Quadrise Fuels International plc Annual Report 2023

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FY2023 Annual Report · Quadrise Fuels International plc

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ANNUAL REPORT
& ACCOUNTS

For the year ended 30 June 2023

Foresight House, 10 / 10A Arthur Street, London, EC4R 9AY

Business Address:

Tel: +44 20 7031 7321

Investor Relations: ir@quadrise.com

TABLE OF CONTENTS

Highlights

Proven Technology

Progress to a Net-Zero Fuel

Our Commitment to ESG

Chairman’s Statement

Chief Executive’s Statement

Strategic Report

Directors’ Section 172 Statement

Directors

Directors’ Report

Statement of Directors’ Responsibilities

Report on Directors’ Remuneration

Corporate Governance Statement

Independent Auditor’s Report

Consolidated Statement of Comprehensive Income

Consolidated Statement of Financial Position

Consolidated Statement of Changes in Equity

Consolidated Statement of Cash Flows

Company Statement of Financial Position

Company Statement of Changes in Equity

Company Statement of Cash Flows

Notes to the Financial Statements

Corporate Information

CBP00019082504183028

This report is printed on Revive 100% White Silk a totally recycled

paper produced using 100% recycled waste at a mill that has been

awarded the ISO 14001 certificate for environmental management.

The pulp is bleached using a totally chlorine free (TCF) process.

This report has been produced using vegetable based inks.

HIGHLIGHTS

Quadrise is positioning itself to be one of the key decarbonisation solution
providers in a rapidly changing global energy market, with each of our
projects now nearing a key milestone. Preparatory steps for the MSC fuel
trials are now complete, with fuel supply agreements nearing finalisation. Our
first licensing revenues will be achieved upon successful completion of Valkor’s
project financing and our trial in Morocco is set to resume in early Q4 2023.
We are making good progress in formulating a net-zero fuel to support clients’
decarbonisation strategies, and along with Valkor revenues, the funds raised
post year-end will enable us to progress our projects up to mid 2024.

Project Progress

The MSC bioMSAR™
vessel trials are planned
to commence in Q1 2024
following the finalisation of
agreements and installation
of our equipment at
the terminal site. Upon
completion of our site trial
in Morocco, commercial
supply discussions are
expected to commence in
Q4 2023. US$1.0m of license
revenue will be due upon
successful completion of
Valkor’s project financing
with a further US$0.5m due
following the transfer of our
equipment to Utah.

Innovations in
bioMSAR™

There is growing interest
in our bioMSAR™ product
and variations based on this
technology, where other
low emission feedstocks can
be combined to produce
Net-zero or near-zero fuels.

Over the past year, we have
identified and researched
multiple feedstock options
and developed partnerships
with companies who have
advantaged technologies.
Our goal is to have a
commercially viable net-zero
fuel by 2030.

Funding in Place

Quadrise raised £1.94 million
in July 2023 via a placing
and open offer, which
together with existing funds
and expected revenues
from Valkor, will enable
us to finance our projects
through to mid-2024. This
accomplishment amidst
difficult market conditions
speaks to the confidence of
new and existing investors
in the potential of our
technology. We remain
hugely grateful to our
investors for their continued
support.

The sectors that we serve – Marine, Heavy Industry and Utilities – contribute 59% of global
(GHG) gas emissions and face increasing regulatory and customer pressures to decarbonise. Our
technologies are a potential changer, enabling decarbonisation rapidly and at lower cost.

Page 1

PROVEN TECHNOLOGY

Our technology draws on over 30 years of experience in the production of oil-in-water emulsion-
based fuels. MSAR® and bioMSAR™ are direct substitutes for fuel oil (also called Heavy Fuel Oil
or “HFO”) and biofuel respectively, and we have established a strong reputation with market
leading companies.

HFO vs MSAR® and
bioMSAR™

Crude oil production and
refining often result in heavy
residual oils that require
expensive refined distillates
to reduce viscosity and
meet pipeline and HFO
specifications. HFO is sold
at a discount to crude oil,
resulting in a loss for the
producer.

Our technology is a
potential game changer
for oil refiners and heavy
oil producers. It frees
up valuable distillates
traditionally used for
fuel viscosity control,
increasing profitability.
This is achieved rapidly and
without incurring significant
expenditure or costs –
which differentiates our
technology from alternative
upgrading solutions.

The global fuel oil market currently is
approximately 7 million barrels per day
(386 million tons per annum), up 13.5% from 2021.

Cost-effective MSAR®
technology enables
additives and water to
replace these high value
distillates, which can then be
sold at a premium. MSAR®
technology can also be used
to produce bioMSAR™, that
incorporates renewable
fuel-grade glycerine to
provide an economic biofuel
solution offering over 20%
lower CO2 emissions today.

Quadrise is further
developing our bioMSAR™
technology to incorporate a
number of other potential
low-carbon / carbon
negative1 feedstocks, to
produce bioMSAR™ Zero,
a Net Zero fuel.

30% Distillates

30% Water
(incl. <1% additives)

30% Water
30% Water
(incl. <1% additives)
(incl. <1% additives)

10% Water
(incl. <1% additives)

10% Water
10% Water
(incl. <1% additives)
(incl. <1% additives)

HEAVY
FUEL OIL
(HFO)

MSAR®

bioMSAR™

70%
Residuals

70%
70%
70%
Residuals
Residuals
Residuals

70%
70%
Residuals
Residuals

40-50%
Residuals

40-50%
Glycerine

1 Feedstocks from products that have a net effect of removing carbon dioxide from the atmosphere
rather than adding it, over their lifecycle.

Page 2

Both MSAR® and bioMSAR™ fuels are extremely
stable, with storage and handling possible
at ambient conditions which is a significant
difference from HFO that has to be continually
heated. MSAR® and bioMSAR™ from different
refineries are compatible with each other and
with a variety of hydrocarbons, and they are
transported using existing fuel infrastructure.

Economic Benefits

Because premium distillate
fuels are replaced with
low-cost water and a small
amount (<1%) of additives,
a higher proportion of the
valuable components of
the oil barrel can be sold
as higher-margin refined
products.

In a refinery producing
HFO, typically just 50-60%
of the crude processed
is sold as premium value
transport oils, whereas in a
refinery producing MSAR® or
bioMSAR™, this can increase
to up to 70%.

Quadrise’s technology
is modular and can be
integrated for production
in under 12 months, with
any tie-ins incorporated into
scheduled maintenance
shutdowns.

Environmental
Benefits

MSAR® and bioMSAR™ fuel
solve key environmental
problems including CO2,
Black Soot, NOx & SOx.

Our fuels offer enhanced
combustion performance
when compared to
conventional fuel oil due to

their inherent physical
characteristics; pre-atomised
micro fuel droplets
suspended in water.

This results in less ash and
black carbon particulate
matter (PM) and nitrogen
oxide (NOx) reductions of
typically 30%, significant in
improving local air quality
and lowering the global
warming potential of fuel oil
use. In addition, bioMSAR™
offers reductions of over 20%
in CO2 emissions due to its
incorporation of renewable
glycerine and improved
engine efficiency.

H2O

INJECTION

COMBUSTION

The water phase carries tiny
atomised oil droplets, 5-10
microns which are invisible to
the human eye.

The water evaporates,
dispersing the oil droplets to
sub-micron sizes.

Nano droplets combust
completely, providing near-
perfect energy conversion.

Page 3

Operational Benefits

MSAR® and bioMSAR™ are extremely stable, with storage and handling possible at much lower
temperatures than HFO. These characteristics make our products safer for crew to handle and
reduce cost and complexity. As emulsion fuels, MSAR® and bioMSAR™ both readily disperse in
water in the unlikely event of a spill; a characteristic which is very different to conventional HFO
or biofuels.

Quadrise’s modular technology can be installed in under 12 months and is compatible with
existing fuel oil and biofuel infrastructure, resulting in a low cost solution. The simple production
process is as follows:

Oil residues are taken from the refinery or
heavy oil production and cooled to under
200ºC to achieve the required viscosity.

Water, which can be derived from several
utility or waste-water sources is added to
the residue.

Special additives provided by our long
term chemical technology partner
Nouryon are included in the water phase
to stabilise the emulsion for long-term
storage and transport, and to promote
complete combustion.

The mixture is processed in a proprietary
emulsion module to produce a
highly-stable oil-in-water emulsion with
enhanced fuel properties.

A biofuel component like renewable
glycerine can be added to produce
bioMSAR™ as an alternative to MSAR®
for further carbon dioxide savings.
bioMSAR™ and MSAR® can be made
interchangeably and are compatible with
each other.

Page 4

PROGRESS TO A NET-ZERO FUEL

We specialise in low-carbon
emulsion fuels for marine,
heavy industry, and utilities.
Our core MSAR® technology
has been tested with leading
players across multiple
sectors and proven to deliver
up to 9% CO2 reductions
compared to HFO.

This blend-on-board ("BoB")
technology gives additional
routing flexibility as well as
simplifying the supply chain.
We filed a patent application
jointly with Nouryon in April
2023 covering BoB and have
already received customer
enquiries.

bioMSAR™ Zero

To meet rising demand for a
net-zero fuel, we started work
on ‘bioMSAR™ Zero’, a
net-zero fuel that we aim to
launch by 2030.

Whilst net-zero fuels do
technically exist, none are yet
commercially competitive
nor globally scalable. We are
therefore directing our efforts
with commerciality at the
forefront of our minds.

Over the past year, we have
researched, shortlisted and
tested multiple renewable
feedstocks with potential to be
incorporated into bioMSAR™.
These include bio-methanol,
Methyl Esters, Lignin, Wood
Pyrolysis Oil (WPO), Tyre
Pyrolysis Oil (TPO), Straight
Vegetable Oil (SVO) and
bio-lactic acid.

In addition to the physical
and chemical properties
of these components, our
criteria includes robust and
competitive supply, GHG
emission profile and social
impacts related to cultivation
and production.

bioMSAR™

In 2021, we developed
bioMSAR™, building on our
original MSAR® technology
to incorporate biofuels.
To-date, our formulation of
bioMSAR™ includes up to
70% of renewable glycerine,
resulting in a 50% reduction
in GHG emissions.

Operational simplicity is
crucial in the global sectors
that we serve. In response
to this, and as an option,
Quadrise has developed and
commissioned a prototype
emulsion system to blend
MSAR® and bioMSAR™ on
board a marine vessel.

Our work is most advanced
with Methyl Esters (like Fatty
Acid Methyl Esters, FAME)
and Lignin (in the form of
sugars). Both show promising
early success in being
incorporated into bioMSAR™.
WPO and TPO have also
shown potential.

We are developing a
bioMSAR™ blend in
collaboration with Vertoro
BV who produce crude sugar
oils (“CSO™”) from lignin, and
we will be performing diesel
engine tests on this blend at
Aquafuel in Q4 2023. Quadrise
has also entered into a Joint
Development Agreement
with BTG Bioliquids BV
to explore the use of their
pyrolysis bio-oils ("FPBO"),
derived from agricultural and
sawmill waste.

Biofuels are not without their
challenges. They are derived
from agricultural crops and
could compete with food
crops. There are concerns
around changes in land use,
increase in water use and
the ‘Food vs Fuel’ debate.
We are fully aware of these
challenges and believe that
biofuels should be derived
from waste streams to
mitigate against these risks
for the highest environmental
and social benefits. Further
detail will be provided in
our upcoming Sustainability
Report 2023.

Page 5

OUR COMMITMENT TO ESG

In the ever-evolving
landscape of corporate
responsibility, Quadrise
is proud to highlight
our commitment to
Environmental, Social,
and Governance ("ESG")
principles. We believe that a
sustainable and responsible
approach to business is not
just a choice; it is our duty as
a company whose purpose is
to deliver innovative energy
solutions for a cleaner planet.

Environmental
Responsibility

Environmental responsibility
is deeply woven into the
fabric of Quadrise. It is not
just a corporate obligation
but the driving force behind
our innovation and growth.

We are committed to
advancing our lower-carbon
MSAR® and bioMSAR™
emulsion fuels, which can
play a pivotal role in reducing
GHG emissions, enhancing
fuel efficiency, and reducing
harmful pollutants.

In our Sustainability Report
2022, we set a target
to become a net-zero
company in our Scope 1
and Scope 2 emissions by
2030, adopting a hierarchy
of Avoiding, Reducing and
finally Compensating our
emissions. Our efforts in
developing ‘bioMSAR™
Zero’, our investments in

avoidance and reduction of
our own emissions, and our
sustainable practices in our
operations are key drivers in
realising these goals.

In our pursuit of sustainability,
we are also conducting a
comprehensive lifecycle
assessment (LCA) of our
bioMSAR™ aligned with
the IMO interim guidelines,

Our commitment to
environmental responsibility
extends beyond our
organisation. We engage
in collaborations with
industry peers to spearhead
sustainability initiatives
and the adoption of our
technology, primarily in the
marine sector.

Quadrise is an active
member of the UK Chamber
of Shipping (UK CoS) and
International Bunker Industry
Association (IBIA), working
together to drive innovation,
share knowledge, and create
solutions that address
decarbonisation of shipping.
Through these partnerships,
we seek to foster a broader
commitment to sustainability
within our industry and
contribute to the global shift
toward responsible energy
practices.

to provide our clients with
the assurance of the GHG
benefits of our technology.

Quadrise CEO Jason Miles (second
from right) in a panel discussion at
the TradeWinds Green Seas Fuels
Forum in New York, March 2023.

Page 6

Social Responsibility

Our commitment to social
responsibility encompasses
several crucial aspects.

The well-being of our
employees is paramount.
We prioritise their safety,
health and professional
development with regular
training at our research
facility, ‘QRF’.

We firmly believe that
diversity is a source of
innovation. As such, Quadrise
is deeply committed
to promoting diversity
and inclusion within our
organisation.

We recognise there is a
gender skew in our sector,
and have recently updated
our employment policies to
stipulate at least a third of
candidates being interviewed
for a position should be
women or from a minority
ethnic group.

Our commitment to social
responsibility includes
upholding human rights and
labour standards. Adherence
to international labour
conventions and guidelines
is a non-negotiable aspect
of our operations, ensuring
the highest ethical standards
are met.

Governance
Responsibility

Since admission to trading
on AIM in 2006, Quadrise
has voluntarily adopted the
UK Corporate Governance
Code (the ‘Code’), that
establishes standards for
good corporate governance
in accordance with five clear
principles of board leadership,
effectiveness, accountability,
appropriate remuneration
and good relations with
shareholders. Companies
which adhere to the Code
must set out how they
comply, or explain instances
of non-compliance.

Quadrise’s disclosures under
the Code are on our website:
https://www.quadrise.
com/ investor-relations/
corporategovernance/.

Our commitment to
governance responsibility is
evident in multiple aspects:

Our board of directors
is composed of highly
experienced individuals
from diverse backgrounds,
ensuring independent
oversight and strategic
guidance for our operations.

Upholding the highest ethical
standards is paramount. We
maintain a comprehensive
code of conduct and ethics
that governs the behaviour of
all our employees, directors,
and partners.

We actively engage with
our shareholders to gather
insights and feedback. This
ongoing dialogue helps us
improve our governance
practices and align our
strategies with shareholder
expectations.

Transparency in financial
reporting and operations is a
fundamental commitment.
We aim to maintain
the highest levels of
accountability, ensuring our
stakeholders have complete
confidence in our practices.

Rigorous risk management
practices are ingrained
in our corporate culture.
We continuously identify,
assess, and mitigate risks
to protect our business and
stakeholders.

Page 7

CHAIRMAN’S
STATEMENT

The cost of energy and
the transition to secure
sustainable fuels continue
to be top priorities for
governments, businesses and
communities. During the year
ended 30 June 2023, Quadrise
has continued to position itself
as a provider of innovative
decarbonisation solutions and
the Board remains confident
in both the quality of the
Company’s solutions and the
commercial opportunities
that they provide.

“The accomplishment of
financing under difficult
market conditions
demonstrated the
continuing confidence
of new and existing
investors in the
potential of the
Quadrise technology
and its applicability
to our real-world
problems.”

payments in respect of the
Company’s Utah project with
Valkor, enable the Company
to continue to finance its
projects through to mid-2024
and thereby to achieve
further milestones that add
shareholder value.

The successful completion
of the fundraising under
difficult market conditions
demonstrated the continuing
confidence of new and
existing investors in the
potential of our technology
and its applicability to
real-world problems. The result
is that the current financial
year is pivotal for Quadrise,
with our key objectives being:

■ To progress business in
North America, building
on a bridgehead to be
established in Utah.

■ To contract sources

of heavy residues and
glycerine for product
supply outside North
America.

In July 2023 the Company
announced that it had raised
gross proceeds of £1.94 million
via a placing of new ordinary
shares in the Company and
subsequent open offer to
qualifying shareholders at an
issue price of 1.25 pence per
share. The funds raised will,
together with receipts from
contracted but conditional

■ To be ready to scale-up our
marine business following
the planned completion of
the trials with MSC.

Our near-term strategy
remains to focus on the
key projects in Morocco,
Utah and with MSC, which
represent the most efficient
use of our financial resources
and provide the fastest and

most material pathways to
commercialisation. Important
milestones are expected to be
achieved in Q4 2023 in each of
these key projects:

■ Following the signing of
a Site License & Supply
Agreement with Valkor
Technologies LLC in
June 2023, commercial
revenues are now expected
from Valkor subject to
successful completion
of their heavy oil project
financing. This is a critical
milestone in attracting
new customers, investors
and strategic partners. We
now look forward to the
commencement of Valkor’s
pilot drilling operations
ahead of the winter season.

■ The trial with our customer
in Morocco is anticipated
to resume in early October
2023 after a series of
technical delays caused by
feed pump problems, with
commercial discussions
then to take place
following confirmation of a
successful trial.

Page 8

■ We also look forward to
being able to update
the market on the next
steps with respect to fuel
supply logistics for the
long-awaited on-board trial
of bioMSAR™ with MSC,
with the finalisation of trial
agreements expected in
Q4 2023. The 4,000-hour
trial is planned to start in
Q1 2024.

Looking further ahead, we
continue to develop the next
generation of bioMSAR™
fuel and energy delivery
technologies, with the goal
of producing a commercially
competitive net-zero product
before 2030.

The year ended 30 June 2023
could be characterised as
one of continued strategic
and operational progress,
but without a breakthrough.
Each of our projects has
several moving parts, and
the management task is
significant in bringing the
Company to an inflexion
point. However, we hope to
see the results of progress to
date come to fruition during
the final quarter of 2023.

Production and development
costs of £1.7m (2022: £1.5m)
comprise the costs of the
Group’s R&D facility (‘QRF’
in Essex), its operational
staff and consultants, and
ongoing bioMSAR™ and
MSAR® development costs.
These costs are largely
related to fixed costs
with the increase due to
bioMSAR™ development and
testing costs.

Administration expenses of
£1.3m (2022: £1.4m), comprise
the Group’s corporate
staff and directors’ costs,
professional advisor fees, PR/
IR costs and head office costs.

At 30 June 2023, the Group
had total assets of £5.0m
(2022: £8.0m). The most
significant balances were
cash of £1.3m (2022 £4.4m),
intangible assets of £2.9m
(2022: £2.9m), and property,
plant and equipment of
£0.4m (2022: £0.4m). The
Group has tax losses arising
in the UK of approximately
£62.0m (2020: £60.0m) that
are potentially available to be
carried forward against any
future profits.

