Our aim is to deliver customer value by creating cost ... - Greenergy

greenergy

Our aim is to deliver customer value by creating cost ... - Greenergy

EfficiEnt.

2012

Annual Report


02

thE UK’s lEAding

sUppliER of

pEtRol And diEsEl

Greenergy provides road fuel to the largest fuel buyers in the UK,

supported by infrastructure and logistical services that maximise

supply efficiency and reliability. Our customers include the major

oil companies and supermarkets, as well as fuel resellers and fleet

users such as bus and logistics companies.

The business grew strongly again this year against a declining UK market. We increased

our sales volume to 10.9 billion litres of fuel, to take our share of the UK road fuels market

to 23.2%. Our continued growth has been achieved through long term partnerships

with our customers to deliver cost, efficiency and reliability benefits, and these remain

our focus going forward.

COnTenTS

ovERviEw

Greenergy at a glance 04

Chairman’s statement 06

chiEf ExEcUtivE’s REviEw

Chief Executive’s review 08

Health and safety 12

Service quality indicators 15

mARKEt REviEw

Changes in the UK downstream

oil sector

20

UK fuel market 22

Petrol manufacturing margins 23

Oil and biofuel price movements 24

Legislative and fiscal environment 26

Greenergy Annual Report 2012

stRAtEgY in Action

Strategic overview 28

Customers, products and services 30

Fuel manufacturing and purchasing 33

Infrastructure investments 36

Information technology 38

Low carbon fuels 41

coRpoRAtE REsponsiBilitY

Biofuel sustainability 44

Carbon emissions 46

BioCarbon Tracker 48

Employment 49

Social responsibility 52

coRpoRAtE govERnAncE

Board of Directors 54

Managing our risks 56

Statement on corporate governance 58

Statutory disclosures 60

chiEf finAnciAl officER’s REviEw

Chief Financial Officer’s review 62

finAnciAl stAtEmEnts

Independent auditors’ report 66

Consolidated income statement 67

Consolidated statement 68

of comprehensive income

Consolidated & Company 69

balance sheet

Consolidated & Company 71

statement of changes in equity

Consolidated & Company 73

statement cash flows

Notes to the financial statements 74

Officers and professional advisors 103

FInAnCIAL HIGHLIGHTS

11/12

10/11

09/10

11/12

10/11

09/10

11/12

10/11

09/10

11/12

10/11

09/10

SALeS GrOWTH MArKeT SHAre

4.4bn L

2008

5.2bn L

2009

7.9bn L

2010

92

9.9bn L

2011

£17.8m

114

10.9bn L

2012

£7.2bn

£25.2m

£24m

£28.9m

£9.8bn

181

% Market Share

£11.9bn

25

20

15

10

5

0

April

2007

£40.1m

£47.2m

April

2008

£11.9bn

£40.1m

181 *

April

2009

Turnover

Operating profit

eBITDA

£47.2m

Permanent employees

*Year end.

April

2010

Greenergy

market share

April

2011

April

2012

Greenergy Annual Report 2012

03

financial statements chief financial

cOrpOrate

cOrpOrate

strategy in actiOn

market review

chief executive’s

overvieW

Officer’s review

gOvernance

respOnsibility

review


04

OVERVIEW

gREEnERgY

At A glAncE

Our aim is to deliver customer value

by creating cost efficiencies and providing

the highest levels of service quality.

gloBAl oRiginAtion

» Flexible global sourcing of petrol, diesel and biofuel raw materials.

» Deep understanding of complex market structures.

» 818 shipments of oil and biofuel products received this year.

» More than 20 different fuel and biofuel products typically handled

at any one time.

A mAnUfActURing And

infRAstRUctURE plAtfoRm

» 2 fuel manufacturing facilities, one on the Thames estuary

and a new second facility at Teesside.

» 1 biodiesel manufacturing plant making fuel from wastes.

» 1 biodiesel pre-processing facility under construction.

» 24 supply locations in the UK.

» Storage in US, Brazil and Europe for local supply and export.

sERvicEs

» More than 100 tankers liveried in our customers’

and our own brands.

» 99.03% of core fleet deliveries made on time.

» Move from an outsource to an insource arrangement for drivers.

» £4.6 million committed to process automation

in preparation for increased service provision.

pRodUcts

» UK petrol, diesel and biofuel sales to oil companies,

supermarkets, fuel resellers, bus companies, logistics

companies and other major fleet users.

» Biofuel sales in the US and Brazil.

» Weekly sales exceeding 200 million litres.

We are a UK manufacturer,

sourcing petrol, diesel and biofuel

raw materials globally

we seek to minimise our

product costs by flexible

global sourcing and by

manufacturing in the UK.

we have invested in critical

infrastructure assets and

process automation in order

to achieve the highest levels

of supply reliability and

service, to make life easier

for our customers.

Greenergy Annual Report 2012 Greenergy Annual Report 2012

Manufacturing

terminal

Supply terminal

Biodiesel

production facility

AMerICAS

TeeSSIDe

IMMInGHAM

THAMeS

ASIA &

nOrTH

AMerICA

eUrOPe

& rUSSIA

05

financial statements chief financial

cOrpOrate

cOrpOrate

strategy in actiOn

market review

chief executive’s

overvieW

Officer’s review

gOvernance

respOnsibility

review


OVERVIEW

CHAIRMAN’S

STATEMENT

HIGHLIGHTS

£47.2m

EBITDA

10.9bn

Sales volume (litres)

10.4%

Sales growth

06 Greenergy Annual Report 2012

This was a record year for the Group with a 10.4% increase

in sales volume and a doubling of EBITDA to £47.2 million.

On behalf of the Board I would like to commend all of the

team for their eff orts in ensuring the continuation of our

long-term strategy of delivering cost, effi ciency and

reliability benefi ts for our customers.

Safety

Safety is of the utmost importance

in our business and we operate to an

exacting health and safety regime.

Everyone involved in Greenergy works

continuously to create the highest level

of safety awareness and to this end all

the Executive Directors and I undertook

safety observational walks this year.

Market and strategy

Last year I wrote that many of the

traditional oil companies had sold their

refi neries, storage terminals and petrol

stations in the UK. This trend continued

through the year, with the traditional

‘oil fi eld – refi nery – petrol station’

supply chain model becoming

increasingly rare.

Several years ago we started preparing

for these changes to the market place

and it is pleasing to see that our

strategy of investing in national logistics

to achieve lowest cost and highest

reliability is paying off with positive

sales growth in an otherwise declining

UK market.

I am confi dent that our team and our

ongoing investments are positioning

the business to take maximum

advantage of the opportunities

presented as the market continues

its transition away from the old model.

IT development

Given my previous experience,

I have been closely following

our intellectual property and IT

development investments. We are part

way through a three year £10 million

programme to develop and automate

processes that will allow us to expand

the services we provide our customers.

I am pleased to report that this project

is so far on-time, on-budget and oncapability.

Once complete,

we believe these systems will give

us supply chain capabilities that have

not previously been considered in

our sector and therefore a signifi cant

competitive advantage in the future.

Financial performance

This was a very strong year for the

Group. Our sales grew by 22.3% in value

terms and 10.4% in volume terms, while

the UK road fuel market as a whole

contracted by 1.5%. This took our

market share to 23.2% by year end.

Our sales growth came from a

combination of organic sales growth

to our long-term customers plus

some new customers attracted to

our developing terminals footprint.

Our growth refl ected not just our

ability to compete on price but also

the confi dence our customers have

in the services we provide and our

operational reliability.

EBITDA grew from £24.0 million last

year to £47.2 million this year and

operating profi ts increased from

£17.8 million to £40.1 million. In spite

of the diffi cult wider market conditions,

we also improved our access to

working capital.

Our people

I have been involved in many dynamic

businesses during my career, but

I am continually amazed at the

‘can-do’ culture within Greenergy.

There is enormous energy and drive

to fi nd better ways of doing things

and to create further operational

effi ciencies. I would like to thank all

the staff for the enthusiasm with which

they strive to continuously improve the

service we provide our customers and

take on new challenges. This culture

is inspired by the entrepreneurial

spirit of the senior management team

which, throughout the course of this

year, has once again demonstrated

the leadership and foresight which has

allowed the company to deliver on all

its strategic objectives.

As a business we continuously

deliberate on how to deliver cost,

effi ciency and reliability improvements.

Last year I wrote that we would be

reassessing all of our outsourced

operations in order to drive the

performance of our business.

As a result of this operational

review we decided, in April 2012,

‘‘

This was a record year for the

Group. Once again we achieved

good sales growth, produced

a strong fi nancial performance

and delivered on all our

strategic objectives.

PAUL LESTER

‘‘

to directly employ 59 drivers. Post year

end we have taken on another 6 drivers,

with recruitment ongoing. I would like

to welcome all of our new staff

to Greenergy.

Outlook

Greenergy is a fl exible and

entrepreneurial company which

continuously assesses ways to grow

its business in rapidly changing markets.

I am in no doubt that the coming year

will once again present the Group with

numerous opportunities for growth and

I believe that we are well positioned

to take full advantage of any and all

of these prospective situations. I am

fi rmly of the view that our business

model is transferable between

international markets and I am

excited about Greenergy’s future.

Paul Lester

Chairman

Greenergy Annual Report 2012

07

FINANCIAL STATEMENTS CHIEF FINANCIAL

CORPORATE

CORPORATE

STRATEGY IN ACTION

MARKET REVIEW

CHIEF EXECUTIVE’S

OVERVIEW

OFFICER’S REVIEW

GOVERNANCE

RESPONSIBILITY

REVIEW


08

CHIEF EXECUTIVE’S REVIEW

chiEf

ExEcUtivE’s

REviEw

HIGHLIGHTS

23.2%

UK market share, April 11 - April 12

85%

Proportion of delivered

fuel with a service package

Greenergy Annual Report 2012

This was a strong year for the Group, with continued growth

in sales volume and a strong financial performance reflecting

healthy manufacturing margins and benefits arising from

changes in biofuel legislation.

at the end of the last financial year

I wrote about the challenges our

business had faced as a result of

industry regrouping, weather and

economic downturn. This year the

external environment presented

fewer challenges to the business and

brought some benefits, and this has

been reflected in our results. We have

continued to make progress on our

strategic targets.

Safety

Safety is a first priority of the company

and I take an active lead in ensuring

that our fuel is handled in a safe way.

This year I continued my own safety

walkabouts at several of our terminals

and offices. all our Executive Directors

and our Chairman undertook similar

on-site activities.

I have been seeking to involve all

staff in continuous real-world safety

awareness, encouraging them to report

on potential hazards when they visit

sites, and I have made safety a recurrent

theme on my blog to staff on the

company’s intranet. This has enhanced

awareness and resulted in enthusiasm

throughout the company to visit sites

and observe safe operations. I have

also encouraged third parties, including

Union representatives, to observe and

comment on our operations.

The rate of lost-time incidents was

lower this year than last (0.8 per

100,000 man hours worked compared

with 1.4 in 2010/11). all incidents were

categorised as slips, trips and falls

and were reported to the enforcing

authority. One of our sub-contractors

had a significant gasoline leak during

the year following a flawed maintenance

procedure. The event has been jointly

investigated and understood, and

we are confident that the lessons will

enhance our ongoing performance.

We work to eliminate hazards before

incidents occur by continually focusing

on reporting of near misses. We have

also extended the scope of our near

miss reporting beyond conventional

Safety, Health and Environment (SHE)

to cover what we now define as

‘Events’, an Event being ‘something

that we were not expecting and that

we would have preferred not to have

happened’. By broadening the focus

of our reporting, we are picking up

non compliances that, while not SHE

detrimental, could be a pre indicator

of something more important.

Focusing on broader Events has also

helped engage all staff and contractors

on the completeness and robustness of

our processes. The senior management

team receives daily flashes and weekly

reports from our SHE team on the

manner in which the causes of near

misses and Events are being addressed.

Operational review

Sales: development of long term

customer partnerships

This year we further increased sales

to our long-term retail customers,

including oil companies and

supermarkets. New supply agreements

were concluded from our Teesside

terminal and we began selling from

our new storage terminal in Cardiff,

which began operation at the

beginning of 2012.

We also continued to explore with

our customers potential integration

efficiencies to reduce our customers’

costs and improve service quality. In

particular, we delivered ‘wet-sourcing’

solutions, operating stock-monitoring,

order generation and haulage services

with high levels of reliability. 85% of the

fuel we delivered this year included

a significant service element.

With our strategic focus on service,

it was important to provide our

customers with the highest levels

of reliability. This year more than 99%

of our core fleet deliveries to customers’

sites were made within the agreed

delivery window and, throughout the

12 month period, there was not a single

case in which a commercial customer

ran out of stock as a result of our

delivery being delayed. I am particularly

pleased that our retail forecourt stock

management operations achieved stock

level non-compliance of only 0.001%.

as more of the major oil companies

scale back their retail operations and

licensing, we see a good opportunity

to develop new sales to independent

petrol retailers. This year we launched

a unique, flexible offer for independent

dealerships that combines fuel supply,

a variety of forecourt brands and

a service package.

The administration of Petroplus in

January 2012 led to the temporary

cessation of supply from its Coryton

refinery in the South East of England

and the closure of its Teesside terminal.

We increased our sales in both locations

on both a temporary and longer-term

basis to meet additional demand.

‘‘

This year we benefitted from a number

of exceptional occurrences, including the

implementation of the eU renewable

energy Directive in the UK.

The coming together of these factors was

unusual, but what was not exceptional

was our ability to maximise the benefit

such opportunities present for the business

through our flexible operations, purchasing,

risk management and controls.

AndREw owEns

‘‘

I am pleased with the way the

business managed these additional

sales, and also with the sharp increases

in demand resulting from concerns

about national strike action by tanker

drivers. Our performance during this

period demonstrates our ability

to continue to grow.

Margins

The business continues to focus

on increasing unit margins by:

» Global purchasing

and manufacturing.

» Creating further operational.

efficiency and overall cost reduction.

Our petrol manufacturing margins were

significantly stronger this period than

the previous year due to lower raw

material costs. although opportunities

to blend diesel are typically more

limited, during this period we were

also able to make a margin by blending

different grades of diesel from around

the world, to produce diesel of

UK specification.

Biofuel sourcing and manufacturing

also represented a significant source

of Group margin growth.

We continue to generate renewable

Transport Fuel Certificates (rTFCs

or ‘tickets’) by supplying more biofuel

in our fuel than required under the

renewable Transport Fuel Obligation.

Through our global bioethanol

purchasing platform and Brazilian and

US offices, we minimised our sourcing

costs for all biofuels and biofuel raw

materials and responded flexibly to

changing price structures in different

markets. Consequently during the

period we sold rTFCs at a higher price

than our own low cost of biofuel supply.

We also improved the efficiency

and reliability of our biodiesel

manufacturing facility at Immingham,

increasing production levels by 17%.

as part of a joint venture with

Brocklesby Ltd, we commenced

construction of a facility to pre-process

low grade and difficult-to-process

waste oils and fats before they enter

our biodiesel production facility.

This will allow us to process a broader

variety of low cost wastes than we

would otherwise be unable to use

and will improve margins further.

Greenergy Annual Report 2012

09

finanCial statements Chief finanCial

COrpOrate

COrpOrate

strategy in aCtiOn

market review

chief executive’s

Overview

OffiCer’s review

gOvernanCe

respOnsibility

review


10

CHIEF EXECUTIVE’S REVIEW

chiEf

ExEcUtivE’s

REviEw

continUEd

HIGHLIGHTS

99.6%

Proportion of biodiesel

produced from waste

33%

reduction in costs associated

with ship discharge times

Greenergy Annual Report 2012

We continued to focus on the creation

of operational efficiencies and cost

reductions. By implementing ideas

put forward by our staff, we achieved

on-going cost reductions of £2.5 million

during the period, delivered back-office

efficiency reflected by 99.7% invoice

accuracy and achieved 33% reduction

in costs associated with ship discharge

times (demurrage).

Exceptionally this year, the business

also benefitted from the overlapping

of incentives for waste-biofuel

occurred due to the timing of the

UK’s implementation of the renewable

Energy Directive (rED). Between 15

December 2011 and 30 March 2012,

biodiesel derived from used cooking

oil qualified for a 20 pence duty

incentive (a pre-rED incentive) and

also generated double renewable

Transport Fuel Certificates (a rED

incentive). The co-existence of both

types of incentive during this period

was a one-off benefit for the business

of approximately £10 million in margin.

Staff

In line with our strategy to increase

our directly controlled service provision,

in april this year we transferred 59

drivers from our contractor to direct

employment within the Greenergy

Group. I am delighted to welcome the

drivers to Greenergy. I am confident

that we can move forward together as

a team to further develop our business.

environment

We continue to work towards meeting

our company target to achieve a 70%

carbon saving across all the biofuels

we use. This is intentionally a stretch

target, and difficult to meet when

market economics favour crop-based

biofuels with high carbon intensity.

This year we came close to our target

through extensive use of waste-based

biofuel and careful selection of US

bioethanol suppliers capable

of delivering the highest carbon

savings. as in our early operations

in Brazil, our priority was to move

quickly to develop strong and

cooperative relationships with

the best suppliers.

For the biofuels that we blended into

own petrol and diesel we achieved

an average carbon saving of 69.7%.

Including the biofuel that we supplied

to other oil companies for their own

blending, the average saving was 66.3%.

99.6% of our biodiesel was derived from

wastes, primarily used cooking oil.

Future prospects

The downstream oil industry in the

UK has seen continuing change this

year, with a number of oil companies

successfully completing the exit of their

refining and retail businesses and others

trying to follow in this path. as a result,

a number of refineries, terminals and

logistical assets have changed hands.

as a result of these changes, an

increasing proportion of the fuel sold

on UK forecourts is now supplied by

a party that is not the forecourt brand.

This presents ongoing opportunities for

us to replace the traditional refineryto-branded

forecourt supply model,

by further expanding not just the

volume of fuel we supply but also the

scope of the services we provide to

our customers. To underpin this service

provision, we have continued with a £10

million project to further develop our

unique IT capabilities and enhance our

ability to embed customer IT interfaces.

The vertical disintegration of the

industry is continuing to present

potential opportunities to expand

our supply infrastructure and we

assessed a number of acquisition

opportunities during the year.

after year end, on 26 June 2012,

we reached agreement with the joint

administrators of Petroplus refining

and Marketing Ltd to purchase assets

of the former Coryton refinery under

a joint venture with royal Vopak

and Shell UK Ltd. The parties intend

to develop a deep water oil blending

terminal capable of receiving product

tankers carrying up to 100,000 tonnes.

This will allow us to connect to the

mainstream world fuel markets and

purchase from the most modern and

efficient refineries around the world,

thereby ensuring cost-effective and

reliable fuel supply for our customers.

We will continue to evaluate all other

worthwhile opportunities going

forward. access to additional capital

may be required to fully exploit these

other opportunities, and therefore

we continue to consider our capital

options, one of which could be IPO.

While I see many opportunities for

stronger long-term growth, in the

immediate term market prices for

raw materials are expected to be less

positive next year than this and the

UK fuel market as a whole is continuing

to reduce in size.

In particular:

» We expect EU incentives for wastebased

biofuels to lead to higher

biofuel raw material costs and lower

demand for rTFCs or ‘tickets’.

This will affect our ability to make

a margin from the sale of rTFCs.

» Ongoing market share and volume

loss from the less successful legacy

operators is creating an overhang

of supply chain terminals and

logistical cost uncertainty.

These are mainly short-term factors

driven by commodity prices. We will

take every opportunity to minimise

our raw material costs through

intelligent and flexible purchasing

and will use our infrastructure assets

to reduce costs and create supply chain

efficiencies. In this way we can continue

to deliver value for our customers and

our shareholders next year and beyond.

Andrew Owens

Chief executive

Greenergy Annual Report 2012

11

finanCial statements Chief finanCial

COrpOrate

COrpOrate

strategy in aCtiOn

market review

chief executive’s

Overview

OffiCer’s review

gOvernanCe

respOnsibility

review


12

CHIEF EXECUTIVE’S REVIEW

hEAlth

And sAfEtY

Approach

We apply Safety, Health and

Environment (SHE) management

controls to manage the way our

fuel is stored, moved, and delivered.

We aim to go beyond statutory

compliance and meet industry

standards of best practice.

We adopt the following approach:

» We appoint experienced suppliers

and contractors that meet our

professional standards for SHE

competence and share our

zero-harm values.

» We continually monitor supplier

activities, looking at their operational

controls, management systems and

actual SHE performance.

» Where issues do arise, we ensure that

a formal investigation is conducted

to identify the root causes and

inform actions to rectify and prevent

re-occurrence.

» We have an internal expert team

to coordinate and manage these

issues, and to ensure closure of

corrective actions.

we seek to create safe working environments by:

Greenergy Annual Report 2012

Fuel is a hazardous substance, and our priority is to ensure that

it is stored, moved and delivered in a safe manner. We work

with all our stakeholders, from supplier to customer, to identify

and manage the risks associated with our collective activities.

Activities during the year

During the year we continued

to challenge all of our stakeholders

to continually improve their SHE

practice and performance. This was

achieved via close cooperation with

the SHE management teams of our

suppliers, tracking their response

to incidents and maintaining our

programme of pro-active auditing.

Internal reporting on SHE issues was

improved with the development of an

events log. This captures all incidents

associated with our activities, including

those involving our suppliers, customers

and our own facilities. Each event is

assigned corrective and preventive

actions with appropriate deadlines,

with progress reviews at the weekly

Executive Management Board meeting.

We undertook significant initiatives

to assess and test the controls in place

at our biodiesel manufacturing facility

and Plymouth fuel storage terminal.

These involved external experts,

the emergency services and

enforcement agencies to ensure

that our systems and responses

reflect industry best practice.

» Instilling the highest possible level of safety awareness in

everyone involved in storing, moving and delivering fuel,

whether that person is a member of staff, or employed

by a contractor or sub-contractor.

» encouraging a culture of incident reporting,

however small the incident.

» Responding quickly to identified trends and

near-misses in order to prevent the occurrence

of more significant incidents or injuries.

