ANNUAL REPORT 2017 - Greenergy€¦ · UK biofuel supply obligations. Customer sales We supply all key customer segments in the UK, including supermarkets, major oil companies, independently

ANNUAL REPORT 2017

Printed on FSC certified paper, acid free with 100% virgin ECF fibre using waterless printing and vegetable-based inks.

Greenergy Fuels Holdings Ltd

198 High Holborn, London WC1V 7BDwww.greenergy.com

ANNUAL REPORT 2017




STRATEGIC REPORT

OVERVIEWOur business model 2Our mission 4Strategic summary 6

CHIEF EXECUTIVE’S REVIEW 8

HEALTH AND SAFETYSafety record 16Approach 18

MARKET REVIEWGlobal markets 22UK market 24Brazil 26Canada and Middle East 27

STRATEGY IN ACTIONUK Fuels 30International Fuels 36Biofuels 46Infrastructure 52Haulage 56

KEY PERFORMANCE INDICATORS Financial KPIs 62Operational KPIs 63Environmental KPIs 64Service quality KPIs 65

CHIEF FINANCIAL OFFICER’S REVIEW 66

MANAGING OUR RISKSRisk overview 71Risk register 72 PEOPLE AND ENVIRONMENTExecutive Directors 82Employment 83Biofuel sustainability 86Carbon emissions 88

STRATEGIC REPORT 89

DIRECTORS' REPORT 90

FINANCIALS

Independent auditors’ report 94Consolidated income statement 96Consolidated statement of comprehensive income 97Consolidated and Company balance sheets 98Consolidated statement of changes in equity 100Consolidated and Company statements of cash flows 102Notes to the financial statements 103Officers and professional advisors 139Registered offices 140

THE LAST 25 YEARS

1bn litres per year group sales

10bnlitres per year group sales

18bnlitres per year group sales

2010

We invest in petrol blending

at Teesside

2012

We start up our new fuel

supply business in Canada

Purchase of the former Coryton and North Tees

refineries

2005

We complete our first infrastructure

investment and start manufacturing

biodiesel

2008

Purchase of the Plymouth fuel terminal

2015

Our first diesel imports are

made into Brazil

2016

Creation of Navigator Terminals

1992

Greenergy founded in

Sweden

1996

First major retail contract in UK

1994

We start selling the first

ultra-low sulphur diesel in the UK

This is our 25th year in business. We have grown from a bedroom start-up in 1992 to become the UK’s only national fuel supplier. We are now building on our UK experience to grow internationally.

+

+

+

OVERVIEW

2017 Greenergy Annual Report

IMPORTS INTO BRAZILWe have established ourselves as a trusted importer of diesel in a rapidly changing market.

EXPANSION IN CANADAFurther sales growth resulted from supply chain diversification and infrastructure investment.

MIDDLE EASTOur strategic collaboration in Bahrain began commercial operation, blending and supplying petrol to the local market.

BIODIESEL EXPANSIONWe increased biodiesel production and reduced unit costs through capacity expansion and operational efficiencies.

OPENING OF THAMES OILPORTWe prepared to open Thames Oilport, giving us scope for expansion in a region of demand growth.

FY17 highlights

EBITDA

£102.0m

KPI

FY16£52.6m

(excluding exceptionals)

Chief Executive's Review p11

1

We have created a unique supply chain to enable us to source fuel products from the lowest-cost global producers and move that fuel in the most efficient way to our customers’ forecourts.

Global originationWe source from around the world in order to find the lowest-cost petrol, diesel and biofuel products. We maintain flexibility and optionality in our purchasing, using our understanding of complex market structures and reacting quickly to market opportunities to source fuel products at minimum cost.

Manufacturing and infrastructure We continue to invest in fuel import terminals in order to access world markets and provide supply resilience for customers. We blend petrol at three state-of-the art petrol locations and own and operate two of Europe’s largest waste-to-biodiesel manufacturing facilities, giving us a low-cost and sustainable supply of biofuel with which to meet our UK biofuel supply obligations.

Customer salesWe supply all key customer segments in the UK, including supermarkets, major oil companies, independently owned forecourts and commercial users. Our low-cost, resilient fuel supply chains earn long-term customer loyalty.

LogisticsWe manage the fuel supply chain for many of our customers, taking care of stock management and delivery as well as fuel supply. In our in-house haulage operation, we continually optimise our operations to improve service for customers and deliver from the lowest-cost location.

OUR BUSINESS MODEL


OVERVIEW

22 3

Navigator Terminals | Thames, UK

To deliver long-term customer partnerships by being the fuel provider with the:

» Lowest cost

» Highest reliability

» Best systems and control

» Easiest people to deal with

» Most transparency.

4

OUR MISSION

4 5

OVERVIEW

2017 Greenergy Annual Report4

UK Fuels BiofuelsInternational Fuels

Infrastructure Haulage

Our aim: Develop low-cost and resilient fuel supply chains to earn the long-term loyalty of our UK customers

Our aim: Create value from biofuel manufacturing and supply

Our aim: Expand by replicating our UK success in other markets

Highlights

» Opening of Thames Oilport for diesel supply shortly after year-end, creating capacity for further growth in the busy South East region

» Further growth in sales to independent forecourt operators, including under our branded wholesaler agreement with Esso

» Continued development of our import capability to allow us to receive fuel on larger, lower-cost ships.

Highlights

» Increased biodiesel manufacturing output as a result of a 28% expansion in capacity and operational efficiencies

» Further extension of our raw material supply chains to allow for sourcing of waste oils with particular quality characteristics or in smaller containers

» Growth in sales of biofuel and UK Renewable Transport Fuel Certificates to other oil companies.

Highlights

» 33% sales growth in Canada, with particularly strong sales from our first rail-to-road supply location

» New tankage agreements in Quebec and Toledo, further diversifying our supply chains into Canada

» Significant expansion of our diesel import operations into Brazil

» Start of commercial operations by our petrol blending collaboration in Bahrain.

Our aim: Acquire, regenerate and operate assets that support our supply chain objectives

Our aim: Make reliable and cost-efficient fuel deliveries to customers

Highlights

» Use of Thames Oilport and Teesside facilities for diesel storage, giving significant margin in contango market conditions

» Completion of refurbishment works at Thames Oilport in preparation for diesel throughput and supply

» Continued works to integrate our Teesside facilities to create cost and operating efficiencies and supply chain value.

Highlights

» Continued focus on safety, with increased resourcing of driver training, more tailored training and a growing safety awareness amongst drivers

» Expansion in our driver workforce to maximise the volume of fuel delivered by our in-house logistics operation and to increase fleet utilisation and profitability

» In-sourcing of vehicle maintenance in order to improve vehicle up-time and reduce costs.

UK Fuels p30 Biofuels p46International Fuels p36 Infrastructure p52 Haulage p56

STRATEGIC SUMMARY

2017 Greenergy Annual Report6 7

OVERVIEW

Boardroom | London, UK

Safety, Health, Environment and Quality (SHEQ)

We have continued to operate with safety and environmental care as our first priority in a culture of open and honest reporting.

There were no RIDDOR dangerous occurrences this year but the number of RIDDOR lost time injuries increased, mainly as a result of injuries to drivers caused by manual handling and slips. We are working to address this rise by introducing the use of a simple dynamic risk assessment tool, by providing additional occupational health support and through more targeted communication of lessons learned from events.

This period we also continued our programme of process safety training, completing training for our process operators.

We have a culture of openly sharing best practice and experience between different parts of the business. As part of the preparations for re-opening Thames Oilport as a road fuels terminal, every member of staff from Thames Oilport spent some time observing and learning about the operations and SHEQ processes at our Plymouth fuel terminal.

Markets

Higher refinery utilisation rates resulted in an oversupply in the diesel market, particularly in North West Europe. There were opportunities to optimise our purchasing and to use our import infrastructure to source lowest-cost products.

The market for oil products remained in contango this period, meaning that prompt prices were again lower than forward prices. With the level of the contango continuing to exceed tankage and working capital costs, we extended our diesel storage at Thames Oilport.

In the UK, road fuel demand continued to grow this period, up 1.3% (FY16: up 2.1%). Dieselisation of the market also continued, albeit more slowly, with diesel consumption rising by 2.9% (FY16: 4.3%) and petrol consumption falling 1.2% (FY16: down 1.5%). By year-end diesel consumption accounted for 64% of total UK road fuel demand (FY16: 63%). We expect dieselisation to slow or reverse in response to air quality concerns.

In Brazil, the major oil company abruptly ended its commitment to supply 100% of the market, creating demand for alternative sources of supply, and began making regular market price revisions. The ending of the volume commitment combined with the transition from a static market price environment towards regular world market re-pricing allowed us to significantly expand our diesel imports.

We have used our infrastructure and supply chain know-how to create cost and operating efficiencies and to provide low-cost, reliable fuel supply to customers.

Chief Executive’s Review

‘‘We benefitted from previous investments to create value in all parts of the business and, in our 25th year in business, delivered our best-ever financial results. These reflect good manufacturing and origination margins in the UK as well as particularly strong sales and margin growth in our international businesses.

’’ Andrew OwensChief Executive

Health and safety p14

Global markets p22

UK market p24

Brazil market p26

8 92017 Greenergy Annual Report

CHIEF EXECUTIVE'S REVIEW

FY1310

20

15

FY14 FY15 FY16 FY17

Bill

ion

litr

es

13.5

15.0 15

.7

18.1 18.6

Chief exec reviewEBITDA increase

FY130

120

80

60

FY14 FY15

100

Mill

ion

(£

)

30.2

25.3 30

.3

102.

0

20

40

FY16 FY17

52.6

25%

12%

14%

49%

UK sales by customer type

(continued)

UK Fuels p30

Fuel sales by customer segment

We have continued to invest in infrastructure to develop cost and operational efficiencies and achieved particularly strong margin growth in international markets with similar import dynamics to the UK.

Strategy

UK FuelsIn a highly competitive environment, our market share for the period averaged 25% for fuel originated by Greenergy (FY16: 28%) and 33% including domestic third party purchases (FY16: 35%). The decline was predominantly in the South East, relating to a planned economic exit from a third party terminal prior to the opening of Thames Oilport.

Margins also remained stable. Our import and blending capability allowed us to source from the lowest price global producers, minimise product and operating costs and compete successfully in the market. Our results were enhanced by our use of Thames Oilport as a contango storage location, prior to its opening for diesel throughput.

We again increased sales to independent forecourt operators, including as part of our branded wholesaler agreement with Esso. As we earned trust and respect in the sector as a flexible and high service fuel supplier, we won new businesses from all competing brands. The number of sites we were contracted to supply at year-end increased to 396 (FY16: 358).

In a significant strategic milestone shortly after year-end, we commenced fuel supply by truck from Thames Oilport. This gives us an additional import and supply

location in the South East, which accounts for approximately one third of the UK’s road fuel demand.

International FuelsWe have drawn on our UK experience and capabilities to expand in new regions.

In Canada, we benefitted from our supply chain flexibility to deliver continuous supply to customers and strengthened our reputation as a reliable and low-cost supplier. Sales in Canada totalled 650 million litres, up 33% on FY16, and were particularly strong from Toronto, where our rail-to-road supply concept has proved popular with our customers. Work to double the size of the existing Toronto facility completed after year-end and we plan to expand further by developing rail-to-road facilities at new locations.

In order to diversify our supply chains further, we took on new tankage in Quebec and Toledo, giving us the ability to receive product by ship from Europe and by rail from North America and Canada. This optionality resulted in improved margins.

We also developed a new forecourt brand called Puck that plays to Canadians’ love of hockey. This will allow us to offer forecourt owners fuel supply under a fresh alternative to the legacy oil brands, providing potential for fuel sales growth.

In Brazil we significantly expanded our diesel import operations. The Brazilian market has historically been supplied predominantly by the national oil company. We have established ourselves as a reliable supplier early on, as the market begins to open to imports and move towards world prices. The uplift in the performance of our Brazil operations was greater than all other parts of the business combined and significantly exceeded our expectations.

In the Middle East, we formally established Bahrain Gasoline Blending (BGB), a strategic collaboration with Bahrain Petroleum Company (Bapco), and BGB began commercial operations, supplying petrol to meet domestic Bahraini demand. This is an example of us bringing our expertise to a new market.

International Fuels p36

EBITDA amounted to £102.0m this period, nearly double FY16 (£52.6m), while profit before tax totalled £77.6m (FY16: £57.9m). There were no exceptional items this period. The increase was due to:

» Strong but transient margins for imports into Brazil

» Income from storing diesel in contango market conditions

» Volume growth in our biodiesel production, combined with stronger manufacturing margins achieved by supply chain diversification and efficiency investments

» A further improvement in the contribution from our Canadian business.

Results

Chief Financial Officer’s Review p66

EBITDA

£102.0m

KPI

(excluding exceptionals)

KPI: Global sales volume KPI: EBITDA (excluding exceptionals)

Sales growth in our international businesses combined with strong biodiesel manufacturing margins and income from diesel storage to increase EBITDA to £102.0m.

Looking ahead, we expect our Brazilian margins to reduce as the import market matures. We also expect lower income from diesel as the global stock surplus shrinks.

Chief Executive’s Review

Hypermarkets

Oil majors

Other

Independent forecourts



BiofuelsInvestments in our biodiesel manufacturing operations resulted in a 28% increase in production capacity and created further operational efficiencies in the manufacturing process, giving improved manufacturing margins. We continue to diversify our supply chains for waste oils and extend our ability to handle lower grade feedstocks, reducing raw material costs and ensuring we remain a lowest-cost producer. We continue to find modestly-sized but high-return investment opportunities within our manufacturing operations.

With growth in our own production exceeding our UK blending requirements, we increased biodiesel and Renewable Transport Fuel Certificate sales to third parties. We had expected biofuel supply obligations in the UK to rise from FY18, creating additional third party demand, but regulatory change was delayed by Government elections. An increase in obligated amounts is now expected in 2018 and existing supply obligations continue until then.

Biofuels p46

Risk register p78

InfrastructureContango market conditions made it advantageous to store fuel products in FY16 and FY17. Recognising early on the potential to generate revenue by storing diesel at Thames Oilport, we fast-tracked works to restore pipeline connections and refurbish tanks for diesel storage, completing an initial 175cbm of tankage by year-end FY16.

Following additional refurbishment works this period, we increased the amount of diesel we had stored at the facility to more than 250cbm, with another third party also storing oil at the terminal expanding operational capacity further. This benefitted the business in two ways:

» In contango conditions, profit from diesel storage at Thames Oilport made a significant contribution to EBITDA

» The refurbishment works opened facilities that were needed to commence diesel throughput and supply from Thames Oilport shortly after year-end.

Elsewhere, our participation in Navigator Terminals has delivered strategically, enabling more integrated supply chain management across Navigator facilities in the South and North East of England that are key to our ongoing UK business.

The investment by Brookfield Business Partners in the business will increase our access to capital, a long-standing strategic objective, and allow us to participate in larger-scale strategic project and acquisition activities to propel our business to its next phase of development.

Chief Executive’s Review (continued)

We maximised the opportunities created by contango market conditions to generate profit which we invested to expedite the regeneration of the Thames Oilport.

HaulageWe have continued to provide a reliable, flexible and efficient haulage operation in-house within Greenergy Flexigrid.

Safety remains our first priority and we continued the roll-out of individual, data-based feedback to drivers on safer, more efficient driving styles. We also focussed on cost and operational efficiency, recruiting more drivers to support volume growth and progressively in-sourcing our fleet maintenance management to improve turnaround times and asset uptime, increasing service resilience.

We also recruited Adam Franklin as Chief Executive of Greenergy Flexigrid. Adam brings significant strategic and operational experience from the world’s largest logistics company.

Governance

Going forward Greenergy Fuels Holdings will be a Brookfield subsidiary. The Executive Directors of Greenergy Fuels Holdings are unchanged and continue to run the business. However, on completion of the transaction shortly after year-end, our Chairman, Paul Lester, and the other Non-Executive Directors left the Board. I would like to thank them for their significant contribution over recent years. We have benefitted greatly from the wider experience that they have brought and for their support in stewarding the business through the investment process.

Outlook

I am excited about the future potential for the business. Capital constraints have sometimes delayed our progress in the past, requiring mostly organic growth and affecting the scale and speed of our infrastructure investments. With the participation of Brookfield Business Partners, we expect to be able to grow the business more quickly, to meet our ambitions both in the UK and internationally.

Andrew OwensChief Executive



Biodiesel manufacturing facility | Immingham, UK

HEALTH AND SAFETY


Kolade AfuwapeHead of Process Integrity

Constantly improving our health and safety is our priority across all our businesses. Our health and safety reporting is open and transparent and includes all collected information.

Safety record

This period there was a reduction in the rate of minor injuries and the lost time injury rate remained stable. However, the RIDDOR reportable injuries rate increased, primarily as a result of drivers sustaining injuries through manual handling or slips. This is being addressed by introducing the use of a simple, dynamic risk assessment tool, providing additional occupational health support.

Incident rate per 100,000 hours worked

FY16

-

0.0 0.45

1.0

3.9

16.8

213.0

Incident rate per 100,000 hours worked

FY17

occurrence

-

0.0 0.7

1.0

3.1

14.8

263.9

injury

Fatalities

RIDDOR dangerous occurrence or injury

RIDDOR dangerous occurrence or injury

Lost time injury

Lost time injury

Minor injuries

Minor injuries

Near misses

Near misses

Hazard observations

Hazard observations

Group safety record FY17

Definitions RIDDOR dangerous occurrence: an incident with a high potential to cause death or serious injury (as defined by the RIDDOR regulations).

RIDDOR injury: a specified major injury such as a fracture or serious burns, or an injury resulting in an absence from or restricted work for more than 7 days.

Lost time injury: an injury resulting in an absence from work beyond the shift in which the injury was sustained.

Minor injury: an injury which is not RIDDOR reportable and does not require time off work or restricted work duties.

Near miss: an unplanned event that did not result in injury, illness, damage or non-compliance but which had the potential to do so.

Hazard observation: an ‘act’ or a ‘condition’ that has the potential to cause injury, loss or damage.

There were nine separate RIDDOR reportable injuries across the business:

» Four manual handling injuries to drivers

» Four other injuries to drivers

» One steam scald to a manufacturing site operator.

There were no RIDDOR dangerous occurrences.

‘‘Safety performance is reviewed regularly at senior level through the Process Integrity Committee, providing strong leadership. The Committee ensures appropriate resourcing and sets goals for employees to work towards in creating a habit of excellence.

’’

Fatalities


HEALTH AND SAFETY

264

213

172FY15

FY16

FY17

per 100,00 hours worked (all business units)

We have continued to expand our safety activities in line with our growing business.

