests) with an option to recognise these at full fair
value as at the acquisition date and a requirement for previously
held non-controlling interests to be fair valued as at the date
control is obtained, with gains and losses recognised in the income
statement.
After initial recognition, goodwill is stated at cost less any
accumulated impairment losses, with the carrying value being
reviewed for impairment, at least annually and whenever events or
changes in circumstances indicate that the carrying value may be
impaired.
For the purpose of impairment testing, goodwill is allocated to
the related cash-generating units expected to benefit from the
combination's synergies and monitored by management. Where the
recoverable amount of the cash-generating unit is less than its
carrying amount, including goodwill, an impairment loss is
recognised in the income statement. On disposal of a
cash-generating unit, the allocated goodwill is taken into account
when determining the gain or loss on disposal to be recognised in
the income statement.
Inventories
Inventories are stated at the lower of cost and net realisable
value. Cost includes all costs incurred in bringing each product to
its present location and condition, as follows:
Raw materials, consumables and goods held for resale - purchase
cost on a first-in, first-out basis
Work in progress and finished goods - cost of direct materials
and labour plus attributable overheads based on a normal level of
activity, excluding borrowing costs
Net realisable value is based on estimated selling price less
any further costs expected to be incurred to completion and
disposal.
Trade and other receivables
Trade receivables, which generally have 30 day terms, are
recognised and carried at the lower of their original invoiced
value and recoverable amount. Provision is made where there is
objective evidence that the Group will not be able to recover
balances in full. Balances are written off when the probability of
recovery is assessed as being remote.
Interest bearing loans and borrowings
Loans and borrowings are recognised when the Group becomes party
to the related contracts and are measured initially at fair value,
being the proceeds received less directly attributable transaction
costs.
After initial recognition, interest bearing loans and borrowings
are subsequently measured at amortised cost using the effective
interest method and taking into account any issue costs and any
discount or premium on settlement.
Gains and losses arising on the repurchase, settlement or other
cancellation of liabilities are recognised respectively in finance
revenue and finance cost.
Provisions
Provisions are measured at the estimated expenditure required to
settle the present obligation, based on the most reliable evidence
available at the reporting date, including the risks and
uncertainties associated with the present obligation. Where there
are a number of similar obligations, the likelihood that an outflow
will be required in settlement is determined by considering the
class of obligations as a whole. Provisions are discounted to their
present values, where the time value of money is material.
Any reimbursement that the Group can be virtually certain to
collect from a third party with respect to the obligation is
recognised as a separate asset. However, this asset may not exceed
the amount of the related provision.
In those cases where the possible outflow of economic resources
as a result of present obligations is considered improbable or
remote, no liability is recognised.
Income taxes
Current tax assets and liabilities are measured at the amount
expected to be recovered from or paid to the taxation authorities,
based on tax rates and laws that are enacted or substantively
enacted by the balance sheet date.
Deferred income tax is recognised on all temporary differences
arising between the tax bases of assets and liabilities and their
carrying amounts in the financial statements, with the following
exceptions:
-- where the temporary difference arises from the initial
recognition of goodwill or of an asset or liability in a
transaction that is not a business combination that at the time of
the transaction affects neither the accounting nor taxable profit
or loss;
-- in respect of taxable temporary differences associated with
investments in subsidiaries, associates and joint ventures, where
the timing of the reversal of the temporary differences can be
controlled and it is probable that the temporary differences will
not reverse in the foreseeable future; and
-- deferred income tax assets are recognised only to the extent
that it is probable that taxable profits will be available against
which the deductible temporary differences, carried forward tax
credits or tax losses can be utilised.
Deferred income tax assets and liabilities are measured on an
undiscounted basis at the tax rates that are expected to apply when
the related asset is realised or liability is settled, based on tax
rates and laws enacted or substantively enacted at the balance
sheet date.
Tax is charged or credited directly to equity if it relates to
items that are credited or charged to equity. Otherwise tax is
recognised in the income statement.
Revenue recognition
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Group and the revenue can be
reliably measured. Revenue is measured at the fair value of the
consideration received, excluding discounts, rebates, VAT and other
sales taxes or duty. The following criteria must also be met before
revenue is recognised:
Sale of goods
Revenue from the sale of goods is recognised when the
significant risks and rewards of ownership of the goods have passed
to the buyer, usually on dispatch of the goods.
Interest income
Finance revenue is recognised as interest accrued using the
effective interest method, that is the rate that exactly discounts
estimated future cash receipts through the expected life of the
financial instruments to its net carrying amount.
Borrowing costs
Borrowing costs on eligible capital projects are capitalised.
Other borrowing costs are recognised as an expense when
incurred.
Share-based payments
Equity-settled transactions
The cost of equity-settled transactions with employees is
measured by reference to the fair value at the date at which they
are granted and is recognised as an expense over the vesting
period, which ends on the date on which the relevant employees
become entitled to the award. Fair value is determined by an
external valuer using the Black-Scholes Option Pricing model. In
valuing equity-settled transactions, no account is taken of any
vesting conditions, other than conditions linked to the price of
the shares of the Company (market conditions).
No expense is recognised for awards that do not ultimately vest,
except for awards where vesting is conditional upon a market
condition, which are treated as vesting irrespective of whether or
not the market condition is satisfied, provided that all other
performance conditions are satisfied.
At each balance sheet date before vesting, the cumulative
expense is calculated, representing the extent to which the vesting
period has expired and management's best estimate of the
achievement or otherwise of non-market conditions and of the number
of equity instruments that will ultimately vest or, in the case of
an instrument subject to a market condition, be treated as vesting
as described above. The movement in cumulative expense since the
previous balance sheet date is recognised in the income statement,
with a corresponding entry in equity.
Where the terms of an equity-settled award are modified or a new
award is designated as replacing a cancelled or settled award, the
cost based on the original award terms continues to be recognised
over the original vesting period. In addition, an expense is
recognised over the remainder of the new vesting period for the
incremental fair value of any modification, based on the difference
between the fair value of the original award and the fair value of
the modified award, both as measured on the date of the
modification. No reduction is recognised if this difference is
negative.
Where an equity-settled award is cancelled, it is treated as if
it had vested on the date of cancellation, and any cost not yet
recognised in the income statement for the award is expensed
immediately. Any compensation paid up to the fair value of the
award at the cancellation is deducted from equity, with any excess
over fair value being treated as an expense in the income
statement.
Assets held for sale
When an asset or disposal group's carrying value will be
recovered principally through a sale transaction rather than
through continuing use, it is classified as held for sale and
stated at the lower of carrying value and fair value less costs to
sell. No depreciation is charged in respect of non-current assets
classified as held for sale.
New standards and interpretations
The accounting policies adopted in the preparation of the
Group's annual financial statements are consistent with those
followed in the preparation of the annual financial statements for
the year ended 31 December 2010.
The amendments to the following standards did not have any
impact on the accounting policies, financial position or
performance of the Group:
-- Various - Annual improvements to IFRS - effective various dates but most 1 January 2011.
-- IFRS 1 - Amendment - First time adoption of IFRS - effective 1 July 2010.
-- IAS 24 - Amendment - Related party disclosures - effective 1 January 2011.
-- IAS 32 - Amendment - Financial instruments: presentation - effective 1 February 2010.
-- IFRIC 14 - Amendment - IAS 19 limit on a defined benefit asset - effective 1 January 2011.
-- IFRIC 19 - Extinguishing financial liabilities with equity
instruments - effective 1 July 2010.
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 9 Financial Instruments (effective 1 January 2015)
-- IFRS 10 Consolidated Financial Statements (effective 1 January 2013)
-- IFRS 11 Joint Arrangements (effective 1 January 2013)
-- IFRS 12 Disclosure of Interests in Other Entities (effective 1 January 2013)
-- IFRS 13 Fair Value Measurement (effective 1 January 2013)
-- IAS 19 Employee Benefits (Revised June 2011) (effective 1 January 2013)
-- IAS 27 (Revised), Separate Financial Statements (effective 1 January 2013)
-- IAS 28 (Revised), Investments in Associates and Joint Ventures (effective 1 January 2013)
-- Deferred Tax: Recovery of Underlying Assets - Amendments to
IAS 12 Income Taxes (IASB effective date 1 January 2012, not yet
adopted by the EU)
-- Disclosures - Offsetting Financial Assets and Financial
Liabilities - Amendments to IFRS 7 (effective 1 January 2013)
-- Offsetting Financial Assets and Financial Liabilities -
Amendments to IAS 32 (effective 1 January 2014)
-- Mandatory Effective Date and Transition Disclosures -
Amendments to IFRS 9 and IFRS 7 (effective 1 January 2015)
-- Government Loans - Amendments to IFRS 1 (effective 1 January 2013)
-- IFRIC 20 Stripping Costs in the Production Phase of a Surface
Mine (effective 1 January 2013)
-- Annual Improvements 2009-2011 Cycle (effective 1 January 2013)
-- Transition Guidance - Amendments to IFRS 10, IFRS 11 and IFRS 12 (effective 1 January 2013)
The Directors do not anticipate that the adoption of amendments
or revisions to the above standards will have a material impact on
the Group's financial statements in the period of initial
application.
