Final Results

Quadrise Fuels International PLC 31 May 2006 Quadrise Fuels International plc (formerly Zareba plc) Preliminary Results for the period ended 31 March 2006 Chairman's statement A New Future In A New Business The Transition We have now embarked on a completely new phase in the development of your Company, Quadrise Fuels International Plc. Under the direction of the previous Chairman, Brian Moritz, the company prepared and positioned itself for a reverse take over. On 9 December 2005 the Company announced that it had entered into a Preliminary Merger Agreement which subsequently led to the announcement on 23 March 2006 of the detailed terms of the acquisition of Quadrise International Limited, a specialist fuels processing and distribution company. The consideration of £45 million was satisfied by the issue of new shares in the Company and a further £12.9 million was raised through a limited private placing to enable the Company to meet the acquisition terms and fund the business plan. Following the completion of the reverse take over, I succeeded Brian Moritz as Chairman and my colleague, Bill Howe, took over as Chief Executive Officer. Dealings in the shares of the company following the acquisition and placing commenced on 19 April 2006. The market response to our transition into the energy sector and the associated prospects for our products and services has been most encouraging. The MSAR Fuels Business Quadrise MSAR fuels are a lower cost substitute for the conventional petroleum fuel oils typically used in steam and power generation. Our fuels are manufactured from low value heavy residues. The process uses Akzo Nobel's proprietary emulsification technology secured under an Alliance Agreement which provides for exclusivity in many major markets. Worldwide power generation from crude oil sourced fuels consumes around 300 million tons of fuel per annum. The Company aims to become pre-eminent in the sale of emulsion fuels and, as a mature business, to have secured up to 10% of this market. MSAR fuels can also substitute for coal in thermal power generation with significant environmental benefits and trials have been conducted on MSAR fuels in diesel engines. The Company owns a patent covering MSAR fuels for turbine engines and management believe that this application holds considerable promise for the medium term. We believe that the range of applications and the market potential represent a very exciting commercial opportunity and that your 'new' Company is very well positioned and equipped for a successful entry into the thermal power generation fuels business. The New Team The management team is new to the Company, but not to the energy field or fuels business. The Company has adopted an 'outsourced services' model for the first phase of development which, while reducing fixed costs, provides access to significant specialised resources and capability. Aside from the call on the specialised skills and know-how in Akzo Nobel Surface Chemistry AB, engineering and plant operating services will be sourced from SNC Lavalin under a global frame agreement. Bill Howe, our Chief Executive, has over 30 years' experience in the oil, gas and energy process engineering business - formerly with Foster Wheeler and more recently with Bateman. He combines expert knowledge in this specialised field with considerable experience in management, project development and client relations. Bill is supported by a professional executive management team with a wealth of experience in international oil and energy. The team has extensive specialised direct technical and commercial experience in the production and marketing of emulsion fuels to the international power generation industry. The services of highly qualified and uniquely experienced expert consultants has also been contractually assured. The Company also has the benefit of two independent non-executive directors who strengthen the Board and complement the team. Laurie Mutch brings a great deal of experience of dealing at top level in the international energy and power industries; Tony Lowrie has a wealth of experience in the international financial services sector with a spread of relationships and contacts which will add considerable value, particularly in developing markets. Their advice and support will be invaluable as the business development programme is progressed. Masefield Relationship Masefield Energy Holdings AG ('Masefield'), having assembled the assets and interests owned by Quadrise International Limited at the time of the reverse transaction, held 59% of the equity of the Company following Admission to AIM on 19 April 2006. Masefield was formed to hold the non-trading assets of Masefield AG, the core business of which is global trading of crude oil and refined oil products. Quadrise Fuels International Plc represents the 'downstream' (processing and marketing) interests of Masefield in the heavy oil related business sector. The Masefield relationship provides assured access to a range of expert services associated with oil procurement and supply and related transaction financing and risk management. While dealings with Masefield companies will be on an arms-length basis, the relationship could reasonably be expected to benefit the Company. 