Our Directors were challenged

to complete ‘safety walks’ across

all aspects of the supply chain.

This resulted in inspections of our

biodiesel plant, supply terminals,

offices and haulage depots and

provided a valuable ‘fresh look’ at our

operations. Our SHE team continues

to monitor the implementation of the

resulting recommendations.

The company SHE policy has

undergone a ‘root and branch’

review and revision to ensure that

it continues to reflect all aspects

of our growing business.

ApplYing sAfEtY, hEAlth And EnviRonmEnt

stAndARds in oUR sUpplY chAin

Manufacturing

We commissioned an expert review

of behavioural safety at our Immingham

manufacturing plant. This involved

an in-depth review of roles and

responsibilities, processes and activities

at the plant. Project Gryphon is now

under way to address recommendations

from the review in a structured and

sustainable way.

We continued to conduct regular

planned and unannounced safety

inspections of the plant and maintain

a rolling log to ensure all resulting

corrective/improvement actions

are completed.

Terminals

We conducted a major live-play

emergency exercise at our fuel storage

terminal in Plymouth. This involved all

of the emergency services and other

external parties that would attend

a ‘real’ emergency situation and

provided a valuable insight which has

been used to refine our existing on and

off site emergency response plans.

Our SHE team continued an ongoing

programme of audits involving all

terminals and supply locations.

These audits involved a review of the

policies and procedures in operation

at each location and a physical

inspection of the facilities.

This included monitoring safety

performance through the intense

activities of construction and

commissioning of our new

Cardiff terminal facilities.

Haulage

We worked closely with our colleagues

providing SHE support to our haulage

suppliers. We continued to ensure

that the risks associated with delivering

product to new customer sites

were assessed before any tankers

were scheduled.

We tracked the performance of our

haulage suppliers, both in the number

of incidents reported and in the

way that their management teams

responded with appropriate action

to prevent recurrence.

Our SHE team provided a link between

the haulier and customer to ensure

that where drivers identified potential

issues at customer premises, these were

communicated to the site operator with

action agreed for improvement and

timely feedback to the drivers.

We encouraged all suppliers to make

demonstrable improvements to their

operations. In particular we persuaded

our main haulage supplier to progress

implementation of the ISO 9001

standard for quality management

across its fuel distribution operations.

With the transfer of part of our haulage

operations from an outsource to an

insource arrangement in april 2012,

we are now working with our own

drivers to review and improve their

safety management systems and

to maintain the same high standards

of safety awareness and no-blame

incident reporting.

Customers

We provided help and advice to our

customers to ensure that the delivery

and storage of their fuel was completed

to the highest safety standards possible.

Where necessary, our SHE team visited

customer sites to provide direct on-site

support in the assessment of risk and

implementation of appropriate safety,

health and environmental controls

around their fuel storage arrangements.

Greenergy Annual Report 2012

13

finanCial statements Chief finanCial

COrpOrate

COrpOrate

strategy in aCtiOn

market review

chief executive’s

Overview

OffiCer’s review

gOvernanCe

respOnsibility

review


14

CHIEF EXECUTIVE’S REVIEW

hEAlth

And sAfEtY

continUEd

We received a roSPA

Gold Award for safety

for our Immingham

biodiesel plant and a

roSPA silver award for

our storage terminal in

Plymouth. This recognises

our approach to safety

at these sites, our low

injury record and ongoing

safety initiatives.

Greenergy Annual Report 2012

sAfEtY REcoRd

Immingham biodiesel

production plant

The following figures are

based on the total staff

and contractor hours

worked at the facility.

This incorporates

contractor time spent

on the significant

development

projects at the site.

Plymouth

fuel terminal

The following figures

incorporate both staff

and contractor hours

worked at the terminal.

road haulage

Until april 2012 we operated

on a sub-contracted basis

a fleet of branded and

unbranded road tankers

to deliver fuel to our

customers. The following

figures relate to our

major sub-contractor.

This activity has since

been replaced by an

insource arrangement.

0

0

3.3

0

0

2.2

0.6

1.4

2.5

1.5

Reportable incident

(RIDDoR)*

lost time incident

(including RIDDoR and

oSHA reportable incidents)*

First aid injuries*

Reportable incident

(RIDDoR)*

lost time incident

(including RIDDoR and

oSHA reportable incidents)*

First aid injuries*

Reportable incident

(RIDDoR)*

lost time incident

(including RIDDoR and oSHA

reportable incidents)*

First aid injuries*

Damage only accident

(per million km)

*Incident rate per 100,000 hours worked 01 May 2011 – 30 april 2012

sERvicE

QUAlitY

indicAtoRs

99.03%

On-time deliveries

0Stock outs

Our aim is to create operational efficiencies and improved

supply reliability for our customers. To assess our efficiency

and the quality of the service we provide customers,

we monitor our performance in three key operational

areas and publish the results monthly on our website.

Our aim is to ensure that fuel

is available for our customers wherever

and whenever they need it. We measure

the reliability of our core haulage fleet

and the effectiveness of our in-house

scheduling team.

This year 99.03% of our deliveries

to commercial customers were

made on-time, compared with

99.2% in 2010/11.

Apr 12

Mar 12

Feb 12

Jan 12

Dec 11

Nov 11

Oct 11

Sep 11

Aug 11

Jul 11

Jun 11

May 11

Kpi 1:

on timE dElivERiEs

on time deliveries

99.20%

99.20%

98.90%

99.20%

98.60%

98.90%

98.78%

99.10%

98.94%

98.91%

If we are unable to make a delivery

at the agreed time, we liaise with

our customers to understand their

requirements, rescheduling routing

patterns real-time and making

‘part-load’ deliveries if required.

as a result of this policy there was

not a single case during the whole year

of a commercial customer stocking out

as a result of a delayed delivery.

99.11%

99.60%

98 99 100

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CHIEF EXECUTIVE’S REVIEW

sERvicE

QUAlitY

indicAtoRs

continUEd

99.69%

Invoice accuracy

Greenergy Annual Report 2012

Kpi 2:

invoicE AccURAcY

We monitor our invoice accuracy

as a measure of the quality of our IT

and back-office systems, as well as the

skills and understanding of our team.

Due to the nature of our business,

our invoicing process is necessarily

complex. Each invoice requires

consolidated and reconciled data on

the amount of fuel collected from the

terminal, amount of fuel delivered to the

customer, pricing structure and delivery

information. Many of these data feeds

are provided by external parties.

Getting our invoicing right therefore

requires accurate and effective

systems and expert staff.

Invoice accuracy

Apr 12

Mar 12

Feb 12

Jan 12

Dec 11

Nov 11

Oct 11

Sep 11

Aug 11

Jul 11

Jun 11

May 11

invoice accuracy

This year we put in place a process

excellence review to review our internal

controls and eliminate the human error

element of credit notes, focussing

on manual pricing errors. We also

began work to increase the proportion

of invoices that are automatically

generated, developing our IT in order

to move more customers onto our

automated invoicing system and further

improve the efficiency of our backoffice

processes.

The Board is pleased that, as a result

of these two initiatives, our invoice

accuracy averaged 99.7%, up from

99.2% in 2010/11. This means that this

year credit notes amounted to no more

than 0.4% of total invoices.

99.68%

99.63%

99.77%

99.68%

99.71%

99.77%

99.79%

99.70%

99.59%

99.57%

99.69%

99.69%

98 99 100

22.10 *

Loading times (mins)

*Vopak terminal Thames

In order to achieve operational

efficiency for our customers and for

ourselves, we seek to minimise delays

when collecting fuel from our terminals.

We monitor loading times at our five

principal supply locations and publish

the results on our website.

It typically takes about 15 minutes

to fill a 36,000 litre fuel tanker with

fuel. We consider 21 minutes to

be the shortest achievable target,

without creating time pressures which

may jeopardise health and safety

considerations. This allows six minutes

for queuing, driving in and out of the

terminal and authorising the lifting.

Apr 12

Mar 12

Feb 12

Jan 12

Dec 11

Nov 11

Oct 11

Sep 11

Aug 11

Jul 11

Jun 11

May 11

Kpi 3:

loAding timEs

loading time* (minutes)

19.98m

The management team pays

particular attention to our busiest site

on the Thames estuary. Here, loading

times averaged just over 22 minutes

during the year.

20.95m

20.93m

21.60m

21.51m

22.36m

22.12m

22.88m

22.58m

23.90m

23.74m

*Loading times, Thames 16terminal. 18 20 22 24 26

October 2012 – Delays due to an IT upgrade by a third party trading partner.

January and February 2012 – administration of Petroplus and closure of nearby Coryton refinery.

March 2012 – Panic buying due to threatened strike action.

24.46m

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CHIEF EXECUTIVE’S REVIEW

cAsE stUdY

mEEting sUddEn

incREAsE in dEmAnd

As an indicator of our operational resilience,

we measured our performance during the

period of panic buying which resulted from

the threat of national strike action by tanker

drivers in March/April 2012.

During this period we experienced

a 20% increase in sales compared with

the previous ten days. The Board is of

the view that the business coped well

with the additional operational demands

placed on it during this extremely

busy period.

20.02% *

Increase in sales volume

Annual average 9.5%

*Compared with the previous 10 days

99.81%

On-time deliveries*

Annual average 99.03%

*Core fleet deliveries

99.63%

Invoice accuracy

Annual average 99.69%

23.06

Loading time* (minutes)

Annual average* 22.10 minutes

*Vopak Thames terminal

mARKEt

REviEw

Greenergy Annual Report 2012 Greenergy Annual Report 2012 19

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MARKET REVIEW

chAngEs

in thE UK

downstREAm

oil sEctoR

This period has seen a number of

oil companies seek to exit the UK

market, by disposing of their refineries,

storage terminals, distribution and

retail infrastructure. Three UK oil

refineries were sold this year to

new market entrants, with one subject

to administration. These changes have

been driven by a combination of trends,

which the Board expects to continue:

» Contraction of UK road fuel

market has meant that some legacy

infrastructure assets have become

sub-critical and require restructuring

or closing. Either outcome is creating

opportunities for our own logistical

activities.

» Contraction is also leading to more

regionalisation of the UK market.

as national branded players focus

on their home regions, there are

opportunities for Greenergy to back

fill supply into the outer regions.

Greenergy Annual Report 2012

The UK downstream oil sector continues to undergo structural

change, with refineries, storage terminals and retail assets

all continuing to change hands or shut down. These changes

create continuous opportunities for Greenergy to participate

in new areas of business, increasing its role as provider of fuel,

infrastructure and supply chain management services in the UK.

» Increasing diesel demand relative

to petrol is creating an increasingly

structural diesel import requirement

in the UK market. The UK is

consuming more diesel and less

petrol over time, but refineries

are typically limited in the amount

of diesel they can produce relative

to petrol. This diesel import

requirement is positive for

Greenergy’s ship and import

based fuel distribution terminals.

» Narrowing of global refinery margins,

on the back of the new highly

competitive refineries being built

in asia, is boosting the competitive

advantage of oil import terminals

relative to oil refineries.

These changes and trends mean

that the legacy ‘closed’ supply chain

model, whereby oil companies refine

their own fuel and deliver it to their own

branded petrol stations, is increasingly

rare. a more ‘open’ supply chain

arrangement is replacing it, in which

Number of operating UK refineries

20

18

16

14

12

10

8

6

4

2

UK refinery closures

fuel retailers are increasingly buying

their fuel freely and outsourcing their

fuel logistics to a midstream specialist

such as Greenergy.

This open supply chain environment

creates transparency of cost and

service level. The Board believes

this to be beneficial to Greenergy

as a low cost provider of fuel focussed

on efficiency and service quality.

1972 1983 1993 2003 2012

gREEnERgY - A lEAding

fUEl mAnUfActURER

We manufacture fuel, importing fuel raw

materials from around the world to our UK

manufacturing facilities to produce petrol,

diesel and biofuel. We do not refine crude oil,

and are not subject to the same global margin

pressures as european refiners.

Our import model offers the following benefits:

flExiBlE BlEnding And

tAnKAgE infRAstRUctURE

We are able to switch between petrol and diesel

production to meet the changing requirements

of our customer base.

flExiBilitY ovER RAw mAtERiAls

We purchase fuel raw materials globally, typically

handling about 20 fuel and biofuel raw materials

at any one time. We can vary our purchasing and

switch between raw materials according to their

price and physical characteristics.

stAtE of thE ARt tEchnologY

Real-time 24/7 manufacturing and stock

control systems.

Greenergy Annual Report 2012

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MARKET REVIEW

UK fUEl

mARKEt

UK RoAd fUEl

mARKEt sUmmARY

The Board expects these trends

to broadly continue.

A declining market overall

The volume of road fuel sold

in the UK fell by 1.5% this year,

affected by improvements in

vehicle efficiency, higher oil prices

and slower economic growth.

Improvements

in vehicle efficiency

The fuel efficiency of new cars

continued to improve, contributing

to reduced demand for fuel. In 2011

the average emissions of new cars

was 17.4% lower than in 2006.

Dieselisation of the market

Within the overall 1.5% volume

decline in the market, diesel

consumption increased by 1.1%

compared with 2010/11, while petrol

consumption declined by 4.7%.

Growth in supermarket sales

The supermarkets’ share of overall

retail petrol and diesel sales has

grown by more than 20% over

the last five years, reaching

38.4% in 2011.

Greenergy Annual Report 2012

190

180

170

160

150

140

130

40

38

36

34

32

30

28

This year has seen continuing decline in the UK road fuel

market, affected by improvements in vehicle efficiency,

increased consumption of more efficient diesel relative

to petrol, high oil prices and weak economic growth.

The market share of the supermarket sector has also

continued to grow.

Billion litres

(billion litres)

Average C02g/km

% Market share

50

48

46

44

42

40

2006/7 2007/8 2008/9 2009/10 2010/11 2011/12

27

25

23

21

19

17

189.8

UK total road

fuel sales

1997 1999 2001 2003 2005 2007 2009 2011

15

2006/7 2007/8 2008/9 2009/10 2010/11 2011/12

31.1%

37.4%

188.4

31.5%

185

29.4%

181

36.3%

177.6

34.2%

174.2

28.6%

35.6%

172.1

169.4

1m 2m

35.8%

171.4

2006 2007 2008 2009 2010 2011

28.6%

35.4%

167.2

36%

164.9

28.9%

158

33.7%

37.4%

149.5

*Financial year ended 14 april 2012

144.2

138.1

*2011 calendar year. Source: SMMT

Diesel

Petrol

*Financial year ended 14 april 2012

28.3%

33.3%

38.4%

Average Co 2

emissions

Company

Dealer

Supermarket

*2011 calendar year Source: Forecourt Trader review

pEtRol

mAnUfActURing

mARgins

We make a margin from

petrol manufacturing when

we are able to purchase the

raw materials for less than the

price of the produced petrol.

Like other commodities,

the price of the raw materials

fluctuates relative to petrol,

and the contribution of

petrol manufacturing to

Group profits therefore

varies significantly from

year to year. This year

the contribution of petrol

manufacturing margins

was particularly strong.

Petrol manufacturing margins showed a strong

improvement during the year, as predicted,

and were an important source of profit.

One of the main raw materials we

use to manufacture petrol is naphtha.

This year, the price of naphtha fell

relative to petrol, making it a cheaper

component than at any time in the past

five years. The largest use of naphtha

worldwide is as a petrochemical raw

material, but other raw materials are

increasingly available, notably natural

gas in the new Middle East chemical

plants plus a new, large supply of

gas condensates as a by-product

of shale gas ‘fracking’ in the US.

These have offset global naphtha

demand somewhat and contributed

to lower naphtha prices.

The outlook for the next twelve

months is for relatively cheap naphtha

to continue to support our petrol

manufacturing margins.

Greenergy Annual Report 2012

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MARKET REVIEW

oil And

BiofUEl pRicE

movEmEnts

Biofuel is typically more

expensive than petrol

and diesel but this

year bioethanol prices

fell relative to petrol,

positively affecting

gross margin. However,

bioethanol prices are

expected to rise above

petrol in the next

financial year.

Greenergy Annual Report 2012

The cost of meeting our biofuel supply obligation

is dictated by the spread between the price of biofuel

and its petrol and diesel equivalent.

Oil

Oil prices this financial year averaged

$114/barrel, up from $89 in 2010-11.

a new UK oil price record was set in

March 2012, when Brent Crude futures

passed £80/barrel for the first time.

The price in dollars reached $128/barrel,

well below the £147.50 peak of July

2008, but in sterling, with an exchange

rate then of £1 =$1.99, the previous peak

was only £74.50/barrel.

In dollar terms, oil prices finished our

financial year virtually unchanged from

12 months earlier. at that time Libya

was the main story keeping prices

firm; this year a key factor has been

concerns over the situation in Iran and

Syria. In between, prices weakened

throughout the summer falling to

$100/barrel four times between July

and December.

We used comprehensive internal control

processes and tightly managed hedging

mechanisms to manage this price

volatility. More on managing our

risks on page 56.

$/TE

1600.00

1400.00

1200.00

1000.00

800.00

600.00

400.00

200.00

diesel vs. biodiesel prices ($/cbm)

Biofuel

Biofuel prices generally fell during the

year following downward agricultural

commodity prices.

Prices for sugar and corn, the raw

materials used for most for the world’s

ethanol, fell by 20% over the past 12

months, and for the period between

January 2012 and april 2012 bioethanol

was cheaper than petrol in Brazil,

the US and Europe. This contributed

positively to petrol manufacturing

margins – more on page 23.

However, vegetable oil prices were

stable during the year and biodiesel

remained more expensive than

diesel. Its use was therefore driven

by regulatory incentives.

Biodiesel

Diesel

0.00

JAN 10 MAY 10 SEP 10 JAN 11 MAY 11 SEP 11 JAN 12 MAY 12

how doEs oil pRicE volAtilitY

AffEct oUR BUsinEss?

Our business was largely unaffected by the oil price

volatility seen this year. There are a number of reasons:

1. Our customer pricing is related to spot market

prices. So if oil prices go up, or down, the effect

is automatically passed on through higher or lower

prices to our customers.

2. Through effective use of hedging mechanisms,

we eliminated our exposure both to oil price

movements and to currency fluctuations.

3. We were successful in extending the amount of open

credit offered by our trading partners - a reflection

of the confidence that our trading counterparties

have in our business. Trading on open credit

mitigates our requirement for banking facilities,

which would otherwise have increased due

to oil price rises.

Detailed information on our management of oil

price and currency risk is provided under managing

our risks on page 56.

Greenergy Annual Report 2012

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MARKET REVIEW

lEgislAtivE

And fiscAl

EnviRonmEnt

UK biofuel duty incentives

This year in the UK there was a duty

incentive for biodiesel made from

used cooking oil which expired

on 31 March 2012. It was replaced

by ‘double counting’ incentives

under the renewable Energy

Directive, effective in the UK

from 15 December 2011.

These incentives made used cooking

oil biodiesel the lowest cost way of

meeting our biofuel supply obligation,

particularly during the 3.5 month period

when the two incentives overlapped.

Therefore we took extensive measures

across the business to increase our

use of biodiesel made from used

cooking oil. More on low carbon

fuels on page 41.

UK implementation of the

renewable energy Directive

The renewable Energy Directive (rED)

was finally implemented in the UK on

15 December 2011, after several delays,

by amendment to the existing rTFO.

Under the UK’s implementation of the

Directive, oil companies are required

to include biofuel in the road transport

fuel they supply at a percentage which

increases from 4% in 2011/12 to 4.5%

in 2012/13 and 5% in 2013/14, and

a penalty is imposed if this supply

obligation is not met. Like the previous

rTFO, the system allows suppliers

who use more biofuel than their

obligated amount to sell renewable

Transport Fuel Certificates (rTFCs)

to other suppliers.

Greenergy Annual Report 2012

This year saw further change in biofuel regulation in the

UK with the implementation of the renewable Energy Directive.

In the US, demand for traceable biofuel took off this year

following the adoption of the renewable Fuel Standard

to increase the use of renewable fuels.

For the first time, the Directive also

enforces minimum carbon and land

use criteria for biofuel and stipulates

that only those biofuels that meet

the minimum criteria count towards

suppliers’ biofuel obligations.

Importantly, it also rewards wastebased

biofuels with ‘double counting’,

awarding them two rFTCs while a

crop-based biofuel generates only one.

This allowed us to generate additional

rTFCs during the final four months

of the year.

The Board considers the business

to have prepared effectively for the

introduction of mandatory sustainability

requirements, with extensive control

processes in place across the business.

99% of the biofuel we supplied this

year complied fully with the rED

requirements, even though the Directive

did not come into effect in the UK until

December. This gives us the potential

to use rTFCs generated before the

implementation of rED to meet our

own, or our customers’, biofuel supply

obligations next year.

US biofuel regulation and the

Greenergy rIn Integrity Standard

In 2010 the US Environmental

Protection agency developed the

US renewable Fuel Standard (rFS2)

to increase the use of renewable fuels

in the US. This requires producers and

importers to track the amount and type

of biofuel being produced, imported

and used in the USa, using a highly

complex system known as rINs.

In order to meet the needs of the

marketplace, we developed this

year a new rIN integrity standard

that ensures that each batch of biofuel

moving to and from Greenergy comes

from an audited source. This provides

a level of assurance which is rare in the

US market.

The Board is of the view that our

ability to supply biofuel meeting our

rIN integrity standard will create new

sales opportunities within the US and

strengthen our relationships with oil

companies in that market.

stRAtEgY

in Action

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STRATEGY IN ACTION

stRAtEgY

in Action

OUr MISSIOn

Deliver long-term customer

partnerships by being the

fuel and infrastructure

provider with the:

» Lowest cost.

» Highest reliability.

» Best systems and control.

» easiest people to deal with.

» Most transparency

on sustainability.

Greenergy Annual Report 2012

Our business is the manufacturing and distribution of petrol

and diesel to oil companies, supermarkets, fuel resellers and

fleet users. Our strategy is to continue to grow our business

through long-term customer partnerships that deliver

efficiency, reliability and cost benefits.

