The following is from their FY07 Financial Statement:
Natural Fuel Limited (ASX: NFL) reported a FY07 net loss after tax of $47.8 million which includes a non-cash impairment charge of $21.1 million against the carrying value of its proposed Houston plant. Without the impairment charge NFL’s full year results were $26.7 million compared to prospectus forecast loss of $25.3 million.
FY 2007 was a challenging year for NFL in view of unfavourable feedstock price movements, commissioning issues in Darwin and variability of the economics of the proposed biodiesel plant in Houston, USA. However,
importantly, the Board is pleased with the progress of what will currently be the world’s largest biodiesel plant and the company’s main operation in Singapore. This project remains on track to generate significant revenues
from the third quarter of FY08.
NFL expects to commission the three 200,000 metric tonne processing plants in Singapore and to start exporting biodiesel to USA and Asia in the third quarter of FY08.
As for the proposed Houston project, the Board has taken the view that it is prudent and conservative to make an impairment charge to the carrying value of this project and to write the carrying value to nil given the increased uncertainties surrounding the current economics of building a biodiesel production facility in Texas.
As an example, the recent decision by the Texas State Government not to renew its Biofuels Incentive Program was just one of the commercial issues the Board has considered in evaluating the project. It should be noted that the Houston project remains under continuous assessment by the Board as part of its overall strategy for the USA operations.
NFL remains committed to developing a strong USA presence by pursuing opportunities which add to shareholder value within an appropriate risk profile. Our near term focus in the USA is to establish an effective sales and distribution network to service the increasing number of sales opportunities for biodiesel in the Americas and Canada. Additionally NFL is reviewing opportunities to acquire existing biodiesel plants that would provide more immediate revenues."
As you can see above they have written off their investment in the USA, but say they are also looking at acquisition which I assume they would need to raise funds for. They just better not ask me.
"At 30 June 2007 NFL had a cash balance of $114.4 million compared to $1.4 million at 30 June 2006."
If they loss approx $25 million per year as they would have done without the write down, they should have a few years a cash left, hopefully the revenue from the Darwin plant will increase and the Singapore plant actually comes on line when they anticipate and generates some revenue.
On a personal note, for what they have done, and how badly they overvalued the company for the IPO, these Directors are being paid way to much money.
Not a happy investor.
Brett