Approach

Open and honest reporting

Safe Operating Standards

Investigation and learning

AuditingSafety walks

Training

We work to maintain a culture of open and honest reporting across all parts of the business, from high hazard operating sites and haulage to offices. We encourage observation and reporting of hazards, near misses and unwanted events, however small, without fear of blame. Capturing information about hazards and incidents that might easily remain unnoticed enables us to reduce risks, improve safe working practices and encourage individuals to have greater awareness of their surroundings and care in work activities.

We continue to review, extend and improve our Safe Operating Standards to provide a structured and consistent approach to safety across all our operations.

This year we introduced a new document management system to ensure that the most recent updates to the standards are easily accessible to all operations.

Continual improvement of the standards is driven by the Process Integrity team. The team shares knowledge and experience from all parts of the business, including Thames Oilport and Navigator Terminals, both formally and informally through team and cross-site meetings.

A comprehensive central reporting system supports the detailed reporting and systematic investigation of each reported observation and unwanted event, so that we can identify lessons to be learned from individual events and broader trends. We then act to correct issues that have potential to lead to injuries or events in future.

All reported safety events are formally signed off by the site or function manager and ultimately closed out by a manager from the Safety, Health, Environment and Quality (SHEQ) team.

Group Process Integrity audits continued at all our storage and manufacturing facilities.

This year the full auditing plan was extended to include Thames Oilport in preparation for the start of road loading.

To ensure compliance with Greenergy performance requirements across all of our haulage operations, our audit programme extends across third party suppliers as well as our in-house activities.

Where we have identified opportunities for improvement of facilities or processes, follow up audits take place to ensure recommendations have been implemented.

As part of their contribution to health and safety we encourage individuals at all levels to carry out safety walks. This includes fuel terminals, manufacturing sites, haulage depots and offices.

Each Executive Director undertakes at least one formal safety walk every year, and more than 20 safety walks were completed by Directors this period. In addition to any findings from these visits, this highlights to everyone the priority given to safety within Greenergy.

We continued our programme of process safety management training at all levels of the organisation, completing process safety training for operators at all Greenergy facilities. This externally accredited course develops the personal commitment of individuals to contribute to improvements in process safety within their organisation.

We also introduced the concept of Human Factors critical task analysis to operating facilities and plan to develop this as a tool to improve operating procedures and practices.

As part of the continuing professional competence training within our haulage operations, we trained drivers in the widely- recognised Smith System of safe and efficient driving.

Personal safety Process safety

Hazardous observationsper 100,000 hours worked

(all business units)


HEALTH AND SAFETY

Thames Oilport | UK

MARKET REVIEW


USA

AFRICA

EUROPE

BALTICS

MIDDLE EAST

Diesel exports

Previous petrol export routes

Market reviewCongtango market

40

20

60

80

0

160

120

140

100

$/m

t

May 17Jan 17Sep 16May 16

Front month gasoil future contract vs 1 year ahead and 2 years ahead, 30 day moving average.

ICE Gasoil Futures

Jan 16

Two-year contango

One-year contango

Diesel and petrol components were again in plentiful supply as a result of increased refinery production in the Middle East and North America. We were able to access lowest-cost products into our import and blending facilities.

Global markets

Global context

Global refinery production continued to grow in 2016, but the rate of growth was slower than recent years. Refinery utilisation was impacted by weaker refinery margins caused by rising oil prices and record diesel stocks.

Global demand for refined products therefore grew more strongly than production and stock levels declined slowly through the year, although they remained high compared to historical norms.

Our petrol blend facilities are unique in Europe, both in terms of their scale and the complexity of components they can handle.

We can therefore purchase petrol components that other suppliers are unable to use.

Contango market conditions

Global diesel stocks remained high, although were below the record levels seen in FY16. High stock levels resulted in the continuation of contango market conditions, meaning that prompt prices remained lower than forward prices.

When the level of the contango rose above combined tankage and working capital costs, we purchased diesel for long-term storage at Thames Oilport and at our Teesside facilities, thereby maximising the benefit of the contango conditions for the business. Margin from contango storage was a significant contributor to the performance of the business this period.

Infrastructure p54

Contango price structure

Availability of petrol and diesel products in the European market

North America

Fracking has driven growth in domestic refinery production and the US is now consuming more of

its own fuel products, limiting export opportunities for European refiners.

Middle East

Following refinery expansion, Middle Eastern demand is now

being met from within the region. Refiners are also stepping up exports

to Europe and West Africa.

Europe

Petrol consumption has fallen as a result of dieselisation and regional demand is failing to

replace declining export markets.

DieselRefinery capacity in the Middle East has expanded significantly.

These new refineries produce very large quantities of diesel and Middle Eastern refiners are targeting diesel

exports to Europe.

Petrol componentsIncreased refinery production

in North America and the Middle East has closed historic export markets for European refiners. We were therefore

able to access petrol components from European refiners with limited

alternative markets.Contangos are by their very nature always transient, so flat or backwardated price structures could return in FY18 if higher oil prices squeeze refinery margins and refinery utilisation rates continue to fall.


MARKET REVIEW

Mill

ion

to

nn

es

15

10

5

(5)

(10)

(15)

0

2004 2006 2008 2010 2012 2014 2016

Net exports

Bill

ion

to

nn

es

2.65

2.45

2.25

2.05

1.45

1.25

1.85

1.65

2013 2014 20152010 2011 2012 2016 2017

Diesel

Petrol

UK market Q&AHow will the debate on diesel engine emissions affect diesel demand?

Rationalisation of UK refinery capacity has made the UK structurally reliant on imports to meet its fuel requirements. We are well positioned to meet this shortfall with supply through our import terminals.

A growing import market

Over the last decade, demand growth has combined with declining domestic refinery production to make the UK market increasingly reliant on fuel imports. In 2016 the UK was a net importer of petroleum products by 10.8m tonnes, up from 9.1m tonnes in 2015. This is the highest level of imports for more than 30 years.

Continued growth in diesel demand

Road fuel demand continued to increase in the UK, up 1.3% overall in the financial year (FY16: up 2.1%). Once again, all of that growth was in diesel demand, up 2.9% (FY16: up 4.3%), with petrol demand falling by 1.2% (FY16: down 1.5%).

The continued rise in diesel usage occurred despite the emergence of a national debate about diesel engine emissions.

With a number of UK cities failing to meet air quality standards, there is widespread debate about the introduction of public policy measures to reduce emissions from diesel engines.

We expect such measures to lead to a move from diesel to petrol-powered light vehicles in the short to medium term. There were early signs of this towards year-end, although, with the average age of cars on the road in the UK being 7.8 years, any change in vehicle preferences will take time to filter through to fuel demand. As a supplier of both petrol and diesel, any shift in demand from diesel to petrol would be neutral for us.

A greater change is likely from the mid 2020’s as a result of changes in technology and vehicle purchasing preferences:

» Enhanced use of petrol hybrids, partially mitigating petrol demand growth resulting from a move away from diesel engines

» Increased home-charging of hybrid vehicles if their 'electric only' range can be increased

» Increased use of electric vehicles in urban fleets influenced by public policy.

Taking all these trends together, the diesel growth of the last 20 years could be reversed at national level from the mid 2020’s, without an offsetting growth in petrol demand. However, this reversal could be mitigated by population growth in key demand regions such as the South East of England, where we are strongly positioned.

Net imports UK fuel demand


MARKET REVIEW

Market reviewPetrol demand in Middle East and Asia

2014 2015 204020352030202520200

8

6

Mb

/d

4

2

Source: OPEC

Middle East

Asia

Canada marketBrazil market Middle East market

In a market characterised by poor legacy infrastructure, our flexible import infrastructure has provided competitive advantage.

The move from a static price environment towards fluctuating prices caused significant and rapid market change.

BGB, our petrol blending operation in Bahrain, aims to supply its home market and meet growing demand in other GCC countries and in Asia.

We supply fuel in the eastern provinces of Canada, where 65% of the Canadian population resides. Regional refinery production has declined over the last decade and is likely to be further impacted by the introduction of new legislation with effect from January 2017 to reduce the sulphur content of petrol.

With local refinery production no longer sufficient to meet demand, the area is increasingly reliant on supply from outside the provinces, and many of our competitors receive product via pipeline from west coast refiners. This period saw significant supply disruption for competitors as a result of reduced capacity on critical pipelines.

We are not a pipeline user and instead have the ability to source our fuel products by rail from Western Canada and the USA and by ship from Europe, the USA and the Middle East. This optionality, and our associated supply resilience, was an important differentiator in the market this year.

Historically, the Brazilian market has been supplied wholly by the 'national' oil company. However, over recent years the ability of the 'national' oil company to meet domestic demand has been impacted by delays and cancellation of refinery projects and a lack of investment in alternative supply.

During this period the 'national' oil company announced that it would no longer guarantee to supply 100% of the Brazilian market requirements. It also moved from a static price structure to periodic price reviews aligned more closely to international oil prices.

Domestic customers have therefore sought:

» Alternative sources of supply from fuel importers such as Greenergy

» Help in managing price risk as the market moves towards market pricing.

The Middle East has seen a significant expansion in refinery production, with 1.4m barrels/day of capacity added since 2010 and a further 1.7mb/d expected by 20211. With these new refineries geared towards diesel exports, there are significant regional imbalances in petrol components.

The local Bahraini market for passenger cars is an entirely petrol market and our new petrol blending collaboration with Bahrain Petroleum Company (Bapco) has been established initially to supply all of Bahraini’s domestic passenger car fuel demand. As we expand our operations, we expect to begin exporting to other GCC countries and to Asia, where demand is growing strongly.

Strategy in action – Canada p38

Strategy in action – Middle East p44

Strategy in action – Brazil p42

Petrol demand growth in the Middle East and Asia

We significantly expanded our diesel imports into Brazil to meet this growing demand, providing reliable supply and innovative pricing formulae that took international risk away from our customers.

The 2016 corruption scandal is likely to exacerbate a lack of investment in 'national' oil company infrastructure in the years ahead. With road fuel demand rising as a result of economic recovery and population growth, we expect growth in the country’s requirement for fuel imports.

1 Source: OPEC


MARKET REVIEW

Rail-to-road facility | Toronto, Canada

STRATEGY IN ACTION


Ross

Clydebank

Teesside

Immingham

Thames Oilport

Thames

Cardi�

Plymouth

Aim: Develop low-cost and resilient fuel supply chains to earn the long-term loyalty of our UK customers

UKFuels

Strategic priority 1 Source diesel from the lowest-cost global producers

Global refinery production continued to increase this period as a result of capacity expansion and improved refinery margins. With new refineries in the Middle East and Asia targeting diesel exports to Europe, there was again a plentiful supply of diesel available to us.

We have an ownership interest and capacity rights in the UK's only deep-water road fuel jetties, at Thames Oilport and Navigator North Tees. With continued investment in both these facilities, we expect to increase our purchasing of lowest-cost diesel direct from global producers, to further improve supply chain optionality and purchase margins.

Strategic priority 2 Blend petrol from component products

We operate sophisticated petrol blending systems at three UK import terminals, being Navigator Thames, Navigator Seal Sands and Inter-Terminals Seal Sands. The operation of these three facilities continues to deliver significant operational flexibility.

Blend margins were lower than the previous year but remained at historically typical levels. We reduced our reliance on naphtha as a petrol blend component when it increased in price relative to petrol, moving to other components instead. The scale of our petrol blending operations meant we were able to accommodate a range of minority components we would otherwise be unable to use.

With extensive import and blend facilities and flexible supply chains we were able to respond effectively to market changes, to benefit from an oversupply of refined products and source from lowest-cost global producers.

We are the UK’s only national fuel supplier

Greenergy stock-managed terminals

Areas of population density

Supply locations

579

9

26

shipments of fuel products into the UK

import storage terminals

supply locations

30

Global markets p22

Infrastructure p54


STRATEGY IN ACTION

Customer forecourt | London, UK- UK FUELS

UK fuelsCargo size

25

20

15

5

10

Ave

rgae

car

go

siz

e (c

bm

per

th

ou

san

d)

FY11 FY12 FY16 FY17FY15FY13 FY14

Average ship size

21,100

11,77710

Strategic priority 3 Create cost and operational efficiencies

We work continually to create operational and supply chain efficiencies, to reduce unit costs across the business. This year we:

» Achieved further economies of scale by importing product on larger ships, minimising the number of ships we received and cutting shipping-related costs

» Reduced and then terminated our use of under-utilised storage at Grays in Essex, in preparation for the opening of Thames Oilport

UK Fuels ‘‘In the highly competitive UK road fuels market, access to import infrastructure continues to be strategically important, allowing us to minimise product costs and provide supply resilience for customers. Opening Thames Oilport for diesel supply shortly after year-end was a significant milestone, creating capacity for further growth in the busy South East region.

’’ Caroline LumbardUK Trading Director

» Optimised our haulage patterns on a daily basis to deliver from the lowest-cost (rather than the closest) supply locations, generating significant cost savings.

(continued)

KPI: Average ship size

Creating economies of scale by using larger vessels

KPI


STRATEGY IN ACTION

33

Customer forecourt | Exeter, UK- UK FUELS

UK fuelsindependent forecourts

396

358

298

90

164FY14

FY13

FY15

FY16

FY17

Case study


Sales to the independently owned forecourt sector continue to grow as we build our reputation as a low-cost, reliable and customer-focussed fuel supplier.

In our fourth year as a supplier in this sector, we successfully renewed existing contracts and won business with new forecourt operators. The number of independently owned forecourts we were contracted to supply at year-end increased to 396 (Esso: 293; other 103).

KPI: Independent forecourts

Strategic priority 4 Grow in target markets


Over the last decade major oil companies have significantly scaled back their UK downstream operations, selling or closing refineries and disposing of company-owned sites. The independent forecourt sector has grown as a result and the market has opened up to fuel suppliers such as Greenergy.

To meet the needs of the sector, we have developed a unique fuel supply offer that gives forecourt operators a choice between the Esso brand (offered under our Branded Wholesaler Agreement with Esso), convenience brands, or operators’ own brands. This flexibility allows us to meet the

We expanded sales to the independent dealer sector and prepared to open Thames Oilport.

We plan to:

» Commence petrol as well as diesel supply from Thames Oilport after further infrastructural development, to supply both retail grades

» Continue to grow sales to the independent forecourt sector

» Create further cost efficiencies through use of larger ships.

needs of the larger independently owned forecourt groups as well as those of single-site dealers.

In a significant enhancement to our customer offer, this year we successfully rolled out a new contactless payment card scheme to more than 200 forecourt sites.

Thames Oilport

We commenced diesel and gasoil supply from Thames Oilport shortly after year-end. The opening of Thames Oilport gives us a second significant import and supply location in the South East of England, an area of population and demand growth, and offers potential for:

» Greater operational flexibility by moving ships between Thames Oilport and Navigator Thames

» De-bottlenecking of Navigator Thames, to reduce peak-time queuing

» Improved supply resilience.

We expect to increase diesel and gasoil sales from the facility during FY18 and, following the next phase of regeneration at the facility, commence petrol supply.

UK Fuels (continued)


STRATEGY IN ACTION

35

Strategy in actionSales growth in Canada

FY130

800

600

400

FY14 FY15 FY16 FY17

Mill

ion

litr

es

244

400

200

699

494

Aim: Expand internationally by replicating our UK experience in other markets

InternationalFuels

Canada Sales growth

We extended our supply chains in order to source fuel products from a range of markets, using sea and rail access to deliver supply resilience throughout the year. Having also expanded our infrastructure and developed a new retail offer, we are well positioned for further growth.

Brazil Expanding diesel imports

The lifting of import quotas caused significant and rapid market change this period, leading to challenging conditions for both suppliers and buyers. By responding effectively to support our customers and manage risk, we built on our reputation as a reliable and trusted trading counterparty in the Brazilian market.

Middle East Collaboration with a national oil company

BGB, our strategic collaboration with Bapco, the national oil company of Bahrain, commenced commercial operations, supplying petrol to the Bahraini local market. This is an example of us using unique expertise to create value in a new market.

We have growing fuel supply businesses in Canada and Brazil and are part of a petrol blending operation in Bahrain. In each of these businesses we are applying our supply chain, risk management and infrastructure skills, as we do in the UK, to source products at lowest-cost and supply fuel reliably to customers.

Canada p38

Brazil p42

Middle East p44

KPI: Sales growth in Canada


STRATEGY IN ACTION

3736

Rail-to-road facility | Toronto, Canada

CANADA

USA

Concord

NEW YORK

ONTARIO

QUEBEC

Montreal

Quebec City

Chicago

Hamilton

Toledo

Detroit

ConcordToronto

Hamilton

Our ability to source product from a range of different suppliers and markets is key to our success in the Canadian market. It allows us to:

» Source from the lowest-cost global suppliers, including in winter months when many Canadian waterways freeze

» Minimise our reliance on local refiners. With control of our own oil, we can differentiate ourselves from competitors to deliver more reliable supply for customers.

Canada

We increased supply chain optionality and flexibility, and thereby minimised product costs, by securing tankage in strategic locations and developing strong supplier partnerships.

This period we took on new tankage at a deep-water import terminal in Quebec City, giving us year-round access to supply from Europe and the Gulf. This complements our other supply chains:

» Sea-fed imports from North America and Europe into the Hamilton terminal

» Supply from refiners in the US Mid-West, by refinery pipeline into storage in Ohio and Illinois and onwards by rail direct to our supply locations

» Supply by rail from Western Canada and other parts of the USA using our extensive railcar fleet.

As our operations grow, we also improved purchase margins by sourcing different grades of diesel for blending and reduced unit costs by improving rail car utilisation.

‘‘Our competitors in the Toronto road fuels market suffered significant supply disruption this period as a result of local refinery downtime and pipeline interruption. Our ability to source products reliably by sea and rail from multiple locations and thereby maintain continuous supply for existing and new customers was a significant differentiating factor in the market.

’’ Mike HealeyDirector, Greenergy Fuels Canada

Strategic priority 1 Develop low-cost and reliable supply chains from North America, Europe and the Gulf

Canada market p27

Marketing terminal

Supply terminal

Greater Toronto catchment area


STRATEGY IN ACTION - INTERNATIONAL FUELS

39

Artist’s impression

Strategic priority 2 Expand our supply footprint and increase sales

Expanding our rail-to-road facilities

Our first rail-to-road supply location at Concord, north of Toronto, has been extremely popular with customers, with sales at maximum capacity through the year.

Developed in partnership with Canadian National Railway, the facility is:

We are growing our presence in the Eastern Canada road fuels market by building new supply infrastructure and by developing an innovative fuel retail brand.

» Revolutionising the way that fuel is supplied to the market

» Creating new supply capacity in locations that are convenient for customers

» Giving industry-leading road loading times.

Works to double the size of our first rail-to-road supply location completed after year-end and we are preparing to expand to other locations.

We plan to:

» Increase sales from existing supply locations

» Open further rail-to-road supply locations, including at Belleville east of Toronto

» Commence fuel supply under our Puck retail brand to a new customer sector.

