TIDMQFI
RNS Number : 1476G
Quadrise Fuels International PLC
28 March 2022
28 March 2022
Quadrise Fuels International plc
("Quadrise", "QFI", the "Company" and together with its
subsidiaries the "Group")
Interim Results and Investor Presentation
Quadrise Fuels International plc (AIM: QFI) announces its
unaudited interim results for the six months ended 31 December 2021
and provides an update on developments during the first quarter of
2022.
Jason Miles, Chief Executive Officer, and Andy Morrison,
Chairman, will provide a live presentation relating to the interim
results via the Investor Meet Company platform on 1 April 2022 at
10:00am BST - registration details are outlined below.
FINANCIAL SUMMARY
-- GBP5.6 million in cash reserves at 31 December 2021 (31
December 2020: GBP1.1 million), sufficient to reach revenue
generation in H2 2022 subject to the conclusion of commercial
project agreements.
-- Loss after tax of GBP1.5 million (2020: GBP2.3 million). This
includes production and development costs of GBP0.7 million (2020:
GBP0.6 million) and administration expenses of GBP0.7 million
(2020: GBP0.8 million).
-- Total assets of GBP9.3 million at 31 December 2021 (2020: GBP4.9 million).
BUSINESS SUMMARY
bioMSAR(TM)
-- Testing of bioMSAR(TM) at Aquafuel and at the VTT facility in
Finland has shown that bioMSAR(TM) use results in an increase in
engine efficiency of over 3% and nitrogen oxide ("NOx") reductions
of over 20% when compared with marine diesel fuel.
-- By advancing injection timing at Aquafuel, engine efficiency
was subsequently increased by over 13%, thereby further reducing
fuel consumption and carbon dioxide ("CO 2 ") emissions without
increases in NOx emissions compared to diesel.
-- Further testing of bioMSAR(TM) is planned in 2022 with
Aquafuel to fully define efficiency and emissions optimisation.
-- An international patent application for bioMSAR(TM) has been
submitted jointly with Nouryon and complements existing MSAR(R)
intellectual property.
MSC
-- QFI is now working with MSC Shipmanagement ("MSC") to
finalise the Letter Of No Objection ("LONO") trial programme and
subsequent bioMSAR(TM) commercial terms.
-- Assuming a positive conclusion to these discussions, trial
preparations are expected to commence in Q2 2022, with the trials
themselves commencing before the end of calendar year 2022 and
expected to take approximately nine months to conclude
thereafter.
-- Testing of MSAR(R) and bioMSAR(TM) by Wärtsilä Switzerland on
their optical combustion chamber is scheduled for late Q2 2022,
with wear rig testing on bioMSAR(TM) scheduled for end Q3 2022.
Utah
-- Following the successful conversion of oil samples from the
Petroteq Oil Sands Plant by our RDI team at QRF, Quadrise is now
working with TomCo Energy PLC ("TomCo") and Valkor Technologies LLC
("Valkor") to secure commercial opportunities for MSAR(R) and
bioMSAR(TM) in Utah.
-- The Valkor opportunity relates to bioMSAR(TM) and MSAR(R)
production for clients in Utah with proposed "carbon negative" oil
extraction, with oil expected to be available in H2 2022. Site
trials are expected to lead to a commercial supply, subject to
commercial agreement.
-- Discussions are in progress with stakeholders to finalise agreements and commercial supply.
Morocco
-- QFI is currently working with the new client team to update
our Material Transfer and Cooperation Agreement with an addendum,
with the intention to conduct site trials commencing Q2 2022 upon
agreement.
-- Quadrise trial equipment is in Morocco, and production of the
MSAR(R) trial volumes for the first trial can commence upon
signature of the updated agreement addendum.
-- Following successful trials, it is subsequently intended to
conclude a commercial supply agreement covering one or more of the
client's sites in Morocco during H2 2022.
Americas
-- Discussions underway regarding potential projects with power
generators in Panama and Honduras, and with the state oil companies
and utility operators in Mexico.
OUTLOOK
-- bioMSAR(TM) testing continues to generate highly promising
results with further development and test work planned for 2022.
The positive results to date support our plans for larger scale
trials on commercial diesel engines such as those planned with MSC,
as well as other non-engine uses in industrial and boiler
applications.
-- Our key projects in the marine, upstream and industrial
sectors have each been subject to delays during the period under
review, and our focus is now on demonstrating MSAR(R) and
bioMSAR(TM) technology at commercial scale and progressing each of
the opportunities to commercial agreements during 2022.
-- The Company's cash balance of GBP5.6 million at 31 December
2021 is sufficient to reach revenue generation in H2 2022 subject
to the conclusion of commercial project agreements. Non-project
cash expenditure is currently around GBP240k per month.
Jason Miles, Chief Executive Officer of Quadrise Fuels
International, commented:
" Increases in both energy prices and volatility exacerbated by
Russia's invasion of Ukraine have further emphasised the reliance
that the global economy has on fossil fuels and the need to more
efficiently utilise hydrocarbons as the world transitions towards a
Net Zero future. The focus on large scale and immediate Net-Zero
carbon solutions to climate change often underplays the valuable
and critical role that must be played by transitional technologies
such as Quadrise's. Our proven MSAR(R) and low carbon bioMSAR(TM)
technologies are available immediately and can generate both cost
and emissions savings for adopters without the need for large scale
capital investment.
Quadrise has progressed a range of its core projects and
business opportunities during and following the period, underlining
the advantages of our strategy of pursuing a diversified range of
projects, however progress in converting these projects to
agreements has been slower than anticipated, largely due to factors
beyond the direct control of the Company. However, conversion of
these projects into commercial contracts remains our key focus.