Strategic objectives

This year the Board considered

a broad range of opportunities to grow

the business both domestically and

internationally. In responding to such

opportunities, the Board draws on

the company’s:

» Depth of understanding of the

fuel and biofuel sectors.

» appreciation of the value each

opportunity has for the business.

» ability to respond quickly

and effectively to changing

circumstances, whether related

to raw material prices, infrastructure

purchase opportunities, legislation

or market competition.

This year saw continued structural

change in the downstream oil sector

in the UK, presenting opportunities

for further sales growth, infrastructure

development and service provision

in the UK. We also began further

international expansion, with sales of

sustainable biofuel in the US creating

new supply relationships in that market.

The Board’s priorities are as follows:

» Focus sales on long-term retailrelated

contracts that include the

provision of haulage and other

services to petrol stations, where

Greenergy has particular expertise.

» Minimise our cost of product by

purchasing globally, manufacturing

our own fuel and developing further

expertise in waste-derived biofuels.

» Improve our productivity by

purchasing out of date third party

supply chain assets, such as terminals

and distribution facilities, with

the objective of modernising and

reconfiguring them to suit current

market needs.

» automate our business processes

to create efficiencies and cost

reduction and to prepare for

expansion into new areas.

» Consider opportunities for expansion

into new markets and territories with

potential for long-term growth.

access to additional capital may

be required to fully exploit these

opportunities, and therefore the

Board will continue to consider

various capital options.

Planned developments in the next

financial year:

» Further IT development to implement

our business processes efficiently

and create a single ‘refinery to car’

control platform.

» Increased sales to independent fuel

retailers, a new target sales sector.

» Ongoing consideration, as a

purchaser, of infrastructure assets

within the UK market.

» Expansion of our physical supply

presence in North america.

» Use of lower grade and lower cost

waste oils for biodiesel production.

oUR stRAtEgic

oBjEctivEs

01 cUstomERs,

pRodUcts And sERvicEs

Create operational efficiencies and

improved supply reliability for our

customers. More on page 30.

02 mAnUfActURing

And pURchAsing

Reduce our cost of product through

global purchasing and use of waste

as a fuel feedstock. More on page 33.

03 infRAstRUctURE

invEstmEnts

Invest in modern and safe distribution

terminals with exceptional levels of

production control, stock availability,

speed and capacity utilisation.

More on page 36.

04 infoRmAtion

tEchnologY

Develop unique intellectual

property through integrated It.

More on page 38.

05 low

cARBon fUEls

Achieve global leadership on low

carbon fuels and the sustainable

use of natural resources.

More on page 41.

Key developments this year:

» Continued organic sales growth in the uK,

with 9.4% increase in sales volume.

» 85% of the fuel we delivered included

a service package.

» provision of logistics services without fuel supply.

» Development of the Flexigrid service brand.

» employment of drivers within Greenergy Flexigrid,

replacing previous outsource arrangement.

Key developments this year:

» Strong petrol manufacturing margins

enhancing Group revenue.

» Increase in the amount of petrol manufactured.

» Increased production of waste based biodiesel,

allowing us to take full advantage of fiscal and

regulatory incentives and reduce our diesel costs.

Key developments this year:

» Completion of fuel manufacturing facilities

in teesside.

» opening of our new storage facility in Cardiff.

» use of rail freight to move fuel between

terminals for the first time.

» Construction of a new biodiesel

pre-processing facility.

Key developments this year:

» Completion of advanced business mapping

process with IBM.

» Commencement of process-derived It

development to support future growth

and new business functions.

Key developments this year:

» effective and early preparation allowing us to take

maximum advantage of overlapping regulatory

and fiscal incentives for waste-based biofuel.

» Supply of biofuel between europe, South and north

America reflecting price and regulatory differences.

Greenergy Annual Report 2012

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STRATEGY IN ACTION

01

cUstomERs,

pRodUcts

And sERvicEs

STrATeGIC AIM

Create operational

efficiencies and improved

supply reliability for

our customers.

Key developments this year:

» Continued organic sales

growth with 10.4% increase

in sales volume.

» 85% of the fuel we delivered

included a service package.

» Provision of logistics services

without fuel supply.

» Development of the Flexigrid

service brand.

» employment of drivers

within Greenergy Flexigrid,

replacing previous outsource

arrangement.

Greenergy Annual Report 2012

Customers

We continued to supply our existing

customer base comprising major oil

companies and supermarkets as well

as fuel resellers and fleet users such

as bus and logistics companies.

Towards the end of the year we

began targeting sales to independent

fuel retailers, being forecourts not

owned by major oil companies or

supermarkets. This is a new sales

sector for us, which the Board believes

will grow in importance as major oil

companies dispose of their retail assets

in the UK and independent retailers

seek new supply partners.

We continued to develop our domestic

oil industry commercial relationships,

with contracts in place for purchase

or sale with all of the major oil groups

present in the UK market. This has

enhanced our ability to supply fuel

in key locations and helped us become

the only completely national fuel

supplier in Britain. Our oil major sales

grew from 9.5% of total sales last year

to 19.5% this year.

71%

2%

customers 2011/12

Supermarkets

Major oil

companies

3%

Haulage

companies

Bus

other

5%

19%

Petrol, diesel and biofuel sales

Petrol and diesel sales increased

as we expanded the volume of our

business with existing customers

and attracted new customers in

new terminal locations. The following

factors were of note:

» Completion of our fuel blending

facilities in Teesside in July 2011,

which reduced our product costs and

allowed us to compete effectively for

new business in the region.

» The interruption of supply from the

Petroplus refinery at Coryton and

the closure of its Teesside terminal.

» award of new long-term sales

contracts for petrol and diesel from

our new storage terminal at Cardiff,

which began commercial operation

in January 2012. These will contribute

to sales growth during the next

financial year.

We also made biodiesel and bioethanol

sales in the UK and sold renewable

Transport Fuel Certificates to other

oil companies to allow them to meet

their biofuel supply obligations.

Internationally, we supplied biofuel

into the US and Brazil. More on low

carbon fuels on page 41.

48%

products 2011/12

petrol

Diesel

Biofuels

2%

50%

flExigRid

pUll oUt Box to go

hERE

‘‘ The Board considers the company’s service

provision to be of strategic importance.

enhanced intellectual property, delivering

operational efficiency and high levels of

service reliability, provides a competitive

advantage over local and global competitors

and, being transferable between markets, gives

opportunities for international expansion.

‘‘

flExigRid – A nEw

sERvicE BRAnd

we have developed a new service brand called flexigrid to

combine our infrastructure, information technology and logistics

operations with new services we are providing to retail service

stations, such as the management of fuel stocks.

By year end, the majority of our haulage fleet carried the

flexigrid brand. this allows us to separate service provision

from fuel manufacturing and supply.

in a move away from our previous outsource arrangement,

we now employ a team of drivers to drive the flexigrid and

greenergy haulage fleets. with our own motivated workforce,

the Board expects to be able to further improve the quality

of service we provide to our customers.

Greenergy Annual Report 2012

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STRATEGY IN ACTION

01

cUstomERs,

pRodUcts

And sERvicEs

continUEd

We continue to expand

the services we provide

to help our customers

achieve operational and

supply chain efficiencies.

Greenergy Annual Report 2012

stocK mAnAgEmEnt And oRdER gEnERAtion

Using telemetry solutions, we recorded stock levels

at customers’ sites and automatically generated orders

to maintain target stock levels. 85% of the fuel we

delivered included this service package.

hAUlAgE

We used a fleet of more than 100 petrol tankers to make

120,000 fuel deliveries to our customers’ sites during the

year, scheduling deliveries to achieve maximum reliability

and efficiencies and adjusting delivery patterns in real-time

to respond to changing requirements.

Using our Flexigrid branded fleet, we are now providing

haulage services even when the customer has their own

source of fuel supply.

stoRAgE And sUpplY

We supplied fuel from 24 terminals across the UK to minimise

transport distances and offer a national supply platform.

In key locations we operated from two or more terminals

to provide maximum supply security.

infoRmAtion tEchnologY

Our IT capability is essential to the delivery of increasingly

complex supply contracts. During the year we undertook

a programme of investments in IT systems to further

automate our business processes, implement efficiencies

and make life easier for our customers. More on information

technology on page 38.

02

mAnUfActURing

And pURchAsing

STrATeGIC AIM

reduce our cost of

product through global

purchasing and use of

waste as a fuel feedstock.

Key developments this year:

» Strong petrol manufacturing

margins enhancing

Group revenue.

» Increase in volume

of petrol manufactured.

» Increased production

of waste based biodiesel,

allowing us to take full

advantage of fiscal and

regulatory incentives and

reduce our diesel costs.

Global purchasing

Our raw materials are sourced from

around the world and transported

by ship to our manufacturing and

storage facilities in the UK. We are

always flexible in our purchasing and

continually adapt our supply chain

to the best available option globally.

This year we typically handled more

than 20 different fuel and biofuel

raw materials at any one time and

during the year sourced from 35

different countries.

Our purchasing required complex stock

management and shipping operations

as we balanced our international supply

chain with our UK storage capacity and

supply requirements. Wherever possible

we sought to minimise our shipping

costs by using larger ships to carry

a number of different fuel products.

23% of our fuel was transported

on vessels carrying more than

20,000 tonnes.

Our overseas offices continued to play

an important role in minimising our

biofuel product costs and maintaining

close relationships with international

suppliers capable of meeting our

European and US sustainability

requirements. More on low carbon

fuels on page 41.

As our thames and teesside manufacturing sites are fuel blending

facilities rather than traditional oil refineries, we have flexibility to:

» Switch between different raw materials according to availability

and price.

» Alter the balance between fuel grades (petrol, diesel,

super-unleaded) in response to changing patterns of demand

and customer requirements.

As a result we are able to make a margin from petrol manufacturing

at a time when some refiners are facing financial pressures.

More on changes in the uK downstream oil sector on page 20.

Petrol and diesel manufacturing

We manufactured petrol at our facilities

on the Thames estuary and, from July

2011, at Teesside. By manufacturing our

own petrol, we were able to:

» Minimise our petrol costs.

» Control the quality of our

supply chain and create a fully

independent and ISO 9001

accredited supply chain.

» Supply bespoke grades of

petrol to meet individual

customer requirements.

Petrol manufacturing margins

were strong this year and our ability

to manufacture our own fuel at

two locations was an important

contributor to Group profits.

There were also opportunities

to reduce our diesel costs by blending

different grades of diesel from around

the world to produce diesel meeting

the UK quality specification.

We combined our diesel imports

with our other purchasing in order

to minimise shipping costs and gain

an early mover advantage.

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STRATEGY IN ACTION

02

mAnUfActURing

And pURchAsing

continUEd

Manufacturing biofuel

from wastes

This year we increased production

of waste-derived biodiesel at our

manufacturing facility at Immingham,

having gained further useful experience

in processing waste oils and fats.

This allowed us to:

» Maximise the amount of used

cooking oil biodiesel that we blended

into our diesel in order to take full

advantage of Government fiscal

and regulatory incentives.

» Minimise our biodiesel, and

therefore our diesel costs.

Our key successes this year were:

» Increasing yield. average yield levels

at our biodiesel manufacturing

facility increased by 3% by the close

of the year. This was achieved firstly

by improving the efficiency

of the conversion process

from oil to biodiesel and also by

reprocessing oils recovered from

waste streams from the biodiesel

manufacturing process.

Greenergy Annual Report 2012

» Improving reliability. With our

greater experience in processing

waste oils, we were able this year

to implement a new programme

of preventative maintenance, using

continuous monitoring to identify

problems before they occurred.

By the end of this year we had

reduced downtime by 53% compared

with the previous year average.

We will work to maintain reliability

at these levels by continuing our

preventative maintenance and

monitoring programmes.

» Cutting waste. This year we reduced

the amount of aqueous matter

produced from the biodiesel

manufacturing process by re-using

waste water and also by removing

oils and fats for reprocessing.

The amount of aqueous matter

taken off site fell by 49% between

quarter 1 and quarter 4. This reduced

our waste disposal costs and gave

environmental benefits.

» Implementing a new programme

of cost reduction across all areas

of the biodiesel production process.

Biodiesel from solid food waste

We continued to produce biodiesel

from high fat solid foods such as pies,

sausage rolls, pastry and crisps, using

foods which are misshapen, overcooked

or past their sell by date. We have been

extracting the oils and fats from solid

foods for processing into biodiesel

at our Immingham facility. Biodiesel

produced in this way qualifies for

incentives for waste-based biofuel

under the renewable Energy Directive.

The Board will continue to review

the scaling up of this operation.

Volume

Biodiesel plant production

1 May 2011 - 30 april 2012

May 11 Aug 11 Oct 11 Dec 11 Feb 12 Apr 12

Biodiesel plant yield

1 May 2011 - 30 april 2012

Overall yield %

Biodiesel yield %

May 11 Aug 11 Oct 11 Dec 11 Feb 12 Apr 12

Greenergy Annual Report 2012

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STRATEGY IN ACTION

03

infRAstRUctURE

invEstmEnts

STrATeGIC AIM

Invest in modern and safe

distribution terminals

with exceptional levels

of production control,

stock availability, speed

and capacity utilisation.

Key developments this year:

» Completion of fuel

manufacturing facilities

in Teesside.

» Opening of our new storage

facility in Cardiff.

» Use of rail freight to move

fuel between terminals for

the first time.

» Construction of a new

biodiesel pre-processing

facility.

Greenergy Annual Report 2012

Fuel manufacturing in Teesside

In July 2011 we completed work on

an advanced fuel manufacturing and

storage facility in Teesside in the north

of England. This gives us a second

petrol and diesel manufacturing

facility in the UK and has allowed us

to increase the amount of petrol that

we manufacture ourselves.

The project had previously been

affected by mechanical and engineering

delays, impacting our ability to make

manufacturing margins and win new

business in the 2010-11 financial year.

With completion of works in July 2011,

we were able to commence petrol and

diesel manufacturing at the terminal,

reducing our cost of product and

enabling us to win new business

in the region.

new storage in Cardiff

We commenced sales from our new

fuel storage and distribution facilities

in Cardiff in January 2012. This followed

completion of an 18 month project to

construct new storage tanks, refurbish

existing tanks and build new road

loading facilities. With this new supply

base, we have won new long-term sales

in the South Wales region.

Use of rail freight

In January 2012 we began using rail

freight to move fuel between terminals,

replacing the use of trucks and ships to

improve productivity. Use of rail allows

us to make smaller, but more frequent

deliveries than would be economic by

ship, and in Cardiff is expected to allow

us to operate with higher throughput

and capacity utilisation than would

otherwise be possible.

A new facility to pre-process

waste oils and fats

In order to increase our production

of waste-derived biodiesel,

we commenced construction of

a new biodiesel pre-processing facility

in the Humberside area. This is the only

facility of its kind and scale in the UK.

The facility is intended to pre-process

low grade oils and fats before they

enter our biodiesel production facility

at Immingham and:

» Give us the ability to convert a

broader variety of waste oils into

biodiesel, including low grade and

lower cost waste oils that we would

otherwise be unable to use.

» Increase the efficiency of our

biodiesel manufacturing, allowing

us to further improve throughput

and yield at our Immingham facility.

The pre-processing facility is being built

as a joint venture with Brocklesby Ltd.

Construction work began in November

2011 and is expected to be completed

in summer 2012.

A second import terminal

on the Thames

after year end, on 26 June 2012,

we reached agreement with the joint

administrators of Petroplus refining

and Marketing Ltd to purchase assets

of the former Coryton refinery under

a joint venture with royal Vopak and

Shell UK Ltd. The parties intend to

develop a state of the art import

and distribution terminal at the site.

The facility will be the only import

terminal in the UK to have a deep water

jetty, giving us the ability to import the

largest product tankers from the most

modern and efficient refineries around

the world. access to the mainstream

world markets represents a step change

for us, improving our ability to source

competitively priced product and

increasing supply resilience.

We have continued to make capital investments

at critical locations where we can increase our

productivity and improve the resilience of

our supply to customers.

This year we completed work on a manufacturing

facility in Teesside and a rail-fed storage facility

in Cardiff. These investments will reduce our

product costs and give us greater control over

product availability.

Greenergy Annual Report 2012

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STRATEGY IN ACTION

04

infoRmAtion

tEchnologY

STrATeGIC AIM

Develop unique

intellectual property

through integrated IT.

Key developments this year:

» Completion of advanced

business mapping process

with IBM.

» Commencement of processderived

IT development to

support future growth and

new business functions.

Greenergy Annual Report 2012

as we continue to expand our business,

for example to take on new functions

on behalf of our customers, we want

to be able to automate new processes

seamlessly and quickly. Our unique IT

concepts, developed over many years

of experience, enable us to do this in

a scalable and secure manner.

IT development strategy

This year we completed Business

Process Mapping of our entire

operations, giving us nearly 160

process maps and an activity by

activity documented understanding

of what we do. This visibility has

determined our IT development

strategy which will be implemented

over the next year.

Some of our new functionality is being

developed in-house, and some is being

implemented through well established,

but configurable applications.

Combined with a major development

of middleware, these systems will

integrate into a single, contiguous

‘refinery to car’ control platform that

is optimised, real-time and meets our

customer-specific business needs.

This approach is unique in the industry.

It will give us enhanced flexibility,

capability and efficiency and will allow

us both to develop new activities in the

future and to further improve what we

do today. Financial reporting timelines

will also be compressed to ‘on demand’.

Hardware expansion

We have continued to expand our

hardware in order to deliver a stable,

secure environment with 24/7

uptime for our customers and

other stakeholders.

During the year we completed the

consolidation of new, state of the

art data centres.

Business continuity

We ran several successful Disaster

recovery exercises during the year

to test the resilience of our IT systems

and Business Continuity plans. We also

made preparations for out-of-office

operations to cover interruption to staff

travel resulting from the Olympic games

in London in august 2012.

We plan to run similar exercises

on a more extensive basis next year.

We are part way through a major three year project

to automate our business processes within a single

IT platform. Our aim is to:

» Create new efficiencies within our business

and reduce our costs.

» prepare for expansion into new business areas.

» Create secure customer and supplier access portals.

£4.6 million was committed to this project this year.

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STRATEGY IN ACTION

04

infoRmAtion

tEchnologY

continUEd

Using it within

oUR BUsinEss

Greenergy Annual Report 2012

pURchAsing

The value and arrival

date of product at sea are

monitored continuously

for risk and stock

management purposes.

mAnUfActURing

And stoRAgE

In-tank telemetry

records information

about products stored

in our terminal facilities.

pRocEss EfficiEncY

We use IT across our business to implement our processes

efficiently and with high levels of reliability and control.

distRiBUtion

Volume of fuel loaded

into the different

compartments of a road

tanker is collected for

our customer invoicing.

schEdUling

Truck follows an optimised

routing developed by our

IT system and perfected

by our scheduling team.

hAUlAgE

Tracks the truck to the

delivery site and allows

real-time scheduling

decisions. also provides

a second record of fuel

volumes on board

for reconciliation purposes.

intEgRAtEd it plAtfoRm

sUpplY chAin optimisAtion

cUstomERs

Telemetry records

levels of product

in tanks at customer

sites to automatically

generate orders.

invoicing

Data reconciliation systems

are used to generate

invoices automatically.

RisK mAnAgEmEnt

05

low cARBon

fUEls

STrATeGIC AIM

Achieve global leadership

on low carbon fuels and

the sustainable use of

natural resources.

Key developments this year:

» effective and early

preparation allowing us

to take maximum advantage

of overlapping regulatory

and fiscal incentives for

waste-based biofuel.

» Supply of biofuel between

europe, South and north

America reflecting price

and regulatory differences.

Using waste–based biofuel

Fiscal and legislative incentives made

used cooking oil biodiesel the lowest

cost way of meeting our biofuel supply

obligation this year. More in legislative

and fiscal environment on page 26.

We took extensive measures across

the business to increase our use

of this form of biodiesel:

» Making further improvements to

our biodiesel manufacturing facility

in order to improve the efficiency

of our waste oil processing – more

on manufacturing on page 33.

» Building a pre-processing plant

to allow us to convert a broader

variety of waste oils into biodiesel,

including low grade and lower

cost waste oils that we would

otherwise be unable to use -

more on infrastructure investments

on page 36.

» Sourcing waste oils globally,

including through our office

in the USa.

» Global purchasing of biodiesel made

from used cooking oil, to supplement

our own UK manufacturing.

» Establishing and auditing supply

chain traceability systems for

suppliers across five continents,

to demonstrate that the oil we were

using met waste classifications.

The Board is pleased that, as a

result of these preparations, 99.5%

of the biodiesel we supplied this

year benefitted from fiscal or

regulatory incentives.

Investigating the commercial

viability of biofuel from algae

We continue to investigate alternative

sources of biofuel raw materials.

This year we processed a small amount

of algal product at our biodiesel

manufacturing facility at Immingham

in order to test its physical suitability

as a biodiesel feedstock as well as

its commercial viability.

although we are now confident that

production of biodiesel algae at our

Immingham facility is technically viable,

the high costs of algal product currently

make this uneconomic. We are working

with various suppliers to find ways

of reducing the cost of algal product.

Using our expertise in

biofuel sustainability to create

international supply opportunities

This year we implemented a new

biofuel traceability standard for biofuel

supply in the USa, opening up new

opportunities in this market. More

in legislative and fiscal environment

on page 26.

In Europe, our sustainability programme

for Brazilian bioethanol was approved

by the European Commission in July

2011 as one of the first voluntary

schemes under the EU renewable

Energy Directive. This will allow us

to sell Brazilian bioethanol throughout

the EU when it is economic to do so,

automatically meeting the sustainability

rules of the different EU countries.

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STRATEGY IN ACTION

05

low cARBon

fUEls

continUEd

gREEnERgY

fUEls, UK

Greenergy Annual Report 2012

USA

» Biofuel requirement to fulfil

our UK supply obligations and

generate renewable Transport

Fuel Certificates for sale to

other oil companies.

» relationships with other

oil companies obligated

to supply biofuel in the UK

and European markets.

