Interim Results
9October2012
PowerHouse Energy Group plc
("PowerHouse", the "Group" or the "Company")
Interim results for the six months ended 30 June 2012
PowerHouse Energy Group plc, (AIM: PHE) announces its unaudited results for the
six months ended 30 June 2012.
Chairman's Statement
These Interim Results are being announced immediately following the
announcement of the results for the year ended 31 December 2011 and represent
the first six months of trading of 2012 - a very difficult time for the
company. The 2011 Annual Results includes a detailed Chairman's Report and I
ask that you review that statement to avoid repetition in this statement.
As you are aware, trading in the company's ordinary share were suspended on 12
April 2012 pending clarification of the company's financial position. I am
pleased to advise that following the publication of the 2011 Annual Results and
this announcement of the Interim Results, the company expects that the
suspension of trading will be lifted and trading its shares will resume.
On 8 May 2012, the company announced that the option to acquire the remaining
70% interest in Pyromex had lapsed. Due to the expiry of the option, Pyromex is
no longer accounted for as a subsidiary of the group. These results show the
impact of the "loss of control" of Pyromex.
In the last four months since my appointment, we have made every effort to
reorganise the company and to begin building in a direction of success. Certain
of the Directors and the former directors released all claims to accrued
salaries and fees, and we have worked closely with our creditors to reduce and
resolve nearly all outstanding debts. We were also able to settle the lawsuit
that been pending against the company on satisfactory terms.
As we prepare to launch into the final few months of 2012, we are poised with
secure funding, developing strategic relationships, a more agile management
structure, specific projects under evaluation and an environment which is in
even greater need of the Pyromex Waste-to-Energy solutions.
The Board and I look forward to continuing to work through the challenges which
face the company with optimism for the future of PowerHouse Energy Group.
Keith Allaun
Chairman
9 October 2012
For additional information please contact:
PowerHouse Energy Group plc
Keith Allaun
Level 3, 8 Cavendish Square | London | W1G OPD
Phone: +44 (0)20 7079 4407
Email: inquire@powerhousegroup.co.uk
Merchant Securities Limited (Nominated Adviser & Broker)
David Worlidge/Simon Clements
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 December
Note 2012 2011 2011
US$ US$ US$
Revenue 15,805 - 62,379
Cost of sales - (13,319) (73,416)
Gross profit / (loss) 15,805 (13,319) (11,037)
Administrative expenses (1,511,949) (1,748,270) (7,790,179)
Operating loss (1,496,144) (1,761,589) (7,801,216)
Finance income 4 - 848
Other income - - -
(Loss of control) / Fair value (1,309,296) 6,209,876 6,209,876
gain on step acquisition
Equity accounted loss (129,600) - -
Finance costs (7,862) (292,307) (310,231)
Impairment of non-current assets - (35,000) (33,387,720)
(Loss) / Profit before taxation (2,942,899) 4,120,980 (35,288,443)
Income tax benefit 10,942 - 3,028,883
(Loss) / Profit after taxation (2,931,957) 4,120,980 (32,259,560)
Foreign exchange arising on 56,321 - (3,621,791)
consolidation
Foreign exchange included in 1,095,440
profit and loss arising from
loss of control
Total comprehensive (expense)/ (1,780,196) 4,120,980 (35,881,351)
income
Total comprehensive (expense)/
income attributable to:
Owners of the Company (1,224,542) 4,120,980 (13,588,143)
Non-controlling interests (555,654) - (22,293,208)
Earnings per share (US$) 3 (0.01) 0.03 (0.05)
Diluted earnings per share (US$) 3 (0.01) 0.02 (0.05)
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-controlling Total
stock losses reserves interests US$
US$ US$ US$ US$
Balance at 1 January 2011 6,218,365 (5,516,668) - - 701,697
(unaudited)
Transactions with equity
participants:
* Issue of common stock 10,199,941 - - - 10,199,941
* Costs related to issue (1,486,802) - - - (1,486,802)
of common stock
* Common stock issued for 206,250 - - - 206,250
services received
* Equity issued for - - 2,019,736 - 2,019,736
acquisition
* Equity reclassification 64,780,459 - (64,780,459) - -
arising from reverse
takeover
* Shares issued for 48,054 - - - 48,054
services received
* Acquisition of Pyromex - - - 23,951,661 23,951,661
Total comprehensive income:
* Profit after taxation - 4,120,980 - - 4,120,980
Balance at 30 June 2011 79,966,267 (1,395,688) (62,760,723) 23,951,661 39,761,517
(unaudited)
Transactions with equity
participants:
* Costs related to issue (35,000) - - - (35,000)
of common stock
* Shares issued for 119,438 - - - 119,438
services received
* Exercise of warrants 188 - - - 188
Total comprehensive income:
