REG - Quadrise PLC - Interim Results
29/03/2023 07:00
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RNS Number : 5434U Quadrise PLC 29 March 2023
29 March 2023
Quadrise Plc
("Quadrise" or the "Company" and together with its subsidiaries the "Group")
Interim Results
Quadrise Plc (AIM:QED), the supplier of innovative energy solutions for a
cleaner planet, announces its unaudited interim results for the six months
ended 31 December 2022 and provides an update on developments during the first
quarter of 2023.
FINANCIAL SUMMARY
· £2.6 million in cash reserves at 31 December 2022 (31 December
2021: £5.6 million).
· Loss after tax of £1.7 million (2021: £1.5 million). This
includes production and development costs of £1.0 million (2021: £0.7
million) and administration expenses of £0.6 million (2021: £0.7 million).
· Total assets of £6.4 million at 31 December 2022 (2021: £9.3
million)
BUSINESS SUMMARY
Each of the Company's key projects in the marine, upstream and industrial
sectors continue to progress with further milestones expected to be passed in
Q2 and the second half of 2023. Quadrise's strategy remains to focus on these
key projects, as detailed below, which provide the fastest and most material
pathways to commercialisation. The Company still expects to deliver commercial
revenues in the current financial year, although further funds will be
required to see every key project through to commercialisation.
MSC
· In July, Quadrise signed a Framework Agreement with MSC
Shipmanagement Limited of Cyprus ("MSC") with a view to the commercial supply
of one or both of the Company's fuels to MSC's global fleet.
· Discussions with feedstock suppliers continue, with the aim of
securing a Tripartite Agreement between the supplier, MSC and Quadrise as soon
as possible in order to commence Proof-of-Concept and Letter of No Objection
trials.
· The MSC Leandra to is scheduled to dry-dock in Q2 2023 in
readiness for testing in H2 2023.
· Testing of the optical combustion properties and engine wear of
bioMSAR™ in December was completed by Wärtsilä Services Switzerland
("Wärtsilä"). Based on this testing, Wärtsilä recommended a further hazard
identification and operability study ("HAZOP") to assess feasibility and safe
operability prior to use on a Wärtsilä 2-stroke engine.
Morocco
· Logistical challenges relating to Moroccan customs have now been
overcome with both of the Company's fuels and the trial equipment now on the
client's site.
· The Company has completed the site engineering set up and is
concluding scheduling discussions with the client linked to its site
production programme, with the trial now expected to commence in April 2023
and results being available shortly thereafter.
· The Company then expects to enter discussions to conclude a
commercial Fuel Supply Agreement as planned, in addition to concluding
agreements for testing at other client sites as required.
Utah
· Commercial discussions between Quadrise and Valkor for the supply
of a license and manufacturing unit to enable Valkor to produce MSAR(®) and
bioMSAR™ are expected to conclude shortly.
· Valkor expects drilling permits at Asphalt Ridge to be awarded in
Q2 2023, with low carbon intensity, low sulphur heavy oil to be extracted and
available for conversion to MSAR(®) and bioMSAR™ for trials during H2 2023.
· Following successful results, these trials would then be expected
to lead to commercial supply of MSAR(®) or bioMSAR™, subject to discussions
with stakeholders to finalise agreements.
Americas
· Quadrise has recently signed a Letter of Intent with a central
American power provider outlining plans for a commercial test of MSAR(®) and
bioMSAR™ at the provider's power plant. Discussions are ongoing and the
Company expects a Test Agreement to be finalised during Q2 2023 ahead of a
site trial followed by entry into a Fuel Supply Agreement upon success.
· Discussions with a large refinery in the Caribbean continue to
progress, subject to them obtaining an operating license.
· Efforts continue to progress activities in Mexico with the state
oil company and utility operators.
bioMSAR™ & Nouryon
· In September 2022, Quadrise announced the entry of a Joint
Development Agreement with Vertoro BV ("Vertoro") to investigate the use of
their crude sugar oils (CSO™) as an alternative biofuel feedstock for
bioMSAR™.
· In November 2022, Quadrise announced the extension of the
Exclusive Global Collaboration and Emulsifiers Sales Agreement with Nouryon
for the exclusive supply of goods, services, and IP for future MSAR(®) and
bioMSAR™ projects.
OUTLOOK
· Quadrise expects to complete the site trial in Morocco, conclude
a Licence Agreement with Valkor, complete a HAZOP for marine bioMSAR™ use
and progress tripartite discussions with MSC and a feedstock supplier during
Q2 2023. Conclusion of the Valkor Licence Agreement would deliver commercial
revenue in the current financial year, but further funds will be required to
see each key project to commercialisation.
· A Fuel Supply Agreement with the client in Morocco, site trials
in Utah and the commencement of commercial scale trials on board the MSC
Leandra would then follow in H2 2023.
· Favourable oil and oil product economics, together with a
regulatory environment increasingly focused on emissions reductions and
biofuels have further increased the business case for low cost, lower carbon
MSAR(®) and bioMSAR™. This, together with the continual easing of supply
chain and covid-related travel constraints should expediate upcoming trials
and commercial discussions.
