Annual Report and
Financial Statements 2015
Contents
2
3
Company Statement
Quadrise MSAR® fuel
5
MSAR® and the environment
6 Projects
7
Chairman’s Statement and Business Review
20 Financial Review
22 Strategic Report
25 Directors
27 Directors’ Report
31
Statement of Directors’ Responsibilities
32
Report on Directors’ Remuneration
34
Corporate Governance Statement
36
Independent Auditors’ Report
38 Consolidated Statement of Comprehensive Income
39
Consolidated Statement of Financial Position
40 Consolidated Statement of Changes in Equity
41
Consolidated Statement of Cash Flows
42
Company Statement of Financial Position
43
Company Statement of Changes in Equity
44
Company Statement of Cash Flows
45
Notes to the Financial Statements
70 Corporate Information
Quadrise Fuels International plc
Annual Report and Financial Statements for the year ended 30 June 2015
Highlights
Contracts executed with Mærsk Line A/S and CEPSA for the production of
Marine MSAR® at CEPSA’s San Roque refinery to supply the 4,000 hour seaborne
Operational Trial Programme due to commence H1 2016. Completion of the
Operational Trial Programme, to support the issue of LONOs by participating
marine engine manufacturers, targeted end Q1 2017, leading to progressive
development of supply sources and global commercial roll-out.
In Saudi Arabia, the focus is now on a fast track ‘production to combustion’
demonstration pilot project, including an extended trial of MSAR® fuel firing at
a 400MWe thermal power unit within a large power station complex. A refinery
has been designated for the installation of an MSAR® manufacturing unit with
commissioning anticipated by Q2 2016.
The substitution of heavy fuel oil in oil refinery steam and power generation
has been identified as an MSAR® target market in its own right, presenting an
opportunity for refiners to reduce costs and potentially generate power and
steam for external sale. Quadrise is currently leading a feasibility assessment with
a mid-sized refinery and anticipating a pilot plant installation during H1 2016.
Three specialist executive appointments during 2015 considerably strengthened
Quadrise management in anticipation of the rapidly growing workload.
Additionally, former specialist consultants have been converted to full time
employees, and R&D facilities and capacity have been expanded and enhanced.
The Group remains debt free, with £8.4 million in cash reserves at 30 June 2015,
and has cumulative tax losses of £40.7 million available for set-off against future
profits. Group operating costs were held within budget and funds available are
expected to meet the Company’s needs for the remaining phases of lead projects
through to early continuous revenues.
Company Registration No. 05267512
1
Company Statement
Quadrise Fuels International plc (“QFI”) was listed
on the London Stock Exchange AIM market in
April 2006. QFI aims to be the premier global
oil-in-water emulsion fuels company. Through
our alliance with AkzoNobel, Quadrise has the capability
to provide first class technology, services and MSAR® fuel
products to our partners and customers.
Quadrise MSAR® fuels offer a low cost substitute for
conventional heavy fuel oil (“HFO”) for use in thermal
and diesel power generation plants and in industrial and
marine diesel engines. The worldwide HFO market
exceeds 500 million tons, with a current value in excess
of US$100 billion per annum.
Our management and board have extensive background
and experience in the specialised energy sectors involved,
and an unparalleled track record in commercial emulsion
fuels development and supply in marine fuels, oil refining,
power generation and general industrial applications.
Corporate structure
100% QFI
93.75% QIL/6.25% Management1
100% QFI
2
Quadrise MSAR® fuel
MSAR®: A proven, established technology
MSAR® technology draws on over 25 years of experience in the production of oil-in-
water emulsion-based asphalts and fuels. A direct substitute for HFO, MSAR® fuel is
establishing an enviable reputation as Quadrise engages with some of the largest
corporations in the energy and transport sectors.
MSAR® is a direct low cost substitute for
conventional Heavy Fuel Oil (“HFO”) used
in marine diesel engines, and for thermal
power and steam generation. MSAR®
technology is a potential game-changer for oil refiners
as it frees up valuable distillates traditionally used for
HFO manufacture, increasing profitability without
incurring significant expenditure.
The global HFO market exceeds 500 million tons
per annum, of which approximately one third is used in
marine applications (as bunker fuel oil).
tie-ins being incorporated into scheduled maintenance
shutdowns. The MSAR® fuel that is produced is:
n extremely stable, with storage and handling possible
at ambient conditions
n transported to end-users in the same way as HFO.
MSAR®: How it works:
The MSAR® production process is relatively simple:
The potential market for MSAR® is substantial; Quadrise
is focusing on two significant market segments:
1 Oil residues are taken from refinery rundowns and
cooled to under 200°C to achieve the required
viscosity (typically 300–500 centistokes).
n Marine MSAR®, a replacement bunker fuel, under joint
development with A.P. Møller-Mærsk, the world’s
leading container shipping company.
2 Water, which can be derived from several utility
or waste-water sources, is added to the residue.
n MSAR®, a replacement HFO for stationary applications:
under joint development with several major oil and
power generation companies globally.
3 Special surfactants and chemicals are added to
stabilise the emulsion for long-term storage and
transport, and to promote complete combustion.
4 The mixture is processed in a proprietary MSAR®
MSAR® technology is modular and can be integrated into
an oil refinery in under 12 months, with any necessary
unit to a high hydrocarbon content (typically 70%)
oil-in-water emulsion.
The MSAR® production process
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MSAR® versus HFO: key benefits for end users
Compared with HFO, MSAR® fuel offers:
n typically 10–20% cost savings per unit of energy
n at least 20% lower NOx emissions. MSAR® is a
pre-atomised fuel with a hydrocarbon particle
size of 5–10 microns (atomised fuel oil droplets
are typically 50–100 microns) and therefore
has enhanced combustion properties
n lower energy consumption. Unlike HFO, MSAR®
fuel can be handled at ambient temperature
and generally does not need to be heated for
viscosity control
n emissions of sulphur dioxide and carbon dioxide
that are generally equivalent to those incurred from
burning HFO.
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QUADRISE FUELS INTERNATIONAL plc | ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 2015 MSAR® and the environment
Lowest CO2 option to meet forthcoming
marine specifications
Residual fuels have higher levels of sulphur and
impurities than distillate fuels, such as gas oil or diesel.
Therefore, where environmental legislation dictates,
either emissions scrubbing equipment is required or a
switch to a distillate or low sulphur fuel is needed for
compliance purposes. This is especially relevant in the
marine sector, where MARPOL fuel sulphur limits will
reduce in the future:
Lower energy
The MSAR® process transforms hydrocarbons that are
solid at room temperatures into a product that can be
stored and transported at ambient temperatures. As a
result the energy requirements for handling and trans-
porting MSAR® are lower than HFO, which is generally
heated to temperatures of 50-100°C.
Lower NOx & PM (Black Carbon)
The emulsification of heavy fuels has been shown over
the years to be the most effective way of simultaneously
reducing particulate matter (“PM”) that includes unburned
carbon (also known as “Black Soot” or “Black Carbon”)
and nitrogen oxide (“NOx”) emissions during combustion.
MSAR® fuel is extremely stable, therefore it can be
distributed optimally in the combustion zone. Water
in the fuel immediately evaporates, causing secondary
atomisation and reducing combustion temperatures,
typically reducing NOx emissions by 20% or more.
NOx gases are significant atmospheric pollutants that
contribute to the formation of smog. NOx reacts with
ammonia, moisture, and other compounds to form nitric
acid vapour and related particles. Inhalation of these
particles can cause respiratory disease and lung damage.
Stringent targets therefore need to be met from utility
and marine fuel consumers.
Black Carbon results from the incomplete combustion of
hydrocarbon which associates with PM. Black Carbon is
estimated to be 5–15% of shipping particulate emissions.
It has the ability to warm the earth by absorbing heat in
the atmosphere and reducing the ability, on deposition,
for snow and ice to reflect sunlight. Studies indicate that
unburned carbon particulate emissions are the second
largest contributors to global warming.
The global debate currently is whether there will be
sufficient distillate fuels available to meet this potential
future demand. Refiners are questioning whether
to invest in the necessary upgrading equipment,
especially as the financial returns for these billion dollar
investments are uncertain and the overall environmental
impact (including increased CO2 emissions) are worse
from cradle to grave when compared with the status quo
of HFO plus scrubbing.
At a macro level, any refinery converting to MSAR®
technology increases the output of distillate hydro-
carbons and reduces the amount of hydrocarbons in the
conventional HFO ‘pool’. The investment for MSAR® is
several orders of magnitude less than the conventional
upgrading alternative and the environmental impact for
the refiner is significantly lower.
As some of the refinery cost savings for MSAR® versus
HFO production can be passed to the consumer, the
capital cost of installing scrubbing equipment can be
subsidised. This concept of ‘affordable compliance’ guides
Quadrise in commercialising MSAR® fuel.
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Projects
Marine
Refinery Refuelling
The Company has identified a refinery based line of
business involving the substitution of conventional
heavy fuel oil with MSAR® for the generation of steam
and power within refineries, principally for their own
use. Refining companies frequently have installed power
generation capacity in excess of their own needs and,
with reduced fuel costs, have the scope to earn revenues
by generating and exporting power.
One such opportunity for a MSAR® pilot demonstration
(production to combustion) has progressed with a mid-
sized refining company. A detailed design feasibility
study is underway in four phases, for completion
and consideration in Q1 2016, and includes proposed
commercial terms for implementation and future
operations. The installation of plant and the initial
demonstration will be managed by QIL and, on success,
the MSAR® fuelling will be extended to several refinery
based utilities on a progressive basis.
Other Opportunities under development
The PowerSeraya power project remains as attractive as
ever, and we are confident that a ‘manufacturing and
supply chain’ can be established to supply the Singapore
bunker market. The participation of a local or regional
refiner has yet to be negotiated but this should change
with the advent of Marine MSAR® production. Having
two marketing opportunities (marine and power) will
encourage refiners still reluctant to install process plant
based on single client supply.
There is also a potential Singapore availability link with
the confidential on-going extended technical assessment
programme with a Global Major which could provide
the solution to the PowerSeraya supply chain. Quadrise
remains convinced that there is sufficient attraction
for both refinery and the power company to assure a
positive future result. QIL and PowerSeraya have again
agreed a 12 month extension to their Memorandum of
Understanding.
Unsolicited approaches concerning projects in areas such
as the Former Soviet Union, the Caribbean, Asia and
Africa continue to be received. Where they have merit
the Company has confirmed conditional interest.
Quadrise has joint development and royalty agreements
with A.P. Møller-Mærsk to commercialise Marine MSAR®
fuel, and a multi-company team has worked closely
throughout the development process with major engine
manufacturers and selected refiners.
In July 2014, Mærsk formally advised that Proof of
Concept requirements had been satisfied, and this
cleared the way for the extended seaborne “Operational
Trial” required to provide performance data based on
which engine manufacturers will, if satisfied, issue
Letters of no Objection.
On 16 September 2015 contracts were executed between
Quadrise International Limited, Mærsk Line and CEPSA to
produce Marine MSAR® at the San Roque refinery adjacent
to the Algeciras bunker hub servicing the EU/Med market.
The timetable now anticipated will see the installation
and commissioning of the first MSAR® manufacturing
unit in mid H1 2016 subject to local and governmental
permitting in Spain. The timetable is now contractually
committed and the seaborne programme will commence
as soon as the MSAR® fuel is available at San Roque/
Algeciras. The seaborne programme, based on 4000 hours
of continuing engine service, will require some 10 months.
The LONO is the last remaining pre-condition to the
commercial phase and progressive ‘roll-out’ to the first
set of selected vessels.
Power
The business opportunity in the Kingdom of Saudi
Arabia (“KSA”) is the production of MSAR® fuel by Saudi
refineries to replace potentially one third of the 30
million tons heavy fuel oil and crude oil currently used
in thermal power generation. Power demand in KSA is
growing very rapidly and the scale and potential of the
opportunity are clearly exceptional.
By converting from heavy fuel oil to MSAR® in
‘qualifying’ refineries, large volumes of distillates would
be released, adding significant value to refinery yields.
The KSA trial timetable targets installation of process
plant in the designated major coastal refinery complex
in time for commissioning in H1 2016. This should ensure
MSAR® fuel is available for an extended combustion trial
in a 400MWe generation unit at the nominated power
station, which has coastal receipt facilities and
an aggregate production capacity of over 5,000MW.
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Chairman’s Statement
and Business Review
I am pleased to present this Annual Report for Quadrise
Fuels International plc (“Quadrise”, the “Company”, “QFI”
and together with its subsidiaries, the “Group”) for the
year ended 30 June 2015 together with recent events.
Business Overview
The past year has been especially challenging for
Quadrise on many fronts but, as advised to investors
during September, very material progress has been
made in our key programmes, and much of the future
pathway to commercial operations is now contractually
underpinned. The global oil price collapse, related delays
in settling terms with key counterparties and legal
constraints on interim disclosure combined with adverse
stock market conditions clearly impacted investor
confidence. While not as far advanced as had been
planned and intended by this time, the Company is now
more assured of progressing to the prime objective of
sustainable commercial multi-source revenues than at
any previous time.
The senior executive team of Quadrise International
Limited (“QIL”), the 100% Group owned principal
operating subsidiary company, has been
considerably strengthened by selective
recruitment, conversion of consultants to
employees and organisational restructuring.
The collective effort is focussed on business
development – converting relationships and
opportunities progressively to contracts,
operations and revenue. In this regard the
Quadrise capacity to perform and deliver has been
very significantly enhanced and the Company is fully
equipped and effectively structured to deliver the
business programme. Whilst the near term focus remains
the Marine MSAR® and Saudi Arabian ventures, both of
which are assuming increased scale and complexity, the
Company has identified and continues to selectively
progress additional initiatives and projects to broaden
the business base, and to add significant future value to
the Group.
Quadrise clients are generally large companies that
produce and consume heavy fuel oil (“HFO”) in particular
in the marine and power generation markets. Qualifying
oil refiners can produce MSAR® fuel under licence using
our technology and QIL’s specialist services. By converting
from ‘conventional’ processing the refiner increases its
own margin and is able to supply former HFO consumers
with a superior and cheaper fuel. These markets are very
large with annual global HFO demand exceeding 500
million tons per annum with an aggregate value of over
US$ 100 billion even at current low oil prices. The Marine
market accounts for approximately 40% of this demand,
most of which is ‘open ocean’ heavy bunker fuel oil.
Marine and power generation fuel oil consumers and
the oil refining industry face unrelenting pressure to
improve efficiency and reduce cost. Our technology
offers a “win–win” proposition to these markets. Semi-
complex oil refineries can step-change margins at very
modest investment, whilst offering the MSAR® consumer
cost and environmental benefits with performance
efficiencies from improved combustion and lower
emissions.
The Quadrise proposition remains attractive in conditions
of both economic growth and recession and through a
wide range of oil prices. Longer term economic trends
and energy fundamentals continue to validate this
proposition, as the demand for distillate transportation
The Company is now more assured of
progressing to the prime objective of
sustainable commercial multi-source
revenues than at any previous time.
fuel is expected to remain relatively strong. While,
directionally, a firm crude oil price tends to support
the refiner’s economics when converting to MSAR®
production, the inter-product price spread is the principal
driver of the Quadrise value-add. This is the price
differential between residue-based fuel oil and distillate
diesel fuel. A wider spread yields more value – and the
global trend has been for growth in distillate demand
to exceed that for fuel oil thereby widening the price
differential – which is very positive for the Company’s
future margin prospects. Experience through 2015 has
been that even when oil prices have entered a US$40 per
barrel range, the economics of the Quadrise processing
mode have remained both viable and relatively
attractive. Informed industry forecasters and forward
market price projections suggest a widening spread will
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remain a long term feature. The production of shale
gas and shale oil, notably in North America, may well
impact global oil and gas supply, demand, movements
and prices, but is not expected to materially impact our
longer term business opportunity in target markets.
In developing the Marine and Saudi MSAR® programmes,
the Company has had to establish relationships with
leading corporates in their respective industries. The
scale and complexity has been challenging as Quadrise
is required to work within our clients’ programmes,
standards and timetables. During the past year several
new associations have been formed, especially within the
refining industry and notably with Compañía Española de
Petróleos S.A.U. (“CEPSA”), a leading oil company. While
the pace of progress during 2015 did not fully meet
prior expectations, valuable experience has been gained
which should reduce lead times in future projects. A very
positive emerging feature is the depth of enthusiasm
which has built progressively within the refining, shipping
and power companies involved with our programmes as
they have gained confidence in the technical validity and
economic promise of the Quadrise proposition.
The more important developments during the period
under review have been:
1. Completion of the management resourcing
programme to secure expertise and services through
conversion of former consultants to employees, and
recruitment of high calibre specialists to the newly
created general management positions to provide
capacity to create, manage
and deliver the future business
development plan.
2. Execution of the tri-partite
Operational Trial and
Collaboration agreements with
Mærsk Line A/S (“Mærsk Line”)
and CEPSA which commit all parties to a programme
intended to result in the issue of LONOs by marine
engine manufacturers to provide the basis for the
future development of the Marine MSAR® fuels
market.
3. The agreed revision and extension of the Royalty
Agreement between A. P. Møller-Mærsk A/S (“Mærsk”)
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and QIL and its novation to Mærsk Line. The revision
serves to further clarify the rights and obligations
of both parties and commits them to work jointly
in developing the market for Marine MSAR® and
procuring its availability through qualifying refiners to
serve both Mærsk Line and third party requirements
at key global supply locations.
4. The designation by Saudi Aramco of the coastal
refining complex and the power station and
production units which will be used for the planned
‘production to combustion’ extended demonstration
pilot programme scheduled now to commence in
Q2 2016.
Financial Overview
The Group held cash and cash equivalents of £11.1 million
as at 1 July 2014 following a successful equity placing
raising gross £10.7 million which closed on 5 March
2014. Prior business plans underlying the 2015 budget
and the associated medium term revenue and cash
flow projections did forecast that the funds then held
would be sufficient to take the company through to the
sustainable revenue phase.