2006 Programme The 2006 focus combines securing fuel supply contracts and establishing viable process locations - with a view to early commissioning of a commercial demonstration plant within the next 12 months. In the same period the Company intends to select and secure suitable partners for effective ventures to supply the thermal power industry in major mature and developing markets. Outlook Your Board believes that the range of applications and market potential of Quadrise Fuels International Plc represent an exciting commercial opportunity and that your 'new' Company is well positioned and equipped for a successful entry into the fuel supply to the thermal power generation industry. We have a combination of skills, experience, technology and support to take the business forward into the future with confidence. Finally, I should like to express my thanks to the Board, our Management and staff, and our external advisers and consultants, for the support they have given me over the past months. I look forward to benefiting from their contributions in the future for the benefit of the Company and all our shareholders. Ian R J Williams Chairman Chief Executive Officer's statement The principal business focus of Quadrise Fuels International Plc is the supply of its specialised MSAR fuels to the thermal power generation industry. Our vision for the Company is that of a profitable and growing business with representation in major world markets and to be acknowledged as the leading supplier of oil emulsion fuels for steam and power generation by 2010. We have formulated a suite of strategies to achieve this objective to deliver profitable growth. The Company's margins are more closely associated with price and value spreads between light and heavy oils than with the oil price itself. These spreads remain positive. Lower oil prices may mean that MSAR fuels can also economically replace coal in thermal power generation and thus increase our potential available market. Partnerships and Alliances We aim to use the strength of our alliance with Akzo Nobel Surface Chemistry AB, our access to the world wide engineering and operational capabilities of SNC Lavalin and our association with the Masefield Group to identify, secure and progress business opportunities. An early objective is to form new partnerships and joint ventures with associates and partners who can help the Company with both market entry and new client relations within our target markets. In this way we intend to multiply the resources applied to identifying and securing clients and viable operating bases for the fuels processing and supply chain systems. Associate Companies The Company holds interests in two independently managed North American associate companies, Quadrise Canada Fuels Systems Inc. and Quadrise Fuels US LP. The Canadian associate has identified the fuelling of steam generation for reservoir heating in heavy oil production facilities as a very substantial preferred market sector with exciting growth prospects. It has already made substantial progress in the commercial application of MSAR fuels within this sector. The USA associate is in a more formative stage but has been actively progressing discussions with potential customers and joint venture partners in its operating territory, whilst also preparing for financing to fund its business development plan. Prospects Your Board believes that the Company has a substantial competitive advantage in a large global marketplace. The management team has the skills, experience and capability to implement the strategy and deliver the business programme - all aimed at growing shareholder value. We are confident of our ability to achieve the Company's objectives of growth, profitability and leadership in the medium term. Bill Howe Chief Executive Officer Profit and Loss Account 16 month period ended 31 March 2006 16 month period ended 31 March 2006 Note £ Turnover 1 - Administrative expenses (195,602) Amounts written off investments (84,980) ---------- Operating loss 2 (280,582) Interest receivable and similar income 4 53,547 ---------- Loss on ordinary activities before taxation (227,035) Tax on loss on ordinary activities 5 - ---------- Loss for the period (227,035) ======== Basic and diluted loss per share (pence) (0.15)p ========== The profit and loss account has been prepared on the basis that all operations are continuing. There are no recognised gains and losses