Looking ahead, fuel efficiency and reduced emissions from the
energy sector are critical, and our emulsion technology platform
can deliver tangible benefits, especially on larger diesel engines
used in the power and marine sectors. Quadrise also recognises that
Net Zero energy solutions will be mandatory in the future,
potentially as early as 2030, and we have an RDI strategy in place
to take advantage of this opportunity.
During the year, opportunities which maximise our ESG
credentials will be prioritised. We expect to continue to develop
the next generation of bioMSAR(TM) and Net Zero energy using our
innovative technology platform, as well as investigating
complementary opportunities.
On behalf of the team at Quadrise, I would like to thank our
shareholders for their patience and support during the financial
year to date, and we look forward to being able to announce
material progress across our projects as 2022 progresses."
Investor Conference Call
Quadrise is pleased to announce that Jason Miles and Andy
Morrison will provide a live presentation relating to the Interim
Results via the Investor Meet Company platform on 1 April 2022 at
10:00am BST. The presentation is open to all existing and potential
shareholders. Questions can be submitted pre-event via the Investor
Meet Company dashboard up until 9am the day before the meeting or
at any time during the live presentation.
Investors can sign up to Investor Meet Company for free and add
to meet Quadrise via:
https://www.investormeetcompany.com/quadrise-fuels-international-plc/register-investor
Investors who already follow Quadrise on the Investor Meet
Company platform will automatically be invited.
For further information, please refer to the Company's website
at www.quadrisefuels.com , or contact ir@quadrisefuels.com or
phone:
Quadrise Fuels International Plc
Andy Morrison, Chairman +44 (0)20 7031 7321
Jason Miles, Chief Executive Officer
Nominated Adviser
Cenkos Securities plc
Ben Jeynes
Katy Birkin +44 (0)20 7397 8900
Broker
Shore Capital Stockbrokers Limited
Toby Gibbs
Fiona Conroy +44 (0)20 7408 4090
Public & Investor Relations
Vigo Consulting
Patrick D'Ancona
Charlie Neish +44 (0)20 7390 0230
Notes to Editors
Quadrise is the supplier of MSAR(R) and bioMSAR(TM) emulsion
technology and fuels, providing innovative lower cost and lower
carbon alternatives to fuel oil and biofuels in the global power
generation, shipping, industrial and refining industries.
This announcement is inside information for the purposes of
article 7 of Regulation 596/2014.
Chairman's Statement
I am pleased and excited to have been appointed as Chairman of
Quadrise and look forward to working with the Group's dedicated and
talented team. The Company continues to progress its pipeline of
exciting projects in the marine, industrial and upstream sectors
and, having now examined the key challenges and opportunities
facing the Company, I look forward to engaging with shareholders
and discussing progress with them. I believe that I have joined
Quadrise at a pivotal time, under the backdrop of ambitious global
climate targets driven by both public and investor sentiment and
when the Company's undoubtedly strong ESG credentials will come
increasingly into sharp and positive relief. Given this backdrop
and following discussions with management and the Board, I believe
our immediate priorities are to:
1. Determine which of our projects can drive revenues and
positive cashflows within our available cash and manpower
resources.
Our projects with MSC in the marine sector, our industrial
project in Morocco and our upstream project with Greenfield Energy
LLC ("Greenfield") in Utah have progressed but not at the pace
originally envisaged. In addition to headwinds from the Covid-19
pandemic and subsequent destabilising global events, they each have
several moving parts with many of these outside the influence and
control of Quadrise. Discussions with our key counterparties are
ongoing and we are determined to bring each of these projects to
clear milestone points.
2. Position Quadrise squarely amongst the growing cohort of Green Economy companies.
The rapid intensification of ESG and climate-change focused
policies across the world presents a huge opportunity for Quadrise.
The focus on largescale and immediate Net Zero carbon solutions to
climate change often underplays the valuable and critical role that
must be played by transitional technologies such as ours.
Quadrise's proprietary MSAR(R) and low carbon bioMSAR(TM) solutions
can drive tangible cost and emissions savings for adopters
immediately without the need for significant capital
investment.
Looking further ahead, opportunities which maximise our ESG
credentials such as bioMSAR(TM) will be prioritised and advanced.
We expect to continue to develop the next generation of bioMSAR(TM)
fuels and energy delivery technologies, with the goal of producing
a fully Net Zero product by 2030. A stronger focus on using
Quadrise's unique emulsion technologies and expertise will leave
the Company more squarely positioned within the ESG sector and less
exposed to risks and uncertainties outside our own influence.
Quadrise will aim to qualify for the LSE Green Economy Mark, which
will provide third-party validation of our green credentials and
increase visibility among investors and other stakeholders,
including industrial partners.
As the Company's financial circumstances permit, we intend to
explore and bring on complementary technologies and additional
businesses to reinforce Quadrise's reputation in the ESG space and
help to ensure that our products and services are part of the
conversation when potential clients are looking at ESG and
decarbonisation solutions.
As shareholders would rightly expect from us, Quadrise will
maintain its own commitment to the highest ESG reporting standards.
This is reflective not only of public sentiment, but also redoubled
ESG commitments from significant institutional investors.
I am very much looking forward to helping the board and
management team to deliver a prosperous future for this Company. On
behalf of the Board, I would like to thank our loyal shareholders
for their support and patience throughout the pandemic.
Financial Position
The Group held cash and cash equivalents of approximately GBP5.6
million as at 31 December 2021 (31 December 2020: GBP1.1 million),
sufficient to reach revenue generation in H2 2022 subject to the
conclusion of commercial project agreements.