The slippage now affecting both programmes has
had two principal effects, actual expenditure during
2015 fell below budget as activities were delayed, and
the ‘early commercial phase’ with related continuous
revenues will occur later in the planning period. The
combination of these factors should assure that
A very positive emerging feature is the depth
of enthusiasm which has built progressively
within the refining, shipping and power
companies involved with our programmes.
available funds meet requirements for the remaining
pre-commercial phases of the lead programmes
through to early continuous revenues. In the longer
term, any substantial change to funding requirements
are only likely to be associated with significant new
business developments or a change in ‘business’ mode.
In both cases it will be possible to assess and plan
for any such requirements well in advance and, when
QUADRISE FUELS INTERNATIONAL plc | ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 2015 doing so, to make judgements on the most appropriate
form of funding (i.e. debt or equity) to use to balance
risk and optimise shareholder interest.
The oil price collapse impacted directly on the
prospective joint venture project with Ecopetrol in
Colombia. With oil revenues falling, venture
participation was declined by Ecopetrol, and
Quadrise could not have gone forward without
exposure to ‘merchant plant’ risk in any
combination with third party venture partners.
As the Group is not funded for this exposure in
the near term it was decided to defer
any further activity on the project and to redirect
resources on developing refinery power and steam
re-fuelling opportunities as a specialist sector. This has
the added advantage of reducing the call for capital
expenditure in the revised medium term business plan.
Tight control has been maintained on all expenditure,
and the year closed with costs and cash spend below
planned levels. While, in principle, the policy of client
contribution to pre-commercial costs continues, the
Company has agreed on a selective basis to bear a
greater share of pre-commercial costs where this
will facilitate client commitment and reduce time to
market. During the period under review the Operating
and Corporate costs of £2.8m (2014: £2.4m) were well
within budget. The loss for the year of £4.9m (2014:
£5.9m) was in line with expectations in terms of
managed operations, but was affected by a further fair
value adjustment of £0.4m (2014: £1.0m) to the carried
value of the Group’s Canadian investments. A non-
cash share option charge of £1.9m (2014: £1.9m) is also
included in the loss for the year.
The Group continues to favour the ‘Licence Mode’ as the
standard business model in the short term due to the
limited capital funding requirements. This is the mode in
which the refiner buys the MSAR® Manufacturing Units
(“MMUs”) and is licenced to use MSAR® manufacturing
technology. In this mode QIL revenues are derived from
fees, supplies and services. A variation or progression is
to contract on a Joint Venture or “Toll Processing” mode
in certain projects in which QIL or the Joint Venture owns
and operates the MMU and charges a fee per ton to
convert the refiner’s heavy residue into MSAR® fuel. In
the longer term the Company would logically aspire to
apply the “Merchant Plant” mode. Here the Company
would acquire the heavy residue from the refiner and
convert it to MSAR® in our own facilities and sell the fuel
directly to consumers. Aside from the funding required
to develop the process facilities and related storage and
services, in this mode the Company would also have to
secure working capital. This generally accounts for a large
Tight control has been maintained
on all expenditure.
share of the funds employed in a bulk fuels operation.
By restricting ambitions to the licence mode in the early
phase, the Company has progressed to the current stage
at very modest cost in oil industry terms.
Review of Directly Managed Interests
The principal Group business interests are managed by
QIL which owns all associated rights and participations.
Where required or advisable, subsidiaries of QIL
have been formed to house interests in a particular
geographic area or market, or provide for joint venture
participations. In principle, the Group looks to simplify
the corporate structure wherever possible and will limit
the formation of new entities to circumstances where
they are appropriate and add value.
All directly managed projects target the substitution
of existing conventional fuels – presently consumed in
large quantities – with Quadrise MSAR® fuels. The global
marine bunker fuel oil market, some 200 million tons
per annum, is a prime example. A very modest share
converting to MSAR® fuel would represent a sizable
business. The 30 million ton per annum market for
thermal power generation fuel in the Kingdom of Saudi
Arabia (“KSA”) is also a major large scale fuel substitution
opportunity. It is estimated that at least one third of this
is potentially convertible to MSAR® fuels based only on
domestic heavy refinery residue conversion – offering
considerable advantage to all stakeholders. This creates
an enormous value-add opportunity to the Kingdom,
with the potential to make a very material contribution
to alleviating growing pressures on the KSA energy costs.
This capacity to reduce cost is certain to gain more
attention as reduced oil sales revenue start to impact
more forcefully on the KSA economy.
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QUADRISE FUELS INTERNATIONAL plc | ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 2015
It is instructive that neither the marine nor the KSA
power fuel markets need demand growth for large scale
fuel substitution to be attractive. In reality, however,
in both cases the market demand is growing and this
is expected to continue. In the case of marine, it has
become widely acknowledged that the impact of ‘slow
steaming’ on aggregate global demand has run its course,
and the marine bunker fuel oil market has again started
to grow. KSA continues to have one of the highest levels
of electricity demand per capita, and this looks set to
continue.
The Group has continued to look for selective
opportunities to broaden the portfolio. These often
arise through initial enquiries which then lead to joint
evaluations with oil majors and associated companies.
The party concerned will generally pay Quadrise to
determine the feasibility of creating saleable MSAR®
fuels by modifying low value ‘problem’ heavy residue
streams from oil and petrochemicals processing to
add value and reduce cost. The resulting business
development opportunity could serve to broaden the
active project portfolio and reduce future dependence
on major programmes such as Marine and KSA. In this
context a number of prospective ‘generic’ opportunities
are currently in evaluation including re-fuelling refinery
steam and power generation.
Unsolicited approaches concerning projects in areas
such as The Former Soviet Union, Asia and Africa
continue to be received. Where they have merit the
Company has confirmed conditional interest. The
key provisos are that the basis of the relationship
will be a joint venture, the prospective partner will
fund the project with no recourse
to QIL, and the Group contribution
will be limited to technology and
expertise in return for our share in
the venture. Our expanded team has
enabled more attention to be given to
these introductions, and some related
work is proceeding. However, ‘select and focus’ will
remain the guiding strategy for some years to come.
The Company continues to receive approaches from
entities looking for co-investment in prospective ‘toll
processing’ opportunities should these arise. No such
commitments have yet been made.
10
Marine MSAR®
The Marine programme originated from a Quadrise
presentation to an international marine fuels conference.
Mærsk quickly recognised the potential of the MSAR®
technology to reduce open ocean marine fuel costs
(then 75% of fleet operating cost). A Joint Development
Agreement (“JDA”) was executed between QIL, Mærsk
and AkzoNobel Surface Chemistry (“Akzo”) to formulate
Marine MSAR® fuel to meet the exacting requirements
of marine diesel propulsion engines. The JDA provisions
have guided the development process over the past four
years. In January 2011 QIL entered into a marketing and
royalty agreement with Mærsk which recorded principles
and terms for commercial relationships then expected to
follow the development phase.
At the outset standards and targets were established
to qualify Marine MSAR® as a fit for purpose “standard”
fuel acceptable for use by Mærsk (and other shipping
companies). These included the ability to switch readily
between fuel oil and/or marine diesel fuel and Marine
MSAR®. These key requirements informed the basis used
for the subsequent Mærsk Proof of Concept (“POC”)
assessment and the associated seaborne proving trials
programme which was completed by mid-2014.
When formulated, Marine MSAR® fuel has to satisfy the
stringent standards set by many industry stakeholders,
and national, regional and global regulatory authorities.
The sector is heavily regulated, having a high profile
due to the impact of freight costs and services on a
range of national and international economic interests.
The shipping industry is also closely scrutinised on
Neither the marine nor the KSA power fuel
markets need demand growth for large
scale fuel substitution to be attractive.
environmental matters, in particular combustion
emissions and associated NOx (nitric oxide/nitrogen
dioxide), SO2 (sulphur dioxide) and carbon particulates
(black soot). Mærsk is the biggest global container
shipping company and largest marine fuels consumer. It
has an enviable record for efficiency in operations and
is an industry leader in environmental performance,
QUADRISE FUELS INTERNATIONAL plc | ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 2015 adoption of new technology, and continuous
improvement. All of these features make Mærsk the ideal
partner for the Quadrise Marine MSAR® development
programme.
n Comprehensive testing had confirmed good engine
and emissions performance on Marine MSAR® fuel.
n Seaborne operational tests were successful on both
Wärtsilä and MAN two stroke propulsion engines.
Gaining the endorsement of the major marine engine
manufacturers is critical. The continuous development
of very large vessel propulsion engines and their fuelling
and management systems is focussed on optimising
power and improving fuel performance. Qualifying fuels
have to be proven in both land-based and seaborne
operations to merit a Letter Of No Objection (“LONO”)
issued by the engine manufacturer without which no
modern shipping company would consider using a new
fuel in its fleet operations.
The multi-company team has worked closely
throughout the development process with two
major engine manufacturers,
Wärtsilä and MAN Diesel
& Turbo (“MAN”), and with
selected refiners. Both
manufacturers are industry
leaders in technology
development, and in
combination account for
the majority of engines installed in the Mærsk fleet,
particularly in the most modern and largest container
and crude oil carriers. This teamwork resulted in the
formulation of Quadrise Marine “MSAR®2” fuel in late
2012 following an exhaustive series of trials. The fuel
was then successfully stress-tested in the Wärtsilä
state-of-the-art, multi-cylinder propulsion engine
test facility in Switzerland, resulting in a very positive
comprehensive report accepted by all stakeholders.
The MSAR®2 formulation became the ‘gold standard’
for marine emulsion fuels leading to the seaborne
POC programme during the last quarter of 2013 and
into the first half of 2014.
The Wärtsilä and MAN seaborne POC programmes using
Marine MSAR® fuel were completed by July 2014 with
the very positive results clearing the way to proceed to
the LONO phase. The key findings of the MSAR® fuel
assessment programme were:
n Fuel stability and optimum handling considerations
had been confirmed.
n Experience during trials included manoeuvring
tests and start/stop of engines according to class
requirements.
In July 2014, Mærsk formally advised that the POC
requirements had been satisfied, and given the quality
of results, the JDA partners (Mærsk, Quadrise and Akzo)
agreed to move forward as soon as practicable to
generate an early return on the investment made during
the period of joint development.
This cleared the way for the extended seaborne
The Wärtsilä and MAN seaborne POC programmes
using Marine MSAR® fuel were completed by July
2014 with the very positive results clearing the
way to proceed to the LONO phase.
programme required to provide operating performance
data on which the engine manufacturer would, if
satisfied, base the issue of a LONO for the engine type
concerned. The LONO is the last remaining pre-condition
to the commercial phase and progressive ‘roll-out’ to
the first set of selected vessels. The expectation is that
circa 4,000 hours of performance data will be required
to obtain the LONO. An interim evaluation may be made
at 2,000 hours, but it is also possible that requirements
could be extended by a further 2,000 hours.
When weighing alternative ways in which to move the
marine programme forward in late 2014, the assurance
of continuing bulk supply and efficient logistics systems
in the ‘post-LONO’ phase of continuous commercial
supply was seen to be more important than early fuel
availability at higher unit cost just to deliver LONO
certification. As a result the revised plan positioned
the LONO programme as the first step of commercial
‘roll-out’, rather than the last step of the development
phase. Provisional volume commitments relating to post
LONO requirements and longer term contracts were
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QUADRISE FUELS INTERNATIONAL plc | ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 2015
also expected to benefit manufacturing and supply
economics, as were related improvements in location
based efficient bulk logistics systems. By adopting a
medium term view this approach offered earlier assured
availability of larger commercial volumes of Marine
MSAR® fuel despite potential short term delays to the
LONO programme.
associated oil processing and operations in refining sites
have proved to be a material element of production
lead time. While this was anticipated, when combined
with the oil price related delays, the original aim of
producing MSAR® for the LONO phase during 2015 will
have slipped by up to 12 months. The timetable now
anticipated will see the installation and commissioning
of the first MMU at San Roque in mid-H1 2016, subject to
The way forward then jointly agreed
with Mærsk in Q4 2014 aimed to:
n Identify candidate refineries to
supply Mærsk requirements in
Europe.
The revised plan positioned the LONO
programme as the first step of commercial
‘roll-out’, rather than the last step of the
development phase.
n Select preferred partners and agree
terms for Quadrise MSAR® Technology licensing and
services contracts and for supply of Marine MSAR® by
the refiner to Mærsk for both the LONO programme
and (subject to contract) longer term requirements.
n Extend the availability of Marine MSAR® and selective
fleet fuelling progressively to the Rest of the World
(“ROW”) on success.
The subsequent, and unforeseen, collapse in global oil
prices then interceded as was explained in the Company’s
2015 Interim Report issued on 30 March 2015. The direct
impact of lower oil prices on Marine MSAR® economics is
limited as the Quadrise process ‘value–add’ relates to the
$ per ton ‘spread’ between the heavy fuel oil and diesel
fuel prices which has remained relatively stable. However,
the principal impact has been the delays experienced in
engaging with refiners who were focussed on adjusting
to the oil price collapse and associated implications for
future oil economics and margins.
The Company was very pleased to report on 16
September 2015 that agreement has been reached and
contracts executed between QIL, Mærsk Line and CEPSA
to produce Marine MSAR® at the San Roque refinery for
the extended seaborne “Operational Trial”. The refinery is
adjacent to the Algeciras “bunker hub” servicing the EU/
Med market. Further contracts were signed relating to
the ‘post LONO’ collaboration between QIL, Mærsk Line
and CEPSA, and the basis of ‘margin sharing’ between
CEPSA and QIL for the trial programme. Regulatory
approvals for the installation of the MSAR® plant and
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local and governmental permitting in Spain. The LONO
programme, based on 4000 hours of continuing engine
service, will require some 10 months, following which
certifications and approvals will be sought to allow as
early a start to the ‘roll-out programme’ as possible.
While the unanticipated delays have been frustrating for
all stakeholders, the Company will benefit greatly from
the participation, commitment and enthusiasm of CEPSA,
as a first league refining company operating from a prime
location for marine fuels supply. The extended period
of the operational trial also provides an opportunity to
further refine and de-risk the on-board fuel switching
techniques and related hardware.
These developments provided an opportunity for
Quadrise and Mærsk to further review the long standing
Royalty Agreement and to introduce clarifications
intended to smooth the way forward in the roll-out to
the Mærsk Line fleet and the introduction of supply to
other shipping companies. Terms include, inter alia:
n the commitment by both parties to the
commercialisation of Marine MSAR® in the global
marine fuels market subject to success with the
Operational Trial and associated LONO certification,
and
n a further extension of the expiry date of the
agreement from 30 December 2022 to the tenth
anniversary of first commercial MSAR® production
following the Operational Trial.
QUADRISE FUELS INTERNATIONAL plc | ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 2015 Looking forward, developments affecting the shipping
industry and marine fuels market continue to be positive
for the global commercialisation of Marine MSAR®. While
the low oil price has provided some relief on cost as
such, competition between operators on major trade
routes in containerised, bulk commodity and other
cargoes remains as keen as ever. Majors look constantly
for competitive advantage, and marginal players for the
means to survive. The economic advantage of the MSAR®
discount to fuel oil is very relevant, especially when
coupled with the environmental benefits associated
with both affordable scrubbing and carbon particulate
emission mitigation.
On environmental matters the new 0.1% sulphur
standards introduced on 1 January 2015 in the Emission
Control Areas (“ECA”s) has had a direct effect on cost
and led to certain suppliers offering a compliant ‘fuel oil’.
While sold at a discount to marine diesel, it is priced well
above bunker fuel oil. In reality these fuels do not have a
residual fuel base, but are largely formulated from heavy
distillate components and seem to have found a place
in the ECA market. A number of the leading operators
in the ECA zones have also wisely invested in scrubbers,
enabling the combination of lower fuel costs and
technology to achieve compliance. As emissions scrubbing
becomes an accepted means of ECA compliance, and
the economics of the technology
continues to improve, it should be
possible in the future for operators
to meet standards using a
combination of Marine MSAR® and
sulphur scrubbers. This combination
should also ensure compliance on
particulate emissions (black soot),
reduce NOx and provide additional
benefits from the efficient conversion of all carbon
particulates to energy in the propulsion of the ship.
Clearly, this way, compliance cost would be considerably
lower than any alternative fuels priced to compete with
diesel.
In the shorter term Quadrise and Mærsk Line are
focussed on ‘open ocean’ fuelling where MSAR® will
comply with current sulphur emissions standards.
Because Marine MSAR® mitigates carbon particulate
emission, the anticipated IMO ‘black soot’ emissions
standards are not expected to pose many difficulties.
Also, as conversion to MSAR® will generally reduce NOx
emission by more than 20% our fuel looks very well
set to compete effectively in the medium term, given
anticipated ever decreasing NOx standards. The next
major milestone for marine fuel standards is the intended
reduction of the ‘open ocean’ sulphur level from 3.5%
to 0.5%. There is no date yet set for this change and
industry consensus is that it is now unlikely to be before
2025. A major related issue is the availability of compliant
distillate fuels in the quantities implied and the major
impact of such a change, even if practically possible, on
the cost of shipping. The more general expectation is
that while sulphur levels may be moderated, regulators
will permit emissions compliance by scrubbing for both
sulphur and particulates. In such circumstances it appears
that the combination of Marine MSAR® and sulphur
scrubbing will represent the lowest cost compliance
option for the larger shipping companies with the most
modern propulsion engines.
While slippage in the programme for LONO certification
of Marine MSAR® has been frustrating, the intervening
time has been put to good use in the recruitment of
additional personnel, conduct of an extensive programme
of formulation and product development, and related
expansion of the ‘technical knowhow base’. The UK based
Quadrise Research Facility has been expanded to serve
Developments affecting the shipping industry
and marine fuels market continue to be
positive for the global commercialisation of
Marine MSAR®.
also as the operations and service base for all active
programmes. Where required, and when advantageous,
activities have and will include design and fabrication
of ancillary plant and specialised equipment which,
combined with the MMU, comprise an MSAR® production
facility.
The timetable is now contractually committed and the
seaborne programme will commence as soon as the
MSAR® fuel is available at San Roque/Algeciras. Mærsk
Line liftings will be programmed to fit with vessel
operating schedules and will continue until the required
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QUADRISE FUELS INTERNATIONAL plc | ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 2015
operating hours have been completed. Further activities
will be informed by the Collaboration Agreement with
commercial terms subject to contract.