Andy Morrison
Non-executive Chairman
29 September 2023

The Board remains active in
evaluating strategic initiatives
that would de-risk and/or
facilitate the delivery of our
key objectives set out above,
such as M&A activity, joint
ventures or other strategic
partnerships. As I stated last
year, our ambitions for the
business are limited more by
the availability of financial
and operational resources
than by the scale of the
significant opportunities that
the Company can address.

The Board remains committed
in its determination for the
Company to deliver on its
strategic objectives and
together with management,
we look forward to driving
the business into commercial
revenues and generating value
for our shareholders, whom
I thank for their continued
support and engagement
throughout the year.

“…we continue to
develop the next
generation of
bioMSAR™ fuel and
energy delivery
technologies, with
the goal of producing
a commercially
competitive net-zero
product before 2030.”

Results for the Year

The consolidated after-
tax loss for the year to
30 June 2023 was £3.1m (2022:
£2.6m), with the loss per
share for the year increasing
to 0.22p from 0.18p in 2022.

Page 9

CHIEF EXECUTIVE’S
STATEMENT

The global energy industry
faces mounting pressure to
reduce carbon emissions
whilst delivering practical
and cost-efficient energy
solutions to consumers.
In recent times, escalating
energy prices have emerged
as significant contributors to
global inflation, exacerbated
by the ongoing Ukraine
conflict and Russian
sanctions. Simultaneously,
there is a crucial global goal to
halve greenhouse gas (“GHG”)
emissions by 2050, a target
set by the IPCC to mitigate
the severe consequences of
climate change.

Addressing
the Maritime
Decarbonisation
Challenge

The shipping sector is
responsible for roughly 3%
of global GHG emissions.
The sector is under
increasing scrutiny from
European regulators who
are encouraging maritime
operators to explore lower-
carbon and eventually
net-zero alternatives.
These include longer-term
options such as green
hydrogen, ammonia, and
methanol, with each of these
demanding substantial
investments and posing
logistical and safety
challenges. While several
lower-carbon and potentially
net-zero solutions are in

development, these are not
yet ready for widespread
adoption. Implementation
will require significant
investment, either in
retrofitting existing fleets or
the building of new vessels
and the logistical challenges
of delivery should not be
underestimated in the
context of currently reduced
global ship building capacity.

Revolutionary
Quadrise Technology

Our patented Quadrise
technology offers a practical
and cost-effective path for
operators in the marine,
industrial, and power sectors
to decarbonise, reduce energy
costs, and lower associated
emissions safely. MSAR®
reduces fuel consumption in
diesel engines by up to 10%
and simultaneously lowers
GHG emissions by the same
margin. By incorporating
renewable glycerine to
produce the economical
bioMSAR™, we can further
reduce GHG emissions by over
20%. The Quadrise solutions
are readily available, utilising
existing infrastructure to
achieve cost savings and
GHG reduction. bioMSAR™
outperforms LNG and FAME
marine fuel blends in terms of
lower CO2 emissions per unit
of energy. Other bioMSAR™
benefits include its water
dispersibility, improved safety,
and biodegradability.

Immediate and Future
Deployment

Our technology is ready for
rapid deployment, delivering
immediate benefits as we
transition towards net-zero
fuel solutions, which may
become mandatory as
early as 2030. To seize
this opportunity, we have
established an R&D strategy,
leveraging our innovative and
adaptable technology. We
are collaborating with fellow
innovators in the sustainable
fuel sector to expand our
portfolio of lower-cost,
renewable, and abundant
biofuel components. As an
example, we are formulating a
bioMSAR™ blend with Vertoro
BV, producers of a crude
sugar oil (“CSO™”). Diesel
engine testing of this blend
at Aquafuel is set to conclude
in Q4 2023. Additionally,
Quadrise has entered
into a Joint Development
Agreement with BTG
Bioliquids to explore the use
of their ‘FPBO’ biofuel, derived
from agricultural and sawmill
waste, alongside other related
net-zero R&D activities.

Page 10

Ongoing Projects

Our core projects encompass
the marine, upstream, and
industrial sectors, with further
projects in the pipeline for
downstream and power plant
applications. Our current
focus is on demonstrating
MSAR® and bioMSAR™
technology at a commercial
scale, progressing these
opportunities into commercial
supply agreements.

The demand for scalable
and certified low or zero
emission shipping services
is evident in the historic
tender recently issued by
an alliance of freight buyers
including Amazon, IKEA,
Philips and over 20 other
major global companies. The
RfP (Request for Proposal)
launched by ZEMBA (Zero
Emission Maritime Buyers
Alliance) seeks bids with
sufficient capacity to move
600,000 containers over 3
years on ships that offer 90%
reduction in GHG emissions
compared to traditional
fossil fuels. This is further
evidence of the demand for
our technology solutions and
the concerted industry effort
to accelerate decarbonisation
in shipping.

MSC – A framework agreement
with MSC Shipmanagement
(“MSC”) was signed in July 2022
to test and trial both of our
economical, cleaner marine fuel
and biofuel alternatives on their
container vessels. Quadrise is
excited to be collaborating with
MSC to decarbonise the largest
container ship fleet in the
world as they lead the way in

advancing the marine sector’s
transition towards a net-zero
future.

A number of preparatory
steps have been completed
by stakeholders prior to
commencing the Letter Of No
Objection (“LONO”) fuel trials
of both bioMSAR™ and MSAR®
on board the MSC Leandra:

■ Wärtsilä Services of

Switzerland carried out
optical combustion
and engine wear
tests on bioMSAR™
in December 2022.

■ The emulsion fuel booster

unit was inspected, upgraded
where necessary, and tested
in readiness for use.

■ The vessel was fully

inspected by MSC and

the intention of concluding
agreements with project
stakeholders, which include
a major global trading
company, as soon as possible.
Following the installation and
commissioning of Quadrise
equipment at the bunker
terminal site, the intention
is then to commence
commercial-scale Proof-of-
Concept and LONO trials
on bioMSAR™ in Q1 2024
provided the relevant permits
are received in time.

Once the initial MSAR® or
bioMSAR™ fuel has been
loaded and the on-board
systems commissioned, the
vessel will be bunkering and
burning bioMSAR™ through
the initial Proof-of-Concept
testing phase, followed by the

“The demand for scalable and certified low or
zero emission shipping services is evident in the
historic tender recently issued by an alliance of
freight buyers including Amazon, IKEA, Philips
and over 20 other major global companies.”

installed with equipment
designed to reduce
emissions and improve
vessel efficiency.

■ A hazard identification and
operability workshop was
recently completed involving
MSC, Quadrise, Wärtsilä and
Lloyds Register using the
framework developed for
the prior use of MSAR® on
the main 2-stroke engine,
when the vessel was owned
by Maersk.

Quadrise is progressing the
fuel production and supply
activities necessary for the
above commercial trials, with

LONO trial, which is currently
expected to be of 4,000-hour
duration.

In addition to progressing
this opportunity with MSC,
the Company continues to
assess strategic means and/
or partnerships with the
intention of accelerating the
commercialisation of both
bioMSAR™ and MSAR® for
marine applications.

Utah – Our project in Utah,
USA with Valkor Technologies
LLC (“Valkor”) involves the
use of MSAR® technology to
emulsify low-sulphur heavy oil.
Valkor has interests in multiple

Page 11

projects at the Asphalt Ridge
site with anticipated oil
deposits of billions of barrels.
Valkor plan to recover heavy oil
from oil-sand and sub-surface
oil deposits at their Primary
Project Site (“PPS”) at Asphalt
Ridge using production
methods that mitigate
greenhouse gas emissions.
Crucially, by using Quadrise
technology, the viscosity of the
extracted heavy oil is reduced,
facilitating transportation
whilst avoiding the use of
costly diluents or excessive
heat in the supply chain. The
resulting MSAR® or bioMSAR™
produced is an alternative
to very low sulphur fuel oil
(<0.5%S “VLSFO”) or biofuels
used in multiple industrial,
power and marine fuel
applications. Oil samples from
the PPS supplied by Valkor
were successfully converted to
both MSAR® and bioMSAR™
by our RDI team in 2022.

Valkor is leading activities for
the award of drilling permits
at Asphalt Ridge as follows:

■ Valkor undertook

successful exploration
drilling and optimisation
of oil sands processing
technologies during 2022.

■ In December 2022, and

on behalf of their project
partners Heavy Sweet Oil
LLC (“HSO”) and AC Oil LLC
(“ACO”), Valkor submitted a
pilot drilling development
plan to the State of Utah’s
Board of Oil, Gas and
Mining (the “OGM Board”)
and the permits for this
were awarded subject to
technical approval by the
Utah Division of Oil, Gas
and Mining (the “Division”).

■ Once technical approval
is received (expected
by Valkor to be in early
October 2023), Valkor plan
to commence pilot drilling
at the PPS in October
2023 and in parallel
submit Underground
Injection Control permit
applications for the
subsequent injection of
steam for enhanced heavy
oil recovery.

■ Using standard well

spacing of 40 acres, Valkor
expect to be able to drill
up to 12 wells under the
pilot development plan
approved by the OGM
Board in December 2022
and managed by the
Division, upon receipt of
technical approvals as
stated above.

■ In addition to the pilot
drilling programme,

there was insufficient
evidence of heavy oil
properties and sub-surface
locations within the
planned area to support
the Plan as submitted.

■ It is important to note that
the OGM Board’s decision
on the Unitisation plan
does not impact Valkor’s
intention to drill the
pilot wells conditionally
granted by the Board
in December 2022. Pilot
well drilling would then
potentially support a
further PPS Unitisation
Plan application in due
course. Valkor are also
managing conventional
oil sands projects for other
clients that are not subject
to associated approvals for
drilling or Unitisation.

■ Valkor are now actively

seeking minimum project
financing of US$15 million

In June 2023, Quadrise signed a Site License
and Supply Agreement (“SLA”) with Valkor.
Under the SLA, Quadrise has granted Valkor the
exclusive right and licence to use its technology at
the PPS and to market the fuel on a non-exclusive
basis from Utah.

Valkor, on behalf of project
sponsors HSO and ACO,
applied for approval of
a Unitisation Plan. This
allows for up to 119 wells
to be drilled at Asphalt
Ridge, using a reduced
well spacing of 2.5 acres.
The OGM Board met in
August 2023 to review the
Plan, and this was, for the
moment, declined. Their
view was that without a
producing well in place,

which is required in order
to progress their activities
at the PPS planned for
Q4 2023.

In June 2023, Quadrise
signed a Site License and
Supply Agreement (“SLA”)
with Valkor. Under the SLA,
Quadrise has granted Valkor
the exclusive right and licence
to use its technology at the
PPS and to market the fuel
on a non-exclusive basis from

Page 12

Following Valkor’s receipt
of the MMU, Quadrise will
provide engineering and
other support services for
a minimum of two years in
exchange for a quarterly
retainer of US$75,000. Valkor
may then choose to purchase
the technology and MMU for
a further US$1.0 million.

A non-binding Heads of
Agreement has also been
entered into between the
parties which sets out the basis
on which Quadrise and Valkor
will seek to agree a conditionally
exclusive Sub-License
Agreement to be granted to
Valkor covering the state of
Utah, as well as the terms on
which the resulting net profit
generated will be shared
between Quadrise and Valkor.

Morocco – In June 2022, QIL
signed a new Material Transfer
& Cooperation Agreement
with its client in Morocco, a
major chemicals company,
under which QIL will
manufacture trial quantities
of MSAR® and bioMSAR™ for
the purpose of an industrial
demonstration test at the
client’s ‘Site-B’ facility. QIL
will then provide the client
with a written report on the
efficacy of using MSAR® and
bioMSAR™. Provided the
client-specified deliverables
regarding performance and
product quality are met,
the parties will enter into
discussions for a potential
commercial supply of MSAR®
and/or bioMSAR™. In parallel
with preparations for the site
demonstration tests, Quadrise
has completed a technical
and economic feasibility study

for a potential additional
industrial demonstration test
at a second site of the client.
This additional industrial
demonstration test will be
subject to future agreement,
once confirmed.

Following the signature of the
new Agreement, volumes of
MSAR® and bioMSAR™ were
produced by Quadrise at a
site in Europe and shipped
to Morocco in Q4 2022. Due
to the process of clearing a
new fuel through Moroccan
customs, the commencement
of the MSAR® demonstration
test was subject to delays,
with 60mt of MSAR® and
10mt of bioMSAR™ arriving at
Site B in late February 2023.
Following the completion of
the site engineering set up,
and finalisation of the client’s
production schedule, the trial
formally commenced in
May 2023.

Cold start-up of the client’s
commercial unit was
carried out and the initial
unit combustion warm-up
sequence was tested using
MSAR® fuel. Whilst running
at 100% load a mechanical
component in the pumping
and heating unit (“PHU”)
failed progressively. This
reduced the available unit
load achievable from the
burner, and it became
impossible to complete
the testing during May
as originally planned. The
parties agreed to pause the
trial so that the client could
complete their scheduled
production run, and the
respective pump could be
replaced. Unfortunately,

Page 13

Utah. In exchange, Valkor will
pay Quadrise US$1.0 million
subject to receipt by Valkor
of a minimum US$15 million
of PPS project financing
referred to above, which
Valkor expect to receive in
Q4 2023.

Further conditionality in the
SLA, relating to the award
by the Division of the drilling
and underground injection
permits for the PPS, was
waived by Valkor in August
2023, based on the positive
progress already made on
these activities. Also under the
SLA, Valkor will pay Quadrise
a further US$0.5 million
upon delivery of an MSAR
Manufacturing Unit (“MMU”)
to the PPS, again, subject
to Valkor’s receipt of the
minimum project financing.

The Company is in regular
contact with Valkor, who
remain confident of receipt of
the minimum project financing
of US$15 million in the near
term, however, until this is
received there remains a risk
that the aggregate US$1.5m
due to Quadrise is significantly
delayed or not received at all.

being able to source
appropriately situated and
priced feedstock.

Other projects – QIL signed a
Letter of Intent in Q1 2023 with
a central American power
provider outlining our mutual
intent for a commercial test
of MSAR® and bioMSAR™ at
the provider’s power plant,
with the conclusion of a Test
Agreement and site trial
being the precursors for entry
into a Fuel Supply Agreement.
Discussions are ongoing
and we originally expected
agreements to be finalised
during Q4 2023. However,
the region is experiencing
a significant and extended
drought that is forcing the
electricity sector into an
ongoing emergency situation
as hydroelectric dams are
generating less power, and
all other power plants are
running at full capacity
in order to close the gap.
Therefore, the opportunity
to conduct a site trial is
delayed. Together with our
local agents, we continue to
explore other opportunities in
the region. Efforts continue to
progress activities in Mexico
with the state oil company
(Pemex) and utility operators.

In December 2022, Quadrise
received and successfully
commissioned our prototype
5 tonne per hour emulsion
system that will be used for
the production of MSAR®
and bioMSAR™ fuels for site
trials and potential ‘blend-
on-board’ (“BoB”) testing on
marine vessels. BoB involves
installation of an MSAR®
Manufacturing Unit (“MMU”)
and associated equipment

on board a marine vessel,
with MSAR® and bioMSAR™
produced on board. This
allows vessels additional
routing flexibility as well as
simplifying the MSAR® and
bioMSAR™ supply chain.
A joint patent application
with Nouryon was filed in
April 2023 covering BoB.
Quadrise has received
enquiries from a number of
marine operators regarding
BoB which are in the scoping
phase of project development
and BoB is also under
investigation as part of the
MSC framework agreement.
QIL is currently in discussions
with a refinery in Asia who
are interested in using this
unit to conduct a refinery
refuelling trial using MSAR®
in advance of a potential
commercial agreement.

bioMSAR™ and bioMSAR™
Zero development - During
the period, Quadrise
has successfully tested
bioMSAR™ produced using
glycerine sourced from a
variety of European suppliers
in advance of commercial
vessel trials with MSC. In
parallel the Company has
been investigating alternative
feedstocks to glycerine for
bioMSAR™ and oil-soluble
biofuels that would allow
the development of a
commercial net-zero version,
‘bioMSAR™ Zero’, by 2030. As
part of this work, following
the June 2023 signature
of a Joint Development
Agreement with BTG
Bioliquids, their propriety
pyrolysis bio-oils (FPBO) and
related sugars have been
tested at the Company’s

Page 14

it was not possible to
complete the test at full load
due to a progressive decline
in replacement fuel pump
performance on several
occasions during August
2023, indicating a design
issue with the pump units at
high pressure.

A replacement pump of
alternative design from a new
supplier has been expedited
to Morocco, installed in the
PHU and commissioned
by the Quadrise team. The
trial is now expected to be
completed in October 2023,
following maintenance of
the client’s commercial unit
where the testing was carried
out in September. The client
remains supportive of the
Company’s efforts to resolve
this final issue and progress
the commercial trial at the
next available opportunity.

Upon successful conclusion
of the trial, the parties
will enter discussions for
potential commercial supply,
in addition to concluding
agreements for testing at
other client sites as required.
Commercial supply will be
dependent on the Company

research facility QRF, with
successful bioMSAR™
blends being produced
using the sugars. In addition,
Quadrise successfully
produced stable blends of
bioMSAR™ containing up
to 40% of Vertoro’s crude
sugar oil (CSO™) at pilot
scale. Engine tests of CSO

prominent in driving the
business case for MSAR® and
bioMSAR™ technology. In the
United States, the Inflation
Reduction Act has created
a favourable environment
for energy decarbonisation
technologies which we look
forward to capitalising upon
with our partners, Valkor.

In parallel the Company has been investigating
alternative feedstocks to glycerine for bioMSAR™
and oil-soluble biofuels that would allow the
development of a commercial net-zero version,
‘bioMSAR™ Zero’, by 2030.

The introduction and
implementation of
environmental regulations,
particularly in Europe,
is expected to increase
biofuel use in our target
sectors. Shipping is now
included in the EU ETS and
Fit-for-55 regulations, which
are expected to increase

against competing biofuels
in certain bunker locations.
Market conditions and trends
therefore provide a favourable
environment for Quadrise
to progress its contract
discussions and business
development activities on
all fronts.

During 2022-23, we have
seen energy security, climate
change and fuel costs rise
to the top of the policy
agenda for governments
and businesses alike, and
the need for solutions such
as ours has never been
more vital. The positioning
of Quadrise as an energy
decarbonisation enabler is
an important statement of
intent to progress licence
agreements and commercial-
scale trials which are expected
to lead to supply contracts and
commercial revenues from
MSAR® and bioMSAR™.

bioMSAR™ demonstrated
improved engine efficiency,
as well as lower NOx and
visible particulate emissions
during use when compared
to conventional diesel.
A joint patent application
with Vertoro was filed
in August 2023 covering
CSO bioMSAR™. Further
testing will now take place
including the Vertoro CSO
and BTG Bioliquids sugars
feedstocks in bioMSAR™
fuels at reputable third-party
testing facilities.

Outlook
In March 2023, the Group
rebranded as Quadrise plc to
better align with our focus
on energy decarbonisation
and carbon mitigation.
Our annual Sustainability
Report, launched in
November 2022, provides
valuable insights into our
environmental contributions
and commitment to create a
net-zero fuel by 2030.

Environmental considerations
and emissions regulations
are becoming ever more

In March 2023, the Group rebranded as Quadrise
plc to better align with our focus on energy
decarbonisation and carbon mitigation.

the use of marine biofuels
from 2024 for most vessels
operating within or near EU
waters. Revenues raised in the
sector via the ETS are to be
reinvested into an Innovation
Fund reserved for sustainable
shipping, the protection of
maritime habitats and for
funding programmes to
decarbonise the maritime
sector. Additionally, subsidies
are still available for renewable
waste-based biofuel
feedstocks such as glycerine
that should enhance the
attractiveness of bioMSAR™

The energy sector is
experiencing significant
shifts, with energy security,
climate change, and fuel
costs taking centre stage.
Quadrise remains dedicated
to its mission and appreciates
the ongoing support of our
shareholders in seeking to
shape a cleaner future.

