South Perth-based Australian Renewable Fuels Ltd has recorded a net loss of $33.6 million, a 959 per cent increase on the loss recorded in the previous year.
South Perth-based Australian Renewable Fuels Ltd has recorded a net loss of $33.6 million, a 959 per cent increase on the loss recorded in the previous year.
The news comes after a major multinational oil company terminated advanced negotiations with with ARF to supply its WA retail service stations with blended biodiesel.
The full text of a company announcement is pasted below
The Directors of Australian Renewable Fuels Limited (ASX Code ARW) ("ARF") herewith lodge the Preliminary Final Report (Appendix 4E) for the financial year ended 30 June 2007.
The principal activity of Arfuels during the 2007 financial year was the production and marketing of biodiesel from its plants at Largs Bay, South Australia and Picton, Western Australia. During the year the company achieved payments 2 and 3 of the Biofuels Capital Infrastructure Grant for a total amount of $5,360,040. These payments were received by ARF following the successful production of quality biodiesel at specified through-put rates.
Large scale commercial production of biodiesel commenced during the year at both plants and although certain initial production issues were encountered, the two plants are gearing up for volume production in anticipation of significant off-take contracts. The Company is currently heavily engaged in sales negotiations with major fuel distributors, mining companies and other potential off-road customers. These negotiations have been protracted, however, ARF is confident of successful outcomes to these discussions in the near future.
During the year, the Company conducted a Share Placement, Rights Issue and capitalisation of shareholder loans raising an amount of $15,850,278 after costs associated with the raisings.
With regard to the commercial exploitation of its Energea NAFTA Rights, American Renewable Fuels Inc. (a 65.52% owned subsidiary of ARF) is about to commence an independent feasibility study into the development of a biodiesel facility at Clovis, New Mexico. This study will be funded through USA capital raising. Initial indications from the USA are extremely promising and the Company expects to make appropriate announcements to shareholders in due course.
RESULTS OF OPERATIONS
This report is based on financial statements that are currently in the final stages of being audited. To the best of our knowledge, the financial statements are not the subject of any dispute with, or likely qualification by, the auditors.
The loss after tax for the year ended 30 June 2007 amounted to $33,659,479. This includes the impact of an impairment adjustment to certain of ARF's Australian assets amounting to $22,761,056. The operating loss for the year after tax from ordinary operations of the Company amounted to $10,898,423. The Company expects a dramatic improvement in operating results for the year ending 30 June 2008.
ARF is currently one of Australia's largest biodiesel producers and has a significant advantage through the Energea technology which is capable of producing biodiesel from a wide range of feedstocks. The cost of all feedstocks worldwide has risen significantly during the past few months, but ARF is hopeful of a retreat in feedstock prices thereby enabling it to generate previously anticipated returns to shareholders.
ARF recognises the benefits to be derived from carbon credit trading on international carbon trading markets. It is not yet able to quantify the benefits to be derived by ARF from this source.
The ARF Group remains optimistic of the prospect of a 50/50 joint venture with Transpacific Industries Limited for the establishment of a biodiesel facility in Brisbane.
No dividends were declared or paid during the 2007 financial year.
ARF's core Australian management team remains focused on the successful operation of its existing two biodiesel plants in Australia. During the current financial year, certain organisational changes were made throughout the ARF Group and the Company expects to derive the benefit of these changes in the current year.