As LONO requirements are met and other regulatory
formalities are completed the early commercial phase
will get underway. The first agreed joint objective will be
to develop and progressively implement a programme
to secure supplies to meet the Mærsk Line nominated
requirements. These will be prioritised in terms of supply
locations and volumes required. QIL and Mærsk Line
are committed in terms of the Royalty Agreement to
jointly use all reasonable endeavours to develop the
commercialisation of Marine MSAR® in the global marine
fuels market – fuelling both qualifying Mærsk Line and
third party vessels. Priority will be given to Mærsk Line
fleet requirements in the early years leading the way for
others to follow. If all goes to plan, the rate of conversion
and growth in demand from the shipping companies
could develop rapidly through the period to 2020 and
beyond. A relatively modest share of this large and
growing market will provide a strong base underpinning
the future expansion and development of the Company.
Saudi Arabia
The business opportunity in the Kingdom of Saudi Arabia
(“KSA”) is the production of Quadrise MSAR® fuel by
Saudi refineries to replace heavy
fuel oil and crude oil used in thermal
power generation. Over 30 million
tons of oil is consumed annually in
this application, and it is estimated
that currently at least one third of
this requirement could be met by
MSAR® fuel produced in KSA. Power
demand in KSA is growing very rapidly and the scale and
potential of the opportunity are clearly exceptional.
By converting from heavy fuel oil to Quadrise MSAR®
production in ‘qualifying’ refineries, large volumes of
distillates would be released, adding significant value
to refinery yields and responding to consistently strong
local market demand growth for high value distillates
such as automotive diesel. The release of distillates
whether for local market or value added exports, in
the tonnages concerned, represents a very attractive
production conversion and fuel substitution opportunity
14
– potentially worth billions of dollars annually at a
national level. Quadrise has invested a considerable
amount of time and sustained effort to gain credibility
and recognition within KSA with Saudi Aramco and
power generation client organisations. This process has
been very effectively supported by our Saudi partner, the
Rafid Group, who have long established relationships in
the oil and energy industries throughout KSA. Quadrise
technology is approved for application within client
refineries and there is a growing appreciation at senior
levels that Quadrise MSAR® fuel technology can enable
a step change in the ‘integrated’ cost of thermal power
generation at a national level, positively contributing
to a KSA strategic imperative. The mitigation of carbon
particulate and NOx emissions is potentially a very
valuable added benefit resulting from conversion of
all hydrocarbon in MSAR® fuel into electrical power in
the generating plants. The prospective elimination of
accumulated carbon particulate which in some cases
has to be trucked in bulk to remote disposal sites,
represents a material further saving in fully costed power
production.
The KSA organisations with whom QIL has been
engaged are large and complex, with policies, practices
and procedures associated with their scale and
complexity. Several past initiatives to create a modest
KSA demonstration and reference plant did lose
Power demand in KSA is growing very
rapidly and the scale and potential of the
opportunity are clearly exceptional.
momentum – possibly due to limited profile, lack of
senior advocacy and the weight of other urgent priority
projects. More recently, however, a more coordinated
approach has led to confirmation of support at senior
level and active advocacy of the proposed ‘production
to combustion’ pilot demonstration plant project based
on a fast-track limited scope programme submitted
by QIL. One of the agreed objectives is to advance the
application and evaluation of the technology in Saudi
Arabia, in both the refining and power station contexts,
to determine the fit and role of emulsion fuels in the
future national energy strategy.
QUADRISE FUELS INTERNATIONAL plc | ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 2015 The KSA trial timetable targets installation of the
process plant in the designated major coastal
refinery complex in time for commissioning in H1
2016. This should ensure MSAR® fuel availability in
the quantities required for an extended combustion
trial in a 400MWe generation unit at the nominated
power station, which has coastal receipt facilities and
an aggregate production
capacity of over 5,000MW.
Continuous supply to the trial
boiler for an extended period
will require a very effective
supply and logistics operation,
and QIL will be working on
site at both the refinery and the power plant to guide
and advise on all relevant aspects of the operations.
Formal acknowledgement of all relevant aspects is a
prerequisite to QIL commitment to longer lead items
and related services.
Quadrise has full confidence that this ‘semi-
commercial’ extended demonstration project should
meet all of the defined objectives and represent a
‘break through event’ for development of an extensive
application programme in KSA. Aside from the process
economics and distillate recovery in oil refining, there
are expectations, as mentioned before, that the
mitigation of carbon particulate emissions could have
a further material impact on the operating costs of the
Saudi Electricity Company (“SEC”) large scale thermal
power stations in KSA. Preliminary studies show that
aside from any strategic considerations, there are
sufficient economic advantages to handsomely reward
both the refining and the power generation companies
for conversion to manufacture and combustion of
MSAR®. In practical terms, this is neither costly nor
complex. Whether approached on a sequential basis or
as an integrated programme, the short lead times and
high value-add of refinery process conversion will offer
rapid recovery of investment and exceptional returns
for all stakeholders.
Conversion of the 5 million tons p.a. of fuel oil at the
designated refinery alone would represent a large scale
project with considerable proven benefits. The scope for
‘roll out’ within the KSA domestic refining industry has
been previously identified in studies conducted jointly
with the client. At a national level the availability of
heavy residue from the client and joint venture refineries
in KSA will limit the potential for MSAR® production to
levels well below present thermal power generation
requirements. The KSA economy could continue to
benefit irrespective of the source of MSAR® and could
potentially import at least a further 10 million tons
annually from other sources as a ‘finished product’-
The short lead times and high value-add of
refinery process conversion will offer rapid
recovery of investment and exceptional returns.
displacing heavy fuel oil imports to considerable financial
advantage. In practice availability will, of course, be
determined by demand. However, any enquiry from KSA
for MSAR® imports would reasonably be expected to
produce a positive response.
Shareholders should anticipate that confidentiality
considerations may continue to limit the permitted
release of information given the nature of the KSA
programme.
Americas
No further action has been taken on the PEMEX front as
the Mexican situation is in transition and it is not yet clear
how far the changes in policy and practices could affect
the feasibility and merits of reviving the Quadrise project.
The Colombian/Ecopetrol opportunity looked very
prospective in terms of the final report of a joint
feasibility study completed late in 2014. Despite the
attractions of the project, Quadrise was advised by
Ecopetrol in early 2015 that the impact of the oil price
collapse on their future crude oil production margins and
net cash revenues required the company to freeze all
non-essential capital and operating expenditure in the
refining, supply and marketing sectors. On this basis they
would not be able to invest in the proposed JV and if it
were to go ahead Quadrise would have to cover all costs
and associated risk, either alone or with an approved
partner. The Company is not funded for what would,
in effect, be a “merchant plant” type operation which
in the early years would also have to also fund its own
working capital requirements due to the non-availability
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QUADRISE FUELS INTERNATIONAL plc | ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 2015
of trade finance for finished MSAR® fuel. On review it
was decided to shelve the Colombian project pending a
change in circumstances in the medium term when oil
market conditions stabilise.
Asia
The YTL PowerSeraya Pte. Limited (“PowerSeraya”)
project opportunity remains as attractive as ever, but the
Company has still not been able to secure the required
source of heavy residue and participating local or regional
refiner. We remain confident that this will change with
the advent of Marine MSAR® production
to supply the Singapore bunker market.
Having two marketing opportunities
(marine and power) will encourage refiners
now still reluctant to install process plant,
convert operations and add a new product
stream based on single client supply. There
is also a potential Singapore availability
link with the confidential on-going
extended technical assessment programme
with a Global Major which could provide the solution
to the PowerSeraya supply chain. Quadrise remains
convinced that there is sufficient attraction for both
refinery and the power company to assure a positive
future result. QIL and PowerSeraya have again agreed a
12 month extension to the MOU which covers the basis
for cooperation on developing a MSAR® supply chain for
the Singapore power plant.
Refinery Power and Steam Re-fuelling
The Company has identified a refinery based line of
business involving substitution of conventional heavy
fuel oil with MSAR® for the generation of steam and
power within refineries, principally for their own
use. While these opportunities tend to be selective,
indications are that they could aggregate to a substantial
and meaningful business sector. Refining companies
frequently have installed power generation capacity in
excess of their own needs and, with reduced fuel costs,
have the scope to earn revenues by generating and
exporting power.
One such opportunity for a MSAR® pilot demonstration
(production to combustion) has progressed with a mid-
sized refining company. A programme is proceeding to
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finalise a detailed design feasibility study in four phases
for completion and consideration in Q1 2016. This includes
proposed commercial terms for implementation and
future operations. It is intended that the implementation
and initial demonstration will be managed by QIL and
that on success the MSAR® fuelling will be progressively
extended to fuel several refinery based utilities on a
progressive basis.
It is intended that a listing of similar prospects be
identified, and that a marketing programme be
developed in which the current project could also
The Company has identified a refinery based
line of business involving substitution of
conventional heavy fuel oil with MSAR® for
the generation of steam and power within
refineries, principally for their own use.
serve as a reference plant. While these projects may
individually be modest in scale, the economics look to
be very attractive and are enhanced by simplicity of
installation, short lead times and low cost intra-plant
logistics.
Global Oil Major
During 2012, QIL agreed to evaluate the conversion of
certain residue streams associated with the proprietary
technologies used in several large scale process plants
of a Global Major. Quadrise is not permitted to disclose
the name of the group concerned, but QIL has been
successful in converting the residue streams arising
from these processing operations into MSAR® fuels. The
relationship is ongoing and the technical scope has been
extended by agreement. Thus far results indicate that
a Quadrise solution will offer a higher value route to
market for the heavy hydrocarbons concerned and could
potentially be an attractive production and marketing
addition compared to their present practice.
The Global Oil Major may also be a potential supplier
to the global marine fuels supply programme in several
bunker hubs. Understandably, until such time as LONOs
are issued stimulating the interest of major shipping
QUADRISE FUELS INTERNATIONAL plc | ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 2015 companies and demand for Marine MSAR®, we do not
expect the Global Major to seriously consider adoption of
the technology and/or demonstration plant installations.
That said, assuming the Marine programme proceeds as
planned, we would expect a step-change in interest by
oil majors in licensing the Quadrise technology in selected
locations.
Board and Management
The Company has greatly benefitted from the continuity
of service and high quality informed and professional
contributions of our non-executive directors. Collectively
they represent a very extensive base of experience across
a range of specialised technical and commercial fields
directly associated with the business, circumstance and
ambitions of the Group. Relations within the board and
between board and management are constructively open
and frank, and continuous interaction and involvement is
encouraged and valued.
The appointment of Mr Philip Snaith as an independent
non-executive director was announced during October
2014. Philip brings a wealth of experience having had
a successful career in the Royal Dutch Shell Group,
progressing through a succession of international
senior executive roles in oil refining, supply, trading and
marketing.
Mr Laurie Mutch and Dr Ian Duckels continued to chair,
respectively, the Audit and Compensation Committees.
Their commitment to the maintenance
of consistently high standards in all of
the associated activities has continued
and we thank them for their valuable
contribution. Mr Snaith has agreed to
serve and has been appointed to the Audit
and Compensation Committees. While
benefitting from his contribution, this
also serves to spread the considerable load borne by his
fellow non-executive directors over many years.
A key objective for 2014/5 has been to restructure the
organisation and recruit in anticipation of the growing
demands of the key business programmes. In doing
so, considerations of creating cover, and a reserve of
keys skills and competencies featured strongly, as did
the need to relieve our ultra-active COO, Jason Miles,
from the growing demands of day to day matters.
Having established a very clear view on structure and
specification for the new roles, candidates were targeted
and appointees selected with a high level of confidence.
While the process took longer than planned, the quality
of the outcome has more than compensated.
The three key General Management roles, Power, Marine
and Refining are now held by Sam Saimbi, Robin Lloyd
and Mark Whittle respectively. All are very well equipped
to meet the requirements in their specialised fields and,
in combination with the COO and their other colleagues,
have rapidly become a formidable and effective team.
An associated objective of the programme was to
secure the full time services of selected contractors and
consultants whose expertise, capabilities and continuity
are very important in the delivery of services and
technical and operational guidance to manufacturing sites
and refinery management, supervisors and operators. This
has also been achieved with the full time engagement of
Bernard Johnston as Head of Operations and Paul Gunter
as Programme and Quality Manager.
Business Associates and Partners
The Company continues to share cordial, constructive
and supportive relations with the Akzo Nobel group
in an association that dates back to 2004. The new
contractual framework agreed late 2013 is working
very effectively and the joint commitment to securing
A key objective for 2014/5 has been to
restructure the organisation and recruit
in anticipation of the growing demands of
the key business programmes.
opportunities and commercialising MSAR® fuels remains
strong notwithstanding frustrating delays. This reflects
the strong conviction and shared belief within the
combined team that the Quadrise MSAR® fundamentals
are sound, the competitive advantage is assured and
that the programmes will succeed. There is a very strong
association and collaboration in the field of research and
application and intellectual property development. While
the new Quadrise Research Facility in the UK is managed
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QUADRISE FUELS INTERNATIONAL plc | ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 2015
by QIL, its programmes have been integrated with
activities in the Akzo facilities in Sweden into a combined
joint effort with priorities driven by Group business
objectives.
to identify and actively promote Quadrise business
opportunities.
Non-Managed Investments in Canada
In Marine Fuels our long standing association with
Mærsk has been a key feature of the programme to
date. It would not have been possible for Quadrise to
even consider entry to the mainstream marine fuels
market without a shipping industry partner. Mærsk, as
a leader in many fields, distinguishes itself among the
elite in the industry. Being a leader in innovation and
adaptation Mærsk was uniquely placed to coordinate
the Joint Development Process having long established
relations with regulators, marine authorities, engine
manufacturers and fuel suppliers. Their commercial
motivation and associated objectives are a constant in
all dealings which is a very good discipline. The recently
announced novation and amendments to the Royalty
Agreement between Quadrise and Mærsk Line reconfirm
the commitment of both parties to work jointly to
ensure the successful commercialisation of Marine
MSAR® in the international marine market fuelling both
Mærsk Line and third party fleets. The terms ensure
that success should reward both parties equitably in
all cases. The Quadrise Group is very appreciative of
the contribution made by Mærsk over an extended
period of preparation and the standard of technical
and commercial professionalism they have introduced
and maintained throughout. As matters now stand
both companies can reasonably expect to reap the
considerable prospective benefits of our joint efforts in
the foreseeable future.
Rafid, our partner in KSA, supplies a range of specialised
products and services to Saudi Aramco and other key
industry and state organisations. Efforts and teamwork
over the past year have further raised the profile of the
“Quadrise opportunity” and improved access at senior
level in the refining and power generation sectors. This
has led to a new consensus on a pragmatic approach to
delivering a commercial scale “production to combustion”
pilot demonstration to prove all facets of the Quadrise
technology while creating an accessible reference plant
in KSA to facilitate familiarity and dispel scepticism. As
a local business of considerable standing in the fields of
technology and engineering, Rafid are able to engage
with the largest state and private sector organisations
The conditions leading to and following the oil price
collapse have severely tested the remaining independent
Canadian ventures. Anticipating this situation, the
carried values have been progressively written down to
a level at which they are no longer material for Quadrise
shareholders.
Paxton Corporation (PC), in which the Company has a
3.8% interest, has unfortunately been severely affected
by the impact of low oil prices on the Canadian oil and
energy industries.
In the current year the Company decided, on advice and
review, to write down the remaining carried value of
Paxton Corporation following the withdrawal of Mærsk
group support for the Clean Energy Systems (“CES”)
technology development programme. This withdrawal
has created a funding crisis for CES and is likely to lead to
insolvency. The 30% equity interest in CES was previously
seen to offer some prospect of access to value for Paxton
shareholders. The recent developments now render that
expectation highly improbable. QFI now carries this
interest at CAD$ nil.
Quadrise Canada Corporation (“QCC”), where the
Company has a 20.4% shareholding, is effectively
operating on a ‘care and maintenance’ basis with very
limited remaining resources. QFI carries this holding at
CAD$ nil
Optimal Resources Inc. (“ORI”), in which the Company
has a 9.5% interest, had no success in securing a partner
for its Enhanced Oil Recovery (“EOR”) technology. It has
more than CAD$8 million in accumulated tax losses but
to monetise value is problematic. QFI carries this holding
at CAD$ nil.
Future Outlook
As anticipated in the 2015 Interim Report, the lead Marine
and Power programmes have both moved forward
to a stage where the road ahead and the respective
timetables are firming up with involvement and support
18
QUADRISE FUELS INTERNATIONAL plc | ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 2015 from an expanded set of respective stakeholders. In this
regard the relationship with CEPSA and the collaboration
with the KSA refining company and the power generator,
all signal a long anticipated change and increased
assurance of project implementation and timing. The
early addition of a prospective refinery power and steam
re-fuelling project is also most encouraging.
The oil price uncertainties are expected to destabilise
the oil and energy sector for some time to come, but
this is not expected to have any further material effect
on our principal programmes in terms of feasibility or
incentive for adoption of MSAR® technology which have
remained robust and considerable. On the contrary, the
perceived additional risk of investment in conventional
high cost refinery upgrading projects to improve
distillate yields could well encourage other refiners to
follow the CEPSA lead and closely evaluate the Quadrise
MSAR® technology alternative. A common objective
for refiners, shipping companies and power generators
will be to identify and adopt low cost technology
which reduces cost and improves efficiency to ensure
competitive advantage and, in some cases, survival.
For qualifying refineries and power plants Quadrise
may offer the best solution, and we are now very well
resourced to engage with credibility and to demonstrate
the merits of our case.
The Company is now better placed than ever before to
make the transition to operations and revenue, and that
is the prime objective of the directors and management
for the years ahead.
Ian Williams
Executive Chairman
9 October 2015
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QUADRISE FUELS INTERNATIONAL plc | ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 2015
Financial Review
Overview
Given the impact of the oil price collapse and, in turn,
the associated delays in our key programmes, strong
treasury management and cost control has been a key
feature of the financial management of the Group during
the year. Both production & development costs and
administration expenses were maintained well within the
approved budgets, with greater emphasis being placed
on enhancing the management resource base and making
further investment to build up our research, development
and service facility to meet the future needs of our key
programmes as they transition from the development
into the commercial phase.