3. 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 managing the outgrower network,
collecting grain and selling crude castor, Jatropha and other
non-edible oilseeds.
-- The Science & Technology segment provided Jatropha plant
science and associated technical consulting services to
third-parties, breeds seeds and seedlings for commercial planting
and undertook 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. In April 2012, the Animal Feed
programme was sold to Quinvita, the purchaser of the original
Science & Technology segment. The Animal Feed activity has been
reclassified as discontinuing and the comparative has been restated
on that basis.
-- The Refining & Trading segment is an operation that was
discontinued in 2008. In 2011-12, activity in this segment related
to remaining refining and trading sites situated in the UK.
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.
The following tables present revenue and profit and certain
asset and liability information regarding the Group's business
segments for the 18 month period ended 30 June 2012 and the year
ended 31 December 2010.
Segment revenue and results
Total Refining Science Total
Continuing & Trading & Technology Discontinued
Operations operations (discontinued) (discontinued) operations Group
18 month period GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
ended 30 June
2012
----------------------- ---------- ----------- --------------- --------------- ------------- ---------
Revenue
Sales to external
customers 862.9 862.9 - 13.7 13.7 876.6
Segment revenue 862.9 862.9 - 13.7 13.7 876.6
----------------------- ---------- ----------- --------------- --------------- ------------- ---------
Results
Depreciation
and amortisation (23.4) (23.4) - (33.6) (33.6) (57.0)
Gain on disposal
of Science &
Technology business - - - 750.5 750.5 750.5
Legal settlement
gain - - 51.2 - 51.2 51.2
Other costs (2,355.9) (2,355.9) 41.4 (477.6) (436.2) (2,792.1)
----------------------- ---------- ----------- --------------- --------------- ------------- ---------
Segment profit/(loss)
before central
costs (1,516.4) (1,516.4) 92.6 253.0 345.6 (1,170.8)
----------------------- ---------- ----------- --------------- --------------- ------------- ---------
Central administration
costs (1,772.3) (1,772.3) - - - (1,772.3)
Unallocated
finance revenue 26.3 26.3 - - - 26.3
Unallocated
finance costs (428.3) (428.3) - - - (428.3)
Taxation (7.1) (7.1) - - - (7.1)
----------------------- ---------- ----------- --------------- --------------- ------------- ---------
Total loss for
the year (3,697.8) (3,697.8) 92.6 253.0 345.6 (3,352.2)
----------------------- ---------- ----------- --------------- --------------- ------------- ---------
Total Refining Science Total
Continuing & Trading & Technology Discontinued
Operations operations (discontinued) (discontinued) operations Group
Restated Restated Restated Restated Restated Restated
Year ended 31 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
December 2010
----------------------- ---------- ----------- --------------- --------------- ------------- ---------
Revenue
Sales to external
customers 105.2 105.2 - 228.9 228.9 334.1
Segment revenue 105.2 105.2 - 228.9 228.9 334.1
----------------------- ---------- ----------- --------------- --------------- ------------- ---------
Results
Depreciation
and amortisation (67.1) (67.1) - (46.7) (46.7) (113.8)
Share of loss
of joint ventures (306.1) (306.1) - - - (306.1)
Loss on disposal
of Science &
Technology - - - (865.8) (865.8) (865.8)
Legal settlement
gain - - 21.7 - 21.7 21.7
Interest expense - - - (1.6) (1.6) (1.6)
Impairment of
assets held
for sale - - (0.7) - (0.7) (0.7)
Other costs (1,434.6) (1,434.6) 902.0 (3,238.3) (2,336.3) (3,770.9)
----------------------- ---------- ----------- --------------- --------------- ------------- ---------
Segment loss
before central
costs (1,702.6) (1,702.6) 923.0 (3,923.5) (3,000.5) (4,703.1)
----------------------- ---------- ----------- --------------- --------------- ------------- ---------
Central administration
costs (1,959.7) (1,959.7) - - - (1,959.7)
Unallocated
finance revenue 386.1 386.1 - - - 386.1
Unallocated
finance costs (57.8) (57.8) - - - (57.8)
Taxation 246.1 246.1 - - - 246.1
----------------------- ---------- ----------- --------------- --------------- ------------- ---------
Total loss for
the year (3,087.9) (3,087.9) 923.0 (3,923.5) (3,000.5) (6,088.4)
----------------------- ---------- ----------- --------------- --------------- ------------- ---------
The accounting policies of the reportable segments are the same
as the Group's accounting policies described in note 2. Segment
profit represents the profit earned by each segment without
allocation of central administration costs, investment gains or
losses, unallocated finance revenue, unallocated finance costs and
taxation. This is the measure used for reporting to the Group's
chief operating decision makers for the purpose of allocation and
assessment of segment performance.
Loss before tax on continuing operations
18 month
period Year
ended ended
30 June 31 December
2012 2010
GBP000 GBP000
----------------------- ----------------- -------------
Operations (1,516.4) (1,702.6)
Central administration
costs (2,174.3) (1,621.2)
----------------------- ----------------- -------------
Total loss before
tax on continuing
operations (3,690.7) (3,323.8)
----------------------- ----------------- -------------
Segment assets
Total
Continuing
Operations operations Group
At 30 June 2012 GBP000 GBP000
----------------- ---------- ----------- -------
Assets
Operating assets 2,402.6 2,402.6 2,402.6
----------------- ---------- ----------- -------
Segment assets 2,402.6 2,402.6 2,402.6
----------------- ---------- ----------- -------
Total Science Refining Total
Continuing & Technology & Trading Discontinued
Operations operations (discontinued) (discontinued) operations Group
At 31 December GBP000 GBP000 GBP000 GBP000
2010
----------------- ---------- ----------- --------------- --------------- ------------- -------
Assets
Operating assets 4,383.2 4,383.2 26.1 401.5 427.6 4,810.8
----------------- ---------- ----------- --------------- --------------- ------------- -------
Segment assets 4,383.2 4,383.2 26.1 401.5 427.6 4,810.8
----------------- ---------- ----------- --------------- --------------- ------------- -------
For the purposes of monitoring segment performance and
allocating resources between segments, the Group's chief operating
decision makers monitor the tangible, intangible and financial
assets attributable to each segment. All assets are allocated to
reportable segments except assets relating to central
administration.
Segment liabilities
Total
Continuing
Operations operations Group
At 30 June 2012 GBP000 GBP000
---------------------- ---------- ----------- ---------
Liabilities
Operating liabilities (1,044.0) (1,044.0) (1,044.0)
---------------------- ---------- ----------- ---------
Segment liabilities (1,044.0) (1,044.0) (1,044.0)
---------------------- ---------- ----------- ---------
Total Refining Science Total
Continuing & Trading & Technology Discontinued
Operations operations (discontinued) (discontinued) operations Group
At 31 December GBP000 GBP000 GBP000 GBP000 GBP000
2010
---------------------- ---------- ----------- --------------- --------------- ------------- ---------
Liabilities
Operating liabilities (1,428.3) (1,428.3) (105.3) (56.2) (161.5) (1,589.8)
---------------------- ---------- ----------- --------------- --------------- ------------- ---------
Segment liabilities (1,428.3) (1,428.3) (105.3) (56.2) (161.5) (1,589.8)
---------------------- ---------- ----------- --------------- --------------- ------------- ---------
For the purposes of monitoring segment performance and
allocating resources between segments, the Group's chief operating
decision makers monitor the operating and financial liabilities
attributable to each segment. All liabilities are allocated to
reportable segments except liabilities relating to central
administration.
