GTL Resources PLC - Final Results.

(From AFX CNF)

RNS Number:2117I GTL Resources PLC 30 August 2006 For Immediate Release 30 August 2006 GTL Resources plc ("GTL" or "the Company") Preliminary Results For the Year Ended 31 March 2006 GTL Resources plc, the project development company focussed on Ethanol production in the US, today announces its Preliminary Results for the year ended 31 March 2006. Highlights a Construction of IRE ethanol plant at Rochelle, Illinois commenced in September 2005 a First production from Rochelle anticipated December 2006 a Significant support for Ethanol announced by US government during year a Loss before taxation US$ 12.5m (2005: Loss US$12.7m) a Loss per share US$ 0.008 (2005: Loss US$ 0.038) Commenting on the results Peter Middleton, Chairman, said: 'The construction of our Ethanol plant at Rochelle continues our strategy to develop renewable fuel projects and we anticipate production commencing in December 2006. The key personnel for Rochelle are in place and we look forward to delivering revenues throughout 2007. We thank all our shareholders for their support over the last year.' For further information, please contact: GTL Resources plc Peter Middleton, Executive Chairman Tel: 020 7958 1685 Michael Brennan, Finance Director Tel: 01642 794 000 Buchanan Communications Tel: 020 7466 5000 Tim Thompson Nick Melson CHAIRMAN'S STATEMENT GTL's aim is to achieve a strong presence in the USA ethanol industry. We took a first step in 2005 by acquiring an 85% controlling interest in Illinois River Energy (IRE). Construction of the IRE ethanol plant at Rochelle, Illinois, began in September 2005 and we are confident that production will commence in December 2006. All of the key personnel to run the IRE plant are now in place. We have opened a Chicago office from where the recently recruited Chief Executive Officer for GTL Resources USA Inc (the holding Company for our US operations) will implement strategy and further develop our US business. We said that we would develop further opportunities. We have applied for permits to double our capacity at IRE. In addition, we are in discussions over a number of other US sites which, like IRE, will reinforce our position as a low cost producer of ethanol. In the year under review we have done what we said we would do. Ethanol is now an important part of the USA government's aim to reduce the 60 per cent of oil it imports. It has the compelling attraction of reducing the budget deficit and supporting American farmers in a green and sustainable way. Ethanol used to be a side-show. It has now moved centre stage. By embarking on our ethanol initiative and bringing IRE close to completion, we now have the opportunity to build on this record of delivery and to justify the faith you have shown in us. We hope that you will continue to support the Board's ambition to grow GTL into one of the major companies in the US production of renewable energy. We now know that Methanol will not take us there. Ethanol can. Peter Middleton Chairman 30 August, 2006 BUSINESS AND FINANCIAL REVIEW Over the past year GTL has been transformed from a project finance company into a leading investor in renewable fuels with a major operation in the USA due to start producing large quantities of ethanol by the end of 2006. Ethanol is a high octane fuel which is used primarily as a gasoline additive and extender. The elimination from the market of the main competing oxygenate methyl tertiary butyl ether (MTBE) due to its environmental problems, and surging oil prices have dramatically increased the demand for ethanol and the US interest in this renewable fuel. During the period under review the Company successfully raised AGBP24 million to develop its first ethanol plant in Rochelle, Illinois. Construction of the plant began in September 2005 with a scheduled sixteen month build programme and a total estimated cost of $80 million. At this time the plant is on budget and is scheduled to open ahead of the sixteen month target in early December 2006. The plant once operational will have the capacity to produce a minimum of 50 million gallons of ethanol per annum. The Board is currently focussing all of its energies, plans and resources on the USA and specifically on ethanol. The market for ethanol has strengthened considerably since GTL began constructing its plant. President George Bush indicated the governmental backing for ethanol as an alternative fuel source in his 31 January 2006 State of the Union address when in admitting an American addiction to oil he mentioned ethanol as a way of changing how US automobiles are powered. Ethanol was seen as a contributor to the US target of replacing more than 75 percent of oil imports from the Middle East by 2025. Since then many US states have adopted targets for introducing / increasing the use of alternative fuels and particularly ethanol. In August 2005 the Energy Policy Act was passed and mandated the use of 7.5 billion gallons of renewable fuels by 2012. The Act did not renew a limitation of liabilities for the use of MTBE in gasoline and as a result, a switch to ethanol was effectively completed nationwide by June 2006. The benefits of ethanol were also illustrated by the US Renewable Fuels Association's assertion that in 2005 ethanol displaced 170 million barrels of oil, reduced greenhouse gases by 8 million tons and supported more than 150,000 US jobs. Furthermore the US Department of Agriculture has calculated that ethanol returns 1.64 units of energy per unit used to produce it. That compares to 0.8 units for gasoline. Support has also been seen from the car manufacturers with Chrysler, General Motors and Ford announcing plans to increase production of flexi fuel vehicles capable of using E85 (an 85/15 % ethanol/gasoline blend). Both car manufacturers and State governing bodies have also supported the extension of the E85 filling station network. The demand for ethanol has therefore significantly increased since GTL began constructing its plant. The price of spot ethanol has spiked to $4 to $5 /gallon due to a shortage of supply and the rising price of oil. However more representative term supply prices have been related to the price of gasoline and at $70 oil have typically been in the $2.00 to $2.50 per gallon range. The market for crude oil remains highly volatile and sensitive to world events (particularly in the Middle East), making it difficult to predict future trends in gasoline let alone ethanol prices. However the US department of Energy's Annual Energy Outlook 2006 forecasts a range of $46 to $60 per …