The Group recorded a loss of GBP1.5 million for the six months
to 31 December 2021 (2020: GBP2.3 million). This included
production and development costs of GBP0.7 million (2020: GBP0.6
million) and administration expenses of GBP0.7 million (2020:
GBP0.8 million). The prior year loss of GBP2.3 million also
included a non-cash fair value loss arising on the valuation of
convertible securities of GBP0.7 million.
Basic and diluted loss per share was 0.11p (2020: 0.21p).
The Group's total assets amounted to GBP9.3 million as at 31
December 2021 (GBP4.9 million as at 31 December 2020). In addition
to the cash and cash equivalents, this included fixed tangible
assets (mainly plant and equipment) of GBP0.4 million and MSAR(R)
trade name of GBP2.9 million.
The Group has accumulated tax losses of approximately GBP58.4
million (2019: GBP53.7 million) available to be carried forward
against future profits.
Andy Morrison
Chairman
25 March 2022
Chief Executive's Statement
Our global opportunity
The past few weeks have witnessed major market upheaval
following the Russian invasion of Ukraine. The resulting increases
in both energy prices and volatility have further emphasised the
reliance that the global economy has on fossil fuels and the need
to use these resources more efficiently as the world transitions to
a Net Zero future. We believe that Quadrise's unique MSAR(R) and
bioMSAR(TM) technology can play a significant role in helping
achieve this goal and establishing the Company as an attractive
investment in the wider ESG context. During the period we
accelerated the development and commercialisation of our
bioMSAR(TM) technology and fuel, and in parallel continued to
develop energy transition technology and Net Zero fuel solutions to
offer to our global clients. According to the Intergovernmental
Panel for Climate Change (IPCC), the world has until 2030 to cut
human-caused CO(2) emissions by half, in addition to other
greenhouse gas ("GHG") emissions such as methane, to have a 50%
chance of avoiding the worst effects of climate change by 2050. As
part of the Glasgow Climate Pact, 153 countries have put forward
new or updated emissions targets, covering around 80% of the
world's GHG emissions. At COP 26, 100 countries also committed to
reduce global methane emissions by 30% by 2030 by signing the
Global Methane Pledge. We believe that Quadrise's unique MSAR(R)
and bioMSAR(TM) technology can play a significant role in attaining
these goals.
bioMSAR(TM) and our transition to Net Zero
The focus on large scale and immediate Net Zero carbon solutions
to climate change often neglects the fact that hydrocarbons in
different forms will remain a large part of the global energy mix
for decades to come, in light of the lack of current and planned
renewable energy capacity. There are however fuels which can be
adopted immediately to bridge the gap between the carbon intensive
fuels of today and the Net Zero energy sources of the future. These
"transition fuels" allow emissions savings to be made immediately,
and include our innovative low carbon bioMSAR(TM) fuel, which takes
advantage of our proven emulsion fuel technology platform.
bioMSAR(TM) utilises clean, renewable glycerine, a by-product of
current biodiesel manufacturing processes, to create a low cost,
low carbon biofuel.
When evaluating transition fuels, there are a number of factors
that are important:
1. Fuel composition and "global warming potential", which takes
into account CO(2) , methane, soot ("Black Carbon") and NOx--
emissions.
2. The efficiency of the transition fuel in converting energy to power at a commercial scale.
3. The resulting emissions from combustion.
4. The overall cost to the consumer.
Testing of bioMSAR(TM) on a high-speed 4-stroke Cummins diesel
engine at Aquafuel and on a medium-speed 4-stroke Wärtsilä diesel
engine at the VTT facility in Finland has shown that bioMSAR(TM)
use results in an increase in engine efficiency of over 3%, and NOx
reductions of over 20% when compared with marine diesel fuel. The
most recently completed round of testing at Aquafuel used an engine
that had been modified to simulate larger, high compression
engines, like the low-speed 2-stroke engines used in the marine
sector. Engine efficiency was increased by over 13% by advancing
injection timing, and unlike marine diesel, there was no increase
in NOx emissions with increased engine efficiency.
Switching from marine diesel to bioMSAR(TM) would therefore
allow shipping operators to reduce both fuel consumption and CO(2)
emissions. Further development and test work is planned during
2022, but the positive results to date support our plans for larger
scale trials on commercial diesel engines for bioMSAR(TM).
Commercial trials are planned with MSC, as well as for use in
industrial and boiler applications.
The glycerine content of bioMSAR(TM) can be adjusted to meet the
client's demands for CO(2) savings, providing a cost-effective
transition fuel solution to meet and go beyond increasingly
stringent decarbonisation requirements. When compared to LNG and
FAME, transition fuels which are increasingly being adopted by the
marine industry, the superior efficiency of bioMSAR(TM) leads to
proven higher CO(2) emissions savings. bioMSAR(TM) delivers energy
at a lower cost per unit, and unlike LNG uses a biofuel that is
dispersible in water, non-flammable, non-toxic and biodegradable.
An international patent application for bioMSAR(TM) has been
submitted jointly with Nouryon and complements our existing MSAR(R)
IP.
The marine sector has reduced CO(2) emissions by 30% from 2008
to 2020, but still contributes 940 million tons or 2.5% of global
emissions. Based on recent results from VTT testing, bioMSAR(TM)
could reduce emissions of CO(2) by over 25%. For a large vessel
consuming 25,000 tons of HFO annually, equating to 23,000 tons of
CO(2) , that is equivalent to the annual emissions of 11,000
average petrol cars.