» relationships with global

producers.

» Understanding of the value

of sustainable biofuel

in all three continents.

» Skills and team to implement

sustainability and traceability

systems in global supply chains.

With local relationships in Brazil, the US and Europe,

we are able to buy and sell biofuel in all three continents

and take advantage of regulatory and price differences

in these markets.

BRAZIL

gREEnERgY

BRAsil

UK/EUROPE

» Strong relationships

with Brazilian producers.

» Long-term purchase contracts

for Brazilian bioethanol.

» Significant prior engagement

with mills on sustainability.

» Storage facilities at import

and export locations.

» relationships with Brazilian

inland distributors.

gREEnERgY

UsA

» relationships with producers

and feedstock suppliers

to source biofuel locally

and to implement supply

chain traceability.

» relationships with distributors

and oil companies obligated to

supply biofuel in the US market.

» Development of an industryleading

rIN standard to

demonstrate compliance

with US renewable fuel

obligations – more on page 26.

» East and Gulf coast

storage facilities.

coRpoRAtE

REsponsiBilitY

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CORPORATE RESPONSIBILITY

BiofUEl

sUstAinABilitY

Greenergy Annual Report 2012

Biofuels represented 8% of our sales this year.

Even so, the biofuel used in Greenergy’s petrol and diesel

accounted for over a quarter of the biofuel used in the

UK during the year. This is a responsibility that the Board

continues to take seriously.

As a major road transport fuel provider, we see biofuels

as the only immediate, economically viable option to cut

transport-related greenhouse gas emissions in the UK.

We have worked to ensure that we only supply biofuels

that use the world’s resources appropriately.

We appreciate that the production of biofuel crops has

the potential for environmental and social impact and

requires land and water that could have alternative uses.

Therefore we have a company-wide commitment to:

» Maximise the carbon savings from the biofuels we choose,

so the carbon footprint of our fuels is as low as possible.

» Use biofuels made from wastes wherever possible,

to minimise the demands that our biofuels place

on the world’s resources.

» ensure that any crops used in our biofuels

are produced in a sustainable way.

» Provide total transparency on the source

and impact of our biofuels.

sUstAinABilitY

oBjEctivEs

cARBon sAvings

fRom BiofUEl

Achieve at least 70% carbon saving

from our biofuel. At double the

level required under the Renewable

energy Directive, this is a highly

ambitious target.

BiofUEl fRom wAstE

Minimise the land use impacts and

improve the emissions savings of our

biofuel by choosing biofuels made

from wastes wherever possible.

lAnd UsE chAngE

And BiodivERsitY

prepare for the introduction of

mandatory sustainability standards

under the Renewable energy Directive

on 15 December 2011.

disclosURE

Make available detailed information

about the biofuels we supply,

so stakeholders can understand

the impact of our biofuel usage and

our biofuel sustainability programme.

Key developments this year:

» Average carbon saving of 69.7% for biofuel

blended into own petrol and diesel.

» Average saving of 66.3% including biofuel

supplied to other oil companies and third

parties for their own blending.

» With use of Brazilian bioethanol in europe

uneconomic this year, the development of strong

cooperative relationships with best-in-class

uS corn producers giving carbon savings

averaging 48%.

» More on carbon emissions on page 46.

Key developments this year:

» 99.6% biodiesel from waste, up from 84%

in 2010/11 and 38% in 2009/10.

» Continued investment in waste-based biodiesel

production – more under manufacturing

on page 33.

» Global sourcing of waste oils and waste based

biodiesel to minimise product costs.

» Work with waste collectors to Implement

traceability and verification systems for waste

oils across global supply chains.

Key developments this year:

» obtained verifiable evidence on the origin and

sustainability impact of more than 300 million

litres of biofuel.

» 99% of the biofuel we supplied this period

met the european sustainability criteria for

biofuels, including provisions on carbon,

land use and biodiversity.

Key developments this year:

» provided monthly updates on our website

on the origin of our biofuel and on the carbon

savings achieved.

» Mapping of our agricultural supply chain on the

BioCarbon tracker carbon and carbon-at-risk

maps, in order to show the proximity of our

suppliers to carbon reserves.

» Displayed basic sustainability information for

each supplier on BioCarbon tracker – more

at www.biocarbontracker.com

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CORPORATE RESPONSIBILITY

cARBon

Emissions

cARBon Emissions fRom

oUR mAnUfActURing, stoRAgE

And hAUlAgE opERAtions

Carbon emissions

from business

operations

Greenergy Annual Report 2012

We commissioned an independent study of the

greenhouse gas emissions produced and saved

as a result of our activities during this financial year.

Tonnes of CO 2

equivalent

(tCO2e) 2011/12

Tonnes of CO 2

equivalent

(tCO2e) 2010/11

HAULAGe + 18,326 + 17,952

BIODIeSeL

PLAnT + 22,308 + 12,929

FUeL STOrAGe,

OFFICeS &

TrAveL

+ 7,801

+ 5,439

totAl

cARBon Emissions + 48,434 + 36,321

cARBon sAvings

fRom BiofUEl sUpplY

-2,065,531 *

2010/11 -1,326,260

*Tonnes of CO 2 equivalent (tCO 2 e) 2011/12

Carbon savings

from biofuel supply

By replacing fossil fuel with biofuel,

we reduced UK road transport fuel

emissions by 2.066 million tonnes CO e 2

- equivalent to taking approximately

650,000 cars off the road.

This represents an increase of 56% from

the previous financial year, reflecting:

» Growth in the volume of biofuel

we supplied.

» Ongoing work with suppliers globally

to source the lowest carbon biofuels

and biofuel raw materials.

» Extensive use of waste-based

biodiesel.

emissions from

biodiesel manufacturing

Our biodiesel manufacturing plant

at Immingham represented the largest

source of our operational carbon

emissions this year, with a 73% increase

in emissions compared with last year.

This was due to:

» an 18% increase in biodiesel output

compared with last year.

» Production of biodiesel from waste

raw materials. This year, for the first

time, the plant processed waste raw

materials exclusively and wastes

require more energy to process

than virgin vegetable oils.

» Generation of our own steam.

We increased the amount of steam

generated in our own boiler and

reduced the amount purchased from

a neighbouring facility. Emissions

from steam generated ourselves are

accounted for in our own emissions

assessment, whereas previously

they had been accounted for by

a third party.

‘‘ The carbon emissions associated with our business

operations increased this year as we manufactured

more of our own fuel - but we also increased our

biofuel supply, resulting in carbon savings totalling

more than 2 million tonnes.

‘‘

Paul Bateson, Chief Operating Officer

emissions from road haulage

Our haulage fleet carried more fuel

further this year, as we increased the

number of deliveries to our customers

and delivered to a wider geographic

area. While the fleet travelled 12%

further, its diesel consumption increased

by only 6% and the associated carbon

emissions rose by just 2%.

This improvement was due to:

» Efficiencies in our supply platform.

» Effective scheduling of deliveries

and vehicles.

» accounting for the use of biodiesel

in road fuel.

» reduction in fuel consumption of 1%.

emissions from storage

Greenergy stores fuel in storage

terminals in the UK, EU, Brazil and the

US. Data reported on throughput shows

a decrease of 3% in fuel consumption

but an increase of 43% in throughput.

This is a result of inconsistent reporting

from third party terminal operators

and Greenergy is now implementing

an automated procedure for carbon

accounting in those terminals to

improve accuracy and facilitate

energy management.

emissions from offices and travel

Emissions from offices more than

doubled from the previous year, while

travel emissions halved. The Manchester

office reported the largest increase

to become equivalent to London,

indicating under reporting in previous

years. Sao Paolo staff quartered their

emissions by significantly reducing

flight mileage.

38%

15%

Biodiesel

manufacturing

Road haulage

1%

greenergy carbon

emissions by activity

Storage

offices

and travel

46%

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CORPORATE RESPONSIBILITY

BiocARBon

tRAcKER

BioCarbon Tracker is

an interactive web map

that uses satellite data

to map the carbon stored

in trees and plants globally,

both on a historic and

ongoing basis. It was

developed at the initiative

of Greenergy in 2010 in

order to better understand

the potential for agricultural

expansion to cause land use

change and carbon emissions,

including in areas of

biofuel production.

We recognise that the usefulness

of BioCarbon Tracker extends

well beyond biofuels and our own

supply chain. This year we agreed

to establish BioCarbon Tracker as

a separate company, BioCarbon

Tracker Ltd, in order to make

BioCarbon Tracker more suitable

for other commercial applications.

Greenergy Annual Report 2012

This year we began using BioCarbon Tracker as a

cost-effective tool to demonstrate compliance with

new biofuel legislative requirements introduced under

the EU renewable Energy Directive. The data within

BioCarbon Tracker was used to prove that farmers

had not converted protected land to crops.

Using BioCarbon Tracker

within Greenergy

This year we began using BioCarbon

Tracker as a cost-effective tool to

demonstrate compliance with new

biofuel legislative requirements

introduced under the EU renewable

Energy Directive. The data within

BioCarbon Tracker was used to prove

that farmers had not converted

protected land to crops.

We also located the areas where

our biofuel crops were grown and

published these on the BioCarbon

Tracker interactive web map.

By disclosing our supply chain

in the context of several layers

of global sustainability data,

we encourage the public to

understand how we assess and

manage the environmental risks

of sourcing biofuels from

agricultural crops.

Creating an environmental

management and reporting

tool for wider use

We have also considered the wider uses

of BioCarbon Tracker. The Board saw

potential to develop BioCarbon Tracker,

outside Greenergy, as a tool for other

companies to assess and disclose the

environmental impact of their activities.

By creating additional data layers within

the interactive map, BioCarbon Tracker

can expand to offer objective data

on a wider range of local and global

environmental concerns.

The potential for BioCarbon Tracker

to inform decision-making more widely

and to become an engaging medium

for public disclosure is an exciting

prospect.

EmploYmEnt

As at 14 April 2012 the

Group employed 181

permanent staff in the UK,

Brazil and the USA, up from

114 staff last year. Most of the

additional headcount was

due to the recruitment this

year of 59 drivers previously

employed by a third-party

haulage provider.

20%

gender diversity

(permanent)

Male

Female

80%

equal opportunities

Greenergy encourages diversity

amongst its staff and is committed

to promoting equal opportunities in

all areas of recruitment, employment,

training and promotion.

The Group actively enforces its policy

not to harass, victimise, or discriminate

against or between its employees

on the basis of their sex, pregnancy,

trans-gender status, sexual orientation,

religion or belief, marital status, civil

partnership status, age, race, colour,

nationality, national or ethnic origins

and/or disability. The policy also

applies to conditions of work, pay

and benefits and to every other

aspect of employment, including

general treatment at work and the

processes involved in the termination

of employment.

an unusual (but not deliberate) feature

of Greenergy is that the proportion

of females in the workplace increases

with seniority, with 40% of Executive

Directors being female.

37%

gender diversity

(Senior management)

Male

Female

63%

Benefits

The Board seeks to provide all

employees with an attractive and

competitive benefits package.

after year end, the Board agreed

in principle a new share option scheme,

to run alongside existing schemes.

The new scheme is being designed

specifically to enable and encourage

employees (both new and long

standing) to contribute to and benefit

from the continued and increased

success of the Group.

40%

gender diversity

(executive Directors)

Male

Female

60%

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EmploYmEnt

continUEd

employee development

at the core of employee development

at Greenergy is a unique Performance

related Pay (PrP) scheme which

combines clear appraisal of employee

performance with tangible rewards.

It is designed to be motivational,

encouraging employees to strive

towards improving their performance

and developing their skill sets to

support the goals and success of the

Group. Whilst it is an annual scheme,

it also has two interim review periods

which allow the employee and their

manager to discuss their performance

in relation to their targets, their longer

term career aspirations and any further

training or experience they may need

to do their job better and take on

new challenges.

The PrP scheme is also the engine

that drives the succession planning

for the company, allowing managers

to work openly with their teams to

ensure we can promote from within

wherever possible.

Greenergy Annual Report 2012

Continuous improvement is a given

at Greenergy and applies to all aspects

of our business. Employees are

encouraged and supported to work

towards professional qualifications

where relevant or to spend time with

colleagues to improve their knowledge

and understanding of all areas of the

business. Greenergy provides a dynamic

environment where the employee is

expected to take responsibility for

determining the success of their career

at Greenergy, working with the support

of their manager. Training is provided

in a way which fulfils each training

need in the most sensible way,

recognizing that this can differ from

department to department and

from employee to employee.

This year our graduate recruits

continued their training under our

Graduate Trainee Programme, spending

time in different roles in the company.

as they prepared to move on to

permanent positions, we began the

recruitment of two further graduates

who are expected to join the company

during 2012.

‘‘ We strive for high operational efficiency.

To achieve this, we employ people with

outstanding skills and abilities and the

motivation to continually seek new and

better ways of working.

‘‘

In April 2012 year we employed 59

drivers to deliver fuel to customers.

This was the first time that drivers have

been employed within the Greenergy

Group and their recruitment represented

a move away from our previous

outsource arrangement.

By employing drivers directly, we aim

to develop a highly motivated team

that is engaged with our business

objectives. The senior management

team is working hard to ensure that

our drivers, like all our staff, are involved

in the development of company strategy

and feel valued for the work they do.

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CORPORATE RESPONSIBILITY

sociAl

REsponsiBilitY

The Board actively

encourages all employees

to participate in the

Group’s charitable giving

and to select recipients

of charitable donations.

Greenergy Annual Report 2012

Helping others through

charitable giving

The Board sets a charity budget

every year, and this year £126,000

was allocated for charitable donations

(2011: £106.000).

The Board actively encourages

all employees to participate in the

Group’s charitable giving and to select

recipients of charitable donations.

With that objective, disbursement

decisions were delegated to all

permanent employees working

in teams, subject to guidelines

and final approval by the Group’s

Charity Committee.

This year the charity budget was again

allocated equally between 12 teams.

Payments were made to a range of

charities working in the UK, Brazil,

Peru, africa, India and Cambodia.

No political donations were made and

no political expenditure was incurred

during the year.

Social sustainability

in our supply chain

The Board has appraised the risks

associated with potential environmental

and social malpractices by participants

in Greenergy’s global supply chain.

In countries where we have assessed

these risks to be relevant, the business

has carried out audits and site visits

to evaluate suppliers’ activities in detail.

We maintained our programme

of social and environmental audits

in Brazil this year, using third party

auditors to assess workers’ rights,

working conditions, environmental

protection and community relations

and land rights. Greenergy Brasil

continued to work with suppliers

directly, training mill managers

to implement sustainability practices

and guiding and persuading mills

to resolve any non-conformances.

The Board also recognises the

importance of trade in promoting

economic development and the

potential to encourage positive

change through our purchasing

activities, particularly in developing

countries. Opportunities to improve

working conditions and invest in

sustainable agriculture are carefully

assessed against the reality of local

culture, national governance, and our

sense of whether a potential supplier

shares the Greenergy value to always

do the right thing.

This year for example we took the

decision not to purchase from a

biofuel supplier in Sudan. although

the producer was willing to show

compliance with an environmental

and social audit, we were of the view

that these positive changes would not

outweigh the clear political and social

risks outside the producer’s direct

sphere of influence.

coRpoRAtE

govERnAncE

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CORPORATE gOvERnAnCE

BoARd of

diREctoRs

Greenergy Annual Report 2012

Paul Lester CBE

non-executive Chairman

Paul joined Greenergy in October 2010. Previously Paul was

Chief Executive of support services company VT Group Plc

and Group Managing Director of infrastructure services business

Balfour Beatty Plc. Paul has held numerous Board and senior

management positions at other engineering and support

service companies.

Paul is also Chairman of Survitec Group, John Laing

Infrastructure Fund, Norland Managed Services and Peverel.

He is a Non-Executive Director of Invensys Plc.

Andrew Owens MBE

Chief executive

andrew is the Chief Executive and co-founder of Greenergy

and has been working in the oil industry for over 30 years.

andrew has a Chemical Engineering degree from

Imperial College London, actively leads the engineering

within Greenergy, and retains links with the college

by occasional lecturing and by holding workshops

at its business school.

Jitesh Sodha

Chief Financial Officer

Jitesh joined Greenergy in 2008 as the Group’s Chief Financial

Officer. Jitesh has over 20 years of experience working in

financial roles across a broad range of industries including

commodities and IT and has served as CFO of Mobile Streams

Plc and T-Mobile International UK Limited.

Jitesh is a graduate of New College, Oxford and a Fellow

of the Chartered Institute of Management accountants.

Tamara earley

Managing Director

Tamara has over 20 years’ experience in the oil industry including

the last 15 years with Greenergy. Before joining Greenergy,

Tamara worked with Safeway and BP in various roles.

Tamara’s portfolio includes major client contracts, logistics,

customer service, regulatory affairs and biofuel sustainability.

Tesco Stores Ltd, as a Greenergy shareholder, has the right to appoint two Directors to the Board.

This year Michael Fletcher and adrian Marsh (appointed 8 Sept 2011) both served as Non-Executive Directors.

Paul Bateson

Chief Operating Officer

Paul has been the Chief Operating Office of Greenergy since

he joined in 2007 and brings over 30 years’ experience in the

downstream oil sector. Prior to joining Greenergy, Paul worked

for Conoco Phillips as the European head of refining business

development and spent 15 years with Louis Dreyfus refining

and Marketing as Operations Director.

Paul oversees the day to day trading operations of the company

as well as health and safety, commercial, marine, inland trading

operations and biodiesel production.

Caroline Lumbard

UK Trading Director

Starting with Greenergy over 14 years ago, Caroline has worked

in numerous roles in the company. as Greenergy’s UK Trading

Director, Caroline is responsible for the Group’s sales and

purchasing strategies within the UK.

Caroline has helped champion Greenergy’s rapid sales and

customer growth and leads the complex supply chain activities

with the major oil companies.

David rees

non-executive Director

David has been a Director of Greenergy since its incorporation

in 1992 and brings over 40 years’ experience in the oil industry

in oil refining, trading and marketing. He has played a leading

role in Greenergy’s global sourcing operations and in particular

in the development of its Brazilian and US bioethanol operations.

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CORPORATE gOvERnAnCE

mAnAging

oUR RisKs

risk can be broadly split into risk

areas where management can actively

control the level of risk (for example

credit risk exposure) and risk areas

where management needs to respond

to external events (for example

UK demand).

Where risk can be actively managed,

the company typically employs an

internal risk committee to set limits

on activity. The membership of the

committee comprises risk, financial

and commercial experts with the risk

and financial staff being in the majority.

Where the risk committee has particular

input or sets limits, these are identified

in the list of risks below.

Fuel product price

risk: Fuel product prices are subject

to international supply and demand,

which are themselves particularly

dependent on political climates

throughout the world. The resulting

risk of product price fluctuations

impacting the Group’s future cash

flows is therefore high.

response: The Group has developed

comprehensive internal control

processes and hedging mechanisms

to minimise this inherent risk.

The objective of these mechanisms

is to match the Group’s priced physical

positions (generated from spot and

term contracts entered into with

suppliers and customers) with equal

and opposite derivative positions.

In order to achieve this, the Group’s

risk management department analyses

the priced position for each product

type throughout each day. Traders

use this information to identify the

most appropriate derivative for hedging

purposes. The risk committee sets limits

around the structure of hedges.

In response to global supply and

demand risk, the Group maintains

an active forward purchasing and

sales activity hedged with appropriate

market mechanisms. Pricing contracts

Greenergy Annual Report 2012

Greenergy operates in a global industry exposed to risk

from a variety of sources. These risk areas pose challenges

to all parties involved in oil markets and supply. The Group

invests heavily in the management of these risks and

in identifying and implementing responses to these risks.

also include floating elements which

are linked to market prices. This reduces

exposure to fuel product price rises.

Credit risk

risk: The Group offers open credit

terms to most customers. Despite

most of the Group’s customers being

FTSE100 or equivalent companies with

good credit standing, there is a risk

of default.

response: The Group operates a strict

policy of applying credit limits to all

new customers prior to entering into

a transaction. These limits are then

subject to regular review throughout

the term of the contractual relationship.

The Group also uses credit insurance

on a customer by customer basis to

reduce this risk. The risk committee sets

credit limits and defines whether there

is a need for insurance.

The Group uses third party credit

referencing agencies as an input into

this process and monitors all trade

debtor balances on a daily basis.

Counterparty risk

risk: The risk that suppliers, for

whatever reason, are unable to deliver

product or that customers are unable

to take it is an increasing industry risk.

When suppliers fail to deliver (normally

due to issues of working capital driven

by high oil or raw material prices

or reduced credit lines), this can have

a material impact on the Group’s cost

of product and supply strategy.

response: all Group counterparties

are set value limits or other relevant

key indicators that define the

maximum level of trade, and form

of trade, with the counterparty. The

Group has strengthened its existing

policy of applying counterparty limits

to all non-oil major or vegetable oil

major suppliers prior to entering into

a first transaction. These limits are then

subject to regular review throughout

the term of the contract. Similar risk

and response considerations apply

to customers. The risk committee sets

trading limits and ensures procedures

are continually assessed to ensure that

they remain appropriate in mitigating

the risk to the Group.

Foreign currency exchange risk

risk: The Group purchases fuel products

mainly in US Dollars and Euros. Because

the international oil markets generally

price in US Dollars, and the majority

of the Group’s UK customers wish

to purchase fuel products in Pounds

Sterling, there can be a significant

foreign currency exchange risk inherent

in this aspect of the Group’s business.

Biofuel feedstocks are also often priced

in Euros which adds a further dimension

of risk to manage.

response: In order to minimise the

financial effect of this risk, the Group

looks to ensure that at all times,

the financial assets denominated

in a particular currency match the

financial liabilities denominated in

the same currency. Where product

is purchased and sold in the same

currency, no foreign exchange

exposure exists.