As stated in the Chairman’s Statement, despite the
consequences and impact of the oil price collapse within
the sectors the Group is involved in and the clients it is
engaged with, it has continued to make considerable
tangible progress on a number of fronts during the
financial year and the period since. Particular attention
was paid to not only stress-test the economic and
commercial viability and attractiveness of our MSAR®
fuel in a possible future world of low oil prices but to also
provide the necessary assurances and confidence to our
clients and other stakeholders to move forward with the
key programmes.
Results for the Year
The consolidated after-tax loss for the year to 30 June
2015 was £4.9m (2014: £5.9m). This included a charge of
£404k (2014: £1.0m) for adjustments to available for sale
investments, general administration expenses of £1.5m
(2014: £1.7m), production and development costs of £1.3m
(2014: £0.7m), a share option charge of £1.9m (2014: £1.9m)
and interest and other income of £233k (2014: £122k).
and equipment of £0.7m (2014: £0.6m), and cash of £8.4m
(2014: £11.1m), and available for sale investments of £nil
(2014: £1.4m). Further information on the intangible assets
and available for sale investments is provided in notes 14
and 15 to the Group Financial Statements.
Cash Flow
The Group ended the year with £8.4m of cash and cash
equivalents (2014: £11.1m) with £2.7m having been utilised
in its operating activities during the year (2014: £2.3m).
The Group continues to remain debt free.
Capital Structure
The Company had 809,585,162 ordinary shares of 1p each
in issue at 30 June 2015. The Company’s current issued
share capital stands at 809,585,162 ordinary shares of 1p
each all with voting rights.
Treasury and Financial Risk Management
Control over treasury and financial risk management is
exercised by the Board and its Audit Committee through
the setting of policies and the regular review of forecasts
and financial exposures. Presently, the Group’s financial
instruments consist principally of cash and liquid
resources and other items such as accounts receivable
and payable, which arise directly from its operations. It
is still the Group’s policy not to undertake any trading
activity in financial instruments, including derivatives.
The principal risks arising from the Group’s financial
instruments are those associated with interest, liquidity
and foreign exchange. The Board reviews and establishes
appropriate policies for the management of such risks
and monitors them on a regular basis.
Basic and diluted loss per share was 0.61p (2014: 0.74p).
Taxation
Statement of Financial Position
At 30 June 2015, the Group had total assets of £12.6m
(2014: £16.3m). The most significant balances were
intangible assets of £2.9m (2014: £2.9m), property, plant
The Group has tax losses arising in the UK of
approximately £40.7m (2014: £34.8m) that are available,
under current legislation, to be carried forward against
future profits. £11.2m (2014: £8.3m) of the tax losses
carried forward represent trading losses within Quadrise
20
Fuels International plc, £25.8m (2014: £23.7m) represent
non-trade deficits arising on intangible assets within
Quadrise International Limited, £1.7m (2014: £1.2m)
represent pre-trading losses incurred by subsidiaries,
£1.9m (2014: £1.5m) represent management expenses
incurred by Quadrise International Limited, and £0.1m
(2014: £0.1m) represent capital losses within Quadrise
Fuels International plc.
Outlook
The key objectives for the current year are to establish
our MSAR® manufacturing facilities at CEPSA to
commence the extended ‘Operational Trial’ with Mærsk
Line and in the designated Saudi refinery to commence
the ‘semi-commercial’ demonstration at the designated
Saudi Electricity Company power plant. The success of
both will potentially unlock two major markets for our
MSAR® fuel as we transition into the commercial phase.
At the same time, other initiatives such as the refinery
refuelling project, converting and testing high viscosity
residue streams for the Global Oil Major, engaging
with additional candidate refineries for Marine MSAR®
production and establishing links in other material
oil-based thermal power markets will also continue to
receive attention.
Close attention to the Group’s treasury and effective
financial management remains a firm ethos of the Board
and management of the Group and, based on the current
plans and expectations, the cash resources of £8.4m at the
year end should carry the Group well through what is now
considered to be the ‘final leg’ of the development phase.
Hemant Thanawala
Finance Director
9 October 2015
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QUADRISE FUELS INTERNATIONAL plc | ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 2015
Strategic Report
For the year ended 30 June 2015
Principal Activity
Market risk
The principal activity of the Company is to develop
markets for its proprietary emulsion fuel (“MSAR®”) as
a low cost substitute for conventional heavy fuel oil
(“HFO”) for use in power generation plants and industrial
and marine diesel engines.
Business Review and Future Developments
A full review of the Group’s activities during the year,
recent events and future developments is contained in
the Chairman’s Statement.
Key Performance Indicators
The Group’s key performance indicators are development
and commercial performance against Group business
plans and project timetables established with clients, and
financial performance and position against the approved
budgets and cashflow forecasts. The Board regularly
reviews the Group business plans, project timetables,
budgets and cashflow forecasts in order to optimise the
application of available resources. Consideration of the
Group’s performance against Key Performance Indicators
is contained in the Chairman’s Statement on pages 7–19
of this report.
Going Concern
The Group had £8.4m in treasury as at 30 June 2015.
Having conducted a full review of the updated business
plan, budgets and associated commitments at the year
end, the Directors have concluded that the Group has
adequate financial resources to continue in operational
existence for at least the forthcoming year and therefore
continue to adopt the going concern basis in preparing
the accounts. Refer to Note 3 for further details.
Principal Business Risks
Set out below are certain risk factors relating to the
Group’s business. However, these may not include all of
the risk factors that could affect future results. Actual
results could differ materially from those anticipated as
a consequence of these and various other factors, and
those set forth in the Group’s other periodic and current
reports filed with the authorities from time to time.
The marketability of MSAR® fuels is affected by
numerous factors beyond the control of the Group.
These include variability of price spreads between
light and heavy oils and the relative competitiveness
of oil, gas and coal prices both for prompt and future
delivery. The Group cannot mitigate this risk by its
nature, but pays close attention to the energy markets
in order to be able to react in a timely and effective
manner.
Feedstock sourcing
There is a risk in respect of appropriately located and
ongoing price competitive availability of heavy oil
residue feedstock as oil refiners seek to extract more
transportation fuels from each barrel of crude using
residue conversion processes. The Group mitigates this
risk where possible by utilising its deep understanding of
the global refining industry, targeting qualifying suppliers
matched to prospective major consumers.
Commercial risks
There is a risk the Group will not achieve a commercial
return due to major unanticipated change in a key
variable or, more likely, the aggregate impact of changes
to several variables which results in sustained depressed
margins. Experience during early 2015 demonstrated that
the price spread between heavy fuel oil and diesel fuel
was relatively robust while crude oil prices collapsed.
As this price spread drives the Quadrise ‘value-add’, the
structure of the oil products market itself mitigates the
principal margin risk.
The competitive position could be affected by changes
to government regulations concerning taxation,
duties, specifications, importation and exportation of
hydrocarbon fuels and environmental aspects. Freight
costs contribute substantially to the final cost of supplied
products and a major change in the cost of bulk liquid
freight markets could have an adverse effect on the
economics of the fuels business. The Group would
mitigate this risk through establishing appropriate
flexibilities in the contractual framework, offtake
arrangements and price risk management
through hedging.
22
Technological risk
Dependence on key personnel
There is a risk that the technology used for the
production of MSAR® fuel may not be adequately
robust for all applications in respect of the character
and nature of the feedstock and the particular
parameters of transportation and storage pertaining
to a specific project. This risk may jeopardise the early
commercialisation of the technology and subsequent
implementation of projects; or give rise to significant
liabilities arising from defective fuel during plant
operations. The Group mitigates this risk by ensuring
that its highly experienced key personnel are closely
involved with all areas of MSAR® formulation and
manufacture, and that the MSAR® fuel is thoroughly
tested before being put into operational use.
Delay in commercialisation of MSAR® and funding risks
There is a risk that the commercialisation of MSAR®
could be delayed further due to unforeseen technical
and/or commercial challenges. This could mean that
the Group may need to raise further equity funds to
remain operational. Depending on market conditions and
investor sentiments, there is a risk that the Group may
be unable to raise the requested funds when necessary.
The Group mitigates this risk by maintaining strong
control over its pre-revenue expenditure, keeping up the
momentum on its key projects as far as possible, and
maintaining regular contact with the financial markets
and investor community.
Competition risks
There is a risk that new competition could emerge
with similar technologies sufficiently differentiated
to challenge the AkzoNobel process. This could result,
over time, in further price competition and pressure on
margins beyond that assumed in the Group’s business
planning. This risk is mitigated by the limited global
pool of expertise in the emulsion fuel market combined
with an enhanced R&D programme aimed at optimising
cost and performance and protection of intellectual
property. The Group also makes best use of scarce
expertise by developing close relationships with strategic
counterparties while ensuring that key employees are
suitably incentivised.
The Group’s business is dependent on obtaining and
retaining the services of key personnel of the appropriate
calibre as the business develops. The appointment in 2015
of three General Managers into a revised organisation
structure and the conversion of former consultants to
key full time posts has reduced risk and equipped the
Company to meet future demands. The success of the
Group will continue to be dependent on the expertise
and experience of the Directors and the management
team, and the loss of personnel could still have an
adverse effect on the Group. The Group mitigates
this risk by ensuring that key personnel are suitably
incentivised and contractually bound.
Environmental risks
The Group’s operations are subject to environmental
risks inherent in the oil processing and distribution
industry. The Group is subject to environmental laws
and regulations in connection with all of its operations.
Although the Group intends to be in compliance, in all
material respects, with all applicable environmental
laws and regulations, there are certain risks inherent to
its activities, such as accidental spills, leakages or other
circumstances that could subject the Group to extensive
liability.
Further, the Group may require approval from the
relevant authorities before it can undertake activities
which are likely to impact the environment. Failure to
obtain such approvals may prevent or delay the Group
from undertaking its desired activities. The Group is
unable to predict definitively the effect of additional
environmental laws and regulations, which may be
adopted in the future, including whether any such laws
or regulations would materially increase the Group’s cost
of doing business, or affect its operations in any area. The
Group mitigates this risk by ensuring compliance with
environmental legislation in the jurisdictions in which it
operates, and closely monitoring any pending regulation
or legislation to ensure compliance.
No profit to date
The Group has incurred aggregate losses since its
inception and it is therefore not possible to evaluate
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QUADRISE FUELS INTERNATIONAL plc | ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 2015
its prospects based on past performance. There can
be no certainty that the Group will achieve or sustain
profitability or achieve or sustain positive cash flow from
its activities.
standard of corporate governance and ‘fit for purpose’
procedures, and by maintaining and applying effective
policies.
Corporate and regulatory formalities
The conduct of petroleum processing and distribution
requires compliance by the Group with numerous
procedures and formalities in many different national
jurisdictions. It may not in all cases be possible to
comply with or obtain waivers of all such formalities.
Additionally, functioning as a publicly listed Group
requires compliance with stock market regulations. The
group mitigates this risk through commitment to a high
Economic, political, judicial, administrative, taxation or
other regulatory factors
The Group may be adversely affected by changes in
economic, political, judicial, administrative, taxation or
other regulatory factors, in the areas in which the Group
operates and conducts its principal activities.
Ian Williams
Executive Chairman
9 October 2015
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QUADRISE FUELS INTERNATIONAL plc | ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 2015 Directors
Ian Williams Executive Chairman
Ian joined the Masefield Group in 1999 with
responsibility for the development and management
of business ventures. He led the strategy to secure
the portfolio of assets and business interests that
culminated in the formation of International Energy
Group AG. Ian’s wide ranging industry experience
encompassed 27 years with the Royal Dutch/Shell
Group as Managing Director and Deputy Chairman
of Shell South Africa, Vice President (Downstream)
of Shell Philippines and Head of Strategy and
Consultancy (Downstream) at Shell International
Petroleum Company – in which capacity he was a
member of the Shell global Downstream Oil Steering
Committee. Ian was a founder and Executive
Chairman of Nautical Petroleum plc and Chairman of
Wilton Petroleum Limited.
Hemant Thanawala Finance Director
Hemant is a Chartered Accountant with over 25 years’
professional and commercial experience. Hemant joined
the Masefield Group, an international oil trader, as
Chief Financial Officer in 2001. He was also a founder
of Nautical Petroleum Plc which was listed on AIM until
acquired by Cairn Energy Plc in 2013. After qualifying
with KMG Thomson McLintock, now KPMG, Hemant
was involved in professional practice in the UK, before
working as Finance Director for the Rostel Group for nine
years and as Chief Financial Officer to Premier Telesports
Group for a further three.
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Jason Miles Chief Operating Officer
Jason started his career as a process engineer with
British Petroleum (“BP”) Engineering in London. In 1992
he was seconded to BP’s joint venture with Petroleos
de Venezuela (“PDVSA”) that established Orimulsion®,
a novel emulsion fuel with worldwide sales of over 60
million tons. He has over 10 years of specialist technical,
environmental and commercial product knowledge in
the application and competitiveness of emulsion fuel
for power generation. Prior to joining QFI in 2006, he
was a Senior Consultant for OpenLink for two years,
implementing trading and risk management solutions for
oil majors. Jason read Chemical Engineering (B.Eng, Hons)
at Loughborough University, has an Executive MBA with
distinction from Cass Business School (City of London)
and is a chartered chemical engineer (MIChemE).
Laurence Mutch Non-Executive Director
Laurie is a management consultant providing advice on
governance, strategic planning, business development
and change management to multi-national organisations.
He had 25 years’ experience in the energy industry with
the Royal Dutch/Shell Group where he sat on the Board
of Shell International Gas & Power, as Executive Director
for business development in the Eastern Hemisphere,
leading the commercial appraisal and development of
all Shell’s gas and power projects in the Middle East,
South Asia, China, Philippines and the Russian Far East.
From 1994 to 1996, he was the Finance Director in
Shell International Gas, and Principal Executive to the
International Energy Agency’s Coal Industry Advisory
Board (“CIAB”), a forum of coal industry leaders and a
main source of advice for coal policy matters to the
International Energy Agency in Paris. Prior roles include
senior management positions in Shell’s Coal and Chemical
Divisions. During his last two years of service he was
Group Chief Information Officer and on the Microsoft
and Dell Enterprise Advisory Boards. Laurie holds a BSc in
Mathematics & Physics and an MSc in Astrophysics.
25
Ian Duckels Non-Executive Director
Ian joined Quadrise Ltd in 1998 after a career span of 28
years in the oil, chemicals and mining industries working
for Shell and BP. In the early
first Chairman of the management board, Ian managed
BP’s newly formed Nerefco refinery in Rotterdam. He has
a BSc in Chemistry, a PhD in Chemical Physics, a BSc in
Mathematics & Astrophysics and is an associate of the
Chartered Institute of Management Accountants.
, as the
Dilipkumar Shah Non-Executive Director
Dilipkumar (‘Dilip’) was appointed to the board of
Quadrise on 5 November, 2010. Dilip brings with him over
25 years of commercial experience in trading, finance,
manufacturing and distribution. Dilip has most recently
been involved in trading/manufacturing in West Africa
with focus on Nigeria, Democratic Republic of Congo and
Ghana. He is a Director and/or a founder member of vari-
ous companies in West Africa involved in the distribution
of fertilizers/chemicals, tobacco related products and the
manufacture of food products. In addition he is on the
board of a number of private companies.
Philip Snaith Non-Executive Director
Philip Snaith was appointed to the board of Quadrise
with effect from 8 October 2014. Philip has spent more
than 35 years with the Royal Dutch Shell group in senior
executive positions, latterly as General Manager of Shell
International Trading & Shipping Company Limited in
London, retiring from the group in 2010. Between 2004
and 2008 Mr. Snaith spent four years in Singapore as
president of Shell International Eastern Trading Company
– with responsibility for Asia-Pacific trading portfolio.
Concurrent with this executive position, Mr. Snaith was a
non-executive director of Shell Eastern Trading Company
(Pte) Ltd, a refining, marketing, supply and trading
company with annual revenues of around US$55 billion,
and was also Chairman of both Shell Tankers Singapore
(Pte) Ltd and Shell International Shipping Services (Pte)
Ltd. Mr. Snaith holds an MBA from Cranfield University,
a B.Sc. (Physics) from Imperial College, London and a
Diploma in Marketing (Dip M) from the UK Chartered
Institute of Marketing. Mr Snaith is currently a partner
of PSI Energy.
26
QUADRISE FUELS INTERNATIONAL plc | ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 2015 Directors’ Report
The Directors present their report together with the audited accounts of Quadrise Fuels International plc (“the
Company”), and its subsidiaries, (“the Group”) for the year ended 30 June 2015.
Results and Dividends
The consolidated loss from continuing operations after taxation for the year ended 30 June 2015 was £4.9m (2014:
£5.9m), including a £404k (2014: £1.7m) non-cash amortisation and impairment charge for intangible assets and fair
value adjustment to available for sale investments. The Directors do not recommend the payment of any dividend for
the year (2014: £nil).
Directors
Those who served as Directors during the year are:
n
Ian Williams (Executive Chairman)
n Hemant Thanawala (Finance Director)
n
Jason Miles (Chief Operating Officer)
n
Ian Duckels (Non-executive Director)
n
Laurence Mutch (Non-executive Director)
n Dilipkumar Shah (Non-executive Director)
n Philip Snaith (Non-executive Director) – appointed 8 October 2014
Resolutions to re-elect Laurie Mutch and Ian Duckels as Directors will also be proposed at the Annual General Meeting.
Both of these directors retire by rotation.
Directors’ Interests
The interests of the Directors holding office at 30 June 2015 were as follows:
Number of Shares held:
Directors
Ian Williams 1
Hemant Thanawala2
Ian Duckels3
Jason Miles
Laurence Mutch
Dilipkumar Shah
Philip Snaith
Notes:
30 June 2015
Ordinary Shares of 1p each
30 June 2014
Ordinary Shares of 1p each
30,090,144
28,210,553
3,817,460
2,880,633
Nil
Nil
Nil
11,616,104
7,863,400
3,817,460
637,007
Nil
Nil
Nil
1
2
3
Entities owned by Tile House Trust, of which Mr Williams is a beneficiary, hold 20,693,564 Ordinary shares of 1p each. Mr Williams has a direct interest in
9,396,580 Ordinary shares of 1p each.