We strongly believe that both MSAR(R) and bioMSAR(TM) will have
an important role to play in the transition to a sustainable
future. We recognise that Net Zero energy solutions will become
mandatory in the future, and we have an RDI strategy in place to
take advantage of this opportunity. Our emulsion technology
platform is innovative and adaptable. Our RDI team are
investigating the use of other renewable fuels to produce a fuel
blend with a Net Zero carbon contribution. In parallel, we are also
investigating alternative methods of sourcing renewable glycerine
from non-conventional sources, as well as contacting biodiesel
suppliers to source the required volumes and quality of renewable,
fuel-grade glycerine and other biofuels to provide a platform for
future growth.
Key projects
Our key projects in the marine, upstream and industrial sectors
have each been subject to delays during the period under review,
and our focus is now to finalise a number of commercial project
agreements expeditiously that will demonstrate MSAR(R) and
bioMSAR(TM) technology at commercial scale during 2022 and to
prioritise our available resources.
MSC - Our discussions with MSC regarding the proposed LONO fuel
trials on board their commercial container vessels are progressing
to the key decision points for both parties. Since the signature of
the Joint Development Agreement with MSC in Q1 2021, the scope of
this project has evolved from conducting the planned vessel trials
using MSAR(R) to instead using bioMSAR(TM) following the positive
test results on 4-stroke diesel engines. The testing of bioMSAR(TM)
on a marine vessel opens up the opportunity to test and use MSAR(R)
in the future.
The Original Engine Manufacturer ("OEM") resources required to
facilitate the trials are currently very limited due to a
significant backlog caused by the Covid-19 pandemic and a full
programme of testing on multiple future fuel solutions.
Participation of the OEMs is important to verify test plans and
results, which then leads to the required support from Class
Societies and Flag States for the vessel testing. As a result of
this backlog, OEMs are focusing their resources solely on fuels
which offer higher CO(2) reductions such as bioMSAR(TM). Testing of
MSAR(R) and bioMSAR(TM) by Wärtsilä Switzerland on their optical
combustion chamber is now scheduled for late Q2 2022, with injector
wear rig testing on bioMSAR(TM) scheduled for late Q3 2022.
We are currently working to finalise the LONO trial programme
and subsequent bioMSAR(TM) commercial terms with MSC, with trial
preparations commencing in Q2 2022 leading to the trials themselves
commencing before the end of this calendar year, and taking 9
months to conclude thereafter.
Utah - Our project in Utah involves using MSAR(R) technology to
emulsify low-sulphur 10-13deg API heavy oil, which can be recovered
from the billions of barrels of oil-sand deposits located at
Asphalt Ridge in Utah, USA. Some of the oil sands are mined, but
there are also high-quality heavy oil seams sub-surface at around
1000 feet. Oil samples were provided from the Petroteq Oil Sands
Plant operated by our client, Greenfield Energy LLC ("Greenfield"),
which is now wholly owned by AIM-listed TomCo Energy PLC ("TomCo"),
after their purchase of the remaining 50% stake in the Greenfield
JV in August last year from Valkor Technologies LLC ("Valkor"). The
oil samples were successfully converted to both MSAR(R) and
bioMSAR(TM) by our RDI team at QRF. Quadrise is now working with
TomCo and Valkor to source new commercial opportunities for MSAR(R)
and bioMSAR(TM) at sites in in Utah. The proposed means of oil
extraction at one such site in Utah is anticipated to be "carbon
negative" through the application of carbon capture and
sequestration. Exploration drilling at this site is well underway.
The current expectation is that production drilling at this site
will take place in the summer, following the receipt of the
required permits, with oil then available for conversion to
bioMSAR(TM) and MSAR(R) for client site trials during H2 2022.
These trials would then be expected to lead to commercial supply.
Discussions with stakeholders to finalise agreements and commercial
supply are in progress.
Morocco - We are currently working with the new client team to
update our Material Transfer and Cooperation Agreement, with the
intention of conducting site trials from Q2 2022. The first of
these trials will be at "Site B", which consumes around one third
of the client's annual HFO consumption, where 60mt of MSAR(R) will
be combusted. The Quadrise trial equipment is in Morocco, and with
the testing of bitumen samples for the MSAR(R) fuel production now
complete, production of the 60mt of MSAR(R) can commence upon
signature of the updated agreement. Following the Site B trial, the
results and a feasibility study for MSAR(R) use at a second client
site ("Site A") will be delivered to the client. A subsequent
commercial trial will then take place at Site A later in 2022,
subject to the client's maintenance programme. Assuming the
successful conclusion of these trials, the intention would then be
to conclude a commercial supply agreement covering one or more of
the client's sites in Morocco during H2 2022.
Americas - Discussions continue to progress with regard to
potential projects with power generators in Panama and Honduras,
and with the state oil companies and utility operators in Mexico.
Our regional agent network is being utilised to progress these
projects with Quadrise support as we expand our footprint in the
region.
Outlook
The downstream oil sector has had to adapt rapidly to changes in
demand driven by the IMO 2020 restrictions on marine sulphur
emissions, followed by the ongoing pandemic and, most recently,
Russia's invasion of Ukraine and the associated sanctions on
Russian oil exports. These changes affected the availability and
prices (relative to HFO) of refinery residuals utilised in MSAR(R)
and bioMSAR(TM).