Jason Miles, Chief Executive Officer of Quadrise, commented:
"The second half of 2022 and the start of this year proved to be both
rewarding and challenging. While delays, such as those experienced in Morocco,
have been frustrating, I am pleased that each of our core projects remains on
track for a positive outcome and we are developing protocols to help us
overcome some of the logistical challenges we have encountered.
The recently announced name change and positioning of Quadrise as an Energy
Decarbonisation enabler is an important statement of intent as we progress
licence agreements and commercial-scale trials, which, on successful
completion, will lead to supply contracts and commercial revenues. Our
continued development of bioMSAR™ and net-zero solutions opens up exciting
opportunities to deploy our unique proven emulsion technology platform in new
applications, securing a green future for the Company and its client base.
I look forward to being able to announce material progress across our projects
in coming months and over the course of 2023. Although we have had to overcome
a number of challenges this year, and we are not immune from global industry
headwinds, Quadrise remains well-positioned to deliver commercial success on a
number of fronts and to play a key role in decarbonising the shipping, power
and industrial sectors."
Investor Conference Call
Due to an ongoing period of significant activity for the Company's management
team, the investor conference call, usually held on the week of results, will
be held in Q2 2023, when management will be able to provide a more detailed
overview of activity to shareholders and interested parties. Details of this
conference call will be provided in due course; shareholders with questions
relating to this announcement are encouraged to send them to the Company's
investor relations email address: ir@quadrise.com (mailto:ir@quadrise.com) .
For additional information, please contact:
Quadrise Plc +44 (0)20 7031 7321
Andy Morrison, Chairman
Jason Miles, Chief Executive Officer
Nominated Adviser
Cenkos Securities plc +44 (0)20 7397 8900
Ben Jeynes
Katy Birkin
Broker
Shore Capital Stockbrokers Limited
+44 (0)20 7408 4090
Toby Gibbs, Rachel Goldstein (Corporate Advisory)
Fiona Conroy (Corporate Broking)
Public & Investor Relations
Vigo Consulting +44 (0)20 7390 0230
Patrick D'Ancona
Charlie Neish
About Quadrise
Quadrise is the supplier of MSAR(®) and bioMSAR™ emulsion technology, fuels
and biofuels, providing innovative solutions to reduce energy costs and
greenhouse gas emissions today for clients in the global power generation,
shipping, industrial and refining industries.
Learn more: www.quadrise.com (http://www.quadrise.com)
Certain of the information contained within this announcement is deemed by the
Company to constitute inside information as stipulated under The Market Abuse
Regulation (EU 596/2014) pursuant to the Market Abuse (Amendment) (EU Exit)
Regulations 2018. Upon the publication of this announcement via a Regulatory
Information Service ("RIS"), this inside information is now considered to be
in the public domain.
Chairman's Statement
Throughout 2022, the cost of energy and the transition to secure, sustainable
fuels have remained top priorities for governments, businesses and society as
a whole. During the reporting period and first months of 2023, Quadrise has
continued to position itself as a provider of decarbonisation solutions,
further highlighted by our recently announced name change and TIDM 'ticker'
update to QED to represent the Quadrise focus on Energy Decarbonisation and to
highlight the simplicity of our solutions. Despite frustrating delays in
recent months, the board remains confident in both the quality of our
solutions and the commercial opportunities they provide.
Pleasingly, during the reporting period and in subsequent months, we have seen
the gradual easing of supply chain constraints and the continued global
recovery from COVID-19, however the broader economic and political landscape
remains challenging with the conflict in Ukraine continuing to impact energy
prices and economic recovery. The conflict, combined with the related
emergence of sustained inflation and recessionary risk in major economies has,
despite underlining the need for energy solutions such as ours, prolonged the
challenging business environment in which we currently operate.
Our strategy remains to focus on key projects, such as those in Morocco, Utah
and with MSC, which represent the most efficient use of the financial
resources we currently have and should provide the fastest and most material
pathways to commercialisation. Important milestones have been reached in each
of these key projects, as detailed by Jason below, and while further funds
will be required to see every project through to commercialisation, the
Company still expects to deliver commercial revenues in the current financial
year, a critical milestone in attracting new customers, investors and
strategic partners.
We are confident that our existing projects will be seen through to success
and beyond generating commercial revenues will provide real world 'use cases'
through which prospective customers in the marine, power and industrial
sectors can understand the tangible environmental, operational and economic
benefits of our solutions. Our confidence comes not only from our own project
discussions, but also from promising dialogue with high-calibre organisations
who can see the potential of the Company's technology.
Beyond the significant environmental benefits that the Company's solutions
have the potential to create for our customers, Quadrise also seeks to measure
and improve its own environmental footprint with Quadrise releasing its maiden
sustainability report in November 2022. The report provided an overview of the
environmental and economic benefits of the Company's technology as well as its
scope 1 and 2 carbon emissions data and its alignment to the UN Sustainable
Development Goals. The report, which was developed to highlight the Company's
relevance in the broader environmental context, serves as an accessible
reference point for decision-makers in our target sectors and has been well
received in discussions with prospective and existing partners.