Canada Case study

A new retail proposition

We began discussions with customers on a new retail brand called Puck, which draws on Canadians’ love of ice-hockey. The brand offers a fresh alternative to major oil company brands which are currently concentrated in the market. This will allow us to target sales to independently owned forecourt groups, as we do in the UK.

Initial feedback on the brand was positive and a contract to supply the first Puck branded forecourt was signed after year-end.

(continued)



41

BRAZIL

Santos

Paranaguá

Strategic priority 3 Increase domestic sales into Brazil

Brazil Supplying Brazil

Having commenced diesel imports into Brazil in FY16, we significantly expanded the scale of our operations this period to become one of the largest importers of diesel into Brazil.

We plan to:

» Continue to expand fuel imports to meet growing demand

» Increase our storage capacity in Brazil

» Create supply chain efficiencies and economies of scale.

Brazil market p26

The Brazilian road fuels market continued its rapid transition from a regulated market supplied by the 'national' oil company to a growing import market.

With fuel wholesalers/customers increasingly looking for alternative sources of supply, we increased our imports of diesel, supplying from facilities at Santos in the Centre South and Paranaguá in the South, both areas of population density. We also supplied cargoes to a retailer in the north of Brazil.

Transient market conditions resulted in strong margins, particularly ahead of the lifting of state-controlled supply quotas around half year,

but required diligent management of counterparty risk. We applied stringent risk management processes for all transactions and worked closely with our customers through our local office to ensure contracts were fulfilled.

We also worked to gain trust of customers who were moving for the first time away from a fixed price market to one in which prices changed unpredictably. By introducing a pricing formula that took risk away from our customers, we earned their loyalty for the future and cemented our reputation in the market.

We also benefitted from long-standing relationships with storage providers and an existing import licence to become an early mover in this new market. Access to import infrastructure continues to be a barrier to entry for other suppliers.

Market summary

FY17 The 'national' oil company abruptly ended its commitment to supply 100% of the market, driving demand for alternative sources of supply.

FY17 Market moved away from static market pricing to regular re-pricing reflecting world market price fluctuations.

Previously supplied almost

entirely by domestic

production

Previously price-controlled

market



Bapco oil refinery | Bahrain

Strategic priority 4

Develop new relationships in the Middle East market

We formally established Bahrain Gasoline Blending (BGB) with our strategic partner, Bahrain Petroleum Company (Bapco), the national oil company of the Kingdom of Bahrain. Initially BGB is supplying finished grade petrol to the local market, using Bapco’s existing refinery infrastructure and production and drawing on Greenergy’s unique petrol blending IP. Over time it plans to expand to meet the growing demand for petrol in the wider region.

Middle East


2017 Greenergy Annual Report 4544

*Flood

FY13* FY14* FY15 FY16 FY17

Pro

du

ctio

n (

cbm

)

£/c

bm

*Flood

FY13* FY14* FY15 FY16 FY17

Pro

du

ctio

n (

cbm

)

£/c

bm

Aim: Create value from biofuel manufacturing and supply

Biofuels

Waste oils for biodieselWe source waste oils from a wide variety of global markets as raw

materials for biodiesel manufacturing.

Biodiesel ProductionWith two manufacturing facilities

on the east coast of England, we are Europe's largest producer

of waste-based biodiesel.

Own blendingWe blend biodiesel and bioethanol

into the petrol and diesel we supply in the UK and Canada to meet

regulatory requirements.

Third party supplyWe also supply biodiesel and bioethanol to other oil companies in the UK and in

Canada, meeting customer-specific sustainability requirements.

StorageWith storage facilities in the UK, Canada

and Rotterdam, we have the capacity to meet our own biofuel blending

requirements and to supply third parties.

Bioethanol and biodieselWe are not a bioethanol producer,

so our bioethanol is sourced entirely from third parties.

With our biodiesel requirements exceeding our own production, we also buy finished biodiesel.

Sourcing

A unique supply chain

Biofuel production

Supply

Production (cbm)

Cost per cbm

We operate a unique biofuel supply chain to meet our requirements as a consumer, producer and supplier of biofuel.

We made efficiency and capacity investments in our biodiesel manufacturing infrastructure and extended our raw material supply chains globally, to ensure we can continue to source increasing quantities of the right types of waste oils.

This resulted in:

» A significant increase in the volume of biodiesel we produced

» A reduction in our unit cost of production.


STRATEGY IN ACTION

46

Biodiesel manufacturing facility | Immingham, UK- BIOFUELS

Strategic priority 1 Develop global supply chains

We have diversified our biofuel supply chains in order to minimise raw material costs and access those waste oils that are best suited for our manufacturing operations. Through our offices in the UK, Middle East, USA and Asia, we have:

» Sourced from non-European markets where there are no comparable biofuel supply obligations or incentives, or where sustainability requirements differ

» Accessed increasingly diverse sources of waste oil for biodiesel production, including those with particular quality characteristics or supplied in smaller containers such as ISO containers and Flexibags

» Established long-term local relationships with suppliers to ensure stable supply chains.

Biofuel sustainability p86

Biofuels

With expansion of our biodiesel manufacturing activities, and with biofuel inclusion rates expected to grow by 2020, scaling up our sourcing operations is becoming increasingly important.

‘‘Our biodiesel manufacturing output reached an all-time high this period, consolidating our position as Europe’s largest manufacturer of waste-based biodiesel. With our global sourcing operations, storage in Rotterdam and continued investment in our biodiesel manufacturing infrastructure facilities, we are ideally positioned to meet increased demand for biofuel resulting from rising inclusion obligations in the UK and Europe.

’’ Paul BatesonChief Operating Officer

(continued)

Strategic priority 2 Manufacture biodiesel from wastes

Combined production at our manufacturing facilities at Immingham and Teesside increased as a result of:

» Reliability and yield enhancing investments at Immingham

» Expanded capacity (up 28%) following construction of a new distillation column at Teesside which was completed at the end of 2017

» Shrewd used cooking oil buying strategies, focussing on raw materials that can be processed more quickly.

We also invested in ISO container handling facilities to allow us to receive product in smaller quantities and from a wider range of suppliers, reducing raw material costs.


STRATEGY IN ACTION

49

- BIOFUELS Biodiesel manufacturing facility | Teesside, UK

Strategic priority 3 Supply biofuel to third parties

We increased our biofuel sales to other oil companies in Canada, the UK, Scandinavia and elsewhere in Europe.

Our focus is on meeting customer-specific sustainability requirements, recognising the characteristics of different continents and markets. By applying our unique sustainability IP, we create value for customers and maximise the value of the biofuel we supply.

We expect biofuel demand to grow in the UK and Europe as legislative blending obligations increase towards 2020 targets.

Strategic priority 4 Generation and sale of RTFO certificates

We continued to blend biofuel into the petrol and diesel we supplied in the UK in order to:

» Meet our own biofuel supply obligations under the Renewable Transport Fuel Obligation (RTFO)

» Generate certificates for sale to other oil companies by blending more biofuel than our obligated amount.

By purchasing globally and by manufacturing our own biodiesel, we were again able to generate certificates for a lower-cost than their market value, creating an important source of margin for the business.

We plan to:

» Make further investments in our biodiesel manufacturing facilities to increase capacity

» Expand our biodiesel raw material origination with a particular emphasis on the Middle East and Asia

» Increase third party biofuel sales

» Leverage our biofuel capability and sustainability expertise to add value to our biofuel sales.

Biofuels (continued)


STRATEGY IN ACTION

Thames Oilport | UK

Phase 3Phase 1 Phase 2

Diesel storage PetrolDiesel road and pipeline connections

Thames Oilport development

We prepared for the start of diesel and gasoil supply from Thames Oilport and made further progress in creating an infrastructure hub on Teesside. Both projects allow for further economies of scale and efficiencies in our supply chain, to reduce costs and support continued growth.

Aim: Acquire, regenerate and integrate assets to support our supply chain objectives

Infrastructure

Development phase

Completed phases


STRATEGY IN ACTION

5352

Strategic priority 1 Regenerate legacy infrastructure to increase value

Strategic priority 2 Create value from former refinery land at Thames Enterprise Park

Demolition of former refinery infrastructure continued on schedule, to clear land that is not required as part of the import terminal at Thames Oilport. 80% of the site has now been cleared in preparation for industrial redevelopment, with the remaining clearance due to be completed in the next financial year.

Discussions to sell land at Thames Enterprise Park to a third party fell through as a result of the poor state of the debt markets immediately after the UK’s referendum vote in June 2016 to leave the EU. We are therefore progressing a strategic joint venture with a property partner to develop the land in preparation for sale.

Strategic priority 3 Operate fuel infrastructure to meet regional demand

Navigator Terminals

We continue to manage our investment in Navigator Terminals, which owns and operates fuel storage and blend facilities in the UK. Our participation in Navigator has provided:

» Continued access to strategically important fuel storage and blending facilities on the Thames and Teesside

» More integrated supply chain management across Navigator facilities

» Shareholder income.

The opening of road loading facilities at Thames Oilport is a further significant milestone in the regeneration of the site, to turn the former refinery into a modern import terminal capable of meeting growing fuel demand in the South East.

Plymouth terminal

We also operated our Plymouth terminal at near capacity as a key part of our national supply chain. Over our nine years of ownership we have upgraded the facility to comply fully with post-Buncefield safety and environmental requirements, completing the final requirements this period.

We plan to:

» Develop petrol storage and supply facilities at Thames Oilport in order to supply retail customers requiring petrol and diesel from the facility

» Commence diesel supply through the UKOP pipeline to inland regions

» Prepare for sale of land at Thames Enterprise Park.

Infrastructure

Thames Oilport

We continue to progress the phased development of Thames Oilport with our joint venture partner.

At the end of FY16 Thames Oilport received its first shipments of diesel and opened for ship-in/ship-out storage. This allowed us to benefit from contango market conditions in FY17, and at year- end we had more than 250m litres of diesel stored at the facility.

The next phase of development has been to prepare the facility for diesel and gasoil road loading, which commenced shortly after year-end. Refurbishment works required for diesel contango storage had already opened

some of the facilities required for diesel throughput and supply. This year’s works therefore included upgraded and automated road-loading facilities, a new driver depot, work on new additive systems and a new control system.

Connection to the UKOP pipeline was also completed this period, giving us the ability to supply diesel by pipeline to customers in other parts of the UK when commercial conditions are right.

We plan to bring additional road–loading facilities into use during FY18 as we expand sales from the facility and, in the next phase of regeneration, to enable petrol storage and supply.

Creating an infrastructure hub on Teesside

Works were carried out on a new diesel pipeline between Navigator North Tees, Navigator Seal Sands and Inter-Terminals Seal Sands. This complements the petrol pipeline and rail head completed in 2015, which allow us to 'export' our Teesside petrol blend margins to other locations.

By importing diesel on large vessels via the deep-water jetty at Navigator North Tees and moving it by pipeline to our other supply locations, we expect to reduce shipping-related costs and improve purchase margins.

(continued)

‘‘With Greenergy now the majority shareholder in the Thames Oilport joint venture, significant progress was made to reduce overhead costs and add further capability, to prepare for road-loading of diesel and gasoil shortly after year-end.

’’ Chris BrookhouseInfrastructure Director


STRATEGY IN ACTION - INFRASTRUCTURE

Haulage

310Drivers

(year average FY17)

Aim: Make safe, reliable and cost-efficient fuel deliveries to customers through the Greenergy Flexigrid haulage operation

Strategic priority 1 Ensure a safe operation

Our number one priority is to ensure that drivers, vehicles and equipment are prepared for all foreseeable hazards, giving our customers assurance that their deliveries are safe in our hands.

We encourage all drivers to report hazards, however small. The frequency of reporting in our in-house haulage operation increased this period by 20%, demonstrating an ever-improving safety culture amongst our drivers. All information provided by drivers was followed up and corrective action taken.

Strategic priority 2 Create an inclusive employee relations environment

We continue to focus on maintaining an active and open dialogue with our driver colleagues, to ensure effective teamwork and a shared focus on customer service. With a quarter of the shares in Greenergy Flexigrid held by a trust on behalf of drivers, our drivers have a real stake in the success of the business. The number of drivers benefiting from this trust increased further this year.

Following detailed analysis of health and safety statistics, and in particular an increase in the frequency of injuries caused by manual handling and slips, we developed highly tailored driver training on specific topics, to supplement existing formal and informal training programmes. We also invested further in our training capability, increasing our resourcing through the introduction of a national network of driver-training assistants to support our full-time driver training team.

We have continued to expand our haulage capability to meet our growing supply requirements in the UK. We have recruited more drivers in order to improve efficiency and in preparation for further growth.

‘‘We benefit financially from the progress of the Greenergy Flexigrid business through the drivers’ trust. As shareholders, we share common goals and push forward together as a team.

’’ Malcolm McGillivrayDriver and Non-Executive Director of Greenergy Flexigrid

285Drivers

(year average FY16)


STRATEGY IN ACTION

56


FY

17F

Y16

FY

15

310

285

261

Drivers

30.2

‘‘We have developed a uniquely flexible national logistics operation, capable of adapting continually to deliver from Greenergy’s lowest-cost supply location. With this efficiency and scalability, we are well-placed to support the growth of Greenergy’s delivered-in fuel service and to compete for haulage-only contracts meeting customer-specific requirements.

’’ Adam FranklinChief Executive Greenergy Flexigrid

Strategic priority 3 Efficient use of resources

We further expanded our driver workforce to 321 at year-end (year average FY17: 310; FY16: 285) in order to grow the volume of fuel delivered using our in-house fleet.

By recruiting more drivers, we:

» Improved asset utilisation

» Gained greater flexibility and control over the quality of service provided to customers

» Improved profitability.

We also rationalised our approved subcontractor base, ensuring we only work with those that operate to our standards and processes.

Following growth in our haulage operations, we invested in a fleet management system and team

to take over the management of our vehicle maintenance operations from a previously outsourced function. With greater control and visibility of vehicle availability, we aim to improve resource planning, reduce costs and improve vehicle up-time.

Newer vehicles were also introduced into our in-house fleet. By year- end 72% of our fleet was less than 12 months old, giving fuel efficiency improvements.

Work began on the selection of a new scheduling system in order to improve fleet utilisation and real-time reporting of ETAs. The system will also bring operational efficiencies and greater scalability, to support the continued growth of the business.

We plan to:

» Introduce a new scheduling platform

» Improve communication with customers on delivery arrival times

» Make further improvements in fleet utilisation

» Continue to grow our operation, including as haulage-only contracts.

Haulage (continued)

KPI: Greenergy Flexigrid drivers


STRATEGY IN ACTION - HAULAGE

59

Navigator Seal Sands Terminal | Teesside, UK

KEY PERFORMANCE

INDICATORS


Unit cost of production (£/cbm)

Average ship size (cbm)Output (cbm)

Average ship size (cbm)

21,100

11,777

cbm

FY13 FY14 FY15 FY16 FY17

£/c

bm

Cost of production

Production

FY

17F

Y16

FY

15

Litres (billion)

18.6

18.1

15.6

FY

14F

Y13

15.0

13.5

FY

17F

Y16

FY

15F

Y14

FY

13

396

358

298

164

90

Number of forecourts supplied at year end

Litres (million)

699

494

400

FY

17F

Y16

FY

15F

Y14

FY

13

244

FY

17F

Y16

FY

15

102.0

52.6

30.3

£ (million)

FY

14F

Y13 30.2

23.5

3.8

77.6

57.9

FY

17F

Y16

FY

15

£ (million)

FY

14F

Y13 16.6

6.8

Operational KPIs

Group sales volume Sales growth continued as a result of expansion in Canada and Brazil.

Ship sizesBy optimising our purchasing and receiving product on larger ships, we are developing economies of scale and driving down unit costs.

Biodiesel manufacturing outputOutput increased and cost per cbm of biodiesel produced fell as a result of previous investments to expand capacity and create operational efficiencies.

Canada sales growthWith greater purchasing flexibility and a successful rail-to-road supply facility, we expanded sales in the Ontario and Quebec regions of Canada.

Sales to UK independent forecourtsSales to the independently owned forecourt sector are growing as we build our reputation as a low-cost, reliable and customer-focussed supplier.

Chief Executive's Review p8 UK Fuels p30

UK Fuels case study p35

Biofuels p46

Canada p38

Financial KPIs

EBITDA/Profit before tax EBITDA and profit before tax increased significantly due to strong transient margins for imports into Brazil, income from diesel storage in contango market conditions as well as strong performances from our biodiesel manufacturing operations and Canadian business.


£102.0m

EBITDA FY17

£77.6m

Profit before tax

EBITDA excluding exceptionals

Profit before tax


KEY PERFORMANCE INDICATORS

FY

17F

Y16

FY

15

100%

99.95%

99.3%

Percentage of Biodieselfrom waste

98.70

98.63

98.68

98.93

98.77

98.56

98.72

98.55

98.52

98.70

99.10

98.50

Percentage on-time deliveries

AP

R 1

7M

AY

16

FY

17F

Y16

FY

15

56%

32%

17%

Percentage of Bioethanolfrom waste

8.95

8.64

8.57

8.52

8.56

8.66

8.74

8.75

8.53

8.41

8.42

8.30

MPG

AP

R 1

7M

AY

16

99.24

99.25

99.36

99.53

99.53

99.44

99.63

99.35

99.47

99.46

99.61

99.37

Percentage invoice accuracy

AP

R 1

7M

AY

16

FY

17F

Y16

FY

15

15.18%

14.41%

27.42%

PercentageFY

14F

Y13

23.42%

26.89%

Percentage of trucks taking over 30 mins to load, Navigator Thames Terminal

Service quality KPIs

On-time deliveries The complexity of our delivery operations increased further as we expanded our sales to the independent forecourt sector.

Investments in new fleet management and scheduling systems are being made to support the continued growth of the business, giving improved visibility of vehicle availability and real-time reporting of ETAs.

Invoice accuracyOur invoice accuracy is an indicator of the quality of the information flow throughout our business.

In order to improve the efficiency and accuracy of our processes, we continue to automate our invoicing wherever possible. The proportion of invoices that were automatically generated this period was 94% (FY16: 93%).

Truck loading timesBy minimising delays for trucks collecting fuel from our terminals, we improve our own, and our customers’ operational efficiency.

The opening of Thames Oilport for diesel supply is expected to further reduce peak-time congestion at Navigator Thames, our busiest terminal.

Environmental KPIs

Biofuel from wasteWe have increased our use of waste-based biofuels in our blending in the UK, using biofuel produced in our manufacturing operations and sourced from third parties.

Fuel efficiency in our in-house haulage fleetFuel efficiency in our in-house fleet improved this period as a result of the introduction of new, more fuel efficient vehicles during the year.