Jason Miles
Chief Executive Officer
29 September 2023

Page 15

STRATEGIC REPORT

For the year ended 30 June 2023

Principal Activity

The principal activity of
the Company is to develop
markets for its proprietary
emulsion fuels, MSAR® and
bioMSAR™ as low-cost,
more environmentally
friendly substitutes for
conventional heavy fuel oil
(“HFO”) and biofuels for use
in power generation plants,
industrial and upstream oil
applications, 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
and CEO Statements on
pages 8 and 10.

Key Performance
Indicators

The Group’s key performance
indicators are:

■ Development and

commercial performance
against the Group’s
business model and
project timetables
established with partners
and clients, and

■ Financial performance

and position against the
approved budgets and
cashflow forecasts.

The Board regularly reviews
the Group’s progress against

the key performance
indicators above, with a
review held at least monthly
with Non-Executive Directors.
The commercial performance
of the Company and each of
the Company’s key projects
and business development
opportunities are discussed
at length in the Chairman
and CEO Statements.

Each year, a detailed two-year
budget and cash forecast is
prepared by the Executive
team, and following an
extensive review process, is
then approved by the Board.
Performance against budget
and updated cash projections
are included within the
monthly management
accounts issued to and
reviewed by the Board.

For the year ended 30 June
2023, progress against the
Group’s business model was
slower than anticipated,
with delays to key projects
as discussed in the CEO
statement on pages 10 to 15.
The financial performance
of the Group was ahead
of budget due to lower
than forecast expenditure
on operations, staff and
consulting costs and net
project expenditure as a result
of delays to project timetables.

Going Concern

The Group had a cash
balance of £1.34m as of
30 June 2023. In July 2023,

the Company raised funds
of £1.94 million (before
expenses) via a placing and
subsequent open offer of
new ordinary shares in the
Company. Based on the latest
Company forecasts which
assume the anticipated
and important receipt of
an aggregate of US$1.5m
from Valkor as described
above, these funds are
expected to be sufficient to
reach forecast commercial
revenues and cover net
project expenditure and fixed
costs up to the end of June
2024. Additional funding
will be required beyond this
point to bridge the gap to
the generation of sustainable
positive cashflows, which
are currently planned to
commence in H2 2025. The
Directors have determined
that the continuation of the
Group as a going concern
will be dependent upon
successfully raising sufficient
funds in the future to bridge
this gap and the prior receipt
of the Valkor income. The
Directors have a reasonable
expectation that such funds

Page 16

will be raised, although no
binding funding agreements
are in place at the date
of this report, and have
therefore determined that
it is appropriate to prepare
the financial statements
on a going concern basis.
However, in the absence of
additional funding being
in place at the date of this
report, these conditions
indicate the existence of a
material uncertainty. This
may cast significant doubt
on the Company’s ability to
continue as a going concern
and, therefore, that it may
be unable to realise its assets
and discharge its liabilities
in the normal course of
business. For further details
behind the judgments and
estimations used by the
Directors in reaching this
determination, refer to note 3.

Longer term viability
statement

In reaching its conclusion
on the going concern
assessment and longer-term
viability of the Group, the
Board reviewed the Group’s
three-year cash flow forecasts
which cover the period to
revenue generation and
positive cashflow. This
period is applicable because
it extends to the point at
which the Group is forecast
to be generating sustainable
positive cashflows. The Board
reviewed the underlying
assumptions in this cashflow,
together with sensitivity
analysis performed on these
projections. The Board
believes these forecasts
are based on a prudent

assessment of the Group’s
prospects and target
markets, taking account of
reasonably possible scenarios
given current market and
economic conditions. The
risks outlined below have
been considered by the
Board in their determination
of longer-term viability,
most significantly ‘Delay in
commercialisation of MSAR®
and funding risks’ and ‘No
profit to date’.

In its sensitivity analysis
and review of underlying
assumptions, which cover
these risks, the Board looked
at delays in project timelines
or that certain projects might
not be realised. The impact on
the Company’s longer-term
viability is that the timing
and level of funds required to
take the Group to the point of
sustainable positive cashflows
is then affected. However, the
Board consider that the Group
remains viable in the longer
term under the sensitivities
modelled.

The Board therefore has a
reasonable expectation that
the Group will be able to
continue in operation and
meet its liabilities as they fall
due over the period of their
assessment, provided it is in
receipt of the Valkor income
and is able to raise the
funding required as outlined
in the Going Concern note
above.

Climate Change

As discussed in both the
Chairman’s and CEO’s
statements on pages 8 to 15,
our bioMSARTM technology

Page 17
Page 17

offers an alternative to HFO
with over 25% lower CO2
emissions. The Directors
believe that the growing
global emphasis on the
COP 26 Goals, specifically
the goal of transition to
global net-zero carbon by
2050, present Quadrise with
increasing opportunities to
assist marine, power and
industrial clients in obtaining
a cost-effective solution
to lowering their carbon
emissions. Government
actions to reduce climate
change therefore provide
opportunities to Quadrise,
but the Board acknowledges
that the Company may also
be presented with additional
risks due to these actions.

Risks, including those
introduced by climate
change and governmental
actions to reduce climate
change, are discussed in the
next section.

Principal Business
Risks

Each year in the second
quarter, the Audit Committee
assists the Executive Team
in a structured zero-based
re-assessment of the
Company’s emerging and
principal risks. The review
considers each operational
sector and organisational
level including the Company’s
research and development
facility, QRF, and risks are
then triaged for the Company
as a whole. The risk level is
determined by its probability,
impact on the Company,
and whether the risk has
increased or decreased over
the last 12 months. A summary

of “Principal Risks and
Uncertainties” is reviewed at a
Board meeting. Subsequently
a Risk Mitigation Strategy and
Action Plan is incorporated
into the annual Business
Planning exercise conducted
in June.

The principal risks identified
during this exercise, ranked
in order of the likelihood of
occurrence, are set out below.
These may not include all the
risk factors that could affect
future results. Actual results
could differ materially from
those anticipated because
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.

Receipt of funds from
Valkor

The Company’s cashflow
forecasts assume the receipt
of an aggregate of US$1.5m of
revenues from Valkor, which,
together with the £1.34m
cash balance as at 30 June
2023 and the £1.94million
(gross) raised via the July
2023 placing and open offer,
are expected to be sufficient
to reach forecast commercial
revenues and cover net
project expenditure and
fixed costs up to the end of
June 2024. At the date of
this report, there remains
a risk that the $1.5m from
Valkor is either not received
or is significantly delayed, in
which event the Company’s
ability to progress its projects
will be at risk without further
funding. The Group mitigates
this risk by maintaining

strong control over its
pre-revenue expenditure, as
well as by actively evaluating
strategic initiatives that
would de-risk and/or facilitate
the delivery of the Group’s
key objectives.

Environmental constraints,
climate change and
decarbonisation

The increasingly hostile public
attitude towards fossil fuels
is a significant challenge
resulting in a rapid move away
from hydrocarbons towards
fully renewable fuels. Whilst
MSAR® provides considerable
environmental advantages,
and bioMSAR™ offers the
added benefits of carbon
reduction, neither offer a
net-zero carbon solution. The
Group mitigates this risk by
continuing to invest in research
and development to pursue
‘net-zero’ carbon fuel solutions
as part of its aim to be at net
zero by 2030 and pursue
business opportunities that
will assist in the achievement
of this goal. The Company
provides progressive
decarbonisation solutions for
applications such as shipping,
where the existing legacy fleet
will be in service for many years
to come.

Market scope and risk

Aligned with the constraints
above, and faced with
the move away from
hydrocarbons, the Group
must still progress its MSAR®
and bioMSAR™ endeavours
into a volume business.
The Group mitigates this
challenge by continuing to
promote the environmental

Page 18

contribution of MSAR® and
bioMSAR™ and explaining
the assured ongoing
contribution of hydrocarbons
to the global energy mix.
The Group further mitigates
this risk by increasing the
potential applicability of
Quadrise technology to
various sectors, as evidenced
by the opportunities in the
upstream and industrial
sectors discussed in the CEO’s
Statement. Nevertheless,
the marketability of our fuels
is affected by numerous
factors beyond the control of
the Group, for example the
variability of price spreads
between light and heavy oils,
the relative cost of biofuel
components, and the relative
competitiveness of oil, gas,
biofuel and coal prices both
for prompt and future delivery.

Commercial return

The Group has made
considerable progress in
its rapid development and
enhancement of bioMSAR™
whilst continuing to advance
commercial opportunities
for MSAR® and reduce
its treat costs in the face
of changes to fuel oil-
gasoil spreads. During the
product development of
bioMSAR™ there remain
the considerable challenges
of testing, feedstock
availability (see below),
glycerine treatment options,
formulation costs and
commercial feasibility still
to overcome. 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.

commercial contract would
motivate candidate feedstock
suppliers to expedite
feedstock supply.

The competitive position could
be affected by 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.

Feedstock sourcing - MSAR®

IMO2020 has impacted
high sulphur residue supply,
and MSAR® economics are
vulnerable to changes in fuel
oil-gasoil spreads. Securing
low-cost residue looks
increasingly challenging.
There is a risk in respect
of appropriately located
residues and ongoing price
competitive availability
of such 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. An MSAR®

Feedstock sourcing -
bioMSAR™

Whilst sufficient quantities
have been identified for
immediate trial purposes,
the volumes and quality
of renewable glycerine
required for a substantial
commercial marine or
industrial bioMSAR™ contract
are beyond those readily
accessible. To mitigate this the
Company is rapidly increasing
its knowledge of current and
potential glycerine sources
and engaging with suppliers.
Clearly a commercial contract
would again stimulate this
market and thus expedite
feedstock supply. The
Company is researching other
renewable feedstocks that
could be utilised together with,
or instead of glycerine, such as
Vertoro’s CSO™ biofuel.

Delay in commercialisation
of MSAR® and funding risks

There is a risk that the
commercialisation of
MSAR® and bioMSAR™
could be delayed further, or
unforeseen technical and/or
commercial challenges arise.
This could mean that the
Group may ultimately
need to raise further
equity funds to remain
operational. Depending
on market conditions and
investor sentiment, there is
a risk that the Group may be
unable to raise the required
funds when necessary.
The Group mitigates this

Page 19

risk by maintaining strong
control over its pre-revenue
expenditure, keeping up
the momentum on its key
projects and maintaining
regular contact with the
financial markets and
investor community.

Technological risk

There is a risk firstly that
the markets for MSAR®
and bioMSAR™ fuels
adopt alternative fuels,
making these technologies
redundant or secondly that
the technology used for
their production may not
be adequately robust for all
applications. This is in respect
of the character and nature
of the feedstock and the
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® and
bioMSAR™ formulation
and manufacture, and
that the fuel is thoroughly
tested before being put into
operational use.

Competition risks

There is a risk that new
competition could emerge
with similar technologies
sufficiently differentiated to

challenge the Company’s
process. Were such
competition to emerge, 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
such as Nouryon while
ensuring that key employees
are suitably incentivised.

Environment, Social and
Governance risks (ESG)

Quadrise is committed to
providing safer, cleaner and
more affordable energy. By
leveraging our extensive RDI
capabilities, and through
continuous improvement
processes, Quadrise aims
to be carbon-neutral by
2030. Furthermore, high
standards of corporate
governance have always been
a strength and this places
the Company in the top
tier of AIM companies. We
maintain this commitment
by adopting the highest
disclosure standards of the
UK Corporate Governance
Code, through the experience
and commitment of our
Non-executive Directors and
by following stringent Board
policies and procedures.

The Company works to
exceptional health, safety,
environmental protection and
quality standards, with strong
risk management processes
in place, all of which are
supported by a first-class
team of professional advisors.

Other Business Risks

Dependence on key
personnel

The Group’s business is
dependent on obtaining
and retaining the services
of key personnel of the
appropriate calibre as the
business develops. 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 the environmental
risks inherent in the oil
processing and distribution
industry. The Group is subject
to environmental laws and
regulations in connection
with all its operations.
Although the Group
ensures compliance with all
applicable environmental
laws and regulations, there
are certain risks inherent
to its activities, such as
accidental spills, leakages
or other circumstances that

Page 20

could expose the Group to
potential 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 such 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
of its business. 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 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.

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 Company requires
compliance with the stock
market regulations. The
Group mitigates this risk
through commitment to a
high standard of corporate

governance and ‘fit for
purpose’ procedures, and by
maintaining and applying
effective policies.

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. The Group
has no direct exposure to the
Ukraine/Russia conflict.

Andy Morrison
Non-executive Chairman
29 September 2023

Page 21

DIRECTORS’ SECTION
172 STATEMENT

Statement by the Directors in performance
of their statutory duties in accordance with
s172(1) Companies Act 2006.

The Board of Directors
acknowledge that they
have a statutory duty under
s172 (1) (a-f) of the Act to
promote the success of the
Group for the benefit of
the members considering
broader stakeholder interests,
and notably having regard to:

a) the likely consequence of
any decision in the long
term: see the ‘Outlook’
section of the CEO’s
statement on page 15, and
principal business risks on
page 18.

b) the interests of employees:
The Group’s employees
are fundamental to the
delivery of its strategy.
The Board has prioritised
fair remuneration
arrangements for
employees and undertakes
regular communication
updates in an open
environment. Decisions
to maximise the resilience
of the business, preserve
cash and minimise risk are
taken after prioritising the
continued employment of
those employee roles that
are instrumental to the
success of the business.

c) the need to foster business
relationships with advisors,
partners, suppliers,
potential MSAR® and
bioMSAR™ consumers and
producers and others: As
a small team of only nine
employees, it is essential
to the Group that close
relationships are fostered.
The Group has healthy
longstanding relationships
with its key counterparties,
based on open and
supportive channels of
communication and
ensuring that payment
of invoices to suppliers is
made on a timely basis.

d) the impact of operations
on the community and
the environment: Use of
MSAR® fuel contributes
to the solution of key
environmental problems,
reducing black soot
emissions and producing
less NOx and SOx
emissions compared
to HFO. The energy
requirements for handling
and transporting MSAR®
are lower than fuel oil,
and pre-atomisation
means that MSAR® fuel
can be burned at lower

Page 22

temperatures than fuel oil,
further reducing energy
consumption during use.
The Board believe that
MSAR® use could provide
a safer, cleaner and more
affordable energy and
a pathway to a more
sustainable future. The
many environmental
benefits of MSAR®
technology (as discussed
on the company’s website
https://www.quadrise.com/
esg/environmental/) have
considerable potential to
contribute to wider society.

e) the desirability of the
Group maintaining
a reputation for high
standards of business
conduct: The Group
has always adopted
the highest disclosure
standards of the UK
Corporate Governance
Code; the Board of
Directors contains
experienced, independent
Non-executive Directors
who follow stringent Board
policies and procedures.
The Group works to high
HSEQ standards, with
strong management
procedures in place, and
supported by a first-class
team of professional
advisors.

f) the need to act fairly
between members
of the Company: The
Board endeavours to
keep shareholders fully
informed (within the usual
disclosure constraints) on
the Company’s strategic
development plans, and
welcomes the views of
shareholders, as evidenced
during the year by the
open question and answer
session following the
Annual General Meeting
on 25 November 2022.
This has been further
demonstrated by the
investor conference
calls, media interviews,
presentations, and regular
updates to the Company’s
website that have occurred
throughout the year.

The Strategic Report was
approved by the Board of
Directors on 29 September
2023 and was signed on its
behalf by:

Andy Morrison
Non-executive Chairman
29 September 2023

Page 23

DIRECTORS

Andy Morrison
Non-Executive
Chairman

Andy is a director of growth
businesses with almost
forty years of experience
encompassing major
multi‑national corporations
and junior public companies.
Andy spent 17 years at Shell
plc in their oil products,
lubricants and speciality
chemicals divisions, where his
roles included VP positions
in sales, marketing, trading
and strategy. Andy then
held senior positions at BG
Group plc and BOC Group
plc in Corporate Strategy and
New Business Development
respectively. Since 2007,
Andy has led a number of
junior listed companies
in both the energy and
ESG sectors, where he has
significant experience
covering restructuring,
turnarounds, new listings and
acquisitions. Andy holds a
first‑class bachelor’s degree
in chemical engineering and
fuel technology from the
University of Sheffield.

Jason Miles
Chief Executive Officer

Laurie Mutch
Non-Executive Director

Jason spent over twelve
years of his career prior
to Quadrise developing
emulsified fuel projects;
initially as a process engineer
for BP and subsequently
for PDVSA, as Business
Development Manager where
he implemented numerous
Orimulsion® projects globally.
Jason has an honours degree
in chemical engineering from
Loughborough University
and an Executive MBA from
the Cass Business School in
London and is a chartered
Chemical Engineer. Jason
has extensive emulsion fuel
and oil market knowledge
and is responsible for
managing MSAR® business
development, project delivery
and commercialisation of the
refining, power, marine and
industrial sectors.

Laurie is a management
consultant to multi‑national
organisations and an adviser
to numerous UK charities.
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.
From 1994 to 1996, he was
the Finance Director in Shell
International Gas, and a senior
adviser to the International
Energy Agency. 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. Laurie
holds a BSc in Mathematics
& Physics and an MSc in
Astrophysics. He is chairman
of the QED Audit and Funding
committees and a member
of the Compensation and
Nominations committees.

Page 24

Dilipkumar Shah
Non-Executive Director

Philip Snaith
Non-Executive Director

Dilip brings with him over
25 years of commercial
experience in trading,
finance, manufacturing and
distribution. Dilip has most
recently been involved in
trading and manufacturing
in West Africa with focus
on Nigeria, Democratic
Republic of Congo and
Ghana. He is a founder
member of various successful
companies in West Africa
involved in the distribution
of fertilizers, chemicals,
tobacco related products
and the manufacture of
food products. In addition,
he serves on the boards
of several private UK and
international companies.

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. Between 2004 and
2008, Philip spent four years in
Singapore as President of Shell
International Eastern Trading
Company – with responsibility
for the Asia‑Pacific trading
portfolio. Concurrent with this
executive position, he was a
Non‑executive Director of Shell
Eastern Trading Company
(Pte) Ltd, 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.
Philip holds an MBA from
Cranfield University, a BSc
(Physics) from Imperial College
and a Diploma in Marketing
(Dip.M) from the UK Chartered
Institute of Marketing. Philip
is a member of the QED Audit
committee, and Chairman
of the Compensation and
Nominations committees.

Page 25

DIRECTORS’ REPORT

The Directors present their report together with the audited accounts of Quadrise plc
(“the Company”), and its subsidiaries, (“the Group”) for the year ended 30 June 2023.

Results and Dividends

The consolidated loss from continuing operations after taxation for the year ended 30 June 2023
was £3.1m (2022: £2.6m). The Directors do not recommend the payment of any dividend for the
year (2022: £nil).

Directors

Those who served as Directors during the year are:

■ Andy Morrison (Non‑executive Chairman)

■ Jason Miles (Chief Executive Officer)

■ Laurence Mutch (Non‑executive Director)

■ Dilipkumar Shah (Non‑executive Director)

■ Philip Snaith (Non‑executive Director)

Resolutions to elect Dilip Shah who will retire as a Director by rotation under the Company’s
Articles of Association, will be proposed at the Company’s 2023 Annual General Meeting.