Where the Group’s stock is

denominated in US Dollars and a sale

is priced in Pounds Sterling, a net US

Dollar financial liability is generated,

resulting in a potential foreign exchange

exposure. Where purchases and

sales are priced in different currencies,

the Group’s treasury department

buys or sells currency to balance

the assets and liabilities by currency,

thus eliminating this transactional

foreign exchange risk.

as a further control, balance sheets

for each of the Group’s major currencies

are prepared on a monthly basis and

any surplus assets or liabilities are

hedged as appropriate.

In response to market and exchange

risks, the Group continues to develop

and implement comprehensive internal

control processes, hedging mechanisms

and IT systems including ever more

automation of price and risk-related

processes such as customer invoicing.

Liquidity risk

risk: rising oil prices impact on

the Group’s working capital. as sales

volumes have increased this risk

has received more attention over

the last year. The Group relies on

both committed and uncommitted

revolving facilities to meet these

working capital requirements.

response: During the year the Group

increased its bank financing lines and

open credit trading. The Group has

a Treasury team that forecasts

cashflows and models the impact

of changes in oil prices to manage

this risk. The Group has been trading

with a mixture of committed and

uncommitted facilities with the same

principal bankers for the past 19

years. The long-standing nature

of the relationships, and the bankers’

verbal assurances give Greenergy

confidence over the continuing

availability of these facilities.

Interest rate risk

risk: The Group’s main tangible fixed

assets act as security for a two separate

term loans. Interest on these loans

is charged at variable rates related

to LIBOr.

response: The interest rate risk inherent

in the movement of LIBOr has been

removed by entering into two interest

rate swaps covering the value of

the loan.

The nature and extent of risks arising

from financial instruments are more

fully described in note 3 to the Financial

Statements on pages 81-83.

Operational risk

risk: as for any company or Group,

management is reliant on internal

systems, processes and controls

to enable the company to continue

to operate and report accurately and

in a timely fashion. a failure of these

systems and processes, or an external

event which interrupts business

operations, could have an adverse

effect on the Group.

response: The Group regularly reviews

its systems, processes and controls

framework in order to safeguard against

operational risk. This framework is

constantly evolving to take account

of changes to the business, industry

guidance and best practice.

The Group also has a disaster recovery

plan to address situations that could

lead to an extended interruption

in business. This includes a detailed

written procedure to follow with

clearly identified responsibilities,

and the provision of backup computer

systems, hardware and remote access

facilities should any of the Group’s

operational offices become inaccessible.

reputation risk

risk: Non-performance by third parties

of their legal obligations damages the

commercial reputation of the Group.

In addition Group staff must observe

and adhere to Group principles

and policies.

Failings by ship owners, inland hauliers,

storage facility operators or other

similar ancillary service providers has

a knock-on negative effect on the

Group’s reputation, including the risk

associated with ensuring the Group’s

biofuels are sourced from sustainable

suppliers. Group staff must refrain

from unlawful practices and report

any inappropriate commercial practices.

response: The Group endeavours

to develop and maintain excellent

relationships with all of its service

providers and carries out sustainability

and carbon audits of its biofuel

suppliers where it considers

this necessary. However, where

unavoidable incidents occur, the

Group’s communications department

is available to manage public relations.

The Group has adopted an appropriate

policy pursuant to the UK Bribery act.

Government risk

risk: across the world, governments’

attitudes to fiscal support for biofuels,

previously revealed in the form of duty

incentives within the UK, can have

a significant effect on market structures,

ultimately impacting on profitability.

response: In response to legislative

and political risk, the Group maintains

its position at the forefront of the UK

biofuels industry through membership

of relevant trade associations and

by providing direct advice to the

UK Government on its fuel policies.

The Group also trades internationally

rather than solely domestically and

maintains active representation

in various international trade

organisations.

Fiscal risk

risk: The Group is a major excise

duty and VaT payer in the UK.

Cash flows of the Group are impacted

by changes in UK Government fiscal

policy. The fuel supply chain could

be impacted by unforeseen changes

made by the Government.

response: The constraints applicable

to Governmental and liquidity risk

are applicable to fiscal risk.

Key staff

risk: The services of key staff may

be lost for whatever reason.

response: The Group endeavours

to remunerate key staff at or above

market rate and offers a comprehensive

package of benefits, including health

insurance, bonuses and share options.

Its philosophy is one of inclusion and

staff development. Senior staff have

a significant three year deferred

element to their remuneration.

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CORPORATE gOvERnAnCE

stAtEmEnt

on coRpoRAtE

govERnAncE

Our approach

The Board is fully aware of the

principles of corporate governance

contained within UK Corporate

Governance Code (‘the Code’).

as a private group, we are not required

to comply with the specific provisions

or principles of the Code and are

not required to report on the way

in which the Code is being applied

within Greenergy.

Nevertheless, the Board recognises

the advantages of a robust corporate

governance framework in order to

promote transparency, accountability

and long-term stability within the

Group, with the ultimate aim of

promoting long term growth.

With that goal in mind, we continue

to move towards full compliance

with the Code, with a number

of advancements planned.

Board of Directors

Composition and role

The Board believes that its overall

composition remains appropriate,

having regard in particular to the

independence of character and

integrity of all its Directors as well

as the experience and skills which

they respectively bring to their duties.

The Directors are fully aware of the

need to take decisions objectively

and each Director has an equal vote.

Care is taken to identify any conflicts

of interest and all existing and

contingent conflicts of interest

have been properly declared.

Greenergy Annual Report 2012

The Board reviews and approves key

policies and decisions, in particular

those relating to:

» Group strategy and planning.

» risk management.

» Health and safety matters.

» Compliance with external laws

and regulations and internal

Group policies.

» Corporate responsibility.

» Financing and treasury matters.

» Financial reporting.

» appointments and removals

of key management personnel.

attendance at the Board meetings

by the Directors throughout the year

has been good, with absences limited

and notified in advance. It is the

practice of the Group for meetings

to be scheduled to achieve full Board

attendance wherever possible, and

contact is maintained with all Directors

throughout the year to ensure that

dates remain appropriate for all.

non-executive Directors

The Board includes four Non-Executive

Directors. It is accepted that these

Non-Executive Directors may be seen

to be associated with a respective

shareholder in the Group and therefore

not truly independent, although the

Non-Executive Directors have in

practice demonstrated objectivity

in all matters.

remuneration

The remuneration of Executive and

Non-Executive Directors is considered

by the Board as a whole. The Directors

believe that the current remuneration

levels remain appropriate to the Group.

Accountability and audit

The roles of Chairman and Chief

Executive are held by different persons

and have clearly defined responsibilities.

The Chairman oversees the functions

and effectiveness of the Board.

The Chief Executive is responsible

for leadership of the Group and

management of the business.

The Chairman and Chief Executive

each bring complimentary skills to their

positions. Paul Lester has extensive

experience across numerous Executive

and Non-Executive directorships which

is of benefit to his role as Chairman.

andrew Owens co-founded Greenergy

and has overseen the continued growth

of the Group. andrew also benefits

from over 30 years’ experience in the

oil industry.

There is no current intention for any

of the Directors to retire by rotation

and/or be required to seek re-election

to their position.

We have established a risk Committee

comprising Directors, management and

staff with risk, financial and commercial

expertise. The risk Committee meets

quarterly, reviews known and expected

risks and uncertainties, and sets

limits on the activities of the Group.

The Group’s assessment of the risks

and uncertainties to the business are

set out in the Managing our risks

section on page 56.

Currently the oversight of audit matters

is the responsibility of the Board.

The Board is intending to implement

a separate audit Committee in future

with representation by Directors

and key management personnel,

recognising that this would provide

a mechanism to improve the Group’s

compliance with the Code.

On the basis of a review of information

and advice known or available to it,

the Board has a reasonable expectation

that the Group has adequate resources

to continue in operational existence for

the foreseeable future. accordingly,

the Board continues to adopt the going

concern basis in preparing the annual

report and the financial statements.

Organisation

a clear organisational structure exists,

detailing lines of authority and control

responsibilities. The professionalism

and competence of staff is maintained

both through rigorous recruitment

policies and a performance appraisal

system which establishes targets,

reinforces accountability and awareness

of controls, and identifies appropriate

training requirements.

action plans are prepared and

implemented to ensure that staff

develop and maintain the required

skills to fulfil their responsibilities and

that the Group can meet its future

management requirements.

Investor relations

The company maintains regular

contract with its key corporate

shareholder, who is also a principal

customer of the company. Contact

is maintained through an informal

investor relations team which meets

on a regular basis.

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CORPORATE gOvERnAnCE

stAtUtoRY

disclosUREs

Directors

The names of the Directors of the

company who served during the

period and until the date of signing are:

a W Owens

T G Earley

P T Bateson

J H Sodha

C S Lumbard

D a rees (Non-Executive)

P J Lester (Non-Executive)

M T N Fletcher (Non-Executive)

D J Gilsenan (Non-Executive)

(resigned: 8 June 11)

a Marsh (Non-Executive)

(appointed: 8 September 11)

results and dividends

The Group made a profit for the

financial period of £25,286,000

(2011: £13,860,000).

The Directors have proposed a final

ordinary dividend of £3,075,000

(2011: 2,341,000) in respect of the

current period in addition to an

interim dividend paid of £1,591,000.

Political and charitable

contributions

During the year the Group allocated

£126,000 for charitable donations

(2011: 106,000). The Group actively

encourages its employees to

participate and select the recipients

of charitable donations.

No political donations were made

and no political expenditure was

incurred during the year (2011: nil).

Suppliers

Individual terms and conditions for

business transactions are agreed with

suppliers. Payment is then made on

these terms, subject to the terms and

conditions being met by the suppliers

including the timely submission

Greenergy Annual Report 2012

of satisfactory invoices. For the

year ended 14 april 2012 the average

trade payables days for the Group

were 2 days (2011: 2 days).

Statement of Directors’

responsibilities

The Directors are responsible

for preparing the Directors’ 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 prepared the Group and

Parent Company 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 of the Group and the

company and of the profit or loss of

the Group for that period. In preparing

these financial statements, the Directors

are required to:

» Select suitable accounting policies

and then apply them consistently.

» Make judgements and estimates

that are reasonable and prudent.

» State whether applicable IFrSs

as adopted by the European Union

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 that

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 the Group 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 the Group and hence for taking

reasonable steps for the prevention

and detection of fraud and other

irregularities.

The Directors are responsible for

the maintenance and integrity of

the company’s website. Legislation

in the United Kingdom governing

the preparation and dissemination

of financial statements may differ

from legislation in other jurisdictions.

Disclosure of information

to auditors

Each of the Directors who held office

at the date of approval of this Directors’

report confirm that, so far as they are

each aware, there is no relevant audit

information of which the Group and

parent company’s auditors are unaware;

and each Director has taken all the

steps that he/she ought to have taken

as a Director to make himself/herself

aware of any relevant audit information

and to establish that the Group and

parent company’s auditors are aware

of that information.

By order of the Board

r W Clifton

Company Secretary

5th July 2012

chiEf finAnciAl

officER’s REviEw

Greenergy Annual Report 2012

61

overvieW

chief executive’s

revieW

market revieW

strategy in action

corporate

responsibility

corporate

governance

Chief finanCial

OffiCer’s review

financial statements


Chief finanCial OffiCer’s review

chiEf

finAnciAl

officER’s

REviEw

FInAnCIAL HIGHLIGHTS

22.3%

Increase in turnover

£40.1m

Operating profits increased

from £17.8m to £40.1m

£47.2m

eBITDA increased

from £24m to £47.2m

Greenergy experienced strong results for the current

financial year and has continued to maintain a healthy

level of investment in the business.

Key performance

This year we achieved our best ever

financial results in respect of both

turnover and profits. The underlying

performance of the Group was strong

with continued growth in sales,

an on-going focus on costs,

and increased contribution from

biodiesel manufacturing as a result

of improved efficiency. There were

also some one-off opportunities

which made this year exceptional.

The most significant of these was

the overlapping of incentive schemes

for manufacturing biofuels from waste.

The Group continued to expand its sales

volumes in the year as the overall UK

market falls. Total sales volumes were

up 10.4% to 10.9bn litres while the

overall UK fuel market declined by 1.5%.

This translated into increased market

share of more than 23% for the year.

Turnover (miilion £)

12

10

8

6

4

2

Annual turnover

Key results

Group turnover increased by 22% to

£11.9bn for the current year as a result

of sales growth and rising oil prices.

average oils prices for Brent Crude

were $114/barrel in the current year

compared with $89/barrel last year.

Operating profits increased from

£17.8m in the prior year to £40.1m

in the current year. EBITDa also

increased from £24.0m to £47.2m.

The earnings were driven by a

significant increase of 21.1% in gross

margin per cubic metre of sales,

when compared with the prior year.

earnings per share

These results translated into an

increase in earnings per share to £161

in the current year, up from £73 in the

prior year.

Focus on costs

In line with one of our mission goals

to be the fuel provider with the lowest

cost, Greenergy has continued to

promote efficiency improvement

initiatives.

Greenergy

turnover

0

06/07 07/08 08/09 09/10 10/11 11/12

In the current year the Group reached

an internal cost saving target of

£2.5m by creating efficiencies within

the business through its Cost Squad

initiative.

Total operating costs rose by 13.6% in

the year, mostly due to a full year of

costs for the Teesside terminal and the

start-up of a new terminal in Cardiff.

Costs will be an area of focus in the

year ahead.

Financial position

Long term investment in assets

In order to support our growing

business, we have continued our

programme of significant investment

in plant and machinery. a total

of £12.2m was invested in capital

expenditure during the year. Of this,

£2.8m has been invested in our biofuels

manufacturing plant at Immingham

in order to increase the productivity

and efficiency of the plant, and to

reduce operating costs. The biodiesel

‘‘

This year has produced Greenergy’s

best ever financial performance.

There have been a number of one-off

opportunities from which we have

benefited, but our ability to convert

opportunity into financial success always

relies on the extensive control systems

in place across our business.

jitEsh sodhA

manufacturing plant has had its

best ever performance in terms

of throughput, yield and downtime.

a further £6.5m has been invested

in our terminal network, including

increasing the manufacturing

capabilities of our Teesside terminal.

Two of Greenergy’s mission goals

are to have the best systems and

controls and the highest reliability.

Greenergy is investing £10m over

3 years in a systems improvement

programme that will help us to achieve

these aims. £4.6m of this has been

committed to date in improvements to

software and information technology.

a good example of this investment

is the in-cab system for Greenergy’s

haulage network, which provides realtime,

paperless lifting and delivery

information to the business. This has

brought benefits with regards to

efficiency and reliability

of information.

62 Greenergy Annual Report 2012

Greenergy Annual Report 2012 63

‘‘

robust financial position

The Group continues to have a strong

net assets position. The successful

financial year has meant total net

assets increased by 24% to £110m

from the prior year‘s £88m. The current

assets of the Group are highly liquid

with inventories of £324m and trade

receivables of £625m that experienced

average turnover rates for the year

of 9 days and 15 days respectively.

Financing facilities

and working capital

The Group continues to work closely

with its banks to finance nearly $1bn

of working capital lines. The banking

and economic crises of recent years

have been negotiated with our

supportive syndicate of banks.

as part of the Group’s strategy

to continue to diversify its banking

exposure we have entered into new

working capital facilities for $135m

with two additional trade finance

banks. Both these facilities are

operational and working well.

overvieW

chief executive’s

revieW

market revieW

strategy in action

corporate

responsibility

corporate

governance

Chief finanCial

OffiCer’s review

financial statements


Chief finanCial OffiCer’s review

chiEf

finAnciAl

officER’s

REviEw

We have again increased

our banking facilities

this year and further

strengthened our

banking relationships.

We are pleased with the

continued confidence

this demonstrates

in our business.

Taxation

Greenergy made Fuel Duty payments

of over £4.6bn in relation to liftings

in the year and VaT payments of over

£1.6bn. Overall the Group contributed

over 1.3% of total UK Government

Treasury receipts for the year.

The principal accounting policies

of the Group are shown in note 1 of

the financial statements which also

give a summary of recent accounting

developments. after adopting

International Financial reporting

Standards across the Group

last year, this has been a relatively

quiet year with regards to the

accounting framework. There have

been no changes to existing standards

having a significant effect on the Group.

During this financial year the

International accounting Standards

Board has announced several areas

they will be focussing their attention

on for improvement. The current

review of the accounting guidance

for financial instruments, and in

particular the focus on hedge

accounting, is particularly welcome.

Jitesh Sodha

Chief Financial Officer

finAnciAl

stAtEmEnts

64 Greenergy Annual Report 2012 Greenergy Annual Report 2012 65

FInAnCIAL STATeMenTS CHIEF FINaNCIaL

COrPOraTE

COrPOraTE

STraTEGY IN aCTION

MarKET rEVIEW

CHIEF ExECUTIVE’S

OVErVIEW

OFFICEr’S rEVIEW

GOVErNaNCE

rESPONSIBILITY

rEVIEW


FINANCIAL STATEMENTS

indEpEndEnt AUditoRs’

REpoRt to thE mEmBERs

of gREEnERgY fUEls

holdings ltd

We have audited the Group and Parent

Company financial statements (the

‘financial statements’) of Greenergy

Fuels Holdings Limited for the year

ended 14 april 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

Statement of Changes in Equity, and

the Consolidated and Parent Company

Statement of Cash Flows, 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 and,

as regards the Parent Company financial

statements, as applied in accordance

with the provisions of the Companies

act 2006.

respective responsibilities

of Directors and auditors

as explained more fully in the

Statement of Directors’ responsibilities

on page 60, 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 Ethical Standards for auditors.

This report, including the opinions,

has been prepared for and only for

the Company’s members as a body

in accordance with Chapter 3 of Part 16

of the Companies act 2006 and for no

other purpose. We do not, in giving these

opinions, accept or assume responsibility

for any other purpose or to any other

person to whom this report is shown

or into whose hands it may come save

where expressly agreed by our prior

consent in writing.

Scope of the audit of the

financial statements

an audit involves obtaining evidence

about the amounts and disclosures

in the financial statements sufficient

to give reasonable assurance that the

financial statements are free from material

misstatement, whether caused by fraud

or error. This includes an assessment

of: whether the accounting policies are

appropriate to the Group’s and Parent

Company’s circumstances and have been

consistently applied and adequately

disclosed; the reasonableness of

significant accounting estimates made by

the Directors; and the overall presentation

of the financial statements. In addition,

we read all the financial and non-financial

information in the annual report to

identify material inconsistencies with

the audited financial statements. If we

become aware of any apparent material

misstatements or inconsistencies we

consider the implications for our report.

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 14 april 2012 and of the Group’s

profit and the Group and Parent

Company’s cash flows for the

year then ended.

» The Group financial statements

have been properly prepared in

accordance with IFrSs as adopted

by the European Union.

» The Parent Company financial

statements have been properly

prepared in accordance with IFrSs

as adopted by the European Union

and as applied in accordance with

the provisions of the Companies

act 2006.

» The financial statements have been

prepared in accordance with the

requirements of the Companies

act 2006.

Opinion on other matter prescribed

by the Companies Act 2006

In our opinion the information given

in the annual 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.

nicholas Stevenson

Senior Statutory Auditor

for and on behalf of

PricewaterhouseCoopers LLP

Chartered accountants and

Statutory auditors, London

5 July 2012

consolidAtEd

incomE

stAtEmEnt

66 Greenergy Annual Report 2012

Greenergy Annual Report 2012 67

note

For the year ended 14 april 2012

year ended

14 April 2012

£’000

year ended

14 April 2011

£’000

revenue 11,934,667 9,761,953

Cost of sales (11,821,372) (9,677,146)

Gross profit 113,295 84,807

Distribution costs (43,992) (41,499)

administrative expenses (32,391) (25,711)

Other operating income 3,221 189

Operating profit 5 40,133 17,786

Finance income 7 243 81

Finance costs 8 (4,861) (4,434)

Profit before taxation 35,515 13,433

Income tax (expense)/credit 9 (10,229) 427

Profit for the financial period 25,286 13,860

Profit attributable to:

Owners of the parent 25,572 11,402

Non-controlling interest (286) 2,458

Profit for the financial period 25,286 13,860

The results stated above are all derived from continuing operations. The notes on pages 74 to 102 are an integral part of these

consolidated financial statements. The Company has elected to take the exemption under section 408 of the Companies act 2006

not to present the Parent Company income statement. The profit of the Parent Company for the period was £3,932,000 (2011: £nil).

financial statements Chief finanCial

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FINANCIAL STATEMENTS

consolidAtEd

stAtEmEnt of

compREhEnsivE

incomE

note

For the year ended 14 april 2012

year ended

14 April 2012

£’000

year ended

14 April 2011

£’000

Profit for the financial period 25,286 13,860

Other comprehensive income:

available-for-sale financial assets 14 (415) 232

Exchange difference on translation of net assets of subsidiaries 216 (96)

Other comprehensive income for the period, net of tax (199) 136

Total comprehensive income for the period, net of tax 25,087 13,996

Attributable to:

Owners of the parent 25,373 11,538

Non-controlling interest (286) 2,458

Total comprehensive income for the period, net of tax 25,087 13,996

Items in the statement above are disclosed net of tax. The income tax relating to each component of other comprehensive income

is disclosed in note 9.