Biofuel sustainability p86 Haulage p56

Biodiesel from waste

Bioethanol from waste


KEY PERFORMANCE INDICATORS

Stephen McCaffreyChief Financial Officer

Boardroom | London, UK

Chief Financial Officer's Review

EBITDA totalled £102.0m this period, nearly double FY16 (£52.6m) and our best-ever financial result.

‘‘International growth combined with stable returns from our established UK business delivered record profits for the year and strong net cash generation. The contribution from our Brazilian operation was particularly significant and our Canadian business delivered a second year of profitable performance. In the UK our results were boosted by the access to infrastructure at Thames Oilport which allowed us to make gains from product storage in contango market conditions.

’’

International growth

We commenced diesel imports into Brazil during FY16, utilising our long held tankage position and local team, and this period expanded our sales significantly and at margins well in excess of expectations.

We see a long-term future for Greenergy in Brazil as a structural net importer of fuels and will consider infrastructure investment opportunities as these arise. However, we do not expect the margins we achieved in Brazil in FY17 to be sustainable for the longer term. The market structure is likely to adjust from current transitional conditions, with margins moving to reflect the economics of a net importer of fuel.

With expansion in Brazil, we have increased our focus on risk management and have built a portfolio of counterparties with which to establish longer term supply relationships. Additionally, with the expectation of lower future margins, we will look to translate our experience in the UK market to focus on being the most cost competitive supplier into our market entry points.

Canada delivered its second consecutive year of profitable performance with sales volumes above expectation. This was driven by more competitive product pricing resulting from continued diversification of our supply chain. Ongoing infrastructure investment in rail-to-road facilities also allowed us to reduce logistics costs for our customers to deliver a regional competitive advantage.

The establishment of Bahrain Gasoline Blending (BGB) saw us enter the Middle East market. The initial years of the collaboration will see steady returns as the operation is established. Subsequent years will see a more significant share of trading income as the infrastructure available to the operation is adapted to allow increased petrol blending.

UK market

Returns in our key UK market were boosted by income earned from the long-term storage of diesel in multiple locations to take advantage of the contango market conditions. We will see further gains in FY18 as the position closes out.

Our ability to take advantage of this contango structure is directly linked to our investment in UK infrastructure, most notably at Thames Oilport. Post year-end the terminal opened for supply to UK customers which will boost future earnings.

Our ownership in Navigator Terminals performed ahead of initial financial expectations with the first cash return being paid out during the current period, ahead of schedule.

The contribution from both biodiesel manufacturing facilities was significantly higher than last period. We continued to invest in our facilities targeting increased production levels and reduced unit costs, with cost reductions achieved through cheaper sources of waste oil as well as operating efficiencies. The expanded production has also added supply flexibility to our European biodiesel trading business which performed well ahead of budget expectation for the year.

Biofuels p46

Global markets p22

Middle East p44

Canada p38

Brazil p42

Risk register p76


CHIEF FINANCIAL OFFICER'S REVIEW

66

Managing our risks p71

0

16

10

Bill

ion

4

6

8

14

12

18

20

2

FY13 FY14 FY15 FY16 FY1701/14

200

0

1200

01/15 01/1701/16

400

600

800

1000

10

30

50

60

70

90

110

-10

130

150

Bre

nt

cru

de

futu

res

US

$ /

bar

rel

Die

sel /

pet

rol p

rice

US

$ /

to

nn

e

(continued)

Infrastructure investment in the UK continues to underpin performance in our main market. Our focus on supply cost continues to be key to maintaining competitive advantage.

Taxation

The Group’s corporation tax charge for the year was £18.8m (FY16: £6.1m) representing an effective rate of 32% (FY16: 11%).

In FY16 our corporate tax charge was positively impacted by the profit realised on disposal of our North Tees terminal. Due to the nature of this transaction, the profit on disposal was deemed to be non-taxable and we were able to retain all the profit within the Group, improving our effective tax rate last year.

This year’s tax rate reflects the normalisation of UK based tax and additional earnings in Brazil, which is a high corporate tax regime.

We continue to be a significant contributor to UK Government Treasury receipts, making fuel duty payments of £6.5bn and VAT payments of £1.8bn during the year. These payments represented 1.5% of total receipts collected by the UK Treasury in the financial year.

Performance

Our run-rate performance was ahead of expectation. Brent crude prices were higher overall than FY16, and also more stable, and Rotterdam market prices for petrol and diesel followed this trend.

Following the UK referendum vote on leaving the European Union there was a significant devaluation of Sterling versus the US Dollar, one of our major trading currencies, and this also resulted in additional translation gains in accounting profit. We maintain a comprehensive hedging strategy to ensure that movements in exchange rates have limited cash impact on the business.

Post balance sheet events

On the 10th of May the company’s existing shareholders completed the sale of 83.64% of the issued share capital of Greenergy Fuels Holdings Limited. The controlling interest in the company is now held by Brookfield Business Partners (NYSE: BBU; TSX: BBU.UN). Existing Greenergy management maintain a 16.36% share in the business.

Additionally, on 13 July 2017 we agreed to purchase 100% of the shares of Inver Energy, an Irish-based independent fuel supplier. Following completion, the transaction will give us a presence in the growing Irish market for the first time.

Earnings per share

These results translated into earnings per share of £372 compared to £328 in the previous year.


Chief Financial Officer's Review

Sales volume and turnoverHistoric prices for diesel, gasoline and brent

Our infrastructure efficiency in the UK combined with sales growth in our international businesses increased operating profit to £87.3m.

Looking ahead, we expect our Brazilian margins to reduce as the import market matures. We also expect lower income from diesel as the contango drops away.

Financing our business

This period we completed the restructuring and renewal of our Borrowing Base facility to finance the future working capital needs of the business.

Working closely with our banking group, we have been able to simplify our financing arrangements and put in place a new $1bn facility for a three year period, with an option to extend for a further two years. This gives the business a stable platform on which to pursue growth through acquisition in the UK and international expansion. Given the extended term of the facility we have structured an initial facility of $800m, with access to an additional $200m to accommodate growth and unforeseen price fluctuations. The new facility has operated well and our banks continue to be supportive.

Across the rest of the Group our Canadian facility has also continued to function well and retains headroom to accommodate the growth we have enjoyed in that market.

Turnover increased due to higher fuel retail prices and growth in sales volume.

Platts petrol Sales volume (litre)

Platts diesel Turnover (£)

Brent crude



CHIEF FINANCIAL OFFICER'S REVIEW

Stolthaven Terminal | Santos, Brazil

Loss of key sta�

Extreme weather

conditions

Mag

nitu

de

of

imp

act

Likelihood of occurence after mitigation

Oil price volatility

HIGH

HIG

H

LOW

HIG

HLO

W

Health, safety and

environmental incidents

Industrial relations

Biofuelmargin

volatility

Supplier/customer

counterpartyriskIT failure

/connectivity loss

Regulatoryrisk/

Brexit

Currencyrisk

Bribery and corruption

Maliciouscyber attack

Product quality issue

Biofuel compliance

risk

Interruption of fuel supply to customers

MANAGING OUR RISKS

Risk overview

The risks we face in our business, and the action we take to mitigate those risks, are formalised in a risk register which is reviewed regularly by the Board.

7170 2017 Greenergy Annual Report70

RiskMagnitude of impact

Mitigating action ResponsibilityLikelihood

of occurrence after mitigation

Group risks

Health, safety and environmental incidents

Our operations involve the storage and processing of fuel products and the movement of fuel products by ship, train and truck, including deliveries to customer sites. These activities bring us into contact with members of the public and with the environment. We focus on preventing major pollution, injury and/or loss of life due to systems or equipment failure.

High Personal and process management systems based on best industry practice are implemented at both corporate and country level. Our approach is to ensure all incidents are reported, systematically investigated and followed up in an atmosphere of ownership and responsibility. Our increased focus on Process Integrity is resulting in additional controls and improved reporting.

Executive Directors

Medium

Malicious cyber-attack

The profile and therefore the risk of cyber-attack is increasing for businesses globally. Threats present themselves in many forms, including viruses or targeted emails which create data integrity issues or loss of data, leading to inaccurate reporting or financial loss.

Medium Our information security strategy is under continual review and is discussed regularly by the Board. We work with leading external security specialists to improve our technology and maintain multiple layers of security to protect the business. Our participation in specialist government/industry committees provides additional notification and ensures we remain aligned with industry best practice.

Executive Directors

Medium

(FY16: low)

IT failure or loss of connectivity

An extended loss of connectivity, breach or major IT system failure would cause significant disruption to our business operations, with potential for reputational damage and loss of sales.

Medium Our IT continuity plan includes site connectivity, data back-up, hardware failure and remote access. Following completion of a multi-year resilience improvement plan, all critical systems now have multiple layers of protection and are hosted by third party data centres appropriate to the scale of our business and accredited to relevant standards. Our incident response plan was practiced this year.

Executive Directors

Low

(FY16: medium)

Extreme weather conditions

Adverse weather conditions have the potential to impact the movement of fuel into our storage facilities and our deliveries to customer sites. Our owned terminal infrastructure and our biodiesel manufacturing facilities are all located in ports, where tidal flooding can occur.

Medium Customer supply resilience is achieved in the UK through a national network of supply locations. In Canada, supply chain diversification has reduced the likelihood supply disruption caused by a long period of extremely cold weather. Flood protection systems have also been reviewed and enhanced where appropriate following flooding of our Immingham biodiesel manufacturing facility in 2013 and infrastructure is adequately insured.

Executive Directors

Low

(FY16: medium)

Loss of key staff Loss of key staff would mean loss of knowledge and skills to the Group. As we expand, the need for the strength and depth of the senior management increases.

Medium Staff retention and succession planning is carried out by the Remuneration Committee, with a focus on both culture and financial reward, including an established performance-related-pay scheme. There is good management connection and team building between different offices and a long-serving senior management team.

Executive Directors

Low

Bribery and corruption, codes of conduct, ethics and good governance

The business sources product globally and from a wide variety of suppliers, counterparties, agents and intermediaries and is increasing its international expansion. It is also selling product to customers on increasingly complex terms with the number of counterparties connected to transactions increasing. There is therefore a need to ensure compliance with domestic and international rules around full disclosure within business dealings, ethical codes of conduct and controls around facilitation and equivalent payments (such as those stipulated in the UK under the Bribery Act 2010).

Low The Group has had in place since 2010 a clear and company-wide policy to inform and set limitations, limits and prohibitions, including a gift register and a record of supplier/customer entertainment. We identify any roles which may be considered to be high risk and ensure that these staff members particularly are aware of the requirements placed on them by the Bribery Act (2010). The Group is building on this policy with the establishment of an 'ethics hotline' to allow staff to report concerns. Over time the general policy will subdivide to reflect distinct elements of the business operation so as to better focus training and monitor adherence.

Executive Directors

Low

Heath and safety p14

Employment p84

Risk register


MANAGING OUR RISKS

continued




UK and International Fuels

Oil price volatility Fluctuations in fuel product prices can result in a difference between purchase and sales prices. Unless managed, these fluctuations could very significantly impact purchase and sales margins.

High Comprehensive control processes and hedging mechanisms are in place to limit exposure to oil and product price fluctuations. The objective of these mechanisms is to match our priced physical positions (generated from spot and term contracts entered into with suppliers and customers) with equal and opposite derivative positions.

In response to global supply and demand risk, we maintain an active forward purchasing and sales activity hedged with appropriate market instruments. Sales contracts also include floating elements which are linked to market prices which reduces exposure to fuel product price rises.

Chief Financial Officer/Audit and Risk Committee

Low

Interruption of fuel supply to customers

An event which significantly interrupts the supply of fuel to our customers has potential to cause reputational, commercial and financial damage. Supply disruption could be market-wide or site-specific:

» A political or physical event in a major oil producing nation or a significant supply location could disrupt supplies into Europe

» Weather-related shipping delays, industrial action, a fuel quality issue or an IT failure could cause product unavailability at a specific supply location.

Medium Supply resilience is central to our mission. By maintaining optionality across our supply chain, we minimise reliance on any single supplier, supply location or haulage provider.

» With our flexible global supply chains and our deep-water infrastructure, we can quickly switch our purchasing to other locations in the event of a major event disrupting oil flows into Europe

» In the UK, our global product sourcing, network of storage and supply locations, in-house and third party haulage arrangements all give operational flexibility and the ability to switch to other sites in the event of an outage or closure at one location

» In Canada, supply resilience is achieved by combining rail and import infrastructure, giving us the ability to source from local suppliers and also from the USA and Europe.

UK Trading Director/Chief Operating Officer

Low

Product quality issue

The supply of fuel failing to meet quality standards could lead to significant reputational damage and remediation costs.

Medium The risk of a field quality issue is minimised through extensive operational controls, certified to ISO 9001. These include independent product quality tests on receipt of product, in tank and prior to releasing product for customer deliveries.

Managing Director and Chief Operating Officer

Low

(FY16: medium)

(continued)Risk register


MANAGING OUR RISKS





UK and International Fuels

Currency risk We purchase fuel products mainly in US Dollars and Euros. Because the international oil markets generally price in US Dollars, and the majority of our UK customers wish to purchase fuel products in Pounds Sterling, there can be a significant foreign currency exchange risk inherent in this part of our business. With the growth of our operations in Brazil, we now have an additional currency risk to manage.

Geopolitical change resulted in greater currency fluctuation this period. Without mitigating action, the potential impact of currency risk is therefore now greater than recent years.

Medium

(FY16: low)

To eliminate transactional foreign exchange risk, our treasury department ensures that, at all times, the financial assets denominated in a particular currency match the financial liabilities denominated in the same currency. As a further control, balance sheets for each of our 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, we continue to develop and refine our internal control processes and hedging mechanisms.

Chief Financial Officer

Low

Counterparty risk

Failure of customers to pay invoices or take delivery of product

Our customers include major oil companies and supermarkets as well as independently owned forecourts, resellers and commercial customers. The failure by any of these customers to pay for product after delivery would represent a credit loss which could potentially be significant for the business.

In Brazil, a customer could potentially default on a purchase contract if the national oil company reduces its price below the market price, leaving us with a loss against hedges.

Medium Trading limits are set for all counterparties and are reviewed regularly in the context of oil price product changes and increasing customer preference for fixed priced sales contracts. Credit insurance is maintained where considered appropriate.

In Brazil we maintain strong relationships with our customers through our local office and have a broad customer base. All of our sales are on a pre-paid basis and we manage price risk on a continuous basis, thereby minimizing counterparty risk.

Chief Financial Officer/ Chief Operating Officer

Low

(FY16: medium)

Haulage

Industrial relations Our driver workforce is largely unionised. An industrial dispute involving our drivers has the potential to disrupt fuel supply to customers, with potentially significant implications for the business. Deliveries could also be disrupted by industrial action involving third party facilities or drivers.

Medium Having in-sourced most of our haulage operations, we focus on open dialogue with our in-house drivers under a respect agenda and provide a variety of forums for communication, both formal and informal, including regular updates on the performance of the business. Past and present drivers are shareholders in Greenergy Flexigrid, encouraging performance and ownership. A practical working relationship with the union is ensured through various channels including full engagement with shop stewards. Disruption at third party sites is minimised through our national network of supply locations, giving us the flexibility to lift from alternative locations if required.

Chief Executive, Greenergy Flexigrid

Medium

Brazil market p26


MANAGING OUR RISKS





Biofuels

Biofuel margin volatility Our margins from manufacturing biodiesel, from blending biofuel into our petrol and diesel and from creating and selling RTFO certificates all depend on the spread between biofuel raw materials and finished product prices and between biofuels and their fossil equivalents.

High Using our understanding of market structures, we lock in margins when opportunities exist, continuously reviewing and extending our hedges. We also forward purchase feedstocks when possible.

Chief Operating Officer

High

(FY16: low)

Counterparty risk

Failure of suppliers to deliver biofuels and raw materials for biofuel production

We purchase raw materials for biodiesel production from a wide range of waste oil collectors globally. Our counterparties are generally much smaller than for oil products, which are purchased primarily from major oil companies. We also purchase bioethanol from third party producers.

Medium

(FY16: low)

Due diligence is carried out for all bioethanol and waste oil suppliers prior to entering into a first transaction and counterparty limits are set and reviewed. As our supply relationships are generally ongoing, we focus on knowing our suppliers and maintain regular contact through our purchasing, sustainability and credit teams.

Chief Financial Officer/ Chief Operating Officer

Low

UK regulatory risk/Brexit

Demand for biofuel in the UK depends largely on the Renewable Transport Fuel Obligation (RTFO), which requires fuel suppliers to supply a proportion of their fuel as biofuel. The percentage biofuel obligation was due to increase in April 2017 but the legislative amendment was delayed by Government elections. An increase in obligated amounts is expected in 2018.

We do not expect the RTFO to be impacted by a UK Brexit, even though it implements EU renewable fuel requirements. The UK has its own Climate Change Act setting binding carbon emission reductions and RTFO policy is considered the best way of delivering these reductions in the road transport sector.

Medium If UK biofuel demand were to fall, or fail to rise, we could:

» Expand our biodiesel exports. Incentives for waste-based biofuel are increasing in all EU Member States in line with EU law and we already supply biodiesel to customers in a number of European countries from tankage in Rotterdam. We also sell to customers in other global markets

» End or reduce our bioethanol purchases from third parties.


Medium

(New risk in light of UK Brexit vote

this period)

Biofuel compliance risk To count towards our biofuel supply obligations under the RTFO, biofuel must meet independently audited sustainability and carbon requirements. With a buy-out fee currently set at 30ppl, audit failure would have significant financial implications for the business.

In Canada, fossil fuel suppliers are required to comply with minimum biofuel blending and reporting obligations or buy Compliance Units from biofuel producers or importers.

Medium By manufacturing our own biodiesel in the UK we reduce reliance on third party suppliers’ sustainability data. Our manufacturing facilities are certified by the ISCC sustainability and carbon system, making the biodiesel we produce automatically compliant with RTFO criteria, and we also work with raw material suppliers to implement our ISCC accreditation in their supply chain. Additional controls exist for purchases from third parties.

In Canada, we blended sustainable biofuels above our blending obligation and sold Compliance Units to other parties. A trained compliance team fulfills our reporting and auditing requirements.


Low


MANAGING OUR RISKS


PEOPLE AND ENVIRONMENT

80 2017 Greenergy Annual Report 81

Paul BatesonChief Operating Officer

Paul joined Greenergy in 2007 and brings 34 years’ experience in the downstream oil sector, including at Exxon, Conoco Phillips, and Louis Dreyfus Refining and Marketing. He manages the company’s trading, biodiesel manufacturing, projects and international businesses.

Caroline LumbardUK Trading Director

Since joining Greenergy 19 years ago, Caroline has helped champion our rapid sales and customer growth. As UK Trading Director, Caroline is responsible for the Group’s sales, purchasing and operations strategies and leads complex supply chain activities with major oil companies in the UK.