* Loss after taxation - (16,695,218) - (19,685,322) (36,380,540)
* Foreign exchange arising (1,020,946) (2,600,845) (3,621,791)
on consolidation
Balance at 31 December 2011 80,050,893 (18,090,906) (63,781,669) 1,665,494 (156,188)
(audited)
Transactions with equity
participants:
* Exercise of warrants 67,876 - - - 67,876
* Pyromex, loss of control (1,109,840) (1,109,840)
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 arising - - 11,504 44,817 56,321
on consolidation
Balance at 30 June 2011 80,118,769 (20,422,392) (62,674,724) - (2,978,347)
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 2012 2011 2011
US$ US$ US$
ASSETS
Non-current assets
Intangible assets - 31,247,927 2,062,838
Property, plant and equipment 2,910 7,916,033 1,825,636
Investment in associate 346,046 - -
Total non-current assets 348,946 43,232,289 3,888,474
Current Assets
Inventory - 719,279 637,601
Trade and other receivables 28,118 237,265 278,384
Cash and cash equivalents 68,317 2,948,543 382,455
Total current assets 96,435 3,905,087 1,298,440
Total assets 445,381 47,137,376 5,186,914
LIABILITIES
Non-current liabilities
Deferred taxation - (3,822,980) (372,277)
Loans 4 (207,022) (420,045) (376,973)
Trade and other payables 5 (582,750) (608,692) (777,000)
Total non-current liabilities (789,772) (4,851,717) (1,526,250)
Current liabilities
Loans 4 (366,906) (66,000) (57,996)
Trade and other payables 5 (2,267,050) (2,458,142) (3,758,856)
Total current liabilities (2,633,956) (2,524,142) (3,816,852)
Total liabilities (3,423,728) (7,375,859) (5,343,102)
Net assets (2,978,347) 39,761,517 (156,188)
EQUITY
Shares and stock 80,118,769 79,957,267 80,050,893
Other reserves (62,674,724) (62,760,723) (63,781,669)
Non-controlling interests - 23,951,661 1,665,494
Accumulated losses (20,422,392) (1,395,688) (18,090,906)
Total equity (2,978,347) 39,761,517 (156,188)
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
2012 2011 2011
US$ US$ US$
Cash flows from operating
activities
(Loss)/Profit before taxation (2,942,899) 4,120,980 (35,288,443)
Adjustments for:
* Finance income (4) - (848)
* Finance costs 7,862 292,307 310,231
* Loss of control / (fair value 1,309,296 (6,209,876) (6,209,876)
gain on step acquisition)
* Equity accounted loss 129,600 - -
* Impairment of non-current - 35,000 33,387,720
assets
* Depreciation and amortisation 123,467 100,212 1,824,241
* Common stock and shares issued - 254,304 373,742
for services
* Foreign exchange revaluations (18,330) 140,581
Changes in working capital:
* Decrease / (Increase) in trade 202,097 (230,611) (178,542)
and other receivables
* Increase / (Decrease) in trade 685,174 (182,306) 1,588,261
and other payables
* Taxation paid (800) - (800)
Net cash used in operations (504,535) (1,819,990) (4,053,733)
Cash flows from investing
activities
Purchase of other non-current 1,356 (85,000) (85,000)
assets
Purchase of intangible assets - (490,840) (494,429)
Loss of control / reverse 1.2 (11,010) (779,243) (949,660)
acquisition
Net cash flows used in investing (9,654) (1,355,083) (1,529,089)
activities
Cash flows from financing
activities
Common stock purchase advance - -
received
Share/stock issues (net of issue 67,876 8,713,139 8,678,326
costs)
Finance income 4 - 848
Finance costs (7,862) (292,307) (310,231)
Loans (repaid) / received 138,959 (2,494,386) (2,596,592)
Net cash flows from financing 198,977 5,926,446 5,772,351
activities
Net increase in cash and cash equivalents (315,212) 38,969 189,529
Cash and cash equivalents at 382,455 197,170 197,170
beginning of period
Foreign exchange on cash balances 1,074 - (4,244)
Cash and cash equivalents at end of 68,317 2,948,543 382,455
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 2012 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
2012.
The financial information set out above does not constitute the company's
statutory accounts for the year ended 31 December 2011, but is derived from
those accounts. Statutory accounts for 2011 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. Consolidation
Pyromex loss of control
US$
Intangible assets 2,005,446
Property, plant and equipment 1,869,045
Inventory 656,418
Trade and other receivables 55,642
Cash 11,012
Trade and other payables (2,424,114)
Intercompany payables (216,527)
Deferred taxation (371,437)
Net assets disposed 1,585,485
Attributable to:
* Non-controlling interests 1,109,839
* Owners of the Company - recognised as investment in 475,646
associate
Investment in associate consists of:
* Initial amount recognised after loss of control 475,646
* Equity accounted losses (129,600)
346,046
1.3. Judgements and estimates
The accounting for the Pyromex acquisition has been based on estimated values
due to lack of access to its records accordingly, the Group has reported, in
this interim financial information, its estimates for profit and loss, and
balance sheet items related to Pyromex.
