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Moneyback on Petrol:
Market Cap
£23.09m
Change Today
Share Price
5.00p
Interim Results
Quadrise Fuels International PLC
25 March 2008
25 March 2008
Quadrise Fuels International plc
Interim Results for the six months ended 31 December 2007
Quadrise Fuels International plc, the specialist producer of low cost emulsion
fuels for use in power generation plants and other large scale steam raising and
energy consuming industries, announces its interim results for the six months
ended 31 December 2007.
Highlights
• The Company has made considerable progress in advancing its business over
the past six months since last reporting to shareholders
• Awareness and acceptance of the Quadrise re-fuelling proposition continues
to grow as the Company enters the early adoption phase
• Two lead projects are entering an accelerated development phase - an oil
field steam flooding project and a power plant refuelling
• The Company intends raising limited additional equity funds by mid 2008 for
the two lead projects expected to progress to full development within
12 months
• Operating costs, including both administrative overheads and project
development expenses, were contained within budget
• Akzo Nobel has formally confirmed the extension of the prime term of the
Alliance Agreement by 2 years to end 2011
Commenting, Bill Howe, Chief Executive Officer, said:
"Quadrise has made valuable progress on several fronts but the prime focus has
continued to be on the early delivery of our lead projects. We now expect to
contract with clients and progress two lead projects to full-scale development
within a 12 month time horizon. Commercialisation through these projects remains
our clear priority, but we are also active in positioning Quadrise in selective
developing oil producing economies, which have longer-term commitment to oil
fired power. The pre-commercial phase of our lead projects has taken longer than
anticipated, but I am greatly encouraged by the traction now achieved at the
project level, the enthusiasm of our clients, and the commitment of our staff
and associates."
For additional information, please contact:
Quadrise Fuels International plc +44 (0)20 7550 4930
Ian Williams
Bill Howe
Hemant Thanawala
Smith & Williamson Corporate Finance Limited +44 (0) 20 7131 4000
Azhic Basirov
Siobhan Sergeant
Capital MS&L +44 (0) 20 7307 5330
Penny Freer
Steffan Williams
Jennifer Martin
Chairman and CEO Statement
Business Review
The strategic review completed mid 2007 set the future priorities and path to
commercialisation for the Quadrise business. The strategy has two principal
thrusts which are being progressed in parallel. These are:
• to select and secure early re-fuelling project opportunities in OECD
territories which will create active commercial installations providing a
path to revenue, and live demonstration facilities.
• to position Quadrise in the longer term for fuelling major energy
consuming developments in oil producing countries like Saudi Arabia, Kuwait
and Mexico where oil based power generation will continue and grow.
In the six months to December 2007 significant progress was made on all fronts
within the framework of this guiding strategy.
Power Plant Refuelling
Experience has tempered our earlier expectations of lead times to closing
re-fuelling project contracts. In practice the development stages are
sequential, progressing on success.
Quadrise is currently pursuing the refuelling of three oil fired power plants
located in North America and Europe. Our lead power plant refuelling project is
the alignment of a major European refiner and a power company to create an MSAR
manufacturing facility.
Significant progress has been made on this project:
• An MSAR manufacturing facility will be established on the refiner's site
during Spring 2008.
• This facility will supply sufficient fuel for one month of operation of a
super-critical power plant fitted with advanced pollution control facilities
that meet stringent European environmental standards.
• MSAR fuel will be produced and sold under separate agreements under
negotiation with the refinery and power company.
• Commercial rates will apply to the initial batch of MSAR fuel, largely
offsetting Quadrise's production costs of US$5 million.
• Subject to finalisation of contracts, Quadrise will install a permanent
MSAR production facility at the refinery capable of servicing 600MWe of
base-load power from end 2009.
In addition, two North American opportunities are following a similar process of
alignment between identified refineries and power companies. These projects are
trailing the European development by approximately six months.
Oil Field Development
Our second lead project is underway with a European oil company involved with a
Western Hemisphere oil field where production is currently in decline. MSAR fuel
will be combusted to raise steam which will increase the production of some 5000
wells in the oil field.
