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 MAC2
terminal in Antwerp, Belgium in Q2 2024 in readiness for bunker
fuel supply upon the receipt of permits by
MAC2.
·
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
("CO2") 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
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+44 (0)20
7031 7321
|
Andy Morrison, Chairman
Jason Miles, Chief Executive
Officer
|
|
|
|
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Nominated
Adviser
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Cavendish Capital Markets Limited
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+44 (0)20
7220 0500
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Ben Jeynes
|
|
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Katy Birkin
|
|
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Joint
Brokers
Shore Capital Stockbrokers Limited
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+44 (0)20
7408 4090
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Toby Gibbs, Rachel Goldstein
(Corporate Advisory)
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Fiona Conroy (Corporate
Broking)
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VSA
Capital Limited
Andrew Raca (Corporate
Finance)
Andrew Monk (Corporate
Broking)
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+44 (0)20
3005 5000
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Public & Investor
Relations
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Vigo Consulting
Patrick D'Ancona
Finlay Thomson
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+44 (0)20
7390 0230
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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
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 MAC2 Solutions NV
("MAC2") 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 CO2 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 MAC2. 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 MAC2, Quadrise expects to
install and commission an MMU and associated equipment at the
MAC2 bunker facility in Antwerp, Belgium during Q2
2024. MSAR® and bioMSAR™ fuels will then be
produced at the MAC2 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
MAC2 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
CO2 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
CO2 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 CO2 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
Unaudited
£'000
|
6 months
ended 31 December 2022
Unaudited
£'000
|
Year
ended
30
June
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
31 December
2023
Unaudited
£'000
|
As
at
31
December 2022
Unaudited
£'000
|
As
at
30
June
2023
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
£'000
|
Share premium
£'000
|
Merger
reserve
£'000
|
Share option
reserve
£'000
|
Warrant reserve
£'000
|
Reverse acquisition reserve £'000
|
Accumulated
losses
£'000
|
Total
£'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
Unaudited
£'000
|
6 months
ended 31 December 2022
Unaudited
£'000
|
Year
ended
30
June
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.
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
Unaudited
|
6 months
ended
31
December
2022
Unaudited
|
Year
ended
30
June
2023
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.