As a company whose purpose is to enable a more sustainable future,
understanding our own impact on the environment, formulating a roadmap to
reduce our impact, and holding ourselves to account is a responsible action.
We intend to continue reporting on our ESG performance on an annual basis.
Furthermore, it remains our intention to qualify for the LSE Green Economy
Mark, which will provide third-party validation of our ESG credentials and
increase visibility among investors and other stakeholders, including
industrial partners.
As the Company's financial circumstances permit, we intend to explore and
advance complementary technologies to reinforce the Company's reputation and
impact in the ESG space, and help to ensure that our products and services are
part of the conversation when potential clients are looking for
decarbonisation solutions. We maintain a healthy research and development
budget and it remains our intention to deliver a commercially competitive
net-zero fuel to market by 2030.
On behalf of the Board, I would like to thank our loyal shareholders for their
support and patience during a challenging period for the Company. As
shareholders would rightly expect from us, the board and management team aim
to reward our shareholders for this patience by delivering commercial revenues
and driving Quadrise on to an exciting phase of growth this year and beyond.
Financial Position
The Group held cash and cash equivalents of approximately £2.6 million as at
31 December 2022 (31 December 2021: £5.6 million), The Directors acknowledge
that this cash balance is not sufficient to cover the Group's operating
requirements through the 12-month outlook period and that further funding will
be required. In common with many development stage companies, these conditions
indicate the existence of material uncertainty regarding the Group's and
Company's ability to continue as a going concern. However, directors are
confident that additional funding can be secured based on the expected passing
of project milestones, and these accounts are, accordingly, presented on a
going concern basis.
The Group recorded a loss of £1.7 million for the six months to 31 December
2022 (2021: £1.5 million). This included production and development costs of
£1.0 million (2021: £0.7 million) and administration expenses of £0.6
million (2021: £0.7 million).
The basic and diluted loss per share was 0.12p (2021: 0.11p).
The Group's total assets amounted to £6.4 million as at 31 December 2022
(£9.3million as at 31 December 2021). In addition to the cash and cash
equivalents, this included fixed tangible assets (mainly plant and equipment)
of £0.4 million and MSAR(®) trade name of £2.9 million.
The Group has tax losses arising in the UK of approximately £60.0m (2021:
£58.4m) that are potentially available to be carried forward against future
profits.
Andy Morrison
Chairman
24 March 2023
Chief Executive's Statement
Quadrise: Energy Decarbonisation
The global energy market is under ever increasing pressure to decarbonise
whilst also offering consumers practical and cost-effective energy solutions.
Over the last year, energy prices have been a key driver of global
inflationary pressures, exacerbated by the ongoing conflict in Ukraine, whilst
greenhouse gas ('GHG') emissions must be halved by 2050 if the worst effects
of climate change are to be avoided according to the IPCC. Unique Quadrise
technology allows operators in the marine, industrial and power sectors to
decarbonise whilst also reducing their energy costs.
MSAR(®) lowers fuel consumption in diesel engines by up to 10% and reduces
GHG emissions by the same amount. GHG emissions can be reduced by over 20% by
incorporating renewable glycerine to produce low cost bioMSAR™.
The shipping industry alone produces around 2.5% of the world's total GHG
emissions. Increasing pressures led by European regulators are incentivising
marine operators to develop and trial lower-carbon and eventually net-zero
solutions. These include some more challenging long-term options such as green
hydrogen, ammonia and methanol, each of which requires significant investment
and presents considerable logistical and safety challenges. The Quadrise
solutions are available immediately as they use existing infrastructure and
can achieve both cost and GHG savings. bioMSAR™ offers lower CO(2) emissions
than both LNG and FAME marine fuel blends at a lower cost per unit of energy,
whilst also being dispersible in water, non-flammable and biodegradable.
Since the initial development of bioMSAR™ in 2021, the results of a testing
programme designed to mirror real-world applications have continually
surpassed expectations and the fuel is now ready for commercial deployment.
Diesel engine testing at Aquafuel and VTT has shown that when compared to
marine diesel fuel, use of bioMSAR™ results in:
· Improvements in diesel engine efficiency of over 3%, increased to
up to 13% by advancing injection timing with no increase in NOx emissions over
original generator settings for diesel fuel;
· A 26% average reduction in equivalent CO(2) emissions over diesel
fuel on a well-to-wake basis; and
· NOx reductions of over 20%, an important regulatory feature in
the marine sector.
The December 2022 optical combustion test demonstrated that bioMSAR™
combustion was similar to MSAR®. The extended fuel injection test of
bioMSAR™ evaluated wear and fatigue of components in contact with the fuel
over a prolonged time (over 250 hours). The results, learnings and
recommendations from these tests are all important steps in preparing
bioMSAR™ for commercial use. The HAZOP recommended by Wärtsilä for
bioMSAR™ is expected to be carried out in Q2 2023.