Capital expenditure
Total Science Total
Continuing & Technology Discontinued
Operations operations (discontinued) operations Group
18 month period GBP000 GBP000 GBP000 GBP000
ended 30 June
2012
-------------------- ---------- ----------- --------------- ------------- ------
Capital expenditure 10.1 10.1 1.8 1.8 11.9
-------------------- ---------- ----------- --------------- ------------- ------
Total Science Total
Continuing & Technology Discontinued
Operations operations (discontinued) operations Group
Year ended 31
December 2010 GBP000 GBP000 GBP000 GBP000
-------------------- ---------- ----------- --------------- ------------- ------
Capital expenditure 48.6 48.6 13.3 13.3 61.9
-------------------- ---------- ----------- --------------- ------------- ------
Geographical information
The Group's revenue from external customers and information
(including discontinued operations) about its segment assets
(non-current assets excluding financial instruments, deferred tax
assets, post-employment benefit assets, and rights arising under
insurance contracts) by geographical location are detailed
below:
18 month Year
period ended
ended 31 December
30 June 2010
2012
GBP000 GBP000
-------------------- -------- ------------
Revenue from
external customers
United Kingdom 37.7 103.8
India 798.5 82.4
Belgium - 46.5
Netherlands - 26.5
Cape Verde - 44.1
Other 40.4 30.8
-------------------- -------- ------------
Total revenue
from external
customers 876.6 334.1
-------------------- -------- ------------
Non-current
assets
United Kingdom 0.6 8.7
India 20.3 84.9
Indonesia - 20.8
Zambia - 28.7
Total non-current
assets 20.9 143.1
-------------------- -------- ------------
4. Revenue and administrative costs
Revenue recognised in the income statement is analysed as
follows:
18 month
period Year
ended ended
30 June 31 December
2012 2010
Restated
GBP000 GBP000
------------------------ -------- -----------
Continuing operations
Sales of goods 862.9 105.2
Finance revenue 26.3 373.5
------------------------ -------- -----------
889.2 478.7
------------------------ -------- -----------
Discontinued operations
Sales of goods 13.7 228.8
Finance revenue - 12.6
------------------------ -------- -----------
13.7 241.4
------------------------ -------- -----------
Group operating loss is stated after charging / (crediting):
18 month Year
period ended
ended
30 June 31 December
2012 2010
GBP000 GBP000
-------------------------------------------- -------- -----------
Depreciation of plant, property and
equipment 57.0 134.9
Amortisation of intangible assets - 0.7
Impairment of assets held for sale - 48.1
Net foreign currency differences - 36.7
Net expenditure on research and development
after tax credits - (20.1)
Current auditors' remuneration
- audit fees in respect of the Company 30.0 -
- interim audit 10.0 -
- audit fees in respect of subsidiaries 14.8 -
- taxation services 5.2 -
Previous auditors' remuneration
- audit fees - 73.0
- overseas audit - 60.0
- taxation services 23.7 35.4
- consulting services 5.5 2.4
-------------------------------------------- -------- -----------
Total auditors remuneration 89.2 170.8
-------------------------------------------- -------- -----------
Payment under operating leases
- property 98.0 345.7
- plant and machinery 2.2 3.2
-------------------------------------------- -------- -----------
As part of the Business Review, the Board withdrew from
Indonesia and Zambia. The contribution to the Group's loss from
these regions for the period was a loss of GBP900,600. The Board
did not consider either Indonesia or Zambia to represent major
geographical business locations.
5. Staff numbers and costs
The average number of persons employed by the Group (including
Directors) during the year, analysed by category was as
follows:
18 month Year
period ended
ended
30 June 31 December
2012 2010
Number Number
------------------------------------- -------- -----------
Executive Directors 2 1
Technical 23 45
Administration and operational staff 39 66
------------------------------------- -------- -----------
Total 64 112
------------------------------------- -------- -----------
The costs incurred in respect of these employees (including
Directors) were:
18 month Year
period ended
ended
30 June 31 December
2012 2010
GBP000 GBP000
---------------------- -------- -----------
Wages and salaries 1,237.4 2,000.8
Social security costs 119.3 193.3
Other pension costs 38.4 50.6
---------------------- -------- -----------
Total 1,395.1 2,244.7
---------------------- -------- -----------
Other pension costs consist of contributions to defined
contribution pension plans.
6. Key management remuneration
Fees 18 month
paid period Year
Short-term Employers Post- to ended ended
employee national employment Termination third 30 June 31 December
parties
for director
benefits insurance benefits benefits services 2012 2010
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------------- ---------- --------- ---------- ----------- ------------ -------- -----------
Executive Directors
Steven Zachariah
Rudofsky 51.0 5.2 - - - 56.2 -
Nicholas Paul
Myerson 51.0 4.7 - - - 55.7 -
Martin John
Jarvis (a) 223.4 29.0 17.3 - - 269.7 167.4
Benjamin Richard
Good (b) - - - - - - 139.5
Henk Jean Pierre
Joos - - - - - - 154.1
Non-Executive
Directors
John Barclay
Forrest 24.1 2.1 - 10.0 - 36.2 64.6
Graham Woolfman 19.3 1.3 - - 22.8 43.4 -
Michael Moquette - - - - 1.7 1.7
Moira Elizabeth
Black - - - - - - 3.8
Charles John
Nicholas Ward - - - - - - 52.1
Brain Myerson
(c) - - - - - - 7.2
368.8 42.3 17.3 10.0 24.5 462.9 588.7
-------------------- ---------- --------- ---------- ----------- ------------ -------- -----------
(a) In 2010, post employment benefits for Martin Jarvis
consisted of GBP12,600 in contributions to the defined contribution
pension scheme operated by the Group.
(b) In 2010, in addition to remuneration of GBP139,500, Ben Good
received GBP158,800 in termination benefits. In 2010, post
employment benefits for Ben Good consisted of GBP10,300 in
contributions to the defined contribution pension scheme operated
by the Group.
(c) Fees paid to third parties in respect of the non-executive
directorship in 2010 of Brian Myerson.
The people identified as key management in the table above were
also the directors of the Company.
Options Options
Lapsed
1 January Granted Exercised in 30 June Exercise Exercisable
Expiry
2011(a) 2011-12 2011-12 2011-12 2012 price date date
--------- --------- --------- --------- --------- --------- -------- ----------- ---------
John
Barclay
Forrest
(e) 78,125 - - (78,125) - GBP1.28 n/a n/a
Martin
John
Jarvis - 2,730,000 - - 2,730,000 GBP0.01 (b) March-21
Martin
John
Jarvis 412,500 2,500,000 - (412,500) 2,500,000 GBP0.02 (c) June-15
490,625 5,230,00 - (490,625) 5,230,000
--------- --------- --------- --------- --------- --------- -------- ----------- ---------
(a) Options in issue at 1 January 2011 or the date of
appointment if later.
(b) These options have been granted as one third exercisable on
the first anniversary of their date of grant. Thereafter a further
1/36 vests each month over the next 24 months so that the full
amount is capable of being exercised after three years.
(c) These options have been granted as one third exercisable on
the first anniversary of their date of grant. Thereafter a further
1/36 vests each month over the next 24 months so that the full
amount is capable of being exercised after three years. A
performance criteria is attached to the exercise of the options. No
part of the option shall become exercisable until the Company's
reported consolidated results for a six-month period demonstrate
that a pre-tax profit in excess of GBP250,000 for such six months
has been achieved, excluding the effects to the profit and loss
account relating to the grant vesting or exercise of any options
granted to the company.
d) The aggregate amounts of gains made by former Directors on
the exercise of share options during the year amounted to GBPnil
(2010: GBPnil). This represents the market price of the shares in
excess of the exercise price on the date the options were
exercised.
(e) The Share option for John Barclay Forrest lapsed upon
cessation of employment or engagement with the Group.
7. Finance revenue and costs
18 month
period Year
ended ended
30 June 31 December
Continuing operations 2012 2010
GBP000 GBP000
--------------------------------------------- -------- -----------
Interest received on bank deposits 26.3 34.6
Net foreign exchange movements - 338.9
--------------------------------------------- -------- -----------
Finance revenue 26.3 373.5
--------------------------------------------- -------- -----------
Interest accretion on deferred consideration
payable (7.2) (47.7)
Net foreign exchange movements (340.2) -
Other finance charges (80.9) (10.1)
--------------------------------------------- -------- -----------
Finance costs (428.3) (57.8)
--------------------------------------------- -------- -----------
8. Taxation
Tax recognised in the income statement
Continuing Discontinued Total
operations operations
--------------------- --------------------- ----------------------
18 month Year 18 month Year 18 month Year
period ended period ended period ended
ended ended ended
30 June 31 December 30 June 31 December 30 June 31 December
2012 2010 2012 2010 2012 2010
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------------- -------- ----------- -------- ----------- --------- -----------
Current tax credit
- UK - (250.0) - - - (250.0)
Current tax expense/
(credit) - overseas 7.1 14.1 - (10.2) 7.1 3.9
--------------------- -------- ----------- -------- ----------- --------- -----------
Tax reported in
consolidated income
statement 7.1 (235.9) - (10.2) 7.1 (246.1)
--------------------- -------- ----------- -------- ----------- --------- -----------
Reconciliation
A reconciliation of total tax applicable to accounting profit
before tax at the Group's effective tax rate for the 18 month
period ended 30 June 2012 and the year ended 31 December 2010 is as
follows:
18 month
period Year
ended ended
30 June 31 December
2012 2010
GBP000 GBP000
---------------------------------------------- --------- -----------
Loss on continuing activities before
taxation (3,690.7) (3,323.8)
Profit / (loss) on discontinued activities
before taxation 345.6 (3,010.7)
Total loss on ordinary activities before
taxation (3,345.1) (6,334.5)
At United Kingdom tax rate of 26% (2010
- 28%) (869.8) (1,773.7)
Expenditure not allowable for tax purposes (73.2) (173.8)
Share option charge 10.3 11.5
Share of loss of joint venture - 85.7
Effect of different tax rates of subsidiaries
in other jurisdictions (0.3) (1.3)
Unrecognised tax losses 940.1 1,883.5
Utilisation of prior year losses - (5.7)
Research and development tax credits - (263.9)
Disallowed loss on disposal of investments - (8.4)
---------------------------------------------- --------- -----------
Total tax income reported in consolidated
income statement 7.1 (246.1)
---------------------------------------------- --------- -----------
The Group has trading tax losses of GBP52.1m (2010: GBP57.2m)
that are available indefinitely for offset against future taxable
profits of the same trade in the companies in which they arose. The
reduction reflects the fact that the Group no longer have the
rights to losses in respect of certain discontinued operations. The
value of the unrecognised trading tax losses at the current tax
rate is GBP14.1m (2010: GBP15.4m). Deferred tax assets have not
been recognised in respect of these trading losses as the companies
with losses are not forecast to generate taxable profits for
several years and the losses are not transferrable. In addition,
the Group has capital tax losses of GBP0.6m (2010: GBP13.4m)
available for offset against future capital gains. Deferred tax
assets have not been recognised in respect of these capital losses
as they are not expected to be utilised in the foreseeable future.