Including 20,347,153 Ordinary Shares held by Lucrone Investments GmbH, a company in which Mr Thanawala has a beneficial interest.
The shares of Ian Duckels are held in the name of TD Direct Investing (Europe) Limited.
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Number of share options held:
Directors
Ian Williams
Hemant Thanawala
Jason Miles
Laurence Mutch
Ian Duckels
Dilipkumar Shah
30 June 2015
Share options
30 June 2014
Share options
1,500,000
1,000,000
5,000,000
2,000,000
1,000,000
3,500,000
-
2,500,000
2,500,000
5,000,000
350,000
3,500,000
1,500,000
500,000
1,500,000
1,000,000
5,000,000
2,000,000
1,000,000
3,500,000
750,000
2,500,000
2,500,000
5.000,000
350,000
3,500,000
1,500,000
500,000
Exercisable up to
19 April 2016
30 November 2017
1 April 2022
19 April 2016
30 November 2017
1 April 2022
26 March 2015
31 December 2016
31 October 2017
1 April 2022
19 April 2016
1 April 2022
1 April 2022
1 April 2022
A total of 23.5 million share options were granted by International Energy Group AG (“IEG”), over its own shares in QFI,
to three existing QFI Directors and one current QFI employee, as well as two former QFI Directors and two former QFI
employees. Of these, 5.5 million were exercised during the financial year (2014: 6 million) and 11 million remain outstanding.
The outstanding share options are included in the table above where applicable. Refer to Note 20 for further details.
Substantial Shareholders
The Board was aware of the following interests of 3% and over of the issued share capital of the Company as at the
date of this report:
Nature of holding
Number of
ordinary shares held
Percentage of issued
share capital and voting rights
Intertrust Trustees Limited
Ruudowen Limited
Phibatec Limited
International Energy Group AG
Anthony Lowrie
Ian Williams
Hemant Thanawala
The Anthony Davies Will trust
Orangefield Corporation Trustees (Mauritius) Limited
Direct
Direct
Direct
Direct
Indirect
Direct/Indirect
Direct/Indirect
Direct
Direct
56,137,771
54,738,353
51,562,500
38,943,5151
31,521,705
30,090,144
28,210,553
27,993,288
25,781,250
6.93%
6.76%
6.37%
4.81%
3.89%
3.72%
3.48%
3.46%
3.18%
With reference to the 11 million share options granted by IEG and currently outstanding, as noted above, if all of the options were exercised as at the date
of this report, IEG’s shareholding in QFI would be reduced from 38,943,515 ordinary shares to 27,943,515 ordinary shares and the percentage interest from
4.81% to 3.45%.
Note:
1
28
QUADRISE FUELS INTERNATIONAL plc | ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 2015 Events After the End of the Reporting Period
On 14 September 2015, Quadrise International Limited, a wholly owned subsidiary of QFI, executed agreements
with Compañía Española de Petróleos S.A.U. (“CEPSA”) Mærsk Line A/S (“Mærsk Line”) and A.P. Moller-Mærsk A/S
(“Mærsk”) for the Operational Trial Programme to provide the basis for the issue of Letters of No Objection
(“LONOs”) by participating marine engine manufacturers. The Operational Trial includes the supply, installation
and commissioning of a Quadrise MSAR® Manufacturing Unit at the CEPSA San Roque refinery near Gibraltar.
Financial Instruments
The Group’s principal financial instruments comprise cash balances and other payables and receivables that arise in the
normal course of business. The risks associated with these financial instruments are disclosed in note 24. The Group’s
financial risk management objectives and policies are set out in note 2.21 to the financial statements.
Research and Development
The Group continues to invest in research and development associated with the design and manufacture of MSAR®
proprietary emulsion fuel. Further information regarding the research and development activities of the group is
contained in the Chairman’s Statement on pages 7–19 of this report.
Directors’ Liabilities
Subject to the conditions set out in the Companies Act 2006, the Company has arranged appropriate Directors’ and
Officers’ liability insurance to indemnify the Directors against liability in respect of proceedings brought by third
parties. Such provisions remain in force at the date of this report.
Disclosure of Information to Auditors
So far as each person who was a Director at the date of approving this report is aware, there is no relevant audit
information, being information needed by the auditor in connection with preparing its report, of which the auditor is
unaware. Having made enquiries of fellow Directors, each Director has taken all the steps that he ought to have taken
as a Director in order to have made himself aware of any relevant audit information and to establish that the auditor
is aware of that information.
Re-appointment of Auditors
In accordance with Section 489 of the Companies Act 2006, a resolution to re-appoint Crowe Clark Whitehill LLP will be
proposed at the next Annual General Meeting.
Board Committees
Information on the Audit Committee and Compensation Committee is included in the Corporate Governance section of
the Annual Report on pages 34–35.
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QUADRISE FUELS INTERNATIONAL plc | ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 2015
Annual General Meeting
The Annual General Meeting will be held on Friday 27 November 2015 as stated in the Notice, which accompanies this
Annual Report.
By order of the Board.
Audrey Clarke
Company Secretary
9 October 2015
30
QUADRISE FUELS INTERNATIONAL plc | ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 2015 Statement of Directors’ Responsibilities
The Directors are responsible for preparing the Annual Report and the Financial Statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law, the
Directors have elected to prepare the financial statements in accordance with International Financial Reporting
Standards (“IFRSs”) as adopted by the EU and applicable law.
Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a
true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the Group for that
period. In preparing these financial statements, the Directors are required to:
n select suitable accounting policies and then apply them consistently
n make judgments and accounting estimates that are reasonable and prudent
n state whether applicable accounting standards have been followed, subject to any material departures disclosed
and explained in the financial statements
n prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company
will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible
for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
They are further responsible for ensuring that the Strategic Report and Report of the Directors and other information
included in the Annual Report and Financial Statements is prepared in accordance with applicable law in the United
Kingdom.
The maintenance and integrity of the Quadrise Fuels International plc website is the responsibility of the Directors; the
work carried out by the auditors does not involve the consideration of these matters and, accordingly, the auditors
accept no responsibility for any changes that may have occurred in the accounts since they were initially presented on
the website.
Legislation in the United Kingdom governing the preparation and dissemination of the accounts and the other
information included in annual reports may differ from legislation in other jurisdictions.
Ian Williams
Executive Chairman
9 October 2015
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Report on Directors’ Remuneration
Key Management Remuneration
The Compensation Committee of the Board of Directors is responsible for determining and reviewing compensation
arrangements for all key management personnel, regarded as the executive Directors and Officers of the Group. The
Compensation Committee assesses the appropriateness of the nature and amount of emoluments of such officers on a
periodic basis and is guided by an approved remuneration policy and takes into account relevant employment market
conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high quality
Board and executive team. The Compensation Committee additionally links part of key management remuneration to
the Company’s financial and operational performance.
No bonus awards were made to key management during the year.
Details of the nature and amount of each element of the emoluments of each member of Key Management for the
year ended 30 June 2015 were as follows:
Short-term
employee
benefits
£’000s
Post-
employment
benefits
£’000s
Other long-
term benefits
£’000s
Termination
benefits
£’000s
Other
benefits
£’000s
Total
2015
£’000s
Total
2014
£’000s
154
129
216
32
85
20
-
636
31
10
11
-
-
-
-
52
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
185
139
227
32
85
20
-
688
173
133
214
33
109
-
-
662
Director
Ian Williams
Hemant Thanawala
Jason Miles
Ian Duckels
Laurence Mutch
Philip Snaith
Dilipkumar Shah
TOTAL
32
Reconciliation of Share Options Granted to Directors
As at 1 July
Granted during the year by QFI
Exercised during the year
As at 30 June
30 June 2015
Number of share options
30 June 2014
Number of share options
30,600,000
-
(750,000)
29,850,000
18,000,000
19,000,000
(6,400,000)
30,600,000
A gain of £36k was realised on the exercise of share options by Directors during the year (2014: £51k)
The market price of the Company’s shares at the end of the reporting period was 12.75p (2014: 31.00p) and the range
during the year was 10.75p to 42.5p (2014: 10.62p to 49.00p) per share.
Ian Duckels
Chairman of the Compensation Committee
9 October 2015
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QUADRISE FUELS INTERNATIONAL plc | ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 2015
Corporate Governance Statement
As the Company is listed on the AIM Market of the London Stock Exchange, it is not required to comply with the
provisions of the UK Corporate Governance Code (the “Code”). However, the Board is committed to the high standards
of good corporate governance embodied in the Code and seeks to apply the principles of the Code where practicable
for a company of Quadrise’s size and complexity.
Board of Directors
The Board is responsible for the direction and overall performance of the Group with emphasis on policy and strategy,
financial results and major operational issues.
The Code recommends that at least one-third of Board members should be non-executive Directors. During the year,
the Board comprised the executive Chairman and Finance Director as executive Directors and three non-executive
Directors who are independent of management. In addition, Jason Miles, an executive Director of QIL, is also a non-
executive Director in the Company.
At each Annual General Meeting, one third of the Directors who are subject to retirement by rotation shall retire from
office provided that if their number is more than three, but not a multiple thereof, then the number nearest to but not
exceeding one-third shall retire.
Appropriate Directors’ and Officers’ liability insurance has been arranged by the Company.
Meetings of the Board of Directors
The Board meets at least four times a year, after all relevant information has been circulated in good time, to discuss a
formal scheduled agenda covering key areas of the Group’s affairs including operational and financial performance and
quarterly management accounts.
All members of the Board are expected to attend Board Meetings, which are scheduled in advance, all directors
attended at least 75% of quarterly meetings held during the year.
Audit Committee
During the year, the Audit Committee comprised two non-executive Directors and was chaired by Laurence Mutch.
The chairman of the Committee provides a written or detailed verbal report as necessary of every Audit Committee
meeting at the next Board Meeting.
The Audit Committee, which meets at least twice a year, is responsible for keeping under review the scope and results
of the audit, its cost effectiveness and the independence and objectivity of the auditors. Due to the size of the
Company, there is currently no internal audit function, although the Audit Committee has oversight responsibility for
public reporting, overall good governance and the Company’s internal controls.
Other members of the Board, as well as the auditors, are invited to attend the Audit Committee meetings as and when
appropriate.
34
Compensation Committee
Ian Duckels chaired the Compensation Committee during the year and its other members are Laurence Mutch and
Philip Snaith. The chairman of the Committee provides a written or detailed verbal report as necessary of every
Compensation Committee meeting at the next Board Meeting.
The Compensation Committee, which meets at least twice a year, is responsible for considering the remuneration
packages for executive Directors and the bonus and share option strategy for the Group and making recommendations
as appropriate. The Compensation Committee works within the framework of a Compensation Policy approved by the
Board.
The Compensation Committee is also responsible for reviewing the performance of the executive Directors and
ensuring that they are fairly and responsibly rewarded for their individual contributions to the Group’s overall
performance. The Committee’s scope extends to all remuneration of Directors including bonus and share options.
None of the Committee members has any day-to-day responsibility for running the Company and no Director
participates in discussions about his own remuneration.
UK Bribery Act 2010
The Board has established a Bribery Policy, signed by all Directors, to achieve compliance with the UK Bribery Act
2010, which came into effect on 1 July 2011. A training programme is in place for all Directors, staff and contractors.
Agreements with third parties contain statements that the Company and its associates are required to adhere at all
times to the UK Bribery Act 2010.
Internal Control
The Board is responsible for the effectiveness of the Group’s internal control system and is supplied with information
to enable it to discharge its duties. Internal control systems are designed to meet the particular needs of the Group
and to manage rather than eliminate the risk of failure to meet business objectives and can only provide reasonable
and not absolute assurance against material misstatement or loss.
Laurence Mutch
Chairman of the Audit Committee
9 October 2015
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QUADRISE FUELS INTERNATIONAL plc | ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 2015
Independent Auditor’s Report
to the Shareholders of
Quadrise Fuels International plc
We have audited the financial statements of Quadrise Fuels International plc for the year ended 30 June 2015 which
comprise of the Group and Parent Company Statements of Financial Position, the Group Statement of Comprehensive
Income, the Group and Parent Company Statement of Cash Flows, the Group and Parent Company Statement of
Changes in Equity and the related notes.
The financial reporting framework that has been applied in their preparation is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company financial
statements, as applied in accordance with the provisions of the Companies Act 2006.
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those
matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s
members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective Responsibilities of Directors and Auditors
As explained more fully in the Statement of Directors’ Responsibilities, the directors are responsible for the preparation
of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and
express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing
(UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.
Scope of the Audit of the Financial Statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or
error. This includes an assessment of: whether the accounting policies are appropriate to the company’s circumstances
and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates
made by the directors; and the overall presentation of the financial statements.
In addition, we read all the financial and non-financial information in the Chairman’s Statement, Financial Review,
Strategic Report, Directors’ Report and any other surround information to identify material inconsistencies with the
audited financial statements and to identify any information that is apparently materially incorrect based on, or
materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware
of any apparent material misstatements or inconsistencies we consider the implications for our report.
Opinion on Financial Statements
In our opinion:
n the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs
as at 30 June 2015 and of the group’s loss for the year then ended;
n the group financial statements have been properly prepared in accordance with IFRSs as adopted by the
European Union;
n the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by
the European Union as applied in accordance with the provisions of the Companies Act 2006; and
36
n the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on Other Matters Prescribed by the Companies Act 2006
In our opinion the information given in the Strategic Report and the Directors’ Report for the financial year for which
the financial statements are prepared is consistent with the financial statements. .
Matters on Which we are Required to Report by Exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to
you if, in our opinion:
n adequate accounting records have not been kept by the parent company, or returns adequate for our audit have
not been received from branches not visited by us; or
n the parent company financial statements are not in agreement with the accounting records and returns; or
n certain disclosures of directors’ remuneration specified by law are not made; or
n we have not received all the information and explanations we require for our audit.
Leo Malkin
Senior Statutory Auditor
For and on behalf of
Crowe Clark Whitehill LLP
Statutory Auditor
St Bride’s House
10 Salisbury Square
London EC4Y 8EH
9 October 2015
Note:
The maintenance and integrity of the Quadrise Fuels International plc website is the responsibility of the directors. The work carried out by the auditors does not
involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements
since they were initially presented on the website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.
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QUADRISE FUELS INTERNATIONAL plc | ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 2015
Consolidated Statement
of Comprehensive Income
For the year ended 30 June 2015
Continuing operations
Revenue
Other income
Production and development costs
Amortisation of intangible assets
Adjustment to available for sale investments
Other administration expenses
Share option charge
Foreign exchange loss
Operating loss
Finance costs
Finance income
Loss before tax
Taxation
Loss for the year from continuing operations
Other Comprehensive Income
Adjustment to available for sale investments – will be recycled
subsequently to profit and loss.
Other comprehensive loss for the year net of tax
Total comprehensive loss for the year
Loss for the year attributable to:
Owners of the Company
Non-controlling interest
Total comprehensive loss attributable to:
Owners of the Company
Non-controlling interest
Loss per share – pence
Basic
Diluted
38
Year ended
30 June 2015
£’000
Year ended
30 June 2014
£’000
Notes
5
14
15
20
6
9
10
11
15
12
12
66
39
(1,268)
-
(404)
(1,540)
(1,914)
(3)
(5,024)
(7)
56
(4,975)
72
-
51
(720)
(685)
(1,006)
(1,690)
(1,924)
(3)
(5,977)
(6)
7
(5,976)
64
(4,903) (5,912)
(1,035)
(1,035)
(186)
(186)
(5,938) (6,098)
(4,898)
(5)
(5,933)
(5)
(0.61)p
(0.61)p
(5,835)
(77)
(6,021)
(77)
(0.74)p
(0.74)p
Consolidated Statement of Financial Position
As at 30 June 2015
ASSETS
Non-current assets
Property, plant and equipment
Intangible assets
Available for sale investments
Non-current assets
Current assets
Cash and cash equivalents
Trade and other receivables
Prepayments
Current assets
TOTAL ASSETS
EQUITY AND LIABILITIES
Current liabilities
Trade and other payables
CURRENT LIABILITIES
Equity attributable to equity holders of the parent
Issued share capital
Share premium
Revaluation reserve
Share option reserve
Reverse acquisition reserve
Accumulated losses
Total shareholders’ equity
Non-controlling interests
Total equity interests
TOTAL EQUITY AND LIABILITIES
As at
30 June 2015
£’000
As at
30 June 2014
£’000
Notes
13
14
15
17
18
19
21
22
22
22
710
2,924
-
3,634
8,361
333
238
8,932
12,566
422
422
8,096
69,216
-
4,210
522
(69,900)
12,144
-
12,144
12,566
612
2,924
1,439
4,975
11,081
170
76
11,327
16,302
241
241
8,072
68,633
1,035
3,045
522
(65,126)
16,181
(120)
16,061
16,302
The financial statements, accompanying policies and notes 1 to 30 (forming an integral part of these financial
statements), were approved and authorised for issue by the Board on 9 October 2015 and were signed on its behalf by:
I. Williams
Chairman
H. Thanawala
Finance Director
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Consolidated Statement of Changes in Equity
For the year ended 30 June 2015
Attributable to owners of the parent
Issued
capital
£’000s
Share
premium
£’000s
Revaluation
reserve
£’000s
Share
option
reserve
£’000s
Reverse
acquisition
reserve
£’000s
Accumulated
losses
£’000s
Total
£’000s
Non-
controlling
interest
£’000s
1 July 2013
7,725
58,489
1,221
1,134
522
(58,793)
10,298
Total
equity
£’000s
10,049
(5,912)
(186)
(249)
(77)
-
(5,835)
(5,835)
-
(186)
(5,835)
(6,021)
(77)
(6,098)
-
-
-
(498)
(65,126)
10,106
1,924
80
(206)
16,181
-
-
-
206
(120)
10,106
1,924
80
-
16,061
(65,126)
16,181
(120)
16,061
(4,898)
(4,898)
-
(1,035)
(5)
-
(4,903)
(1,035)
(4,898)
(5,933)
(5)
(5,938)
-
1,914
43
107
706
-
(625)
(125)
-
-
-
125
-
1,914
107
-
-
12,144
522
(69,900)
12,144
Loss for the year
Fair value adjustments
Total comprehensive
loss for the year
New shares issued
net of issue costs
Share option charge
Exercise of share
options
Acquisition of Minority
Interest
-
-
-
-
-
-
334
9,772
-
4
9
-
89
283
-
(186)
(186)
-
-
-
-
-
-
-
-
1,924
(13)
-
30 June 2014
8,072
68,633
1,035
3,045
1 July 2014
8,072
68,633
1,035
3,045
Loss for the year
Fair value adjustments
Total comprehensive
loss for the year
Share option charge
Exercise of share
options
Transfer of balances
relating to expired
share options
Acquisition of Minority
Interest
-
-
-
-
8
-
-
-
-
-
99
-
16
484
30 June 2015
8,096
69,216
-
(1,035)
(1,035)
-
-
-
-
-
-
-
-
1,914
(43)
(706)
-
4,210
-
-
-
-
-
-
-
522
522
-
-
-
-
-
-
-
For an explanation of the nature and purpose of other reserves refer to note 22.
