QFI.L Regulatory News (QFI)

31 May 2006 07:02

Quadrise Fuels International PLC31 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 yourCompany, Quadrise Fuels International Plc. Under the direction of the previous Chairman, Brian Moritz, the company preparedand positioned itself for a reverse take over. On 9 December 2005 the Companyannounced that it had entered into a Preliminary Merger Agreement whichsubsequently led to the announcement on 23 March 2006 of the detailed terms ofthe acquisition of Quadrise International Limited, a specialist fuels processingand distribution company. The consideration of £45 million was satisfied by theissue of new shares in the Company and a further £12.9 million was raisedthrough a limited private placing to enable the Company to meet the acquisitionterms and fund the business plan. Following the completion of the reverse take over, I succeeded Brian Moritz asChairman and my colleague, Bill Howe, took over as Chief Executive Officer. Dealings in the shares of the company following the acquisition and placingcommenced on 19 April 2006. The market response to our transition into theenergy sector and the associated prospects for our products and services hasbeen most encouraging. The MSAR Fuels Business Quadrise MSAR fuels are a lower cost substitute for the conventional petroleumfuel oils typically used in steam and power generation. Our fuels are manufactured from low value heavy residues. The process uses AkzoNobel's proprietary emulsification technology secured under an AllianceAgreement which provides for exclusivity in many major markets. Worldwide power generation from crude oil sourced fuels consumes around 300million tons of fuel per annum. The Company aims to become pre-eminent in thesale of emulsion fuels and, as a mature business, to have secured up to 10% ofthis market. MSAR fuels can also substitute for coal in thermal power generation withsignificant environmental benefits and trials have been conducted on MSAR fuelsin diesel engines. The Company owns a patent covering MSAR fuels for turbineengines and management believe that this application holds considerable promisefor the medium term. We believe that the range of applications and the market potential represent avery exciting commercial opportunity and that your 'new' Company is very wellpositioned and equipped for a successful entry into the thermal power generationfuels business. The New Team The management team is new to the Company, but not to the energy field or fuelsbusiness. The Company has adopted an 'outsourced services' model for the first phase ofdevelopment which, while reducing fixed costs, provides access to significantspecialised resources and capability. Aside from the call on the specialisedskills and know-how in Akzo Nobel Surface Chemistry AB, engineering and plantoperating services will be sourced from SNC Lavalin under a global frameagreement. Bill Howe, our Chief Executive, has over 30 years' experience in the oil, gasand energy process engineering business - formerly with Foster Wheeler and morerecently with Bateman. He combines expert knowledge in this specialised fieldwith considerable experience in management, project development and clientrelations. Bill is supported by a professional executive management team with a wealth ofexperience in international oil and energy. The team has extensive specialiseddirect technical and commercial experience in the production and marketing ofemulsion fuels to the international power generation industry. The services ofhighly qualified and uniquely experienced expert consultants has also beencontractually assured. The Company also has the benefit of two independent non-executive directors whostrengthen the Board and complement the team. Laurie Mutch brings a great dealof experience of dealing at top level in the international energy and powerindustries; Tony Lowrie has a wealth of experience in the internationalfinancial services sector with a spread of relationships and contacts which willadd considerable value, particularly in developing markets. Their advice andsupport will be invaluable as the business development programme is progressed. Masefield Relationship Masefield Energy Holdings AG ("Masefield"), having assembled the assets andinterests owned by Quadrise International Limited at the time of the reversetransaction, held 59% of the equity of the Company following Admission to AIM on19 April 2006. Masefield was formed to hold the non-trading assets of Masefield AG, the corebusiness of which is global trading of crude oil and refined oil products.Quadrise Fuels International Plc represents the 'downstream' (processing andmarketing) interests of Masefield in the heavy oil related business sector. The Masefield relationship provides assured access to a range of expert servicesassociated with oil procurement and supply and related transaction financing andrisk management. While dealings with Masefield companies will be on anarms-length basis, the relationship could reasonably be expected to benefit theCompany. 2006 Programme The 2006 focus combines securing fuel supply contracts and establishing viableprocess locations - with a view to early commissioning of a commercialdemonstration plant within the next 12 months. In the same period the Company intends to select and secure suitable partnersfor effective ventures to supply the thermal power industry in major mature anddeveloping markets. Outlook Your Board believes that the range of applications and market potential ofQuadrise Fuels International Plc represent an exciting commercial opportunityand that your 'new' Company is well positioned and equipped for a successfulentry into the fuel supply to the thermal power generation industry. We have acombination of skills, experience, technology and support to take the businessforward into the future with confidence. Finally, I should like to express my thanks to the Board, our Management andstaff, and our external advisers and consultants, for the support they havegiven me over the past months. I look forward to benefiting from theircontributions in the future for the benefit of the Company and all ourshareholders. Ian R J WilliamsChairman 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 Account16 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 similarincome 4 53,547 ----------Loss on ordinary activities beforetaxation (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 operationsare continuing. There are no recognised gains and losses other than those passing through theprofit and loss account. Balance SheetAs At 31 March 2006 2006 £Current assetsDebtors 174,687Cash at bank and in hand 1,235,731 --------- 1,410,418Creditors: amounts falling due within one year 208,973 ---------Net current assets 1,201,445 ---------NET ASSETS 1,201,445 =========CAPITAL AND RESERVESCalled up share capital 203,300Share premium account 1,225,180Profit and loss account (227,035) ---------Shareholders' funds - equity interests 1,201,445 ========= Cash Flow StatementPeriod ended 31 March 2006 2006 £ Net cash outflow from operating activities (185,697) ---------Returns on investments and servicing of financeBank interest received 53,547 ---------Net cash inflow for returns on investments and servicing offinance 53,547 ---------Capital expenditure and financial investmentsPayments 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 andfinancing (217,130) ---------FinancingIssue of new shares 1,583,000Expenses 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 StatementsPeriod 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 1,428,480Closing 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 184,592Impairment 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 standardrate of UK corporation tax of 30% 68,110 ---------Effects of:Non-deductible expenses 54,128Tax losses unutilised: - UK 13,892 --------- 68,110 ---------Current tax charge - ---------There is no corporation tax charge for the period due to the losses incurredduring the period. 6. EFFECTS OF TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS ("IFRS") The financial information for the period ended 31 March 2006 has been restatedto comply with IFRS. A summary of the adjustments required is set out below. UK GAAP Effect of IFRS transition £ £ £ Current assetsReceivables 8,925 - 8,925Cash 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 liabilitiesOther payables 18,831 - 18,831 --------- --------- --------- Total current liabilities 18,831 - 18,831 --------- --------- --------- Total liabilities 18,831 - 18,831 --------- --------- --------- Shareholders' equity Share capital 203,300 - 203,300Share premium account 1,225,180 (20,000) 1,205,180Profit and loss account (227,035) - (227,035)Other equity reserves - 20,000 20,000 --------- --------- --------- Shareholders' funds - equity 1,201,445 - 1,201,445interests --------- --------- --------- Total liabilities andshareholders' 1,220,276 1,220,276equity --------- --------- Adjustment in respect of share based payments On Admission to AIM on 14 February 2005 the Company granted options to itsprofessional advisers to subscribe for 9,000,000 ordinary shares at 1p per shareat any time up to the fifth anniversary of Admission. The adjustment representsthe estimated fair value of the services received in consideration for the issueof other options, measured at the date of grant. The recognition of additionalvalue in relation to the services received has been set against the Company'sshare 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