Half-yearly Report
24 September 2013
PowerHouse Energy Group plc
("PowerHouse", the "Group" or the "Company")
Interim results for the six months ended 30 June 2013
PowerHouse Energy Group plc, (AIM: PHE) announces its unaudited results for the
six months ended 30 June 2013.
Chairman's Statement
I am pleased to report that PowerHouse has continued to take positive action in
the recovery and expansion of the Group.
During the first six months of 2013, PowerHouse made significant progress
towards its goal of becoming a global force in the Waste-to-Energy (WtE)
market. This time was marked by a tremendous effort on the parts of both of the
PowerHouse and the Pyromex teams in achieving the completion of the PowerHouse
acquisition of Pyromex AG, and on the part of the engineering, manufacturing,
and commercial teams to finalize the Pyromex Ultra High Temperature Reactor
(UHTR) development.
The efficiency of the Pyromex UHTR system is such that it is extremely
favourable when compared with other renewable options on the market. This
efficiency, coupled with the economic advantages of diverting waste from
landfills, and cleanly generating electricity makes the PowerHouse /Pyromex
solution very compelling to our potential customers.
Waste-to-Energy is a growing, vibrant market in which demand is clearly
outpacing supply. There are lucrative, long-term, rewards for companies with
economical solutions to an ever-growing waste stream with which we are faced.
The problem of waste continues to grow as first-world economies grapple with
the reality that one can only achieve so much by reducing, reusing, and
recycling. The time has come to "recover." Recover the huge deposit of
renewable energy that lies trapped within our organic municipal and industrial
waste. By diverting appropriate waste streams from landfill, and engaging the
Powerhouse process, we can recover as much as 90% of the energy that was being
"thrown away", cleanly, economically and sustainably.
With the acquisition of Pyromex successfully completed in August 2013 we are
only beginning to fully realise the commercial potential of the Pyromex UHTR
gasification technology. We are positioning ourselves, with prudent planning,
targeted hiring, and determined customer acquisition, to become a global player
in this field.
During the final few months of 2013, we will continue working on the
finalization of commercialisation of the technology, stress-testing,
commissioning, and customer demonstrations. We continue to aim at first unit
deliveries by early 2014 and are pushing aggressively to achieve that goal.
During the six months to 30 June 2013, loss after taxation was US$403,707 (30
June 2012: US$2,942,899). Operational costs during the period were tightly
controlled and amount to US$208,626. These will increase as we assume the
operations of Pyromex, however we will maintain our strict and responsible cost
controls to ensure all available resources are focused towards commercial
success and shareholder value.
At the Annual General Meeting and the General Meeting held on 6 September 2013,
all resolutions were passed unanimously.
We are excited about the integration of Pyromex and are thankful to the Pyromex
team for their continued hard work. As always the Board thank our extended
team, our suppliers, and our shareholders who have continued to support
PowerHouse Energy Group.
Keith Allaun
Chairman
24 September 2013
For additional information please contact:
PowerHouse Energy Group plc
Keith Allaun - Executive Chairman
Phone: +44 (0)20 7079 4407
Email: inquire@powerhousegroup.co.uk
Sanlam Securities UK Limited (Nomad and Broker)
David Worlidge
Phone: +44 (0)20 7628 2200
Statement of Comprehensive Income
(Unaudited) (Unaudited) (Audited)
Six months Six months Year
ended ended ended
30 June 30 June 31 cember
Note 2013 2012 2012
US$ US$ US$
Revenue - 15,805 19,756
Administrative expenses (208,626) (1,511,949) (594,520)
Operating loss (208,626) (1,496,144) (574,764)
Finance income - 4 4
Other income - - 352,322
(Loss of control) / Fair value
gain on step - (1,309,296) (1,309,296)
acquisition
Equity accounted loss - (129,600) (475,646)
Finance costs (195,081) (7,863) (210,272)
Loss before taxation (403,707) (2,942,899) (2,217,652)
Income tax benefit - 10,942 10,942
Loss after taxation (403,707) (2,931,957) (2,206,710)
Foreign exchange arising on 73,310 56,321 (36,462)
consolidation
Foreign exchange included in
profit and - 1,095,440 1,095,440
loss arising from loss of
control
Total comprehensive expense (330,397) (1,780,196) (1,147,732)
Total comprehensive expense
attributable to:
Owners of the Company (330,397) (1,224,542) (592,078)
Non-controlling interests - (555,654) (555,654)
Loss per share (US$) 3 (0.01) (0.01) <(0.01)
The notes numbered 1 to 6 are an integral part of the interim financial information.