The notes on pages 74 to 102 are an integral part of these consolidated financial statements.

consolidAtEd

& compAnY

BAlAncE shEEt

Group Company

68 Greenergy Annual Report 2012

Greenergy Annual Report 2012 69

note

14 April 2012

£’000

14 April 2011

£’000

14 April 2012

£’000

as at 14 april 2012

14 April 2011

£’000

Assets

non-current assets

Property, plant and equipment 11 91,637 88,716 - -

Intangible assets 12 13,607 11,511 - -

Investment in Group undertakings 13 - - 244 244

Investments in associates 13 138 78 - -

available for sale financial assets 14 348 1,437 - -

Other receivables 801 801 - -

Deferred income tax assets 20 1,743 1,651 - -

108,274 104,194 244 244

Current assets

Inventories 15 326,376 295,776 - -

Trade and other receivables 16 762,468 702,197 - -

Cash and cash equivalents 17 93,711 114,490 - -

Corporation tax receivable - 2,561 - -

1,182,555 1,115,024 - -

Total assets 1,290,829 1,219,218 244 244

Liabilities

non-current liabilities

Borrowings 18 (7,109) (10,132) - -

Provisions for other liabilities and charges 19 (1,750) (1,750) - -

Deferred income tax liabilities 20 (9,491) (8,102) - -

(18,350) (19,984) - -

Current liabilities

Trade and other payables 21 (1,042,132) (899,524) - -

Borrowings 18 (114,812) (211,236) - -

Corporation tax liabilities (5,808) - - -

(1,162,752) (1,110,760) - -

Total liabilities (1,181,102) (1,130,744) - -

net assets 109,727 88,474 244 244

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FINANCIAL STATEMENTS

consolidAtEd

& compAnY

BAlAncE shEEt

continUEd

Shareholders’ equity

note

14 April 2012

£’000

Group Company

14 April 2011

£’000

14 April 2012

£’000

14 April 2011

£’000

Called up share capital 23 159 159 159 159

Share premium account 85 85 85 85

Merger reserve 24,904 24,904 - -

revaluation reserve (183) 232 - -

retained earnings 82,085 60,131 - -

Total shareholders’ funds 107,050 85,511 244 244

Non-controlling interests 2,677 2,963 - -

Total equity 109,727 88,474 244 244

The notes on pages 74 to 102 are an integral part of these consolidated financial statements.

The financial statements on pages 67 to 73 were approved by the Board of Directors on 5 July 2012 and were signed on its behalf by:

J H Sodha

Director

consolidAtEd

stAtEmEnt of

chAngEs in EQUitY as at 14 april 2012

70 Greenergy Annual Report 2012

Greenergy Annual Report 2012 71

Group

note

Share

capital

£’000

Share

premium

£’000

Attributable to owners of the parent

Merger

reserve

£’000

retained

earnings

£’000

revaluation

reserve

£’000

Total

£’000

noncontrolling

interest

£’000

Balance at 15 April 2010 154 24,817 - 54,115 - 79,086 - 79,086

Comprehensive income

Profit or loss

Other comprehensive income

- - - 11,402 - 11,402 2,458 13,860

available-for-sale financial

assets

14 - - - - 232 232 - 232

Exchange difference on

translation of net assets

of subsidiaries

- - - (96) - (96) - (96)

Total comprehensive income - - - 11,306 232 11,538 2,458 13,996

Transactions with owners

Issue of shares 5 172 - - - 177 - 177

Equity from minority interest - - - - - - 505 505

Change in Group structure - (24,904) 24,904 - - - - -

Share-based payments - - - (735) - (735) - (735)

Dividends 10 - - - (4,555) - (4,555) - (4,555)

Total transactions

with owners

5 (24,732) 24,904 (5,290) - (5,113) 505 (4,608)

Balance at 15 April 2011 159 85 24,904 60,131 232 85,511 2,963 88,474

Comprehensive income

Profit or loss

Other comprehensive income

- - - 25,572 - 25,572 (286) 25,286

available-for-sale

financial assets

14 - - - - (415) (415) - (415)

Exchange difference on

translation of net assets

of subsidiaries

- - - 216 - 216 - 216

Total comprehensive income - - - 25,788 (415) 25,373 (286) 25,087

Transactions with owners

Share-based payments - - - 98 - 98 - 98

Dividends 10 - - - (3,932) - (3,932) - (3,932)

Total transactions

with owners

- - - (3,834) - (3,834) - (3,834)

Balance at 14 April 2012 159 85 24,904 82,085 (183) 107,050 2,677 109,727

The notes on pages 74 to 102 are an integral part of these consolidated financial statements.

Total

equity

£’000

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FINANCIAL STATEMENTS

compAnY

stAtEmEnt of

chAngEs in EQUitY

continUEd

Company

note

Share capital

£’000

Share premium

£’000

Attributable to owners of the parent

retained earnings

£’000

Comprehensive income

Profit or loss - - - -

Total comprehensive income

Transactions with owners

- - - -

Issue of shares 159 85 - 244

Total transactions with owners 159 85 - 244

Balance at 15 April 2011

Comprehensive income

159 85 - 244

Profit or loss - - 3,932 3,932

Total comprehensive income

Transactions with owners

- - 3,932 3,932

Dividends - - (3,932) (3,932)

Total transactions with owners - - (3,932) (3,932)

Balance at 14 April 2012 159 85 - 244

The notes on pages 74 to 102 are an integral part of these consolidated financial statements.

as at 14 april 2012

Total

£’000

consolidAtEd

& compAnY

stAtEmEnt

of cAsh flows

For the year ended 14 april 2012

72 Greenergy Annual Report 2012

Greenergy Annual Report 2012 73

note

14 April 2012

£’000

14 April 2011

£’000

net cash generated from operating activites

Investing activities

25 99,151 (154,036)

acquisitions, less cash acquired (60) (78)

Purchases in respect of property, plant and equipment & intangibles (12,089) (16,039)

Disposals in respect of property, plant and equipment - 79

net cash used in investing activities (12,149) (16,038)

Financing activities

Proceeds from issuance of ordinary shares - 177

(Decrease)/increase in bank borrowings (2,948) 3,073

Cash received from minority interest - 505

Decrease in other third-party borrowings (75) (69)

Finance income 243 81

Finance costs (4,861) (4,609)

Dividends paid 10 (3,932) (4,555)

net cash used in financing activities (11,573) (5,397)

Increase/(decrease) in cash and cash equivalents 75,429 (175,471)

Cash and cash equivalents and bank overdrafts

at the beginning of the period

(93,739) 81,830

Translation adjustments on cash and cash equivalents 216 (98)

Cash and cash equivalents and bank overdrafts at the end of the period (18,094) (93,739)

The notes on pages 74 to 102 are an integral part of these consolidated financial statements.

There were no cash flows in Parent Company during the periods ended 14 april 2011 and 14 april 2012 and consequently

no statement is presented.

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FINANCIAL STATEMENTS

notEs to

thE finAnciAl

stAtEmEnts

1. Summary of business and significant

accounting policies

General business description

Greenergy Fuels Holdings Limited (the ‘Company’) is a company

domiciled and incorporated in the UK. The address of the

registered office is given on page 103.

The Company and its subsidiaries (together, ‘the Group’) is one

of the major petrol and diesel oil suppliers in the UK, being both

the UK’s largest independent oil group and one of the largest

privately owned groups in the UK. The Group is also a major

supplier, manufacturer and trader of biofuels and has supporting

supply and trading operations outside the UK.

Basis of preparation

The consolidated financial statements have been prepared

in accordance with International Financial reporting Standards

as adopted by the European Union (IFrS) and International

Financial reporting Interpretations Committee (IFrIC)

interpretations and the Companies act 2006 applicable

to companies reporting under IFrS.

On 26 august 2010 there was a capital reorganisation that

required a new Parent Company for the Group. This transaction

involved entities under common control which is outside the

scope of IFrS 3. as a result the transaction was accounted for

using merger accounting principles. In order to incorporate the

full information of the subsidiaries financial statements, the period

used for consolidation purposes was the year to 14 april 2011,

encompassing the full year’s results for all subsidiaries and the

results of the Parent Company for the period from 26 august

2010 to 14 april 2011.

The consolidated financial statements have been prepared on

the going concern basis and under the historical cost convention,

as modified by the revaluation of inventories, available-forsale

financial assets and financial assets and financial liabilities

(including derivative instruments) at fair value through profit

or loss. The accounting policies that follow have been consistently

applied to all periods presented. The consolidated financial

statements are presented in Pounds Sterling and all values are

rounded to the nearest thousand Pounds Sterling (£ thousand),

except where otherwise indicated.

Consolidation

The consolidated financial statements include the accounts of the

Company and the entities it controls (its subsidiary undertakings)

made up to the period end date. Control is achieved where the

Company has the power to govern the financial and operating

policies of an entity, generally accompanying a shareholding

of greater than half of the voting rights, so as to obtain benefits

from its activities.

The financial performance and position of subsidiaries are

consolidated for the same reporting period as the Parent

Company, using consistent accounting policies.

The results of subsidiaries acquired or disposed of during the

period are fully consolidated from the effective date of acquisition

or up to the effective date of disposal.

all intragroup balances, transactions, income and expenses are

eliminated in full.

Foreign currency

a. Functional and presentation currency

Items included in the financial statements of each of the Group’s

entities are measured using the currency of the primary economic

environment in which the entity operates (‘the functional

currency’). The consolidated financial statements are presented

in Pounds Sterling, which is the Company’s functional and the

Group’s presentational currency.

b. transactions and balances

Transactions in foreign currencies are initially recorded using

monthly rates of exchange. Monetary assets and liabilities

denominated in foreign currencies are translated using the rate

of exchange ruling at the balance sheet date and the gains or

losses on translation are included in the income statement within

cost of sales.

Non-monetary assets and liabilities that are measured at historical

cost and denominated in a foreign currency are translated

into the functional currency using the rates of exchange as

at the dates of the initial transactions. Non-monetary assets

and liabilities measured at fair value in a foreign currency are

translated into the functional currency using the rate of exchange

at the date the fair value was determined. These gains or losses

on translation are included in the income statement within

administrative expenses.

c. Group companies

The results and financial position of all the Group entities (none

of which has the currency of a hyper-inflationary economy)

that have a functional currency different from the presentation

currency are translated in to the presentation currency as follows:

1. assets and liabilities for each balance sheet presented are

translated at the closing rate at the date of the balance sheet.

2. income and expenses for each income statement are translated

at average exchange rates.

3. all resulting exchange differences are recognised in other

comprehensive income.

property, plant and equipment

Property, plant and equipment are stated at historical cost

less accumulated depreciation and/or accumulated impairment

losses, if any.

Historical cost includes the original purchase price or construction

cost, any costs directly attributable to bringing the asset to its

working condition for its intended use and the initial estimate

of any decommissioning obligation, if any, and borrowing costs.

Land is not depreciated. Depreciation on other assets is

calculated using the straight line method and charged to write

off the cost less the estimated residual value by equal instalments

over their estimated useful lives once the asset has been

successfully commissioned and is proven to be able to operate

at normal levels. The useful lives of the Group’s property, plant

and equipment are as follows:

Office equipment 2 to 5 years

Plant and machinery 2 to 20 years

Biodiesel plants 20 years

Terminals 15 to 20 years

Depreciation is not charged on assets which are under

construction or on plant and machinery which has yet to

be successfully commissioned until such time that the asset

is in a working condition for its intended use.

The residual values and useful lives of property, plant and

equipment are reviewed, and adjusted if appropriate, at the

end of each reporting period.

Gains and losses on disposals are determined by comparing

the proceeds with the carrying amount and are recognised with

‘Other operating income/(losses)’ in the income statement.

Borrowing costs

Borrowing costs directly attributable to the acquisition,

construction or production of an asset that necessarily takes

a substantial period of time to get ready for its intended use

or sale are capitalised as part of those respective assets.

all other borrowing costs are expensed in the period in which

they occur. Borrowing costs consist of interest and other costs

that an entity incurs in connection with the borrowing of funds.

Intangible assets

a. Goodwill

On acquiring a subsidiary, the acquisition method of accounting

is used whereby the purchase consideration is allocated

to the identifiable net assets on the basis of fair value at the

date of acquisition.

Goodwill represents the excess of the cost of an acquisition over

the fair value of the Group’s share of the net identifiable assets

of the acquired subsidiary at the date of acquisition.

If the fair value attributable to the Group’s share of the acquiree’s

identifiable net assets exceeds the fair value of the consideration,

the Group reassesses whether it has correctly identified and

measured the acquiree’s identifiable net assets and recognises

any assets or liabilities that are identified in that review. If that

excess remains after the reassessment, the Group recognises

the resulting gain in profit or loss on the acquisition date.

after initial recognition, goodwill is measured at cost less

any accumulated impairment losses. Goodwill is reviewed for

impairment on an annual basis or more frequently if indications

that the carrying value may be impaired arise. Impairment is

determined by assessing the recoverable amount of the cashgenerating

unit to which the goodwill relates. Goodwill is

allocated to those cash generating units that are expected to

benefit from the business combination in which the goodwill

arose. Where the carrying amount of the cash-generating unit

exceeds its recoverable amount an impairment loss is recognised.

Goodwill arising on business combinations prior to 1 april 2009

is stated at the previous carrying amount under UK generally

accepted accounting practice.

b. other intangible assets

Intangible assets with a finite useful life are capitalised at their

cost and written off on a straight line basis over their useful

economic life.

The carrying values of intangible assets are reviewed for

impairment whenever events or changes in circumstances

indicate the carrying value may not be recoverable. research

and development assets are amortised over the estimated life

of the related asset.

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1. Summary of business and significant

accounting policies (continued)

Investments in subsidiaries

Investments is subsidiary companies held in the Company

are stated at cost less impairment.

Impairment of non-financial assets

The carrying amounts of assets are reviewed at each balance

sheet date to determine whether there is any indication of

impairment. an asset is deemed to be impaired if, and only if,

there is objective evidence of impairment as a result of one or

more events that has occurred after the initial recognition of the

asset (an incurred ‘loss event’) and that loss event has an impact

on the estimated future cash flows of the financial asset or the

Group of financial assets that can be reliably estimated. If any

such indication exists, a full impairment review is undertaken

for that asset or group of assets, and any estimated loss is

recognised in the income statement. 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.

For the purposes of assessing impairment assets are grouped

at the lowest levels for which there are separately identifiable

cash flows (cash-generating units).

Research & development

all expenditure on research is charged to the income statement

in the period in which it is incurred.

Development expenditure is charged to the income statement

as incurred unless it meets the recognition criteria set out in IaS

38 ‘Intangible assets’. Where the recognition criteria are met,

intangible assets are capitalised and amortised over their useful

economic lives.

Financial assets

a. Classification

Financial assets are classified as financial assets at fair

value through profit or loss, loans and receivables, held-tomaturity

investments, or as available-for-sale financial assets.

The Group determines the classification of its financial assets

upon initial recognition.

b. Measurement

The initial and subsequent measurement of financial assets

held by the Group depends on their classification as follows:

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss includes

financial assets held for trading and financial assets designated

upon initial recognition at fair value through profit or loss.

Initial measurement is at fair value and transaction costs are

expensed in the income statement. Subsequent measurement

is at fair value with gains or losses to the fair value recognised

in the income statement.

loans and receivables

Loans and receivables are non-derivative financial assets with

fixed or determinable payments that are not quoted in an active

market. Such financial assets are held at amortised cost using the

effective interest rate method.

Available-for-sale financial assets

Other investments in debt and equity securities held by the Group

are classified as being available-for-sale and are stated at fair

value, with any resultant gain or loss being recognised directly

in other comprehensive income, except for impairment losses.

When these investments are derecognised, the cumulative gain

or loss previously recognised directly in equity is recognised

in the income statement.

c. Impairment of financial assets

The Group assesses at the end of each reporting period whether

there is objective evidence that a financial asset or group of

financial assets is impaired. a financial asset or a group of

financial assets is impaired and impairment losses are incurred

only if there is objective evidence of impairment as a result of one

or more events that occurred after the initial recognition of the

asset (a ‘loss event’) and that loss event (or events) has an impact

on the estimated future cash flows of the financial asset or group

of financial assets that can be reliably estimated.

For the loans and receivables category, 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.

The carrying amount of the asset is reduced and the amount of

the loss is recognised in the income statement. 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 (such as an improvement in the

debtor’s credit rating), the reversal of the previously recognised

impairment loss is recognised in the income statement.

For available-for-sale financial assets, a significant or prolonged

decline in the fair value of the security below its cost is also

evidence that the assets are impaired. If any such evidence

exists for available-for-sale financial assets, the cumulative loss –

measured as the difference between the acquisition cost and the

current fair value, less any impairment loss on that financial asset

previously recognised in profit or loss – is removed from equity

and recognised in the income statement. Impairment losses

recognised on equity instruments are not reversed through

the income statement.

Financial liabilities

When a financial liability is recognised initially, the Group

measures it at its fair value plus, in the case of a financial liability

not at fair value through profit or loss, transaction costs that are

directly attributable to the issue of the financial liability. Financial

liabilities include trade payables, other payables, borrowings

and derivative financial instruments. Subsequent measurement

depends on its classification as follows:

Financial liabilities at fair value through profit or loss

Financial liabilities classified as held for trading and derivative

liabilities that are not designated as effective hedging instruments

are classified as financial liabilities at fair value through profit or

loss. Such liabilities are carried on the balance sheet at fair value

with gains or losses being recognised in the income statement.

other

all other financial liabilities not classified as fair value through

profit or loss are measured at amortised cost using the effective

interest method.

Derivative financial instruments and hedging activities

Derivative financial instruments such as futures and swap

contracts are entered into in order to hedge exposure to price

fluctuations which arise on stock and purchases and sales of oil

products. Derivative financial instruments are recognised at fair

value and gains and losses on remeasurement of contracts at the

balance sheet date, arising as a result of changes in the fair value

of such contracts, are taken to cost of sales.

The fair value of derivative financial instruments such as swaps

and futures is determined by reference to the traded price of that

instrument on the relevant exchange or over the counter market

at the balance sheet date.

Changes in the carrying value of financial instruments that are

designated and effective as hedges of future cash flows (‘cash

flow hedges’) are recognised directly in equity and any ineffective

portion is recognised immediately in the profit and loss account.

amounts deferred in equity in respect of cash flow hedges are

subsequently recognised in the profit and loss account in the

same period in which the hedged item affects net profit or loss.

Hedge accounting is discontinued when the hedging instrument

expires or is sold, terminated, exercised, or no longer qualifies for

hedge accounting. at that time, any cumulative gains or losses

relating to cash flow hedges recognised in equity are recognised

in the profit and loss account.

If a hedged transaction is no longer expected to occur, the net

cumulative gain or loss recognised in equity is transferred to the

profit and loss account immediately.

Fixed price sales and purchase contracts for the delivery

of specified quantities of a commodity at a determined future

date which are in the scope of IaS 39 based on a practice

of net settlement of such contracts are calculated by reference

to the difference between the market index price of the relevant

commodity at the balance sheet date and at the contract

pricing date(s).

leases

Leases in which a significant portion of the risks and rewards

of ownership are retained by the lessor are classified as operating

leases. Payments made under operating leases (net of any

incentives received from the lessor) are charged to the income

statement on a straight-line basis over the period of the lease.

Finance leases, which transfer to the Group substantially all the

risks and benefits incidental to ownership of the leased item,

are capitalised at the commencement of the lease at the fair

value of the leased property or, if lower, at the present value

of the minimum lease payments. Lease payments are apportioned

between finance charges and reduction of the lease liability

so as to achieve a constant rate of interest on the remaining

balance of the liability. Finance charges are recognised in the

income statement.

Leased assets are depreciated over the useful life of the asset.

However, if there is no reasonable certainty that the Group will

obtain ownership by the end of the lease term, the asset is

depreciated over the shorter of the estimated useful life of the

asset and the lease term.

Inventories

Fuel products are traded in active markets and are purchased

with a view to resale in the near future, generating a profit from

fluctuations in prices or margins. as a result, stocks of fuel

products are carried at market value by reference to quoted

market prices at period end, in accordance with the broker/trader

exemption granted by IaS 2. Changes in fair value are recognised

in the income statement through cost of sales. Duty paid on stock

is valued at cost.

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1. Summary of business and significant

accounting policies (continued)

Renewable transport Fuel obligation (RtFo)

Since 1 april 2008 the Group has been part of the renewable

Transport Fuel Obligation (rTFO) Scheme under which it is

required to meet annual targets for the supply of biofuels.

The obligations which arise are either settled by cash or through

the delivery of certificates which are generated by the Group

through the blending of biofuels. To the extent that the Group

generates certificates in excess of its current year obligation,

these can either be carried forward to offset up to 25% of the

next year’s obligation of the Group or sold to other parties.

The liability associated with the Group’s obligations under the

scheme is recognised in the period in which the obligation arises

and is valued by reference to either the cost of generating the

certificates which will be surrendered to meet the obligation or

the expected future cash outflow where cash settled.

Certificates generated or purchased during the period which

will be used to settle the current obligation are recognised at

the lower of cost and net realisable value. Where certificates are

generated, cost is deemed to be the average cost of blending

biofuels during the period in which the certificates are generated.

Certificates held for sale to third parties are recognised at fair

value by reference to period end market prices. Changes in

market prices of the certificates and the quantity of tickets

considered to be realisable through external sales are recognised

immediately in the profit and loss account.

Certificates for which no active market is deemed to exist

are not recognised.

trade receivables

Trade receivables are amounts due from customers for fuel

products sold or services performed in the ordinary course

of business. If collection is expected in one year or less they

are classified as current assets, otherwise they are presented

as non-current assets.

Trade receivables are recognised initially at fair value and

subsequently at amortised cost, less provision for impairment.

Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held

at call with banks, and other short-term highly liquid investments

with original maturities of three months or less.

Share capital

Ordinary shares are classified as equity. Incremental costs

directly attributable to the issue of new shares are shown

in equity as a deduction, net of tax, from the proceeds.

trade payables

Trade payables are obligations to pay for goods or services that

have been acquired in the ordinary course of business from

suppliers. accounts payable are classified as current liabilities

if payment is due within one year or less, otherwise they are

presented as non-current liabilities.

Trade payables are recognised initially at fair value and

subsequently measured at amortised cost.

Borrowings

Borrowings are recognised initially at fair value, net of transaction

costs incurred. Borrowings are subsequently carried at amortised

cost; any difference between the proceeds (net of transaction

costs) and the redemption value is recognised in the income

statement over the period of the borrowings using the effective

interest method.

Fees paid on the establishment of loan facilities are recognised

as transaction costs of the loan to the extent that it is probable

that some or all of the facility will be drawn down. In this case,

the fee is deferred until the draw-down occurs. To the extent

there is no evidence that it is probable that some or all of the

facility will be drawn down, the fee is capitalised as a prepayment

for liquidity services and amortised over the period

of the facility to which it relates.

Bank overdrafts are included within the current borrowings

on the balance sheet.

