REG - Quadrise PLC - Interim Results
18/03/2024 17:00
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RNS Number : 2982H Quadrise PLC 18 March 2024
18 March 2024
Quadrise Plc
("Quadrise" or the "Company")
Interim Results
Quadrise Plc (AIM: QED), the supplier of fuel decarbonisation technology for
shipping and industrial applications, announces its unaudited interim results
for the six months ended 31 December 2023 and provides an update on
developments during the first quarter of 2024.
FINANCIAL SUMMARY
· £1.7 million in cash reserves at 31 December 2023 (31 December 2022:
£2.6 million).
· Loss after tax of £1.7 million (2022: £1.7 million). This includes
production and development costs of £0.9 million (2022: £1.0 million) and
administration expenses of £0.7 million (2022: £0.6 million).
· Total assets of £5.2 million at 31 December 2023 (2022: £6.4
million).
· Each of the Company's 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.
BUSINESS SUMMARY
The Company's strategy is to generate demand amongst the shipping industry and
other sectors and to stimulate supply of its fuels around global marine
bunkering hubs. During the period, progress has been made in each of the
Company's projects, which are designed to fulfil this strategy. The Company's
focus remains on the completion of the trials and agreements that will
demonstrate MSAR(®) and bioMSAR™ technology at commercial scale and further
milestones are expected to be passed during 2024 as detailed below.
Decarbonisation of shipping: MSC
· In February 2024, Quadrise signed a Collaboration Agreement with
Cargill and MAC2 in respect of the production of MSAR(®) and bioMSAR™ fuels
for the Company's forthcoming vessel trials on board the MSC Leandra.
· Once further binding trial agreements between Quadrise, MSC and
Cargill have been executed, Quadrise expects to install and commission an
MSAR(®) Manufacturing Unit ("MMU") and associated equipment at the MAC(2)
terminal in Antwerp, Belgium in Q2 2024 in readiness for bunker fuel supply
upon the receipt of permits by MAC(2).
· The operational trial is expected to commence mid-2024. It will
comprise an initial 1-2 month Proof of Concept ("POC") period using MSAR(®)
and then bioMSAR™ for performance baseline tests, followed by 4,000 hours of
operation (approximately 6-8 months) on bioMSAR™ in order to obtain a Letter
of No Objection ("LONO") from the engine manufacturer, Wärtsilä.
bioMSAR™ and bioMSAR™ Zero
· During the period, the Company investigated alternative feedstocks to
glycerine for bioMSAR™, with positive results arising from bioMSAR™ blends
containing Vertoro BV's ("Vertoro") Crude Sugar Oil ("CSO™") and blends
containing waste-based methyl esters. Both biofuels demonstrated significant
reductions in carbon dioxide ("CO(2)") and other emissions when compared with
diesel, and provide feedstock options to accelerate the development of
bioMSAR™ Zero.
· In February 2024, Quadrise signed a Project Development Agreement
with BTG Bioliquids BV and Euthenia Energy Group Limited under which a
programme of lab and pilot testing of bioMSAR™ incorporating fast pyrolysis
bio-oils and sugars, followed by diesel engine testing, is planned leading to
a third-party commercial marine vessel trial.
Projects supporting supply and demand around major ports:
· Morocco: In November 2023, Quadrise successfully completed an
industrial demonstration test of trial quantities of MSAR(®) and bioMSAR™
at the 'Site-B' facility of its client in Morocco. This was the first
demonstration of bioMSAR™ in an industrial application. The parties are now
negotiating a long-term commercial supply with a view to signing an agreement
by mid-2024. In parallel, Quadrise completed a technical and economic
feasibility study for an additional paid-for industrial demonstration test at
a second site of the same client ("Site A") as part of efforts to expand
commercial applications for MSAR(®) and bioMSAR™ fuels.
· Utah: Valkor expect to finalise project finance activities in H1
2024, following which the Company will be paid a US$1.0 million licence fee
and a further US$0.5 million upon delivery of a Quadrise MMU to the Valkor
project site. Following installation of the MMU, low carbon intensity, low
sulphur heavy oil will be extracted and available for conversion to MSAR(®)
and bioMSAR™ for end user trials during H2 2024 under a technology transfer
agreement. Based on successful results, these trials will then be expected to
lead to commercial supply.
