Interim Results

FOR: MICROFUZE INTERNATIONAL PLC AIM SYMBOL: MFZ September 4, 2006 MicroFuze International Plc: Interim Results for the Six Months Ended 30 June 2006 Chairman's Statement LONDON, UNITED KINGDOM--(CCNMatthews - Sept. 4, 2006) - MicroFuze International plc (AIM:MFZ) a provider of innovative surface engineering technology, announces its interim results for the period ended 30 June 2006. Highlights: - Successful completion of placing - Senior management and engineering team strengthened - Engineering team now in place - First commercial order for chrome diffusion - Continued development work of Microwave Diffusion Treatment ("MDT") for chrome and boron diffusion - Investment in "cool plasma" technology - Net cash position at the end of the period was Pounds Sterling 1.7 million Since the placing of MicroFuze on 13 February 2006 the Company has made progress with its development and commercial focus. Milestones achieved include the appointment of senior executives needed to provide the required leadership and expertise to direct the Company towards future growth and commercialisation. MicroFuze's first commercial order and investment in new technologies further demonstrate the Company's focus in commercialising surface engineering solutions using microwaves. Results Summary The loss on ordinary activities for the period ended 30 June 2006 was Pounds Sterling 989,000 or 0.66p per share. This loss is inclusive of exceptional items totalling Pounds Sterling 421,000, being Research and Development in respect of ongoing projects. During the period Pounds Sterling 3,010,000 was raised through the issuance of ordinary shares at a cost to the company of Pounds Sterling 445,000. The net cash position of the company as at 30 June 2006 was Pounds Sterling 1,712,000. As was announced in our trading update of 25 August 2006 the revenues for the financial year ended 31 December 2006 will not meet expectations. This is as a result of delay in the scale up and purchase of a production microwave. As a consequence the Company is continuing to preserve its cash. Business Operations Chrome The Company received its first commercial order for the chrome diffusion of studs from Diffusion Technologies, an industry leader in the maintenance of black liquor boilers for energy extraction and a tier one supplier to the pulp and paper industry. Diffusion Technologies acknowledges that MicroFuze's microwave-treated products provide significant advantages over conventional diffusion, since they can be made within a few hours, replacing conventional processes that take several days, and are more consistent in quality and superior in welding characteristics. The Diffusion Technologies order has already been part-completed using the existing development microwave in Chattanooga, Tennessee. Boron The Company has focused its development efforts on the diffusion of boron into hard steels. Further research and development time and cost will be spent on boron. The discussions the Company is having with its customers for boron diffusion technology is encouraging and the Company sees boron diffusion as a promising growth market. Production The Company is in discussions with vendors for the purchase of a new production microwave. This will enable the Company to complete commercial orders which require larger manufacturing capacity than our smaller development microwave can provide. We expect the new production microwave to be located in Chattanooga, Tennessee. Management The Company has recruited the senior executive talent needed to progress the commercialisation of its patented microwave technology: Sandy Barblett joined the Company in April as an Executive Director based in London. Sandy has gained a wealth of experience from Pace Micro Technology plc and we welcome his global sales, marketing and leadership skills. Sandy is working to accelerate the commercial rollout of the technology and will also be active in looking at other technologies and companies that are complementary to the MicroFuze technology. Art Greenberg joined the Company in June as the President of MicroFuze Americas, Inc., the key subsidiary which holds the licence to commercialise the US Government's patents and which is 85% owned by MicroFuze, 10% owned by the US Department of Energy and 5% owned by Harley Grant, who is one of the inventors of the technology. Art is a chemical engineer by trade and has experience in chemicals and metal coatings applied to industries such as those served by MicroFuze. Art's appointment is as part of the executive management team. Development of New Technologies The Company appointed as a consultant Professor Nguyen Tran, who is a leading authority in the field of microwave engineering, where he has been active for some 20 years. Professor Tran is developing the "cool plasma" technology for creating metal infused coatings using microwaves which could extend the existing range of metals to which MDT is applied to include aluminum and magnesium. Professor Tran is based in Melbourne and will set up a second development microwave for the Company in addition to our