Directors’ Interests

The interests of the Directors holding office at 30 June 2023 were as follows:

Number of shares held:

Directors

Andy Morrison

Jason Miles

Laurence Mutch

Philip Snaith

Dilipkumar Shah

30 June 2023
Ordinary Shares
of 1p each

30 June 2022
Ordinary Shares
of 1p each

700,000

‑

3,905,988

522,107

506,649

170,000

Page 26

Number of share options held:

Directors

Andy Morrison

Jason Miles

30 June 2023
Share options

30 June 2022
Share options

Exercisable up to

4,000,000

‑

3 August 2030

1,500,000

22 March 2024

‑

3,551,122

27 June 2029

1,448,878

27 June 2027

1,775,862

3 September 2029

3,551,122

‑

27 June 2029

Laurence Mutch

2,000,000

27 June 2027

4,000,000

‑

3 August 2030

Dilipkumar Shah

500,000

27 June 2027

Philip Snaith

Substantial Shareholders

2,000,000

‑

3 August 2030

2,000,000

27 June 2027

4,000,000

‑

3 August 2030

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.

Hargreaves Lansdown

Interactive Investor

HDSL

Barclays Smart Investor

AJ Bell

Ruudowen Limited

HSBC Private Bank

Number of
ordinary shares
held

Percentage of
issued share
capital and
voting rights

Nature of holding

Indirect

347,818,628

Indirect

252,263,449

Indirect

156,233,122

Indirect

89,991,110

Indirect

82,140,380

Direct

62,839,261

Indirect

51,699,771

22.60%

16.15%

10.00%

5.76%

5.26%

4.02%

3.31%

Page 27

Disclosure of
Information to Auditor

Annual General
Meeting

The Annual General Meeting
will be held on Monday
27 November 2023 as
stated in the Notice, which
accompanies this Annual
Report.

By order of the Board.

MSP Corporate Services
Limited
Company Secretary
29 September 2023

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.

Appointment of Auditor

In accordance with
Section 489 of the Companies
Act 2006, a resolution to
appoint PKF Littlejohn LLP
will be proposed at the next
Annual General Meeting.

Board Committees

Information on the Audit and
Compensation committees
is included in the Corporate
Governance section of the
Annual Report.

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 22.

Research and
Development

The Group continues to invest
in research and development
associated with the
formulation and manufacture
of MSAR® and bioMSAR™
proprietary emulsion
fuel. Further information
regarding the research and
development activities of the
Group is contained in the
Chief Executive’s Statement.

Future Developments

Further information
regarding the future
developments of the Group
is contained in the Chief
Executive’s Statement.

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.

Page 28

STATEMENT OF DIRECTORS’
RESPONSIBILITIES

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.

Andy Morrison
Non‑executive Chairman
29 September 2023

The Directors are responsible
for preparing the Strategic
Report, Directors’ 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 UK adopted
international accounting
standards in conformity
with the requirements of
the Companies Act 2006
for reporting year ended
30 June 2023.

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:

■ Select suitable accounting
policies and then apply
them consistently;

■ Make judgments and
accounting estimates
that are reasonable and
prudent;

■ State whether applicable

accounting standards have

been followed, subject to
any material departures
disclosed and explained in
the financial statements;

■ 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 plc
website is the responsibility

Page 29

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 considers 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.

Details of the nature and amount of each element of the emoluments of each member of
Key Management for the year ended 30 June 2023 were as follows:

Director

Andy Morrison1
Mike Kirk2

Jason Miles

Philip Snaith

Laurence Mutch

Dilipkumar Shah

Total

Short-term
employee
benefits
£’000s

Social
security costs
£’000’s

Post-
employment
benefits
£’000s

Other
benefits
£’000’s

Share option
benefits*
£’000’s

‑

271

‑

423

‑

115

Total
2023
£’000s

105

356

609

Total
2022
£’000s

300

457

1 Appointed 1 February 2022.
2 Resigned 26 November 2021.
* Non‑cash share option expense.

Reconciliation of Share Options Granted to Directors

As at 1 July

Granted during the year by QED

Exercised during the year

Resignation of Director

Expired during the year

As at 30 June

30 June 2023
Number of share
options

30 June 2022
Number of share
options

12,775,862

38,000,000

25,051,122

13,052,793

‑

(16,776,931)

(11,051,122)

(21,500,000)

26,775,862

12,775,862

No share options were exercised by Directors during the year (2022: nil).

The market price of the Company’s shares at the end of the reporting period was 2.10p (2022:
1.60p) and the range during the year was 1.00p to 2.75p (2022: 1.49p to 4.47p) per share.

Philip Snaith
Chairman of the Compensation Committee
29 September 2023

Page 30

CORPORATE GOVERNANCE
STATEMENT

Since admission to trading
on AIM in 2006, the Company
has adopted the UK
Corporate Governance Code
and at its Board meeting on
27 June 2018, the Board of the
Company resolved to apply
the UK Corporate Governance
Code, published by the
Financial Reporting Council,
as revised in July 2018
(the “Code”).

The Code sets standards for
good practice in relation
to board leadership and
effectiveness, remuneration,
accountability and relations
with shareholders. The
provisions of the Code (the
2018 version of which the
Board resolved to adopt)
which apply to Quadrise plc
are set out below.

Principles of the UK
Corporate Governance
Code

Board Leadership &
Company Purpose

Effective and
entrepreneurial board
promoting sustainable
success, generating value
for shareholders and
contributing to wider
society.

2. Establish the company’s

purpose, values & strategy.
Directors to act with
integrity and promote the
desired culture.

3. Ensure necessary
resources to meet
objectives and measure
performance. Establish
framework of controls
which enable risk to be
assessed and managed.

4. Ensure effective

engagement with and
encourage participation
from shareholders and
stakeholders.

5. Workforce policies and
practices are consistent
with the company’s
values and support long
term sustainable success.
Workforce able to raise
matters of concern.

Division of Responsibilities

6. Chair responsible for board
effectiveness. Promote
a culture of openness
and debate, facilitate
constructive board
relations and contribution
of Non‑executive Directors.
Ensure accurate, timely
and clear information.

7. Appropriate combination

of Executive and
Non‑executive (particularly
independent) Directors so
that no one individual or
group dominates. A clear
division between board
and company leadership.

8. Non‑executive directors
to have sufficient time
to meet responsibilities

and provide constructive
challenge, strategic
guidance, specialist
advice and hold executive
management to account.

9. Ensure policies, processes,
information, time and
resources required to
function effectively and
efficiently.

Composition, Succession
and Evaluation

10. A formal, rigorous and
transparent procedure
to board appointment.
Establish a succession
plan for board and senior
management, based
on merit and objective
criteria. Promote diversity
of gender, social and
ethnic backgrounds,
cognitive and personal
strengths.

11. Board and committees
to have a combination
of skills, experience and
knowledge. Review length
of service of the board with
membership regularly
refreshed.

12. The annual board

evaluation to consider its
composition, diversity and
effective working together.
Individual evaluation to
demonstrate whether
each director continues to
contribute effectively.

Page 31

Audit, Risk and Internal
Control

13. Establish formal and

transparent policies and
procedures to ensure
independence and
effectiveness of internal
and external audit
functions. Satisfy itself on
integrity of financial and
narrative statements.

14. Present a fair, balanced
and understandable
assessment of company’s
position and prospects.

15. Establish procedures to
manage risk, oversee
internal controls and
determine nature and
extent of principal risks in
achieving its long‑term
strategic objectives.

17. A formal and transparent
procedure for developing
policy on executive
remuneration should be
established. No director
involved in deciding their
own remuneration.

Remuneration

18. Directors to exercise

16. Policies and practices
designed to support
strategy and promote
long‑term sustainable
success. Executive
remuneration aligned to
purpose and values and
clearly linked to successful
delivery of company’s
long‑term strategy.

independent judgement
and discretion when
authorising remuneration
outcomes, taking account
of company and individual
performance and wider
circumstances.

Page 32

Chairman’s Corporate
Governance Statement

Dear Shareholders,

Since its original listing in
April 2006, Quadrise has
applied strong corporate
governance principles in
all its endeavours. As an
example, each year the
Board has (albeit informally)
tested itself against the then
applicable UK Corporate
Governance Code (the
“Code”) and endeavoured
to act on any perceived
deficiencies. The Company
continues to consider the
Code to be the gold standard
for governance compliance
and is the recognised
corporate governance code to
which the Company adheres.

We have provided details
of the Code on our website
and explain where we
comply, and if not, why and if
appropriate what corrective
steps we are taking to
address any deficiencies.
This information is reviewed
at least once each year and
our website will disclose the
review date.

As Chairman, it is my duty
together with my fellow
Board members to promote
and apply good standards
of corporate governance
throughout our organisation.
The Group benefits from a
highly experienced Board,
setting clear values and
strategy whilst promoting
a hands‑on, friendly but
professional culture.

The Company strives to keep
our shareholders informed
of material progress on our
projects, but we acknowledge
that this progress has
not been as rapid as we
would have liked, leading
in some instances, to gaps
in the provision of updates.
However, we continue to
receive positive responses
from investors regarding
our use of Investor Meet
Company (“IMC”), and
ensure that all questions, no
matter how challenging, are
answered either during the
event or posted on the IMC
website afterwards. Feedback
from IMC is that we are a
positive outlier in terms of
the number of questions
that we get asked and the
diligence with which we
answer them. We believe
that this demonstrates a
real commitment from the
Company to treat our retail
shareholders in the same
manner as our institutional
and longstanding high‑net‑
worth shareholders – with the
opportunity to directly ask
questions of management on
a regular basis.

Alongside IMC, we continue
to use Proactive Investors for
interviews around key areas,
and regularly update our
social media feeds (Twitter
and LinkedIn) to provide
background and supporting
information to shareholders.

Whilst we regard the
broadening of our channels
to shareholders as helpful, it

is important to emphasise
that all substantive
announcements are made via
RNS. As a Board we are fully
aware of our responsibilities
in this regard and we have
regular contact with our
high‑quality advisory team
including our NOMAD,
brokers and our PR‑IR and
legal advisors. Our approach
to the use of social media,
blogs and other non‑RNS
news dissemination is always
discussed in detail with our
NOMAD to ensure that we
are not revealing any material
that should be disclosed via
RNS. This open dialogue with
our advisors ensures that the
information that we provide
via RNS meets the regulatory
requirements of AIM – and
that any supplementary
information we disclose via
other channels does not
contain anything that is
material or price sensitive.

The Company maintains
a comprehensive suite
of policies and practices
appropriate for our size
and stage of development.
Each of these is reviewed
and signed off by at least
one nominated Executive or
Non‑executive Director with
appropriate experience of the
subject matter. The executive
team frequently consult
the Chairman of the audit,
compensation and funding
committees on planning,
finance, legal and human
resource matters.

Page 33

In May and June each year
the Board undertakes a
structured risk assessment
and the outcomes of this are
incorporated in the annual
Business Plan and the
associated financial modelling.

I trust these few examples
illustrate that the Company
has a proactive and
transparent approach to

oversight on behalf of all
shareholders and those
high standards of corporate
governance are inherent in
our culture.

The Company was delighted
to hold an in‑person AGM in
November 2022, which was
live‑streamed via the IMC
platform to shareholders
unable to attend in person.

We will be continuing with
this hybrid approach for
our 2023 meeting, with
the investor presentation
and subsequent Q&A
livestreamed via IMC.

Andy Morrison
Non‑executive Chairman
29 September 2023

Application of the Code

In accordance with AIM Rule 26, the following describes how the Company complies with and
where it departs from the Code together with an explanation of the reasons for doing so.

Board Leadership and Company Purpose

Principle A: Effective and entrepreneurial board promoting sustainable success, generating
value for shareholders and contributing to wider society.

The Quadrise Board met formally on 11 occasions during the year ending 30 June 2023 in its
endeavours to progress the announced relationships and potential projects more fully described
above and in the Chairman’s Corporate Governance statement to Shareholders.

Given the progress outlined in the Chairman and Chief Executive’s statements, the opportunity
for the Company to generate future value for shareholders remains sound in our view. Refer to
further information under Provisions 1 and 14, and Principles F, G and H (Board effectiveness,
Independence).

MSAR® and bioMSAR™ technology has many environmental benefits as reported elsewhere,
and on the company’s website https://www.quadrise.com/esg/environmental/ and in this way has
considerable potential to contribute to wider society.

Page 34

Principle B: Establish the company’s purpose, values & strategy. Directors to act with
integrity and promote the desired culture.

Our mission is to be the leading emulsion‑based energy solutions provider to benefit the
environment and create value for our stakeholders. We aim to provide the best available
technology, solutions, services and MSAR® and bioMSAR™ synthetic fuel oil products for our
major, market‑leading customers.

Our strategy is to work with global and regional companies in the refining, shipping, industrial
and power‑generation markets to develop, simultaneously, the capacity to both produce and
consume MSAR® and bioMSAR™ emulsion fuels on a commercial scale and world‑wide.

The Quadrise team of nine employees and directors are highly cohesive and motivated with a
clear sense of purpose. The Company is privileged to have a highly experienced Board, setting
values and strategy in our annual Business Plan, and adopting the highest standards of integrity
whilst promoting a hands‑on, friendly but professional culture. For further information refer to
Provisions 2 and 8.

Principle C: Ensure necessary resources to meet objectives and measure performance.
Establish framework of controls which enable risk to be assessed and managed.

We will continue to reduce costs where this is sensible within the business, without impacting
our ability to deliver our business development plans, including the essential research and
development support. This includes changes to the executive structure where appropriate.

Refer to Provisions 28: Assessment of Risks, and 29: Internal Controls, as well as the disclosures
under Principles I and O.

Principle D: Ensure effective engagement with and encourage participation from
shareholders and stakeholders.

Our AGM held on 25 November 2022 was a hybrid in‑person/online event attended by
37 shareholders in person with a further 167 attending online. Through investor conference
calls (4 October 2022, 12 July 2023) with an average of 189 shareholders on each call, media
interviews, presentations and regular updates to the Company website, the executive team has
endeavoured to keep shareholders fully informed (within the usual disclosure constraints) on the
Company’s strategic development plans. Refer to Provisions 4, 5, 6 and 7 for further information.

Principle E: Workforce policies and practices are consistent with the company’s values and
support long term sustainable success. Workforce able to raise matters of concern.

As a small and cohesive organisation, the Company is quickly alerted to any practices that
are inconsistent with our values and determination to achieve long‑term sustainable success.
The Company nevertheless prides itself in having in place all of the standard procedures of
a much larger corporation, together with a wealth of experience on the Board to address any
workforce concerns. During the induction programme, new employees are encouraged to
bring forward any concerns at any time including use of a Whistleblowing Policy. Refer to
further disclosures in Provisions 2, 5 and 6.

Provision 1: Opportunities and risks to future success

The CEO’s Statement in the 2023 Annual Report describes the MSAR® and bioMSAR™ market
opportunities in the power generation, industrial, upstream oil and marine bunker fuel sectors. The
risks associated with our endeavours have been demonstrated historically by the disappointments
of the terminated trial project in KSA, and the marine fuel trial by Maersk. Principal Business Risks are

Page 35

more fully covered on page 18 in the Annual Report. Notwithstanding the challenges faced in our key
markets, the Board firmly believes in the sustainability of the Company’s business model. Progress will
not always be smooth, but we are well positioned to capitalise on past experience and the significant
opportunities that we see going forwards. The Company would not be able to attract the attention of
partners of this calibre without clear evidence of its standards of corporate governance.

Provision 2: Monitoring corporate culture

The Company does not formally assess and monitor culture – this being a small organisation,
where any deviation from policy, practices and behaviour at odds with the Company’s purpose
and values would become quickly apparent to management. The Quadrise team can be
described as cohesive and highly professional with a very clear sense of purpose. Team meetings
are held weekly where project progress is reviewed, and remedial action taken. The performance
of all employees is assessed annually together with a discussion on career development plans.
The remuneration scheme for all employees includes the potential award of bonuses and
options subject to company and personal performance.

Provision 3: Regular engagement with major shareholders

Refer to Disclosure under Principle D and Provision 7.

Provision 4: Action to be taken in the event there are 20% votes against a resolution

At the Company’s AGM held on 25 November 2022, five ordinary resolutions, including in relation
to the directors’ authority to allot shares, were carried with at least 89.11% of votes in favour of
the resolutions. Three special resolutions, concerning the disapplication of pre‑emption rights
in relation to the issue of shares for cash and for the purposes of financing, and the adoption of
new articles of association, were carried with at least 88.96% of votes in favour of the resolutions.

Provision 5: Stakeholder engagement mechanisms

Being a small organisation with 9 employees, the Company can readily consider and respond
to views put forward by the workforce and other key stakeholders. In view of this, the Company
does not have a director appointed from the workforce, a formal workforce advisory panel or a
designated non‑executive director to engage with the workforce.

Provision 6: A means for the workforce to raise concerns

During the induction programme and subsequently, employees are encouraged to bring
forward any concerns at any time including use of a Whistleblowing Policy. If appropriate the
chairman of the compensation committee would be asked to investigate and seek external
advice should this be necessary.

Provision 7: Identify and manage conflicts of interest

Both executive and non‑executive directors meet and consult major shareholders within the
usual disclosure constraints to surface and manage any potential conflicts of interest. Any related
party transactions are reported in Note 23 to the financial results.

Provision 8: Board Minutes to record issues that cannot be resolved

The Board works hard to resolve any concerns about the management of the company and the
operation of the Board. On occasions a director will request that the Board minutes record his
divergent opinion from the majority view. A resigning non‑executive director would be encouraged
to provide a written statement to the chair if his resignation resulted from such a concern.

Page 36

Division of Responsibilities

Principles F, G & H: Chair responsible for board effectiveness. Promote a culture of openness
and debate, facilitate constructive board relations and contribution of Non-executive Directors.

Ensure accurate, timely and clear information. Appropriate combination of exec and non-exec
(particularly independent) directors so that no one individual or group dominates. A clear
division between board and company leadership.

Non-exec directors to have sufficient time to meet responsibilities and provide constructive
challenge, strategic guidance, specialist advice and hold executive management to account.

Quadrise is privileged to have a highly qualified and practiced Board of directors of an unusual
level of seniority and standing given the Company’s moderate size and still early stage of
development. Refer to Director Profiles on pages 24‑25 of the Annual Report. The non‑executive
directors have a level of experience and gravitas that ensures a culture of openness and debate
and provide the necessary challenge, guidance and advice. Detailed board papers are prepared a
week ahead of meetings. For further information refer to Provision 8: Divergent opinions, Provision
10: Independence, Provision 15: Demands on time, and Provisions 16: Company Secretary.

With a non‑Executive Chairman, there is a clear division between board and company leadership.
Refer to Provision 9.

Principle I: Ensure policies, processes, information, time and resources required to function
effectively and efficiently.

The Company has a digital Policies and Procedures Directory comprising some 100 policies in
22 business categories. The Policies and Procedures are intentionally kept short so that these
are easy to refer to and update. Of note, each of these is reviewed and signed off by at least one
nominated director (executive or non‑executive) who is required to have considerable prior
experience of the subject matter. Refer to Provision 29. QED has a comprehensive disaster
recovery plan which is tested on a regular basis.

Expenditure and other authorities are subject to a tight Authorities Matrix, reviewed regularly by
the Audit Committee.

The Company has implemented a GDPR policy and has online training facilities for Bribery and
Corruption, GDPR and General Data Protection. Completion of this training is compulsory for all
employees and directors.

Provision 9: The roles of chair and chief executive

Addressed under Division of responsibilities above. Jason Miles is the Company’s CEO and Andy
Morrison was appointed as non‑Executive Chairman on 1 February 2022.