40
Consolidated Statement of Cash Flows
For the year ended 30 June 2015
Notes
13
13
9
10
14
15
20
18
19
9
11
10
13
Operating activities
Loss before tax from continuing operations
Depreciation
Loss on disposal of fixed assets
Finance costs
Finance income
Amortisation of intangible assets
Adjustment to available for sale investments
Share option charge
Working capital adjustments
Increase in trade and other receivables
(Increase)/decrease in prepayments
Increase in trade and other payables
Cash utilised in operations
Finance costs
Taxation received
Net cash outflow from operating activities
Investing activities
Finance income
Purchase of property, plant and equipment
Net cash outflow from investing activities
Financing Activities
Issue of Ordinary share capital (net of issue costs)
Exercise of share options
Net cash inflow from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
17
Year ended
30 June 2015
£’000
Year ended
30 June 2014
£’000
(4,975)
(5,976)
108
14
7
(56)
-
404
1,914
(163)
(162)
181
(2,728)
(7)
72
(2,663)
56
(220)
(164)
-
107
107
(2,720)
11,081
8,361
77
-
6
(7)
685
1,006
1,924
(9)
3
7
(2,284)
(6)
64
(2,226)
7
(129)
(122)
10,106
80
10,186
7,838
3,243
11,081
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Company Statement of Financial Position
As at 30 June 2015
ASSETS
Non-current assets
Property, plant and equipment
Available for sale investments
Investments in subsidiaries
Non-current assets
Current assets
Cash and cash equivalents
Trade and other receivables
Prepayments
Current assets
TOTAL ASSETS
EQUITY AND LIABILITIES
Current liabilities
Trade and other payables
Current liabilities
Equity attributable to equity holders of the parent
Issued capital
Share premium
Revaluation reserve
Share option reserve
Accumulated losses
Total shareholders’ equity
TOTAL EQUITY AND LIABILITIES
As at
30 June 2015
£’000s
As at
30 June 2014
£’000s
Notes
13
15
16
17
18
19
21
22
22
158
-
18,845
19,003
7,875
142
63
8,080
27,083
268
268
8,096
69,216
-
4,210
(54,707)
26,815
27,083
119
1,439
15,433
16,991
10,554
116
55
10,725
27,716
118
118
8,072
68,633
1,035
3,045
(53,187)
27,598
27,716
The financial statements, accompanying policies and notes 1 to 30 (forming an integral part of these financial
statements), were approved and authorised for issue by the Board on 9 October 2015 and were signed on its behalf by:
I. Williams
Chairman
H. Thanawala
Finance Director
42
Company Statement of Changes in Equity
For the year ended 30 June 2015
Issued
capital
£’000s
Share
premium
£’000s
Revaluation
reserve
£’000s
Share option
reserve
£’000s
Accumulated
losses
£’000s
1 July 2013
Loss for the year
Fair value adjustments
Total comprehensive loss for the year
Share option charge
Exercise of share options
New shares issued (net of issue costs)
30 June 2014
1 July 2014
Loss for the year
Fair value adjustments
Total comprehensive loss for the year
Share option charge
Exercise of share options
Transfer of balances relating to expired
share options
New shares issued net of issue costs
7,725
58,489
-
-
-
-
4
343
8,072
8,072
-
-
-
-
8
-
16
-
-
-
-
89
10,055
68,633
68,633
-
-
-
-
99
-
484
30 June 2015
8,096
69,216
1,219
-
(184)
(184)
-
-
-
1,035
1,035
-
(1,035)
(1,035)
-
-
-
-
-
1,134
-
-
-
1,924
(13)
-
3,045
3,045
-
-
-
1,914
(43)
(706)
-
4,210
(49,215)
(3,972)
-
(3,972)
-
-
-
(53,187)
(53,187)
(2,269)
-
(2,269)
-
43
706
-
Total
£’000s
19,352
(3,972)
(184)
(4,156)
1,924
80
10,398
27,598
27,598
(2,269)
(1,035)
(3,304)
1,914
107
-
500
(54,707)
26,815
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Company Statement of Cash Flows
For the year ended 30 June 2015
Year ended
30 June 2015
£’000s
Year ended
30 June 2014
£’000s
Notes
(2,269)
(3,972)
13
9
10
15
20
18
19
10
13
16
16
36
2
(365)
404
1,914
(26)
(8)
150
(162)
(2)
(164)
365
(75)
(2,912)
-
(2,622)
-
107
107
(2,679)
10,554
7,875
21
2
(7)
1,008
1,924
(84)
1
46
(1,061)
(2)
(1,063)
7
(102)
20
(292)
(367)
10,398
80
10,478
9,048
1,506
10,554
Operating activities
Loss before tax from continuing operations
Depreciation
Finance costs
Finance income
Adjustment to available for sale investments
Share option charge
Working capital adjustments
Increase in trade and other receivables
(Increase)/decrease in prepayments
Increase in trade and other payables
Cash utilised in operations
Finance costs
Net cash outflow from operating activities
Investing activities
Finance income
Purchase of property, plant and equipment
Loan (to)/from subsidiary
Investment in subsidiary
Net cash outflow from investing activities
Financing Activities
Issue of Ordinary share capital (net of issue costs)
Exercise of share options
Net cash inflow from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
17
44
Notes to the Financial Statements
1. General Information
Quadrise Fuels International plc (“QFI”, “Quadrise”, “Company”) and its subsidiaries (together “the Group”) are engaged
principally in the manufacture and marketing of emulsion fuel for use in power generation, industrial and marine diesel
engines and steam generation applications. The Company’s ordinary shares are listed 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 at, and is registered at, Gillingham House, 38-44 Gillingham Street, London, SW1V 1HU.
2. Summary of Significant Accounting Policies
The Board has reviewed the accounting policies set out below and considers them to be the most appropriate to the
Group’s business activities.
2.1. Basis of Preparation
The financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS’s”)
as adopted by European Union, and effective, or issued and early adopted, as at the date of these statements. The
financial statements have been prepared under the historical cost convention as modified for financial assets carried
at fair value.
At the date of authorisation of these financial statements, a number of Standards and Interpretations were in issue
but not yet effective. The directors do not anticipate that the adoption of these standards and interpretations, or any
of the amendments made to existing standards as a result of the annual improvements cycle, will have a material
effect on the financial statements in the year of initial application.
The preparation of financial statements in conformity with IFRS accounting principles requires the use of estimates
and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and
the reported amounts of expenses during the reporting period. Although these estimates are based on management’s
best knowledge of the amount, event or actions, actual results ultimately may differ from those estimates.
2.2. Basis of Consolidation
The consolidated financial statements incorporate the financial statements of entities controlled by the Group as at 30
June 2015.
All inter-company balances, transactions, income and expenses and profits and losses resulting from intra-group
transactions are eliminated on consolidation. Subsidiaries are fully consolidated from the date of acquisition, being
the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases.
Accounting policies of subsidiaries are consistent with those adopted by the Group.
Control is defined as when QFI, or a company which it controls, is exposed, or has rights, to variable returns from its
involvement with the investee and has the ability to affect those returns through its power over the investee. Thus
QFI demonstrates control when it has all the following:
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QUADRISE FUELS INTERNATIONAL plc | ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 2015
n power over the investee;
n exposure, or rights, to variable returns from its involvement with the investee; and
n the ability to use its power over the investee to affect the amount of the investor’s returns.
Non-controlling interests at the balance sheet date, being the portion of the net assets of subsidiaries attributable to
equity interests that are not owned by the Group, whether directly or indirectly through subsidiaries, are presented
in the Consolidated Statement of Financial Position and Statement of Changes in Equity within equity, separately
from equity attributable to the equity holders of the group. Non-controlling interests in the results of the Group are
presented on the face of the Consolidated Statement of Comprehensive Income as an allocation of the total profit or
loss for the year between non-controlling interests and the equity holders of the Group.
2.3. Changes in Accounting Principles and Adoption of New and Revised Standards
The accounting policies adopted are consistent with those of the previous financial year. There have been no new or
revised standards or interpretations during the year which have had an impact on the financial information of the Group.
2.4. Significant Accounting Estimates and Assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the statement of
financial position date that have a significant risk of causing a material adjustment to the carrying amounts of assets
and liabilities in the next financial period are discussed below:
n Intangible Assets – The Group tests intangible assets annually for impairment or more frequently if there are
indications that they might be impaired. This requires an estimation of the value in use of the intangible asset.
Estimating the value in use requires management to make an estimate of the expected future cash flows from
the intangible assets and also to choose a suitable discount rate in order to calculate the present value of those
cash flows. The carrying value of intangible assets at 30 June 2015 is determined to be £2.9m (2014: £2.9m). Further
details are given in Note 14.
n Available for Sale Investments – The Group reviews the fair value of its unquoted equity instruments at
each statement of financial position date. This requires management to make an estimate of the fair value of
the unquoted securities in the absence of an active market. Uncertainty also exists due to the early stage of
development of certain of the investments. The fair value of available for sale investments at 30 June 2015 is
determined to be £nil (2014: £1.4m). Further details are given in Note 15.
2.5. Revenue Recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the
revenues can be reliably measured. Revenue is recognised at the fair value of the consideration received, excluding
discounts, rebates, and other sales taxes or duty. The following recognition criteria must also be met before revenue is
recognised:
46
QUADRISE FUELS INTERNATIONAL plc | ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 2015
Sale of goods
Revenue for the sale of goods is recognised when the significant risks and rewards of ownership of the goods have
passed to the buyer.
Interest income
Revenue is recognised as interest accrues.
Dividends
Revenue is recognised when the Group’s right to receive the payment is established.
2.6. Foreign Currencies
The Group financial statements are presented in sterling, which is the Company’s functional and presentation currency.
Each entity in the Group determines its own functional currency and items included in the financial statements of each
entity are measured using that functional currency. Transactions in foreign currencies are initially recorded using the
functional currency rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign
currencies are re-translated at the functional currency rate of exchange ruling at the statement of financial position
date. Any resulting exchange differences are included in the statement of comprehensive income. Non-monetary
items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair
value was determined.
The following exchange rates are used in the Group’s major currencies:
ISO Code
Statement of Financial Position
(closing rate at 30 June 2015)
Statement of Comprehensive Income
(average rate throughout the financial year)
USD
CAD
EUR
1.5717
1.9417
1.4165
1.5755
1.8430
1.3134
United States
Canada
Europe
2.7. Finance Costs
Finance costs include interest charges and other costs incurred in connection with the borrowing of funds and are
expensed as incurred. Interest and costs are accounted for on the accruals basis and are recognised through the
statement of comprehensive income in full. No interest or borrowing costs have been capitalised.
2.8. Business Combinations
Acquisition of subsidiaries is accounted for using the purchase method. The results of businesses acquired are
consolidated from the effective date of acquisition, whereby upon acquisition of a business or an associate, net assets
are stated at fair value.
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On 18 April 2006, Zareba plc (renamed Quadrise Fuels International plc) became the legal parent of Quadrise
International Limited in a share-for-share transaction. Due to the relative size of the companies, the shareholders of
Quadrise International Limited became the majority shareholders of Quadrise Fuels International plc. Accordingly, the
substance of the combination was that Quadrise International Limited acquired Quadrise Fuels International plc and
was therefore accounted for as a reverse acquisition under IFRS 3.
2.9. Intangible Assets
Intangible assets acquired separately are measured initially at cost. The costs of intangible assets acquired in a business
combination are measured at the fair value as at the date of acquisition. Following initial recognition, intangible assets
are carried at cost less any accumulated amortisation and accumulated impairment loss.
Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever
there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method
for an intangible asset with a finite useful life are reviewed at each financial year-end. Changes in the expected useful
life or the expected pattern of consumption of future economic benefits embodied in the assets are accounted for
by changing the amortisation period or method, as appropriate, and treated as a change in accounting estimate. The
intangible assets of finite life are amortised over 93 months. The amortisation expense on intangible assets with finite
lives is recognised in the statement of comprehensive income in the expenses category consistent with the function of
the intangible asset.
Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the cash-
generating unit level. Such intangibles are not amortised. The useful life of an intangible asset with an indefinite life is
reviewed annually to determine whether indefinite life assessment continues to be supportable and, if not, the change
in the useful life assessment from indefinite to finite is made on a prospective basis.
Research expenditure is recognised as an expense when it is incurred.
Development expenditure is recognised as an expense except that costs incurred on development projects are
capitalised as long-term assets to the extent that such expenditure is expected to generate future economic benefits.
2.10. Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation. Depreciation is calculated using a
straight line method with an allowance for estimated residual values. Rates are determined based on the estimated
useful lives of the assets as follows:
Plant and equipment
3 to 15 years
Additions to property, plant and equipment are comprised of the cost of the contracted services, direct labour and
materials. Depreciation commences in the month the asset is placed in service.
2.11. Financial Instruments
Financial assets and liabilities are recognised in the Group’s statement of financial position when the Group becomes
a party to the contractual provisions of the instrument. The Group currently does not use derivative financial
instruments to manage or hedge financial exposures or liabilities.
48
QUADRISE FUELS INTERNATIONAL plc | ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 2015 2.12. Investments and other Financial Assets
Financial assets are classified as either financial assets at fair value through profit and loss, loans and receivables, held
to maturity investments or available for sale financial assets, as appropriate. When financial assets are recognised
initially, they are at fair value. The Group determines the classification of its financial assets at initial recognition and,
where allowed and appropriate, re-evaluates this designation at each financial year-end.
Investments in Subsidiaries
Investments in subsidiaries are carried at cost less impairment. The Company tests investments annually for
impairment, or more frequently if there are indications that they might be impaired. Impairment is based on the value
in use of the subsidiaries.
Available-for-Sale Investments
Available-for-sale investments are those non-derivative financial assets that are designated as available for sale or
are not classified as loans and receivables, held to maturity investments or financial assets at fair value through profit
and loss. After initial recognition, available for sale financial assets are measured at fair value with gains or losses
being recognised as a separate component of equity until the investment is derecognised or until the investment is
determined to be impaired at which time the cumulative gain or loss previously reported in equity is included in the
statement of comprehensive income.
The fair value of investments that are actively traded in organised financial markets is determined by reference to quoted
market bid prices at the closure of business on the statement of financial position date. For investments where there is
no active market, fair value is determined using valuation techniques. Such techniques include using recent arm’s length
market transactions, reference to the current market value, discounted cash flow analysis and option pricing models.
2.13. Impairment
At each statement of financial position date, reviews are carried out on the carrying amounts of tangible and
intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If
any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent, if any,
of the impairment loss. Where the asset does not generate cash flows that are independent from the other assets,
estimates are made of the cash-generating unit to which the asset belongs. Intangible assets with an indefinite useful
life are tested for impairment at least annually and whenever there is an indication that the asset may be impaired.
The recoverable amount is the higher of fair value, less costs to sell, and value in use. In assessing value in use,
estimated future cash flows are discounted to their present value using a discount rate appropriate to the specific
asset or cash-generating unit. If the recoverable amount of an asset or cash-generating unit is estimated to be less
than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable
amount. Impairment losses are recognised immediately in the statement of comprehensive income.
2.14. Cash and Cash Equivalents
For the purposes of the statement of cash flows, cash and cash equivalents comprise cash-in-hand bank balances, call
money and unrestricted time deposit balances with a maturity of 90 days or less.
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QUADRISE FUELS INTERNATIONAL plc | ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 2015
2.15. Trade and Other Receivables and Payables
Trade and other receivables and trade and other payables are initially recognised at fair value. Fair value is considered
to be the original invoice amount, discounted where material, for short-term receivables and payables. Long term
receivables and payables are measured at amortised cost using the effective interest rate method. Where receivables
are denominated in a foreign currency, retranslation is made in accordance with the foreign currency accounting policy
previously stated.
2.16. Derecognition and Impairment of Financial Assets and Liabilities
Financial Assets
A financial asset is derecognised where:
n the right to receive cash flows from the asset has expired;
n the Group retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full
without material delay to a third party under a pass-through arrangement; or
n the Group has transferred the rights to receive cash flows from the asset, and
l either has transferred substantially all the risks and rewards of the asset, or
l
has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred
control of the asset.
Financial Liabilities
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. Where
an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms
of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of
the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is
recognised in the statement of comprehensive income.
2.17. Taxation
Current Tax
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be
recovered from or paid to the tax authorities. The tax rates and the tax laws used to compute the amount are those
that are enacted or substantively enacted by the statement of financial position date.
Deferred Tax
Deferred income tax is recognised on all temporary differences arising between the tax bases of assets and liabilities
and their carrying amounts in the financial statements, with the following exceptions:
50
QUADRISE FUELS INTERNATIONAL plc | ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 2015
n where the temporary difference arises from the initial recognition of goodwill or of an asset or liability in a
transaction that is not a business combination and, at the time of the transaction, affects neither accounting nor
taxable profit or loss;
n in respect of taxable temporary differences associated with investment in subsidiaries, associates and joint
ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that
the temporary differences will not reverse in the foreseeable future and
n deferred income tax assets are recognised only to the extent that it is probable that taxable profit will be available
against which the deductible temporary differences, carried forward tax credits or tax losses can be utilised.
