Future Fuels – Investor Presentation
January 2014
Investment Benefits
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A low risk opportunity to invest in a British Clean Technology business which has
raised over £130 million to date, owns a $220 million ethanol plant in Virginia, USA as
well as fully permitted land, with constructions works underway, to build an ethanol
plant in the UK
For every £1 you invest in Tranche 3a, the Capital Allowances the LLP is entitled to
should allow you to reduce your tax liabilities immediately by £1 in the current
(2013/14) tax year (subject to your level of taxable income)
The reduction in your tax liabilities should effectively provide you with 100% capital
protection for your investment
These tax allowances are entirely statutory and based only on actual expenditure
incurred in acquiring c. £115 million of plant and machinery in the 2012/13 tax year
An expected annual post tax rate of return of 44.1%, based on the assumptions
regarding the performance of the US plant alone
£1 invested today should return you £2.30 (post tax) over the next eight years. The
equivalent pre-tax return, assuming a top rate taxpayer and 45% tax rates, is £3.37
Profits should start to be distributed following the 2014/15 tax year
There is potential for additional profits through the build and operation of the UK site
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Key Project Milestones
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2006 – Project begins
Jan 2008 – FCP becomes involved
Dec 2012 – offer to acquire 220m litre ethanol plant in USA
March 2013 – Acquired Hopewell plant
July 2013 – A strategic review of best outcomes for the project
October 2013 – Project focus to re-commission US Operations
October 2013 – Budget & timetable established for recommissioning
November 2013 – CEO appointed; structure established
December 2013 – Vireol Bio Energy LLC incorporated
January 2014 – Initial staff (18) join
February / March – Finalise recruitment, commission key plant items
April – plant start-up
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Project Review and Current Focus
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UK fundamentals remain strong - growing demand and crop prices falling towards
historic long term levels, but
Legislative uncertainty and cautious senior lending sector are significant hurdles in
raising circa £140m of new money
Closure and sale of Ensus plant severely eroded bank and investor confidence
US ethanol sector is strong with legislative requirement of 13bn gallons of 1st
generation ethanol in 2014 & c.1bn gallon export opportunity
No material supply increase in the US since 2010
Mothballed plants in the US are being brought back into production
US plant offers attractive earnings potential; could produce an annual EBITDA of
$32m (for around $10m of restart costs) based on historic 3 year ethanol / 5 year
wheat prices
The plant could be in production by April 2014
Local support and demand in Virginia
Operating in the US will advance the UK project by demonstrating the skills of the
management team and possibly being a source of funds
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Key actions for recommissioning
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Recruitment of staff well underway
 18 staff currently employed (inc. CFO, Safety & Quality Mgrs)
 Balance (c.20) to join in February
Plant condition remains as expected (very good)
Katzen (technology providers) assisting VBE LLC re recommissioning
Main contracts (corn supply / DDGS offtake; & ethanol offtake) well advanced
Finalisation of marketing strategies in late February / early March
Corn procurement to begin in March
Key items of equipment brought to operational readiness through March
Plant scheduled to begin production in April
The project is now focused on bringing the
US plant into operation as quickly as possible
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Grain storage already operational
Distillation Columns
Fermenter Tanks
Ethanol Storage
Grain Storage
Grain Delivery
Stillage Tanks
Dryers
Control Building & Workshop
Multi-track rail sidings
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Future Fuels LLP owned US Site
Offices
Distillation Columns
Dryers
Ethanol Storage
Grain Storage
Fermenters
DDGS Store
Evaporator
Milling
Grain Delivery
Cooling Towers
Stillage Tanks
Multi-track rail sidings
Control Building & Workshop
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Commercial overview
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US$11m funding required
Plant will be debt free
Strong demand for ethanol (Mandate,
export, E15 & E85)
Supply & demand balanced
Corn prices have fallen dramatically
(<$4.20 / bushel)
Attractive operating margin (ethanol &
DDGs less corn)
State/City support (including from
Governor & Sec. Of State for
Agriculture)
Local markets for supply and offtake
for all products on strong commercial
terms
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Projected returns from US plant
Base Case:
 Ethanol – 3 year average price
 Corn – 5 year average price
 Sale at 5 x EBITDA
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Additional activity
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The Technical Centre at Grimsby will continue to be built and rented. Initial
works by Kier are underway
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Alternative uses for the UK land will be considered if they produce income and
do not prohibit a build of the intended ethanol plant
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Corn storage & handling facilities at US plant already operational through shortterm lease (until needed by the plant)
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Additional opportunities identified to enhance revenues
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Corn spinning – to produce biodiesel
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Additional storage capacity
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Development of E85 gas station
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Funding for Tranche 3A & 3B
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Tranche 3A
 Initial requirement of $11,000,000 (incl. Contingency £2.5m) for re-commencing
operations
 These funds are required according to a cash flow plan over the next 3 months
 It is anticipated that capital allowances with a cash value equivalent to £7.8m
are available in 2013/14
 The Tranche 3A “raise” is at an advanced stage
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Tranche 3B
 An additional £5.2m will be raised for UK operational costs and contingencies
 Tranche 3B benefits from capital allowances of £4.2m (2014/15) and £1m (2015/16)
 The LLP means to raise Tranche 3B by Q1 2014
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Revenue from US Operations
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Revenue from US operations
Cumulative distributions, rents and sales proceeds from US operation*
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First £9m shared between:
 FF LLP (45%)
 EVL (30%)
 Other creditors
Next £9m shared between:
 FF LLP (45%)
 EVL (22.5%)
 Other creditors
Balance shared between:
 FF LLP (60%)
 EVL (15%)
 VBI/Management (20%)
 Other creditors
Note: The Operating company will also retain £1m from the first two distributions
* Net of operating costs and taxes
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Important Information
This investment opportunity is not suitable for ordinary retail investors. It is a high risk
investment which is illiquid and should only be promoted to high net worth, sophisticated and
professional investors. Further details are set out in the relevant Information Memorandum.
Investors are recommended to seek professional advice. Issued by Future Capital Partners (FS)
Limited which is authorised and regulated by the Financial Conduct Authority.
The values used in this presentation are based on commercial principles and financial models
that make certain assumptions regarding the tax treatment of the overall project and certain
individual elements within that project. The tax position of the legal entities within the project is
subject to a final opinion being agreed with our advisers and may be subject to alteration from
the assumed treatment in this presentation. It is important that cross border businesses are
correctly structured in order to avoid double taxation. Whilst we consider that the calculations
used to support this presentation have been prepared with due care and diligence and in line
with advice received to date, they are subject to further adjustment once the final opinion has
been received.
10 Old Burlington Street
London W1S 3AG
T: +44 (0) 20 7009 6600
F: +44 (0) 20 7009 6601
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