Chris BrookhouseInfrastructure Director

Chris joined in 2015 as Infrastructure Director to maximise the value potential of our assets. He brings significant project and capital development expertise from the downstream oil and energy sectors. Chris is also Chief Executive for joint venture activities at Thames Oilport and Thames Enterprise Park.

Andrew Owens MBEChief Executive

Andrew is a co-founder of Greenergy and has more than 30 years’ experience working in the oil industry. Andrew has a Chemical Engineering degree from Imperial College and retains links with the College as Adjunct Professor at Imperial College Business School.


Stephen joined Greenergy in 2005 as the Chief Financial Officer of Greenergy Biofuels and has subsequently fulfilled numerous roles including Managing Director of Greenergy Terminals. Stephen is a chartered accountant and has over 20 years’ experience in the oil and gas industry including roles with Amerada Hess and The BOC Group plc.

Tamara EarleyManaging Director

Tamara has over 25 years’ experience in the oil industry, including 20 with Greenergy. Before Greenergy, Tamara worked with Safeway and BP in various roles. Tamara’s portfolio includes business development, forecasting and planning, IT infrastructure and security, human resources, industrial relations and regulatory affairs.

Executive Directors Employment

Our average headcount increased from 637 in FY16 to 677 in FY17 as a result of an increase in our driver workforce and our international expansion.

Values

Our values underpin every interaction we have, whether with clients, suppliers, the communities in which we operate and, just as crucially, with our colleagues.

The importance of respect is regularly discussed by the Chief Executive at staff meetings and through intranet blogs and is reinforced by management. This creates an environment in which the senior leadership team is trusted to listen and follow-up on any concerns within the company.

Culture

Corporate culture reflects the values and behaviours of everyone in the workplace, and we continue to work hard to keep the quick decision making and hands-on approach of a small company as we have grown.

The open communication channels from the Executive Management Team coupled with our company values ensure that all employees are recognised, respected and rewarded. Our unique Performance Related Pay (PRP) bonus scheme gives employees opportunities to thrive and develop, with targets designed specifically to improve both the business and the individual.

Our values are to:

» Do no harm to people or place

» Respect each other and take care in all we do

» Act in a fair, responsible and honest manner.

Despite the time and logistical obstacles, it is crucial to the success of the company that our unique culture is understood and embraced by all. Our 25th birthday party held in March 2017 was attended by representatives from all our locations, and resulted in an enjoyable and rewarding evening.



Biodiesel manufacturing facility | Teesside, UK

All employees

Non-driver workforce

Senior Management

Executive Directors

104 573

104 263

2 4

4 19

Case study

Succession planning

As part of a long-term programme of succession planning at our infrastructure and manufacturing facilities, we continue to recruit young people into the business, both as apprentices and as graduates.

10 apprentices were employed in the business at year end (FY16: 10) and a further three former apprentices completed their training and took full time roles.

Employee demographics

We remain committed to being an employer of choice, and to ensuring our people are working within safe, productive and overall enjoyable environments. Staff retention and succession planning is key, and our senior management team having an average service of nine years is testament to that.

Having identified that our infrastructure businesses had an ageing demographic, we implemented a strategy to ensure that retirements are planned for and a longer term site succession plan is understood. As a result, the average age of Greenergy Terminals employees reduced to 46 years this period (FY16: 52 years).

As part of our long-term programme of succession planning, we continue to operate an apprenticeship programme, with 10 apprentices at year-end (FY16: 10). All of our apprentices join the company as permanent employees, and this year three former apprentices completed their training and took up full time roles.

We also increased our headcount within our haulage operation, although the average age of employees in this part of the business was unchanged. The abolition of the standard retirement age has allowed us to employ drivers on a part-time basis as they wind down their careers, retaining their experience and knowledge whilst providing vital cover for holidays and absence.

Charitable giving

Each year, the Board sets a charity budget through which it can help fund socially orientated and development causes both nationally and internationally.

This years’ charity budget of £210,000 was distributed by our 20 charity teams. The teams are made up of permanent employees, each of whom can nominate a charity for consideration by the wider team. The way by which funds are disbursed allows for employees to share ideas and make decisions as a team.

No political donations were made and no political expenditure was incurred during the year.

Employment

Gender diversity

Women Men

(continued)



People and environmentBiodiesel blended into diesel

supplied in the UK

92%5%3%

People and environmentBioethanol blended into petrol

supplied in the UK

25%

10.5%

56% 7%1.5%

Percentage bioethanol from waste

FY140

60

40

30

FY15 FY16 FY17

50

Per

cen

tag

e

8%

17%

32%

56%

10

20

Biofuel sustainability

We blend biofuel into our petrol and diesel in order to meet our biofuel supply obligations and reduce the environmental impact of the fuel we supply. Our focus is on using biofuels which deliver greatest carbon benefit and have minimal land use impacts.

Action 1 Maximise biofuel from waste

We further increased our use of biofuels derived from waste.

The biodiesel we blended into diesel in the UK was derived entirely from wastes and was supplied primarily from our own production (FY17: 95%; FY16: 86%).

We again increased our sourcing of waste-based bioethanol from third party manufacturers for blending into petrol. 56% of the bioethanol in the petrol we supplied in the UK this period was derived from waste (FY16: 32%).

Percentage bioethanol from waste

Action 2 Choose biofuels with the greatest carbon benefit

The average carbon saving from the biofuel blended into our petrol and diesel in the UK increased significantly to 82% (FY16: 74%), with an average saving from biodiesel of 93% (FY16: 88%) and from bioethanol of 72% (FY16: 65%).

This very high level of carbon saving was achieved by:

» Reduced energy consumption per tonne of biodiesel produced at our biodiesel manufacturing facilities

» Increased use of bioethanol from wastes, with higher carbon savings

» Detailed information capture at each stage of our supply chain.

Action 3 Diversifying sustainable supply chains

Sourcing raw materials with the best sustainability and quality characteristics is an ongoing priority, particularly as we increase our biodiesel production.

Our focus is on developing lasting relationships with businesses in all continents of the world, and particularly in countries where comparable biofuel incentives do not exist. This required pioneering work with suppliers to demonstrate traceability back to the restaurant. Our ability to receive waste oils in small containers also enabled us to source raw materials from a wider variety of collectors globally.

Where we do use biofuels derived from crops, we ensure they are produced in accordance with an EU approved biofuel sustainability standards. 100% of the crop-based biofuel we supplied in the UK was verified as compliant with one of these standards (FY16: 100%).

93%

Carbon saving from biodiesel

Q&AWhat is our biofuel made from?

BiodieselAll of the biodiesel that we blended in the UK was derived from wastes. Most was produced at our manufacturing facilities on the east coast of England using waste oils sourced from around the world.

BioethanolAlthough we are not ourselves a bioethanol producer, we work with innovative third-party manufacturers to increase our use of waste-derived bioethanol as a petrol blend component.

Biodiesel blended into diesel supplied in the UK

Bioethanol blended into petrol supplied in the UK

Used cooking oil Waste materials

Food waste Corn

Sugar cane

Other wastes Wheat

Sugar beet

Biofuels p46 UK Fuels p31



Biofuels p46

Infrastructure p52

Biofuel sustainability p86

Haulage p56

3%

28%

1%

58%

10%

People and environmentGroup carbon emissions

At 88m tonnes Co2e, our Group carbon emissions were 8% higher than FY16 as we expanded our business.2

Carbon emissions Carbon savings from biofuel

Strategic report

Group carbon emissions

UK Fuels

Carbon emissions from our UK Fuels business relate to fuel storage, shipping, office and travel. This year our UK Fuels calculation:

» Excludes emissions from biofuel sourcing, manufacturing and supply, which are now reported as a separate business unit

» Includes emissions from the North Tees terminal following the sale of the facility to Navigator Terminals in April 2016 (previously included as part of our infrastructure emissions).

Excluding these changes, emissions from our UK business were broadly unchanged from the prior year.

International Fuels

Our operations to source, store and supply fuel in Canada and Brazil grew rapidly this year, resulting in a 59% increase in emissions from these parts of the business.

The biofuel we used and supplied globally, including to other oil companies, saved 4.9 million tonnes CO2e (FY16: 3.8mt) compared to its fossil fuel equivalent. This was due to growth in our biofuel sales to third parties and increased use of waste-based biofuels in our own petrol and diesel in the UK.

By blending biofuel into the petrol and diesel we supply in the UK and Canada, we saved 1.9 million tonnes CO2e compared with using the fossil fuel equivalent (FY16: 1.8mt). This was equivalent to taking 0.8m cars off the road.

Strategic report for the year ended 14 April 2017

The Directors present their strategic report on the Group for the year ended 14 April 2017 on pages 2–89.

Review of the business

The review of the business can be found on pages 8–13.

Biofuels

Emissions from our biofuels business were 16% higher than FY16 as we expanded our biofuel sourcing and manufacturing operations.

Infrastructure

Our calculation relates to emissions from our fuel storage terminal at Plymouth (primarily electricity for pumping and heating) and from regeneration work at Thames Oilport and Thames Enterprise Park. Emissions at these sites were 13% higher than FY16 as a result of our increased shareholding in Thames Oilport and Thames Enterprise Park and preparations for the start of diesel supply at Thames Oilport.

Haulage

Emissions from our in-house and third party haulage operations fell 6%. Fuel efficiency in our in-house fleet increased to 9 miles per gallon this period (FY16: 8.21 MPG) following the introduction of newer vehicles during the year. We expect average MPG to improve further in FY18, when the newer vehicles will be in operation for the full 12 months.

MethodologyAll CO2e conversions from Greenergy operational data have been calculated in accordance the Defra’s 2015 conversion factors for Company Reporting (2015, Version 1.1. Expiry – 31 May 2016), except for office workers where an industry standard carbon factor was used as government data was unavailable.

We have included all emissions classified in Scope 1 & 2 of the World Business Council on Sustainable Development Scope GHG Protocol (www.ghgprotocol.org/about-ghgp). Certain aspects of Scope 3 have also been included on a voluntary basis.

This year’s calculation restates current and prior emissions from kerosene following a recommendation from an ISCC audit. Emissions associated with office and travel have been allocated to the relevant business unit.

Net savings from biofuel we supplied in CO2e tonnes

4.9mFY163.8m

Andrew OwensChief Executive

Biofuels

Haulage

Infrastructure

UK Fuels

International Fuels

2



Directors' report

Directors’ report for the year ended 14 April 2017

The Directors present their report and the audited financial statements of the Company for the year ended 14 April 2017.

Future developmentsAn indication of the likely future developments in the business can be found on pages 28–59.

Results and dividendsThe Group’s profit before tax for the financial year was £77.6m (FY16: £57.9m).

At the time of this report no dividend was proposed or declared for the year.

Political and charitable contributionsThe Group allocated £216,273 for charitable donations during the year (FY16: £210,217), including £210,000 distributed by the Company’s 20 employee charity teams referenced on page 84.

Suppliers Terms and conditions for business transaction are agreed individually with suppliers. Payment is then made on these terms, subject to the terms and conditions being met by the suppliers including the timely submission of satisfactory invoices. For the year ended 14 April 2017 the average trade payables period for the Company was two days, unchanged from last year.

Financial risk management The risk management programme of the Company, including financial risk management, is detailed on pages 70–79.

Directors The Directors of the Company who served during the period and up to the date of signing the financial statements are listed on page 82.

EmployeesCommunications are established and maintained with all employees through the Company intranet and twice yearly presentations.

Consultation with employees or their representatives has continued at all levels, with the aim of ensuring that their views are taken into account when decisions are made that are likely to affect their interests and that all employees are aware of the financial and economic performance of their business units and of the Company as a whole.

Applications for employment by disabled persons are always fully considered, bearing in mind the respective aptitudes and abilities of the applicant concerned. It is the policy of the Company that the training, career development and promotion of a disabled person should, as far as possible, be identical to that of a person who does not suffer from a disability.

Statement of Directors’ responsibilitiesThe 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 auditorsEach 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 CliftonCompany Secretary

Employment p83


DIRECTORS' REPORT

Plymouth Terminal | UK

FINANCIALS


Independent auditors’ report to the members of Greenergy Fuels Holdings Limited

Report on the financial statements

Our opinion

In our opinion:

» Greenergy Fuels Holdings Limited’s Group financial statements and Company financial statements (the ‘financial statements’) give a true and fair view of the state of the Group’s and of the Company’s affairs as at 14 April 2017 and of the Group’s profit and the Group’s and the Company’s cash flows for the year then ended;

» The Group financial statements have been properly prepared in accordance with International Financial Reporting Standards (‘IFRSs’) as adopted by the European Union;

» The 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; and

» The financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

Responsibilities for the financial statements and the audit

Our responsibilities and those of the Directors

As explained more fully in the Statement of Directors’ Responsibilities set out on page 91, 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) (‘ISAs (UK & 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.

What an audit of financial statements involves

We conducted our audit in accordance with ISAs (UK & Ireland). 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 the 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.

What we have audited

The financial statements, included within the Annual Report, comprise:

» The Consolidated & Company balance sheets as at 14 April 2017;

» The Consolidated income statement and Consolidated statement of comprehensive income for the year then ended;

» The Consolidated & Company statements of cash flows for the year then ended;

» The Consolidated statement of changes in equity and Company statement of changes in equity for the year then ended; and

» The notes to the financial statements, which include a summary of significant accounting policies and other explanatory information.

The financial reporting framework that has been applied in the preparation of the financial statements is IFRSs as adopted by the European Union and applicable law and, as regards the company financial statements, as applied in accordance with the provisions of the Companies Act 2006.

In applying the financial reporting framework, the Directors have made a number of subjective judgements, for example in respect of significant accounting estimates. In making such estimates, they have made assumptions and considered future events.

We primarily focus our work in these areas by assessing the Directors’ judgements against available evidence, forming our own judgements, and evaluating the disclosures in the financial statements.

We test and examine information, using sampling and other auditing techniques, to the extent we consider necessary to provide a reasonable basis for us to draw conclusions. We obtain audit evidence through testing the effectiveness of controls, substantive procedures or a combination of both.

In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. With respect to the Strategic Report and Directors’ Report, we consider whether those reports include the disclosures required by applicable legal requirements.

Nicholas Stevenson Senior Statutory Auditor

for and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors

London 31 July 2017

Opinion on other matter prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

» The information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

» The Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements.

In addition, in light of the knowledge and understanding of the Group, the Company and their environment obtained in the course of the audit, we are required to report if we have identified any material misstatements in the Strategic Report and the Directors’ Report. We have nothing to report in this respect.

Other matters on which we are required to report by exception

Adequacy of accounting records and information and explanations received

Under the Companies Act 2006 we are required to report to you if, in our opinion:

» We have not received all the information and explanations we require for our audit; or

» Adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received from branches not visited by us; or

» The company financial statements are not in agreement with the accounting records and returns.

We have no exceptions to report arising from this responsibility.

Directors’ remuneration

Under the Companies Act 2006 we are required to report to you if, in our opinion, certain disclosures of Directors’ remuneration specified by law are not made. We have no exceptions to report arising from this responsibility.


FINANCIALS

Note

Year ended 14 April 2017

£’000


£’000

Revenue 14,868,124 13,672,479

Cost of sales (14,645,618) (13,515,919)

Gross profit 222,506 156,560

Distribution costs (78,184) (67,610)

Administrative expenses (62,077) (53,591)

Other operating income 1,021 1,849

Exceptional operating items 6 - 7,500

Share of results of joint ventures 14 868 -

Operating profit 5 84,134 44,708

Investment income 3,126 -

Exceptional profit on disposal of fixed assets 6 - 23,341

Finance income 8 98 552

Finance costs 9 (9,786) (10,660)

Profit before taxation 77,572 57,941

Income tax expense 10 (18,772) (6,100)

Profit for the financial year 58,800 51,841

Profit attributable to:

Owners of the Parent 58,506 51,827

Non-controlling interest 294 14


The results stated above are all derived from continuing operations.

The notes on pages 103–138 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 result of the Parent Company for the year was £Nil (2016: profit £7,274,000).

Consolidated income statement For the year ended 14 April 2017


FINANCIALS

Consolidated statement of comprehensive income

Group Note


£’000


£’000


Other comprehensive (expense)/income:

Items that may be reclassified subsequently to profit or loss

Available-for-sale financial assets 15 11,638 169

Exchange difference on translation of net assets of subsidiaries 612 (110)

Cash flow hedges 272 (344)

Total items that may be reclassified subsequently to profit or loss 12,552 (285)

Other comprehensive (expense)/income for the period, net of tax 12,552 (285)

Total comprehensive income for the year, net of tax 71,322 51,556

Attributable to:

Owners of the Parent 71,028 51,542

Non-controlling interest 294 14

Total comprehensive income for the year, net of tax 71,322 51,556

The items in the statement above are disclosed net of tax. The income tax impact relating to the cash flow hedges is a credit of £Nil (2016: £69,000). There are no other taxation charges or credits associated with the elements of other comprehensive income reported above (2016: none).