The UK Government has announced that the future rate of Corporation
Tax will fall to 23% by 2014. If enacted, this would have no
material effect as no deferred tax asset is recognised.
9. Loss per ordinary share
18 month
period Year
ended ended
30 June 31 December
2012 2010
For Group Number Number
------------------------------------- ----------- -----------
Weighted average number of shares in
issue 149,233,084 126,481,574
------------------------------------- ----------- -----------
Pence Pence
------------------------------------ ------ ------
Loss per ordinary share - basic and
diluted (2.28) (4.81)
------------------------------------ ------ ------
18 month
period Year
ended ended
30 June 31 December
2012 2010
For Group from continuing operations Number Number
------------------------------------- ----------- -----------
Weighted average number of shares in
issue 149,233,084 126,481,574
------------------------------------- ----------- -----------
Pence Pence
------------------------------------ ------ ------
Loss per ordinary share - basic and
diluted (2.51) (2.62)
------------------------------------ ------ ------
The number of shares in issue at 30 June 2012 was 178,315,219
(31 December 2010: 126,675,219). For the purposes of calculating
the loss per ordinary share the weighted average number of shares
excludes 193,645 shares (2010: 193,645 shares) held by the D1 Oils
plc Employee Benefit Trust. No diluted loss per share has been
disclosed as the share options are anti-dilutive. For the purposes
of calculating earnings per share, the following profit figures
were used:
18 month
period Year
ended ended
30 June 31 December
2012 2010
Restated
GBP000 GBP000
---------------------------------------------- --------- -----------
Loss for the period attributable to
equity holders of the parent from continuing
operations (3,697.8) (3,087.9)
Profit / (loss) for the period attributable
to equity holders of the parent from
discontinued operations 345.6 (3,000.5)
---------------------------------------------- --------- -----------
Total loss for the period attributable
to equity holders of the parent (3,352.2) (6,088.4)
---------------------------------------------- --------- -----------
10. Property, plant and equipment
Motor Plant Fixtures
and
vehicles machinery and fittings Total
Group GBP000 GBP000 GBP000 GBP000
------------------------- -------- --------- ------------ -------
Cost
At 1 January
2010 75.4 474.8 74.8 625.0
Additions 25.5 41.2 0.2 66.9
Disposal (42.2) (221.4) (48.9) (312.5)
Foreign exchange
movements 3.5 12.4 0.6 16.5
------------------------- -------- --------- ------------ -------
At 31 December
2010 62.2 307.0 26.7 395.9
------------------------- -------- --------- ------------ -------
Additions 6.3 5.3 0.3 11.9
Disposal (52.7) (197.4) (18.9) (269.0)
Foreign exchange
movements (3.8) (30.5) (3.6) (37.9)
------------------------- -------- --------- ------------ -------
At 30 June 2012 12.0 84.4 4.5 100.9
------------------------- -------- --------- ------------ -------
Accumulated depreciation
At 1 January
2010 28.0 157.0 40.8 225.8
Charge for the
year 22.8 101.3 10.8 134.9
Elimination on
disposal (27.3) (79.5) (36.9) (143.7)
Foreign exchange
movements 1.2 7.3 1.2 9.7
------------------------- -------- --------- ------------ -------
At 31 December
2010 24.7 186.1 15.9 226.7
------------------------- -------- --------- ------------ -------
Charge for the
year 12.9 40.7 3.4 57.0
Elimination on
disposal (27.9) (139.7) (13.8) (181.4)
Foreign exchange
movements (2.6) (17.5) (2.2) (22.3)
------------------------- -------- --------- ------------ -------
At 30 June 2012 7.1 69.6 3.3 80.0
------------------------- -------- --------- ------------ -------
Net book value
At 30 June 2012 4.9 14.8 1.2 20.9
------------------------- -------- --------- ------------ -------
At 31 December
2010 37.5 120.9 10.8 169.2
------------------------- -------- --------- ------------ -------
At 1 January
2010 47.4 317.8 34.0 399.2
------------------------- -------- --------- ------------ -------
Plant Fixtures
and and
machinery fittings Total
Company GBP000 GBP000 GBP000
------------------------- --------- --------- -------
Cost
At 1 January 2010 5.8 18.0 23.8
Additions 28.3 - 28.3
Disposals (5.8) (18.0) (23.8)
------------------------- --------- --------- -------
At 31 December 2010 28.3 - 28.3
------------------------- --------- --------- -------
Additions 0.9 - 0.9
Disposals (28.3) - (28.3)
------------------------- --------- --------- -------
At 30 June 2012 0.9 - 0.9
------------------------- --------- --------- -------
Accumulated depreciation
At 1 January 2010 2.9 8.7 11.6
Charge for the year 3.5 4.0 7.5
Elimination on disposal (4.2) (12.7) (16.9)
------------------------- --------- --------- -------
At 31 December 2010 2.2 - 2.2
------------------------- --------- --------- -------
Charge for the year 13.6 - 13.6
Disposals (15.5) - (15.5)
------------------------- --------- --------- -------
At 30 June 2012 0.3 - 0.3
------------------------- --------- --------- -------
Net book value
At 30 June 2012 0.6 - 0.6
------------------------- --------- --------- -------
At 31 December 2010 26.1 - 26.1
------------------------- --------- --------- -------
At 1 January 2010 2.9 9.3 12.2
------------------------- --------- --------- -------
11. Intangible assets
Group Software
licences Goodwill Total
GBP000 GBP000 GBP000
--------------------------- -------- -------- ------
Cost
At 1 January 2010 34.6 64.1 98.7
Disposals (7.5) (64.1) (71.6)
Foreign exchange movements (0.7) - (0.7)
--------------------------- -------- -------- ------
At 31 December 2010 26.4 - 26.4
--------------------------- -------- -------- ------
Disposals - - -
Foreign exchange movements - - -
--------------------------- -------- -------- ------
At 30 June 2012 26.4 - 26.4
--------------------------- -------- -------- ------
Accumulated amortisation
At 1 January 2010 32.1 64.1 96.2
Charge for the year 0.7 - 0.7
Disposals (6.0) (64.1) (70.1)
Foreign exchange movements (0.4) - (0.4)
At 31 December 2010 26.4 - 26.4
--------------------------- -------- -------- ------
Charge for the year - - -
Disposals - - -
Foreign exchange movements - - -
--------------------------- -------- -------- ------
At 30 June 2012 26.4 - 26.4
--------------------------- -------- -------- ------
Net book value
At 30 June 2012 - - -
--------------------------- -------- -------- ------
At 31 December 2010 - - -
--------------------------- -------- -------- ------
At 1 January 2010 2.5 - 2.5
--------------------------- -------- -------- ------
12. Investments in subsidiaries and jointly controlled
entities
The Company ultimately owns more than 10% of the share capital
of the following companies:
Holding by
Nature Country Shareholder NEOS Resources
Name of business of incorporation class plc Percentage
----------------------- ----------------- ------------------ ------------ ---------------- ----------
D1 (UK) Limited Dormant UK Ordinary Indirect 100%
NEOS Resources
Subsidiary Limited Dormant UK Ordinary Direct 100%
D1 Oils Africa
(Pty) Limited Dormant Swaziland Ordinary Indirect 100%
D1 Oils India Private
Limited Dormant India Ordinary Indirect 100%
D1 Oils Plant Science
(Zambia) Limited Dormant Zambia Ordinary Indirect 100%
D1 Oils South Africa South
(Pty) Limited Dormant Africa Ordinary Indirect 95%
D1 Oils Trading Non-edible
Limited oils trading UK Ordinary Direct 100%
D1 Oils Fuel Crops Non-edible
Limited oils investment UK Ordinary Indirect 100%
Fuel Crops Limited Dormant UK Ordinary Indirect 100%
Middlesbrough Oils
UK Limited Dormant UK Ordinary Indirect 100%
D1 Mohan Bio Oils
Limited Dormant India Ordinary Indirect 50%
D1 Williamson Magor
Bio Fuel Limited Dormant India Ordinary Indirect 50%
D1-BP Fuel Crops
South Africa (Pty) South
Limited Dormant Africa Ordinary Indirect 95%
D1-BP Fuel Crops
Zambia Limited Dormant Zambia Ordinary Indirect 100%
D1 Oils Fuel Crops Non-edible
India Private Limited oils trading India Ordinary Indirect 100%
D1-BP Fuel Crops
Asia Pacific Pte
Limited Dormant Singapore Ordinary Indirect 100%
PT D1 Oils Indonesia Dormant Indonesia Ordinary Indirect 100%
D1-BP Fuel Crops
Philippines, Inc Dormant Philippines Ordinary Indirect 100%
Investments in the Group comprise interests in joint ventures
and trade investments. Investments in the Company comprise
interests in subsidiary undertakings and trade investments.