In December 2022, Quadrise received and successfully commissioned our
prototype 5 tonne per hour emulsion system that will be used for production of
MSAR(®) and bioMSAR™ fuels for site trials and potential blend-on-board
testing on marine vessels.
Despite the immediate and cost-effective carbon reductions that bioMSAR™ can
offer we recognise that the requirement for net-zero carbon fuel solutions is
becoming increasingly urgent. Our RDI strategy is now focused on the delivery
of a commercially viable net-zero 'bioMSAR Zero' solution by 2030. As part of
this exercise, we continue to work with Vertoro and other strategic partners
to investigate the use of crude sugar oils (CSO™) and associated waste
biofuel products as an alternative water-based, lower cost, and abundant
biofuel feedstock for bioMSAR™. This work has now successfully progressed to
diesel engine testing at Aquafuel, with results expected early in Q2 2023.
Key project delivery
Each of our key projects in the marine, upstream and industrial sectors is now
nearing a major milestone, and our focus is on the completion of the trials
and agreements that will demonstrate MSAR(®) and bioMSAR™ technology at
commercial scale during 2023.
MSC - The preparatory work to enable the Letter Of No Objection ("LONO") fuel
trials of both bioMSAR™ and MSAR(®) on board the MSC Leandra is ongoing.
Quadrise is in discussions with potential feedstock suppliers, with the
intention to conclude Tripartite Agreements with a fuel supplier and MSC as
soon as possible in order to commence commercial-scale Proof-of-Concept and
4000-hour LONO trials in H2 2023. The trials themselves are expected to take
nine months to conclude.
The MSC Leandra is scheduled for dry-dock during April-May 2023, during which
time it will be inspected and installed with equipment designed to reduce
emissions and improve vessel efficiency. The vessel, formerly the Seago
Istanbul, was previously used to conduct a successful MSAR(®) trial. The
emulsion fuel booster unit already on board has been inspected and will be
upgraded and tested in readiness for use, so the vessel preparation required
for the trial is minimal.
Utah - Following the signature of the Commercial Development Agreement with
Valkor Technologies LLC ("Valkor") in April 2022, discussions are continuing
with regard to the supply of a license and manufacturing unit to enable Valkor
to produce MSAR(®) and bioMSAR™ from oil produced at their oil-sand deposit
sites at Asphalt Ridge in Utah. These discussions are expected to conclude
shortly. The oil sands reserves at Asphalt Ridge comprise billions of barrels,
with Valkor having interests in multiple projects at this location. Oil
samples supplied by Valkor were successfully converted to both MSAR(®) and
bioMSAR™ by our RDI team at QRF in 2022.
Valkor is leading activities for the award of drilling permits at Asphalt
Ridge, following successful exploration drilling in 2022. Valkor expects the
permits to be awarded in Q2 2023, with drilling to commence as soon as
weather-permits, with produced heavy oil available for conversion to
bioMSAR™ and MSAR(®) for client trials during H2 2023.
These trials would then be expected to lead to commercial supply, subject to
discussions with stakeholders to finalise agreements. Through the application
of CO(2) sequestration and proprietary new enhanced oil recovery technology in
Utah, the extracted heavy oil is anticipated to have a lower carbon intensity
than conventional oils. In addition, the very low sulphur content and
properties of this heavy oil allows it to comply with the International
Maritime Organisation's regulations on marine fuel once converted to MSAR(®)
or bioMSAR™, without the need for carbon-intensive oil refining. This heavy
oil would therefore be a low carbon, low sulphur MSAR(®) or bioMSAR™ option
for potential use in the industrial, power and marine sectors.
The Inflation Reduction Act, signed into law on 16 August 2022, is directing
significant federal spending toward reducing carbon emissions, and is
accelerating the implementation of low-carbon and renewable projects such as
this in the United States.
Morocco - The initial MSAR(®) trial at the client's 'Site-B' has been subject
to delays, primarily due to the process of clearing a new fuel through
Moroccan customs. This process was finally completed in late February. 60mt of
MSAR(®) and 10mt of bioMSAR™, together with the trial equipment are now all
at Site B. Quadrise has now completed the site engineering set up and is
concluding scheduling discussions with the client linked to its site
production programme. The trial is expected to commence in April 2023, with
the results available soon thereafter. Following a successful trial, Quadrise
expects to enter discussions to conclude a commercial fuel supply agreement in
Q2 2023 as planned, in addition to concluding agreements for testing at other
client sites as required.
Americas - Quadrise has recently signed a Letter of Intent with a central
American power provider outlining our mutual intent for a commercial test of
MSAR(®) and bioMSAR™ at the provider's power plant, with conclusion of a
Test Agreement and site trial being the precursors for entry into a Fuel
Supply Agreement. Discussions are ongoing and we expect agreements to be
finalised during Q2 2023. Together with our local agents, we continue to
explore other opportunities in the region. Discussions with a large refinery
in the Caribbean continue to progress subject to them obtaining an operating
license. Efforts continue to progress activities in Mexico with the state
oil company and utility operators.