For the year ended 14 April 2017

Group Company

Note14 April 2017

£’00014 April 2016

£’00014 April 2017

£’00014 April 2016

£’000

Equity

Share capital 26 158 158 158 158

Share premium account 85 85 85 85

Merger reserve 24,904 24,904 - -

Capital redemption reserve (689) (689) - -

Hedging reserve - (272) -

Revaluation reserve 12,083 446 - -

Retained earnings 204,233 140,457 - -

Equity attributable to owners of the Parent 240,776 165,089 243 243

Non-controlling interests (317) (612) -

Total equity 240,457 164,477 243 243


The financial statements on pages 96–138 were approved by the Board of Directors on 31 July 2017 and were signed on its behalf by:


FINANCIALS

Consolidated and Companybalance sheets As at 14 April 2017

Company number: 07318726

Consolidated and Company balance sheets (continued) As at 14 April 2017

Company number: 07318726

Group Company

Note14 April 2017

£’00014 April 2016

£’00014 April 2017

£’00014 April 2016

£’000

Assets

Non-current assets

Property, plant and equipment 12 107,983 202,161 - -

Intangible assets 13 35,733 36,754 - -

Investment in Group undertakings 14 - - 243 243

Investments in associates 14 164 164 - -

Investments in joint ventures 14 92,273 - - -

Available-for-sale financial assets 15 25,256 13,264 - -

Other receivables 17 56,831 28,537 - -

Deferred income tax assets 22 438 1,620 - -

318,678 282,500 243 243

Current assets

Inventories 16 556,595 365,903 - -

Trade and other receivables 17 870,254 903,515 - -

Cash and cash equivalents 18 60,499 83,370 - -

1,487,348 1,352,788 - -

Assets held for sale 19 - 41,269 - -

1,487,348 1,394,057 - -

Total assets 1,806,026 1,676,557 243 243

Liabilities

Non-current liabilities

Borrowings 20 (8,895) (13,572) - -

Provisions for other liabilities and charges 21 (4,699) (1,700) - -

Other payables 23 (1,461) (7,730) - -

Deferred income tax liabilities 22 (3,637) (10,568) - -

(18,692) (33,570) - -

Current liabilities

Trade and other payables 23 (1,284,041) (1,355,727) - -

Borrowings 20 (253,184) (118,730) - -

Corporation tax liabilities (9,652) (4,053) - -

(1,546,877) (1,478,510) - -

Total liabilities (1,565,569) (1,512,080) - -

Net assets 240,457 164,477 243 243

SE McCaffreyDirector

Consolidated statement of changes in equity As at 14 April 2017

Attributable to owners of the Parent

Group Note

Share capital £’000

Share premium account

£’000

Merger reserve

£’000

Retained earnings

£’000

Capital redemption

reserve £’000

Hedging reserve

£’000

Revaluation reserve

£’000Total

£’000

Non- controlling

interest £’000

Total equity £’000

Balance at 15 April 2015 158 85 24,904 95,898 (689) (353) 277 120,280 (625) 119,655

Comprehensive income

Profit for the year - - - 51,827 - - - 51,827 14 51,841

Other comprehensive income

Available-for-sale financial assets

15 - - - - - - 169 169 - 169

Exchange difference on translation of net assets of subsidiaries

- - - (110) - - - (110) - (110)

Cash flow hedge: Amounts recycled to income statement

- - - - - 425 - 425 - 425

Cash flow hedge: Fair value gains in year

- - - - - (344) - (344) - (344)

Total comprehensive income - - - 51,717 - 81 169 51,967 14 51,981

Share-based payments 27 - - - 116 - - - 116 - 116

Dividends 11 - - - (7,274) - - - (7,274) - (7274)

Total transactions with owners - - - (7,158) - - - (7,158) - (7,158)

Balance at 15 April 2016 158 85 24,904 140,457 (689) (272) 446 165,089 (612) 164,477


Profit for the year - - - 58,506 - - - 58,506 294 58,800

Other comprehensive income


15 - - - - - - 11,638 11,638 - 11,638

Exchange difference on translation of net assets of subsidiaries

- - - 612 - - - 612 - 612

Cash flow hedge: Fair value gains in year

- - - - - 272 - 272 - 272

Total comprehensive income - - - 59,118 - 272 11,638 71,027 294 71,322

Share-based payments 27 - - - 107 - - - 107 - 107

Deferred tax on share options

- - - 4,552 - - - 4,552 - 4,552

Dividends 11 - - - - - - - - -

Total transactions with owners - - - 4,659 - - - 4,659 - 4,659

Balance at 14 April 2017 158 85 24,904 204,233 (689) - 12,083 240,775 (317) 240,458


Company statementof changes in equity

Attributable to owners of the Parent

Company Note

Share capital £’000

Share premium account

£’000Retained earnings

£’000

TotalEquity £’000

Balance at 15 April 2015 158 85 - 243


Profit for the financial year - - 7,274 7,274

Total comprehensive income - - 7,274 7,274

Dividends 11 - - (7,274) (7,274)

Total transactions with owners - - (7,274) (7,274)

Balance at 15 April 2016 158 85 - 243


Result for the financial year - - - -

Total comprehensive income - - - -

Dividends 11 - - - -

Total transactions with owners - - - -

Balance at 14 April 2017 158 85 - 243


As at 14 April 2017


FINANCIALS

Consolidated and Company statements of cash flows

Group Company

Note14 April 2017

£’00014 April 2016

£’00014 April 2017

£’00014 April 2016

£’000

Net cash (used in)/generated from operating activities

28 (129,048) (187,543) - 7,274

Investing activities

Acquisition of increased shareholding in joint arrangement

- (26,181) - -

Acquisition of investment (354) - - -

Purchases of property, plant and equipment (7,473) (29,417) - -

Purchases of intangible assets (3,917) (199) - -

Proceeds from sale of property, plant and equipment 221 2,356 - -

Disposal of investment - 7,606 - -

Redesignation of joint arrangement (3,316) - - -

Net cash generated from/used in investing activities

(14,839) (45,835) - -

Financing activities

Proceeds from borrowings - 15,000 - -

Repayments of borrowings (8,594) (17,199) - -

Finance income 98 551 - -

Finance costs (8,858) (9,943) - -

Dividends paid 11 - (7,274) - (7,274)

Net cash used in financing activities (17,354) (18,865) - (7,274)

(Decrease) in cash and cash equivalents (161,241) (252,243) - -

Cash and cash equivalents and bank overdrafts at the beginning of the year

(28,444) 223,799 - -

Cash and cash equivalents and bank overdrafts at the end of the year

18 (189,685) (28,444) - -


For the year ended 14 April 2017


FINANCIALS

Notes to the financial statements

1. Summary of business and significant accounting policies

General business descriptionGreenergy Fuels Holdings Limited (the ‘Company’) is a company domiciled and incorporated in the UK. The address of the registered office is given on page 140.

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 preparationThe 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.

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-for-sale 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 years 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.

In preparing the financial statements on the going concern basis the Directors have considered the reliance the Group has on the $800 million working capital facility provided by a syndicate of banks which is due to expire in April 2020, and involving elements of both committed and uncommitted facilities. 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.

ConsolidationThe consolidated financial statements include the financial statements of the Company and the entities it controls (its subsidiary undertakings) made up to the year-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 year as the parent company, using consistent accounting policies.

The results of subsidiaries acquired or disposed of during the year 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 presentational 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.

Group companiesThe 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 presentational currency are translated into the presentational currency as follows:

i. Assets and liabilities for each balance sheet presented are translated at the closing rate at the date of the balance sheet;

ii. Income and expenses for each income statement are translated at average exchange rates; and

iii. All resulting exchange differences are recognised in other comprehensive income.


FINANCIALS

1. Summary of business and significant accounting policies (continued)

Property, plant and equipmentProperty, 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:

Buildings 15 to 20 years Plant and machinery 2 to 20 years Office equipment 2 to 5 years Motor vehicles 1 to 10 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 within ‘Other operating income/(losses)’ in the income statement.

Borrowing costsBorrowing 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 cash-generating 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.

» 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.

» Branding Rights Expenditure in relation to branding rights which meets the recognition criteria set out in IAS 38 ‘Intangible Assets’ has been capitalised and amortised over the life of the branded wholesale agreement.

The carrying values of intangible assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable.

The amortisation of intangibles has been recognised within administrative expenses in the consolidated income statement.

Investments in subsidiariesInvestments in subsidiary companies held in the Company are stated at cost less impairment.

Investments in joint arrangementsThe Group applies IFRS 11 to all joint arrangements. A joint arrangement is a contractual arrangement whereby the Group and other parties undertake an economic activity that is subject to joint control; that is, when the strategic financial and operating policy decisions relating to the activities require the unanimous consent of the parties sharing control.

Investments in joint arrangements are classified as joint operations to the extent the Group has rights to the assets and obligations for the liabilities of these arrangements. As such, the Group has accounted for its share of the assets, liabilities, revenue and expenses on a line by line basis. Unrealised gains on transactions between the Group and its joint operations are eliminated to the extent of the Group’s interest in the joint arrangement. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

Investments in joint arrangements that are classified as joint ventures are accounted for using the equity method. At initial recognition the investment is recognised at cost. Subsequent to initial recognition, the carrying value of the investment is adjusted for the Group’s share of comprehensive income and distributions. The carrying value is assessed for impairments at each reporting date.

The Group’s share of its joint venture’s result is recognised as a component of operating profit as these operations form part of the core fuels business of the Group and are an integral part of the business.

Impairment of non-financial assetsThe 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).

Financial assets

a. Classification

Financial assets are classified as financial assets at fair value through profit or loss, loans and receivables, held-to-maturity 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 include 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.

Notes to the financial statements (continued)


FINANCIALS


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 liabilitiesWhen 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 activitiesDerivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Group designates certain derivatives as either:

» Hedges of the fair value of recognised assets or liabilities or a firm commitment (fair-value hedge)

» Hedges of a particular risk associated with a recognised asset or liability or a highly probable forecast transaction (cash flow hedge), or

» Hedges of a net investment in a foreign operation (net investment hedge).

The Group documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting the changes in fair values or cash flows of hedged items.

The fair values of various derivative instruments used for hedging purposes are disclosed in note 25. The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining hedged item is more than 12 months; and as a current asset or liability when the remaining maturity of the hedged item is less than 12 months. Trading derivatives are classified as a current asset or liability.

Cash flow hedgeThe effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately in the income statement within cost of sales.

Amounts accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss (for example, when the forecast sale that is hedged takes place).

When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement within cost of sales.

LeasesLeases 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.

InventoriesFuel 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 year-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. Used cooking oil and other products and chemicals used in the production of biofuels are valued at the lower of cost and net realisable value. Duty paid on stock is valued at cost.

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 are recognised in the year 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 year 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 year in which the certificates are generated.

Certificates held for sale to third parties are recognised at fair value by reference to year-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 income statement.

Certificates for which no active market is deemed to exist are not recognised.

Trade receivablesTrade 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 equivalentsCash 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 capitalOrdinary 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 payablesTrade 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.

BorrowingsBorrowings 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 pre-payment 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 taxesThe tax expense for the year 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.



FINANCIALS


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 paymentsThe 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 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 subsidiary undertakings in their separate financial statements.

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.

Pension costsContributions are made to the personal plans of all applicable employees. The expenditure is charged to the income statement in the period to which it relates.

Provisions and contingenciesProvisions 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 recognitionRevenue 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.

c. Haulage services

The Group provides haulage services to third-party customers on a delivered-in basis. The revenue related to haulage services is recognised at the point the goods are received by the customer.

Dividend distributionDividend distribution to the Company’s shareholders is recognised as a liability in the Group and the Company’s financial statements in the year in which the dividends are approved by the Company’s shareholders.

Exceptional itemsExceptional items are disclosed separately in the financial statements where it is necessary to do so to provide further understanding of the financial performance of the Group. They are material items of income or expense that have been shown separately due to the significance of their nature or amount.

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 2017

No new standards, amendments or interpretations, effective for the first time for the financial year beginning on or after 15 April 2017 have had a material impact on the Group or Parent Company.

b. New standards, amendments and interpretations issued but not effective for the financial year beginning 15 April 2018 and not early adopted.

The following standards have been issued and are effective for accounting periods ending on or after 15 April 2018 and are expected to have an impact on the Group financial statements and have not been applied in preparing these financial statements. None of these are expected to have a significant effect on the financial statements of the Group or Parent Company, except the following, set out below:

FRS 9, ‘Financial instruments’, addresses the classification, measurement and recognition of financial assets and financial liabilities. It replaces the guidance in IAS 39 that relates to the classification and measurement of financial instruments. FRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets: amortised cost, fair value through OCI and fair value through P&L.

The basis of classification depends on the entity’s business model and the contractual cash flow characteristics of the financial asset. Investments in equity instruments are required to be measured at fair value through profit or loss with the irrevocable option at inception to present changes in fair value in OCI not recycling. There is now a new expected credit losses model that replaces the incurred loss impairment model used in IAS 39.

For financial liabilities there were no changes to classification and measurement except for the recognition of changes in own credit risk in other comprehensive income, for liabilities designated at fair value through profit or loss. IFRS 9 relaxes the requirements for hedge effectiveness by replacing the bright line hedge effectiveness tests. It requires an economic relationship between the hedged item and hedging instrument and for the ‘hedged ratio’ to be the same as the one management actually uses for risk management purposes. Contemporaneous documentation is still required but is different from that currently prepared under IAS 39. The standard is effective for accounting periods beginning on or after 1 January 2018.

IFRS 15, ‘Revenue from contracts with customers’ deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. Revenue is recognised when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or service. The standard replaces IAS 18 ‘Revenue’ and IAS 11 ‘Construction contracts’ and related interpretations. The standard is effective for annual periods beginning on or after 1 January 2018.

IFRS 16, ‘Leases’ addresses the definition of a lease, recognition and measurement of leases and establishes principles for reporting useful information to users of financial statements about the leasing activities of both lessees and lessors. A key change arising from IFRS 16 is that most operating leases will be accounted for on balance sheet for lessees. The standard replaces IAS 17 ‘Leases’, and related interpretations. The standard is effective for annual periods beginning on or after 1 January 2019.

Management is currently assessing the likely impact that these new standards may have on the Group’s financial statements. However this is not expected to be significant.



FINANCIALS

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 inventoryThe 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 year-end market value is assigned based on relevant comparative market data and recent realised prices. Inventories used in production are valued at cost.

Estimate of impairment of non-current assetsThe 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 cash-generating 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 13.

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 riskThe 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 where the cost of acquiring cover is considered commensurate with the risk incurred.

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 are highly rated investment grade.

The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets (refer to Note 24). The value of trade and other receivables pledged as security against borrowings is disclosed in Note 17.

Liquidity riskThe 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. The Directors therefore consider that the exposure to liquidity risk is low.

In managing its working capital requirements, the Group currently relies on a combination of uncommitted revolving facilities, which could be withdrawn at any time, and a committed credit line. The existing facility is a $800 million (£640 million) asset backed facility which was amended and extended at the end of the 2016/17 financial year to support the Group’s trade financing and working capital requirements. The working capital facility has been secured with a syndicate of high-quality UK and European banks which are highly rated investment grade. The previous facility was a 12 month revolving facility with extension options. The amended facility is a three year facility with extension options and comprises $400 million of committed and $400 million of uncommitted funding. In addition, an accordion feature has been included in the credit facility which allows the facility to increase by a further $200 million, if required.

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.

Market riskThis 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 table below shows the banking facilities of Group, divided between the total available and the amounts utilised at the year-end.

Group

14 April 2017 14 April 2016

Credit facility £’000

Utilised £’000

Credit facility £’000

Utilised £’000

Counterparty

On 13th April 2017 the facility was renewed with the following limits:

Syndicated facility — committed ($0.4bn) 319,540 189,024 - -

Syndicated facility — uncommitted ($0.4bn) 319,540 - - -

On 26th August 2016 a trade finance facility was taken out with the following limits:

Trade facility – committed ($0.1bn) 79,885 56,718 - -

On 13th April 2016 the facility was renewed with the following limits:

Syndicated facility — committed ($0.3bn) - - 212,000 79,000

Syndicated facility — uncommitted ($0.45bn) - - 318,000 -

The table below shows the financial liabilities of the Group outstanding at the year-end, on the basis of contractual undiscounted cash flows for liabilities:

Less than 1 year£’000

Between 1 and 2 years

£’000

Between 2and 5 years

£’000

At 14 April 2017

Borrowings including future interest payments 253,579 3,207 6,153

Trading and net settled derivative financial instruments 32,535 84 -

Trade and other payables 309,304 1,019 2,151

595,418 4,310 8,304

At 14 April 2016

Borrowings including future interest payments 119,531 5,015 9,548

Trading and net settled derivative financial instruments 92,040 5,107 60

Trade and other payables 286,322 873 1,690

497,893 10,995 11,298



FINANCIALS

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 minimize 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.

The following table illustrates only the Group’s sensitivity to the fluctuation of the major currencies on its income statement and financial assets and liabilities:

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.

There are also highly probable forecast sales denominated in foreign currencies. The risk of changes in the relevant spot exchange rate associated with these highly probable forecast foreign currency transactions is hedged as appropriate using forward contracts.

c. Interest rate risk

The tangible fixed assets within the Group act as security for a term loan within Greenergy Terminals Limited. Interest on this loan is charged at variable rates related to LIBOR. The interest rate risk inherent in the movement of LIBOR has been mitigated by an interest rate swap covering a portion of the value of the loan.

The effect of the interest rate swap has been to convert £4,750,000 of the loan into debt at a fixed rate of 4.1% 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.

3. Nature and extent of risks arising from financial instruments (continued)

The main types of hedge transaction which the Group enters into are as follows:

i. 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 2017, 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 pre-tax profit for the year would have been £341,000 lower (2016: £54,000 lower).

ii. Over-the-counter (‘OTC’) contractsTypically 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 2017, 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 pre-tax profit for the year would have £33,000 higher (2016: £109,000 lower).

iii. Sales and purchase contract embedded hedgesTypically 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 2017, 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 pre-tax profit for the year would have been £316,000 higher (2016: £154,000 higher).

14 April 2017

£’000

Equity £’000

Sterling/US dollar +/- 10% change 16,221 43--

Income statement

4. Capital management

Management regard 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.

5. Operating profit

Note14 April 2017

£’00014 April 2016

£’000

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

Operating lease rentals:

Land and buildings 830 2,258

Other 46,479 41,321

Depreciation, amortisation and impairment 15,578 15,356

Loss/(Profit) on disposal of property, plant and equipment 267 (105)

Employee benefit expense 7 46,006 45,597

Foreign exchange loss 6,078 2,902

5b. Auditors’ remuneration:

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

150 144

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

Audit of financial statements of subsidiaries pursuant to legislation 278 220

All other audit-related assurance services 43 30

Taxation compliance services 150 104

All other taxation advisory services 50 148

All other non-audit services 155 6

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.

A Group Capital Committee was formed during the prior year, and meetings are held regularly to discuss both ongoing and prospective capital projects.

Value for shareholders is measured by internal business KPIs. All structured debt was repaid immediately post year-end.



FINANCIALS

6. Exceptional items

14 April 2017 £’000

14 April 2016 £’000

Tankage rebate - 7,500

14 April 2017 £’000

14 April 2016 £’000

Operating items:

Tankage rebate - 7,500

Profit on disposal of terminal - 23,341

Exceptional income - 30,841

6a. Tankage rebate

During the prior year, it was agreed with a supplier that a rebate was owed to the Group in respect of tankage costs which had been overcharged from the supplier in the previous 3 financial years. The amount shown within exceptional items is the value of the rebate received from the supplier in the year but relating to previous financial years:

6b. Profit on disposal of North Tees

On 8 April 2016, the Group sold the trade and assets of its terminal at North Tees to the Navigator group (‘Navigator’) in exchange for shares and loan notes representing a 19.72% equity share in Navigator. During the prior year, this has resulted in an available-for-sale asset being recognised for the investment in Navigator and a profit on the disposal of the investment held in and assets of North Tees.

The amount shown within exceptional items is the net profit on disposal:

14 April 2016

£’000

Consideration received 38,000

Value of investment and assets disposed of (14,659)

Net profit on disposal 23,341

14 April 2017

14 April 2016

The average monthly number of persons employed by the Group (including Directors) during the year, analysed by category, was as follows:

Drivers – Flexigrid 313 285

Infrastructure staff 108 119

Office staff 256 233

677 637

14 April 2017 £’000

14 April 2016 £’000

The aggregate payroll costs of these persons were as follows:

Wages and salaries 39,600 39,225

Social security costs 4,709 4,540

Other pension costs 1,589 1,716

Equity-settled share-based payments 108 116

46,006 45,597

The Company had no direct employees during the year.