Joint
ventures
Group GBP000
------------------------- ---------
Cost
1 January 2010 206.1
Additional investment 100.0
Share of joint ventures'
results (306.1)
------------------------- ---------
31 December 2010 -
------------------------- ---------
Additional investment 100.0
Impairment (100.0)
------------------------- ---------
30 June 2012 -
------------------------- ---------
The joint venture is a 50:50 partnership with Williamson Magor
Group, India. The business operates through a joint venture company
called D1 Williamson Magor Biofuel Ltd ("D1WM"), and undertakes
plantation activities in North East India. In June 2011, GBP100,000
was invested in D1WM by the Group. Under a strategic business
review by the new Board, it was concluded in October 2011 to
withdraw from the D1WM joint venture. As such, the Group no longer
reports joint venture activity and is finalising formal closure of
the joint venture. The Group equity accounts for joint
ventures.
Subsidiary
undertakings
Company GBP000
------------------------- ------------
Cost
1 January 2010 125.1
Additional investment 0.8
31 December 2010 125.9
------------------------- ------------
Impairment of investment (0.9)
------------------------- ------------
At 30 June 2012 125.0
------------------------- ------------
13. Discontinued operations
Within the 18 month period to 30 June 2012, 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. Closure of these businesses resulted in the sites and
refining equipment being reclassified from plant, property and
equipment to assets held for sale. 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
GBP2.2m. At 30 June 2012, the refining and trading operation
remained classified as discontinued operations.
The results of the refining and trading activities of the Group
for the period are presented below:
18 month
period Year
ended ended
30 June 31 December
2012 2010
GBP000 GBP000
------------------------------------ -------- -----------
Other income (a) / (b) 92.6 971.1
Asset impairment - (48.1)
------------------------------------ -------- -----------
Operating profit 92.6 923.0
Profit before tax from discontinued
operation 92.6 923.0
------------------------------------ -------- -----------
Profit from discontinued operation 92.6 923.0
------------------------------------ -------- -----------
(a) Settlement received in respect of a legal case.
(b) Administrative expenses in 2012 include 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:
18 month
period Year
ended ended
30 June 31 December
2012 2010
GBP000 GBP000
---------------- -------- -----------
Operating 355.6 1,451.4
Net cash inflow 355.6 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 GBP0.8m working capital;
3. Issue of GBP0.8m in 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.
In April 2012, the Group disposed of the germplasm and
intellectual property relating to the Animal Feed programme
previously retained, and the Preference Shares to Quinvita. The
germplasm and intellectual property were sold for cash
consideration of GBP300,000 and the Preference Shares for a secured
loan of GBP372,000 accruing interest at 10% per annum. The loan is
secured over the germplasm and intellectual property and is
repayable within five years. All other rights between the parties
of the December 2010 agreement have been waived, subject to
compliance with the Sales Agreement.
The results of the Science & Technology division for the
period are presented below:
18 month
period Year
ended ended
30 June 31 December
2012 2010
GBP000 GBP000
-------------------------------------------- -------- -----------
Revenue 13.7 228.8
Expenses (511.2) (3,307.7)
-------------------------------------------- -------- -----------
Operating loss (497.5) (3,078.9)
Finance income - 12.6
Finance costs - (1.6)
-------------------------------------------- -------- -----------
Trading loss before tax from discontinued
operation (497.5) (3,067.9)
-------------------------------------------- -------- -----------
Tax income / (expense) - 10.2
-------------------------------------------- -------- -----------
Trading loss from discontinued operation (497.5) (3,057.7)
-------------------------------------------- -------- -----------
Profit / (loss) on disposal of Science
& Technology division 750.5 (865.8)
Profit / (loss) from discontinued operation 253.0 (3,923.5)
-------------------------------------------- -------- -----------
The net cash flows incurred by the discontinued portion of the
Science & Technology division are as follows:
18 month
period Year
ended ended
30 June 31 December
2012 2010
GBP000 GBP000
----------------- -------- -----------
Operating (497.5) (1,756.5)
Investing 352.3 (800.0)
Financing - -
----------------- -------- -----------
Net cash outflow (145.2) (2,556.5)
----------------- -------- -----------
Profits / (losses) and profit / (loss) per share for the
discontinued operations
The losses from discontinued operations are as follows:
18 month
period Year
ended ended
30 June 31 December
2012 2010
GBP000 GBP000
------------------------------------------ -------- -----------
Profit from discontinued Refining &
Trading operations 92.6 923.0
Profit / (loss) from discontinued Science
& Technology operations 253.0 (3,693.6)
Total profit / (loss) from discontinued
operations 345.6 (2,770.6)
------------------------------------------ -------- -----------
The losses per share for the discontinued operations are as
follows:
18 month
period Year
ended ended
30 June 31 December
2012 2010
pence pence
------------------------------------ -------- -----------
Basic and diluted from discontinued
operations 0.23 (2.37)
------------------------------------ -------- -----------
14. Inventories
Group Group Company Company
2012 2010 2012 2010
GBP000 GBP000 GBP000 GBP000
------------------- ------ ------ ------- -------
Raw material stock 7.5 163.0 - -
Finished product 346.0 48.4 - -
------------------- ------ ------ ------- -------
Total 353.5 211.4 - -
------------------- ------ ------ ------- -------
15. Trade and other receivables
Group Group Company Company
2012 2010 2012 2010
GBP000 GBP000 GBP000 GBP000
----------------------------------- ------ ------ ------- -------
Non-current
Amounts owed by Group undertakings - - - 2,879.6
- - - 2,879.6
----------------------------------- ------ ------ ------- -------
Current
Trade receivables 12.8 0.9 - -
Other receivables 464.1 788.4 413.6 301.6
Prepayments and accrued income 16.1 62.9 13.2 28.5
Taxation and social security 1.4 47.5 1.4 23.0
----------------------------------- ------ ------ ------- -------
494.4 899.7 428.2 353.1
----------------------------------- ------ ------ ------- -------
As at 30 June 2012, there were no impairments of trade
receivables (2010: nil). There were no movements in provision for
the impairment of receivables in 2011-12.
Individually Collectively
impaired impaired Total
GBP000 GBP000 GBP000
----------------- ------------ ------------ ------
At 1 January 2010 - - -
At 1 January 2011 - - -
----------------- ------------ ------------ ------
At 30 June 2012 - - -
----------------- ------------ ------------ ------
The Company had no impairment provisions at any time during
2011-12 or 2010.
As at 30 June 2012, the ageing of receivables is as follows:
Group at 30 June 2012
Not yet Overdue Overdue Overdue
31-60
due <30 days days >60 days Total
GBP000 GBP000 GBP000 GBP000 GBP000
------------------------ ------- -------- ------- -------- ------
Gross trade receivables
as at 30 June 2012 12.1 - 0.1 0.6 12.8
Other receivables 464.1 - - - 464.1
Impairment - - - - -
------------------------ ------- -------- ------- -------- ------
Net trade receivables
as at 30 June 2012 476.2 - 0.1 0.6 476.9
------------------------ ------- -------- ------- -------- ------
Group at 31 December 2010
Not
yet Overdue Overdue Overdue
<30 31-60 >60
due days days days Total
GBP000 GBP000 GBP000 GBP000 GBP000
------------------------ ------ -------- -------- -------- ------
Gross trade receivables
as at 31 December 2010 0.9 - - - 0.9
Other receivables 408.6 - - 379.8 788.4
Impairment - - - - -
------------------------ ------ -------- -------- -------- ------
Net trade receivables
as at 31 December 2010 409.5 - - 379.8 789.3
------------------------ ------ -------- -------- -------- ------
Company at 30 June 2012
Not yet Overdue Overdue Overdue
<30 31-60 >60
due days days days Total
GBP000 GBP000 GBP000 GBP000 GBP000
---------------------- ------- -------- -------- -------- ------
Amounts owed by Group
undertakings - - - - -
Other receivables 413.6 - - - 413.6
---------------------- ------- -------- -------- -------- ------
Net trade receivables
as at 30 June 2012 413.6 - - - 413.6
---------------------- ------- -------- -------- -------- ------
Company at 31 December 2010
Not yet Overdue Overdue Overdue
<30 31-60 >60
due days days days Total
GBP000 GBP000 GBP000 GBP000 GBP000
------------------------ ------- -------- -------- -------- -------
Amounts owed by Group
undertakings 2,879.6 - - - 2,879.6
Other receivables 353.1 - - - 353.1
Net trade receivables
as at 31 December 2010 3,232.7 - - - 3,232.7
------------------------ ------- -------- -------- -------- -------
The Company advanced funds to subsidiary companies to meet their
working capital and capital expenditure funding requirements.