Current and deferred income taxes

The tax expense for the period comprises current and deferred

tax. Tax is recognised in the income statement, except to the

extent that it relates to items recognised in other comprehensive

income or directly in equity. In this case, the tax is also recognised

in other comprehensive income or directly in equity, respectively.

a. Current taxes

The current income tax charge is calculated on the basis of the

tax laws enacted or substantively enacted at the balance sheet

date in the countries where the Company’s subsidiaries operate

and generate taxable income.

b. Deferred taxes

Deferred income tax is recognised, using the liability method,

on temporary differences arising between the tax bases of assets

and liabilities and their carrying amounts in the consolidated

financial statements. However, deferred tax liabilities are not

recognised if they arise from the initial recognition of goodwill;

deferred income tax is not accounted for if it arises from initial

recognition of an asset or liability in a transaction other than

a business combination that at the time of the transaction affects

neither accounting nor taxable profit or loss. Deferred income tax

is determined using tax rates (and laws) that have been enacted

or substantially enacted by the balance sheet date and are

expected to apply when the related deferred income tax asset

is realised or the deferred income tax liability is settled.

Deferred income tax assets are recognised only to the extent that

it is probable that future taxable profit will be available against

which the temporary differences can be utilised.

Deferred income tax is provided on temporary differences

arising on investments in subsidiaries and associates, except

for deferred income tax liability where the timing of the reversal

of the temporary difference is controlled by the Group and

it is probable that the temporary difference will not reverse

in the foreseeable future.

Deferred income tax assets and liabilities are offset when there

is a legally enforceable right to offset current tax assets against

current tax liabilities and when the deferred income taxes assets

and liabilities relate to income taxes levied by the same taxation

authority on either the same taxable entity or different taxable

entities where there is an intention to settle the balances on

a net basis.

Share-based payments

The Group operates a number of equity-settled, share-based

compensation plans. 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 fully entitled to the award. The total

amount to be expensed over the vesting period is determined

by reference to the fair value of the options granted, excluding

the impact of any non-market vesting conditions (for example,

profitability and sales growth targets). Non-market vesting

conditions are included in assumptions about the number

of options that are expected to vest. at each balance sheet date,

the entity revises its estimates of the number of options that

are expected to vest. It recognises the impact of the revision

to original estimates, if any, in the income statement,

with a corresponding adjustment to equity.

The financial effect of awards by the Group of options over

its equity shares to the employees of subsidiary undertakings

are recognised by the Company in its separate financial

statements. In particular, the Company records an increase

in its investment in subsidiaries with a credit to equity

equivalent to the cost in the subsidiary undertakings.

The proceeds received net of any directly attributable transaction

costs are credited to share capital (nominal value) and share

premium when the options are exercised.

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1. Summary of business and significant

accounting policies (continued)

pension costs

Contributions are made to the personal plans of certain

employees. The expenditure is charged to the income

statement in the period to which it relates.

provisions and contingencies

Provisions are recognised when the Group has a present

obligation (legal or constructive) as a result of a past event,

it is probable that an outflow of resources will be required

to settle the obligation and a reliable estimate can be made

of the amount.

a contingent liability is disclosed where the existence

of an obligation will only be confirmed by future events

or where the amount of the obligation cannot be measured

reliably. Contingent assets are not recognised, but are disclosed

where an inflow of economic benefits is probable.

Where the Company enters into financial guarantee contracts

to guarantee the indebtedness of other companies within

its Group, the Company considers these to be insurance

arrangements, and accounts for them accordingly. In this respect,

the Company treats the guarantee contract as a contingent

liability until such time as it becomes probable that the Company

will be required to make a payment under the guarantee.

Revenue recognition

revenue comprises the fair value of the consideration received

or receivable for the sale of goods and services in the ordinary

course of the Group’s activities.

revenue is recognised when the significant risks and rewards

of ownership have passed to the buyer and the value can be

reliably measured. revenue is measured at the fair value of the

consideration received or receivable for goods provided in the

normal course of business, net of discounts, rebates, VaT and

after eliminating sales within the Group.

The following criteria must also be met before revenue

is recognised:

a. Sale of goods

revenue from the sale of goods represents net invoiced sales

of fuel products and rTFO certificates, excluding value added tax

and including excise duty. revenue is recognised at the point that

title passes to the customer.

b. Managed services and storage services

Managed services and storage services income is recognised

evenly over the contract period. revenue related to one-off

services is recognised on the date of the service provision.

Dividend distribution

Dividend distribution to the Company’s shareholders is

recognised as a liability in the Group and the Company’s financial

statements in the period in which the dividends are approved

by the Company’s shareholders.

Recent accounting developments

a. new and amended standards and interpretations adopted

by the Group for the first time for the financial year beginning

15 April 2011.

annual improvements to IFrSs 2010

b. new and amended standards and interpretations mandatory

for the first time for the financial year beginning 15 April 2011

but not currently relevant to the Group.

amendment to IFrS 1 ‘First time adoption’

amendment to IaS 24 ‘related party disclosures’

IFrIC 14 ‘Prepayments of a minimum funding requirement’

IFrIC 19 ‘Extinguishing financial liabilities with equity investments’

c. new standards, amendments and interpretations issued

but not effective for the financial year beginning 15 April 2011

and not early adopted.

IFrS 9 ‘Financial instruments’

IFrS 10 ‘Consolidated financial statements’

IFrS 11 ‘Joint arrangements’

IFrS 12 ‘Disclosures of interests in other entities’

IFrS 13 ‘Fair value measurement’

IaS 27 (revised 2011) ‘Separate financial statements’

IaS 28 (revised 2011) ‘associates and joint ventures’

amendments to IFrS 1 ‘First time adoption’

amendments to IFrS 7 ‘Financial instruments: Disclosures’

amendments to IaS 1 ‘Financial statement presentation’

amendments to IaS 12 ‘Income taxes’

amendments to IaS 19 ‘Employee benefits’

amendments to IaS 32 ‘Financial instruments: Presentation’

IFrIC 20 ‘Stripping costs in the production phase

of a surface mine’

None of the accounting developments above have or are

expected to have a significant effect on the Group’s financial

statements aside from potential presentational changes.

2. Critical accounting estimates and judgements

Estimates and judgements applied within the business are

continually evaluated and are based on historical experience,

current issues and events, and expectations of future events.

Valuation of inventory

The Group’s inventories which include fuel products and

rTFO certificates are subject to fluctuations in value as a result

of changes in their market price. as set out in note 1 above both

fuel products and rTFO certificates held for sale to third parties

are recognised at market value in the financial statements.

Where there is no quoted marker for certain fuel products

or vintages of rTFO certificates, a period end market value

is assigned based on relevant comparative market data and

recent realised prices.

estimate of impairment of non-current assets

The Group determines whether property, plant and equipment

are impaired when there is an indicator of potential impairment.

This requires the determination of the recoverable amount of the

cash-generating units to which the property, plant and equipment

are allocated. The recoverable amounts are determined by

estimating the value in use of those cash-generating units.

Value in use calculations require the Group to make an estimate

of the expected future cash flows to be derived from the cashgenerating

units and to choose a suitable discount rate in order

to calculate the present value of those cash flows. Further

detail on the assumptions used in determining the value

in use is provided in note 12.

3. nature and extent of risks arising

from financial instruments

The Directors have identified the following types of risk

which may arise from the use of financial instruments.

Credit risk

The Group is exposed to credit risk from its operating activities

(primarily trade receivables and derivative instruments) and

from its financing activities, including deposits with banks

and financial institutions, foreign exchange transactions and

other financial instruments.

In respect of trade receivables, the Group operates a strict

policy of applying credit limits to all new customers prior

to entering into a transaction. These limits are then subject

to regular review throughout the term of the contractual

relationship. The Group uses third party credit referencing

agencies as an input into this process and monitors all trade

debtor balances on a daily basis. Exposure to debt default

is managed by the use of credit insurance.

The counterparties involved in the Group’s other financial

instruments such as swaps, futures and fixed price sales and

purchase contracts within the scope of IaS 39 are subjected

to the same credit review process. In addition, contractual terms

for all such instruments are reviewed in detail to ensure that

credit risk is minimised.

Credit risk from balances with banks and financial institutions

is managed by the treasury team. Investments of surplus funds

are only made with approved counterparties who have a rating of

‘a’ or higher. The credit ratings of the two primary lenders at the

balance sheet date are detailed in the liquidity risk section below.

Because of the processes detailed above, the Directors believe

there is no material exposure to credit risk on the Group’s

financial instruments at the balance sheet date.

liquidity risk

The Group’s treasury department constantly monitors the Group’s

cash position by maintaining up-to-date cash flow projections

so that appropriate action may be taken to ensure financial

liabilities are met as they become due. In addition, the Group

aims to maintain a net current asset position. The Directors

therefore consider that the exposure to liquidity risk is low.

The Group has been trading on the basis of uncommitted

revolving facilities with the same principal bankers for the past

19 years. In managing its working capital requirements, the

Group currently relies on a combination of these uncommitted

revolving facilities, which could be withdrawn at any time and

a committed credit line, which is scheduled for its biennial renewal

in March 2013. Given the long standing nature of these banking

relationships, the bankers’ willingness to renew and extend credit

lines in the recent past, and verbal assurances received from the

bankers, the Directors are satisfied that both the uncommitted

and committed facilities will continue to be available to the Group

for the foreseeable future.

The table below shows the credit rating and the utilisation

of the credit facilities of the four primary lenders at the balance

sheet date.

80 Greenergy Annual Report 2012

Greenergy Annual Report 2012 81

Group

Counterparty

rating

Credit facility

£’000

14 April 2012 14 April 2011

Utilised

£’000

Credit facility

‘£000

Barclays a 285,000 46,792 285,000 143,255

BNP Paribas aa- 201,448 35,171 195,587 62,370

Natixis a 37,771 2,782 - -

Société Générale a 47,214 - - -

Utilised

£’000

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3. nature and extent of risks arising

from financial instruments (continued)

Market risk

This area can be further subdivided into fuel product price risk,

foreign exchange risk and interest rate risk which are addressed

separately below.

a. Fuel product price risk

Fuel product prices are subject to international supply

and demand, which are themselves particularly dependent

on political climates throughout the world. The resulting risk

of product price fluctuations impacting the Group’s future

cash flows is therefore high.

The Group has developed comprehensive internal control

processes and hedging mechanisms to minimise this inherent

risk. The objective of these mechanisms is to match the

Group’s priced physical positions (generated from spot and

term contracts entered into with suppliers and customers) with

equal and opposite derivative positions. In order to achieve this,

the Group’s risk management department analyses the priced

position for each product type throughout each day. Traders use

this information to identify the most appropriate derivative for

hedging purposes.

The main types of hedge transaction which the Group

enters into are as follows:

1. Exchange-traded commodity derivatives

Typically in the form of futures and options traded on

a recognised exchange such as the International Petroleum

Exchange or the New York Mercantile Exchange. The fair

value of these derivatives changes with movements in the

underlying commodity price. The Group is generally obliged

to make margin calls to the exchange where the fair value of the

instrument is in favour of the exchange. The Group generally

closes out any futures contracts prior to crystallisation.

at 14 april 2012, if the closing price for each of the Group’s

exchange-traded commodity derivatives had been 1 US Dollar

per metric tonne lower with all other variables held constant,

consolidated post tax profit for the period would have been

£13,000 lower (2011: £20,000 higher).

2. Over-the-counter (‘OTC’) contracts

Typically in the form of commodity swaps. OTC contracts

are negotiated between two parties and are not traded on

an exchange. Swaps are entered into in respect of specified

indices and time periods. The amount payable under such

instruments varies directly with the quote of those indices over

the specified period. The Group is generally obliged to make

margin calls to the counterparty where the fair value of the

instrument is in favour of the counterparty.

at 14 april 2012, if the closing price for each of the open OTC

contracts had been 1 US Dollar per metric tonne lower with all

other variables held constant, consolidated post tax profit for

the period would have been £56,000 (2011: £40,000) higher.

3. Sales and purchase contract embedded hedges

Typically in the form of fixed price spot and term physical

contracts. The fair values of the hedges embedded in fixed

price sales and purchase contracts for the delivery of specified

quantities of a commodity at a determined future date are

calculated by reference to the difference between the market

index price of the relevant commodity at the balance sheet date

and at the contract pricing date(s).

at 14 april 2012, if the market price indices of the relevant

commodities for the total priced physical position had been

1 US Dollar per metric tonne lower with all other variables held

constant, consolidated post tax profit for the period would have

been £36,000 (2011: £75,000) lower.

b. Foreign currency exchange risk

The Group purchases fuel products mainly in US Dollars and

Euros. Because the international oil markets generally price

in US Dollars, and the majority of the Group’s UK customers

wish to purchase fuel products in Pounds Sterling, there can

be a significant foreign currency exchange risk inherent in this

aspect of the Group’s business. In order to minimise the financial

effect of this risk, the Group looks to ensure that at all times,

the financial assets denominated in a particular currency match

the financial liabilities denominated in the same currency.

Where product is purchased and sold in the same currency,

no foreign exchange exposure exists.

Where the Group’s stock is denominated in US Dollars and a

sale is priced in Pounds Sterling, a net US Dollar financial liability

is generated, resulting in a potential foreign exchange exposure.

Where purchases and sales are priced in different currencies,

the Group’s treasury department buys or sells currency to

balance the assets and liabilities by currency, thus eliminating

this transactional foreign exchange risk.

as a further control, balance sheets for each of the Group’s major

currencies are prepared on a monthly basis and any surplus

assets or liabilities are hedged as appropriate.

c. Interest rate risk

The Group’s main tangible fixed assets act as security for two

separate term loans within Greenergy Terminals Limited. Interest

on these loans is charged at variable rates related to LIBOr.

The interest rate risk inherent in the movement of LIBOr has

been removed by entering into two interest rate swaps covering

the value of the loan.

1. Interest rate swap 1 - Greenergy Terminals Limited

The effect of the interest rate swap has been to convert

the loan into debt at a fixed rate of 3.05% per annum.

2. Interest rate swap 2 - Greenergy Terminals Limited

The effect of the interest rate swap has been to convert

the loan into debt at a fixed rate of 2.06% per annum.

Interest on the Group’s deposits/overdrafts is credited/charged

on a daily basis based on LIBOr plus a commercial margin.

The Directors consider that there is no material exposure

to interest rate risk on the Group’s financial instruments

at the balance sheet date.

4. Capital management

Management regards the capital of the business to be equity and

net debt (constituting borrowings less cash and cash equivalents).

The Group’s objective for managing capital is to maintain a solid

capital base in order to preserve the confidence of the Group’s

investors and creditors and to sustain future development of

its businesses.

Group members are subject to various banking covenants on their

financing facilities. These generally take the form of a requirement

to meet a variety of financial ratio targets. Such targets are

monitored as part of the regular reporting processes for the

entities concerned.

One of the covenants places a restriction on the level of dividend

which Greenergy Fuels Holdings Limited’s subsidiary Greenergy

Fuels Limited may distribute.

a variety of financial modelling techniques are employed in the

appraisal of potential capital expenditure projects and Board

approval is required before such projects are entered into.

There were no changes in the Group’s approach to capital

management during the period.

82 Greenergy Annual Report 2012

Greenergy Annual Report 2012 83

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5. Operating profit

14 April 2012

£’000

14 April 2011

£’000

5a Group operating profit is stated after charging/(crediting):

Operating lease rentals:

Land and buildings 310 357

Other 30,105 26,437

Depreciation, amortisation and impairment 7,746 6,255

Employee benefit expense (note 6) 16,530 12,534

Foreign exchange loss/(gain) 450 5,895

5b Auditor’s remuneration:

Fees payable to the Company’s auditor for the audit of Parent Company and

consolidated financial statements

Fees payable to the Company’s auditor and its associates for other services:

104 132

» audit of financial statements of subsidiaries pursuant to legislation 136 143

» Other services relating to taxation 60 155

» Other services 276 118

6. employee numbers and benefit expense

14 April 2012

14 April 2011

The average monthly number of persons employed by the Group (including Directors)

during the period, analysed by category, was as follows:

Selling and administration 137 127

14 April 2012

£’000

14 April 2011

£’000

The aggregate payroll costs of these persons were as follows:

Wages and salaries 14,333 10,771

Social security costs 1,850 1,482

Pensions and post retirement benefits 180 28

Equity-settled share-based payments 167 253

The Company had no direct employees during the period.

16,530 12,534

7. Finance income

84 Greenergy Annual Report 2012

Greenergy Annual Report 2012 85

14 April 2012

£’000

14 April 2011

£’000

Interest receivable on:

Bank balances 241 80

Other loans 2 1

243 81

8. Finance costs

14 April 2012

£’000

14 April 2011

£’000

Interest payable on:

Bank balances 3,435 3,742

Other loans 1,426 867

4,861 4,609

Capitalised to fixed assets during the period - (175)

recognised in the income statement 4,861 4,434

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9. Income tax expense

14 April 2012

£’000

14 April 2011

£’000

Analysis of charge in period:

UK corporation tax

Current tax on income for the period 8,442 -

adjustment in respect of previous periods (230) (2,836)

Overseas tax

8,212 (2,836)

Current tax on income for the period 811 214

adjustment in respect of previous periods - -

811 214

Total current tax charge/(credit)

Deferred tax (note 20)

9,023 (2,622)

Origination and reversal of timing differences 743 92

adjustment in respect of previous periods 463 2,103

Total deferred tax charge 1,206 2,195

Tax on profit on ordinary activities 10,229 (427)

The total tax charge/(credit) for the period is higher (2011: lower) than the standard rate of corporation tax in the UK

(25.92%, 2011: 27.96%). The differences are explained below:

14 April 2012

£’000

14 April 2011

£’000

Profit before tax 35,515 13,433

at tax 25.92% (2011: 27.96%) 9,205 3,756

Effects of:

Expenses not deductible for tax 668 (92)

Effect of different effective tax rates overseas 811 (1,865)

Other short term timing differences - (13)

re-measurement of deferred tax due to change in UK tax rate (688) (491)

Deduction in respect of Schedule 23 - (989)

adjustments in respect of previous periods 233 (733)

Total tax charge/(credit) 10,229 (427)

Factors that may affect future tax charges: During the current financial period the Government enacted legislation to cut the

rate of corporation tax from 26% to 24% for financial years commencing on or after 1 april 2012. Further tax cuts are planned

in future years reducing the rate of corporation tax to 23% by 2014/15. The carry forward and use of unutilised tax losses will

result in a reduction of the future current tax charges of the Group. There are no current or deferred tax items relating to other

comprehensive income in these financial statements.

10. Dividends

86 Greenergy Annual Report 2012

Greenergy Annual Report 2012 87

14 April 2012

£’000

14 April 2011

£’000

Current period interim dividend paid:

£10.01 per share (2011: nil) 1,591 -

Previous period final dividend paid:

£14.73 per share (2011: £29.65 per share) 2,341 4,555

The Directors have proposed a final ordinary dividend in respect of the current period of £3,075,000 (2011: £2,341,000).

This has not been included within payables as it was not approved before the period end.

The dividend proposed will be received from other Group companies in advance of being paid, and will be paid on behalf

of the Parent Company by a subsidiary.

11. Property, plant and equipment

Group

Assets under

construction

£’000

Land and

buildings

£’000

Plant and

machinery

£’000

Office

equipment

£’000

Cost

at 15 april 2010 13,203 1,330 70,733 1,362 86,628

additions 403 8 14,190 1,536 16,137

Disposals - - (72) (40) (112)

reclassifications (13,203) (112) 13,315 - -

at 14 april 2011 403 1,226 98,166 2,858 102,653

additions 1,661 200 7,980 152 9,993

reclassifications (403) - 403 - -

At 14 April 2012 1,661 1,426 106,549 3,010 112,646

Accumulated depreciation

at 15 april 2010 - (10) (7,028) (677) (7,715)

Disposals - - 5 28 33

Charge for the period - (8) (5,605) (642) (6,255)

at 14 april 2011 - (18) (12,628) (1,291) (13,937)

Charge for the period - (12) (6,418) (642) (7,072)

At 14 April 2012 - (30) (19,046) (1,933) (21,009)

net book value at 14 April 2012 1,661 1,396 87,503 1,077 91,637

Net book value at 14 april 2011 403 1,208 85,538 1,567 88,716

Net book value at 14 april 2010 13,203 1,320 63,705 685 78,913

Depreciation expense of £2,851,000 (2011: £2,750,000) has been charged to cost of sales, £3,591,000 (2011: £3,103,000)

in distribution costs and £630,000 (2011: £402,000) in administration expenses.

The Group had contracted, but not yet incurred, capital expenditure of £2,582,000 as at 14 april 2012 (2011: £nil).

Total

£’000

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12. Intangible assets

Group

Purchased

goodwill

£’000

research and

development

£’000

Cost

at 15 april 2010 11,434 - 11,434

additions - 77 77

at 14 april 2011 11,434 77 11,511

additions - 2,173 2,173

Disposals (77) (77)

At 14 April 2012

Accumulated amortisation and impairment

11,434 2,173 13,607

at 15 april 2010, 14 april 2011 and 14 april 2012 - - -

net book value at 14 April 2012 11,434 2,173 13,607

Net book value at 14 april 2011 11,434 77 11,511

Net book value at 14 april 2010 11,434 - 11,434

research and development relates to internally generated software assets.

as detailed in the accounting policies goodwill is assessed for impairment annually.

Impairment reviews are performed for all other tangible and intangible assets where there has been an indicator of impairment during

the period, or the prior period. These impairment reviews are based on value-in-use calculations for the relevant Cash Generating

Units (CGU). These calculations use pre-tax cash flow projections based on financial budgets approved by management covering

a five-year period. Cash flows beyond the five year period are extrapolated using estimated growth rates.

Key assumptions for impairment reviews conducted in the current year were as follows:

» Pre-tax discount rate of 7.5%.

» Nominal growth rate of cash flows between 5 and 14 years of 4.5%.

» Nominal growth rate of cash flows after 14 years of 2.5%.

as part of the review process a sensitivity analysis is applied, flexing key assumptions such as growth rates and distant rates.

