Last close As at 05/08/2026
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GBP21m
Research: Industrials
Quadrise is preparing for marine trials with MSC Shipmanagement, two larger-scale trials with an industrial partner in Morocco and a pilot up-stream trial in Utah. Management notes that these activities could potentially result in the first commercial shipments of MSAR in early calendar year (CY) 2022. Importantly, MSC would like to test Quadrise’s low carbon fuel, bioMSAR, ahead of standard MSAR during the letter of no objection (LONO) programme.
Written by
Quadrise Fuels International |
Trials in three sectors progressing |
Pre-close progress update |
Alternative energy |
29 June 2021 |
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Quadrise Fuels International is a research client of Edison Investment Research Limited |
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Quadrise is preparing for marine trials with MSC Shipmanagement, two larger-scale trials with an industrial partner in Morocco and a pilot up-stream trial in Utah. Management notes that these activities could potentially result in the first commercial shipments of MSAR in early calendar year (CY) 2022. Importantly, MSC would like to test Quadrise’s low carbon fuel, bioMSAR, ahead of standard MSAR during the letter of no objection (LONO) programme.
Year end |
Revenue (£m) |
EBITDA |
PBT* |
EPS* |
DPS |
P/E |
06/17 |
0.1 |
(3.9) |
(4.1) |
(0.45) |
0.00 |
N/A |
06/18 |
0.0 |
(3.3) |
(3.5) |
(0.37) |
0.00 |
N/A |
06/19 |
0.0 |
(2.8) |
(3.0) |
(0.32) |
0.00 |
N/A |
06/20 |
0.0 |
(3.1) |
(3.4) |
(0.32) |
0.00 |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Minor delays to projects
Preparatory work for the LONO trials with MSC is taking longer than management had expected, resulting in a couple of months delay in commencing the trial programme, which is now likely to begin very early in CY22. This means the start of the commercial roll-out across MSC’s global fleet has slipped slightly, from CY Q222 to mid-2022, subject to successful completion of the LONO trials. While the larger scale industrial trial in Morocco has slipped from CY H121 to CY Q321 because of COVID-19-related issues and the commercial trial scale to later in CY H221, management still expects that successful conclusion of these trials could potentially result in the first commercial shipments of MSAR to the customer early in CY22. However, Greenfield Energy has experienced significant problems in starting heavy oil extraction at the Petroteq Oil Sands plant in Utah, so has only recently been able to take samples for Quadrise to test, even though management had expected to receive the samples by the end of December 2020.
Accelerated testing of bioMSAR
The placing and open offer in March 2021 raising £7.0m (gross) enabled Quadrise, among other activities, to bring forward tests of bioMSAR on a medium-speed four-stroke Wärtsilä engine testing at VTT in Finland. The initial feedback received so far has been positive and will inform further testing by Aquafuel. BioMSAR comprises 40–50% refinery residues, 40–50% renewable glycerol and 10% water plus Nouryon additives. In addition, Quadrise is evaluating future production options including refining and algal production of glycerine to secure feed-stock availability as well as renewables such as lignin to offer a net carbon zero solution by 2030.
Valuation: Modest adoption transformational
Based on data from the company, our scenario analysis calculates that even modest adoption of MSAR would generate material profits. A single refinery producing MSAR equivalent to 1.9Mtpa HFO (heavy fuel oil) under a licensing model would generate $15.9m in annual EBITDA (see our November outlook note).
Exhibit 1: Financial summary
£000s |
2016 |
2017 |
2018 |
2019 |
2020 |
||
30-June |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
INCOME STATEMENT |
|||||||
Revenue |
|
|
2 |
126 |
9 |
22 |
0 |
EBITDA |
|
|
(3,989) |
(3,858) |
(3,284) |
(2,780) |
(3,072) |
Operating Profit (before amort. and except.) |
|
|
(4,137) |
(4,069) |
(3,514) |