Amounts owed by Group companies have no fixed repayment date but
are repayable on demand. The Directors believe that until the
business plan is proven it is prudent to impair amounts to the
Company from subsidiary companies, to GBPnil. At such time the
business plan shows a flow of economic benefit, appropriate
reversals of previous impairments will be made.
The Group has no concerns over the credit quality of amounts
which are overdue and not impaired. No receivables have been
impaired. Trade receivables are non-interest bearing and on 30 day
terms. The Group does not hold any collateral or other credit
enhancements over these balances nor does it have a legal right to
offset against any amounts owed by the Group to the counterparty.
Given the small number of debtors, the Group assesses the credit
risk from each debtor through scrutiny of the debtor's finances in
a manner commensurate with the level of credit exposure. The Group
has no specific concerns about its receivables that are neither
past due nor impaired.
16. Other financial assets
Group Group Company Company
2012 2010 2012 2010
GBP000 GBP000 GBP000 GBP000
------------------------ ------ ------ ------- -------
Euro forward deposit(a) - 90.0 - 90.0
------------------------ ------ ------ ------- -------
- 90.0 - 90.0
------------------------ ------ ------ ------- -------
(a) In 2010, the Company deposited GBP90,000 with its foreign
exchange supplier as part of an arrangement to purchase Euros at a
fixed price. The position was closed out in March 2011.
17. Cash and short-term deposits
Group Group Company Company
2012 2010 2012 2010
GBP000 GBP000 GBP000 GBP000
------------------------- ------- ------- ------- -------
Cash at bank and in hand 1,533.8 2,439.4 1,088.1 1,981.9
Short-term deposits - 1,001.1 - 1,001.1
------------------------- ------- ------- ------- -------
1,533.8 3,440.5 1,088.1 2,983.0
------------------------- ------- ------- ------- -------
Cash at bank earns interest at floating rates based on daily
bank deposit rates. Short-term deposits are made for varying
periods up to three months depending on the immediate cash
requirements of the Group and earn interest at varying short-term
deposit rates. In practice these deposits are returnable on an at
call basis.
18. Trade and other payables
Group Group Company Company
2012 2010 2012 2010
GBP000 GBP000 GBP000 GBP000
----------------------------- ------ ------ ------- -------
Current
Trade payables 54.0 96.1 34.1 87.4
Other payables 28.5 214.4 25.4 198.9
Taxation and social security 9.9 26.2 14.4 29.6
----------------------------- ------ ------ ------- -------
92.4 336.7 73.9 315.9
----------------------------- ------ ------ ------- -------
Trade payables are non-interest bearing and the average creditor
days is 7.
19. Payments due to vendors
Group Group Company Company
2012 2010 2012 2010
GBP000 GBP000 GBP000 GBP000
----------------------- ------ ------ ------- -------
Non-current
Deferred consideration - 4.1 - 4.1
Current
Deferred consideration 561.5 476.5 561.5 476.5
----------------------- ------ ------ ------- -------
561.5 480.6 561.5 480.6
----------------------- ------ ------ ------- -------
The deferred consideration is a payment, up to a maximum of
GBP600,000, due to a vendor as part of a previous transaction. The
calculation is based upon the sale of crude Jatropha oil to third
parties. To the extent not already paid, the GBP600,000
consideration is payable by 31 December 2014.
20. Provisions
Group Contract Group
Redundancy settlement contractual
provision provision
(a) (b) commitments
GBP000 GBP000 GBP000
----------------------- ---------- ---------- -----------
Current
At 1 January 2011 24.0 250.0 274.0
Released in the period (24.0) - (24.0)
----------------------- ---------- ---------- -----------
At 30 June 2012 - 250.0 250.0
----------------------- ---------- ---------- -----------
(a) (The redundancy provision covered redundancy plans
previously announced. Group restructuring has been largely complete
and no further redundancies are planned.)
(b) (The contract settlement provision covers possible
settlement of various contracts. The details are not disclosed as
they are commercially sensitive and may influence the outcome of
the matters.)
Company Contract Company
Redundancy settlement contractual
provision
(a) Provision(b) commitments
GBP000 GBP000 GBP000
----------------------- ---------- ------------ -----------
Current
At 1 January 2011 24.0 250.0 274.0
Released in the period (24.0) - (24.0)
----------------------- ---------- ------------ -----------
At 30 June 2012 - 250.0 250.0
----------------------- ---------- ------------ -----------
(a) The redundancy provision covered redundancy plans previously
announced. Group restructuring has been largely complete and no
further redundancies are planned.
(b) The contract settlement provision covers possible settlement
of various contracts. The details are not disclosed as they are
commercially sensitive and may influence the outcome of the
matters
21. Operating lease commitments
Future minimum rentals payable under non-cancellable operating
leases as at 30 June 2012 are as follows:
Group Group Group Group
Land Plant Land Plant
and and and and
buildings equipment buildings equipment
2012 2012 2010 2010
GBP000 GBP000 GBP000 GBP000
---------------------------- --------- --------- --------- ---------
Within one year 69.2 30.9 158.4 1.1
After one year but not more
than five years 12.1 4.1 102.5 0.3
After more than five years - - 15.7 -
---------------------------- --------- --------- --------- ---------
81.3 35.0 276.6 1.4
---------------------------- --------- --------- --------- ---------
The Group had entered into commercial leases on certain property
and items of equipment. The equipment leases have an average
duration of between one and four years. There are no restrictions
placed upon the lessee by entering into these leases.
Company Company
Land Land
and and
buildings buildings
2012 2010
GBP000 GBP000
-------------------------------------- --------- ---------
Within one year 17.2 21.8
After one year but not more than five -
years -
After more than five years - -
-------------------------------------- --------- ---------
17.2 21.8
-------------------------------------- --------- ---------
22. Issued share capital
Group Group Group Group
and and and and
Company Company Company Company
2012 2010 2012 2010
No. of No. of
shares shares GBP000 GBP000
------------------------------ ----------- ----------- ------- -------
Called up, allotted and fully
paid
At 1 January 2011 126,675,219 126,675,219 1,266.8 1,266.8
Issued on placing of new
shares 51,640,000 516.4
At 30 June 2012 178,315,219 126,675,219 1,783.2 1,266.8
------------------------------ ----------- ----------- ------- -------
The Company has one class of ordinary shares which carry no
rights to fixed income.
On 2 November 2011, the Company completed the placing of
51,640,000 new ordinary shares. The Company received cash
consideration of GBP1,291,000 for this placing prior to expenses of
GBP92,245.
23. Equity
Share capital
Share capital represents the nominal value of shares issued by
the Company.
Share premium
Share premium represents the premium over the nominal value
raised on the issue of shares by the Company.
Own shares held
D1 Oils Employee Benefit Trust holds 193,645 shares in the
Company which were acquired at a total cost of GBP484,000. Shares
held by the trust can be purchased by employees exercising options
under the Group's option scheme. At 30 June 2012, the shares had a
market value of GBP6,788.
Other reserve
The merger reserve arose when the Company acquired 100% of the
issued share capital of D1 Oils Trading Limited in consideration
for ordinary shares in the Company. The acquisition was accounted
for under the rules of merger accounting as a group reorganisation
with the share premium being adjusted through the merger
reserve.
Share option reserve
The share option reserve arose on the Group's acquisition of BP
International Limited's 50% of the D1-BP Joint Venture in July
2009. Existing share options were replaced with 24,119,088 share
options with exercise prices of between 13p and 18.5p as part of
the consideration for the acquisition.
Currency translation reserve
The currency translation reserve captures currency movements
between the presentation currency of the Group, Pound Sterling, and
the functional currencies used by the Group.