• MSAR technology provides the only feasible short-term solution for steam
generation and the economics are very favourable.
• The prospective benefits of MSAR are sufficiently attractive for the oil
company to reimburse Quadrise for its costs for the technical development of
the project.
• Subject to project development approval, we expect to establish a permanent
MSAR production facility on site within 12 months.
• The capacity of this plant would be expanded progressively, to potentially
more than 500,000 tonnes of MSAR per annum.
Quadrise owes the growing momentum in progressing its lead prospects to the high
calibre expertise of its management team and its keen focus on projects with
positive economic fundamentals for MSAR technology. Whilst we still have hurdles
to overcome, we are optimistic that these lead projects will demonstrate the
commercialisation of the technology and facilitate its wider application in
Quadrise's other target markets.
Quadrise Canada Corporation (QCC)
QCC, in which the Company presently holds approximately 19% of the equity, had a
very successful period from an operating perspective. Extensive large scale
trials were conducted at the R&D facilities of Alsthom Power in Connecticut,
USA. These trials were attended by many oil and power sector representatives,
including potential Quadrise customers. Visitors were impressed by the technical
performance and pollution characteristics of MSAR fuel. QCC also made positive
progress on new technical initiatives, including successful first patent
registration of their proprietary CO2 capture technology. These initiatives hold
high promise for the future.
QCC's core market, manufacture of MSAR as a steam raising fuel for heavy oil
production in Canada, continues to hold high potential. This market has however
suffered implementation delays due to the magnitude of the projects, as well as
fiscal and permitting issues.
This has coincided with a fund raising cycle and has resulted in QCC's early
2008 fund raising being set, on advice, at C$3.00 per share. This is a
substantially lower price than had been anticipated. The Quadrise board
considers this reduction in price to be an aberration reflecting the very
difficult current financial market conditions and believes that the fundamentals
of the QCC core business remain extremely positive. In the circumstances the
board of Quadrise has decided that a value of C$6.00 should be applied to our
holding at this time. This results in a write down of £4.45 million in the value
of our QCC shareholding in our interim accounts.
Akzo Nobel
Akzo Nobel works very closely with the Company and continues to provide valued
technical support to all our projects.
Recognising the progress made by Quadrise in developing its lead opportunities,
Akzo Nobel has formally agreed to extend the date of first notice of termination
of the Alliance Agreement under which Quadrise operates by a further two years.
The Alliance Agreement will now run until at least December 2011.
Ian Williams
Chairman
Bill Howe
Chief Executive Officer
Consolidated Income Statement
For the 6 months ended 31 December 2007
6 Months 6 Months
Note ended ended 18 Months
31 December 31 December ended
2007 2006 30 June 2007
Unaudited Unaudited Audited
£'000 £'000 £'000
Continuing operations
Other income 11 94 287
Write-off of goodwill
on acquisition - - (584)
Write-down of
investments 6 (2,445) - -
Amortisation of
intangible assets (3,456) (3,456) (8,646)
Administration expenses (1,298) (919) (3,439)
------- ------- --------
Operating loss 3 (7,188) (4,281) (12,382)
Finance costs - - (126)
Finance revenue 155 247 507
Loan write-off gain - - 115
Foreign exchange
(losses)/gains (343) 3 10
------- ------- --------
Loss before taxation (7,376) (4,031) (11,876)
Taxation - - (41)
------- ------- --------
Loss for the period from
continuing operations (7,376) (4,031) (11,917)
------- ------- --------
Loss per share - pence
Basic 4 (1.59) p (0.95) p (2.74) p
Diluted 4 (1.59) p (0.95) p (2.74) p
Consolidated Balance Sheet
As at 31 December 2007
As at As at As at
31 December 31 December 30 June
2007 2006 2007