The impairment reviews, including the sensitivity analysis, conducted indicated that there were no impairments of CGUs in the period.

Total

£’000

13. Investments

Company £’000

13a Investments in subsidiaries

Cost

additions 244

at 14 april 2011 244

additions -

At 14 April 2012 244

Interests in subsidiary undertakings are as follows. all interests are 100% unless otherwise stated.

name of undertaking Country of registration Principal activity Direct/indirect

Greenergy International Limited England and Wales Holding company Direct

Greenergy Fuels Limited England and Wales Blending, supply and marketing

of branded low emission fuels

Indirect

Greenergy Biofuels Limited England and Wales Construction and operation of biofuel

production plants and distribution

of resultant products

Greenergy Deutschland GmbH Germany Distribution of low emission fuels

to the German market

88 Greenergy Annual Report 2012

Greenergy Annual Report 2012 89

Indirect

Indirect

Greenergy Sa Switzerland Provision of oil trading services Indirect

Greenergy USa Inc United States of america Origination of low emission fuels

and feedstock

Greenergy Terminals Limited England and Wales Construction and operation

of fuel terminals

Indirect

Indirect

Greenergy Flexigrid Limited England and Wales Supply of road fuels Direct

Greenergy Bioethanol Sa 1 Switzerland Trading entity working to

procure sustainable bioethanol

Greenergy Brasil Trading Sa 1 Brazil Support entity working to

procure sustainable bioethanol

1 The Group interests in Greenergy Bioethanol Sa and Greenergy Brasil Trading Sa are 70%.

During the year the Group subscribed for the share capital of Greenergy Flexigrid Limited.

all of the above companies operate principally in their country of incorporation or registration.

The Directors believe that the carrying value of the investments is supported by their underlying net assets.

Indirect

Indirect

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Group

13b Investments in associates

Cost

additions 78

at 14 april 2011 78

additions 60

At 14 April 2012 138

The investments in associates relates to a 23% investment in Scarab Distributed Energy Limited, a private company.

The Company is currently in a start-up phase and as such there are no material profits or losses to recognise.

14. Available for sale financial assets

Group

equity investments classified as available for:

14 April 2012

£’000

£’000

14 April 2011

£’000

Fair value on acquisition 5,704 5,704

Decrease in fair value (5,356) (4,267)

net fair value 348 1,437

The investment classified as available-for-sale relates to a 5.04% investment in Camco International Limited, a company quoted

on the London Stock Exchange’s alternative Investment Market. The fair value of the investment in Camco is determined by reference

to published price quotations in an active market. as at 14 april 2012, the published price quote of this investment was 4.11p per share

(2011: 17.00p per share).

as at 14 april 2012, the Directors considered the decrease in the fair value of the investment in Camco to be significant and

prolonged and as such have impaired the asset to a price of 6.27p per share. This resulted in an exceptional charge to the profit

and loss of £674,000.

15. Inventory

Group

14 April 2012

£’000

14 April 2011

£’000

Fuel products 310,756 276,957

rTFO certificates - own use 10,805 14,472

rTFO certificates - held for trading 4,815 4,347

326,376 295,776

During the period £11,571,795,000 of inventory was expensed through cost of sales (2011: £9,508,139,000).

There were no write downs of inventory in either period.

Inventories with a carrying amount of £35,171,000 were pledged as security for certain of the Group’s borrowings (2011: £56,163,000).

16. Trade and other receivables

90 Greenergy Annual Report 2012

Greenergy Annual Report 2012 91

Group

14 April 2012

£’000

14 April 2011

£’000

Trade receivables 625,769 588,401

Less: Provision for impairment of receivables (364) (106)

625,405 588,295

Other debtors 2,088 976

Prepayments 14,175 14,465

accrued income 110,908 67,632

Derivative financial instruments 9,892 30,829

762,468 702,197

Trade receivables with a carrying amount of £46,792,000 were pledged as security for certain of the Group’s borrowings

(2011: £150,834,000).

Trade and other receivables are predominantly non-interest bearing.

as of 14 april 2012, trade debtors of the Group with a carrying value of £364,000 (2011: £106,000) were provided for.

The amount of the provision was £364,000 (2011: £106,000). The aging of these debtors is as follows:

Group

14 April 2012

£’000

14 April 2011

£’000

1-10 Days - -

11-30 Days - -

30+ Days 364 106

364 106

The receivables which have been provided for at the period end have either entered administration and have been fully provided

or are experiencing unexpected financial difficulty and it was assessed that not all of the receivables balance may be recovered.

During the period, receivables of the Group written off as uncollectible amounted to £5,000 (2011: £10,000). The Company did not

write off any receivables as uncollectible during the period.

The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable mentioned above.

Neither the Group nor the Company hold any collateral as security.

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17. Cash and cash equivalents

Group

14 April 2012

£’000

14 April 2011

£’000

Cash at bank and on hand 93,711 114,490

Cash and cash equivalents 93,711 114,490

Cash and cash equivalents include the following for the purposes of the statement of cash flows:

Group

14 April 2012

£’000

14 April 2011

£’000

Cash and cash equivalents 93,711 114,490

Bank overdrafts (note 18) (111,805) (208,229)

Cash and cash equivalents and bank overdrafts (18,094) (93,739)

18. Borrowings

Group Maturity

92 Greenergy Annual Report 2012

Greenergy Annual Report 2012 93

14 April 2012

£’000

14 April 2011

£’000

Borrowings - current

Bank overdrafts:

United Kingdom On demand 76,634 145,830

Non United Kingdom On demand 35,171 62,399

111,805 208,229

Bank loans: United Kingdom See below 2,932 2,932

Other third party loans 75 75

114,812 211,236

The bank loans shown above comprise two separate loans. The first loan was taken out by Greenergy Terminals Limited and

is repayable in quarterly instalments of £383,000 starting on 28 July 2010. The second loan was taken out by Greenergy Terminals

Limited and is repayable in quarterly instalments of £350,000 starting on 3 November 2010.

Interest on the bank overdrafts is charged at a commercial margin above LIBOr (United Kingdom) and FED (Non-United Kingdom).

The blended effective interest rate on the bank loans undertaken by Greenergy Terminals Limited is 2.56% after the effect of the

interest rate swaps discussed in note 3c.

Group

14 April 2012

£’000

14 April 2011

£’000

Borrowings - non-current

Bank loans 7,028 9,976

Other third-party loans 81 156

7,109 10,132

effective*

interest rate % Maturity

14 April 2012

£’000

Bank loans

Bank loans:

United Kingdom

*includes the effects of related interest rate swap as discussed in note 3c.

2.56% 2015 9,960

The bank loans due in more than one year relate to the facilities undertaken by Greenergy Terminals and are repayable in quarterly

instalments of £383,000 that started on 28 July 2010, and quarterly instalments of £350,000 that started on 3 November 2010.

The other third party loans relate to the costs of commissioning of Greenergy Biofuels Immingham plant, due to be repaid by 31

March 2014. The amount is a fixed repayment of £75,000 per annum.

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18. Borrowings (continued)

Group

14 April 2012

£’000

14 April 2011

£’000

Maturity of debt

Within one year 3,007 3,007

In more than one year, but not more than two years 3,007 3,007

In more than two years, but not more than five years 4,102 7,125

10,116 13,139

19. Provisions for other liabilities and charges

Group

Provision for plant

dismantlement

£’000

At 14 April 2011 and 2012 1,750

The dismantlement provision represents management’s estimate of the costs involved in dismantling the Immingham biofuels plant

at the end of its useful life and returning the site to the same state in which it was originally acquired. Management reviews the

provision on an annual basis to ensure that the expected outflow of economic benefits is correctly provided for.

20. Deferred income tax

14 April 2012

£’000

14 April 2011

£’000

The elements of the deferred taxation provision are as follows:

accelerated capital allowances (9,239) (8,051)

Other short term timing differences 856 912

Losses and other differences 635 688

net deferred tax liability (7,748) (6,451)

Deferred tax asset 1,743 1,651

Deferred tax liability (9,491) (8,102)

net deferred tax liability (7,748) (6,451)

14 April 2012

£’000

14 April 2011

£’000

The movement on deferred taxation is as follows:

at the beginning of the year (6,451) (3,272)

Income statement charge (1,206) (2,195)

Tax charged/(credited) directly to equity (91) (984)

At the end of the year (7,748) (6,451)

21. Trade and other payables

94 Greenergy Annual Report 2012

Greenergy Annual Report 2012 95

Group

14 April 2012

£’000

14 April 2011

£’000

Trade payables 21,439 63,286

rTFO - current year obilgation 10,805 14,472

Other taxes and social security 763,687 683,580

Other creditors 3,899 1,353

accrued expenses 231,626 110,875

Deferred income 139 1,294

Derivative financial instruments 10,537 24,665

1,042,132 899,524

The carrying amounts of trade payables and other payables approximate to their fair values. Trade and other payables

are predominantly non-interest bearing.

22. Financial instruments

The accounting policies for financial instruments in note 1 have been applied to the line items below:

Group

Loans and

receivables

£’000

Assets at fair

value through

profit and loss

£’000

Available

for sale

£’000

Assets at 14 April 2012

available-for-sale investments (level 1) - - 348 348

Derivative financial instruments (level 1) - 60 - 60

Derivative financial instruments (level 2) - 9,832 - 9,832

Debtors 738,401 - - 738,401

Cash 93,711 - - 93,711

832,112 9,892 348 842,352

Assets at 14 April 2011

available-for-sale investments (level 1) - - 1,437 1,437

Derivative financial instruments (level 1) - 3,961 - 3,961

Derivative financial instruments (level 2) - 26,868 - 26,868

Debtors 656,903 - - 656,903

Cash 114,490 - - 114,490

771,393 30,829 1,437 803,659

Total

£’000

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22. Financial instruments (continued)

Liabilities at fair

value through

profit and loss

£’000

Other financial

liabilities

£’000

Liabilities at 14 April 2012

Creditors - 371,776 371,776

Derivative financial instruments (level 1) 7,303 - 7,303

Derivative financial instruments (level 2) 3,234 - 3,234

10,537 371,776 382,313

Liabilities at 14 April 2011

Creditors - 386,750 386,750

Derivative financial instruments (level 1) 7,547 - 7,547

Derivative financial instruments (level 2) 17,118 - 17,118

24,665 386,750 411,415

The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date.

a market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group,

pricing service, or regulatory agency, and those prices represent actual and regularly occuring market transactions on an arm’s

length basis. The quoted market price used for financial assets held by the Group is the current bid price. These instruments are

included in level 1. Instruments included in level 1 comprise aIM equity investments classified as available for sale and exchange

traded commodity derivative financial instruments.

The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives)

is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where

it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument

are observable, the instrument is included in level 2.

No analysis of where hedge accounting has been applied is provided because the hedged amount is considered immaterial to these

financial statements.

The carrying amounts of financial assets are denominated in the following currencies:

Group

14 April 2012

£’000

Total

£’000

14 April 2011

£’000

Pounds 738,219 670,662

US Dollars 102,571 131,644

Euros 523 1,012

Swiss Francs 106 23

Brazilian real 933 318

842,352 803,659

No analysis of the age of financial assets that are past due at the balance sheet date but not impaired is provided because these

balances are not significant and consequently the risk of exposure on these assets is considered to be immaterial to the financial

statements. The carrying amounts of trade debtors and other receivables approximate to their values.

22. Financial instruments (continued)

96 Greenergy Annual Report 2012

Greenergy Annual Report 2012 97

Group

Charge/(credit)

to profit &

loss account

£’000

14 April 2012 14 April 2011

Fair value

asset/

(liability)

£’000

Charge/(credit)

to profit &

loss account

£’000

Fair value

asset/

(liability)

£’000

Derivative financial instruments 4,218 (8,563) 5,904 (4,345)

Sales and purchase commodity contracts 2,591 7,918 (13,144) 10,509

6,809 (645) (7,240) 6,164

Included in trade and other receivables 9,892 30,829

Included in trade and other payables (10,537) (24,665)

(645) 6,164

Derivative financial instruments shown above generally relate to exchange traded commodity derivatives and over-the-counter

contracts. Sales and purchase commodity contracts relate to open contracts that the Group has entered into.

The carrying amounts of creditors are denominated in the following currencies:

Group

14 April 2012

£’000

14 April 2011

£’000

Pounds 259,640 247,817

US Dollars 119,799 162,365

Euros 1,812 392

Swiss Francs 438 241

Brazilian real 624 600

382,313 411,415

Company

at 14 april 2012 and 14 april 2011, all financial assets of the Company were categorised as equity investments.

The Company held no financial liabilities at 14 april 2012 or 14 april 2011.

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23. Called up share capital

Company

14 April 2012

£’000

14 April 2011

£’000

Allotted, called up and fully paid

103,406 ordinary shares of £1 each 103 103

55,558 non-voting ordinary shares of £1 each 56 56

159 159

Other than the ability to vote at general meetings, the rights of ordinary and non-voting ordinary shareholders are identical.

24. Share based payments

Details of outstanding share options awarded to Group employees including Directors are set out below:

Date of grant Date of expiry

Strike

price £

Opening

balance

vested at

opening

repurchased

in the year

Balance of

options remaining

vested at

closing

15 apr 2002 14 apr 2012* £6.00 375 100% (100) 275 100%

21 Mar 2006 20 Mar 2016 £6.00 275 100% 275 100%

21 Mar 2006 20 Mar 2016 £100.00 3,300 100% 3,300 100%

21 Mar 2006 20 Mar 2016 £100.00 300 100% 300 100%

21 Mar 2006 20 Mar 2016 £200.00 2,267 100% (50) 2,217 100%

28 Feb 2008 27 Feb 2018 £750.00 2,000 100% 2,000 100%

28 Feb 2008 27 Feb 2018 £750.00 4,264 75% 4,264 100%

*possible extension of expiry date to be reviewed

24. Share based payments (continued)

The following tables illustrates the number and weighted average exercise price (WaEP) of, and movements in, share options

during the period.

Opening balance outstanding 12,781 £431.52 20,872 £292.09

Exercised during the period - - (5,340) £33.25

repurchased during the period (150) £4.29 (26) £200.00

Forfeited during the period - - (2,725) £146.20

Closing balance outstanding 12,631 £435.81 12,781 £431.52

Closing balance exercisable 12,631 £435.81 11,715 £431.52

For share options outstanding as at 14 april 2012, the weighted average remaining contractual life is 4.81 years (2011: 5.77 years).

The Group’s equity-settled share-based payments are made under a share option plan dated 5 July 2000, as amended on 21 March

2006 (the ‘Plan’). From time to time, the Group awards share options to employees of the Company itself and employees of other

Group companies.

Options awarded under the Plan have a life of 10 years and normally vest equally on the first, second, third and fourth anniversary

of grant. Subject to certain conditions, vested options may be exercised on or after the earlier of flotation or takeover of the

Company; and 50% of those options granted on or after 21 March 2006, may be exercised on the fifth anniversary of grant.

The Directors have assessed the probability of the exercise conditions being met at various times during the life of each option and

applied the inputs shown in the table below to a simple binomial model in order to determine the fair value of each option award

under the Plan. In the absence of historic pricing information for the Group’s shares, the Directors have assessed expected volatility

by considering the historic volatility of similar listed entities.

98 Greenergy Annual Report 2012

Greenergy Annual Report 2012 99

2012

no.

2012

WAeP

Granted 21 Mar 2006

exercise price

£100

2011

no.

Granted 21 Mar 2006

exercise price

£200

2011

WAeP

Granted 26 Feb 2008

exercise price

£750

The Plan: 2012 option awards

Share price at date of grant £200 £200 £750

Exercise price £200 £200 £750

Maximum option life in years 10 10 10

risk free rate 4.4% 4.4% 4.4%

Expected staff turnover excluding Directors 10% 10% 5%

Expected volatility 40% 40% 17%

Expected dividend yield 2.5% 2.5% 0%

expected value per option £108 - £111 £67 - £72 £164

The expense recognised for equity-settled share-based payments in respect of employee services received during the period

is £167,000 (2011: £253,000).

financial statements Chief finanCial

COrpOrate

COrpOrate

strategy in aCtiOn

market review

Chief exeCutive’s

Overview

OffiCer’s review

gOvernanCe

respOnsibility

review


finAnciAl stAtEmEnts

notEs to

thE finAnciAl

stAtEmEnts

continUEd

25. net cash provided by operating activities

Group note

14 April 2012

£’000

14 April 2011

£’000

Profit before taxation 35,515 13,433

adjustments for:

Depreciation of property, plant and equipment 7,072 6,255

Impairment of available for sales assets 14 674 -

Share based payments charge 167 253

revaluation of financial instruments 6,809 (7,240)

Increase in inventory (34,262) (33,230)

Increase in receivables (81,125) (195,523)

Increase in payables 160,314 61,921

Income taxes paid (534) (4,258)

Other non-operating charges 4,521 4,353

net cash generated from operating activities 99,151 (154,036)

26. Financial commitments

Land and buildings Other

14 April 2012

£’000

14 April 2011

£’000

14 April 2012

£’000

14 April 2011

£’000

Operating leases which expire:

No later than one year 32 - 19,074 17,289

Later than one year and no later than five years 782 1,160 16,504 17,181

Later than five years 409 439 9,378 -

1,223 1,599 44,956 34,470

27. Contingencies

Greenergy Fuels Limited and Greenergy Biofuels Limited have given fixed and floating charges over all the assets of the respective Group

Companies in favour of their principal bankers to secure the liabilities to such bankers.

Group

14 April 2012

£’000

14 April 2011

£’000

The aggregate secured liabilities comprise:

Bank loans and overdrafts 121,765 221,137

Greenergy Fuels Limited has also provided unsecured guarantees to the Dutch Collector of Taxes amounting to €904,000

(2011: €904,000).

28. related party transactions

The Company is the ultimate parent of the Group and has no parent company.

Company

During the period the Company received dividends from subsidaries of £3,932,000. at the period end date there were

no balances outstanding.

Group

The following transactions were carried out with related parties:

100 Greenergy Annual Report 2012

Greenergy Annual Report 2012 101

14 April 2012

£’000

14 April 2011

£’000

a Sales/(purchases) of services

related parties with common directorships - sales 5 5

related parties with common directorships - purchases (26) -

14 April 2012

£’000

14 April 2011

£’000

b Consultancy fees

related parties with common directorships 291 184

14 April 2012

£’000

14 April 2011

£’000

c Loans granted

related parties with common directorships 239 -

14 April 2012

£’000

14 April 2011

£’000

d Period end balances arising from sales/purchases of goods and services and loans

related parties with common directorships:

receivables - -

Payables - -

Loans 239 -

There were no guarantees associated with these transactions and no amounts were provided for at the balance sheet date.

FInAnCIAL STATeMenTS CHIEF FINaNCIaL

COrPOraTE

COrPOraTE

STraTEGY IN aCTION

MarKET rEVIEW

CHIEF ExECUTIVE’S

OVErVIEW

OFFICEr’S rEVIEW

GOVErNaNCE

rESPONSIBILITY

rEVIEW


finAnciAl stAtEmEnts

notEs to

thE finAnciAl

stAtEmEnts

continUEd

29. Key management personnel compensation

Key management is composed of the Directors. The compensation paid or payable to key management of the Group for employee

services is shown below:

14 April 2012

£’000

14 April 2011

£’000

Salaries and other short term benefits 2,998 2,410

Post employment benefits 25 25

Share-based payments 75 226

3,098 2,661

Highest paid Director

aggregate emoluments 807 662

Company pension contributions to money purchase schemes 10 24

817 686

During the period the highest paid Director did not exercise any share options (2011: none).

During the period key management personnel exercised no share options.

30. Post balance sheet events

On 26 June 2012 the Group reached agreement with the joint administrators of Petroplus refining and Marketing Limited to purchase

assets of the former Coryton refinery under a joint venture with royal Vopak and Shell UK Limited. Greenergy will be equal shareholders

in the new joint venture which will acquire and develop the assets and the site.

after 14 april 2012 but prior to the signing of the accounts the Group has agreed to set aside 25% of the future profits of Greenergy

Flexigrid Limited for the benefit of the drivers that are recruited by that company. Whilst a binding commitment has been given

to this effect, the precise structure of the arrangement has not been agreed.

Effective from 8 May 2012 the Board agreed the principles of a new share incentive scheme for existing employees, and the particular

awards under the scheme; the new scheme will run alongside current schemes.

officERs And

pRofEssionAl

AdvisoRs

Directors

a W Owens

T G Earley

P T Bateson

J H Sodha

C S Lumbard

D a rees (Non-Executive)

P J Lester (Non-Executive)

M T N Fletcher (Non-Executive)

a Marsh (Non-Executive)

Company secretary

102 Greenergy Annual Report 2012

Designed by Mr B & Friends

Greenergy Annual Report 2012 103

r W Clifton

registered office

198 High Holborn

London, WC1V 7BD

Independent auditors

PricewaterhouseCoopers LLP

Chartered accountants and Statutory auditors

1 Embankment Place

London, WC2N 6rH

Solicitors

ashurst LLP

Broadwalk House

5 appold Street

London, EC2a 2Ha

Bankers

Barclays Bank plc

Level 28

1 Churchill Place

London, E14 5HP

BNP Paribas (Suisse) Sa

Place de Hollande 2

CH - 1211

Geneva 11

Switzerland

The royal Bank of Scotland

135 Bishopsgate

London, EC2M 3Ur

registration number 07318726 england and Wales

FInAnCIAL STATeMenTS CHIEF FINaNCIaL

COrPOraTE

COrPOraTE

STraTEGY IN aCTION

MarKET rEVIEW

CHIEF ExECUTIVE’S

OVErVIEW

OFFICEr’S rEVIEW

GOVErNaNCE

rESPONSIBILITY

rEVIEW


Greenergy Fuels Holdings Ltd

198 High Holborn, London WC1V 7BD

www.greenergy.com

Printed on 50% recycled, FSC certified paper

using waterless printing and vegetable based inks.

GreenerGy AnnuAl RepoRt 2012

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