Despite changes to oil consumption, the underlying crude oil
price has seen a very significant increase, which is positive for
the upstream sector and for Quadrise. The demand for HFO in the
power and marine sectors has also remained strong, the latter
driven by the increasing use of exhaust gas cleaning systems (or
"scrubbers") to comply with IMO 2020. Quadrise expects that
distillate fuel demand will continue to recover in 2022 driven by
the transportation sector. This will be positive for refinery
margins and the HFO-distillate spread, underpinning the economic
value of refinery residuals as an energy source for MSAR(R) and
bioMSAR(TM) in our key markets.
Prices of underlying biofuels and derivatives have also
increased dramatically during the last six months and this increase
continues to be driven by reduced supply as a result of Covid-19.
Price rises seen during 2021 appeared to be flattening and
softening at the start of 2022, however underlying biofuel prices
have spiked again, along with oil prices following the Russian
invasion of Ukraine. Crude glycerine prices have been subject to
similar trends as other biofuels and feedstocks. However, glycerine
pricing remains competitive based on refining of crude glycerine to
fuel grade when compared with biofuels such as FAME on both a unit
energy basis and relative CO(2) emissions savings
"well-to-wake".
The publicly supported global energy transition towards the
adoption of renewables and low emission fuel options is
accelerating interest in bioMSAR(TM) and increasing the market
opportunity in various sectors. During the next 12 months we plan
to demonstrate the long-term economic and environmental benefits of
MSAR(R) and bioMSAR(TM) projects through commercial-scale trials
which, on successful completion, will lead to supply contracts and
commercial revenues. In parallel, our RDI team is focused on
identifying and developing new Net Zero fuel solutions, as well as
looking into opportunities to deploy our MSAR(R) emulsion
technology platform in new applications.
During the period, there were some changes to our senior team.
Our former Chairman, Mike Kirk stepped down from his role following
the AGM on 26 November 2021 after six years with the Company. Mike
made a huge contribution during his time with Quadrise and left
with our very best wishes. I am glad to report that we welcomed
Phil Hill as our new COO in January, and then in February we were
delighted to announce the appointment of our new non-executive
Chairman, Andy Morrison. Both Phil and Andy have hit the ground
running and are supporting the Company in progressing projects
through to commercialisation. Our new arrivals and current team
will be instrumental in shaping the future of the Company as it
helps drive and benefit from the global energy transition to Net
Zero.
On behalf of the team at Quadrise, I would like to thank our
shareholders for their support and patience during the financial
year to date, and we look forward to being able to announce
material progress across our projects over the course of 2022.
Jason Miles
Chief Executive Officer
25 March 2022
Consolidated Statement of Comprehensive Income
For the 6 months ended 31 December 2021
Note 6 months 6 months Year ended
ended 31 ended 31 30 June
December December 2021
2021 2020 Audited
Unaudited Unaudited GBP'000
GBP'000 GBP'000
Continuing operations
Revenue 75 8 17
Production and development
costs (686) (645) (1,377)
Other administration expenses (743) (770) (1,527)
Fair value adjustments
arising on Convertible
Securities - (668) (1,257)
Share option charge 3 (165) (147) (303)
Warrant charge - - -
Foreign exchange gain/(loss) 1 (5) (9)
------------------------------- ----- ----------- ----------- -----------
Operating loss (1,518) (2,227) (4,456)
Finance costs (1) (51) (4)
Finance income - - 50
------------------------------- ----- ----------- ----------- -----------
Loss before tax (1,519) (2,278) (4,410)
Taxation - - 150
------------------------------- ----- ----------- ----------- -----------
Total comprehensive loss for
the period from continuing
operations (1,519) (2,278) (4,260)
-------------------------------------- ----------- ----------- -----------
Loss per share - pence
Basic 4 (0.11)p (0.21)p (0.36) p
Diluted 4 (0.11)p (0.21)p (0.36) p
------------------------------- ----- ----------- ----------- -----------
Consolidated Statement of Financial Position
As at 31 December 2021
Note As at As at As at
31 December 31 December 30 June
2021 2020 2021
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Property, plant and equipment 5 417 523 460
Intangible assets 6 2,924 2,924 2,924
Non-current assets 3,341 3,447 3,384
------------------------------- ----- ------------- ------------- ---------
Current assets
Cash and cash equivalents 5,590 1,111 7,006
Trade and other receivables 132 193 117
Prepayments 168 113 95
Stock 61 61 61
------------------------------- ----- ------------- ------------- ---------
Current assets 5,951 1,478 7,279
------------------------------- ----- ------------- ------------- ---------
TOTAL ASSETS 9,292 4,925 10,663
------------------------------- ----- ------------- ------------- ---------
Equity and liabilities
Current liabilities
Trade and other payables 259 314 276
Convertible securities 7 - 1,521 -
------------------------------- --------- --------- ---------
Current liabilities 259 1,835 276
------------------------------- --------- --------- ---------
Equity attributable to
equity holders of the parent
Issued share capital 14,069 10,774 14,069
Share premium 77,189 75,708 77,189
Merger reserve 3,777 - 3,777
Share option reserve 3,229 3,188 3,344
Warrant reserve 1,017 1,122 1,017
Reverse acquisition reserve 522 522 522
Accumulated losses (90,770) (88,224) (89,531)
------------------------------- --------- --------- ---------
Total shareholders' equity 9,033 3,090 10,387
------------------------------- --------- --------- ---------
TOTAL EQUITY AND LIABILITIES 9,292 4,925 10,663
------------------------------- --------- --------- ---------
Consolidated Statement of Changes in Equity