7. Employee numbers and benefit expense

8. Finance income

14 April 2017 £’000

14 April 2016 £’000

Interest receivable on bank balances 98 507

Interest receivable on other loans - 45

98 552

9. Finance costs

14 April 2017 £’000

14 April 2016 £’000

Interest payable in servicing of:

Term loans 257 283

Fair value loss on financial instruments: cash flow hedges 10 94

Working capital facilities 9,519 10,283

9,786 10,660



FINANCIALS

10. Income tax expense

Note14 April 2017

£’00014 April 2016

£’000

Analysis of charge in year:

UK corporation tax

Current tax on income for the year 14,482 7,089

Adjustments in respect of previous years 804 365

15,286 7,454

Overseas tax

Current tax on income for the year 4,684 (20)

Adjustments in respect of previous years - (502)

4,684 (522)

Total current tax charge 19,970 6,932

Deferred tax 22

Origination and reversal of timing differences (340) 249

Effects of change in tax rates (470) (1,047)

Adjustments in respect of previous years (388) (34)

Total deferred tax (credit)/charge (1,198) (832)

Tax on profit on ordinary activities 18,772 6,100

The total tax charge for the year is higher (2016: lower) than the standard rate of corporation tax in the UK of 19.96% (2016: 20%). The differences are explained below:

14 April 2017 £’000

14 April 2016 £’000

Profit before tax 77,572 57,941

At tax rate of 19.96% (2016: 20.00%) 15,485 11,588

Effects of:

Expenses not deductible for tax 241 457

Income not taxable (167) (4,889)

Effect of different tax rates 2,858 (1,052)

Tax on joint arrangement 1,074 -

Movement on unrecognised deferred tax (768) 167

Share options (367) -

Adjustments in respect of previous years 416 (171)

Total tax charge 18,772 6,100

Factors that may affect future tax charges:

» Changes to the UK corporation tax rates were enacted in September 2016 to reduce the main rate to 17% from 1 April 2020. Changes to reduce the UK corporation tax rate to 19% from 1 April 2017 and to 18% from 1 April 2020 had already been substantively enacted in October 2015.

» There are no current or deferred tax items relating to other comprehensive income in these financial statements.

-

Assets under construction

£’000

Land and buildings

£’000

Plant and machinery

£’000

Office equipment

£’000

Motor vehicles

£’000Total

£’000

Cost

At 15 April 2015 38,687 1,838 192,959 7,804 2,856 244,144

Additions 34,061 - 43 - - 34,104

Disposals (1,885) - (22,971) (90) (277) (25,223)

Foreign exchange adjustments - - 35 (1) - 34

Acquisition of subsidiary 18,196 - 31,975 - - 50,171

Reclassifications (45,052) 41,293 (923) 1,307 740 (2,635)

Amounts reclassified as held for sale - (41,269) - - - (41,269)

At 14 April 2016 44,007 1,862 201,118 9,020 3,319 259,326

Additions 3,591 26 2,750 393 713 7,473

Disposals (231) - (34) - (354) (619)

Foreign exchange adjustments 5 - 214 22 - 241

Acquisition of increased shareholding in joint operation - - - - - -

Reclassifications (43,636) - (47,804) (27) 27 (91,440)

Amounts reclassified as held for sale - - - - - -

At 14 April 2017 3,736 1,888 156,244 9,408 3,705 174,981

Accumulated depreciation and impairment

At 15 April 2015 - (91) (42,228) (4,776) (799) (47,894)

Charge for the year - (27) (9,151) (1,297) (383) (10,858)

Disposals - - 1,397 17 182 1,596

Foreign exchange adjustments - - (6) (3) - (9)

Reclassifications - - - - - -

At 14 April 2016 - (118) (49,988) (6,059) (1,000) (57,165)

Charge for the year - (27) (9,041) (1,350) (388) (10,806)

Impairment - - 802 - - 802

Disposals - - - - 195 195

Foreign exchange adjustments - - (11) (13) - (24)

At 14 April 2017 - (145) (58,238) (7,422) (1,193) (66,998)

Net book value at 14 April 2017 3,736 1,743 98,006 1,986 2,512 107,983



Depreciation and impairment expenses of £3,747,000 (2016: £3,564,000) has been charged to cost of sales, £5,744,000 (2016: £5,925,000) in distribution costs and £1,315,000 (2016: £1,369,000) in administration expenses.

Dividends paid in the year were £Nil or £Nil per share (2016: £7,274,000 or £46.02 per share). The Directors propose a final dividend of £Nil (2016: £Nil), to be paid after the balance sheet date.

11. Dividends

12. Property, plant and equipment



FINANCIALS

13. Intangible assets

GroupPurchased

goodwill £’000

Branding rights £’000

Software £’000

Total £’000

Cost

At 15 April 2015 16,486 6,802 19,969 43,257

Additions - 199 - 199

Disposals (9) (3) (51) (63)

Reclassifications - 1,977 658 2,635

At 14 April 2016 16,477 8,975 20,576 46,028

Additions - 3,295 622 3,917

Disposals - - (172) (172)

Foreign exchange adjustments - - 4 4

Reclassifications - 2 - 2

At 14 April 2017 16,477 12,272 21,030 49,779

Accumulated amortisation and impairment

At 15 April 2015 - (2,694) (2,084) (4,778)

Charge for the year - (2,415) (2,083) (4,498)

Reclassifications - 2 - 2

At 14 April 2016 - (5,107) (4,167) (9,274)

Charge for the year - (2,758) (2,014) (4,772)

Disposals - - - -

At 14 April 2017 - (7,865) (6,181) (14,046)

Net book value at 14 April 2017 16,477 4,407 14,849 35,733



Branding rights relate to the costs associated with the Group becoming a branded wholesaler within the UK market. Goodwill has arisen on the UK Fuels business and on acquisition of Greenergy Biofuels Teesside Limited during 2015 financial year.

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 year. These impairment reviews are based on value-in-use calculations for the relevant Cash Generating Units (CGU). These calculations use post-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% (2016: 7.5%).

» Nominal growth rate of cash flows after 5 years kept steady to reflect the overall state of the market. (2016: 5 years)

As part of the review process a sensitivity analysis is applied, flexing key assumptions such as growth rates and discount rates. The impairment reviews conducted, including the sensitivity analysis, indicated that there were no impairments of goodwill in the year.

14. Investments

Company

£’000

14a. Investment in Group undertakings

At 15 April 2016 and 14 April 2017 243

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

All of the below 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.

Name of undertaking Country of registration Principal activity Direct/indirect

Greenergy Asia DMCC United Arab Emirates Sourcing of raw materials in the Far East

Indirect

Greenergy Bioethanol SA Switzerland Procurement of sustainable bioethanol Indirect

Greenergy Biofuels Limited England and Wales Construction and operation of biofuel production plants and distribution of resultant products

Indirect

Greenergy Biofuels Teesside Limited

England and Wales Construction and operation of biofuel production plants and distribution of resultant products

Indirect

Greenergy Brasil Trading SA Brazil Support entity working to procure sustainable bioethanol

Indirect

Greenergy Deutschland GmbH Germany Dormant company Indirect

Greenergy Flexigrid Limited (75%)

England and Wales Provision of haulage and logistics services

Direct

Greenergy Fuels Canada Inc (80%)

Canada Blending, supply and marketing of branded low emission fuels

Indirect

Greenergy Fuels Holdings North America Inc

Canada Holding company Indirect

Greenergy Fuels Limited England and Wales Blending, supply and marketing of branded low emission fuels

Indirect

Greenergy Fuels North America Inc (80%)

Canada Holding company Indirect

Greenergy Fuels Private Limited India Holding company Indirect

Greenergy International Limited England and Wales Holding company Direct

Greenergy Morzine Holding Limited

England and Wales Holding company Indirect

Greenergy Oil U.K. Limited England and Wales Holding company Indirect

Greenergy Services Limited England and Wales Dormant company Indirect

Greenergy Terminals Limited England and Wales Construction and operation of fuel terminals

Indirect

Greenergy USA Inc United States of America

Procurement and brokerage on behalf of UK and Canada feedstock

Indirect

The registered addresses of all related undertakings are included on page 140.



FINANCIALS

14. Investments (continued) Group

£’000

14b. Investments in associates

Cost

At 14 April 2016 and 14 April 2017 288

Impairment

At 14 April 2016 and 14 April 2017 (124)

Net fair value at 14 April 2017 164

Net fair value at 14 April 2016 164

The investments in associates relates to a 23% investment in Scarab Distributed Energy Limited, a private company set up to investigate alternative methods of biofuel production from food waste. The company is currently in a start-up phase and as such there are no material profits or losses to recognise. Investments also relate to a 49% investment in Anglo China Chemical Company Limited, which is deemed an associate of Greenergy International Limited.

Name Country of registration Principal activity Percentage shareholdings

Anglo China Chemical Company Limited

Hong Kong Procurement of used cooking oil 49

Scarab Distributed Energy Limited

England and Wales Investigating alternative methods of biofuel production from food waste

23

14c. Investments in joint arrangements

At 14 April 2017, the Group had the following interests in joint arrangements carrying on businesses which affect consolidated profits and losses. Unless otherwise stated the Group’s principal joint arrangements all have share capital consisting solely of ordinary shares, which are indirectly held, and the country of incorporation or registration is also their principal place of operation.

Name Country of registration Principal activity Percentage shareholdings 1

Greenergy North Cave Limited England and Wales Construction and operation of waste processing plant and distribution of resultant products

50.0

Morzine Limited t/a Thames Oilport 2

England and Wales Retail-mix fuel terminal with blending facilities

66.7

1 Rounded to nearest tenth of one per cent. 2 Morzine Limited t/a Thames Oilport’s most recent financial period related to the year ended 30 November 2016.

14. Investments (continued)

As at the 15 April 2016 the nature of the Group’s investment in Morzine Limited changed from a joint operation to a joint venture. From this point onwards the Group’s investment has been equity accounted. The net assets of Morzine Limited which have been included in the Group consolidated balance sheet at 14 April 2017 were £Nil (2016: £97,644,000).

Group14 April 2017

£,000

14 April 2016

£’000

14d. Investment in joint ventures

At 15 April 2016 - -

Change in nature of investment 91,405 -

Share of profit 868 -

At 14 April 2017 92,273 -

The summarised financial information of the material joint venture as at the last financial year-end (unaudited) is detailed below:

Morzine Limited

30 November 2016£’000

Assets

Current assets 76,996

Non-current assets 98,819

Liabilities

Current liabilities (7,790)

Non-current liabilities (60,980)

Net assets 107,045

Revenue (3,288)

Post tax loss from continuing operations (3,386)

Total comprehensive loss (3,386)

14. Investments (continued)

Reconciliation of equity investment in joint venture to joint venture result

14 April 2017 £’000

Ownership percentage applied to net assets 71,363

Accounting policy alignments 16,656

Share of post joint venture balance sheet results 4,254

Total 92,273

An impairment assessment has been carried out over the recoverability of the Group’s share of the assets of its joint venture in Morzine Limited. Management consider that the value is recoverable through either the sale of surplus land or its development for commercial property usage and the economic benefit that will be generated in the Greenergy Group for operating at Thames Oilport.


The following table shows the movement of level 3 non-financial assets during the year.

17. Trade and other receivables

Group14 April 2017

£’000

14 April 2016

£’000

Trade receivables 696,984 669,138

Less: Provision for impairment of receivables (1,732) (1,869)

695,252 667,269

Other receivables 86,721 40,760

Prepayments 14,576 35,920

Accrued income 105,471 90,751

Derivative financial instruments 25,065 97,352

927,085 932,052

Less non-current portion:

Other receivables (105) (2,409)

Loan receivable from joint ventures (31,350) -

Loan receivable from affiliates (25,308) (25,308)

Derivative financial instruments (68) (820)

Current portion 870,254 903,515

Trade and other receivables with a carrying amount of £763,183,000 were pledged as security for certain of the Group’s borrowings (2016: £704,661,000).

Trade and other receivables are predominantly non-interest bearing.

As of 14 April 2017, trade debtors of the Group with a carrying value of £1,732,000 (2016: £1,869,000) were provided for. The amount of the provision was £1,732,000 (2016: £1,869,000). The aging of these debtors is as follows:

Group14 April 2017

£’000

14 April 2016

£’000

30+ Days 1,732 1,869

1,732 1,869

During the year, receivables of the Group written off as uncollectible amounted to £Nil (2016: £47,000).

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.


FINANCIALS

14 April 2017

£’00014 April 2016

£’000

Opening balance 16,254 9,648

Reversal of fair value movements on non-financial instruments (16,254) (9,648)

Gain from non-financial instruments held at fair value 22,018 16,254

Closing balance 22,018 16,254

15. Available-for-sale financial assets

Group14 April 2017

£’00014 April 2016

£’000

Equity investments classified as available-for-sale:

Fair value on acquisition 18,395 5,704

Additions 356 12,692

Impairment provision for permanent diminution in value (5,578) (5,578)

AFS reserve 12,083 446

Net fair value 25,256 13,264

During the year, an investment was made in Bahrain Gasoline Blending W.L.L, a company incorporporated in Bahrain. This is a strategic partnership between Nogaholding, Bahrain Petroleum Company (BAPCO) and Greenergy International Limited. The strategic aim will combine BAPCO’s infrastructure and refinery gasoline production with Greenergy’s blending, terminal operations and trading expertise to meet Bahrain’s domestic demand for gasoline blend components as well as create opportunities to import and export.

The investments classified as available for sale relate to a 4.45% investment in RedT Energy Plc and a 19.72% investment in Navigator Topco. RedT Energy is a company quoted on the London Stock Exchange’s Alternative Investment Market. The fair value of the investment in RedT Energy is determined by reference to published price quotations in an active market. As at 14 April 2017, the published price quote of this investment was 8.38p per share (2016: 9.06p per share). Navigator Topco is the holding company for Navigator Terminal assets.

16. Inventories

Group14 April 2017

£’00014 April 2016

£’000

Fuel products 425,357 265,543

RTFO certificates – own use 109,220 84,106

RTFO certificates – held for trading 22,018 16,254

556,595 365,903

During the year £12,813,406,542 of inventory was expensed through cost of sales (2016: £13,510,484,000).

Inventories with a carrying amount of £350,030,000 were pledged as security for certain of the Group’s borrowings (2016: £155,556,000).

There is currently no externally quoted market for the valuation of RTFO certificates. In order to value these contracts, management have adopted a pricing methodology, combining both observable inputs based on market data and assumptions developed internally based on observable market activity.

The anticipated market premia above the calculated cost of creation of RTFO certificates is the most significant input. Assuming other inputs remain unchanged, if the premia was decreased by 1ppl, pre-tax profit would decrease by £1,147,000 (2016: decrease by £814,000).

Certificate marker -1ppl

£’000

Certificate marker

+1ppl£’000

Level 3 asset

Movement in fair value of RTFO certificates (1,147) 1,147

16. Inventories (continued)



FINANCIALS

Group14 April 2017

£’000

14 April 2016

£’000

Cash at bank and on hand 60,499 83,370

Cash and cash equivalents 60,499 83,370

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

Group Note14 April 2017

£’000

14 April 2016

£’000

Cash and cash equivalents 60,499 83,370

Borrowings 20 (250,184) (111,814)

Cash and cash equivalents and bank overdrafts (189,685) (28,444)

18. Cash and cash equivalents

Thames Enterprise Park (TEP) During the prior year, the assets related to Thames Enterprise Park, held as part of the consolidated Morzine Limited balance sheet, were presented as a held for sale following the approval of the Group’s management and shareholders during the year ended 14 April 2016 to sell Thames Enterprise Park. During the current year, no transaction to sell the assets has been completed, though it remains the management’s intention to dispose of the surplus land. Following the change in nature of the Group’s investment in Morzine Limited from a joint operation to a joint venture this asset is no longer separately presented.

Group14 April 2017

£,000

14 April 2016

£’000

Assets classified as held for sale

Land and buildings - 41,269

- 41,269

In accordance with IFRS 5, the assets held for sale were being held at the lower of carrying amount and fair value less costs to sell. This fair value has been measured based on the expected realisable value on sale of the land.

19. Assets held for sale

20. Borrowings

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 3.49% after the effect of the interest rate swaps discussed in Note 3c (2016: 3.49%).

Group Maturity14 April 2017

£’000

14 April 2016

£’000

Borrowings – current

Bank overdrafts:

United Kingdom On demand 245,744 39,261

Non-United Kingdom On demand 4,440 72,553

250,184 111,814

Bank loans: United Kingdom See below 3,040 6,916

253,224 118,730

Group14 April 2017

£’000

14 April 2016

£’000

Borrowings – non-current

Bank loans 8,855 13,572

8,855 13,572

GroupEffective*

interest rate % Maturity

14 April 2017

£’000

Bank loans

Bank loans:

United Kingdom – Terminal facility loans 3.49% 2021 11,895

*Includes the effects of related interest rate swap as discussed in Note 3c.

The loan was taken out by Greenergy Terminals Limited on 18 January 2016 and is repayable in quarterly instalments of £750,000. On 8 May 2017 this loan was repaid in full.

The loan taken out by Greenergy Biofuels Limited on 5 October 2012 was repaid during the year.

The other third party loans relate to the long-term payables owed by the Thames Oilport and North Cave joint operations, reflected in the Group post-consolidation.

Group14 April 2017

£’000

14 April 2016

£’000

Maturity of debt

Within one year 3,040 6,916

In more than one year, but not more than two years 2,947 4,592

In more than two years, but not more than five years 5,908 8,980

11,895 20,488



FINANCIALS

Group

Provision for

plant dismantlement £’000

Provision for legal claims

£’000

Provision for onerous lease

£’000

Total

£’000

At 14 April 2016 500 1,200 - 1,700

Increase in the year - - 2,999 2,999

At 14 April 2017 500 1,200 2,999 4,699

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

The lease relates to a long-term agreement entered into with a third party. Management have undertaken an assessment of this agreement and deemed it unlikely to yield a notable business return. An associated provision has therefore been made.

21. Provisions for other liabilities and charges

22. Deferred income tax

Group14 April 2017

£’000

14 April 2016

£’000

The elements of the deferred taxation is as follows:

Accelerated capital allowances (8,480) (10,599)

Intangible assets (1,403) -

Other short term timing differences 911 637

Losses and other differences 309 1,014

Share options 5,465 -

Net deferred tax liability (3,198) (8,948)

Deferred tax asset 438 1,620

Deferred tax liability (3,637) (10,568)

Net deferred tax liability (3,198) (8,948)

14 April 2016 £’000

14 April 2015

£’000

The movement on deferred taxation is as follows:

At the beginning of the year (8,948) (10,386)

Income statement credit 810 798

Equity credit 4,552 -

Adjustments in respect of prior years 388 34

Movement arising from the acquisition of subsidiary - 606

At the end of the year (3,198) (8,948)

The Group has unused losses of £34,000 (2016: £3,771,000) for which no deferred tax asset has been recognised.