Provision 10: Independence of non-executive directors

The profiles and experience of the non‑executive directors are provided on pages 24‑25 of the
Annual Report.

Non‑Executive Chairman Andy Morrison has the appropriate experience as a former VP at Shell plc
and holder of senior positions at BG Group plc and BOC Group plc, as well as leadership positions at
junior listed companies in both the energy and ESG sectors. He is a shareholder and holds options in
the Company. Mr Morrison has clearly indicated that these holdings do not and have not hindered

Page 37

his ability to be independent and after careful consideration the Board concurs with this view and
believes him to be independent.

Mr Snaith has the appropriate experience as a former senior executive of the Royal Dutch Shell
Group to chair the compensation and nominations committees. He is a shareholder and holds
options in the Company. Mr Snaith has clearly indicated that these holdings do not and have not
hindered his ability to be independent and after careful consideration the Board concurs with this
view and believes him to be independent.

Non‑executive director Laurence Mutch is also a Director of Laurie Mutch & Associates Limited,
which from time to time provides consulting services to the Group. The total fees charged for
the 2023 financial year amounted to £nil (2022: £5k). He is a shareholder and holds options in
the Company and has been a director since 2006. Mr Mutch has clearly indicated that these
potential impairments do not and have not hindered his ability to be independent and after
careful consideration the Board concurs with this view and believes him to be independent. He
was a former senior finance director of the Royal Dutch Shell Group, and has current accounting
(through his charity activities) financing, corporate governance and regulatory experience. He
thus has the experience to chair the audit and funding committees.

Mr Dilip Shah is closely associated with significant shareholders, he is a shareholder and holds
options in the Company and is not considered independent. Mr Shah retires by rotation with a
resolution for his re‑appointment to be proposed at the 2023 AGM

In view of their contribution to the Company, Mr Morrison, Mr Snaith, Mr Mutch and Mr Shah
have been awarded options in the Company, as more fully detailed on page 27 and Provision 34.
In addition, Mr Morrison, Mr Snaith and Mr Mutch have each shown their support for, and confidence
in, the future of the company at fund raisings and accordingly hold shares in the company. Whilst
this may question their independence in accordance with the Code, the Board continues to hold the
view that this has not and does not impair their ability to act as independent directors.

Provision 12: Appointment of a Senior Independent Director

In view of its size, the Company has not appointed a Senior Independent Director. This will be
reviewed as the Company progresses its development plans. To the extent that there are unusual
circumstances that may require the duties and role of a Senior Independent Director, Mr Mutch
acts in this capacity.

Provision 13: Appointing and Removing Executive Directors

On the appointment of Executive Directors refer to Principle J. As discussed under Provision 41, the
Compensation Committee annually reviews the performance of the Company against previously
determined corporate performance targets adopted by the Board. The non‑executive directors meet
frequently to discuss any performance concerns.

Provision 14: Meetings of the Board

During the 2022‑23 financial year the Board comprised the Chairman, Chief Executive Officer
and three non‑executive Directors. 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.

Page 38

The Board met a total of 11 times during the 2022‑23 financial year, including four formal
quarterly meetings to discuss a scheduled agenda covering key areas of the Group’s affairs
including operational and financial performance and monthly management accounts. All
relevant information is circulated in good time. The attendance record of each director is
shown below:

Director

Andy Morrison

Jason Miles

Laurence Mutch

Philip Snaith

Dilip Shah

Attendance

100%

91%

100%

73%

Provision 15: Demands on Directors’ time

In addition to his role as Non‑Executive Chairman, Andy Morrison is currently also a Director
of Net Zero Carbon Developments Ltd, a Non‑Executive director of Ondo InsurTech Plc,
Non‑Executive Chairman of Hemspan Ltd and Managing Director of Spinnaker Opportunities
Ltd. Dilip Shah has other disclosed external appointments. These positions have been disclosed
to the Board and do not, of themselves, impact the time they need to commit to the Company.
Laurie Mutch and Philip Snaith have no other external appointments.

Provision 16: Advice from the Company Secretary

In Ian Farrelly the Company has a highly experienced Company Secretary and, for example, both
the chairman of the compensation committee and the chairman of the audit committee are in
regular contact to seek his guidance.

Composition, Succession and Evaluation of the Board

Principle J: A formal, rigorous and transparent procedure to board appointments. Establish a
succession plan for board and senior management, based on merit and objective criteria.
Promote diversity of gender, social and ethnic backgrounds, cognitive and personal
strengths.

The Board Nominations Committee is chaired by Philip Snaith and comprises Andy Morrison,
Philip Snaith and Laurence Mutch. There is a formal, rigorous and transparent procedure to
board appointments with the use of external recruitment advisers as may be necessary. Refer
to Provision 20. In view of its small size the Board does not have a formal succession plan, and
this will be put in place as the Company progresses its development plans. The Board is keen to
promote diversity as the Company develops.

Principle K: Board and committees to have a combination of skills, experience and
knowledge. Review length of service of the board with membership regularly refreshed.

Refer to Director Profiles in the Annual Report pages 24‑25. Each of the members of the Audit
Committee has considerable financial experience. The members of the Audit and Compensation
Committees formerly held senior executive positions in large organisations. External guidance is
used in setting remuneration policy guidelines.

Mr Mutch has been on the Board for 16 years (since listing in April 2006). Whilst this is at odds
with regularly refreshing the Board, long experience is highly valued by shareholders when the
directors retire by rotation and are then re‑elected. Refer to Provisions 18 and 19.

Page 39

Principle L: The annual board evaluation to consider its composition, diversity and effective
working together. Individual evaluation to demonstrate whether each director continues to
contribute effectively.

An annual appraisal is undertaken of the contribution of each director, and the effectiveness of
the Board and its committees. This involves the completion of a confidential director evaluation
matrix with 10 contribution attributes, and a detailed questionnaire on board and committee
performance together with an opportunity to propose improvements to Board and committee
effectiveness. These are returned to the Company Secretary and a consolidated review is
provided to the Chairman for review by the Board.

The Chairman oversees an annual evaluation of all employees with targets set for the following
year. The Compensation Committee undertakes an evaluation of the Company’s performance
and that of the Chairman and CEO. Refer to Provision 41.

Provision 17: The Nominations Committee

Refer to Principle J.

Provision 18: Re-election of Directors

In accordance with the Company’s Articles of Association, 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.

Provision 19: Nine-year limitation of Chairman

Andy Morrison was appointed Non‑executive Chairman on 1 February 2022.

Provision 20: External search consultant

The Company appointed external search consultants during the prior year to assist with the
recruitment of the Chairman and COO roles.

Provisions 21, 22 and 23: Evaluation of the Board.

Refer to the commentary under Principle L above.

Audit, Risk and Internal Control

Principle M: Establish formal and transparent policies and procedures to ensure
independence and effectiveness of internal and external audit functions. Satisfy itself on
integrity of financial and narrative statements.

Refer to the Corporate Governance Statement on pages 31‑44 in the Annual Report. In view of
its size the Company does not have an internal audit function. However, the Audit Committee
is closely consulted on the drafting of the Annual Report and of course is integral to the
preparation of the annual results. The Committee has considerable governance, control and
finance experience. Refer to “The work of the Audit Committee” under Provisions 24, 25 and 26.

Principle N: Present a fair, balanced and understandable assessment of company’s position
and prospects.

Refer to the Chairman’s Statement in the Annual Report, and to Provision 24, 25 and 26: The work
of the Audit Committee, Provision 27: Board responsibility in preparing the accounts, Provision
30: Going Concern and Provision 31: The prospects of the Company.

Page 40

Principle O: Establish procedures to manage risk, oversee internal controls and determine
nature and extent of principal risks in achieving its long-term strategic objectives.

QED performs a structured risk assessment on an annual basis. This involves a review of the
probability and impact of adverse events across operational regions and at corporate level. This
culminates in the preparation of a risk dashboard for consideration by the Board. This is followed
by a documented risk mitigation strategy that is subsequently incorporated into the annual
Business Plan. Refer also to Provision 28: Assessment of the Company’s Risks and Provision 29:
Risk Management and Internal Control systems.

Provisions 24, 25 and 26: The work of the audit committee

The Audit Committee is chaired by Laurence Mutch and comprises Philip Snaith and Laurence
Mutch, both of whom have recent and relevant financial experience and considerable
competence across all elements of the oil sector. 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 committee meets at least four times a year and is responsible for monitoring
the integrity of the financial statements of the Company, keeping under review the scope and
results of the audit, its cost effectiveness and the independence and objectivity of the auditors.
The committee provides advice on whether the annual report and accounts are fair, balanced
and understandable. Due to the size of the Company, there is currently no internal audit
function, although the committee has oversight responsibility for public reporting, overall good
governance and the Company’s internal controls. The committee annually assists management
in the formal and robust assessment of the Company’s risks. Other members of the Board, the
Chief Financial Officer, as well as the auditors, typically attend the Audit Committee meetings.

The performance of the committee is reviewed annually by the Board as more fully described
under Principle L above.

Significant Issues

The significant issues considered relating to the 2023 financial statements were Going Concern,
the Valuation of Intangible Assets, and Management Override of Controls. The subject of Going
Concern is covered in the Strategic Report on page 16 in the Annual Report, in the Auditors
Report on page 45 and in Note 3 to the Financial Statements. The Valuation of Intangible Assets
is addressed in the Auditors Report on page 45 and in Note 11 to the Financial Statements.

No Internal Audit function

An internal audit function is not appropriate at this time given the Company’s current size,
and in view of this, the Audit Committee consider the risk of management override of controls
a significant issue. In making their assessment the Audit Committee considered specifically
the controls over and approval processes covering cash payments and journals, as well as
any indication of unusual transactions and any evidence of bias in the estimates made by
management. The Audit Committee also considered the quality and frequency of management
information provided to the Board. The Audit Committee’s conclusion was that there is no
evidence of inappropriate management override of controls.

Assessment and Safeguarding the Independence and Effectiveness of the
external audit process

The committee has not identified any issues with regards to integrity, objectivity and
independence of the Auditors and therefore considers them to be independent.

Page 41

Provision 27: Board responsibility in preparing the accounts

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. In addition, the Board is
responsible for preparing the annual report and accounts, and considers this annual report and
accounts, taken as a whole, to be fair, balanced and understandable, and that it provides the
information necessary for shareholders to assess the company’s position, performance, business
model and strategy.

Provision 28: Assessments of the Company’s Risks

Each year in the second quarter, the Audit Committee assists the Executive Team in a structured
zero‑based re‑assessment of the Company’s emerging and principal risks. This is conducted for each
operational sector and organisational level including the Company’s research and development
facility, QRF, and then aggregated for the Company as a whole. The risk level is determined by its
probability, impact on the Company, and whether the risk has increased or decreased over the
last 12 months. A summary of “Principal Risks and Uncertainties” is reviewed at a Board meeting.
Subsequently a Risk Mitigation Strategy and Action Plan is incorporated into the annual Business
Planning exercise conducted in June.

Provision 29: Risk Management and Internal Control systems

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.

The Company has a digital Policies and Procedures Directory comprising some 100 policies in
22 business categories. The Policies and Procedures are intentionally kept short so that these
are easy to refer to and remain current. Of note, each of these is reviewed and signed off by at
least one nominated director (executive or non‑executive) who is required to have considerable
prior experience of the subject matter. Expenditure and other authorities are subject to a tight
Authorities Matrix, reviewed regularly by the Audit Committee. QED has a comprehensive
disaster recovery plan which is tested on a regular basis.

The Board has established a Bribery Policy, signed by all Directors and employees, to achieve
compliance with the UK Bribery Act 2010, which came into effect on 1 July 2011. Agreements with
third parties contain statements that the Company and its associates are required to always
adhere to the UK Bribery Act 2010. The Company has implemented a GDPR policy and has online
training facilities for Bribery and Corruption, GDPR and General Data Protection. Completion of
this training is compulsory for all employees and directors.

Provision 30: Going Concern and Longer-Term Viability

The subject of Going Concern is covered in the Strategic Report on page 16 of the Annual Report,
in the Auditors Report on page 45 and in Note 3 to the Financial Statements. The Group’s longer‑
term viability as a revenue and profit generating entity is covered in the Chairman’s statement
and CEO’s statements on pages 8 to 15 and in the Strategic Report on page 16.

Provision 31: The prospects of the Company

The Outlook for the Company is addressed as part of the CEO’s Statement on page 10 of the
Annual Report.

Page 42

Principles P, Q & R: Remuneration

Policies and practices designed to support strategy and promote long-term sustainable
success. Executive remuneration aligned to purpose and values and clearly linked to
successful delivery of company’s long-term strategy.

A formal and transparent procedure for developing policy on executive remuneration
should be established. No director involved in deciding their own remuneration.

Directors to exercise independent judgement and discretion when authorising remuneration
outcomes, taking account of company and individual performance and wider circumstances.

Refer to the Report on Directors’ Remuneration on page 30.

With reference to Provision 41, the Compensation Committee reviews remuneration policy on
an annual basis to assess its effectiveness, and on behalf of the Board conducts performance
appraisals of the Company, the Chairman and CEO each year. External guidance is sought
as necessary in setting the terms of senior executive compensation. Refer to Provision 35:
Remuneration Consultant. In consultation with the Chairman, the committee prepares corporate
targets for formal adoption by the Board and proposals to determine the award of bonuses and /
or options. These are clearly linked to the delivery of long‑term objectives and corporate strategy.
Refer also to Provision 37: Compensation Committee discretion.

Provision 32: Appointment of the Compensation Committee

The Compensation Committee is chaired by Philip Snaith and comprises Philip Snaith and
Laurence Mutch. The chairman of the committee provides a written or detailed verbal report as
necessary of every compensation committee meeting at the next Board Meeting. Philip Snaith
served on the committee prior to taking over as chairman.

Provision 33: Remuneration Policy

Refer to Provision 41.

Provision 34: Remuneration of Non-executive Directors

The Board determines the remuneration of the non‑executive directors, and no Director
participates in discussions about his own remuneration. Each of the non‑executive directors have
been awarded share options in prior years. Provision 34 of the Code states that remuneration
for non‑executive directors should not include share options or other performance‑related
elements. However as stated above, the Company’s Non‑executive Directors are of an unusual
level of seniority and standing given the Company’s moderate size and still early stage of
development. The Company has a small full‑time team and therefore the non‑executive directors
are more closely engaged in the strategic development of the Company than is normally the
case, and their fee compensation is low given their seniority.

Provision 35: Remuneration Consultant

At this time the committee does not make use of a remuneration consultant, but the committee
does make use of independent remuneration surveys when these become readily available.

Provision 36: The award of share options to Executive Directors

Options are granted by Board resolution in line with one or more of the three QED Share Option
Schemes, a Schedule 5 Enterprise Management Incentive Plan (“EMIP”), a Schedule 4 Company
Share Option Plan (“CSOP”) and an Unapproved Share Option Plan (“USOP”). The award of

Page 43

options is tightly linked to the delivery of long‑term objectives and corporate strategy. The views
of shareholders are taken into consideration.

Provision 37: Compensation Committee discretion

The committee retains an attitude of applying discretion when this is applicable regarding
outstanding individual performance.

Provision 38: Only basic salary to be pensionable

Only basic salary is pensionable and pension contribution rates for executive directors are in line
with those for other staff.

Provision 39: Contract periods and no reward for disappointing performance

The contracts for Executive Directors have no fixed end date. Bonuses to Executive Directors are
proposed by the Compensation Committee with the amount determined by a formula which
factors in both Company and individual performance.

Provision 40: Remuneration Policy Principles

Refer to Provision 41.

Provision 41: The work of the Compensation Committee

The committee works within the framework of a regularly reviewed compensation policy
approved by the Board. It meets at least twice a year and conducts performance appraisals of the
Company against previously determined corporate performance targets adopted by the Board.
External guidance is sought as necessary in setting the terms of senior executive compensation
including the award of bonuses and / or options.

In determining Executive Director compensation, the committee places considerable
importance on proportionality, clearly linking remuneration to the delivery of long‑term
objectives and corporate strategy. In designing remuneration policy, the committee has
endeavoured to incorporate the principles of clarity, simplicity, and predictability. As an external
measure, the committee refers to remuneration surveys of AIM companies of similar size and
complexity, when these are readily available. Shareholder views on compensation have been
expressed at the AGM and in other meetings, and the committee has taken these and the
company’s performance into account in its deliberations.

The Report on Directors’ Remuneration is on page 30.

The performance of the committee is reviewed annually by the board at large as more fully
described under Principle L above.

Laurence Mutch
Chairman of the Audit Committee
29 September 2023

Page 44

INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF QUADRISE PLC

Opinion

We have audited the financial statements of Quadrise Plc (the ‘parent company’) and its
subsidiaries (the ‘group’) for the year ended 30 June 2023 which comprise the Consolidated
Statement of Comprehensive Income, the Consolidated and Parent Company Statement of
Financial Position, the Consolidated and Parent Company Statements of Changes in Equity,
the Consolidated and Parent Company Statements of Cash Flows and notes to the financial
statements, including significant accounting policies. The financial reporting framework that
has been applied in their preparation is applicable law and UK‑adopted international accounting
standards and as regards the parent company financial statements, as applied in accordance
with the provisions of the Companies Act 2006.

In our opinion:

■ 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 2023 and of the group’s loss for the year then ended;

■ the group financial statements have been properly prepared in accordance with UK‑adopted

international accounting standards;

■ the parent company financial statements have been properly prepared in accordance with
UK‑adopted international accounting standards and as applied in accordance with the
provisions of the Companies Act 2006; and

■ the financial statements have been prepared in accordance with the requirements of the

Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK))
and applicable law. Our responsibilities under those standards are further described in the
Auditor’s responsibilities for the audit of the financial statements section of our report. We are
independent of the group and parent company in accordance with the ethical requirements that
are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard
as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance
with these requirements. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.

Material uncertainty related to going concern

We draw attention to note 3 in the financial statements, which indicates that the group and
parent company will need to raise additional funding within twelve months from the date of
approval of the financial statements in order to fund its ongoing working capital requirements.
As stated in note 3, these events or conditions indicate that a material uncertainty exists that may
cast significant doubt on the group and parent company’s ability to continue as a going concern.
Our opinion is not modified in respect of this matter.

Page 45

In auditing the financial statements, we have concluded that the director’s use of the going
concern basis of accounting in the preparation of the financial statements is appropriate.
Our evaluation of the directors’ assessment of the group and parent company’s ability to
continue to adopt the going concern basis of accounting included the following:

■ Obtaining the directors’ going concern assessment and evaluating the appropriateness of the

assessment;

■ Reviewing the budgets/cashflow forecasts which cover the period to 30 June 2025 and

challenging management’s basis for the underlying assumptions in the forecast, agreeing to
supporting documentation such as the review of post year end bank statements, management
accounts and regulatory news service announcements; and

■ Reviewing the adequacy of the disclosures in respect of going concern including the

uncertainties over the ability to raise additional funds.

Our responsibilities and the responsibilities of the directors with respect to going concern are
described in the relevant sections of this report.

In relation to the Company’s reporting on how it has applied the UK Corporate Governance Code,
we have nothing material to add or draw attention to in relation to:

■ The directors’ statement in the financial statements about whether the directors considered it

appropriate to adopt the going concern basis of accounting; and

■ The directors’ identification in the financial statements of the material uncertainty related to

the entity’s ability to continue as a going concern over a period of at least twelve months from
the date of approval of the financial statements.

Our responsibilities and the responsibilities of the directors with respect to going concern are
described in the relevant sections of this report.

Our application of materiality

The scope of our audit was influenced by our application of materiality.