Statement of Changes in Equity
Shares and Accumulated Other Non-
stock losses Reserves controlling Total
US$ US$ US$ interests US$
US$
Balance at 1 January 80,050,893 (18,090,906) (63,781,669) 1,665,494 (156,188)
2012 (audited)
Transactions with equity
participants:
* Exercise of warrants 67,876 - - - 67,876
* Pyromex, loss of - - - (1,109,840) (1,109,840)
control
Total comprehensive
income:
* Loss after taxation - (2,331,486) - (600,471) (2,931,957)
* Foreign exchange - - 1,095,441 - 1,095,441
included in profit
and loss
arising from loss of
control
* Foreign exchange - - 11,504 44,817 56,321
arising on
consolidation
Balance at 30 June 2012 80,118,769 (20,422,392) (62,674,724) - (2,978,347)
(unaudited)
Transactions with equity
participants:
* Shares issued to 43,850 - - - 43,850
settle liabilities
Total comprehensive
income:
* Profit after - 725,247 - - 725,247
taxation
* Foreign exchange - - (92,783) - (92,783)
arising on
consolidation
Balance at 31 December 80,162,619 (19,697,145) (62,767,508) - (2,302,034)
2012 (audited)
Total comprehensive
expense:
* Loss after taxation - (403,707) - (403,707)
* Foreign exchange - - 73,310 73,310
arising on
consolidation
Balance at 30 June 2013 80,162,619 (20,100,852) (62,694,198) - (2,632,431)
(unaudited)
The notes numbered 1 to 6 are an integral part of the interim financial
information.
Statement of Financial Position
(Unaudited) (Unaudited) (Audited)
As at As at As at
30 June 30 June 31 December
Note 2013 2012 2012
US$ US$ US$
ASSETS
Non-current assets
Property, plant and equipment 486 2,910 957
Investment in associate - 346,036 -
Total non-current assets 486 348,946 957
Current Assets
Trade and other receivables 6,690 28,118 3,790
Cash and cash equivalents 31,867 68,317 11,492
Total current assets 38,557 96,435 15,282
Total assets 39,043 445,381 16,239
LIABILITIES
Non-current liabilities
Loans 4 (549,463) (207,022) (313,399)
Trade and other payables 5 - (582,750) -
Total non-current liabilities (549,463) (789,772) (313,399)
Current liabilities
Loans 4 (551,231) (366,906) (401,400)
Trade and other payables 5 (1,570,780) (2,267,050) (1,603,474)
Total current liabilities (2,122,011) (2,633,956) (2,004,874)
Total liabilities (2,671,474) (3,423,728) (2,318,273)
Net liabilities (2,632,431) (2,978,347) (2,302,034)
EQUITY
Shares and stock 2 80,162,619 80,118,769 80,162,619
Other reserves (62,694,198) (62,674,724) (62,767,508)
Accumulated losses (20,100,852) (20,422,392) (19,697,145)
Total deficit (2,632,431) (2,978,347) (2,302,034)
The notes numbered 1 to 6 are an integral part of the interim financial
information.