Group14 April 2017

£’000

14 April 2016

£’000

Trade payables 66,787 75,997

RTFO – current year obligation 109,220 84,106

Other taxes and social security 828,614 885,759

Other payables 8,128 51,558

Accrued expenses 237,559 161,330

Deferred income 2,575 7,500

Derivative financial instruments 32,619 97,207

1,285,502 1,363,457


Other payables (1,377) (2,563)

Derivative financial instruments (84) (5,167)

Current portion 1,284,041 1,355,727

The carrying amounts of trade payables and other payables approximate to their fair values. Trade and other payables are predominantly non-interest bearing.

23. Trade and other payables

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

Group Loans and receivables

£’000

Financial assets at fair value through

profit and loss £’000


£’000Total

£’000

Assets at 14 April 2017

Available-for-sale investments (Level 1) - - 708 708

Available-for-sale investments (Level 3) - - 24,548 24,548

Derivative financial instruments (Level 1) - 961 - 961

Derivative financial instruments (Level 2) - 24,104 - 24,104

Receivables 887,444 - - 887,444

Cash and cash equivalents 60,499 - - 60,499

947,943 25,065 25,256 998,264

Assets at 14 April 2016

Available-for-sale investments (Level 1) - - 572 572

Derivative financial instruments (Level 1) - - 12,692 12,692



Receivables 798,780 - - 798,780

Cash and cash equivalents 83,370 - - 83,370

882,150 97,352 13,264 992,766

Of the £25,065,000 (2016: £97,352,000) of financial assets at fair value through profit and loss, £Nil (2016: £74,000) are hedging instruments (Note 25).

24. Financial instruments



FINANCIALS

24. Financial instruments (continued)

Group

Financial liabilities

at fair value through profit and loss

£’000

Financial liabilities measured at

amortised cost £’000

Total £’000

Liabilities at 14 April 2017

Payables - 421,694 421,694

Bank loans and overdrafts - 262,079 262,079

Derivative financial instruments (Level 1) 14,542 - 14,542


32,620 683,773 716,393

Liabilities at 14 April 2016

Payables - 372,991 372,991

Bank loans and overdrafts - 132,302 132,302



97,207 505,293 602,500

Of the £32,620,000 (2016: £97,207,000) of financial liabilities at fair value through profit and loss, £Nil (2016: £337,000) of these are hedging instruments (Note 25).

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 occurring market transactions on an arm’s length basis. The quoted market price used for financial instruments held by the Group is the current mid-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. For derivative contracts where publicly available information is not available, fair value estimations are generally determined using models and other valuation methods, the key inputs for which include future prices, volatility, price correlations, counterparty credit risk and market liquidity, as appropriate; for other assets and liabilities, fair value estimations are generally based on the net present value of expected future cash flows. If all significant inputs required to fair value an instrument are observable, the instrument is included in Level 2.

Available for sale investments are held at fair value, measured using appropriate valuation techniques. During the prior year certain financial instruments were valued using observable market inputs that required significant adjustment based on unobservable inputs. We have deemed these instruments to be Level 3 within the hierarchy above.

The carrying value of the financial instruments is deemed to be the same as fair value due to them being predominantly short term in nature.


14 April 2017

£’000

14 April 2016

£’000

Opening balance 12,692 226

Balance reclassified to Level 2 - (226)

AFS financial assets acquired 356 12,692

Profits recognised during the year relating to fair value movements 11,500 -

Closing balance 24,548 12,692

The following table reconciles the movements in the Group’s net financial instruments classified in Level 3 of the fair values hierarchy:

Group14 April 2017

£’000

14 April 2016

£’000

Pounds 864,849 805,704

US Dollars 97,296 170,341

Euros 7,752 4,218

Swiss Francs 269 9

Canadian Dollars 21,017 11,327

UAE Dirhams 87 52

Brazilian Real 6,994 1,115

998,264 992,766

During the prior year, the pricing methodology for Brazilian ethanol contracts was changed so that it was based on observable market inputs. The financial assets and liabilities are therefore deemed to be Level 2 and have been reclassified in the prior year.

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



FINANCIALS


Gross amounts of recognised

financial liabilities £’000

Amounts being offset in the

balance sheet £’0000

Net amounts of financial liabilities

presented in the balance sheet

£’000

Balances subject to a contractual

right of offset £’000

Cash collateral pledged

£’000Net amounts

£’000

As at 14 April 2017

Derivative financial liabilities 18,086 (2,800) 15,286 (3,847) 10,935 504

Total 18,086 (2,800) 15,286 (3,847) 10,935 504

As at 14 April 2016

Derivative financial liabilities 14,564 (3,551) 11,013 (6,763) (4,065) 185

Total 14,564 (3,551) 11,013 (6,763) (4,065) 185

Offsetting financial assets and financial liabilitiesThe following table sets out the Group’s financial assets and financial liabilities that are subject to counterparty offsetting or a master netting agreement. The master netting agreements regulate settlement amounts in the event either party defaults on their obligations:

Gross amounts of recognised

financial assets £’000

Amounts being offset in the

balance sheet £’000

Net amounts of financial assets

presented in the balance sheet

£’000

Balances subject to a contractual

right of offset £’000

Cash collateral pledged

£’000Net amounts

£’000

As at 14 April 2017

Derivative financial assets 7,479 (2,800) 4,679 (3,847) - 832

Total 7,479 (2,800) 4,679 (3,847) - 832

As at 14 April 2016

Derivative financial assets 9,991 (2,890) 7,101 (6,763) - 338

Total 9,991 (2,890) 7,101 (6,763) - 338

Group

14 April 2017 Charge/(credit)

to hedging reserve

£’000

14 April 2017 Charge/(credit) to profit & loss

account £’000

14 April 2017 Fair value

asset/ (liability)

£’000

14 April 2016 Charge/(credit)

to hedging reserve

£’000

14 April 2016 Charge/(credit) to profit & loss

account £’000

14 April 2016 Fair value

asset/ (liability)

£’000

Derivative financial instruments (272) 6,980 (11,401) (81) 11,384 (4,421)

Sales and purchase commodity contracts - 719 3,847 - 1,553 4,566

(272) 7,699 (7,554) (81) 12,937 145

Included in trade and other receivables 25,065 97,352

Included in trade and other payables (32,619) (97,207)

(7,554) 145

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 financial liabilities are denominated in the following currencies:

Group14 April 2017

£’000

14 April 2016

£’000

Pounds 442,143 295,371

US Dollars 241,084 299,568

Euros 8,834 4,234

Swiss Francs 41 -

Canadian Dollars 671 2,714

UAE Dirhams 160 -

Brazilian Real 23,457 613

Hong Kong Dollar 3 -

716,393 602,500

CompanyAt 14 April 2017 and 14 April 2016, all financial assets of the Company were categorised as equity investments. The Company held no financial liabilities at 14 April 2017 or 14 April 2016.

25. Hedged derivative financial instruments

14 April 2017 £’000

14 April 2016 £’000

Group Assets Liabilities Assets Liabilities

Forward foreign exchange contracts – cash flow hedges

- - 74 (337)

Total - - 74 (337)


Forward foreign exchange contracts

– cash flow hedges

- - - -

Current portion - - 74 (337)

The full fair value of a hedging derivative is classified as non-current asset or liability if the remaining maturity of the hedged item is more than 12 months and, as a current asset or liability, if the maturity of the hedged item is less than 12 months.

The ineffective portion recognised in the profit or loss that arises from cash flow hedges amounts to gain/loss of £Nil (2016: £Nil).

Forward foreign exchange contractsThe net notional principal amounts of the outstanding forward foreign exchange contracts at 14 April 2016 were $5,551,000 (2015: $14,440,000).

The hedged highly probable forecast transactions denominated in foreign currency are expected to occur at various dates during the next 12 months. Gains and losses recognised in the hedging reserve in equity on forward foreign exchange contracts as of 14 April 2016 are recognised in the income statement in the period or periods during which the hedged forecast transactions affect the income statement.



FINANCIALS

26. Share capital

Group and Company14 April 2017

£’000

14 April 2016

£’000

Allotted, called up and fully paid

102,549 (2015: 102,549) ordinary shares of £1 each 103 103

55,525 (2015: 55,525) non-voting ordinary shares of £1 each 55 55

158 158

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

27. Share-based payments

During the year ending 14 April 2013, the Group introduced a hurdle scheme for its employees with effect from 8 May 2012, in addition to the share option plan which was already in existence. The details of both plans are outlined in the following tables.

Share option planThe 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 Company 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.

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 2018 £6.00 275 100% - 275 100%

21 Mar 2006 20 Mar 2018 £6.00 231 100% - 231 100%

21 Mar 2006 20 Mar 2018 £100.00 2,269 100% - 2,269 100%

21 Mar 2006 20 Mar 2018 £100.00 147 100% - 147 100%

21 Mar 2006 20 Mar 2018 £200.00 1,206 100% (150) 1,056 100%

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

28 Feb 2008 27 Feb 2018 £750.00 2,389 100% - 2,389 100%

27. Share-based payments (continued)

2017 No.

2017 WAEP

2016No.

2016 WAEP

Opening balance outstanding 8,517 443.53 10,599 492.99

Exercised during the year - - - -

Repurchased during the year - - - -

Forfeited during the year (150) 4.37 (2,082) (49.46)

Closing balance outstanding 8,367 447.90 8,517 443.53

Closing balance exercisable 8,367 447.90 8,517 443.53

For share options outstanding as at 14 April 2017, the weighted average remaining contractual life is 0.90 years (2016: 1.11 years).

The following tables illustrate the number and weighted average exercise price (WAEP) of, and movements in, share options during the year.

Granted 21 Mar 2006Exercise price

£100

Granted 21 Mar 2006Exercise price

£200

Granted 26 Feb 2008Exercise price

£750

The Plan

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

Exercise price £100 £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

Employee hurdle scheme The Group’s equity-settled share-based payments are made under a share option plan dated 8 May 2012 (the ‘Plan’). From time to time, the Company awards share options to employees of the Company itself and employees of other Group companies.

Options awarded under the Plan have a life of seven years. Subject to certain conditions, options may be exercised on or after the earlier of flotation or takeover of the Company.

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

Date of grant Date of expiryStrike

price £Opening balance

Leavers options forfeited in year

Repurchased in the year

Balance of options remaining

8 May 2012 8 May 2022 £650 7,265 (1,529) - 5,571

8 May 2012 8 May 2022 £850 7,580 (1,640) - 5,399

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.



FINANCIALS

27. Share-based payments (continued)

The following table illustrates the number and weighted average exercise price (WAEP) of, and movements in, share options during the period.

2017No.

2017 WAEP

2016No.

2016WAEP

Opening balance outstanding 14,139 749.57 14,845 752.12

Granted during the period - - - -

Exercised during the period - - - -

Repurchased during the period - - - -

Forfeited during the year (3,169) 753.50 (706) 803.26

Closing balance outstanding 10,970 748.43 14,139 749.57

Closing balance exercisable 10,970 748.43 14,139 749.57

For share options outstanding as at 14 April 2017, the weighted average remaining contractual life is 5.07 years (2016: 6.07 years).

The fair value of awards was calculated using a Monte-Carlo simulation model.

Granted 8 May 2012Exercise price

£650

Granted 8 May 2012Exercise price

£850

The Plan

Share price at date of grant £662.53 £662.53

Exercise price £650 £850

Maximum option life in years 10 10

Risk-free rate 0.97% 0.97%

Expected staff turnover excluding Directors 0% 0%

Expected volatility 37.37% 37.37%

Expected dividend yield 3.68% 3.68%

Expected value per option £13 – £124 £15 – £76

The expense recognised for equity-settled share-based payments in respect of employee services received during the year is £107,000 (2016: £116,000).

All share options and hurdles were exercised post year-end as a result of the post balance sheet event. See Note 33.


28. Net cash (used in)/generated from operating activities

Group Company

Note14 April 2017

£’00014 April 2016

£’00014 April 2017

£’00014 April 2016

£’000

Profit before taxation 77,572 57,941 - 7,274

Adjustments for: - -

Depreciation of property, plant and equipment 12 10,806 9,754 - -

Loss/(profit) on disposal of property, plant and equipment

5 267 (105) - -

Profit on non-cash disposal of investment - (23,341) - -

Amortisation of intangibles 13 4,772 4,498 - -

Impairment of investment in associate 14 - - - -

Share-based payments charge 107 116 - -

Revaluation of financial instruments 7,699 12,843 - -

(Increase)/decrease in inventory 16 (165,188) (15,260) - -

(Increase)/decrease in receivables 17 (71,605) (67,590) - -

(Decrease)/increase in payables 23 12,068 (173,254) - -

Share of results in joint venture 14 (868) 0 - -

Income taxes (paid)/refunded (14,372) (3,255) - -

Net finance costs 9,688 10,108 - -

Other non-operating charges 6 2 - -

Net cash (used in)/generated from operating activities (129,048) (187,543) - 7,274

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.

Group14 April 2017

£’000

14 April 2016

£’000

The aggregate secured liabilities comprise:

Bank loans and overdrafts 261,340 132,302

Greenergy Fuels Limited has also provided unsecured guarantees to the Dutch Collector of Taxes amounting to £467,869 (2016: £438,000).

The Company enters into financial guarantee contracts to guarantee the indebtedness of other companies within its Group. In this respect, the Company treats the guarantee contract as a contingent liability.

30. Contingencies

14 April 2017

£’000 14 April 2016

£’000

29a. Capital commitments

Capital expenditure contracted for at the end of the reporting period but not yet incurred is as follows:

Property, plant and equipment 3,244 1,893

Intangible assets 6,715 7,694

Total 9,959 9,587

Land and buildings Other

14 April 2017 £’000

14 April 2016 £’000

14 April 2017 £’000

14 April 2016 £’000

29b. Operating lease commitments

The future minimum lease payments payable under non-cancellable operating leases are as follows:

No later than one year 1,387 1,010 39,582 31,954

Later than one year and no later than five years 4,424 2,531 98,423 83,560

Later than five years 15,200 2,043 174,460 199,834

21,011 5,584 312,465 315,348

29. Financial commitments 31. Related party transactions

The Company is the ultimate parent of the Group and there is no ultimate controlling party of the Group.

CompanyDuring the year the Company received dividends from subsidiaries of £Nil (2016: £7,274,000). At the year-end date there were no balances outstanding (2016: £Nil).

GroupThe following transactions were carried out with related parties:

14 April 2017£’000

14 April 2016£’000

31a. Purchases of services

Related parties – joint arrangements (6,041) (8)

14 April 2017 £’000

14 April 2016£’000

31b. Sales of services

Related parties – AFS investment 1,300 -

14 April 2017£’000

14 April 2016£’000

31c. Loans to related parties

Related parties – joint arrangements 44,518 10,352

Related parties – AFS investment 25,308 25,308

69,826 35,660

Loans to Directors are non-interest bearing. These have been fully repaid post year-end.

14 April 2017£’000

14 April 2016£’000

31d. Directors

Loans to Directors 130 36

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


FINANCIALS


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 2017£’000

14 April 2016£’000

Salaries and other short-term benefits 5,071 4,767

Post employment benefits 48 63

Share-based payments 35 41

5,154 4,871

Highest paid Director

Aggregate emoluments 2,086 2,112

Company pension contributions to money purchase schemes 30 31

2,116 2,143

During the year the highest paid Director did not exercise any share options (2016: none).

During the year key management personnel exercised no share options (2016: none).

32. Key management personnel compensation

33. Post balance sheet events

Change of control On 10 May 2017 Brookfield Business Partners (NYSE: BBU; TSX: BBU.UN), together with institutional partners, acquired an 83.64% controlling stake in Greenergy Fuels Holdings Ltd.

Inver EnergyOn 13 July 2017 Greenergy International Ltd entered into a sale and purchase agreement, subject to completion, to acquire 100% of the shares of Inver Energy, an Irish-based independent fuel supplier.


FINANCIALS


DirectorsP T Bateson C J Brookhouse T G Earley C S Lumbard S E McCaffrey A W Owens

Company secretaryR W Clifton

Independent auditorsPricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors 1 Embankment Place London WC2N 6RH

SolicitorsMacfarlanes LLP 20 Cursitor Street London EC4A 1LT

BankersLloyds Bank plc 25 Gresham Street London EC2V 7HN

ING Bank N.V. Bijlmerplein 888 1102 MG Amsterdam Netherlands

Officers and professional advisors

2017 Greenergy Annual Report140

FINANCIALS

Registered offices

Greenergy Fuels Holdings Limited198 High Holborn, London, WC1V 7BD

Registration number 07318726 England and Wales

Greenergy International Limited198 High Holborn London WC1V 7BD

Greenergy Asia DMCC#R 01-01 Suite 101, Floor No1,

Serviced Offices JLT, Reef Tower, Jumeirah Lake TowersDubai UAE

Greenergy Bioethanol SAHinterbergstrasse 24, 6312 Steinhausen, Zug, Switzerland

Greenergy Biofuels Limited198 High Holborn, London, WC1V 7BD

Greenergy Biofuels Teesside Limited198 High Holborn, London, WC1V 7BD

Greenergy Brasil Trading SARua Gomes de Carvalho, 1069, cj 181 and 182, Advance Tower, Vila Olimpia, São Paulo – SP, Brazil 04547-004

Greenergy Deutschland GmbHAustraße 6, 73230 Kirchheim unter Teck, Germany

Greenergy Flexigrid Limited198 High Holborn, London, WC1V 7BD

Greenergy Fuels Canada Inc107 Germain Street, Suite 300, Saint John, NB, E2L 2E9, Canada

Greenergy Fuels Limited198 High Holborn, London, WC1V 7BD

Greenergy Fuels Holdings North America Inc1 Germain Street Suite 1500, Saint John, E2L 4V1 Canada

Greenergy Fuels North America Inc107 Germain Street, Suite 300, Saint John, NB, E2L 2E9, Canada

Greenergy Fuels Private Limited165/XXI, Kaniyamparambil, Thondankulangara Ward, Avalookunnu (P.O), Alappuzha, Kerala India, 686006

Greenergy Morzine Holding Limited198 High Holborn, London, WC1V 7BD

Greenergy Oil U.K. Limited198 High Holborn, London, WC1V 7BD

Greenergy Services Limited198 High Holborn, London, WC1V 7BD

Greenergy Terminals Limited198 High Holborn, London, WC1V 7BD

Greenergy USA Inc9 Greenway Plaza, Suite 1260 Houston, Texas, 77046 USA

Designed by Mr B & Friends

ANNUAL REPORT 2017




Documents

ANNUAL REPORT 2017 - Greenergy€¦ · UK biofuel supply obligations. Customer sales We supply all key customer segments in the UK, including supermarkets, major oil companies, independently