Auditors expressed disquiet over a considerable narrowing in D1 Oil's losses by saying they were "unable to form an opinion" over the data because of the question marks hanging over the oilseeds group.

Mark Hatton at accountancy group Ernst & Young said that D1 directors had made appropriate cautions about the company's situation, and that he was satisfied that they had abided by rules on accounting records and disclosures.

However, he added that Ernst & Young was "unable to form an opinion" over whether the accounts "give a true and fair view" of the financial situation of D1, which is developing a market for jatropha, a biofuel feedstock crop which can be grown on poor quality land.

Nor could the auditors ensure that the accounts had been "properly prepared" in accordance with European Union financial standards, or with UK companies law.

'New capital injection'

The caution reflected the uncertainties hanging over D1, which faces a request by its biggest shareholder, the activist investor Brian Myerson, to be wound up, and is in talks with Australia-based Mission NewEnergy over a takeover.

Without a deal, the group will require a "new capital injection" to oil its financial wheels next year, Barclay Forrest, the D1 chairman, said.

"If a fundraising is not successful, then there would be significant doubt about the group's ability, in its current form, to continue as a going concern," he added.

D1, which has raised money from investors four times in six years, ended 2009 with net cash of £6.1m.

List of setbacks

He added thanks to shareholders for their support "through a very difficult, challenging and uncertain time for the business", which last year suffered the withdrawal by BP, the oil giant, from a joint venture, and fought off an attempt by Mr Myerson to merge it with a cane ethanol company.

Last week, the group revealed hiccups over the £2.6m sale of a former oil refinery in Liverpool, with the buyer revealing a "material risk" over the funding of the deal.

The refinery is being sold as part of a change of tack on biofuels strategy, which saw revenues more than halve to £1.80m over the year, but slashed after-tax losses of continuing operations by 88% to £3.9m.

D1 shares closed down 1.0% unchanged at 6.99p in London.