· Central America: Quadrise now expects agreements with Sparkle Power
covering a commercial test of MSAR(®) and bioMSAR™ at their oil-fired power
plant to be finalised during H1 2024, allowing testing of MSAR(®) and
bioMSAR™ in H2 2024 and for other opportunities to be explored in Panama.
· South East Asia: Discussions are ongoing with a refinery operator in
South-East Asia who is interested in using MSAR(®) technology and fuel for
internal thermal applications. The refinery is well placed for bulk oil
storage and bunkering opportunities near Singapore.
OUTLOOK
The energy sector is experiencing significant shifts, with energy security,
climate change, and fuel costs taking centre stage. Quadrise remains dedicated
to its mission to decarbonise energy use and appreciates the ongoing support
of our shareholders in seeking to shape a cleaner future.
In H1 2024, Quadrise expects to complete binding agreements for the MSC vessel
trials, commence installation of our marine fuel production equipment at the
MAC2 facility, finalise commercial agreements with the client in Morocco, and
receive the US$1.0 million licence fee from Valkor following completion of
their project financing. Commercial scale trials on board the MSC Leandra,
finalisation of supply agreements for Morocco and site trials in Utah are
projected to follow in H2 2024.
With favourable economics for oil and biofuel products, coupled with a
regulatory and end-user environment increasingly focused on emission reduction
and decarbonisation, the Board strongly believes that the fundamental business
case for low-cost, low-carbon MSAR(®) and bioMSAR™ continues to improve
for the Company.
Jason Miles, Chief Executive Officer of Quadrise, commented:
"The period began with the raising of £1.94m of additional funding through a
placing and open offer that was completed in July 2023. With these funds, we
were able to make good progress on our projects with MSC and in Morocco and
with our further development of low-cost biofuels that promise an affordable
lower carbon footprint for shipping customers.
Under the EU Emissions Trading Scheme, international shipping companies are
for the first time in 2024 seeing a cash cost for carbon emissions in European
waters. We were delighted to announce a world class collaboration with Cargill
recently and we are now preparing to undertake the long-awaited operational
trials with MSC at the MAC2 terminal, and to prepare for scale up to capture
the huge opportunities in front of us.
Not everything went our way, of course. The drought conditions in Panama
delayed our efforts there and our partners in Utah were unable to secure
project funding as quickly as they had hoped. We nevertheless believe these
are prizes worth going for, particularly in Utah bearing in mind the
incentives available under the US Inflation Reduction Act.
Quadrise remains dedicated to its mission to decarbonise energy use and looks
forward to providing further project updates in the coming months. We
appreciate the ongoing support of our shareholders in seeking to shape a
cleaner future."
For additional information, please contact:
Quadrise Plc +44 (0)20 7031 7321
Andy Morrison, Chairman
Jason Miles, Chief Executive Officer
Nominated Adviser
Cavendish Capital Markets Limited +44 (0)20 7220 0500
Ben Jeynes
Katy Birkin
Joint Brokers
Shore Capital Stockbrokers Limited
+44 (0)20 7408 4090
Toby Gibbs, Rachel Goldstein (Corporate Advisory)
Fiona Conroy (Corporate Broking)
( ) ( ) ( )
VSA Capital Limited +44 (0)20 3005 5000
Andrew Raca (Corporate Finance)
Andrew Monk (Corporate Broking)
Public & Investor Relations
Vigo Consulting +44 (0)20 7390 0230
Patrick D'Ancona
Finlay Thomson
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 shipping, power
generation, industrial and refining industries. Learn more
at: www.quadrise.com
(https://url.avanan.click/v2/___http:/www.quadrise.com/___.YXAxZTpzaG9yZWNhcDphOm86MWM2MDhhYWQ3NTcyYWZkYjk2MDUwZGIzNGIwNDA4OTg6NjoxMzI3Ojc3NzdhZGNiZmZkZTYxNTMwNmNiMWNhMjM4MDJhZWI2YTFhNjdiZGRhY2Q1NzliMjI1NzViOTkyMDdhMmRkN2Y6cDpU)
This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic
law by virtue of the European Union (Withdrawal) Act 2018 ("MAR") and is
disclosed in accordance with the Company's obligations under Article 17 of
MAR.