(3,010) |
(3,244) |
Amortisation of acquired intangibles |
0 |
0 |
0 |
0 |
0 |
||
Exceptionals |
0 |
0 |
0 |
0 |
(1,133) |
||
Share-based payments |
(802) |
(242) |
(53) |
(154) |
(474) |
||
Reported operating profit |
(4,939) |
(4,311) |
(3,567) |
(3,164) |
(4,851) |
||
Net Interest |
33 |
9 |
11 |
(3) |
(139) |
||
Profit Before Tax (norm) |
|
|
(4,104) |
(4,060) |
(3,503) |
(3,013) |
(3,383) |
Profit Before Tax (reported) |
|
|
(4,906) |
(4,302) |
(3,556) |
(3,167) |
(4,990) |
Reported tax |
149 |
213 |
294 |
184 |
147 |
||
Profit After Tax (norm) |
(3,955) |
(3,847) |
(3,209) |
(2,829) |
(3,236) |
||
Profit After Tax (reported) |
(4,757) |
(4,089) |
(3,262) |
(2,983) |
(4,843) |
||
Minority interests |
0 |
0 |
0 |
0 |
0 |
||
Discontinued operations |
0 |
0 |
0 |
0 |
0 |
||
Net income (normalised) |
(3,955) |
(3,847) |
(3,209) |
(2,829) |
(3,236) |
||
Net income (reported) |
(4,757) |
(4,089) |
(3,262) |
(2,983) |
(4,843) |
||
Average Number of Shares Outstanding (m) |
809.6 |
846.1 |
862.2 |
888.7 |
982.8 |
||
EPS - normalised (p) |
|
|
(0.49) |
(0.45) |
(0.37) |
(0.32) |
(0.32) |
EPS - diluted normalised (c) |
|
|
(0.49) |
(0.45) |
(0.37) |
(0.32) |
(0.33) |
EPS - basic reported (c) |
|
|
(0.59) |
(0.48) |
(0.38) |
(0.34) |
(0.49) |
Dividend per share (p) |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
||
BALANCE SHEET |
|||||||
Fixed Assets |
|
|
4,080 |
3,980 |
3,885 |
3,654 |
3,506 |
Intangible Assets |
2,924 |
2,924 |
2,924 |
2,924 |
2,924 |
||
Tangible Assets |
1,156 |
1,056 |
961 |
730 |
582 |
||
Investments & other |
0 |
0 |
0 |
0 |
0 |
||
Current Assets |
|
|
4,685 |
5,561 |
2,600 |
1,396 |
2,766 |
Stocks |
0 |
61 |
61 |
61 |
61 |
||
Debtors |
297 |
302 |
188 |
169 |
213 |
||
Cash & cash equivalents |
4,268 |
5,045 |
2,229 |
1,060 |
2,380 |
||
Other |
120 |
153 |
122 |
106 |
112 |
||
Current Liabilities |
|
|
(576) |
(247) |
(400) |
(288) |
(2,243) |
Creditors |
(576) |
(247) |
(400) |
(288) |
(198) |
||
Tax and social security |
0 |
0 |
0 |
0 |
0 |
||
Short term borrowings |
0 |
0 |
0 |
0 |
0 |
||
Convertible securities |
0 |
0 |
0 |
0 |
(2,045) |
||
Long Term Liabilities |
|
|
0 |
0 |
0 |
0 |
0 |
Long term borrowings |
0 |
0 |
0 |
0 |
0 |
||
Other long term liabilities |
0 |
0 |
0 |
0 |
0 |
||
Net Assets |
|
|
8,189 |
9,294 |
6,085 |
4,762 |
4,029 |
Minority interests |
0 |
0 |
0 |
0 |
0 |
||
Shareholders' equity |
|
|
8,189 |
9,294 |
6,085 |
4,762 |
4,029 |
CASH FLOW |
|||||||
Op Cash Flow before WC and tax |
(3,989) |
(3,858) |
(3,284) |
(2,780) |
(3,072) |
||
Working capital |
308 |
(428) |
298 |
(77) |
(140) |
||
Exceptional & other |
2 |
0 |
0 |
130 |
65 |
||
Tax |
149 |
213 |
294 |
184 |
147 |
||
Net operating cash flow |
|
|
(3,530) |
(4,073) |
(2,692) |
(2,543) |
(3,000) |
Capex |
(596) |
(111) |
(135) |
(24) |
(24) |
||
Acquisitions/disposals |
0 |
0 |
0 |
0 |
0 |
||
Net interest |
33 |
9 |
11 |
(3) |
1 |
||
Equity financing |
0 |
4,952 |
0 |
1,401 |
2,343 |
||
Dividends |
0 |
0 |
0 |
0 |
0 |
||
Other |
0 |
0 |
0 |
0 |
0 |
||
Net Cash Flow |
(4,093) |
777 |
(2,816) |
(1,169) |
(680) |
||
Opening net debt/(cash) |
|
|
(8,361) |
(4,268) |
(5,045) |
(2,229) |
(1,060) |
FX |
0 |
0 |
0 |
0 |
0 |
||
Other non-cash movements |
0 |
0 |
0 |
0 |
2,000 |
||
Closing net debt/(cash) |
|
|
(4,268) |
(5,045) |
(2,229) |
(1,060) |
(2,380) |
Source: Company reports
|
|
Research: TMT
Nanoco has provided a further update on the litigation against Samsung for the alleged wilful infringement of the group’s IP. Nanoco has petitioned the judge in Texas to delay the court trial until after the US Patent Trial and Appeal Board (PTAB) has completed inter partes reviews (IPRs) of the five patents in the case which examine the validity of the patents themselves. At the moment the trial will be held before the IPRs. The change in sequence improves the likelihood of a positive outcome for Nanoco but potentially extends the timescales. Nanoco’s major shareholders have indicated their intention to provide a non-dilutive debt facility of £3.0m to help support the organic activities of the group during this period.