microwave in Chattanooga. MicroFuze's existing patented MDT creates alloys by diffusing metals in a microwave. For metals such as magnesium and aluminum with relatively low melting temperatures, working in a cooler environment is essential for making an alloy layer without damaging the target metal. The appointment of Professor Tran for an initial 12 month period allows the Company to further extend its technology base. If the Company is able to successfully diffuse metals or rare earths at lower temperatures, it will open up many opportunities for metals that have previously been untreatable using conventional methods, and certain industrial applications previously considered impossible. We will keep the shareholders updated on developments in this regard. Outlook MicroFuze is continuing to establish itself as a solutions provider of innovative surface treatment technologies. The MDT technology is the base from which the Company will seek to grow both organically and via acquisition. The Company continues to be focused on working with customers and partners who have a real commercial need for the microwave diffusion treatment technology. There have been very few significant technological advances in the market place that we operate in recent time. Companies are looking at new processes in the surface engineering sector that are cheaper, quicker, more environmentally friendly and provide the customer with better properties in their base metals. MicroFuze will seek to capitalise on the important opportunities which are now underpinning a changing market place. The board looks forward to reporting developments in the MDT technology in the coming months. Duncan Clegg Chairman /T/ For further information: MicroFuze International plc www.microfuze.com Doug Parrish, Chief Executive Tel: +44 (0)20 7016 5100 parrish@microfuze.com Mob: +44 (0) 7789 373 292 Libertas Capital Andrew Raca Tel: +44 (0)20 7569 9604 ajr@libertascapital.com Media enquiries: Positive Profile Henry Gewanter Tel: +44 (0)20 7489 2028 henryg@positiveprofile.com Mob: + 44 (0) 7774 22 88 45 MicroFuze International plc --------------------------- Profit and Loss Account ----------------------- For the period ended 30th June 2006 Period 19.8.05 to 30.06.06 (unaudited) Total Pounds Sterling Note 000 Turnover 2 Net operating costs 2 (1,071) ------------------------------------------------------------------------ Operating loss (1,069) Interest receivable 30 ------------------------------------------------------------------------ Loss before taxation (1,039) Taxation - ------------------------------------------------------------------------ Loss after taxation (1,039) Minority interests 50 ------------------------------------------------------------------------ Loss for the period (989) ------------------------------------------------------------------------ ------------------------------------------------------------------------ Loss per share 0.66p ------------------------------------------------------------------------ /T/ Earnings per share Loss per share of 0.66p has been calculated using the loss after taxation and minority interest of Pounds Sterling 989k applied to 149,121,110 shares /T/ MicroFuze International plc --------------------------- Group Consolidated Balance Sheet -------------------------------- 30th June 2006 (unaudited) ------------------------------------------------------------------------ ------------------------------------------------------------------------ Pounds Sterling Note 000 ------------------------------------------------------------------------ ------------------------------------------------------------------------ Fixed Assets Goodwill 1,464 Tangible 62 ------------------------------------------------------------------------ 1,526 ------------------------------------------------------------------------ Current Assets Debtors - amounts falling due within one year 3 84 Cash at bank 1,712 ------------------------------------------------------------------------ 1,796 ------------------------------------------------------------------------ Creditors: amounts falling due within one year Other creditors (201) ------------------------------------------------------------------------ Net current assets 1,595 ------------------------------------------------------------------------ Total assets less current liabilities 3,121 ------------------------------------------------------------------------ Net assets 3,121 ------------------------------------------------------------------------ Capital and reserves Called up share capital 224 Share premium account 3,941 Profit and loss account (955) ------------------------------------------------------------------------ Shareholders' funds 3,211 Minority interests (equity) (89) ------------------------------------------------------------------------ 3,121 ------------------------------------------------------------------------ ------------------------------------------------------------------------ MicroFuze International plc --------------------------- Group Cash Flow --------------- Period 19.8.05 to 30.06.06 (unaudited) ------------------------------------------------------------------------ Pounds Sterling Note 000 ------------------------------------------------------------------------ Net cash outflow from operating activities 1 (889) Return on investments and servicing of finance - interest received 30 Tax paid - ------------------------------------------------------------------------ Net cash outflow before investing activities (859) Net capital receipts 1 2,571 ------------------------------------------------------------------------ Increase in cash 1,712 ------------------------------------------------------------------------ Movement in net cash in the period ------------------------------------------------------------------------ Increase in the period 1,712 ------------------------------------------------------------------------ As at 30 June 2006 1,712 ------------------------------------------------------------------------ MicroFuze International plc --------------------------- Statement of total recognised gains and losses ---------------------------------------------- Period 19.8.05 to 30.06.06 (unaudited) Pounds Sterling 000 ------------------------------------------------------------------------ ------------------------------------------------------------------------ Loss for the period (989) Exchange adjustments 34 ------------------------------------------------------------------------ Total recognised gains and losses in the period (955) ------------------------------------------------------------------------ Reconciliation of movements in shareholders' funds Period 19.8.05 to 30.06.06 (unaudited) Pounds Sterling 000 ------------------------------------------------------------------------ ------------------------------------------------------------------------ Recognised losses relating to the period (955) Shares issued during the period 4,165 ------------------------------------------------------------------------ Net increase in shareholders' funds 3,210 At beginning of period - ------------------------------------------------------------------------ At end of period 3,210 ------------------------------------------------------------------------ /T/ Historical cost profits and losses There were no differences between the reported loss before taxation and the historical cost loss before taxation for the period. Basis of preparation of the interim financial information The interim financial information has been prepared on the same basis and using the same accounting policies as were applied in drawing up the financial information contained in the admission document. The figures for the period are unaudited. /T/ MicroFuze International plc --------------------------- Notes to the half year accounts ------------------------------- 1. Consolidated cash flow statement Period 19.8.05 to 30.06.06 (unaudited) ------------------------------------------------------------------------ ------------------------------------------------------------------------ Pounds Sterling Net cashflow from operating activities 000 ------------------------------------------------------------------------ ------------------------------------------------------------------------ Operating loss (1,069) Depreciation charge 7 Goodwill amortisation 44 Decrease in debtors 35 Increase in creditors 94 ------------------------------------------------------------------------ Net cash outflow from operating activities (889) ------------------------------------------------------------------------ Period 19.8.05 to 30.06.06 (unaudited) ------------------------------------------------------------------------ ------------------------------------------------------------------------ Pounds Sterling Net capital receipts/(payments) 000 ------------------------------------------------------------------------ ------------------------------------------------------------------------ Purchase of tangible fixed assets (11) Issue of ordinary shares 3,010 Costs of share issue (445) Cash acquired with subsidiaries 17 ------------------------------------------------------------------------ 2,571 ------------------------------------------------------------------------ /T/ 2. Operating Exceptional Items Included within net operating costs for the period is the following exceptional item: /T/ Pounds Sterling '000 Research and development in respect of ongoing projects 421 ----------- /T/ 3. Debtors Included within Debtors is an amount of Pounds Sterling 27,211 in respect of unpaid share capital. Of this amount Pounds Sterling 10,000 has been received since the period end and the balance is expected to be received in the near future. -30- FOR FURTHER INFORMATION PLEASE CONTACT: MicroFuze International plc Doug Parrish Chief Executive +44 (0)20 7016 5100 Mob: +44 (0) 7789 373 292 parrish@microfuze.com OR Libertas Capital Andrew Raca +44 (0)20 7569 9604 ajr@libertascapital.com OR Media enquiries: Positive Profile Henry Gewanter +44 (0)20 7489 2028 Mob: + 44 (0) 7774 22 88 45 henryg@positiveprofile.com -0- MicroFuze International plc

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