Pre-close Trading Update


 

TIDMDOO 
 
RNS Number : 7572M 
D1 Oils Plc 
04 February 2009 
 

 
 
 
4 February 2009 
 
 
D1 Oils plc ("D1 Oils" or "the Group") 
Pre-close Trading Update 
 
 
The Board of D1 Oils plc today issues the following update ahead of the 
publication of the Company's results for the year ended 31 December 2008 which 
are scheduled to be announced in April 2009. 
 
 
Significant progress was made during 2008 in demonstrating the viability of 
Jatropha as an energy crop and in consolidating the Group's world leading 
position in its cultivation, underpinned by a plant science programme that 
differentiates the Group from its competitors. 
 
 
  *  Total planting of Jatropha at 31 December 2008 in which D1-BP Fuel Crops Limited 
  ("D1-BP Fuel Crops" or the "Joint Venture") has an interest was approximately 
  257,000 hectares (192,016 hectares as at 31 March 2008). The majority of the 
  activity during the year was in North East India, where Williamson Magor made 
  significant progress. During the year the Joint Venture successfully produced 
  its first quantities of crude Jatropha oil. 
  *  D1 Oils Plant Science Limited (DOPSL), the Company's wholly owned subsidiary, 
  has significantly developed the Group's global breeding programme in support of 
  D1-BP Fuel Crops, establishing a central facility in Cape Verde and 
  eight development centres in Africa, India and South East Asia. 
  *  DOPSL delivered 19 million seedlings of its first Jatropha selection to D1-BP 
  Fuel Crops' farmers in 2008. 
  *  DOPSL is currently evaluating 13 new selections of Jatropha material in 29 
  product placement trials worldwide. In 2009 the best performers will be selected 
  for high oil yield and good biodiesel profile and multiplied up for initial 
  commercial release intended to take place in 2010. 
  *  DOPSL has applied for a patent for a process to turn Jatropha seedcake into a 
  high protein animal feed, thereby substantially enhancing the value of the 
  byproduct and improving significantly the economics of Jatropha planting 
  worldwide. Tests have shown the improved meal contains more digestible protein 
  than soya bean meal and has an energy and amino acid composition competitive 
  with the best available protein sources for animal feed production. 
  *  The Group can now demonstrate Jatropha's carbon saving credentials. Based on an 
  assessment of the carbon performance of D1-BP Fuel Crop's Jatropha planting in 
  North East India, Ecofys, the sustainable energy consulting company, estimates 
  that Jatropha-based biodiesel can deliver over 60% carbon savings compared to 
  fossil fuel diesel. The assessment uses the greenhouse gas methodology of the UK 
  Renewable Transport Fuel Obligation (RTFO) and is a significant improvement on 
  the RTFO default values for the carbon savings of rapeseed, soya and palm. 
 
 
 
Building on this performance, D1 Oils has been in discussion with BP 
International ("BP") about the most appropriate way to deliver value for 
shareholders. As a result the partners have agreed a new forward strategy for 
the business to include: 
 
 
  *  The marketing of a substantial share in D1-BP Fuel Crops to third parties to 
  contribute to the funding of the further growth and development of the business. 
  *  Full and final settlement of the previously announced discussions regarding the 
  planting assets transferred to D1-BP Fuel Crops at the inception of the Joint 
  Venture. The settlement includes a payment by D1 to BP of GBP5 
  million, GBP3 million of which was provided for in the year ended 31 December 
  2007. 
  *  A new business plan for D1-BP Fuel Crops which will tighten the business' 
  geographic focus, reduce the overhead base and contain short term cash 
  requirements, whilst maintaining investment in the key technologies and 
  capabilities that differentiate the business. 
 
 
 
Finance 
During 2008 the Company announced its intention to withdraw from refining and 
trading biodiesel in the UK. The resulting cost reduction programme has been 
completed in line with expectations. 
 
 
As a result of the deterioration in the economic climate and consequent 
constraint on potential buyers' ability to raise debt finance, the disposals of 
our UK refining sites and equipment at Middlesbrough and Bromborough have been 
delayed. Discussions are continuing with a number of interested parties. In view 
of the difficulties in realising value from the assets at Bromborough and 
Middlesbrough, the Directors believe it is appropriate to reduce the holding 
value of these assets by approximately GBP3.5 million. 
 
 
As a result of the above impairment charge, the additional costs associated with 
the planting settlement referred to above and certain impairment charges at the 
Joint Venture level, the loss after tax for the year ended 31 December 2008 is 
now likely to be greater than the Board's previous expectations. 
 
 
Gross cash on hand (defined as cash held in bank accounts and on deposit) as at 
31 December 2008 was GBP20.2 million and net cash (defined as gross cash less 
cash held as collateral) was GBP18.2 million. In addition, the gross and net 
cash position at 31 December 2008 of D1-BP Fuel Crops, of which the Group owns 
50%, was GBP12.4 million. 
 
 
Commenting on the announcement Brian Myerson, Chairman of D1 Oils, said: 
 
 
"During 2008 D1 Oils demonstrated the viability of Jatropha as one of the most 
promising non-food energy crops. The Company is now established as a world 
leader in Jatropha curcas, with a significant planting business backed by 
pioneering plant science. We look forward to taking the business forward to its 
next stage of development and in turn to creating value for all shareholders." 
 
 
Enquiries: 
 
 
D1 Oils plc 
Graham Prince,  020 7367 5600 
Director, Corporate Communications 
 
 
Brunswick 
Kevin Byram 
Camilla Gore 020 7404 5959 
 
 
 
 
Notes to Editors: 
D1 Oils plc is a biofuels technology company. Our strategy is to develop new 
energy crops into sustainable commercial fuels. We provide technology and 
services for the breeding, development, planting and harvesting of new varieties 
of commercial biofuel crops, focusing on alternative, sustainable feedstocks 
that are not subject to the same price pressures as food-grade crops. We have an 
established plant science and planting programme for Jatropha curcas, a robust, 
tropical oilseed bearing tree. Jatropha produces inedible oil feedstock for 
biodiesel and is able to make use of land not suitable for arable agriculture. 
D1 has a 50:50 joint venture with BP for the global planting of Jatropha. 
 
 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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