Unaudited Unaudited Audited
Notes £'000 £'000 £'000
Assets
Non-current assets
Intangible assets 5 24,585 31,521 28,041
Available for sale
investments 6 11,684 15,914 16,131
Equipment 1 1 1
------ ------ ------
Non-current assets 36,270 47,436 44,173
------ ------ ------
Current Assets
Cash and cash equivalents 4,787 10,615 5,874
Trade and other receivables 247 206 66
Prepayments 5 43 7
------ ------ ------
Current Assets 5,039 10,864 5,947
------ ------ ------
TOTAL ASSETS 41,309 58,300 50,120
------ ------ ------
Equity and liabilities
Non-current liabilities
Deferred tax - 600 -
------ ------ ------
Non-current liabilities - 600 -
------ ------ ------
Current liabilities
Trade and other payables 688 3,906 755
Tax payable - 39 -
------ ------ ------
Current liabilities 688 3,945 755
------ ------ ------
Equity attributable to equity
holders of the parent
Issued capital 4,617 4,617 4,617
Share premium 53,634 53,565 53,634
Revaluation reserve - 2,002 2,002
Other reserves 1,663 276 1,029
Accumulated losses (19,293) (6,705) (11,917)
------- ------ -------
Total shareholders' equity 40,621 53,755 49,365
------- ------ -------
TOTAL EQUITY AND LIABILITIES 41,309 58,300 50,120
------- ------ -------
Consolidated Statement of Changes in Equity
For the 6 months ended 31 December 2007
Accumulated Share Share Revaluation Share Foreign Reverse Total
Losses Capital Premium reserve Option currency acquisition
reserve reserve reserve
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Loss for the
financial period (7,376) - - - - - - (7,376)
Revaluation of
QCC shares - - - (2,002) - 342 - (1,660)
Share options reserve - - - - 292 - - 292
------ ----- ----- ------ ----- ---- ----- ------
Net change in
shareholders'
equity (7,376) - - (2,002) 292 342 - (8,744)
Shareholders'
equity brought
forward at 1 July
2007 (11,917) 4,617 53,634 2,002 507 - 522 49,365
------- ----- ------ ------ ----- ---- ----- ------
Shareholders'
equity at
31 December 2007 (19,293) 4,617 53,634 - 799 342 522 40,621
------- ----- ------ ------ ----- ---- ----- ------
Consolidated Cash Flow Statement
For the 6 months ended 31 December 2007
6 Months 6 Months 18 Months
ended ended ended
31 December 31 December 30 June
2007 2006 2007
Unaudited Unaudited Audited
£'000 £'000 £'000
Operating activities
Loss before tax from
continuing operations (7,376) (4,031) (11,876)
Interest expense - - 126
Interest income (89) (247) (507)
Income tax paid - - 41
Write-down of investments 2,445 - -
Write-off of goodwill on
acquisition - - 584
Write-down of intangibles 3,456 3,456 8,646
Foreign exchange gain 343 (3) (10)
Share-based payments expenses 292 - 507
Write-off of capitalised
development costs - 856 911
Forex gain/(loss) on
investments - (104) (115)
------ ------- -------
Working capital adjustments (929) (73) (1,693)
Increase in trade and
other receivables (186) (206) (73)
(Decrease)/increase in
trade and other payables (127) 181 (427)
------- ------- -------
Cash outflows from operations (1,242) (98) (2,193)
Interest paid - - (126)
Income tax paid - - (41)
------- ------- -------
Net cash outflows from
operating activities (1,242) (98) (2,360)
------- ------- -------
Investing activities
Purchase of investments
held-for-sale - - (845)
Acquisition of subsidiaries,
net of cash acquired - - (3,416)
Interest received 155 247 507
------- ------- -------
Net cash inflows/(outflows)
from investing activities 155 247 (3,754)
------- ------- -------
Financing activities
Proceeds from issue of shares - - 12,940
Transaction costs incurred
with share issues - - (952)
Net cash inflows from
financing activities - - 11,988
Net (decrease)/increase in cash
and cash equivalents (1,087) 149 5,874
Cash and cash equivalents at the
beginning of the year 5,874 10,466 -
------- ------ ------
Cash and cash equivalents at the
end of the year 4,787 10,615 5,874
======= ====== ======
Notes
1. General Information
Quadrise Fuels International plc ("QFI", "Quadrise", "Company") and its
subsidiaries ("the Group") are engaged principally in the manufacture and
marketing of emulsified fuel for power generation and steam raising activities.