Chairman's Statement
At the recent COP 28 climate conference in Dubai, representatives from nearly
200 countries reached a historic agreement to "transition away from fossil
fuels". This agreement adds to the momentum already underway in global energy
markets, as policy makers, companies and investors worldwide work to
accelerate the adoption of decarbonisation technologies to avert the worst
impacts of climate change and achieve net zero by 2050. The shipping industry,
in particular, has seen significant progress as ship owners, cargo owners and
governments collaborate to reduce emissions from international traded goods.
Quadrise has positioned itself as a provider of lower cost decarbonisation
solutions for the shipping industry and other consumers of heavy fuel oil. Our
strategy is to generate demand primarily amongst the shipping industry and to
stimulate supply of our fuels around global marine bunkering hubs, with our
key projects with MSC Shipmanagement Limited ("MSC"), Valkor Technologies LLC
("Valkor") and our client in Morocco designed to fulfil this strategy. Our
focus remains on the completion of the trials and agreements that will
demonstrate MSAR(®) and bioMSAR™ technology at commercial scale, as this
provides the fastest and most material pathway to commercialisation whilst
also representing the most efficient use of our financial resources.
Important milestones have been reached in each of our key projects, with an
agreement recently signed with Cargill NV ("Cargill") and MAC(2) Solutions NV
("MAC(2)") with regard to the production of fuel for the MSC trials,
successful completion of the trial in Morocco with further agreements expected
to follow, and the Company expecting commercial licence revenues in 2024 from
Valkor following the approval of drilling permits and expected financing for
their projects.
In March 2023, the Company changed its name to Quadrise Plc and its trading
ticker (TIDM) to 'QED'. The renaming of the Company was part of an initiative
to emphasise the Company's position in the energy decarbonisation space
amongst customers and investors and to acknowledge the material contribution
that the Company's technology solutions can make to reducing carbon intensity
in marine, power and industrial applications. The move sets the tone for the
direction of the Company as it continues to implement its strategy towards
net-zero energy solutions and carbon mitigations.
The Company launched its second Sustainability Report in November 2023. This
report is designed to place Quadrise in the broader environmental context and
serve as an accessible reference point for decision-makers in the marine,
energy and industrial sectors looking to decarbonise their businesses rapidly,
practically and economically, as well as providing important information on
the Company's positioning for investors. The report includes an overview of
the environmental and economic benefits of the Company's technology as well as
its scope 1 and 2 carbon emissions, alignment to the UN Sustainability Goals
and ambitions to create a net-zero fuel before 2030.
Subject to the Company's financial circumstances permitting, we intend to
explore and advance complementary technologies to strengthen our
decarbonisation proposition to customers, increase the Company's impact on
sustainability, and help to ensure that our products and services are high on
the consideration set when potential clients are looking for solutions to
reduce emissions. We maintain a focused research and development programme and
are progressing well against our goal to deliver a commercially competitive
net-zero fuel to market before 2030.
On behalf of the Board, I would like to thank our loyal shareholders for their
continued support and patience during a challenging period for the Company. As
shareholders would rightly expect, 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 in 2024 and beyond.
Financial Position
The Group held cash and cash equivalents of approximately £1.7 million as at
31 December 2023 (31 December 2022: £2.6 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. 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
2023 (2022: £1.7 million). This included production and development costs of
£0.9 million (2022: £1.0 million) and administration expenses of £0.7
million (2022: £0.6 million).
The basic and diluted loss per share was 0.11p (2022: 0.12p).
The Group's total assets amounted to £5.2 million at 31 December 2023 (£6.4
million at 31 December 2022). In addition to the cash and cash equivalents,
this included fixed tangible assets (mainly plant and equipment) of £0.3
million and MSAR(®) trade name of £2.9 million.
The Group has tax losses arising in the UK of approximately £62.0 million
(2022: £60.0 million) that are potentially available to be carried forward
against future profits.
Andy Morrison
Chairman
18 March 2024
Chief Executive's Statement
The recent COP 28 agreement to "transition away from fossil fuels" represents
the latest landmark in global efforts to reduce carbon emissions and mitigate
the most severe consequences of climate change. Major energy consumers are
seeking new technologies to reduce both their carbon emissions and their
energy costs, which have risen significantly as a result of instability in the
Middle East, the ongoing Ukraine conflict and Russian sanctions.
The shipping industry carries 90% of the world's traded goods and accounts for
approximately 3% of greenhouse gas ("GHG") emissions. According to the
International Energy Agency (IEA), the proportion of low-carbon fuels in the
shipping industry must grow from under 1% to more than 13% by 2030 to meet
regulations. Marine operators are incentivised to develop, trial and adopt
biofuels, lower-carbon fuels and, eventually, net-zero solutions. However,
some of the longer-term options like green hydrogen, ammonia and methanol
require significant investment and present considerable logistical and safety
challenges.