Outlook
The invasion of Ukraine in February 2022 and the resulting sanctions on
Russian oil exports initially led to a significant elevation in global energy
prices. Over the last 12 months however, the price of crude oil has declined
by over 30%, with the prices of oil products such as fuel oil and marine
diesel decreasing by similar amounts The price spread between fuel oil and
diesel, which drives the cost of refinery residuals and the economic case for
MSAR(®) production has only declined by 11% due to strong demand for diesel,
with current spreads continuing to provide healthy margins for production of
both MSAR(®) and bioMSAR™ in target refineries. The prices of renewable
biofuels including FAME and glycerine by-products reached record prices in the
summer, however they have since reduced dramatically which has increased
interest and demand in the marine sector for biofuels, including bioMSAR™.
Whilst the higher prices of biofuels resulted in limited demand in the marine
sector over the year, the introduction and implementation of environmental
regulations, particularly in Europe, is expected to increase biofuel use in
all sectors commencing this year. Shipping is now included in the EU ETS and
Fit-for-55 regulations, that are expected to increase the use of marine
biofuels from 2024 for most vessels operating within or near EU waters.
Revenues raised via the ETS are to be reinvested into an Innovation Fund
reserved for sustainable shipping, the protection of maritime habitats and for
funding programmes to decarbonise the maritime sector. Additionally, subsidies
are still available for renewable waste-based biofuel feedstocks such as
glycerine that should enhance the attractiveness of bioMSAR™ against
competing biofuels in certain bunker locations. Market conditions and trends
therefore provide a favourable environment for Quadrise as we progress our
contract discussions and business development activities on all fronts.
The positioning of Quadrise as an Energy Decarbonisation enabler is an
important statement of intent as we progress licence agreements and
commercial-scale trials during 2023 which, on successful completion, will lead
to supply contracts and commercial revenues from MSAR(®) and bioMSAR™
sales. Looking ahead, our continued development of bioMSAR™ and net-zero
solutions opens up exciting opportunities to deploy our unique proven emulsion
technology platform in new applications, securing a green future for the
company and its client base.
I look forward to being able to announce material progress across our projects
in coming months and over the course of 2023. although we have had to overcome
a number of challenges this year, and we are not immune from global industry
headwinds, Quadrise remains well-positioned to deliver commercial success on a
number of fronts and play a key role in decarbonising the shipping, power and
industrial sectors.
Jason Miles
Chief Executive Officer
24 March 2023
Consolidated Statement of Comprehensive Income
For the 6 months ended 31 December 2022
Note 6 months ended 31 December 2022 6 months ended 31 December 2021 Year ended
Unaudited Unaudited 30 June
£'000 £'000 2022
Audited
£'000
Continuing operations
Revenue - 75 75
Other Income 27 - -
Production and development costs (1,049) (686) (1,447)
Other administration expenses (649) (743) (1,419)
Share option (charge)/credit 3 (77) (165) 44
Warrant charge - - (18)
Foreign exchange (loss)/gain (4) 1 5
Operating loss (1,752) (1,518) (2,760)
Finance costs (1) (1) (3)
Finance income 4 - 1
Loss before tax (1,749) (1,519) (2,762)
Taxation - - 164
Total comprehensive loss for the period from continuing operations (1,749) (1,519) (2,598)
Loss per share - pence
Basic 4 (0.12)p (0.11)p (0.18)p
Diluted 4 (0.12)p (0.11)p (0.18)p
Consolidated Statement of Financial
Position
As at 31 December
2022
Note As at As at As at
31 December 2022 31 December 2021 30 June
Unaudited Unaudited 2022
£'000 £'000 Audited
£'000
Assets
Non-current assets
Property, plant and equipment 5 418 417 398
Intangible assets 6 2,924 2,924 2,924
Non-current assets 3,342 3,341 3,322
Current assets
Cash and cash equivalents 2,645 5,590 4,423
Trade and other receivables 100 132 103
Prepayments 148 168 177
Stock 126 61 -
Current assets 3,019 5,951 4,703
TOTAL ASSETS 6,361 9,292 8,025
Equity and liabilities
Current liabilities
Trade and other payables 270 259 262
Current liabilities 270 259 262
Equity attributable to equity holders of the parent
Issued share capital 14,069 14,069 14,069
Share premium 77,189 77,189 77,189
Merger reserve 3,777 3,777 3,777
Share option reserve 840 3,229 1,151
Warrant reserve 18 1,017 970