24. Related party disclosures and principal subsidiary
undertakings
Intra-group loans with subsidiary companies
During the 18 month period, the Company provided net funding to
subsidiary companies or received net funding from subsidiary
companies within the Group as follows:
2012 2010
GBP000 GBP000
--------------------------------------- ------- ---------
D1 Oils Trading Limited (24.8) (1,352.3)
D1 Oils Plant Science Limited - 2,704.6
D1 (UK) Limited - (144.0)
D1 Oil Subsidiary Limited (379.8) (1,256.7)
Middlesbrough Oils UK Ltd 1,151.2 -
PT D1 Oils Indonesia 131.7 28.6
D1 Oils Plant Science (Zambia) Limited 236.8 605.2
Fuel Crops Limited (3.0) (165.0)
--------------------------------------- ------- ---------
Total 1,112.1 420.4
--------------------------------------- ------- ---------
During 2010, Quinvita Plant Science Limited (formally D1 Oils
Plant Science Limited) repaid GBP5,095,098 of its loan to the
Company, primarily through the sale of animal feed assets to the
Company. Prior to the disposal of the agronomy and breeding
business, the remaining intra-group loans to D1 Oils Plant Science
Limited totalling GBP412,880 were written off. D1 Oils Plant
Science Limited was one of the companies sold.
At 30 June, at the period / year end, the net funding balances
due to the Company from subsidiary undertakings or by the Company
to subsidiary undertakings were as follows:
2012 2010
GBP000 GBP000
--------------------------------------- ---------- ----------
D1 Oils Trading Limited 55,420.9 55,445.7
D1 Oils Plant Science Limited - -
D1 (UK) Limited 15,809.9 15,809.9
D1 Oil Subsidiary Limited 9,286.8 9,666.5
Middlesbrough Oils UK Limited (1,348.8) (2,500.0)
PT Oils Indonesia 160.3 28.6
D1 Oils Plant Science (Zambia) Limited 842.0 605.2
Fuel Crops Limited (168.0) (165.0)
Impairment of receivables (80,003.1) (72,326.1)
--------------------------------------- ---------- ----------
Total - 6,564.8
--------------------------------------- ---------- ----------
The Company does not anticipate any repayments being made within
one year. Balances in excess of expected repayments have been
impaired. The funding is not subject to any interest charge. The
impairment charge in 2011-12 was GBPnil (2010: GBPnil).
Disposal of Science & Technology
Background
In December 2010, the Group disposed of its agronomy and
breeding research business following the conclusion by the Board
that the Group was unable to afford the ongoing costs of
approximately GBP1.5m per annum in the absence of substantial
revenue generation.
The agronomy and breeding business was acquired by entities
controlled by three key management personnel, including Henk Joos,
a director of the Company at the time, and Vincent Volckaert, a
director of a subsidiary of the Company. Post disposal, the
agronomy and breeding business was renamed "Quinvita".
Along with the disposal of the assets relating to the agronomy
and breeding business, this business was sold with cash or an
entitlement to receive cash of GBP0.8m in exchange for Redeemable
Preference Shares in the head entity of the Quinvita Group. The
Board estimated that an orderly wind up of these activities would
cost at least GBP1.1m and create substantial challenges to access
to comparable know-how.
Transfer of animal feed activities from D1 Oils Plant Science
Limited to the Company
One of the entities disposed of to Quinvita, D1 Oils Plant
Science Limited, owned and operated the Group's animal feed
research activity. Prior to the disposal, all assets and agreements
relating to the animal feed activity were sold by D1 Oils Plant
Science Limited to the Company in exchange for a reduction in the
loan owed by D1 Oils Plant Science Limited to the Company as
consideration.
Disposal of animal feed activity and Redeemable Preference
Shares to Quinvita
In April 2012, the Company sold the remaining animal feed
business, associated intellectual property, and the Redeemable
Preference Shares to Quinvita.
The animal feed business and intellectual property was sold for
cash consideration of GBP300,000 and the Redeemable Preference
Shares in return for a secured loan of GBP372,000 accruing interest
at 10% per annum. The loan is secured over the germplasm and the
animal feed business intellectual property and is repayable at any
time within 5 years.
All other rights and obligations between the parties and
respective Groups of the December 2010 transaction between the
Company and Quinvita were (subject to various terms of the
Agreement) waived.
Director remuneration
Any other related party transaction involving Directors related
to remuneration and is shown in note 6.
25. Share-based payments - Group and Company
All employees share option plan
Awards are made to staff at the discretion of the Board of
Directors either on appointment, at salary review time, or any
other time that the Directors deem appropriate. There are specific
performance criteria attached to some of the options. The criteria
is defined as no part of the option shall first become exercisable
until the Group's reported consolidated results for a six month
period demonstrate that a pre-tax profit in excess of GBP250,000
for such six months has been achieved.
Options vest in one of two ways:
1. Options granted vest 1/3 after 12 months, 1/3 after 24 months
and the remaining 1/3 after 36 months.
2. Options granted vest 1/3 after 12 months with the remaining
2/3 vesting in equal monthly instalments over the next 24
months.
Equity settlement is applied to all options, there is no cash
alternative.
The expected life of the options has been assessed at 2.5 years
for options which vest 1 year from grant and 4 years for options
which vest after 1 year. The contractual life of the options is 10
years.
The fair value of the awards are calculated using the
Black-Scholes model and subsequently adjusted for gain dependency,
assessed at 15%, and forfeitures, assessed at 10% over the life of
the award. A volatility adjustment considered appropriate for the
sector and the age of the Group is included in the calculation. In
forming the
volatility assumption, the Directors have considered the
volatility of the share price since the date of listing. The
volatility of companies operating in the same sector has also been
reviewed. Based on these factors, volatility has been assessed at
65% for awards granted before 1 March 2007, 60% for awards granted
after 1 March 2007 but before 1 January 2008, 70% for awards
granted after 1 January 2008 but before 1 January 2009 and 95% for
awards granted after 1 January 2009. Appropriate risk free rates
(as defined by the Bank of England) between 2.1% and 5.6% have been
applied to individual awards. A zero dividend yield has been
assumed.
The expenditure recognised in the income statement of the Group
and the Company for share-based payments in respect of employee
services received during the 18 month period to 30 June 2012 is
GBP39,700 (2010: GBP41,200). This expense all relates to
equity-settled, share-based payment transactions.
The following table illustrates the number and weighted average
exercise price (WAEP) of, and movements in, share options during
the period.
2012 2012 2010 2010
Number WAEP Number WAEP
---------------------------- ----------- ---- ----------- ----
Outstanding at 1 January
2011 5,833,178 0.79 11,419,985 0.57
Granted during the period 5,620,000 0.01 - -
Forfeited during the period (5,833,178) 0.79 (5,586,807) 0.34
Outstanding at 30 June 2012 5,620,000 0.01 5,833,178 0.79
---------------------------- ----------- ---- ----------- ----
Exercisable at 30 June 2012 1,791,610 0.01 5,060,151 0.88
---------------------------- ----------- ---- ----------- ----
The range of exercise prices for options outstanding at the end
of the year was 1p - 2p. The weighted average remaining contractual
life of the options in issue at 30 June 2012 is 5.7 years.
BP International Limited share options
As part of the agreement to acquire the remaining of D1 Oils
Fuel Crops Limited (formerly D1-BP Fuel Crops Limited) from BP
International Limited on 27 July 2009, the Company brought BP up to
the 16 per cent entitlement of the issued share capital of the
Company. The options are exercisable at the following prices:
Options Exercise price
------------------------- --------------
6,029,772 ordinary shares 13p per share
6,029,772 ordinary shares 14p per share
6,029,772 ordinary shares 16p per share
18.5p per
6,029,772 ordinary shares share
------------------------- --------------
These options are exercisable at any time between 27 July 2009
and 27 July 2019.
The fair value of the awards was calculated using the
Black-Scholes model. A volatility assumption of 87% was included in
the calculation and considered appropriate for the sector and age
of the Group. In forming the volatility assumption the Directors
considered the volatility of the share price over the three years
to the date of grant. An appropriate risk free rate as defined by
the Bank of England of 3.75% and a zero dividend yield are applied
to the calculation.
The total fair value of these options for the Group and the
Company was GBP1.0m and was all recognised in equity in the year to
31 December 2009.The following table illustrates the number and
weighted average exercise prices (WAEP) of, and movements in, these
options during the year.
2012 2012 2010 2010
Number WAEP Number WAEP
---------------------------- ---------- ---- ---------- ----
Outstanding at 1 January
2011 24,119,088 0.15 24,119,088 0.15
Outstanding at 30 June 2012 24,119,088 0.15 24,119,088 0.15
---------------------------- ---------- ---- ---------- ----
Exercisable at 30 June 2012 24,119,088 0.15 24,119,088 0.15
---------------------------- ---------- ---- ---------- ----
The weighted average fair value per option of options granted to
BP International Limited during the year was 15p. The range of
exercise prices for options outstanding at the end of the year was
13p - 18.5p. The weighted average remaining contractual life of the
options in issue at 30 June 2012 is 7.1 years.