Statement of Cash Flows
(Unaudited) (Unaudited) (Audited)
Six months Six months Year ended
ended ended 31
Note 30 June 30 June December
2013 2012 2012
US$ US$ US$
Cash flows from operating activities
Loss before taxation (403,707) (2,942,899) (2,217,652)
Adjustments for:
* Finance income - (4) (4)
* Finance costs 195,081 7,862 210,272
* Loss of control on step - 1,309,296 1,309,296
acquisition
* Equity accounted loss - 129,600 475,646
* Loan waivers - - (352,322)
* Depreciation and amortisation 448 123,467 124,049
* Foreign exchange revaluations - (18,330) (99,327)
Changes in working capital:
* (Increase) / Decrease in trade (3,033) 202,097 226,580
and other receivables
* Increase / (Decrease) in trade 15,044 685,174 (569,617)
and other payables
* Taxation paid - (800) (800)
Net cash used in operations (196,167) (504,535) (893,876)
Cash flows from investing activities
Purchase of other non-current assets - 1,356 -
Purchase of tangible and intangible - - 2,846
assets
Loss of control / reverse - (11,010) (11,010)
acquisition
Net cash flows used in investing - (9,654) (8,164)
activities
Cash flows from financing activities
Share/stock issues (net of issue - 67,876 111,726
costs)
Finance income - 4 4
Finance costs (195,081) (7,862) (210,272)
Loans received 412,651 138,959 627,197
Net cash flows from financing 217,570 198,977 528,655
activities
Net increase in cash and cash 21,403 (315,212) (373,385)
equivalents
Cash and cash equivalents at 11,492 382,455 382,445
beginning of period
Foreign exchange on cash balances (1,028) 1,074 2,432
Cash and cash equivalents at end of 31,867 68,317 11,492
period
The notes numbered 1 to 6 are an integral part of the interim financial
information.
Notes (forming part of the interim financial information)
1. Summary of significant accounting policies
The following accounting policies have been applied consistently in dealing
with items which are considered material in relation to the financial
information.
1.1 Basis of preparation
This interim consolidated financial information is for the six months ended 30
June 2013 and has been prepared in accordance with International Accounting
Standard 34 "Interim Financial Statements". The accounting policies applied are
consistent with International Financial Reporting Standards ("IFRS") adopted
for use by the European Union. The accounting policies and methods of
computation used in the interim consolidated financial information are
consistent with those expected to be applied for the year ending 31 December
2013.
The financial information set out above does not constitute the company's
statutory accounts for the year ended 31 December 2012, but is derived from
those accounts. Statutory accounts for 2012 have been delivered to the
Registrar of Companies. The auditors have reported on those accounts: their
report was qualified and contained a disclaimer of opinion and contained
statements under section 498(2) or (3) of the Companies Act 2006.
1.2 Going concern
The Directors have considered all available information about the future events
when considering going concern. The Directors have reviewed cash flow forecasts
which assume a favourable settlement outcome to RenewMe liability and the
Aspermont loan.
The convertible loan obtained from Hillgrove Investments Pty Limited is
considered sufficient to settle outstanding creditors, maintain the Group's
overhead and other planned events. In addition, the Company is in receipt of a
letter of intention of financial support from Hillgrove Investments Pty Limited
to ensure the Company continues to meet its obligations as they fall due and to
ensure it operates as a going concern. Based on this, the Directors continue to
adopt the going concern basis of accounting for the preparation of the annual
financial statements.
1.3 Functional and presentational currency
This interim financial information is presented in US dollars which is the
Group's functional currency. The principal rates used for translation are:
30 June 30 June
2013 2013
Closing Average
British Pounds $1.540 $1.546
2. SHARE CAPITAL
1.0 p 4.5 p 4.0 p
Ordinary Deferred Deferred
shares shares shares
Balance at 31 December 2012 and 286,534,426 17,373,523 9,737,353
30 June 2013
The deferred shares have no voting rights and do not carry any entitlement to
attend general meetings of the Company. They will carry only a right to
participate in any return of capital once an amount of £100 has been paid in
respect of each ordinary share. The Company will be authorised at any time to
affect a transfer of the deferred shares without reference to the holders
thereof and for no consideration.