Reverse acquisition reserve 522 522 522
Accumulated losses (90,324) (90,770) (89,915)
Total shareholders' equity 6,091 9,033 7,763
TOTAL EQUITY AND LIABILITIES 6,361 9,292 8,025
Consolidated Statement of Changes in Equity
For the 6 months ended 31 December 2022
Issued share capital Share premium £'000 Merger reserve Share option reserve Warrant reserve £'000 Reverse acquisition reserve £'000 Accumulated
losses
£'000 £'000 £'000
Total
£'000
£'000
As at 1 July 2022 14,069 77,189 3,777 1,151 970 522 (89,915) 7,763
Loss and total comprehensive loss for the period - - - - - - (1,749) (1,749)
Share option charge - - - 77 - - - 77
Transfer of balances relating to expired share options - - - (388) - - 388 -
Transfer of balances relating to expired warrants - (952) - 952 -
Shareholders' equity at 31 December 2022 - unaudited 14,069 77,189 3,777 840 18 522 (90,324) 6,091
As at 1 July 2021 14,069 77,189 3,777 3,344 1,017 522 (89,531) 10,387
Loss and total comprehensive loss for the period - - - - - - (1,519) (1,519)
Share option charge - - - 165 - - - 165
Transfer of balances relating to expired share options - - - (280) - - 280 -
Shareholders' equity at 31 December 2021 - unaudited 14,069 77,189 3,777 3,229 1,017 522 (90,770) 9,033
As at 1 January 2022 14,069 77,189 3,777 3,229 1,017 522 (90,770) 9,033
Loss and total comprehensive loss for the period - - - - - - (1,079) (1,079)
Share option charge - - - (209) - - - (209)
Warrant charge - - - - 18 - - 18
Transfer of balances relating to expired share options - - - (1,869) - - 1,869 -
Transfer of balances relating to expired warrants - - - - (65) - 65 -
Shareholders' equity at 30 June 2022 - audited 14,069 77,189 3,777 1,151 970 522 (89,915) 7,763
Consolidated Statement of Cash Flows
For the 6 months ended 31 December 2022
Note 6 months ended 31 December 2022 6 months ended 31 December 2021 Year ended
Unaudited Unaudited 30 June
£'000 £'000 2022
Audited
£'000
Operating activities
Loss before tax from continuing operations (1,749) (1,519) (2,762)
Finance costs paid 1 1 3
Finance income received (4) - (1)
Depreciation 5 57 61 120
Share option charge 3 77 165 (44)
Warrant charge - - 18
Working capital adjustments
Decrease/(increase) in trade and other receivables 3 (15) 14
Decrease/(increase) in prepayments 29 (73) (82)
(Increase)/decrease in stock (126) - 61
Increase/(decrease) in trade and other payables 8 (17) (14)
Cash utilised in operations (1,704) (1,397) (2,687)
Finance costs paid (1) (1) (3)
Taxation received - - 164
Net cash outflow from operating activities (1,705) (1,398) (2,526)
Investing activities
Finance income received 4 - 1
Purchase of fixed assets 5 (77) (18) (58)
Net cash outflow from investing activities (73) (18) (57)
Financing activities
Issue of ordinary share capital - - -
Issue costs - - -
Net cash inflow from financing activities - - -
Net decrease in cash and cash equivalents (1,778) (1,416) (2,583)
Cash and cash equivalents at the beginning of the period 4,423 7,006 7,006
Cash and cash equivalents at the end of the period 2,645 5,590 4,423
Notes to the Group Financial Statements
1. General Information
Quadrise ("QED", "Quadrise", or the "Company") and its subsidiaries (together
with the Company, the "Group") are engaged principally to develop markets for
its proprietary emulsion fuels, MSAR(®) and bioMSAR™ as low-cost, more
environmentally friendly substitutes for conventional heavy fuel oil for use
in power generation plants, industrial and upstream oil applications, and
marine diesel engines. The Company's ordinary shares are quoted on the AIM
market of the London Stock Exchange.
QED was incorporated on 22 October 2004 as a limited company under UK Company
Law with registered number 05267512. It is domiciled and registered at
Eastcastle House, 27-28 Eastcastle Street, London, W1W 8DH.
Risks and uncertainties
The Board continuously assesses and monitors the key risks of the business.
The key risks that could affect the Company's medium term performance and the
factors that mitigate those risks have not substantially changed from those
set out in the Group's 30 June 2022 Annual Report and Financial Statements, a
copy of which is available on the Company's website: www.quadrise.com
(http://www.quadrise.com) .
Critical accounting estimates
The preparation of interim accounts requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
end of the reporting period. Significant items subject to such estimates are
set out in Note 2.4 of the Group's 30 June 2022 Annual Report and Financial
Statements. The nature and amounts of such estimates have not changed
significantly during the interim period.