The quantitative and qualitative thresholds for materiality determine the scope of our audit and
the nature, timing and extent of our audit procedures.

The materiality applied to the group financial statements was £75,000, based on 1.5% of the
group’s gross assets. Gross assets were selected as the benchmark this includes the intangible
assets (which includes the MSAR brand) and the technology for producing the emulsion fuel.
The materiality applied to the parent company financial statements was £56,200 which has been
assessed based on 1.5% of the parent company gross assets and capped below the overall group
materiality. Gross assets were selected as the benchmark for the parent company materiality
as the significant balance in the parent company financial statements is the investment in the
subsidiaries, which own the trade name MSAR upon which the Group’s business models relies.

We use performance materiality to reduce to an appropriately low level the probability that
the aggregate of uncorrected and undetected misstatements exceeds overall materiality.
Specifically, we use performance materiality in determining the scope of our audit and the
nature and extent of our testing of account balances, classes of transactions and disclosures.
The performance materiality for the group was £45,000 and £33,700 for the parent company,
being 60% of materiality for the financial statements as a whole.

Page 46

In determining performance materiality, we considered the following factors:

■ Our knowledge of the group and its environment, including industry specific trends;

■ Significant transactions during the year; and

■ The level of judgement required in respect of the key accounting estimates.

We agreed with the audit committee that we would report all audit differences identified during
the course of our audit in excess of £3,750 for group and £2,800 for parent company level, as well
as differences below that threshold that, in our view, warranted reporting on qualitative grounds.

We applied the concept of materiality in planning and performing our audit and in evaluating
the effect of misstatement. No significant changes have come to light during the audit which
required a revision of our materiality for the financial statements as a whole.

Our approach to the audit

Our audit is risk based and is designed to focus our efforts on the areas at greatest risk of
material misstatement, aspects subject to significant management judgement as well as
greatest complexity, risk and size.

As part of designing our audit, we determined materiality, as above, and assessed the risk of
material misstatement in the financial statements. In particular, we looked at areas involving
significant accounting estimates and judgement by the directors and considered future events
that are inherently uncertain. These areas of estimate and judgement included:

■ The valuation of intangible assets as In line with IAS 36, management is required to perform
an impairment assessment at each reporting end date to determine whether there is any
indication that those assets have suffered an impairment loss. This included the assessment
of key inputs such the future cash flow forecasts, discount rates, period and growth.

■ The recoverability of investments in subsidiary undertakings (including intercompany

receivable amounts). This included the assessment of key inputs such as future cash flow
forecasts, discount rates, period and growth;

■ The valuation of share based payments as there is complexity relating to the fair value

calculation of such arrangements, including the valuation methodology used and the key
inputs to such valuation models, which require management judgement. There is a risk that
these arrangements have not been accounted for in accordance with IFRS 2 “Share‑based
payments”.

We also addressed the risk of management override of internal controls, including among other
matters consideration of whether there was evidence of bias that represented a risk of material
misstatement due to fraud.

The scope of our audit was based on the significance of component’s operations and materiality.
Each component was assessed as to whether they were significant or not to the group by either
their size or risk.

Page 47

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most
significance in our audit of the financial statements of the current period and include the most
significant assessed risks of material misstatement (whether or not due to fraud) we identified,
including those which had the greatest effect on: the overall audit strategy, the allocation of
resources in the audit; and directing the efforts of the engagement team. These matters were
addressed in the context of our audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matter

How our scope addressed this matter

Valuation of intangible assets (Note 11)

Our audit work in this area included:

The Group holds £2.92m of intangible
assets relating to the MSAR® trade
name from which currently no revenue
is being generated.

■ Considering whether any impairment indicators

have been triggered;

■ Obtaining and reviewing the Board approved

impairment papers in respect of intangible assets;

In line with IAS 36, management is
required to perform an impairment
assessment at each reporting end
date to determine whether there is
any indication that those assets have
suffered an impairment loss.

This is considered to be a key audit
matter due to the judgement and
estimation required by management in
making this assessment.

Valuation of investments (Including
intercompany receivables) – Parent
company (Note 12)

There is a risk of material misstatement
regarding the recoverability of
investments in subsidiaries (including
intercompany receivables i.e. the net
investment in each subsidiary) and
other equity investments, which are not
yet revenue producing.

■ Checking the mathematical accuracy of the

discounted cash flow forecasts used within the
impairment papers;

■ Challenging management on the key assumptions

underlying the cash flow forecasts used in the
impairment assessments (basis of future cash flow
estimates, growth rates and discount rate) and
using our own internal experts to verify the discount
rate used for reasonableness;

■ Evaluating the reasonableness of the cash flow
forecasts and projections in the model through
comparison to actual and prior period performance;

■ Performing sensitivity analysis’ on the key

assumptions and management judgements used
within the models; and

■ Considering whether any other indicators of
impairment are present under IAS 36 having
reference to internal and external factors.

Our audit work in this area included:

■ Reviewing the value of investment balances against

the value of the underlying assets;

■ Obtaining evidence of ownership for all
investments held within the Group;

Page 48

Key audit matter

How our scope addressed this matter

■ Reviewing management’s impairment paper
in respect of the recoverability of investment
balances (including Intragroup receivables at the
parent level) and providing appropriate challenges,
corroborating any key assumptions used (Such as
discount rate, cashflow projections, growth rates,
period); and

■ Considering whether any other indicators of
impairment are present under IAS 36 having
reference to internal and external factors.

The Group’s business model relies upon
the assets held by QIL – intangible
assets, patents and trademarks. The
recoverable amount of the investment
in QIL is therefore determined by
calculation of the net present value
(‘NPV’) of the forecast cashflows
produced by the Group’s business
model, which is regularly reviewed
by management. The basis for the
inclusion of projects and the estimation
of growth rates, margins and project
lifespans within the business model
is based on the latest agreements
with counterparties, commodity and
chemical prices and the most recent
discussions with customers, suppliers
and other business partners.

This is considered to be a key audit
matter due to the judgement and
estimation required by management in
making this assessment.

Other information

The other information comprises the information included in the annual report, other than the
financial statements and our auditor’s report thereon. The directors are responsible for the other
information contained within the annual report. Our opinion on the group and parent company
financial statements does not cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our knowledge obtained
in the course of the audit, or otherwise appears to be materially misstated. If we identify such
material inconsistencies or apparent material misstatements, we are required to determine
whether this gives rise to a material misstatement in the financial statements themselves. If,
based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

■ 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; and

■ the strategic report and the directors’ report have been prepared in accordance with

applicable legal requirements.

Page 49

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the parent company
and their environment obtained in the course of the audit, we have not identified material
misstatements in the strategic report or the directors’ report.

We have nothing to report in respect of the following matters in relation to which the Companies
Act 2006 requires us to report to you if, in our opinion:

■ 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

■ the parent company financial statements are not in agreement with the accounting records

and returns; or

■ certain disclosures of directors’ remuneration specified by law are not made; or

■ we have not received all the information and explanations we require for our audit.

Corporate governance statement

We have reviewed the directors’ statement in relation to going concern, longer‑term viability and
that part of the Corporate Governance Statement relating to the company’s compliance with the
provisions of the UK Corporate Governance Code specified for our review by the Listing Rules.

Based on the work undertaken as part of our audit, we have concluded that each of the
following elements of the Corporate Governance Statement is materially consistent with the
financial statements or our knowledge obtained during the audit:

■ Directors’ statement with regards the appropriateness of adopting the going concern basis of

accounting and any material uncertainties identified set out on page 42;

■ Directors’ explanation as to their assessment of the entity’s prospects, the period this

assessment covers and why the period is appropriate set out on page 17;

■ Directors’ statement on whether they have a reasonable expectation that the company will be

able to continue in operation and meet its liabilities set out on page 16;

■ Directors’ statement that they consider the annual report and the financial statements, taken

as a whole, to be fair, balanced and understandable set out on page 42;

■ Board’s confirmation that it has carried out a robust assessment of the emerging and

principal risks set out on page 42;

■ The section of the annual report that describes the review of effectiveness of risk

management and internal control systems set out on page 42; and

■ The section describing the work of the audit committee set out on page 41.

Responsibilities of directors

As explained more fully in the directors’ responsibilities statement, the directors are responsible
for the preparation of the group and parent company financial statements and for being
satisfied that they give a true and fair view, and for such internal control as the directors
determine is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.

Page 50

In preparing the group and parent company financial statements, the directors are responsible
for assessing the group and the parent company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the group or the parent company or to
cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as
a whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance
but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect
a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these financial statements.

Irregularities, including fraud, are instances of non‑compliance with laws and regulations.
We design procedures in line with our responsibilities, outlined above, to detect material
misstatements in respect of irregularities, including fraud. The extent to which our procedures are
capable of detecting irregularities, including fraud is detailed below:

■ We obtained an understanding of the group and parent company and the sector in which they
operate to identify laws and regulations that could reasonably be expected to have a direct
effect on the financial statements. We obtained our understanding in this regard through
discussions with management about the potential instances of non‑compliance with laws and
regulations.

■ We determined the principal laws and regulations relevant to the group and parent company

in this regard to be those arising from:

The Companies Act 2006;

o AIM Rules; and

Local tax and employment law in the UK

■ We designed our audit procedures to ensure the audit team considered whether there were
any indications of non‑compliance by the group and parent company with those laws and
regulations. These procedures included, but were not limited to:

o Conducting enquiries of management regarding potential instances of non‑compliance;

o Reviewing Regulatory News Service (RNS) announcements;

o Reviewing legal and professional fees ledger accounts; and

o Reviewing board minutes and other correspondence from management.

Page 51

■ We also identified the risks of material misstatement of the financial statements due to fraud.
We considered, in addition to the non‑rebuttable presumption of a risk of fraud arising from
management override of controls, whether key management judgements could include
management bias. The potential for bias was identified in relation to the following:

o Valuation of intangible assets

o Recoverability of investment in subsidiaries and intercompany balances

The valuation of share based payments

■ As in all of our audits, we addressed the risk of fraud arising from management override of

controls by performing audit procedures which included, but were not limited to: the testing
of journals; reviewing accounting estimates for evidence of bias; and evaluating the business
rationale of any significant transactions that are unusual or outside the normal course of
business.

Because of the inherent limitations of an audit, there is a risk that we will not detect all
irregularities, including those leading to a material misstatement in the financial statements
or non‑compliance with regulation. This risk increases the more that compliance with a law or
regulation is removed from the events and transactions reflected in the financial statements,
as we will be less likely to become aware of instances of non‑compliance. The risk is also greater
regarding irregularities occurring due to fraud rather than error, as fraud involves intentional
concealment, forgery, collusion, omission or misrepresentation.

A further description of our responsibilities for the audit of the financial statements is located
on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor’s report.

Use of our report

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.

Joseph Archer (Senior Statutory Auditor)
For and on behalf of PKF Littlejohn LLP
Statutory Auditor

15 Westferry Circus
Canary Wharf
London E14 4HD

29 September 2023

Page 52

CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 JUNE 2023

Notes

Year ended
30 June 2023
£’000s

Year ended
30 June 2022
£’000s

Continuing operations

Revenue

Production and development costs

Other administration expenses

Share option (charge)/credit

Warrant charge

Foreign exchange (loss)/gain

Operating loss

Finance costs

Finance income

Loss before tax

Taxation

Loss and total comprehensive loss for the year from
continuing operations to owners of the parent

Loss per share – pence

Basic

Diluted

(1,741)

(1,331)

(178)

(6)

(1,447)

(1,419)

(18)

(3,256)

(2,760)

(4)

(3)

(3,248)

(2,762)

154

164

(3,094)

(2,598)

(0.22)

(0.18)

Page 53

CONSOLIDATED STATEMENT
OF FINANCIAL POSITION

AS AT 30 JUNE 2023

Company No. 05267512

Notes

As at
30 June 2023
£’000s

As at
30 June 2022
£’000s

Assets

Non-current assets

Property, plant and equipment

Intangible assets

Non-current assets

Current assets

Cash and cash equivalents

Trade and other receivables

Prepayments

Inventory

Current assets

TOTAL ASSETS

Equity and liabilities

Current liabilities

Trade and other payables

Current liabilities

Equity attributable to owners of the parent

Issued share capital

Share premium

Merger reserve

Share option reserve

Warrant reserve

Reverse acquisition reserve

Accumulated losses

Total shareholders’ equity

TOTAL EQUITY AND LIABILITIES

374

2,924

3,298

398

2,924

3,322

1,342

4,423

119

174

1,724

5,022

175

14,069

77,189

3,777

718

522

103

177

4,703

8,025

262

14,069

77,189

3,777

1,151

970

522

(91,428)

(89,915)

4,847

5,022

7,763

8,025

The financial statements, accompanying policies and notes 1 to 27 (forming an integral part
of these financial statements), were approved and authorised for issue by the Board on
29 September 2023 and were signed on its behalf by:

A. Morrison
Chairman

J. Miles
Director

Page 54

CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2023

Issued
capital
£’000s

Share
premium
£’000s

Merger
reserve
£’000s

Share
option
reserve
£’000s

Warrant
reserve
£’000s

Reverse
acquisition
reserve
£’000s

Accumulated
losses
£’000s

Total
£’000s

1 July 2021

14,069 77,189 3,777 3,344

1,017

522

(89,531)

10,387

Loss and total
comprehensive loss for the
year

Share option charge

Transfer of balances
relating to expired share
options

Warrant charge

Transfer of balances
relating to expired
warrants

(44)

(2,149)

(65)

(2,598)

(44)

2,149

30 June 2022

14,069 77,189 3,777

1 July 2022

14,069 77,189

3,777

Loss and total
comprehensive loss for the
year

Share option charge

Transfer of balances
relating to expired share
options

Transfer of balances
relating to expired
warrants

1,151

178

(611)

(970)

970

522

(89,915)

7,763

(89,915)

7,763

(3,094)

611

970

178

30 June 2023

14,069 77,189 3,777

718

522

(91,428) 4,847

For an explanation of the nature and purpose of other reserves refer to note 20.

Page 55

CONSOLIDATED STATEMENT OF
CASH FLOWS

FOR THE YEAR ENDED 30 JUNE 2023

Operating activities

Loss before tax from continuing operations

(3,248)

(2,762)

Notes

Year ended
30 June 2023
£’000s

Year ended
30 June 2022
£’000s

Depreciation

Finance costs paid

Finance income received

Share option charge/(credit)

Warrant charge

Working capital adjustments

Decrease in trade and other receivables

Decrease/(increase)in prepayments

Decrease in trade and other payables

(Increase)/decrease in inventory

Cash utilised in operations

Finance costs paid

Taxation received

Net cash outflow from operating activities

Investing activities

Finance income received

Purchase of property, plant and equipment

Net cash outflow from investing activities

Net decrease 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

119

(12)

178

(87)

(174)

120

(1)

(44)

(82)

(14)

(3,148)

(2,687)

(4)

154

(3)

164

(2,998)

(2,526)

(95)

(83)

(3,081)

4,423

1,342

(58)

(57)

(2,583)

7,006

4,423

Page 56

COMPANY STATEMENT OF
FINANCIAL POSITION

AS AT 30 JUNE 2023

Company No. 05267512

Notes

As at
30 June 2023
£’000s

As at
30 June 2022
£’000s

Assets

Non-current assets

Property, plant and equipment

Investments in subsidiaries

Amount due from subsidiary

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

Amount due to subsidiary

Current liabilities

Equity attributable to equity holders of the parent

Issued capital

Share premium

Merger reserve

Share option reserve

Warrant reserve

Accumulated losses

Total shareholders’ equity

TOTAL EQUITY AND LIABILITIES

21,479

28,801

50,291

21,479

26,109

47,589

1,090

4,086

1,204

51,495

7,666

7,743

14,069

77,189

3,777

718

(52,001)

43,752

51,495

4,197

51,786

148

7,666

7,814

14,069

77,189

3,777

1,151

970

(53,184)

43,972

51,786

The loss for the year dealt within the accounts of Quadrise plc was £0.4m (2022: income of £0.02m).

A. Morrison
Chairman

J. Miles
Director

Page 57

COMPANY STATEMENT OF
CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2023

Issued
capital
£’000s

Share
premium
£’000s

Merger
reserve
£’000s

Share
option
reserve
£’000s

Warrant
reserve
£’000s

Accumulated
losses
£’000s

Total
£’000s

1 July 2021

14,069 77,189

3,777

3,344

1,017

(55,421) 43,975

Income and total comprehensive
income for the year

Share option credit

Transfer of balances relating to
expired share options

Warrant charge

Transfer of balances relating to
expired warrants

(44)

(2,149)

(65)

(44)

2,149

30 June 2022

1 July 2022

14,069 77,189 3,777

14,069 77,189

3,777

Loss and total comprehensive loss
for the year

Share option charge

Transfer of balances relating to
expired share options

Transfer of balances relating to
expired warrants

970

(53,184) 43,972

(398)

1,151

178

(611)

611

178

(970)

970

30 June 2023

14,069 77,189 3,777

718

(52,001) 43,752

Page 58

COMPANY STATEMENT OF
CASH FLOWS

FOR THE YEAR ENDED 30 JUNE 2023

Notes

Year ended
30 June 2023
£’000s

Year ended
30 June 2022
£’000s

Operating activities

(Loss)/income before tax from continuing operations

Depreciation

Finance income received

Share option (credit)/charge

Warrant charge

Working capital adjustments

Decrease in trade and other receivables

(Increase)/decrease in prepayments

Decrease in trade and other payables

Net cash (used in)/generated by operating activities

Investing activities

Finance income received

Purchase of property, plant and equipment

Loan to subsidiary

Net cash outflow from investing activities

Net decrease 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

(398)

(12)

178

(5)

(71)

(305)

(11)

(2,692)

(2,691)

(2,996)

4,086

1,090

(1)

(44)

(13)

(2,465)

(2,464)

(2,455)

6,541

4,086

Page 59

NOTES TO THE FINANCIAL
STATEMENTS

1. General Information

Quadrise plc (“QED”, “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.

QED 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, Eastcastle
House, 27-28 Eastcastle Street, London,
W1W 8DH.

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 UK adopted international
accounting standards in conformity with the
requirements of the Companies Act 2006 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.

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 2023.

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 QED, 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 QED demonstrates control when it has all
the following:

■

power over the investee;

■

exposure, or rights, to variable returns from
its involvement with the investee; and

the ability to use its power over the investee
to affect the amount of the investor’s
returns.

(2.3) Changes in Accounting Principles and
Adoption of New and Revised Standards

Other

The Group does not expect any other
standards issued by the IASB, but not yet
effective, to have a material impact on the
group. The Directors do not expect that the
adoption of new standards will have a material
impact on the financial statements of the
Group in future periods.

Page 60

(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:

Intangible Assets (see note 11)

The recoverable amount of the MSAR® trade
name intangible asset has been determined
using a VIU model. The expected future cash
flows utilised in the VIU model are derived
by quantifying the royalties that would result
if the asset was licensed from a third party
in order to determine the income stream
directly attributable to the asset in isolation.
The royalties are based on a percentage of
projected future revenues up to 30 June
2033 with an assumed growth rate being
used beyond that date. The key assumptions
used by management in this VIU model are
a) royalty rate, b) discount rate, c) the period
over which cashflows are forecast d) the
growth rate beyond that period. The basis for
the assumptions used is discussed further in
note 11.

The carrying value of intangible assets at
30 June 2023 is determined to be £2.9m (2022:
£2.9m). Further details are given in Note 11.