Our patented Quadrise technology offers solutions that are not constrained by
these challenges. They are available immediately, use existing
infrastructure and reduce both cost and GHG emissions. MSAR(®) reduces GHG
emissions and fuel consumption in diesel engines by up to 10%. bioMSAR™
reduces GHG emissions by over 20% and outperforms LNG and biodiesel marine
fuel blends in terms of lower CO(2) emissions per unit of energy. Other
bioMSAR™ benefits include its water dispersibility, improved safety, and
biodegradability. In summary, our technology delivers immediate benefits as we
transition towards net-zero fuel solutions, which may become mandatory as
early as 2030.
Our Strategy
The Company's strategy is to generate demand primarily amongst the shipping
industry and to stimulate supply of our fuels around global marine bunkering
hubs. All our projects intend to establish a presence for Quadrise at key hub
locations. Our lead projects are approaching major milestones, with the
intention of concluding the trials and agreements that will demonstrate
MSAR(®) and bioMSAR™ technology at commercial scale.
Decarbonisation of shipping: MSC
Our flagship project with MSC is a crucial first step in demonstrating the
contribution that MSAR(®) and bioMSAR™ technology can make in decarbonising
the shipping sector.
On 6 February 2024, Quadrise announced the signature of a Collaboration
Agreement with Cargill and MAC(2). This is a critical milestone towards the
production of MSAR(®) and bioMSAR™ fuels for the Company's forthcoming
vessel trials on board the MSC Leandra. The signature of a binding agreement
between Quadrise, MSC and Cargill is expected during the coming weeks, along
with associated binding agreements for toll manufacture and fuel supply.
Upon conclusion of these agreements and the receipt of permits by MAC(2),
Quadrise expects to install and commission an MMU and associated equipment at
the MAC(2) bunker facility in Antwerp, Belgium during Q2 2024. MSAR(®) and
bioMSAR™ fuels will then be produced at the MAC(2) site using feedstocks
supplied by Cargill, who will also be responsible for bunkering operations to
supply the fuels to the MSC Leandra commencing in Q3 2024.
The operational trial consists of an initial 1-2 month Proof of Concept
("POC") using both MSAR(®) and bioMSAR™ to develop performance baselines.
This will be followed by 4,000 hours of operation on bioMSAR™ over a period
of 6-8 months in order to obtain a Letter of No Objection ("LONO") from
Wärtsilä, the engine manufacturer. An interim inspection will be conducted
after circa 2,000 hours of operation (3-4 months), and assuming performance is
satisfactory, active planning for next steps can continue.
As a result the parties expect to conclude a commercial supply agreement for
MSAR(®) and bioMSAR™ and secure bunker supply operations to MSC by Cargill
from MAC(2) facilities in Antwerp on a permanent basis. In addition to
progressing this opportunity with MSC, the Company continues to assess
strategic options and partnerships to accelerate commercialisation of both
bioMSAR™ and MSAR(®) within the shipping sector.
Development of bioMSAR™ and bioMSAR™ Zero
Despite the immediate and cost-effective carbon reductions that bioMSAR™ can
offer, the requirement for net-zero fuel solutions is pressingly urgent, and
our solutions must stay ahead of this trajectory. To this end, our development
programme is focused on delivering a viable commercial net-zero 'bioMSAR™
Zero' solution, enabling us to capture this demand opportunity ahead of other
more expensive net-zero biofuels.
During the period, the Company has investigated alternative feedstocks to
glycerine for bioMSAR™ including water and oil-soluble biofuels, and we are
currently well ahead of our launch target of 2030.
bioMSAR™ blends containing Vertoro's Crude Sugar Oil ("CSO™") reduced
CO(2) emissions by over 30% when considering increased engine efficiency of up
to 7%, and significantly reduced emissions of Nitrogen Oxides ("NOx") and
Carbon Monoxide ("CO") compared with diesel.
New bioMSAR™ formulations incorporating waste-based methyl esters were shown
to reduce CO(2) emissions by over 45%, increase engine efficiency by up to
7%, and reduce NOx and CO emissions significantly when compared with diesel,
providing a new potential pathway for bioMSAR™ Zero.