For the 6 months ended 31 December 2021
Issued Share Merger Share Warrant Reverse Accumulated
share premium reserve option reserve acquisition losses Total
capital GBP'000 GBP'000 reserve GBP'000 reserve GBP'000 GBP'000
GBP'000 GBP'000 GBP'000
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 July
2020 10,351 75,431 - 3,927 1,122 522 (87,324) 4,029
Loss and total
comprehensive
loss for the
period - - - - - (2,278) (2,278)
------------------------- ------- ------- ------ ------ ------ ----- ------------- ----------
Fair value adjustment
arising on Convertible
Securities - - - - - - 492 492
Share option
charge - - - 147 - - - 147
------------------------- ------- ------- ------ ------ ------ ----- ------------- ----------
Transfer of balances
relating to expired
share options - - - (886) - - 886 -
------------------------- ------- ------- ------ ------ ------ ----- ------------- ----------
Shares issued
upon exercise
of Convertible
Security 423 277 - - - - - 700
------------------------- ------- ------- ------ ------ ------ ----- ------------- ----------
Shareholders'
equity at 31
December 2020
- unaudited 10,774 75,708 - 3,188 1,122 522 (88,224) 3,090
------------------------- ------- ------- ------ ------ ------ ----- ------------- ----------
As at 1 January
2021 10,774 75,708 - 3,188 1,122 522 (88,224) 3,090
Loss and total
comprehensive
loss for the
period - - - - - - (1,982) (1,982)
Fair value adjustment
arising on Convertible
Security - - - - - - 1,072 1,072
------------------------- ------- ------- ------ ------ ------ ----- --------- ------------
Share option
charge - - - 156 - - - 156
------------------------- ------- ------- ------ ------ ------ ----- --------- ------------
Transfer of balances
relating to expired
warrants - - - - (105) - 105 -
------------------------- ------- ------- ------ ------ ------ ----- --------- ------------
New shares issued 2,599 639 3,777 - - - - 7,015
------------------------- ------- ------- ------ ------ ------ ----- --------- ------------
Share issue costs - - - - - - (502) (502)
------------------------- ------- ------- ------ ------ ------ ----- --------- ------------
Shares issued
upon exercise
of Convertible
Security 696 842 - - - - - 1,538
------------------------- ------- ------- ------ ------ ------ ----- --------- ------------
Shareholders'
equity at 30
June 2021 - audited 14,069 77,189 3,777 3,344 1,017 522 (89,531) 10,387
------------------------- ------- ------- ------ ------ ------ ----- --------- ------------
Consolidated Statement of Cash Flows
For the 6 months ended 31 December 2021
Note 6 months 6 months Year ended
ended 31 ended 31 30 June
December December 2021
2021 2020 Audited
Unaudited Unaudited GBP'000
GBP'000 GBP'000
Operating activities
Loss before tax from continuing
operations (1,519) (2,278) (4,110)
Fair value adjustments
arising on convertible
securities - 668 1,257
Finance costs paid 1 51 4
Finance income received - - (50)
Depreciation 5 61 70 135
Loss on disposal of fixed
assets - - 16
Share option charge 3 165 147 303
Working capital adjustments
(Increase)/decrease in
trade and other receivables (15) 20 96
(Increase)/decrease in
prepayments (73) (1) 17
(Decrease)/increase in
trade and other payables (17) 116 78
Cash utilised in operations (1,397) (1,207) (2,554)
--------------------------------- ----- ----------- ----------- -----------
Finance costs paid (1) (51) (4)
Taxation received - - 150
----------- -----------
Net cash outflow from operating
activities (1,398) (1,258) (2,408)
--------------------------------- ----- ----------- ----------- -----------
Investing activities
Finance income received - - 50
Purchase of fixed assets 5 (18) (11) (29)
Net cash (outflow)/inflow
from investing activities (18) (11) 21
--------------------------------- ----- ----------- ----------- -----------
Financing activities
Issue of ordinary share
capital - - 7,015
Issue costs - - (502)
Increase in convertible
securities 7 - - 500
Net cash inflow from financing
activities - - 7,013
--------------------------------- ----- ----------- ----------- -----------
Net (decrease)/ increase
in cash and cash equivalents (1,416) (1,269) 4,626
Cash and cash equivalents
at the beginning of the
period 7,006 2,380 2,380
--------------------------------- ----- ----------- ----------- -----------
Cash and cash equivalents
at the end of the period 5,590 1,111 7,006
--------------------------------- ----- ----------- ----------- -----------
Notes to the Group Financial Statements
1. General Information
Quadrise Fuels International plc ("QFI", "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(R) and bioMSAR(TM) 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.
QFI 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.
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
2021. Whilst the financial information included in this
announcement has been prepared in accordance with the recognition
and measurement requirements of UK IFRS, 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 2021 or 30 June
2020, but is derived from those financial statements. Financial
statements for the year ended 30 June 2021 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 2021 and 30 June
2020 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 2020 financial statements did
draw attention to matters by way of emphasis while the auditors'
report on the 30 June 2021 financial statements did not.
The directors have carried out a detailed assessment of going
concern as part of the financial reporting process. Following a
full review of the updated business plan, detailed budgets,
associated commitments and potential future risks associated with
COVID-19, Russia/Ukraine and Brexit, the directors have concluded
that the Group has adequate financial resources to continue in
operational existence for the going concern period, and therefore
continue to adopt the going concern basis in preparing the
accounts.
The interim accounts for the six months ended 31 December 2021
were approved by the Board on 25 March 2022.
The directors do not propose an interim dividend.