The Company's ordinary shares are listed on the AIM market of the London Stock
Exchange.
QFI, the legal parent company, was incorporated on 22 October 2004 as a limited
company under the Companies Act with registered number 05267512. It is
domiciled at, and is registered at Parnell House, 25 Wilton Road, London SW1V
1YD.
2. Basis of Preparation
The interim accounts have been prepared in accordance with International
Financial Reporting Standards and on the basis of the accounting policies set
out in the June 2007 annual report and accounts. The interim report is unaudited
and does not constitute statutory accounts as defined in Section 240 of the
Companies Act 1985, but is based on the latest statutory accounts. These accounts
upon which the auditors issued an unqualified opinion, have been delivered to
the registrar of companies.
The interim report for the six months ended 31 December 2007 was approved by the
Directors on 20 March 2008.
3. Operating loss
Operating loss is stated 6 Months ended 6 Months ended 18 Months ended
after charging: 31 December 2007 31 December 2006 30 June 2007
Unaudited Unaudited Audited
£'000 £'000 £'000
Goodwill write off - - 584
Amortisation charge on
intangible assets 3,456 5,188 8,646
Investment write-off -
refer note 6 2,445 - -
Share option charge 292 - 507
4. Loss Per Share
The calculation of loss per share is based on the following loss and number of
shares:
6 Months ended 6 months ended 18 Months ended
31 December 2007 31 December 2006 30 June 2007
Loss for the period from (7,376) (4,031) (11,917)
continuing operations (£000's)
Weighted average number of shares:
Basic 461,726,857 424,774,023 435,424,442
Diluted 461,726,857 424,774,023 435,424,442
Loss per share:
Basic (1.59) p (0.95) p (2.74) p
Diluted (1.59) p (0.95) p (2.74) p
5. Intangible assets
£'000
Intellectual Property
Cost
At 1 July 2007 36,687
Additions -
------
At 31 December 2007 36,687
------
Amortisation
At 1 July 2007 (8,646)
Charge for the period (3,456)
-------
At 31 December 2007 (12,102)
--------
Net book value at 31 December 2007 24,585
--------
Net book value at 1 July 2007 28,041
--------
Intangibles include intellectual property of £36.7m acquired from Quadrise
International Ltd., on 19 April 2006, which comprises assets of finite and
infinite life. Quadrise Canada Corporation's royalty income of £7.7m and the
MSAR Trade name of £3.1m are termed as assets having infinite life and hence
not amortised. The remaining intangibles amounting to £25.9m, which is primarily
made up of technology and know-how, are considered as finite assets and
amortised over 45 months. The Board has adopted an amortisation policy on those
assets, which have a finite life. As a consequence of adopting this policy, a
non-cash charge of £3.5m has been recognised in the income statement during the
period.
6. Available for Sale Investments
Unquoted securities represent the Group's investment in Quadrise Canada
Corporation and Paxton Corporation, both of which are incorporated in Canada. As
at the balance sheet date the Group held a 19.19% share in the ordinary issued
capital of Quadrise Canada Corporation and a 7.77% share in the ordinary issued
capital of Paxton Corporation. The Directors do not consider that they have
significant influence over either entity and as such these investments are not
accounted for as associates.
As at the period end, the directors have performed a review of the fair value of
the unquoted securities. Due to the lack of an active market in either of the
securities, the directors considered other factors such as past equity placing
pricing and independent assessment of risked net present value of the
enterprises to arrive at their conclusion of the fair value. As a result of that
review, the directors have concluded that the carrying value of Quadrise Canada
Corporation should be adjusted to C$6.00 per share in the accounts. The most
recent independent assessment of the risked net present value of the enterprise
is however C$16.65. With regard to Paxton Corporation, the directors have
concluded from their review that no adjustment is necessary as at the period
end.
7. Copies of the announcement
Copies of the announcement will be available on the Company's website at
www.quadrisefuels.com and from the Company's registered office, Parnell House,
25 Wilton Road, London SW1V 1YD for a period of one month.
This information is provided by RNS
The company news service from the London Stock Exchange