2. Summary of Significant Accounting Policies
2.1 Basis of Preparation
The financial information contained in this results announcement has been
prepared on the basis of the accounting policies set out in the statutory
financial statements for the year ended 30 June 2022. Whilst the financial
information included in this announcement has been prepared in accordance with
the recognition and measurement requirements of UK-adopted international
accounting standards and the requirements of the Companies Act 2006, this
announcement does not itself contain sufficient disclosures to comply with
IFRS. The financial information does not constitute the Group's statutory
financial statements for the years ended 30 June 2022 or 30 June 2021, but is
derived from those financial statements. Financial statements for the year
ended 30 June 2022 have been delivered to the Registrar of Companies and those
for the year ended 30 June 2022 will be delivered following the Company's
Annual General Meeting. The auditors' report on both the 30 June 2022 and 30
June 2021 financial statements were unqualified and did not contain statements
under section 498 (2) or (3) of the Companies Act 2006. The auditors' report
on the 30 June 2022 financial statements did draw attention to the material
uncertainty related to going concern while the auditors' report on the 30 June
2021 financial statements did not.
2.2 Going Concern
The Group had a cash balance of £2.6m as at 31 December 2022. The Directors
acknowledge that this cash balance is only sufficient to cover the Group's
operating requirements up to early Q4 calendar 2023. These conditions indicate
the existence of material uncertainty regarding the Group's and Company's
ability to continue as a going concern.
The Directors have determined that the continuation of the Group as a going
concern is dependent upon successfully raising sufficient funds in the short
term, and that they have a reasonable expectation that such funds will be
raised, although no binding funding agreements are in place at the date of
this report. The Directors therefore have determined that it is appropriate to
prepare the financial statements on a going concern basis.
These unaudited interim accounts have been prepared in accordance with AIM
Rules. In preparing this report, the group has adopted the guidance in the AIM
Rules for interim accounts which do not require that the interim condensed
group financial statements are prepared in accordance with IAS 34 "Interim
financial reporting".
The interim accounts for the six months ended 31 December 2022 were approved
by the Board on 24 March 2023.
The directors do not propose an interim dividend.
3. Share Option charge
On 3 August 2022 the Company granted a total of 21.5m share options to
Directors with a weighted average exercise price of 3.0p and a weighted
average fair value of 0.9p. The options were granted in accordance with the
provisions of the Company's Unapproved Option Scheme 2016 ("2016 Scheme").
Director Number of Options Exercise price
Jason Miles 7,500,000 3p
Andy Morrison 4,000,000 3p
Laurie Mutch 4,000,000 3p
Philip Snaith 4,000,000 3p
Dilip Shah 2,000,000 3p
Total 21,500,000
The options will vest on the basis of 50% on the first anniversary of grant
date and 50% on the second anniversary of the grant date. The options awarded
to Jason Miles are subject to the satisfaction of certain performance
conditions prior to the vesting date and will only vest if these conditions
have been met. The Options will be exercisable from vesting until the eighth
anniversary of grant.
The Share Option Schemes are equity settled plans, and fair value is measured
at the grant date of the option. Options issued under the Schemes vest over a
one-to-three-year period provided the recipient remains an employee of the
Group. Options also may be exercised within one year of an employee leaving
the Group at the discretion of the Board.
The share option charge for the period was £77k (2022: £165k).
4. Loss Per Share
The calculation of loss per share is based on the following loss and number of
shares:
6 months ended 31 December 2022 6 months ended Year ended
Unaudited 31 December 30 June
2021 2022
Unaudited Audited
Loss for the period from continuing operations (£'000s) (1,749) (1,519) (2,598)
Weighted average number of shares:
Basic 1,406,904,968 1,406,903,048 1,406,904,000
Diluted 1,406,904,968 1,406,903.048 1,406,904,000
Loss per share:
Basic (0.12)p (0.11)p (0.18)p
Diluted (0.12)p (0.11)p (0.18)p
Basic loss per share is calculated by dividing the loss for the period from
continuing operations of the Group by the weighted average number of ordinary
shares in issue during the period.
For diluted loss per share, the weighted average number of ordinary shares in
issue is adjusted to assume conversion of all potential dilutive options and
warrants over ordinary shares. Potential ordinary shares resulting from the
exercise of share options and warrants have an anti-dilutive effect due to the
Group being in a loss position. As a result, diluted loss per share is
disclosed as the same value as basic loss per share.
The 16.6 million exercisable share options and 3.0 million exercisable
warrants issued by the Company and which are outstanding at the period-end
could potentially dilute earnings per share in the future if exercised when
the Group is in a profit-making position.