3. Loss per share
(Unaudited) (Unaudited) (Audited)
As at As at As at
30 June 30 June 31 December
2013 2012 2012
Total comprehensive expense (US$) (403,707) (2,331,486) (592,078)
Weighted average number of shares 286,534,426 284,499,626 285,085,135
Loss per share (US$) (0.01) (0.01) <(0.01)
4. LOANS
(Unaudited)(Unaudited) (Audited)
As at As at As at
30 June 30 June 31 December
2013 2012 2012
US$ US$ US$
Accrued dividends on preferred 4.1 33,000 33,000 33,000
stock
Management loans - 352,322 -
Citi bank business loan 4.2 26,913 39,580 26,913
Aspermont loan 4.3 491,318 149,026 341,487
Hillgrove Investments Pty 4.4 549,463 - 313,399
Limited
Total loans 1,100,694 573,928 714,799
Classified as:
* Current 551,231 366,906 401,400
* Non-current 549,463 207,022 313,399
4.1 Accrued dividends on preferred stock
The accrued dividends on the preferred stock became due on 31 March 2013. The
Group is in negotiations to resolve the settlement of this liability.
4.2 Citi bank business loan
Loan from Citi bank incurs interest at the prime rate as published by The Wall
Street Journal plus 3% and is repayable in equal monthly installments of
$2,083.
4.3 Aspermont loan
On 18 April 2013 Aspermont Ltd, Dilato Holdings Pty Ltd and Tesla Nominees Pty
Ltd collectively provided a facility of £100,000 to the Group. The facility is
repayable on demand and incurs interest at 7 per cent. per month. The Group is
currently in negotiations to revise the terms of the loan.
4.4 Hillgrove Loan
Hillgrove Investments Pty Limited ("Hillgrove"), which holds 5.77 per cent. of
the issued share capital of the Company, has provided the Company with a
convertible loan facility which can be increased at Hillgrove's option. The
loan is unsecured, repayable on 8 October 2014 and carries interest of 15 per
cent. per annum. Hillgrove has the option at any time to convert the loan in
part or whole at a conversion price of 1p per share. Hillgrove have provided a
letter of support for the Company indicating it is willing to increase the loan
amount pending any unforeseeable or material changes to the Company's current
circumstances.
5. Trade and other payables
(Unaudited) (Unaudited) (Audited)
As at As at As at
30 June 30 June 31 December
Trade creditors 240,369 263,474 227,104
Salary and wage accruals - 1,203,186 -
RenewMe 1,011,120 1,036,000 1,036,000
Customer deposits 150,000 153,202 150,000
Other accruals 169,291 193,938 190,370
Total trade and other payables (1,570,780) 2,849,800 1,603,474
Classified as:
* Current (1,570,780) 2,267,050 1,603,474
* Non-current - 582,750 -
5.1 RenewMe
RenewMe Limited had been granted exclusive rights by Pyromex to use, own,
assemble and install and operate Pyromex systems in territories also licensed
to Powerhouse Energy, Inc. The Group entered into a settlement agreement with
RenewMe whereby the parties agreed to change the respective exclusive rights
pertaining to the Pyromex technology. Under the settlement agreement the Group
has the obligation to pay five instalments of €200,000 annually from 30 June
2012. Following the non-payment of the instalment due on 30 June 2013, all
amounts due under the contract have been recognised as a liability on the
balance sheet as at 30 June 2013. The Directors are currently in negotiations
with RenewMe regarding the existing licensing agreement.
6. AVAILABILITY OF THE INTERIM RESULTS
A copy of this announcement will be available at the Company's registered
office (16 Great Queen Street, London WC2B 5DG) 14 days from the date of this
announcement and on its website - www.powerhouseenergy.net. A copy of the
interim results will not be sent to shareholders.
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