In June 2023, Quadrise signed a Joint Development Agreement with BTG
Bioliquids BV ("BTL") to investigate their proprietary Fast Pyrolysis Bio-oils
and sugars as a potential cost-effective renewable feedstock for bioMSAR™.
Following positive results from this work, Quadrise recently signed a Project
Development Agreement with BTL and Euthenia Energy Group
Limited ("Euthenia"). A programme of lab and pilot testing, followed by
diesel engine testing, is planned leading to a third-party commercial marine
vessel trial using this next generation formulation of bioMSAR™ which also
takes us another step closer to bioMSAR™ Zero.
Projects supporting supply and demand around major marine bunker hubs:
· Morocco
The Group's project with the industrial client, a major mining and chemicals
company, is designed to stimulate supply of MSAR(®) in the Mediterranean, a
significant region for maritime trade and bunkering due to its strategic
location connecting Europe, Asia, and Africa.
In November 2023, Quadrise successfully completed its first ever demonstration
of bioMSAR™ in an industrial application. Trial quantities of MSAR(®) and
bioMSAR™ were tested at the client's 'Site-B' facility. The industrial
unit was successfully operated at varying loads up to 100%, this being
equivalent to 33MW of energy supplied by a single burner, and similar to the
energy consumption of a medium-sized container ship. This clearly underscores
the credibility of our solutions.
Quadrise submitted a technical report on the test results to the client and
the parties have commenced discussions on long-term commercial supply, aiming
to sign a fuel supply agreement in H1 2024. The parties are also seeking to
increase commercial applications for MSAR(®) and bioMSAR™ fuels across
other facilities and locations. Quadrise has submitted a technical and
economic feasibility study for a potential additional paid industrial
demonstration test at a second site of the client ('Site A').
· Utah
The project with Valkor in Utah, USA, targets the supply of low sulphur
MSAR(®) and bioMSAR™ to the marine and power sectors, with the fuels
produced on-site then transported to major ports and power stations.
The oil sands resources at Asphalt Ridge in Utah comprise billions of barrels.
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 other properties of this heavy oil allow it to comply
with the International Maritime Organization ("IMO")'s regulations on marine
fuel once converted to MSAR(®) or bioMSAR™. This, notably, without the need
for carbon-intensive oil refining. This heavy oil would therefore constitute a
low carbon, low sulphur MSAR(®) or bioMSAR™, meeting the needs of the
marine and power sectors.
Following the signature of a Site License and Supply Agreement in June 2023,
Valkor now expects to finalise its project financing activities in H1 2024.
Upon receipt of at least US$15 million of project financing, Valkor will pay
Quadrise a US$1.0 million license fee, and a further US$0.5 million upon
delivery of a Quadrise MMU to Valkor's project site. Thereafter, Valkor will
pay a quarterly retainer of US$75,000 for Quadrise engineering, project
development and support services for a minimum of two years. Valkor may then
choose to purchase the MMU for US$1.0 million. Commercial trials with end
users are targeted to begin in H2 2024.
Valkor is leading operations and development activities across several
projects at Asphalt Ridge that could utilise the MMU. It has taken longer than
expected for Valkor to secure the required project financing, but there has
been steady progress. This remains an important and worthwhile project for
the Company as it gives us a presence in North America from which to expand.
· Central America
The availability of MSAR(®) and bioMSAR™ in major marine hubs such as the
Panama Canal is seen by the Board as being key to the Group's strategy to
decarbonise shipping. The Company's intended project in Central America is to
develop demand initially from local power generators, and then to develop a
supply base in the region.
In 2023, Quadrise signed a Letter of Intent with Sparkle Power, a power
generator in Panama, which outlined mutual intent for a commercial test of
MSAR(®) and bioMSAR™ at Sparkle Power's oil-fired power plant. Due to
prolonged drought conditions which have reduced Panama's hydroelectric power
supply, Sparkle Power have been running at full capacity and thus not been
able to progress trial preparations. As water levels improve, the Company
expects agreements to be finalised during H1 2024 to allow testing of MSAR(®)
and bioMSAR™ in H2 2024.
Together with our local agents, we continue to explore other opportunities in
the region to create demand and stimulate supply in and around Panama and
Honduras, the latter being a large consumer of fuel oil for power generation.
· South-East Asia
Singapore is the world's largest bunkering hub, with volumes over three times
higher than the second largest hub in ARA (Antwerp, Rotterdam, Amsterdam).