5. Property, Plant and Equipment
Leasehold improvements Computer equipment Software Office equipment Plant and machinery Total
£'000 £'000 £'000 £'000 £'000 £'000
Cost
Opening balance - 1 July 2022 89 94 43 16 1,440 1,682
Additions - - - - 77 77
Closing balance - 31 December 2022 89 94 43 16 1,517 1,759
Depreciation
Opening balance - 1 July 2022 (76) (90) (43) (16) (1,059) (1,284)
Depreciation charge for the period (1) (1) - - (55) (57)
Closing balance - 31 December 2022 (77) (91) (43) (16) (1,114) (1,341)
Net book value at 31 December 2022 - unaudited 12 3 - - 403 418
Cost
Opening balance - 1 July 2021 74 98 43 16 1,397 1,628
Additions 5 1 - - 12 18
Closing balance - 31 December 2021 79 99 43 16 1,409 1,646
Depreciation
Opening balance - 1 July 2021 (74) (92) (43) (16) (943) (1,168)
Depreciation charge for the period - (1) - - (60) (61)
Closing balance - 31 December 2021 (74) (93) (43) (16) (1,003) (1,229)
Net book value at 31 December 2021 - unaudited 5 6 - - 406 417
Cost
Opening balance - 1 July 2021 74 98 43 16 1,397 1,628
Additions 15 - - - 43 58
Disposals - (4) - - - (4)
Closing balance - 30 June 2022 89 94 43 16 1,440 1,682
Depreciation
Opening balance - 1 July 2021 (74) (92) (43) (16) (943) (1,168)
Depreciation charge for the year (2) (2) - - (116) (120)
Disposals - 4 - - - 4
Closing balance - 30 June 2022 (76) (90) (43) (16) (1,059) (1,284)
Net book value at 30 June 2022 - audited 13 4 - - 381 398
6. Intangible Assets
QCC royalty payments MSAR(®) trade name Technology and know-how
Total
£'000 £'000 £'000 £'000
Cost
Balance as at 1 July 2022 and 31 December 2022 7,686 3,100 25,901 36,687
Amortisation and Impairment
Balance as at 1 July 2022 and 31 December 2022 (7,686) (176) (25,901) (33,763)
Net book value at 31 December 2022 - unaudited - 2,924 - 2,924
Cost
Balance as at 1 July 2021 and 31 December 2021 7,686 3,100 25,901 36,687
Amortisation and Impairment
Balance as at 1 July 2021 and 31 December 2021 (7,686) (176) (25,901) (33,763)
Net book value at 31 December 2021 - unaudited - 2,924 - 2,924
Cost
Balance at 1 July 2021 and 30 June 2022 7,686 3,100 25,901 36,687
- - - -
Amortisation and Impairment
Balance at 1 July 2021 and 30 June 2022 (7,686) (176) (25,901) (33,763)
Net book value at 30 June 2022 - audited - 2,924 - 2,924
Intangibles comprise intellectual property with a cost of £36.69m, including
assets of finite and indefinite life. QCC royalty payments of £7.69m and the
MSAR(®) trade name of £3.10m are termed as assets having indefinite life as
it is assessed that there is no foreseeable limit to the period over which the
assets are expected to generate net cash inflows for the Group. The assets
with indefinite life are not amortised. The remaining intangibles amounting to
£25.90m, primarily made up of technology and know-how, are considered as
finite assets and are now fully amortised. The Group does not have any
internally generated intangibles.
The Group tests intangible assets annually for impairment, or more frequently
if there are indications that they might be impaired. As at 30 June 2022, the
QCC royalty payments asset and the technology and know-how asset were fully
impaired and the MSAR(®) trade name asset had a net book value of £2.924m.
For the six-month period to 31 December 2022, there was no indication that the
MSAR(®) trade name asset may be impaired.
As a result, the Directors concluded that no impairment is necessary for the
six-month period to 31 December 2022.
7. Related Party Transactions
Non-executive Director Laurie Mutch is also a Director of Laurie Mutch &
Associates Limited, which has provided consulting services to the Group. The
total fees charged for the period amounted to £nil (31 December 2021: £5k).
The balance payable at the statement of financial position date was £nil (31
December 2021: £5k).
QED defines key management personnel as the Directors of the Company. Other
than the above, and the issuance of share options to Directors (note 3) there
are no transactions with Directors other than their remuneration.
8. Events After the End of the Reporting Period
On 27 January 2023 the Company granted a total of 14,733,038 share options to
directors and employees of the Company granted in accordance with the
provisions of Company's Enterprise Management Incentive Plan ("The Plan").
3,551,122 of the options were granted to Chief Executive Officer Jason Miles
with an exercise price of 7.5p and fair value of 0.2p. The options replace the
same number of options granted under the Plan on 27 June 2019 that have since
been cancelled by the Company. The options will vest on 27 April 2023 and are
exercisable from vesting until 27 June 2029.
11,181,916 of the options were granted to employees of the Company with a
weighted average exercise price of 1.9p and a weighted average fair value of
0.7p. 5,531,916 of these options vest on 3 August 2023 and 4,450,000 vest 50%
on 3 August 2023 and 50% on 3 August 2024 subject to performance conditions
having been met. The options are exercisable from vesting until 27 January
2033.
The Share Option Schemes are equity settled plans, and fair value is measured
at the grant date of the option. Options issued under the Schemes vest over a
one-to-three-year period provided the recipient remains an employee of the
Group, unless otherwise determined by the Board. Options may be also exercised
within one year of an employee leaving the Group at the discretion of the
Board.
On 28 March 2023, the Company's name was changed from Quadrise Fuels
International plc to Quadrise plc, and the Company's TIDM from 'QFI' to 'QED'.
9. Copies of the Interim Accounts
Copies of the interim accounts are available on the Company's website at
www.quadrise.com.
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