Estimates of credit losses (‘ECL’) (see note 13)

Management makes judgement in relation
to the future recoverability of receivables. In
relation to the parent Company there is a net
substantial loan to subsidiaries. Management
has used the ‘General Approach’ guidance
as noted in IFRS 9 to make judgements in
relation to the future risk of default and the
ability of the subsidiary to raise the funds
necessary to repay the loan in the event that
it was called due. Inherent in this model are

a number of judgements. Management have
estimated that a provision was required of
£1.24m at 30 June 2023 (2022: £621k).

Under the General Approach, at each reporting
date, entities are required to determine whether
there has been a Significant Increase in Credit
Risk (SICR) since initial recognition and whether
the loan is credit impaired. This determines
whether the loan is in Stage 1, Stage 2 or
Stage 3, which in turn determines both:

■

The amount of ECL to be recognised:
12-month ECL or Lifetime ECL; and

The amount of interest income to be
recognised in future reporting periods: EIR
based on gross carrying amount of the loan
which excludes ECL or the net carrying
amount (i.e. the amortised cost) which
includes ECL.

Lifetime ECL are the ECL that result from all
possible default events over the expected
life of the loan whereas 12-month ECL are a
portion of Lifetime ECL that represent the
ECL that result from default events that are
possible within 12 months of the reporting
date. For loans with an expected life in excess
of 12 months, Lifetime ECL will typically be
greater than 12-month ECL because entities
will need to factor in all possible default
event rather than only those possible within
12 months.

(2.5) Revenue Recognition

Under IFRS 15, revenue is recognised based on
the delivery of performance obligations and an
assessment of when control is transferred to
the customer. In determining the amount of
revenue and profits to record, and associated
statement of financial position items (such
as trade receivables, accrued income and
deferred income), management is required
to review performance obligations within
individual contracts.

Page 61

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Revenue is recognised to depict the transfer
of promised goods or services to the customer
in an amount that reflects the consideration
to which the entity expects to be entitled in
exchange for those goods or services.

Interest income

Revenue is recognised as interest accrues.

(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 uses Sterling as 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. 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:

Statement
of Financial
Position
(closing rate at
30 June 2023)

Statement of
Comprehensive
Income
(average rate
throughout the
financial year)

ISO Code

USA

Europe

USA

EUR

1.266

1.163

1.208

1.151

(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.

On 18 April 2006, Zareba plc (renamed
Quadrise 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 plc. Accordingly,
the substance of the combination was that
Quadrise International Limited acquired
Quadrise 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 amortisation expense on

Page 62

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.

(2.12) Financial liabilities and equity
instruments

Financial assets and financial liabilities are
recognised when a Company becomes a party
to the contractual provisions of the instruments.

■

Initial Recognition: Financial assets and
financial liabilities are initially measured at
fair value. Transaction costs that are directly
attributable to the acquisition or issue of
financial assets and financial liabilities
(other than financial assets and financial
liabilities at fair value through profit or loss
and ancillary costs related to borrowings)
are added to or deducted from the fair value
of the financial assets or financial liabilities,
as appropriate, on initial recognition.
Transaction costs directly attributable to the
acquisition of financial assets or financial
liabilities at fair value through profit or loss
are charged to the Statement of Profit and
Loss over the tenure of the financial assets or
financial liabilities.

Classification as debt or equity: Debt and
equity instruments issued by the Company
are classified as either financial liabilities or
as equity in accordance with the substance
of the contractual arrangements and the
definitions of a financial liability and an
equity instrument. An equity instrument
is any contract that evidences a residual
interest in the assets of an entity after
deducting all of its liabilities. Equity
instruments issued by a Company are
recognised at the proceeds received.

■

Classification and Subsequent
Measurement: Financial liabilities are
classified as either financial liabilities at
FVTPL or ‘other financial liabilities’.

Page 63

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

The Company de-recognises financial
liabilities when and only when, the Company’s
obligations are discharged, cancelled or have
expired. The difference between the fair value
amount of the financial liability de-recognised
and the consideration paid and payable is
recognised in the Statement of Profit and Loss.

Fair value measurement

The fair value measurement of the Group’s
financial liabilities utilises market observable
inputs and data as far as possible.

Inputs used in determining fair value
measurements are categorised into different
levels based on how observable the inputs used
in the valuation technique utilised are (the ‘fair
value hierarchy’): - Level 1: Quoted prices in active
markets for identical items (unadjusted) - Level 2:
Observable direct or indirect inputs other than
Level 1 inputs - Level 3: Unobservable inputs
(i.e. not derived from market data).

The classification of an item into the above
levels is based on the lowest level of the inputs
used that has a significant effect on the fair
value measurement of the item. Transfers of
items between levels are recognised in the
period they occur.

(2.13) Investments and other Financial Assets

Subsequent to the initial recognition, trade
and other receivables in the Group accounts
and the loan receivable in the Company
accounts are measured at amortised cost
using the effective interest method. These
assets arise principally from the provision
of goods and services to customers (e.g.
trade receivables), but also incorporate other
types of financial assets where the objective
is to hold these assets in order to collect
contractual cash flows and the contractual
cash flows are solely payments of principal and
interest. They are initially recognised at fair
value plus transaction costs that are directly

attributable to their acquisition or issue, and
are subsequently carried at amortised cost
using the effective interest rate method, less
provision for impairment.

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.

Equity instruments

Following the introduction of IFRS 9, the Group
subsequently measures all equity investments
at fair value. Changes in the fair value of
financial assets is recognised in the statement
of profit or loss as applicable.

Investments, where there is no active market
are held at fair value, are determined using
valuation techniques which include using
recent arm’s length market transactions,
reference to the current market value,
discounted cash flow analysis and option
pricing models.

(2.14) 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.

Page 64

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.

(2.15) 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.

(2.16) 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.

(2.17) Inventories

Inventories are stated at the lower of cost and
net realisable value. Net realisable value is the
estimated selling price in the ordinary course of
business, less the estimated costs of completion
and selling expenses. In determining the cost
of raw materials, consumables and goods
purchased for resale, the weighted average

purchase price is used. The cost of finished
goods and work in progress comprises design
costs, raw materials, direct labour, other direct
costs and related production overheads (based
on normal operating capacity) but excludes
borrowing costs. For work in progress and
finished goods manufactured by the Group,
cost is taken as production cost, which includes
an appropriate proportion of attributable
overheads.

Inventories as at 30 June 2023 relate to MSAR
and bioMSAR fuel (2022: no inventories held.)

(2.18) 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:

■

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;

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

Page 65

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

■

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 profit or loss or other
comprehensive income as appropriate.

(2.19) Employee Retirement Benefits

The Group maintains a defined contribution
pension plan for providing employee
retirement benefits. The retirement benefit
plan is generally funded by contributions
from the Group to an independent entity
that operates the retirement benefit
schemes. Current service cost for the defined
contribution plan 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.

(2.20) 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. 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. If equity settled transactions
are not expected to vest as at the reporting date,
then the cumulative expense recognised in the
statement of comprehensive income up to the
reporting date will be reversed. 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.

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.

Page 66

(2.21) Warrants

Warrants are recognised at fair value on date
of grant. The fair value is measured using the
Black-Scholes model. Where warrants are
issued in exchange for services, under IFRS 2
they are expensed on a straight line basis over
the vesting period. Warrants issued as part of
an equity based fundraising fulfil the criteria
to be recognised as an equity instrument
under IAS 32, with the fair value recorded
in the warrants reserve and recognised in
Share Premium.

(2.22) 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, 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.

3. Going Concern

The Group had a cash balance of £1.34m as
of 30 June 2023. In July 2023, the Company
raised funds of £1.94 million (before expenses)
via a Placing and subsequent Open Offer.
These funds are expected to be sufficient to
cover net project expenditure and fixed costs

up to H2 2024. Additional funding will be
required to bridge the gap to the generation of
sustainable positive cashflows, with these now
forecast to commence in H2 2025.

The basis for these expectations is the Group
business model, budget and business plan,
and sensitivity analysis, which have been
reviewed and approved by the Board. The
model comprises the financial forecasts
associated with each project opportunity
deemed to have a realistic chance of
progressing, with assumptions based on the
latest market information, agreements with
counterparties and the status of discussions.

The Directors carry out a detailed risk
assessment process each year, with key risks
and mitigating actions identified. Despite the
ongoing global disruption caused by Russia’s
invasion of Ukraine, the Directors note the
positive and sustained levels of engagement
with partners, prospective clients and project
stakeholders worldwide during the year,
with progress continuing with regard to
the Company’s primary projects with MSC,
Valkor and the client in Morocco. Existing
and prospective commercial partners make
decisions based on long-term considerations,
and the Directors believe that the economic
and environmental advantages offered by
MSAR® and bioMSARTM are increasingly
attractive in periods of global uncertainty as
counterparties look to both generate savings
and further improve their environmental
performance.

The Group’s ability to reach commercial
revenues and sustainable positive cashflows
will be determined by the successful outcome
of the forthcoming trials. The Board are
confident that the trials will be successful
based upon the following:

■ Morocco: The trial in Morocco involves
the combustion of MSAR® for power

Page 67

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

generation. This is a similar application to
that successfully trialled by Quadrise at
the Orlen Lietuva plant in Lithuania in 2011,
where MSAR® was consumed in a power
plant boiler to generate electricity.

■ MSC: The MSC trials will take place on the
same vessel used for the Maersk LONO
trial (the MSC Leandra, formerly the
Seago Istanbul). In addition, the engine
manufacturer (Wartsila) and MSC are happy
to proceed directly to on-vessel trials, rather
than commencing with an initial stationary
engine test, given their assessment of the
low-risk nature of the trial.

■ Utah: The Utah application is in the

upstream sector, where similar technology
has been successfully demonstrated
previously by Quadrise Canada.

In addition, the positive results generated by
the Aquafuel testing on bioMSAR™ and the
similar properties of MSAR® and bioMSAR™
mean that trials involving bioMSAR™ do not
have a significantly higher risk of failure than
the MSAR® equivalents.

The Directors have reviewed both the Group
and Company’s ability to operate as a going
concern up to the 31 December 2024, and
have determined that the continuation of
the Group and Company as a going concern
will be dependent upon successfully raising
sufficient funds within 12 months of the
financial statements sign off date to bridge
the gap between the exhaustion of existing
funds and the generation of sustainable
positive cashflows. The Company is the 100%
parent of Quadrise International Limited (‘QIL’),
the subsidiary through which the Group runs
the operating and project activities discussed
above. The Directors have a reasonable
expectation that with positive trial results and
ongoing progress to commercial revenues,

such funds will be raised, although no binding
funding agreements are in place at the date
of this report, furthermore, notwithstanding
the Board’s confidence, there are currently
no binding agreements in place in respect of
commercial revenues.

The Directors have therefore concluded that
it is appropriate to prepare the Group and
Company financial statements on a going
concern basis; however, in the absence of
additional funding being in place at the date
of this report, these conditions indicate the
existence of a material uncertainty which may
cast significant doubt over the Group’s ability
to continue as a going concern and, therefore,
that it may be unable to realise its assets and
discharge its liabilities in the normal course of
business. The audit report on pages 45 to 52
draws attention to going concern by way of a
material uncertainty.

The financial statements do not include the
adjustments that would result if the Group
and Company were unable to continue as a
going concern.

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 only geographical segment
during the year was the UK.

Page 68

5. 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

Research and development costs

6. 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 2023
£’000s

Year ended
30 June 2022
£’000s

205

119

595

211

120

326

Year ended
30 June 2023
Number

Year ended
30 June 2022
Number

Year ended
30 June 2023
£’000s

Year ended
30 June 2022
£’000s

904

110

1,074

836

101

994

Page 69

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Included in total staff costs are the costs of the Executive Directors as employed by the Company
as follows:

Director

Jason Miles

Wages and salaries – as paid

Pension costs

Mike Kirk1

Wages and salaries - as paid

Pension costs

Mark Whittle2

Wages and salaries - as paid

Pension costs

Year ended
30 June 2023
£’000s

Year ended
30 June 2022
£’000s

271

281

251

261

Total

281

354

Aggregate emoluments of the Directors of the Company (excluding social security costs) were as
follows:

Salaries and fees – as paid

Share option expense

Pension costs

Total

1 Resigned 25 November 2021

2 Resigned 16 July 2022.

423

115

548

454

(86)

385

Non-executive Directors fees for the year amounted to £152k (2021: £117k).

The highest paid Director’s remuneration totalled £281k (2021: £261k), represented by all aggregate
emoluments.

Refer to the Report of Directors’ Remuneration (on page 30) 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 23 – Related
Party Transactions.

Page 70

7. Losses Attributable to Quadrise plc

As provided by s.408 of the Companies Act 2006, no statement of comprehensive income is
presented in respect of Quadrise plc.

8. Taxation

UK corporation tax credit

Total

Year ended
30 June 2023
£’000s

Year ended
30 June 2022
£’000s

(154)

(164)

No liability in respect of corporation tax arises as a result of trading losses.

Tax Reconciliation

Loss on continuing operations before taxation

Loss on continuing operations before taxation multiplied by the UK
corporation tax rate of 20.5% (2022: 19%)

Effects of:

Non-deductible expenditure

Super deduction

R&D tax credit

Non-taxable income

Temporary differences

Tax losses carried forward

Total taxation credit on loss from continuing operations

Year ended
30 June 2023
£’000s

Year ended
30 June 2022
£’000s

(3,248)

(666)

(2,762)

(525)

(3)

(154)

631

(154)

(4)

(164)

(10)

532

(164)

The Group has tax losses arising in the UK of approximately £62.10m (2022: £59.97m) that are
available, under current legislation, to be carried forward against future profits. However, the
ability to utilise the losses is restricted, being dependant on the type of loss and when it arose.
The use of losses under the UK corporation tax regime was reformed from 1 April 2017 such
that different rules on the use of losses apply to losses arising pre-April 2017 and post-April
2017. Pre-2017 trading losses can only be deducted against profits of the same trade within the
company in which they arose, whereas the post-2017 trading losses can be used more widely and
are deductible against total profits of the group.

Page 71

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Reconciliation of tax losses

Trading losses

Non-trade deficits arising in Intangible Assets within Quadrise
International Limited

Management expenses incurred by Quadrise International Limited

Non-trade loan relationships

Capital losses

Total

Year ended
30 June 2023
£’000s

Year ended
30 June 2022
£’000s

36,255

33,215

25,758

817

62,101

59,968

A deferred tax asset representing these losses and other temporary differences at the statement
of financial position date of approximately £15.53m (2022: £14.99m) has not been recognised as
a result of existing uncertainties in relation to its realisation.

9. 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 2023

Year ended
30 June 2022

(3,094)

(2,598)

1,406,904,968

1,406,904,000

1,406,904,968

1,406,904,000

(0.22)p

(0.18)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 18.3m 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.

Page 72

10. Property, plant and equipment

Consolidated

Cost

Opening balance – 1 July 2022

Additions

Disposals

Closing balance – 30 June 2023

Depreciation

Opening balance – 1 July 2022

Depreciation charge for the year

Disposals

Leasehold
Improve-
ments
£’000s

Computer
Equipment
£’000s

Furniture
and Office
Equipment
£’000s

Plant and
machinery
£’000s

Software
£’000s

Total
£’000s

(1)

1,440

1,682

(1)

1,524

1,776

(76)

(3)

(90)

(2)

(43)

(16)

(1,059)

(1,284)

(114)

(119)

Closing balance – 30 June 2023

(79)

(91)

(43)

(16)

(1,173)

(1,402)

Net book value at 30 June 2023

351

374

Company

Leasehold
Improve-
ments
£’000s

Computer
Equipment
£’000s

Furniture
and Office
Equipment
£’000s

Plant and
machinery
£’000s

Software
£’000s

Total
£’000s

Cost

Opening balance – 1 July 2022

Additions

Disposals

Closing balance – 30 June 2023

Depreciation

Opening balance – 1 July 2022

Depreciation charge for the year

Disposals

Closing balance – 30 June 2023

Net book value at 30 June 2023

(1)

(66)

(44)

(16)

(1)

(66)

(44)

(16)

127

(1)

137

(126)

(1)

(126)

Page 73

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Property, plant and equipment

Consolidated

Cost

Opening balance – 1 July 2021

Additions

Disposals

Closing balance – 30 June 2022

Depreciation

Opening balance – 1 July 2021

Depreciation charge for the year

Disposals

Leasehold
Improve-
ments
£’000s

Computer
Equipment
£’000s

Software
£’000s

Office
Equipment
£’000s

Plant and
machinery
£’000s

Total
£’000s

(74)

(2)

(4)

(92)

(2)

1,397

1,628

(4)

1,440

1,682

(43)

(16)

(943)

(1,168)

(116)

(120)

Closing balance – 30 June 2022

(76)

(90)

(43)

(16)

(1,059)

(1,284)

Net book value at 30 June 2022

381

398

Company

Leasehold
Improve-
ments
£’000s

Computer
Equipment
£’000s

Software
£’000s

Office
Equipment
£’000s

Plant and
machinery
£’000s

Total
£’000s

Cost

Opening balance – 1 July 2021

Additions

Disposals

Closing balance – 30 June 2022

Depreciation

Opening balance – 1 July 2021

Depreciation charge for the year

Disposals

Closing balance – 30 June 2022

Net book value at 30 June 2022

(4)

(69)

(44)

(16)

(1)

(66)

(44)

(16)

131

(4)

127

(129)

(1)

(126)

Page 74

11. Intangible Assets

Consolidated

Cost

Balance as at 1 July 2022 and
30 June 2023

Amortisation and Impairment

Balance as at 1 July 2022 and
30 June 2023

QCC royalty
payments
£’000s

MSAR®
trade name
£’000s

Technology and
know-how
£’000s

Total
£’000s

7,686

3,100

25,901

36,687

(7,686)

(176)

(25,901)

(33,763)

Net book value as at 30 June 2023

2,924

Cost

Balance as at 1 July 2020 and
30 June 2022

Amortisation and Impairment

Balance as at 1 July 2020 and
30 June 2022

7,686

3,100

25,901

36,687

(7,686)

(176)

(25,901)

(33,763)

Net book value as at 30 June 2022

2,924

Intangible assets comprise intellectual property with a cost of £36.7m, including assets of finite
and indefinite life. Quadrise Canada Corporation’s (“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, as they arise from cashflows resulting from Quadrise and QCC
gaining a permanent market share. The assets with indefinite life are not amortised, but the QCC
royalty payments intangible asset became fully impaired in 2012.

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, being fully
amortised in 2012. The Group does not have any internally generated intangibles.

MSAR® trade name intangible asset

In accordance with IAS 36 “impairment of assets” and IAS 38 “intangible assets”, a review of
impairment for indefinite life intangible assets is undertaken annually or at any time an indicator
of impairment is considered to exist. The discount rate applied to calculate the present value
is for the cash generating unit (“CGU”). A CGU is the smallest identifiable group of assets that
generates cash inflows that are largely independent of the cash inflows from other assets or
groups of assets. The recoverable amount of the CGU is assessed by reference to the value in use
(“VIU”), being the net present value (“NPV”) of future cash flow expected to be generated by the
asset, and fair value less costs to sell (“FVLCS”).

Page 75

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

The key assumptions used in this calculation are as follows:

Royalty rate (% of projected revenue)1

Discount rate2

Revenues forecast up to3

Growth rate beyond forecast period4

2023

0.5%

20%

2022

0.5%

20%

30 June 2033

30 June 2032

The royalty rate used upon initial recognition of this intangible asset was 0.33% of revenues
determined as part of a third-party intangible asset valuation exercise. This was increased to
0.5% of revenues from 2011 onwards to reflect the wider awareness of the MSAR® trademark in
the market.