Deferred income tax assets and liabilities are measured on an undiscounted basis at the tax rates that are expected
to apply when the related asset is realised or liability is settled, based on tax rates and laws enacted or substantively
enacted at the statement of financial position date.
The carrying amount of deferred income tax assets is reviewed at each statement of financial position date. Deferred
income tax assets and liabilities are offset, only if a legal enforcement right exists to set off current tax assets against
current tax liabilities, the deferred income taxes related to the same taxation authority and that authority permits the
Group to make a single net payment.
Income tax is charged or credited directly to equity if it relates to items that are credited or charged to equity.
Otherwise income tax is recognised in the statement of comprehensive income.
2.18. Employee Benefits
The Group maintains various defined contribution plans for providing employee benefits, which conform to laws and
practices in the countries concerned. Retirement benefit plans are generally funded by contributions from both the
employees and the Companies to independent entities (multi-employer plan) that operate the retirement benefit
schemes. Current service cost for defined contribution plans is equivalent to the employer’s contributions due for
that period. The Group’s contributions to the defined contribution pension plans are charged to the statement of
comprehensive income in the year to which they relate.
2.19. Share-based Payments
Employees (including Directors and senior executives) of the Group receive remuneration in the form of share-based
payment transactions, whereby these individuals render services as consideration for equity instruments (“equity-
settled transactions”). These individuals are granted share option rights approved by the Board, which can only be
settled in shares of the respective companies that award the equity-settled transactions. Share options rights are also
granted to these individuals by a major shareholder over their shares held. No cash settled awards have been made or
are planned.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the
period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant
individuals become fully entitled to the award (“vesting point”). The cumulative expense recognised for equity-settled
transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired
and the Group’s best estimate of the number of equity instruments and value that will ultimately vest. The statement
of comprehensive income charge for the year represents the movement in the cumulative expense recognised as at
the beginning and end of that period.
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QUADRISE FUELS INTERNATIONAL plc | ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 2015
The fair value of share-based remuneration is determined at the date of grant and recognised as an expense in the
statement of comprehensive income on a straight-line basis over the vesting period, taking account of the estimated
number of shares that will vest. The fair value is determined by use of a Black Scholes model.
2.20. Separately Disclosable Items
Items that are material in size and unusual and infrequent in nature are presented as separately disclosable items
in the statement of comprehensive income or separately disclosed in the notes to the financial statements. The
Directors are of the opinion that the separate recording of these items provides helpful information about the Group’s
underlying business performance.
2.21. Financial Risk Management, Recognition and Accounting
The Group’s multi-national operations expose it to a variety of financial risks that include the effects of changes in
foreign currency exchange rates, credit risks, equity securities prices, liquidity and interest rates. The Group has in place
a risk management programme that seeks to limit the adverse effects on the financial performance of the Group. The
Board has approved the risk management policies applied by the Group.
These policies are implemented by central finance that prepares regular reports to enable prompt identification of
financial risks so that appropriate actions may be taken. The Group has a policy and procedures manual that sets out
specific guidelines to manage foreign exchange risk, interest rate risk, credit risk and the use of financial instruments to
manage these. No forward hedging activities are undertaken unless approved by the Board.
2.22. Financial Risk Management Objectives and Policies
The QFI business model relies on bespoke contracts that do not contain any derivative financial instruments. The
Group does not enter into any forward exchange rate contracts.
The main financial risks arising from the Group’s activities are cash flow interest rate risk, liquidity risk, foreign currency
risk, price risk (fair value) and credit risk. The Board reviews and agrees policies for managing each of these risks and
they are summarised as:
n Cash Flow Interest Rate Risk – the Group’s exposure to the risk of changes in market interest rates relates
primarily to the Group’s deposit accounts with major banking institutions. The Group’s policy is to manage its
interest income using a mixture of fixed and floating rate deposit accounts.
n Liquidity Risk – the Group raises funds as required on the basis of budgeted expenditure and inflows. When
funds are sought, the Group balances the costs and benefits of equity and debt financing. When funds are received
they are deposited with banks of high standing in order to obtain market interest rates.
n Foreign Currency Risk – the Group’s significant operations are in the UK, however movements in exchange
rates can affect its financial results. Currently this risk to the financial position of the Group is not considered to be
significant to warrant hedging or other risk management solutions.
n Price Risk – the carrying amount of the following financial assets and liabilities approximate to their fair value due
to their short term nature: cash accounts, accounts receivable and accounts payable. Available for sale investments
are valued at fair value based on recent shareholder transactions or the underlying net asset base. The Group
monitors market conditions regularly and considers the market conditions when buying or selling investments.
52
QUADRISE FUELS INTERNATIONAL plc | ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 2015 n Credit Risk – with respect to credit risk arising from other financial assets of the Group, which comprise cash and
time deposits and accounts receivable, the Group’s exposure to credit risk arises from default of the counterparty,
with a minimum exposure equal to the carrying amount of these instruments. The credit risk on cash is limited as
cash is placed with substantial financial institutions.
2.23. Events After the End of the Reporting Period
Post year-end events that provide additional information about the Group’s position at the statement of financial
position date and are adjusting events are reflected in the financial statements. Post year-end events that are not
adjusting events are disclosed in the notes when material.
2.24. Segment Reporting
An operating segment is a component of the Group that engages in business activities from which it may earn
revenues and incur expenses. All operating segments’ operating results are reviewed regularly by the chief operating
decision maker, which is the Board, to make decisions about resources to be allocated to the segment and to assess its
performance, and for which discrete financial information is available.
Segment results that are reported to the Board include items directly attributable to a segment as well as those that
can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets and head office expenses.
2.25. Leasing Commitments
Office rental charges payable under operating leases are charged to the Statement of Comprehensive Income as part
of administration expenses over the lease term.
3. Going Concern
The Group’s business activities and financial position, together with the factors likely to affect its future development,
performance and position are set out in the Chairman’s Statement.
The Group had £8.4m in treasury as at 30 June 2015. The Directors have carried out a detailed assessment of going
concern as part of the financial reporting process, and having conducted a full review of the updated business
plan, budgets and associated commitments at the year end, have concluded that the Group has adequate financial
resources to continue in operational existence for at least the forthcoming year and therefore continue to adopt the
going concern basis in preparing the accounts.
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QUADRISE FUELS INTERNATIONAL plc | ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 2015
4. Segmental Information
For the purpose of segmental information the reportable operating segment is determined to be the business
segment. The Group principally has one business segment, the results of which are regularly reviewed by the Board.
This business segment is a business to produce emulsion fuel (or supply the associated technology to third parties)
as a low cost substitute for conventional heavy fuel oil (“HFO”) for use in power generation plants and industrial and
marine diesel engines.
Geographical Segments
The Group’s main geographical segments during the year were the UK and Canada. The following table presents
certain asset information regarding the Group’s geographical segments.
30 June 2015
£’000s
30 June 2014
£’000s
3,634
-
3,634
3,536
1,439
4,975
Year ended
30 June 2015
£’000s
39
39
Year ended
30 June 2014
£’000s
51
51
Year ended
30 June 2015
£’000s
Year ended
30 June 2014
£’000s
18
18
11
238
108
-
14
15
8
179
77
685
Non-current assets
UK
Canada
Total
5. Other Income
Other income includes:
Recoverable costs recharged to related parties
Total
6. Operating Loss
Operating loss is stated after charging:
Fees payable to the Company’s auditor for the audit of the
Company’s annual accounts.
Fees payable to the Company’s auditor and its associates for other services:
Audit of accounts of subsidiaries
Tax compliance services
Consultants and other professional fees (including legal)
Depreciation of property, plant and equipment
Amortisation of intangible assets
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QUADRISE FUELS INTERNATIONAL plc | ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 2015 7. Staff Cost
Head count
Average number of employees of the Group (including executive Directors employed
by the Company) during the year was:
Management
Technical staff / support / other
Staff costs
Wages and salaries
Social security costs
Pension costs
Total
Year ended
30 June 2015
Number
Year ended
30 June 2014
Number
2
6
2
4
Year ended
30 June 2015
£’000s
Year ended
30 June 2014
£’000
809
83
75
967
559
52
48
659
Included in total staff costs are the costs of the Executive Directors as employed by the Company as follows:
Director
Ian Williams
Wages and salaries
Pension costs
Hemant Thanawala
Wages and salaries
Pension costs
Jason Miles
Wages and salaries
Pension costs
Total
Aggregate emoluments of the Directors of the Company were as follows
Share option expense
Salaries and fees
Pension costs
Total
Year ended
30 June 2015
£’000s
Year ended
30 June 2014
£’000s
154
31
185
129
10
139
154
11
165
489
1,713
645
52
2,410
151
22
173
126
7
133
-
-
-
306
1,885
633
30
2,548
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QUADRISE FUELS INTERNATIONAL plc | ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 2015
Non-executive Directors’ fees for the year amounted to £103k (2014: £88k). Consulting fees paid to non-executive
Directors for the year amounted to £103k (2014: £253k).
The highest paid Director’s remuneration totalled £263k (2014: £214k), represented by all aggregate emoluments.
Refer to the Report of Directors’ Remuneration (on pages 32–33) for further details, the Key Management Personnel
referred to therein are the Directors of the Company.
Further details regarding Non-executive Directors’ remuneration are disclosed in note 25 – Related Party Transactions.
8. Losses Attributable to Quadrise Fuels International plc
The loss for the year dealt with in the accounts of Quadrise Fuels International plc was £2.3m (2014: £4.0m). As
provided by s.408 of the Companies Act 2006, no statement of comprehensive income is presented in respect of
Quadrise Fuels International plc.
9. Finance Costs
Bank charges
Total
10. Finance Income
Year ended
30 June 2015
£’000s
Year ended
30 June 2014
£’000s
7
7
6
6
All finance income recognised during the current and prior year has arisen from interest on bank deposits and loans.
11. Taxation
UK corporation tax credit
Total
No liability in respect of corporation tax arises as a result of trading losses.
Year ended
30 June 2015
£’000s
(72)
(72)
Year ended
30 June 2014
£’000s
(64)
(64)
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QUADRISE FUELS INTERNATIONAL plc | ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 2015
Tax Reconciliation
Loss on continuing operations before taxation
Loss on continuing operations before taxation multiplied by
the UK corporation tax rate of 20.75% (2014: 22.5%)
Effects of:
Non-deductible expenditure
R&D tax credit
Tax losses carried forward
Total taxation credit on loss from continuing operations
Year ended
30 June 2015
£’000s
Year ended
30 June 2014
£’000s
(4,975)
(1,032)
500
(72)
533
(72)
(5,976)
(1,345)
227
(64)
1,118
(64)
The Group has tax losses arising in the UK of approximately £40.7m (2014: £34.8m) that are available, under current
legislation, to be carried forward against future profits. £11.2m (2014: £8.3m) of the tax losses carried forward represent
trading losses, £25.8m (2014: £23.7m) represent non-trade deficits arising on intangible assets within Quadrise
International Limited, £1.7m (2014: £1.2m) represent pre-trading losses incurred by subsidiaries, £1.9m (2014: £1.5m)
represent management expenses incurred by Quadrise International Limited, and £0.1m (2014: £0.1m) represent capital
losses within Quadrise Fuels International plc.
A deferred tax asset representing these losses and other timing differences at the statement of financial position date
of approximately £8.1m (2014: £7.3m) has not been recognised as a result of existing uncertainties in relation to its
realisation.
12. Loss Per Share
The calculation of loss per share is based on the following loss and number of shares:
Loss for the year (£’000s)
Weighted average number of shares:
Basic
Diluted
Loss per share:
Basic
Diluted
Year ended
30 June 2015
(4,898)
Year ended
30 June 2014
(5,835)
808,656,176
808,656,176
783,491,125
783,491,125
(0.61)p
(0.61)p
(0.74)p
(0.74)p
Basic loss per share is calculated by dividing the loss for the year from continuing operations of the Group by the
weighted average number of ordinary shares in issue during the year.
For diluted loss per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion
of all potential dilutive options over ordinary shares. Potential ordinary shares resulting from the exercise of share
options 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 31.0m dilutive share options issued by the Company and
which are outstanding at year-end could potentially dilute earnings per share in the future if exercised when the
Group is in a profit making position.
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QUADRISE FUELS INTERNATIONAL plc | ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 2015
13. Property, plant and equipment
Consolidated
Leasehold
Improvements
£’000s
Computer
Equipment
£’000s
Software
£’000s
Office
Equipment
£’000s
Plant and
machinery
£’000s
Total
£’000s
Cost
Opening balance – 1 July 2014
Additions
Disposals
Closing balance – 30 June 2015
Depreciation
Opening balance – 1 July 2014
Depreciation charge for the year
Disposals
Closing balance – 30 June 2015
Net book value at 30 June 2015
94
5
-
99
(6)
(20)
-
(26)
73
21
49
-
70
(7)
(7)
-
(14)
56
17
26
-
43
(9)
(6)
-
(15)
28
16
-
-
16
(6)
(3)
-
(9)
7
559
140
(17)
682
(67)
(72)
3
(136)
546
707
220
(17)
910
(95)
(108)
3
(200)
710
Company
Leasehold
Improvements
£’000s
Computer
Equipment
£’000s
Software
£’000s
Office
Equipment
£’000s
Plant and
machinery
£’000s
Total
£’000s
94
5
-
99
(6)
(20)
-
(26)
73
20
44
-
64
(7)
(7)
-
(14)
50
18
26
-
44
(10)
(6)
-
(16)
28
16
-
-
16
(6)
(3)
-
(9)
7
-
-
-
-
-
-
-
-
-
148
75
-
223
(29)
(36)
-
(65)
158
Cost
Opening balance – 1 July 2014
Additions
Disposals
Closing balance – 30 June 2015
Depreciation
Opening balance – 1 July 2014
Depreciation charge for the year
Disposals
Closing balance – 30 June 2015
Net book value at 30 June 2015
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QUADRISE FUELS INTERNATIONAL plc | ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 2015
Property, plant and equipment
Consolidated
Leasehold
Improvements
£’000s
Computer
Equipment
£’000s
Software
£’000s
Office
Equipment
£’000s
Plant and
machinery
£’000s
Total
£’000s
Cost
Opening balance – 1 July 2013
Additions
Disposals
Closing balance – 30 June 2014
Depreciation
Opening balance – 1 July 2013
Depreciation charge for the year
Disposals
Closing balance – 30 June 2014
Net book value at 30 June 2014
17
94
(17)
94
(12)
(11)
17
(6)
88
14
7
-
21
(4)
(3)
-
(7)
14
17
-
-
17
(5)
(4)
-
(9)
8
16
-
-
16
(3)
(3)
-
(6)
10
531
28
-
559
(11)
(56)
-
(67)
492
595
129
(17)
707
(35)
(77)
17
(95)
612
Company
Leasehold
Improvements
£’000s
Computer
Equipment
£’000s
Software
£’000s
Office
Equipment
£’000s
Plant and
machinery
£’000s
Total
£’000s
Cost
Opening balance – 1 July 2013
Additions
Disposals
Closing balance – 30 June 2014
Depreciation
Opening balance – 1 July 2013
Depreciation charge for the year
Disposals
Closing balance – 30 June 2014
Net book value at 30 June 2014
17
94
(17)
94
(12)
(11)
17
(6)
88
12
8
-
20
(4)
(3)
-
(7)
13
18
-
-
18
(6)
(4)
-
(10)
8
16
-
-
16
(3)
(3)
-
(6)
10
-
-
-
-
-
-
-
-
-
63
102
(17)
148
(25)
(21)
17
(29)
119
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QUADRISE FUELS INTERNATIONAL plc | ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 2015
14. Intangible Assets
Consolidated
Cost
Opening balance – 1 July 2014
Additions
Closing balance – 30 June 2015
Amortisation and Impairment
Opening balance – 1 July 2014
Amortisation
Closing balance – 30 June 2015
QCC royalty
payments
£’000s
MSAR®
trade name
£’000s
Technology
and know-how
£’000s
7,686
-
7,686
(7,686)
-
(7,686)
3,100
-
3,100
(176)
-
(176)
25,901
-
25,901
(25,901)
-
(25,901)
Total
£’000s
36,687
-
36,687
(33,763)
-
(33,763)
Net book value at 30 June 2015
-
2,924
-
2,924
Consolidated
Cost
Opening balance – 1 July 2013
Additions
Closing balance – 30 June 2014
Amortisation and Impairment
Opening balance – 1 July 2013
Amortisation
Closing balance – 30 June 2014
Net book value at 30 June 2014
QCC royalty
payments
£’000s
MSAR®
trade name
£’000s
Technology
and know-how
£’000s
7,686
-
7,686
(7,686)
-
(7,686)
-
3,100
-
3,100
(176)
-
(176)
2,924
Total
£’000s
36,687
-
36,687
(33,078)
(685)
(33,763)
25,901
-
25,901
(25,216)
(685)
(25,901)
-
2,924
Intangible assets comprise intellectual property with a cost of £36.7m, including assets of finite and indefinite life.
QCC’s royalty payments of £7.7m and the MSAR® trade name of £3.1m are termed as assets having indefinite life as it
is assessed that there is no foreseeable limit to the period over which the assets would be expected to generate net
cash inflows for the Group. The assets with indefinite life are not amortised. The remaining intangibles amounting to
£25.9m, primarily made up of technology and know-how, are considered as finite assets and were amortised over 93
months. The Group does not have any internally generated intangibles.
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QUADRISE FUELS INTERNATIONAL plc | ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 2015
The Group tests intangible assets annually for impairment, or more frequently if there are indications that they might
be impaired. The recoverable amount of intangible assets is determined based on a value in use calculation using
cash flow forecasts derived from the most recent financial model information available. These cash flow forecasts
extend to the year 2031 to ensure the full benefit of all current projects is realised. The key assumptions used in
these calculations include discount rates, turnover projections, growth rates, joint venture participation expectations,
expected gross margins and the lifespan of the project. Management estimates the discount rates using pre-tax rates
that reflect current market assessments of the time value of money and risks specific to expected future projects.