3. Share Option charge
On 3 September 2021 the Company granted a total of 14.5m share
options to Directors and Employees with a weighted average exercise
price of 5.7p and a weighted average fair value of 3.1p. The
options were granted in accordance with the provisions of (a) the
Company's Enterprise Management Incentive Plan ("EMI Plan"), in
respect of awards of an aggregate of 1,462,929 Options (the "EMI
Options") and (b) the Company's Unapproved Option Scheme 2016
("2016 Scheme") in respect of awards of an aggregate of 13,052,793
Options ("2016 Scheme Options").
Director Number of Options Plan Exercise
price
Mike Kirk 3,776,931 7.5p (3m
options)
2016 Scheme 1p (776,931
options)
------------------ ------------- ---------------
Jason Miles 9,275,862 2016 Scheme 7.5p (7.5m
options)
1p (1,775,862
options)
------------------ ------------- ---------------
Employees 1,462,929 EMI Plan 1p
------------------ ------------- ---------------
Total 14,515,722 - -
------------------ ------------- ---------------
The EMI Options and the 2016 Scheme Options granted with an
exercise price of 1p will vest on the first anniversary of grant
date. The 2016 Scheme Options granted with an exercise price of
7.5p will vest 50% on the first anniversary of the grant and 50% on
the second anniversary of the date of grant. All vestings are
subject to the satisfaction of certain performance conditions prior
to the vesting date. The 2016 Scheme Options and the EMI Options
will be exercisable from vesting until the eighth and tenth
anniversaries of grant respectively.
Due to the departure of Mike Kirk from his role as Chairman of
the Company effective 26 November 2021, the options above granted
to him shall not vest further and as a result these options lapsed
in full during the period.
During the period to 31 December 2020 the Company granted a
total of 10.0m share options to Directors with a weighted average
exercise price of 7.5p and a weighted average fair value of 2.1p.
On 21 August 2021 these options lapsed in full due to the specific
performance conditions of these options not having been met.
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 may be also
exercised within one year of an employee leaving the Group at the
discretion of the Board.
4. Loss Per Share
The calculation of loss per share is based on the following loss
and number of shares:
6 months 6 months Year ended
ended 31 ended 30 June
December 31 December 2021
2021 2020 Audited
Unaudited Unaudited
Loss for the period from
continuing operations (GBP'000s) (1,519) (2,278) (4,260)
Weighted average number
of shares:
Basic 1,406,903,048 1,063,639,425 1,175,406,844
Diluted 1,406,903,048 1,063,639,425 1,175,406,844
Loss per share:
----------------------------------- -------------- -------------- --------------
Basic (0.11)p (0.21)p (0.36)p
----------------------------------- -------------- -------------- --------------
Diluted (0.11)p (0.21)p (0.36)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 27.2 million exercisable share options and 40.2 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 Computer Software Office Plant Total
improvements equipment equipment and machinery
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
Opening balance
- 1 July 2021 74 98 43 16 1,397 1,628
Additions 5 1 - - 12 18
Disposals - - - - - -
--------------------- -------------------------- ----------- --------- ----------- --------------- --------
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)
Disposals - - - - - -
--------------------- -------------------------- ----------- --------- ----------- --------------- --------
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 2020 181 95 43 16 1,410 1,745
Additions - 3 - - 8 11
Disposals - - - - - -
--------------------- -------------------------- ----- ----- ----- ------ --------
Closing balance
- 31 December
2020 181 98 43 16 1,418 1,756
--------------------- -------------------------- ----- ----- ----- ------ --------
Depreciation
Opening balance
- 1 July 2020 (181) (89) (43) (16) (834) (1,163)
Depreciation charge
for the period - (2) - - (68) (70)
Disposals - - - - - -
--------------------- -------------------------- ----- ----- ----- ------ --------
Closing balance
- 31 December
2020 (181) (91) (43) (16) (902) (1,233)
--------------------- -------------------------- ----- ----- ----- ------ --------
Net book value
at 31 December
2020 - unaudited - 7 - - 516 523
--------------------- -------------------------- ----- ----- ----- ------ --------
Cost
Opening balance
- 1 July 2020 181 95 43 16 1,410 1,745
Additions - 3 - - 26 29
Disposals (107) - - - (39) (146)
--------------------- ------ ----- ----- ----- ------ --------
Closing balance
- 30 June 2021 74 98 43 16 1,397 1,628
--------------------- ------ ----- ----- ----- ------ --------
Depreciation
Opening balance
- 1 July 2020 (181) (89) (43) (16) (834) (1,163)
Depreciation charge
for the year - (3) - - (132) (135)
Disposals 107 - - - 23 130
--------------------- ------ ----- ----- ----- ------ --------
Closing balance
- 30 June 2021 (74) (92) (43) (16) (943) (1,168)
--------------------- ------ ----- ----- ----- ------ --------
Net book value
at 30 June 2021
- audited - 6 - - 454 460
--------------------- ------ ----- ----- ----- ------ --------
6. Intangible Assets
QCC royalty MSAR(R) Technology
payments trade name and know-how Total
GBP'000 GBP'000 GBP'000 GBP'000
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 as at 1 July
2020 and 31 December
2020 7,686 3,100 25,901 36,687
Amortisation and
Impairment
Balance as at 1 July
2020 and 31 December
2020 (7,686) (176) (25,901) (33,763)
Net book value at
31 December 2020
- unaudited - 2,924 - 2,924
----------------------- -------- -------- --------- ---------
Cost
Balance at 1 July
2020 and 30 June
2021 7,686 3,100 25,901 36,687
- - - -
Amortisation and
Impairment
Balance at 1 July
2020 and 30 June
2021 (7,686) (176) (25,901) (33,763)
Net book value at
30 June 2021 - audited - 2,924 - 2,924
------------------------- -------- ------ --------- ---------
Intangibles comprise intellectual property with a cost of
GBP36.69m, including assets of finite and indefinite life. QCC
royalty payments of GBP7.69m and the MSAR(R) trade name of GBP3.10m
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 GBP25.90m, 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 2021, the QCC royalty payments asset was
fully impaired and the MSAR(R) trade name asset had a net book
value of GBP2.924m. For the six month period to 31 December 2021,
there was no indication that the MSAR(R) 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 2021.