Bunkering of biofuel blends in Singapore has tripled in the past year,
exceeding 500,000 tonnes in 2023. In line with the Board's strategy, the
Company intends to establish a presence in South-East Asia as a supply point
for MSAR(®) and bioMSAR™ to the marine and industrial sectors.
During 2023, Quadrise had discussions with a refinery operator in the region
who is interested in conducting a trial using Quadrise technology for internal
thermal applications in advance of a potential commercial agreement and supply
after the trial. The refinery is well placed close to future bulk oil storage
and trading opportunities.
In Summary
In H1 2024, Quadrise expects to make further significant progress on our
projects. We expect to complete binding agreements for the MSC vessel
trials, commence installation of our MMU and associated equipment at the MAC2
facility, finalise commercial agreements with our client in Morocco, and
receive the US$1.0 million license fee from Valkor upon completion of their
project financing.
H2 2024 should see the operational trial commence on board the MSC Leandra,
finalisation of supply agreements for Morocco, and on-site trials with samples
of heavy sweet oil from Valkor.
The Company's proven, unique MSAR(®) and bioMSAR™ technology meets the
challenge presented by the International Maritime Organisation targets, and
the EU Emissions Trading Scheme and associated regulations which now encompass
shipping. The positioning of Quadrise as an energy decarbonisation enabler for
shipping is an important statement of intent to progress licence agreements
and commercial-scale trials, thus leading to supply contracts and commercial
revenues. The Board and Management strongly believes that our solutions have
never been more relevant than they are today.
Jason Miles
Chief Executive Officer
18 March 2024
Consolidated Statement of Comprehensive Income
For the 6 months ended 31 December 2023
Note 6 months ended 31 December 2023 6 months ended 31 December 2022 Year ended
Unaudited Unaudited 30 June
£'000 £'000 2023
Audited
£'000
Continuing operations
Other income - 27 -
Production and development costs (909) (1,049) (1,741)
Other administration expenses (658) (649) (1,331)
Share option charge 3 (157) (77) (178)
Foreign exchange loss - (4) (6)
Operating loss (1,724) (1,752) (3,256)
Finance costs (2) (1) (4)
Finance income 16 4 12
Loss before tax (1,710) (1,749) (3,248)
Taxation - - 154
Total comprehensive loss for the period from continuing operations (1,710) (1,749) (3,094)
Loss per share - pence
Basic 4 (0.11)p (0.12)p (0.22)p
Diluted 4 (0.11)p (0.12)p (0.22)p
Consolidated Statement of Financial
Position
As at 31 December
2023
Note As at As at As at
31 December 2023 31 December 2022 30 June
Unaudited Unaudited 2023
£'000 £'000 Audited
£'000
Assets
Non-current assets
Property, plant and equipment 5 337 418 374
Intangible assets 6 2,924 2,924 2,924
Non-current assets 3,261 3,342 3,298
Current assets
Cash and cash equivalents 1,658 2,645 1,342
Trade and other receivables 129 100 89
Prepayments 147 148 119
Inventory - 126 174
Current assets 1,934 3,019 1,724
TOTAL ASSETS 5,195 6,361 5,022
Equity and liabilities
Current liabilities
Trade and other payables 181 270 175
Current liabilities 181 270 175
Equity attributable to equity holders of the parent
Issued share capital 15,625 14,069 14,069
Share premium 77,353 77,189 77,189
Merger reserve 3,777 3,777 3,777
Share option reserve 868 840 718
Warrant reserve - 18 -
Reverse acquisition reserve 522 522 522
Accumulated losses (93,131) (90,324) (91,428)
Total shareholders' equity 5,014 6,091 4,847
TOTAL EQUITY AND LIABILITIES 5,195 6,361 5,022
Consolidated Statement of Changes in Equity
For the 6 months ended 31 December 2023
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 2023 14,069 77,189 3,777 718 - 522 (91,428) 4,847
Loss and total comprehensive loss for the period - - - - - - (1,710) (1,710)
Share option charge - - - 157 - - -
New shares issued net of issue costs 1,556 389 - - - - - 1,945
Issue costs - (225) - - - - - (225)
Transfer of balances relating to expired share options - - - (7) - - 7 -
Shareholders' equity at 31 December 2023 - unaudited 15,625 77,353 3,777 868 - 522 (93,131) 5,014
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 January 2023 14,069 77,189 3,777 840 18 522 (90,324) 6,091