other than those passing through the profit and loss account. Balance Sheet As At 31 March 2006 2006 £ Current assets Debtors 174,687 Cash at bank and in hand 1,235,731 --------- 1,410,418 Creditors: amounts falling due within one year 208,973 --------- Net current assets 1,201,445 --------- NET ASSETS 1,201,445 ========= CAPITAL AND RESERVES Called up share capital 203,300 Share premium account 1,225,180 Profit and loss account (227,035) --------- Shareholders' funds - equity interests 1,201,445 ========= Cash Flow Statement Period ended 31 March 2006 2006 £ Net cash outflow from operating activities (185,697) --------- Returns on investments and servicing of finance Bank interest received 53,547 --------- Net cash inflow for returns on investments and servicing of finance 53,547 --------- Capital expenditure and financial investments Payments to acquire fixed asset investment (109,980) Proceeds on disposal of fixed asset investment 25,000 --------- Net cash outflow for capital expenditure (84,980) --------- Net cash outflow before management of liquid resources and financing (217,130) --------- Financing Issue of new shares 1,583,000 Expenses paid in connection with share issues (154,520) --------- Net cash inflow from financing 1,428,480 --------- Net increase in cash in the period 1,211,350 --------- Notes to the Financial Statements Period ended 31 March 2006 1. TURNOVER The principal activity of the Company was investment holding during the period. 2. LOSS PER SHARE 2006 £ Loss before taxation 227,035 ----------- Weighted average number of shares in issue (basic and diluted) 151,394,426 ----------- Basic loss per share (pence) 0.15 ----------- Diluted loss per share (pence) 0.15 ----------- 3. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS 2006 £ Loss for the financial period (227,035) Issue of share capital 1,428,480 Closing shareholders' funds 1,201,445 4. RECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES 2006 £ Operating loss (280,582) Increase in debtors (174,687) Increase in creditors 184,592 Impairment loss 84,980 --------- Net cash outflow from operating activities (185,697) ========= 5. TAXATION 2006 £ Taxation: current tax charge - --------- Factors affecting the tax charge for the period: Loss on ordinary activities before tax 227,035 --------- Loss on ordinary activities before taxation multiplied by standard rate of UK corporation tax of 30% 68,110 --------- Effects of: Non-deductible expenses 54,128 Tax losses unutilised: - UK 13,892 --------- 68,110 --------- Current tax charge - --------- There is no corporation tax charge for the period due to the losses incurred during the period. 6. EFFECTS OF TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS ('IFRS') The financial information for the period ended 31 March 2006 has been restated to comply with IFRS. A summary of the adjustments required is set out below. UK GAAP Effect of IFRS transition £ £ £ Current assets Receivables 8,925 - 8,925 Cash at bank and in hand 1,211,351 - 1,211,351 --------- --------- --------- Total current assets 1,220,276 - 1,220,276 --------- --------- --------- Total assets 1,220,276 - 1,220,276 --------- --------- --------- Current liabilities Other payables 18,831 - 18,831 --------- --------- --------- Total current liabilities 18,831 - 18,831 --------- --------- --------- Total liabilities 18,831 - 18,831 --------- --------- --------- Shareholders' equity Share capital 203,300 - 203,300 Share premium account 1,225,180 (20,000) 1,205,180 Profit and loss account (227,035) - (227,035) Other equity reserves - 20,000 20,000 --------- --------- --------- Shareholders' funds - equity 1,201,445 - 1,201,445 interests --------- --------- --------- Total liabilities and shareholders' 1,220,276 1,220,276 equity --------- --------- Adjustment in respect of share based payments On Admission to AIM on 14 February 2005 the Company granted options to its professional advisers to subscribe for 9,000,000 ordinary shares at 1p per share at any time up to the fifth anniversary of Admission. The adjustment represents the estimated fair value of the services received in consideration for the issue of other options, measured at the date of grant. The recognition of additional value in relation to the services received has been set against the Company's share premium account on Admission. 7. COMPARATIVE FIGURES No comparative figures have been included as the Company has not released final results prior to this announcement. 8. COPIES OF ANNOUNCEMENT Copies of this announcement will be available on the Company's website at www.quadrisefuels.com and from the Company's registered office, Parnell House, 25 Wilton Road, London SW1V 1YD for a period of one month. This information is provided by RNS The company news service from the London Stock Exchange

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