7. Convertible securities
On 22 August 2019, the Company entered into an agreement with
Bergen Global Opportunity Fund LP ('the Investor') whereby the
Investor agreed to provide up to GBP4.0 million of interest free
unsecured funding in two tranches via the issue by the Company of
Convertible Securities with a nominal value of up to GBP4.3
million, convertible into Ordinary Shares.
An initial tranche of Convertible Securities with a nominal
value of GBP2.15 million was subscribed for by the Investor for
GBP2.0 million on 30 August 2019. A second tranche of Convertible
Securities, with a nominal value of up to GBP537.5k was subscribed
for by the Investor for GBP0.5 million on 10 February 2021. Both
tranches had 24 month maturity dates from the dates of their
respective issuance, and any Convertible Securities not converted
prior to such dates will automatically convert into Ordinary Shares
at such time.
The Company also issued 4.9 million 36 month warrants to
subscribe for new Ordinary Shares to the Investor by way of a
Warrant Instrument initially exercisable at 5.78p per Ordinary
Share, subject to anti-dilution and exercise price reduction
provisions.
In connection with the Agreement, on 30 August 2020 the Company
also issued to the Investor 3,888,889 new Ordinary Shares in
settlement of a commencement fee of GBP140,000 and a further
4,500,000 new Ordinary Shares to collateralise the Agreement
subscribed for at nominal value by the Investor.
The Convertible Securities were only convertible to the extent
that the Company has corporate authority to do so, and it was a
term of the agreement that the Company must retain sufficient
authority to issue and allot (on a non-pre-emptive basis) a
sufficient number of Ordinary Shares potentially required to be
issued under the terms of the Agreement (and the Warrant
Instrument).
The Agreement was completed and both tranches funded to the
Company on the basis of the remaining Authority from the 2018
Annual General Meeting, and the updated authority obtained at the
27 September 2019 General Meeting of shareholders.
Debt and equity instruments issued by the Company are classified
as either financial liabilities or as equity. An equity instrument
is any contract that evidences a residual interest in the assets of
an entity after deducting all of its liabilities. Under the terms
of the Convertible Securities agreement of 22 August 2019, the
Company had no obligation to repay the securities in cash (unless
the Company defaulted on the terms) and the number of shares which
may be issued upon conversion was variable. As there was no
residual interest in the assets of the Company after conversion of
the Convertible Securities, the Convertible Securities met the
criteria to be classified entirely as a financial liability.
Tranches 1 and 2 of the Convertible Securities instrument were
designated at fair value on initial recognition. The fair value of
tranche 1 was assessed as GBP1.86m, being the nominal value of
GBP2.15m less interest and warrant charges. The fair value of
tranche 2, which had a nominal value of GBP537.5k was assessed as
GBP1.19m, with tranche 2 being fully converted on 30 April 2021,
and therefore no balance remains outstanding. Upon each exercise of
conversion rights, the portion of the Convertible Securities
converted was assessed at fair value, with the resulting fair value
adjustment being recorded in the Statement of Comprehensive
Income.
The fair value adjustment charge arising for the period of
GBPnil (2020: GBP668k) comprises fair value adjustments arising
upon initial recognition, revaluation as at balance sheet dates and
upon subsequent conversion.
During the term of the Convertible Securities agreement, the
Investor exercised their conversion rights as follows:
Conversion Convertible Conversion No. of Share price Fair value
date Securities price (p) shares on conversion adjustment
converted awarded date (GBP'000)
(GBP) upon conversion
23 March
2020 100,000 1.2 8,333,333 1.68 40
------------ ----------- ----------------- --------------- ------------
15 April
2020 100,000 1.2 8,333,333 1.64 36
------------ ----------- ----------------- --------------- ------------
22 June
2020 250,000 1.1 22,727,273 2.98 426
------------ ----------- ----------------- --------------- ------------
19 August
2020 300,000 1.6 18,750,000 2.90 244
------------ ----------- ----------------- --------------- ------------
7 September
2020 400,000 1.7 23,529,412 2.76 248
------------ ----------- ----------------- --------------- ------------
5 January
2021 500,000 1.8 27,777,778 3.01 336
------------ ----------- ----------------- --------------- ------------
26 January
2021 500,000 2.0 25,000,000 3.40 350
------------ ----------- ----------------- --------------- ------------
30 April
2021 537,500 3.2 16,796,875 5.50 386
------------ ----------- ----------------- --------------- ------------
Total 2,687,500 151,248,004 2,066
------------ ----------- ----------------- --------------- ------------
As at 31 December 2021, both tranches have been converted in
full, and no nominal value remains outstanding to the investor
under the terms of the Convertible Security instrument.
8. 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 GBP5k (31 December 2020: GBP5k). The balance payable at
the statement of financial position date was GBPnil (31 December
2020: GBP5k).
QFI 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.
9. Events After the End of the Reporting Period
On 1 February 2022 the Company announced the appointment of Andy
Morrison as Non-Executive Chairman with immediate effect.
10. Copies of the Interim Accounts
Copies of the interim accounts are available on the Company's
website at www.quadrisefuels.com.
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END
IR KQLFLLXLXBBD
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