26. Financial risk management objectives and policies
The main risks arising from the Group's 2011-12 operations were
interest rate risk, liquidity risk, foreign currency translation
risk and certain commodity price risks. The main risk arising from
the Company's 2011-12 operations is interest rate risk.
Interest rate risk
'At call' cash
The Group and Company retain cash in 'at call' bank accounts to
cover working capital requirements. Funds held 'at call' on
floating interest rates at 30 June 2012 totalled GBP1,533,800 (31
December 2010: GBP2,439,400) in the Group and GBP1,088,100 (31
December 2010: GBP1,981,900) in the Company.
The following table demonstrates the sensitivity of the Group
and Company's profit before tax and equity to a reasonably possible
change in floating interest rates, with all other variables held
constant, that may impact interest on 'at call' cash.
Increase/ Group Group Company Company
Effect Effect Effect Effect
decrease on loss on on loss on
before before
in floating tax equity tax equity
interest
rate GBP000 GBP000 GBP000 GBP000
----- ----------- -------- ------ -------- -------
2012 +0.5% 7.7 7.7 5.4 5.4
-0.5% (7.7) (7.7) (5.4) (5.4)
----- ----------- -------- ------ -------- -------
2010 +0.5% 12.1 12.1 9.9 9.9
-0.5% (12.1) (12.1) (9.9) (9.9)
----- ----------- -------- ------ -------- -------
Fixed term deposits
The Company invests surplus funds on behalf of the Group in
fixed rate term deposits. Funds held on fixed rate term deposits at
30 June 2012 totalled GBPnil (31 December 2010: GBP1,001,100).
The following table demonstrates the sensitivity of the Group's
profit before tax and equity to a reasonably possible change in
interest rates on term deposits, with all other variables held
constant that may impact the Company and the Group following the
maturity of the deposits and subsequent reinvestment of the
funds.
Increase/
Effect Effect
decrease on on
loss
in term before
deposit tax equity
interest
rate GBP000 GBP000
----- --------- ------- ------
2012 +1% - -
-1% - -
----- --------- ------- ------
2010 +1% 10.0 10.0
-1% (10.0) (10.0)
----- --------- ------- ------
Foreign exchange risk
The Group seeks to manage foreign exchange risk by obtaining the
most favourable rates at the time sums are converted to a foreign
currency.
During 2010, the Group entered into a forward contract for Euros
to cover the expenditure of its Belgian and Netherlands operations.
The forward contract was to purchase EUR1.0m at EUR1.1075/GBP1.00
during the year to 29 March 2011. In 2010, an expense of GBP31,800
was recognised to reflect the impact of the strengthened British
Pound against the Euro in relation to the outstanding forward
contract at 31 December 2010.
Liquidity risk
The Group seeks to manage financial risk to ensure sufficient
liquid funds are available to meet foreseeable needs while
investing cash assets safely and profitably.
The Group is almost solely financed by equity. The Group manages
liquidity risk by maintaining adequate reserves to meet short-term
funding requirements while investing excess funds in bank term
deposits. If required, these deposits can be recalled
immediately.
The table below summarises the maturity profile of the Group's
financial liabilities at 30 June 2012 and 31 December 2010 based on
contractual undiscounted payments. Interest rates on variable rate
loans are based on the rate prevailing at the balance sheet
date.
Less
than
3 to 1 to
On demand 3 months 12 months 5 years > 5 years Total
Period ended 30
June 2012 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------- --------- -------- ---------- -------- --------- ------
Trade and other
payables - 54.0 - - - 54.0
Payments due to
vendors - - - 561.5 - 561.5
---------------- --------- -------- ---------- -------- --------- ------
Less
than
3 to 1 to
On demand 3 months 12 months 5 years > 5 years Total
Year ended 31 December
2010 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------------- --------- -------- ---------- -------- --------- ------
Trade and other
payables - 96.1 - - - 96.1
Payments due to
vendors - - 4.1 476.5 - 480.6
----------------------- --------- -------- ---------- -------- --------- ------
Managing capital
The Group aims to optimise its capital structure by holding an
appropriate level of debt relative to equity in order to maximise
shareholder value. The appropriate level of debt is set with
reference to a number of factors and financial ratios including
expected operating and capital expenditure cash flows, contingent
liabilities and the level of restricted cash as well as the general
economic environment. The Group aims to control its capital
structure by issuing new shares and raising debt finance to the
extent that it is possible on commercially acceptable terms. The
economic conditions currently prevailing and the Groups relatively
recent entry into the non-edible vegetable oils industry have
restricted the Group's ability to raise debt finance and exert any
significant degree of control over its gearing ratio. As a
consequence, the Group is currently financed primarily from
equity.
18 month
period Year
ended ended
30 June 31 December
2012 2010
GBP000 GBP000
-------------------------------------- -------- -----------
Loans and borrowings
Obligations under finance leases - -
Instalments due on mortgage - -
-------------------------------------- -------- -----------
Total loans and borrowings - -
Equity 460.2 2,590.1
-------------------------------------- -------- -----------
Total equity and loans and borrowings 460.2 2,590.1
-------------------------------------- -------- -----------
Equity includes all capital and reserves of the Group
attributable to the equity holders of the parent. The Group is
primarily financed through equity and it should be noted that the
equity component in the gearing ratio calculation includes the
impact of retained losses.
Fair values of financial assets and financial liabilities
Set out below is a comparison by category of carrying amounts
and fair values of all of the Group and Company's financial
instruments that are carried in the financial statements. All of
the balances included below are classified as loans and receivables
in accordance with IFRS 7.8.
Book Fair Book Fair
Group value value value value
2012 2012 2010 2010
GBP000 GBP000 GBP000 GBP000
----------------------------- ------- ------- ------- -------
Financial assets
Cash and short-term deposits 1,533.8 1,533.8 3,440.5 3,440.5
Trade and other receivables 494.4 494.4 899.7 899.7
Long-term deposits and cash
collateral - - 90.0 90.0
Financial liabilities
Trade and other payables 92.4 92.4 336.7 336.7
Payments due to vendors 561.5 561.5 480.6 480.6
----------------------------- ------- ------- ------- -------
Book Fair Book Fair
Company value value value value
2012 2012 2010 2010
GBP000 GBP000 GBP000 GBP000
----------------------------- ------- ------- ------- -------
Financial assets
Cash and short-term deposits 1,088.1 1,088.1 2,983.0 2,983.0
Trade and other receivables 428.2 428.2 353.1 353.1
Long-term deposits and cash
collateral - - 90.0 90.0
----------------------------- ------- ------- ------- -------
The fair value of the financial assets and financial liabilities
with standard terms and conditions and traded on active liquid
markets are determined with reference to quoted market prices. The
fair value of all the financial assets and financial liabilities
above were determined on this basis.
27. Contingent assets
At 30 June 2012, the Group had no contingent assets:
28. Contingent liabilities
At 30 June 2012, the Group had one contingent liability:
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 the Company. The maximum
exposure is GBP1.7m 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.
29. Capital commitments
At the end of the period there were no capital commitments
(2010: none)
30. Disposal of intellectual property relating to the Animal
Feed business, and Cumulative Redeemable Preference Share to
Quinvita
On 24 November 2010, the Group announced the disposal of its
subsidiaries Quinvita Limited ("Quinvita") and Quinvita Plant
Science Limited (formally D1 Oils Plant Science Limited) which
owned and conducted substantially all of the Company's Jatropha
plant science and technology activities, excluding its animal feed
programme. The Group received as consideration 800,000 5 per cent.
Cumulative redeemable preference shares of GBP1.00 each in Quinvita
(the "Preference Shares"), which are redeemable by 1 November 2015,
and an entitlement to various royalties on Jatropha revenues
generated by the Quinvita group.
In April 2012, the Group entered into a conditional agreement to
sell to Quinvita N.V. the germplasm and intellectual property
relating to the animal feed programme previously retained by the
Company for a cash consideration of GBP300,000 and the Preference
Shares in return for a secured loan of GBP372,000, accruing
interest at 10 per cent. per annum (the "Agreement"). The loan is
to be secured over the germplasm and the animal feed programme
intellectual property and is repayable within 5 years.
All other rights and obligations between the parties and members
of their respective groups and associated parties, including
approximately GBP60,000 of royalties due to the Group, have
(subject to compliance by Quinvita with various terms of the
Agreement) been waived.
The Company has retained the right to exploit in perpetuity at
nil cost the current Animal Feed programme intellectual property
and, at a preferential rate, any future improvements or
modifications to the current animal feed programme intellectual
property.
Completion of the Agreement is conditional upon Quinvita N.V., a
subsidiary of Quinvita, concluding a share issue to raise
EUR1,000,000 by no later than 1 June 2012.
The balance of the loan (capital plus interest) due at 30 June
2012 was:
2012 2010
GBP000 GBP000
----------------- ------ ------
Other receivable 378.2 -
----------------- ------ ------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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