Loss and total comprehensive loss for the period - - - - - - (1,345) (1,079)
Share option charge - - - 101 - - - 101
Transfer of balances relating to expired share options - - - (223) - - 223 -
Transfer of balances relating to expired warrants - - - - (18) - 18 -
Shareholders' equity at 30 June 2023 - audited 14,069 77,189 3,777 718 - 522 (91,428) 4,847
Consolidated Statement of Cash Flows
For the 6 months ended 31 December 2023
Note 6 months ended 31 December 2023 6 months ended 31 December 2022 Year ended
Unaudited Unaudited 30 June
£'000 £'000 2023
Audited
£'000
Operating activities
Loss before tax from continuing operations (1,710) (1,749) (3,248)
Finance costs paid 2 1 4
Finance income received (16) (4) (12)
Depreciation 5 45 57 119
Share option charge 3 157 77 178
Working capital adjustments
(Increase)/decrease in trade and other receivables (40) 3 14
(Increase)/decrease in prepayments (28) 29 58
Decrease/(increase) in inventory 174 (126) (174)
Increase/(decrease) in trade and other payables 6 8 (87)
Cash utilised in operations (1,410) (1,704) (3,148)
Finance costs paid (2) (1) (4)
Taxation received - - 154
Net cash outflow from operating activities (1,412) (1,705) (2,998)
Investing activities
Finance income received 16 4 12
Purchase of fixed assets 5 (8) (77) (95)
Net cash outflow from investing activities 8 (73) (83)
Financing activities
Issue of ordinary share capital 1,945 - -
Issue costs (225) - -
Net cash inflow from financing activities 1,720 - -
Net increase/(decrease) in cash and cash equivalents 316 (1,778) (3,081)
Cash and cash equivalents at the beginning of the period 1,342 4,423 4,423
Cash and cash equivalents at the end of the period 1,658 2,645 1,342
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 2023 Annual Report and Financial Statements, a
copy of which is available on the Company's website: www.quadrise.com
(https://url.avanan.click/v2/___http:/www.quadrise.com___.YXAxZTpzaG9yZWNhcDphOm86MWM2MDhhYWQ3NTcyYWZkYjk2MDUwZGIzNGIwNDA4OTg6NjpiYzk5OjJkNzMwMWM2ZDQ3YjE0MzE3ODY2ZmU1MDVmMDViZTkxZjQ5NDdkZWJiNWU4YWJmZTFiNWJlMDMwYzhkOTIzMDM6cDpU)
.
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 2023 Annual Report and Financial
Statements. The nature and amounts of such estimates have not changed
significantly during the interim period. Management uses the Black Scholes
model to value the share options. The model requires use of assumptions
regarding volatility, risk free interest rate and a calculation of the value
of the option at the time of the grant. Please see Note 3 for details.
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 2023. 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 2023 or 30 June 2022, but is
derived from those financial statements. Financial statements for the year
ended 30 June 2023 have been delivered to the Registrar of Companies and those
for the year ended 30 June 2024 will be delivered following the Company's
Annual General Meeting. The auditors' report on both the 30 June 2023 and 30
June 2022 financial statements were unqualified and did not contain statements
under section 498 (2) or (3) of the Companies Act 2006. The auditors' reports
on the 30 June 2023 and 30 June 2022 financial statements drew attention to
the material uncertainty related to going concern.
2.2 Going Concern
The Group had a cash balance of 1.7m as at 31 December 2023. The Directors
acknowledge that this cash balance is only sufficient to cover the Group's
operating requirements up to early Q3 calendar 2024. 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. 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 2023 were approved
by the Board on 18 March 2024.
The directors do not propose an interim dividend.
3. Share Option charge
On 3 August 2023, the Company granted a total of 13,500,000 options (the
'Performance Options') over new ordinary shares of 1p each in the Company
executives and employees of the Company in accordance with the provisions of
the Company's Enterprise Management Incentive Plan ("EMI Plan"). The issue of
these options follows the lapsing in full of the 11,950,000 options issued by
the Company on 27 January 2023 due to the specific performance conditions of
those options not having been met. 7,500,000 of the Performance Options were
granted to Jason Miles, Chief Executive Officer of the Company.