The discount rate of 20% has been determined by management as conservative estimate
based on the uncertainty inherent in the revenue forecasts. 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.

The 2023 revenue forecast extends to 30 June 2033 which is considered to be a reasonable
timeframe that allows each project included within the forecast to reach full maturity.

No growth has been forecast beyond the forecast period due to the uncertainty inherent in
the revenue projections beyond the stage of project maturity.

The revenue forecast is based on the latest Company business model, which is regularly
reviewed by management. The basis for the inclusion of projects and the estimation of growth
rates, margins and project lifespans within the business model is based on the latest agreements
with counterparties, commodity and chemical prices and the most recent discussions with
customers, suppliers and other business partners.

The ‘base-case’ impairment assessment based on the above inputs shows a recoverable amount
for the asset that is in excess of the net book value of asset and therefore no impairment has
been identified, with the VIU exceeding the carrying value by £1.48m (the ‘headroom’).

Management have performed sensitivity analyses whereby certain parameters were flexed
downwards by reasonable amounts and certain scenarios were modelled for the CGU to assess
whether the recoverable value would result in an impairment charge. In isolation, none of these
scenarios would result in an impairment to the MSAR® Trade Name intangible asset. However,
a combination of two or more of these scenarios could result in an impairment charge, but
management do not consider this likely.

Page 76

The following sensitivities were applied:

Results of sensitivity analysis

Scenario

Delayed revenues (1 year)

Delayed revenues (2 years)

Resulting headroom
(£’m)

Scenario which would reduce headroom to nil

1.32

A 3 year delay to forecast revenues.

0.61

A 3 year delay to forecast revenues.

Increase in discount rate to 25%

0.46

Increase in discount rate to 26.95%.

Removal of projects which generate
25% of forecast revenues

Finite company lifespan (to 30 June 2035)

Amortisation of Intangible Assets

0.89

0.71

Removal of projects which
generate 42% of revenues.

Finite company lifespan
(to 30 June 2033).

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 2023.

12. Investments

At the statement of financial position date, the Group held a 20.44% share in the ordinary issued
capital of Quadrise Canada Corporation (“QCC”), a 3.75% share in the ordinary issued capital of
Paxton Corporation (“Paxton”), a 9.54% share in the ordinary issued capital of Optimal Resources
Inc. (“ORI”) and a 16.86% share in the ordinary issued capital of Porient Fuels Corporation
(“Porient”), all of which are incorporated in Canada.

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 period 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.

The Group has no immediate intention to dispose of its 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 2023. The shares in each of these
companies were valued at CAD $nil on 1 July 2022 due to their business models being highly
uncertain, with minimal possibility of any material value being recovered from their asset base.
During the year there has been no indication that this situation has changed, therefore the
Directors have determined that the investments should continue to remain valued at CAD $nil at
30 June 2023.

Page 77

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

13. Investments and loans in Subsidiaries

Opening balance

Long term loans advanced

Movement in expected credit loss
arising under IFRS 9

Company
Amount due
from subsidiary
£’000s

Company
Amount due to
subsidiary
£’000s

Company
Direct
investment
£’000s

26,109

3,296

(604)

(7,666)

21,479

Total

39,922

3,296

(604)

Closing balance

28,801

(7,666)

21,479

42,614

Loans to/from subsidiaries

In accordance with IFRS 9, a Company must recognise expected credit losses for all financial
assets held at amortised cost, including most intercompany loans from the perspective of
the lender. Expected credit losses are based on the assumption that repayment of the loan is
demanded at the reporting date. As at 30 June 2023, the Company has a loan of £29.7m (2022:
£26.7m) due from its 100% subsidiary Quadrise International Limited (‘QIL’), and a loan payable of
£7.7m (2022: £7.7m) due to its 100% subsidiary Quadrise Limited (‘QL’). Both loans are repayable
upon demand.

As at 30 June 2023, QIL has no ability to repay the balance due if this were to be demanded,
there would therefore be a 100% probability of default. In this event, the Company must assess
the expected manner of recovery.

The directors have determined that the most expeditious means of recovery of this balance
would be via the means of a sale of QIL’s assets in order to raise the balance due. The assets held
by QIL include the Group’s intangible assets, patents and trademarks, assets which underpin the
value of the Group’s business model. The directors have determined that the sale of these assets
at a sufficient discount would allow QIL to obtain the funds necessary to raise the balance due
and have further assumed that such a sale would be completed within a period of 6 months. The
expected credit loss is calculated by discounting the balance due over the period of recovery at a
determined discount rate.

On 29 April 2015 a Debenture agreement was finalised between QIL and the Company, in which
QIL agrees to pay any balances when due, and to pay interest of 3.5% above the base rate on any
sum demanded until payment. The base rate at 30 June 2023 is 5%. The discount rate used to
calculate the expected credit loss is 8.5%.

Page 78

The resulting expected credit loss arising on the loan due from QIL is £1,224k (2022: £621k). This is
based on the recovery in full of the loan. In the event the group were only to realise a percentage
of QIL’s assets, the expected credit loss would be as follows:

Percentage recovery

100%

90%

75%

50%

Investment in subsidiaries

Expected
Credit Loss
30 June 2023
(£’000s)

Expected
Credit Loss
30 June 2022
(£’000s)

1,224

4,104

8,424

15,624

621

3,231

7,147

13,675

In accordance with IAS 36 a Company’s assets must not be carried at more than their
recoverable amount. Where there is any indication of impairment, an impairment test must be
carried out.

The Group’s business model relies upon the assets held by QIL – intangible assets, patents
and trademarks. The recoverable amount of the investment in QIL is therefore determined by
calculation of the net present value (‘NPV’) of the forecast cashflows produced by the Group’s
business model, which is regularly reviewed by management. The basis for the inclusion of
projects and the estimation of growth rates, margins and project lifespans within the business
model is based on the latest agreements with counterparties, commodity and chemical prices
and the most recent discussions with customers, suppliers and other business partners.

The NPV valuation of the forecast cashflows was prepared using discount rates of 10%, 20% and
30%. Further sensitivity analysis was carried out using the following scenarios:

■

The base-case scenario using the existing financial forecasts

■

A 2 year delay to projects.

■

Removal of the projects contributing 60% of cashflows.

■

A finite company lifespan assuming activity does not progress beyond 2031-32.

None of the scenarios modelled above result in an NPV below the investment value of £21.5m.

As at 30 June 2023, there is no indication that the carrying value of the investment held by the
Company in QIL is being held at more than its recoverable amount as determined by the net
present value of the forecast cashflows produced by the Group’s business model. Based on
this the Directors concluded that no impairment is necessary for the year ended 30 June 2023.
Holdings in subsidiaries are detailed in note 26.

Page 79

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

14. Cash and Cash Equivalents

Cash at bank

Total

15. Trade and Other Receivables

Trade receivables

Other receivables

Other taxes

Total

16. Trade and Other Payables

Trade payables

Other taxes

Accruals

Total

Consolidated
30 June 2023
£’000s

Consolidated
30 June 2022
£’000s

Company
30 June 2023
£’000s

Company
30 June 2022
£’000s

1,342

4,423

1,090

4,086

Consolidated
30 June 2023
£’000s

Consolidated
30 June 2022
£’000s

Company
30 June 2023
£’000s

Company
30 June 2022
£’000s

103

Consolidated
30 June 2023
£’000s

Consolidated
30 June 2022
£’000s

Company
30 June 2023
£’000s

Company
30 June 2022
£’000s

108

175

141

262

148

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 2023 amount to 13 days (2022: 16 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 £nil (2022:£nil).

Page 80

17. Share Options

Share option expense for the year ended 30 June 2023 was £178k (2022: credit of £44k).

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

Number
30 June 2023

21,385,343

36,233,038

WAEP
(pence)
30 June 2023

Number
30 June 2022

WAEP
(pence)
30 June 2022

9.00

42,750,000

3.28

14,515,722

Expired during the year

(21,854,570)

7.07

(35,880,379)

Exercised during the year

Options outstanding as at 30 June

35,763,811

4.39

21,385,343

Exercisable as at 30 June

16,231,895

6.55

18,250,000

14.69

5.70

14.44

9.00

10.37

The weighted average remaining contractual life of the 35.76 million options outstanding at the
statement of financial position date is 6.40 years (2022: 4.64 years). The weighted average share
price during the year was 1.57p (2022: 2.66p) 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 Schemes are equity settled plans, and fair value is measured at the grant date
of the option. Options issued under the Schemes vest over a one to three year period provided
the recipient remains an employee of the Group. Options also may be exercised within an agreed
period of an employee leaving the Group at the discretion of the Board.

The Company issued 36.2 million share options to directors and employees during the year (2022:
14.5 million). The fair value was calculated using the Black Scholes option pricing model. The
weighted average inputs were as follows

Stock price:

Exercise Price

Interest Rate

Volatility

Expected term (years)

2023

2022

1.46p

3.28p

2.16%

4.10p

5.70p

0.1%

104.85%

124.12%

3.69

4.0

Page 81

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

18. Warrants

Movement in the year:

The following table illustrates the number and weighted average exercise prices (“WAEP”) of, and
movements in, warrants during the year:

Number
30 June 2023

WAEP
(pence)
30 June 2023

Number
30 June 2022

WAEP
(pence)
30 June 2022

Outstanding as at 1 July

40,228,026

6.98

40,228,026

Granted during the year

Exercised during the year

3,000,000

Expired during the year

(40,228,026)

6.98

(3,000,000)

Warrants outstanding as at 30 June

Exercisable as at 30 June

40,228,026

6.98

1.80

3.53

6.85

The warrants are equity settled warrants which vest immediately on grant date. Fair value is
measured at the grant date of the option using the Black Scholes pricing model. The inputs into
this model are: Stock price at the date of grant, exercise price, interest rate, expected term and
expected volatility. The expected volatility of the warrants reflects the assumption that historical
volatility is indicative of future trends, which may not necessarily be the actual outcome. The
expected life of the warrants 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 weighted average inputs into the Black Scholes option pricing model were as follows:

Stock price:

Exercise Price

Interest Rate

Volatility

Expected term (years)

2023

2022

1.87p

1.80p

1.25%

91.94%

0.72

No warrants remain outstanding at the statement of financial position date. As at 30 June 2022,
the weighted average remaining contractual life of the 40.2 million warrants outstanding was
0.23 years. The weighted average share price during the year was 1.57p (2022: 2.66p) per share.

Page 82

19. Share Capital

The company has one class of ordinary share capital which carries no rights to fixed income, any
preferences or restrictions.

Issued and fully paid:

1,406,904,968 (2022: 1,406,904,968) Ordinary
shares of £0.01 each

2023
£

2022
£

14,069,050

The table below shows a reconciliation of movement in share capital and share premium during
the year:

No. of shares

1,406,904,968

Share Capital
(£’000)
£

Share Premium
(£’000)
£

14,069

77,189

As at 1 July 2022

As at 30 June 2023

20. Other Reserves

Nature and purpose of other reserves

Merger reserve

In March 2021, the Company incorporated a Jersey registered ‘Cash Box’ company. This was used
to facilitate the placing of 222,222,222 new ordinary shares of 1p each on 9 March 2021 at a placing
price of 2.7p per share. The placing raised £6.0m and the Company received cash proceeds
of £5.5m net of expenses. The proceeds of the share issue were parcelled into the ‘cash box’
Company which was then acquired by way of a share exchange which qualified for merger relief
so avoided the need to recognise a share premium on the share issue. The net amount booked
to share capital and reserves was £6.0m. £2.2m was allocated to nominal share capital and the
excess of £3.8m was recorded within the merger reserve. All shares are fully paid up.

Reverse acquisition reserve

The reverse acquisition reserve arose on the reverse acquisition of Zareba plc (now Quadrise 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.

Warrant reserve

The warrant reserve is used to record the cumulative fair value of warrants granted by the
Company net of lapsed and exercised warrants.

Page 83

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

21. Pension Commitments

For direct employees of Quadrise plc, the Company contributes 8% of salary to a defined
contribution pension scheme. Pension cost to the Company for the year amounted to
£60k (2022: £57k).

22. Derivatives and Other Financial Instruments

The Group’s principal financial instruments comprise 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

Loans and receivables - Cash and
cash equivalents

Loans and receivables - Trade and
other receivables

Financial liabilities

Other financial liabilities - Trade and
other payables

Consolidated
30 June 2023
£’000s

Consolidated
30 June 2022
£’000s

Company
30 June 2023
£’000s

Company
30 June 2022
£’000s

1,342

4,423

1,090

4,086

103

175

233

134

All receivables are current and are due within 30 days. Trade and other payables are 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 Sterling and it uses this as its reporting currency. Exposure to
any foreign exchange movements exists primarily in the Euro currency.

The net monetary balances in other currencies at 30 June 2023 were net assets of US$23k
(2022: US$38k) and €6k (2022: €38k).

A 10% strengthening of Sterling against the Euro at the statement of financial position date
would have increased loss for the year by £0.5k (2022: £1k) whilst a 10% weakening of Sterling
against the Euro would have reduced loss for the year by £0.5k (2022: £1k). This analysis assumes
that all other variables remain constant.

A 10% strengthening of Sterling against the US$ at the statement of financial position date
would have increased loss for the year by £2k (2022: £6k) whilst a 10% weakening of Sterling
against the US$ would have reduced loss for the year by £2k (2022: £6k). This analysis assumes
that all other variables remain constant.

Page 84

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 reduce loss for the year by approximately £13k (2022: £44k) per annum. A decrease in interest
rates of 1% will increase loss for the year by approximately £13k (2022: £21k) 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 £89k at 30 June 2023 (2022: £103k), of which £nil (2022: £nil) was
receivable from related parties. Receivables of £89k 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 2023 (2022: £nil).

23. 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 £nil (2022: £5k). The balance payable at the statement of financial position date was
£nil (2022: £nil).

QED defines key management personnel as the Directors of the Company. Other than as above,
there are no transactions with Directors, other than their remuneration as disclosed in the
Report of Directors’ Remuneration.

24. 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.

Page 85

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

25. Subsidiaries

The financial statements include the financial statements of Quadrise plc and the following
subsidiaries:

Name

Quadrise International Limited

Quadrise (Dormant) Limited

Percentage interest
held and voting
rights

Class of share held

100%

Ordinary

Quadrise plc and its subsidiaries are involved in the production and development of MSAR®
and bioMSARTM emulsion fuel (along with supplying the associated technology to third parties)
as a low cost substitute for conventional heavy fuel oil for use in power generation plants and
industrial and marine diesel engines.

The registered office for all subsidiaries is Eastcastle House, 27-28 Eastcastle Street, London,
W1W 8DH.

26. Events After the end of the Reporting Period

Placing and Open Offer

On the 7 July 2023, the Company raised total gross proceeds of £1.1 million pursuant to a Placing
of 88,000,000 New Ordinary Shares at a price of 1.25 pence per share. On 25 July 2023, additional
gross proceeds of £0.84 million were raised from an Open Offer to qualifying shareholders for
a total of 67,573,855 New Ordinary Shares at a price of 1.25 pence per share. The Placing and
subsequent Open Offer raised a total of £1.94 million (before expenses) for the Company.

Issuance of Share Options

Performance Options

On 3 August 2023, the Company granted a total of 13,500,000 options (the ‘Performance
Options’) over new ordinary shares of 1p each in the Company executives and employees of
the Company in accordance with the provisions of the Company’s Enterprise Management
Incentive Plan (“EMI Plan”). The issue of these options follows the lapsing in full of the 11,950,000
options issued by the Company on 27 January 2023 due to the specific performance conditions
of those options not having been met. 7,500,000 of the Performance Options were granted to
Jason Miles, Chief Executive Officer of the Company.

The Performance Options have an exercise price of 2.5p, and will vest as to 50% on the first
anniversary of grant and the remaining 50% shall vest on the second anniversary of the date of
grant. All vestings are subject to the satisfaction of specific performance conditions prior to the
first anniversary of grant. The Performance Options will be exercisable from vesting until the
eighth anniversary of the date of grant.

Page 86

Additional Options

On 3 September 2023 Quadrise also granted 4,500,000 options over new ordinary shares of
1p each in the Company to Non-Executive Directors of the Company in accordance with the
provisions of the Company’s Unapproved Share Option Plan 2016 (“2016 Plan”) in the amounts set
out below (the “Additional Options”).

Director

Andrew Morrison

Laurie Mutch

Philip Snaith

Dilip Shah

Total

No. of Share
Options

2,000,000

1,000,000

500,000

4,500,000

The Additional Options have an exercise price of 2.5p. There are no performance conditions to
the vesting of the Additional Options, which will vest as to 50% on the first anniversary of grant
and the remaining 50% shall vest on the second anniversary of the date of grant. The Additional
Options will be exercisable from vesting until the eighth anniversary of the date of grant.

Nominal Value Options

On 3 August 2023, the Company granted a total of 35,555,555 nominal value options (‘NVOs’) over
new ordinary shares of 1p each in the Company to executives and employees in accordance with
the provisions of the Company’s Enterprise Management Incentive Plan (“EMI Plan”). 6,666,667 of
the Performance Options were granted to Jason Miles, Chief Executive Officer of the Company.

These Options have an exercise price of 1p, and will vest after 12 months from the date of grant,
with vesting not subject to performance conditions. The NVOs will be exercisable from vesting
until the tenth anniversary of the date of grant.

27. 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.quadrise.com and from the Company’s registered office, Eastcastle
House, 27-28 Eastcastle Street, London, W1W 8DH.

Page 87

CORPORATE INFORMATION

Registered Office

Joint Brokers

Registrar

Eastcastle House
27-28 Eastcastle Street
London
W1W 8DH

Company Secretary

Ian Farrelly
MSP Corporate Services Ltd
27-28 Eastcastle Street
London
W1W 8DH

Nominated Advisor

Cavendish Securities plc
One Bartholomew Close
London
EC1A 7BL

Shore Capital
Cassini House
57-58 St. James’s Street
London
SW1A 1LD

VSA Capital Limited
Park House
16-18 Finsbury Circus London
EC2M 7EB

Solicitor

Shoosmiths LLP
1 Bow Churchyard
London
EC4M 9DQ

Share Registrars Ltd
The Courtyard
17 West Street
Farnham
Surrey
GU9 7DR

Auditor

PKF Littlejohn LLP
15 Westferry Circus
London E14 4HD
United Kingdom

Banker

Coutts & Co
440 Strand
London
WC2R 0QS

Page 88

TABLE OF CONTENTS

Highlights

Proven Technology

Progress to a Net-Zero Fuel

Our Commitment to ESG

Chairman’s Statement

Chief Executive’s Statement

Strategic Report

Directors’ Section 172 Statement

Directors

Directors’ Report

Statement of Directors’ Responsibilities

Report on Directors’ Remuneration

Corporate Governance Statement

Independent Auditor’s Report

Consolidated Statement of Comprehensive Income

Consolidated Statement of Financial Position

Consolidated Statement of Changes in Equity

Consolidated Statement of Cash Flows

Company Statement of Financial Position

Company Statement of Changes in Equity

Company Statement of Cash Flows

Notes to the Financial Statements

Corporate Information

CBP00019082504183028

This report is printed on Revive 100% White Silk a totally recycled
paper produced using 100% recycled waste at a mill that has been
awarded the ISO 14001 certificate for environmental management.

The pulp is bleached using a totally chlorine free (TCF) process.
This report has been produced using vegetable based inks.

ANNUAL REPORT

& ACCOUNTS

For the year ended 30 June 2023

Business Address:
Foresight House, 10 / 10A Arthur Street, London, EC4R 9AY

Tel: +44 20 7031 7321

Investor Relations: ir@quadrise.com