Turnover projections, growth rates, margins and project lifespans are all estimated based on the latest business models
and the most recent discussions with customers, suppliers and other business partners.
For the MSAR® trade name and technology and know-how intangible, the growth rate used for the extrapolation of
cash flows beyond budgeted projections is 2.5% (2014: 2.5%) and the pre-tax discount rate applied to the cash flow
projections is 12% (2014: 12%).
A 5% increase in the discount rate used would result in no impairment charge for the MSAR® trade name intangible
asset or the Technology and know-how intangible asset. A 5% decrease in the discount rate used would also result in
no impairment charge.
Amortisation of Intangible Assets
The Board has reviewed the accounting policy for intangible assets and has amortised those assets which have a
finite life. All intangible assets with a finite life were fully amortised as at 30 June 2015, and a non-cash charge of £nil
(2014: £0.685m) was recorded in the statement of comprehensive income for the year ended 30 June 2015.
15. Available for Sale Investments
Unquoted securities
Opening balance
Changes in fair value
Impairment charge
Closing balance
Consolidated
30 June 2015
£’000s
Consolidated
30 June 2014
£’000s
Company
30 June 2015
£’000s
Company
30 June 2014
£’000s
1,439
(1,035)
(404)
-
2,631
(186)
(1,006)
1,439
1,439
(1,035)
(404)
-
2,631
(184)
(1,008)
1,439
Unquoted securities represent the Group’s investment in Quadrise Canada Corporation (“QCC”), Paxton Corporation
(“Paxton”), Optimal Resources Inc. (“ORI”) and Porient Fuels Corporation (“Porient”), all of which are incorporated in
Canada.
At the statement of financial position date, the Group held a 20.44% share in the ordinary issued capital of QCC, a
3.75% share in the ordinary issued capital of Paxton, a 9.54% share in the ordinary issued capital of ORI and a 16.86%
share in the ordinary issued capital of Porient.
QCC is independent of the Group and is responsible for its own policy-making decisions. There have been no material
transactions between QCC and the Group during the year or any interchange of managerial personnel. As a result, the
Directors do not consider that they have significant influence over QCC and as such this investment is not accounted
for as an associate.
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QUADRISE FUELS INTERNATIONAL plc | ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 2015
The Group has no immediate intention to dispose of its available for sale investments unless a beneficial opportunity
to realise these investments arises.
Given that there is no active market in the shares of any of above companies, the Directors have determined the fair
value of the unquoted securities at 30 June 2015. In this regard, the Directors considered other factors such as past
equity placing pricing and assessment of risked net present value of the enterprises to arrive at their conclusion on any
impairment for all of the unquoted securities.
The QCC shares were valued at CAD $nil on 1 July 2014. Shareholder communications received during the period to 30
June 2015 indicate that the business model of QCC remains uncertain, as does the possibility of any material value
being recovered from QCC’s asset base. On that basis, the directors have determined that the investment should
continue to remain valued at CAD $nil at 30 June 2015.
The Paxton shares were valued at CAD$4.00 per share as at 1 July 2014. Shareholder communications received since
1 July 2014 show that Paxton is no longer considered to be a going concern and steps are being taken to wind up its
operations. Based on this, the Directors have determined that a full provision should be made against the value of the
652,874 shares held in Paxton, resulting in a charge of £404k.
ORI shares were valued at CAD $nil per share on 1 July 2014. The viability of ORI’s business model continues to remain
highly doubtful and no material amounts are expected to be realised from its remaining assets. On that basis, the
directors have determined that the investment should continue to remain valued at CAD $nil at 30 June 2015.
The Porient shares were valued at CAD $nil per share on 1 July 2014. Porient is yet to be defined into a business with
active projects and the current prospects of this happening are doubtful. Based on this, the Directors concluded that
the investment should continue to be valued at CAD $nil at 30 June 2015.
16. Investments in Subsidiaries
Direct Investment
Opening balance
Acquisition of ROE Projects Ltd
Closing balance
Amounts due to/(from) Subsidiaries
Opening balance
Amounts loaned from subsidiaries
Amounts loaned to subsidiaries
Closing balance
Company
30 June 2015
£’000s
Company
30 June 2014
£’000s
20,979
500
21,479
(5,546)
-
2,912
(2,634)
20,979
-
20,979
(5,818)
272
-
(5,546)
Total
18,845
15,433
The acquisition of ROE projects was made to acquire the remaining non-controlling interest within the Group and as
such is treated as a transaction within equity and therefore IFRS 3 ‘Business Combinations’ has not been applied.
62
QUADRISE FUELS INTERNATIONAL plc | ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 2015 The Company tests investments annually for impairment, or more frequently if there are indications that they might
be impaired. Impairment is based on the value in use of the subsidiaries. The Directors performed a review of the
value in use of the investments at 30 June 2015 by assessing the value in use of the financial assets and liabilities in the
underlying subsidiaries. Based on this the Directors concluded that no impairment is necessary for the year ended 30
June 2015. Holdings in subsidiaries are detailed in note 27.
17. Cash and Cash Equivalents
Cash at bank
Total
18. Trade and Other Receivables
Trade receivables
Other receivables
Receivable from related parties
Total
Consolidated
30 June 2015
£’000s
Consolidated
30 June 2014
£’000s
Company
30 June 2015
£’000s
8,361
8,361
11,081
11,081
7,875
7,875
Company
30 June 2014
£’000s
10,554
10,554
Consolidated
30 June 2015
£’000s
Consolidated
30 June 2014
£’000s
Company
30 June 2015
£’000s
Company
30 June 2014
£’000s
3
325
5
333
11
145
14
170
-
137
5
142
-
102
14
116
Group receivables of £nil (2014: £nil) and Company receivables of £nil (2014: nil) were past due at year-end.
Amounts due from related parties at year end amounted to £5k (2014:£14k).
19. Trade and Other Payables
Consolidated
30 June 2015
£’000s
Consolidated
30 June 2014
£’000s
Company
30 June 2015
£’000s
Company
30 June 2014
£’000s
Trade payables
Other taxes
Payable to related parties
Accruals
Total
145
132
23
122
422
109
-
18
114
241
76
132
7
53
268
There are no material differences between the fair value of trade and other payables and their carrying values at
year-end.
Trade payables as at 30 June 2015 amount to 55 days (2014: 24 days) of purchases made in the year. All trade
payables balances are less than 30 days old.
Amounts due to related parties at year end amounted to £23k (2014:£18k).
50
-
3
65
118
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QUADRISE FUELS INTERNATIONAL plc | ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 2015
20. Share Options
Movement in the year:
The following table illustrates the number and weighted average exercise prices (“WAEP”) of, and movements in, share
options during the year:
Outstanding as at 1 July
Granted during the year
Expired during the year
Exercised during the year
Options outstanding as at 30 June
Exercisable as at 30 June
Number
30 June 2015
43,600,000
3,100,000
-
(6,250,000)
40,450,000
31,016,667
WAEP
(pence)
30 June 2015
19.16
23.80
-
2.59
22.08
19.31
Number
30 June 2014
30,000,000
20,000,000
-
(6,400,000)
43,600,000
30,183,333
WAEP
(pence)
30 June 2014
5.27
34.56
-
2.19
19.16
12.35
The weighted average remaining contractual life of the 40.45 million options outstanding at the statement of financial
position date is 4.55 years (2014: 4.91 years). The weighted average share price during the year was 23.84p (2014: 29.07p)
per share.
The expected volatility of the options reflects the assumption that historical volatility is indicative of future trends,
which may not necessarily be the actual outcome. The expected life of the options is based on historical data available
at the time of the option issue and is not necessarily indicative of future trends, which may not necessarily be the
actual outcome.
The Share Option Scheme is an equity settled plan and fair value is measured at the grant date of the option. Options
issued under the Scheme vest over a 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.
The Company issued 3.1 million share options to employees during the year (2014: 20 million) the weighted average
exercise price of these options was 23.8p (2014: 34.6p) and the weighted average fair value was 13.8p (21.2p). The
exercise price of the options issued during the year ranged from 12.1p to 32.3p (2014: 23.3p to 35.2p).
The fair value was calculated using the Black Scholes option pricing model. The weighted average inputs were as
follows:
Year ended
30 June 2015
Year ended
30 June 2014
20.5p
23.6p
0.5%
77.3%
31.0p
34.6p
0.5%
92.0%
4 years
4.8 years
Stock price
Exercise price
Interest rate
Volatility
Time to maturity
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QUADRISE FUELS INTERNATIONAL plc | ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 2015 21. Share Capital
The company has one class of ordinary share capital which carries no rights to fixed income, any preferences or restrictions.
30 June 2015
£
30 June 2014
£
Issued and fully paid:
809,585,162 (2014: 807,241,536) Ordinary shares of £0.01 each
8,095,852
8,072,415
On 22 October 2014, the company issued 1,593,626 new Ordinary Shares of 1p each at a price of 31.4 pence per share to
Jason Miles in exchange for 100% of the share capital of ROE Projects Limited, which holds a 6.25% interest in each of
Quadrise Marine Limited, Quadrise KSA Limited, Quadrise Americas Limited and Quadrise Asia Limited.
On 29 Jan 2015, Jason Miles, a non-executive director of the Company, exercised 750,000 options to subscribe for
Ordinary Shares in the Company.
22. Revaluation and Other Reserves
Nature and purpose of other reserves
Revaluation reserve
The revaluation reserve is used to record increases in the fair value of available for sale investments and decreases to
the extent that such decrease relates to an increase on the same asset previously recognised in equity. The reserve can
only be used to pay dividends in limited circumstances.
Reverse acquisition reserve
The reverse acquisition reserve arose on the reverse acquisition of Zareba plc (now Quadrise Fuels International plc) by
Quadrise International Limited on 18 April 2006 as accounted for under IFRS 3.
Share option reserve
The share option reserve is used to record the cumulative fair value of share options granted by the Company net of
lapsed and exercised options.
23. Pension Commitments
For direct employees of Quadrise Fuels International plc, the Company contributes between 7% and 20% of salary to a
defined contribution pension scheme. Pension cost to the Company for the year amounted to £51k (2014: £48k).
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QUADRISE FUELS INTERNATIONAL plc | ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 2015
24. Derivatives and Other Financial Instruments
The Group’s principal financial instruments comprise available for sale investments, cash balances, accounts payable
and accounts receivable arising in the normal course of its operations.
The financial instruments of the Group and the Company at year-end are:
Financial assets
Available for sale investments
Loans and receivables – Cash and cash equivalents
Loans and receivables – Trade and other receivables
Financial liabilities
Consolidated
30 June 2015
£’000s
Consolidated
30 June 2014
£’000s
Company
30 June 2015
£’000s
Company
30 June 2014
£’000s
-
8,361
333
1,439
11,081
170
-
7,875
142
1,439
10,554
116
Other financial liabilities – Trade and other payables
422
241
268
118
All receivables and payables are current and due within 30 days.
Foreign currency exchange risk
The Group does not generally undertake foreign currency hedging. The majority of the Group’s transactions are
denominated in British pounds and it uses this as its reporting currency. Exposure to any foreign exchange movements
exists primarily in European, American and Canadian currencies.
The Group had available for sale investments in Canada amounting to £nil (2014: £1,439k) as at the statement of
financial position date. These investments are represented in Canadian dollars amounting to CAD $nil (2014: CAD$2,611k).
A 10% strengthening of the GBP against the CAD at the statement of financial position date would have decreased
equity by £nil (2014: £131k) whilst a 10% weakening of the GBP against the CAD would have increased equity by £nil
(2014: £144k). This analysis assumes that all other variables remain constant and would only occur if the available for
sale investments were fair valued.
The net monetary assets in other currencies at 30 June 2015 were US $nil (2014: US$1k) and €252k (2014: €31k).
A 10% strengthening of the GBP against the USD at the statement of financial position date would have decreased
profit and loss by £nil (2014: £nil) whilst a 10% weakening of the GBP against the USD would have increased profit and
loss by £nil (2014: £nil). This analysis assumes that all other variables remain constant.
A 10% strengthening of the GBP against the Euro at the statement of financial position date would have decreased
profit and loss by £16k (2014: £2.3k) whilst a 10% weakening of the GBP against the Euro would have increased profit
and loss by £18k (2014: £2.5k). This analysis assumes that all other variables remain constant.
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QUADRISE FUELS INTERNATIONAL plc | ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 2015 Interest rate risk
The Group has floating rate financial assets in the form of deposit accounts with major banking institutions; however,
it is not currently subjected to any other interest rate risk.
Based on cash balances at the statement of financial position date, a rise in interest rates of 1% will increase profit and
loss by approximately £78k (2014: £106k) per annum.
Liquidity risk
The Group regularly reviews its major funding positions to ensure that it has adequate financial resources in meeting
its financial obligations. The Group takes liquidity risk into consideration when deciding its sources of funds.
Credit risk
The Group had receivables of £333k at 30 June 2015 (2014: £170k), of which £5k (2014: £14k) was receivable from related
parties. Receivables of £333k represent the maximum credit risk to which the Group is exposed.
Capital risk management
The Group defines capital as the total equity of the Group. The Group’s objectives when managing capital are to
safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits
for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain
or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to
shareholders, issue new shares or sell assets to reduce debt.
Fair value of financial assets and liabilities
There are no material differences between the fair value of the Group’s financial assets and liabilities and their carrying
values in the financial information.
Borrowings Facilities
The Group had no external borrowing facilities as at 30 June 2015.
25. Related Party Transactions
Non-executive Director Laurence Mutch is also a Director of Laurie Mutch & Associates Limited, which has provided
consulting services to the Group. The total fees charged for the year amounted to £41k (2014: £60k). The balance payable
at the statement of financial position date was £21k (2014: £4k).
Jason Miles is also a Director of ROE Projects Limited, which provided consulting services to the group until its acquisition
by the Company on 22 October 2014. The total fees charged for the year amount to £62k (2014: £242k). The balance
payable at the statement of financial position date was £nil (2014: £15k).
Ian Williams and Hemant Thanawala were directors of International Energy Services Limited (“IESL”). QFI provided services
to IESL during the year for which QFI received income of £39k (2014: £51k). The balance receivable at the statement of
financial position date was £nil (2014: £14k).
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QUADRISE FUELS INTERNATIONAL plc | ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 2015
On 22 October 2014, the Company issued 1,593,626 new ordinary shares in the Company, equating to a value of £500k, to
Jason Miles in consideration for the acquisition by the Company of ROE Projects Limited, which holds a 6.25% interest in
each of Quadrise Marine Limited, Quadrise KSA Limited, Quadrise Americas Limited and Quadrise Asia Limited.
QFI defines key management personnel as the Directors of the Company. There are no transactions with Directors, other
than their remuneration as disclosed in the Report of Directors’ Remuneration.
26. Ultimate Parent Undertaking and Controlling Party
The directors have determined that there is no Controlling Party as no individual shareholder holds a controlling
interest in the Company.
27. Subsidiaries
The financial statements include the financial statements of Quadrise Fuels International plc and the following
subsidiaries:
Name
Quadrise International Limited
Quadrise Limited
Quadrise KSA Limited
Quadrise Americas Limited
Quadrise Marine Limited
Quadrise Asia Limited
ROE Projects Limited
Country of
incorporation/
registration
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
Percentage
interest held
and voting rights
Class of share held
100%
100%
100%
100%
100%
100%
100%
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Quadrise Fuels International plc and its subsidiaries are involved in activities such as enhanced heavy oil recovery,
conversion of heavy oil, refinery upgrade projects, and manufacture and sale of MSAR® to large energy consumers.
28. Commitments and Contingencies
The Group and the Company have entered into a commercial lease for office rental. This lease expires on 25 March
2019, and there are no restrictions placed on the Group or Company by entering into this lease. The minimum future
lease payments for the non-cancellable lease are as follows:
Office premises
One year
Two to five years
After five years
30 June 2015
£’000s
30 June 2014
£’000s
106
293
-
77
399
-
Additionally, the Group and the Company have no capital commitments or contingent liabilities as at the statement of
financial position date.
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QUADRISE FUELS INTERNATIONAL plc | ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 2015 29. Events After the End of the Reporting Period
On 14 September 2015, Quadrise International Limited, a wholly owned subsidiary of QFI, executed agreements with
Compañía Española de Petróleos S.A.U. (“CEPSA”) Mærsk Line A/S (“Mærsk Line”) and A.P. Moller-Mærsk A/S (“Mærsk”) for
the Operational Trial Programme to provide the basis for the issue of Letters Of No Objection (“LONOs”) by participating
marine engine manufacturers. The Operational Trial includes the supply, installation and commissioning of a Quadrise
MSAR® Manufacturing Unit at the CEPSA San Roque refinery near Gibraltar.
30. Copies of the Annual Report
Copies of the annual report will be posted to shareholders and will be available shortly from the Company’s website
at www.quadrisefuels.com and from the Company’s registered office, Gillingham House, 38-44 Gillingham Street,
London, SW1V 1HU.
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QUADRISE FUELS INTERNATIONAL plc | ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 2015
Corporate Information
Registered Office
Gillingham House
38-44 Gillingham Street
London
SW1V 1HU
Company Secretary
Audrey Clarke FCIS
Gillingham House
38-44 Gillingham Street
London
SW1V 1HU
Nominated Adviser
Smith and Williamson Corporate Finance Limited
25 Moorgate
London
EC2R 6AY
Broker
Peel Hunt
Moor House
120 London Wall
London,
EC2Y 5ET
Solicitors
Bircham Dyson Bell
50 Broadway
London
SW1H 0BL
Registrars
Share Registrars Ltd
Suite E
First Floor
9 Lion & Lamb Yard
Farnham
Surrey
GU9 7LL
Auditors
Crowe Clark Whitehill LLP
St Bride’s House
10 Salisbury Square
London
EC4Y 8EH
Bankers
Coutts & Co
440 Strand
London
WC2R 0QS
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