The Performance Options have an exercise price of 2.5p, and will vest as to
50% on the first anniversary of grant and the remaining 50% shall vest on the
second anniversary of the date of grant. All vestings are subject to the
satisfaction of specific performance conditions prior to the first anniversary
of grant. The Performance Options will be exercisable from vesting until the
eighth anniversary of the date of grant.
Additional Options
On 3 September 2023 Quadrise also granted 4,500,000 options over new ordinary
shares of 1p each in the Company to Non-Executive Directors of the Company in
accordance with the provisions of the Company's Unapproved Share Option Plan
2016 ("2016 Plan") in the amounts set out below (the "Additional Options").
Director No. of NVOs
Andrew Morrison 2,000,000
Laurie Mutch 1,000,000
Philip Snaith 1,000,000
Dilip Shah 500,000
Total 4,500,000
The Additional Options have an exercise price of 2.5p. There are no
performance conditions to the vesting of the Additional Options, which will
vest as to 50% on the first anniversary of grant and the remaining 50% shall
vest on the second anniversary of the date of grant. The Additional Options
will be exercisable from vesting until the eighth anniversary of the date of
grant.
Nominal Value Options
On 3 August 2023, the Company granted a total of 35,555,555 nominal value
options ('NVOs') over new ordinary shares of 1p each in the Company to
executives and employees in accordance with the provisions of the Company's
Enterprise Management Incentive Plan ("EMI Plan"). 6,666,667 of the
Performance Options were granted to Jason Miles, Chief Executive Officer of
the Company.
These Options have an exercise price of 1p, and will vest after 12 months from
the date of grant, with vesting not subject to performance conditions. The
NVOs will be exercisable from vesting until the tenth anniversary of the date
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 £157k (2022: £77k).
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 2023 6 months ended Year ended
Unaudited 31 December 30 June
2022 2023
Unaudited Audited
Loss for the period from continuing operations (£'000s) (1,710) (1,749) (2,598)
Weighted average number of shares:
Basic 1,541,341,071 1,406,904,968 1,406,904,000
Diluted 1,541,341,071 1,406,904,968 1,406,904,000
Loss per share:
Basic (0.11)p (0.12)p (0.18)p
Diluted (0.11)p (0.12)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 28.8 million exercisable share options 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 Furniture and Office equipment Plant and machinery Total
£'000 £'000 £'000 £'000 £'000 £'000
Cost
Opening balance - 1 July 2023 89 96 43 24 1,524 1,776
Additions - - - - 8 8
Closing balance - 31 December 2023 89 96 43 24 1,532 1,784
Depreciation
Opening balance - 1 July 2023 (79) (91) (43) (16) (1,173) (1,402)
Depreciation charge for the period (2) (1) - - (42) (45)
Closing balance - 31 December 2023 (81) (92) (43) (16) (1,215) (1,447)
Net book value at 31 December 2023 - unaudited 8 4 - 8 317 337
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 2022 89 94 43 16 1,440 1,682
Additions - 3 - 8 84 95
Disposals - (1) - - - (1)
Closing balance - 30 June 2023 89 96 43 24 1,524 1,776
Depreciation
Opening balance - 1 July 2022 (76) (90) (43) (16) (1,059) (1,284)
Depreciation charge for the year (3) (2) - - (114) (119)
Disposals - 1 - - - 1
Closing balance - 30 June 2023 (79) (91) (43) (16) (1,173) (1,402)
Net book value at 30 June 2023 - audited 10 5 - 8 351 374
6. Intangible Assets
QCC royalty payments MSAR(®) trade name Technology and know-how
Total
£'000 £'000 £'000 £'000
Cost
Balance as at 1 July 2023 and 31 December 2023 7,686 3,100 25,901 36,687
Amortisation and Impairment
Balance as at 1 July 2023 and 31 December 2023 (7,686) (176) (25,901) (33,763)
Net book value at 31 December 2023 - unaudited - 2,924 - 2,924
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 at 1 July 2022 and 30 June 2023 7,686 3,100 25,901 36,687
- - - -
Amortisation and Impairment
Balance at 1 July 2022 and 30 June 2023 (7,686) (176) (25,901) (33,763)
Net book value at 30 June 2023 - 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 2023, 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 2023, 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 2023.
7. Related Party Transactions
QED defines key management personnel as the Directors of the Company. Other
than the issuance of share options to Directors (note 3) there are no
transactions with Directors other than their remuneration.
8. 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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