1.4 Going concern
The directors have considered all available information about the future events
when considering going concern. The directors have reviewed cash flow forecasts
for twelve months following the date of these accounts. The cash flow forecasts
assume no further funding of Powerhouse Energy, Inc. and Pyromex. The £380,000
convertible loan obtained from Hill Grove Investments Pty Limited ("Hill
Grove"), secured prior to these accounts being signed, together with the
$250,000 convertible loan advanced by Linc Energy Limited on 19 June 2012 is
considered sufficient to settle outstanding creditors of the company and
maintain the company's reduced overhead and other limited unforeseen events for
at least the next twelve months. In addition, the company is in receipt of a
letter of intention of financial support from Hill Grove to ensure the company
continues to meet its obligations as they fall due and to ensure it operates as
a going concern for a period of at least 12 months. Based on this, the
Directors continue to adopt the going concern basis of accounting for the
preparation of these interim accounts.
1.5. 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
2012 2012
Closing Average
British Pounds $1.554 $1.577
Swiss Franc $1.043 $1.077
2. MOVEMENT IN SHARE CAPITAL (company)
1.0 p 4.5 p 4.0 p
Ordinary Deferred Deferred
shares shares shares
Balance at 31 284,271,197 17,373,523 9,737,353
January 2012
* Exercise of 243,229 - -
warrants
Balance at 30 June 283,514,426 17,373,523 9,737,353
2012
The deferred shares have no voting rights and do not carry any entitlement to
attend general meetings of the Company. They will carry only a right to
participate in any return of capital once an amount of £100 has been paid in
respect of each ordinary share. The Company will be authorised at any time to
affect a transfer of the deferred shares without reference to the holders
thereof and for no consideration.
3. EARNINGS PER SHARE
(unaudited) (unaudited) (audited)
As at As at As at
30 June 30 June 31 December
2012 2011 2011
Total comprehensive income (2,331,486) 4,120,980 (2,384,162)
(expense) (US$)
Weighted average number of shares 284,499,626 190,956,619 117,474,385
Weighted average number of - 4,322,980 -
dilutive potential shares
Earnings per share (US$) (0.01) 0.02 (0.02)
Diluted earnings per share (US$) (0.01) 0.02 (0.02)
4. LOANS
(unaudited) (unaudited) (audited)
As at As at As at
30 June 30 June 31 December
Notes 2012 2011 2011
US$ US$ US$
Accrued dividends 4.1 33,000 66,000 33,000
on preferred stock
Management loans 4.2 352,322 357,722 349,885
Citi bank business 4.3 39,580 62,323 52,084
loan
Aspermont loan 4.4 149,026 - -
Total loans 573,928 486,045 2,980,432
Classified as:
* Current 207,022 66,000 57,996
* Non-current 366,906 420,045 376,973
4.1. Accrued dividends on preferred stock
The accrued dividends on the preferred stock became due on 31 March 2012.
4.2. Management loans
Loans from management incur interest at 5% per annum. The loans are repayable
as PowerHouse Energy, Inc. generates gross profits or, if earlier, within 30
days of termination of management's employment contract. Subsequent to balance
sheet date these loans have been settled through a Mutual release agreement.
4.3. 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.
4.4. Aspermont loan
On 18 April 2012 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 1 per cent. per month. The group is
currently in productive negotiations to revise the terms of the loan.
4.5. Hill Grove Loan
On 19 June 2012 the group entered into a convertible loan agreement with Linc
Energy Limited under which Linc agreed to advance $250,000 to the Group. The
loan is unsecured, repayable on 18 June 2014 and carries interest of 15 per
cent. per annum. Linc has the option at any time to convert the loan in part or
whole at a conversion price of 1p per share. On 8 October 2012, the group was
advised that all rights under this agreement have been assigned to Hill Grove.
On 8 October 2012, the group entered into a further convertible loan agreement
with Hill Grove under which Hill Grove has agreed to advance £380,000 to the
group. The loan is unsecured, repayable on 5 October 2014 and carries interest
of 15 per cent. per annum. Hill Grove has the option at any time to convert the
loan in part or whole at a conversion price of 1p per share.
5. Trade and other payables
(unaudited) (unaudited) (audited)
As at As at As at
30 June 30 June 31 December
Trade creditors 263,474 1,592,549 856,924
Salary and wage 1,203,186 821,619 1,445,926
accruals
RenewMe 1,036,000 - 1,036,000
Customer deposits 153,202 337,293 939,236
Other accruals 193,938 315,373 257,770
Total trade and other 2,849,800 3,066,834 4,535,856
payables
Classified as:
* Current 2,267,050 2,458,142 3,758,856
* Non-current 582,750 608,692 777,000
5.1. Salary and wage accruals
The difference between salaries and wages paid and the amounts due under
service agreements has been accrued. Certain of the US employees filed a
lawsuit in the US District Court (Nevada) against Powerhouse Energy, Inc. and
Powerhouse Energy Group plc for accrued salaries and amounts due to the end of
their service contracts to the value of $1,961,938, plus interest, damages and
legal costs. After the lawsuit was filed an agreement was reached with the
employees whereby in exchange for a cash settlement of $25,000, 520,000 shares
in the company and settlement of their legal fees incurred (approximately
$12,000) the case would be withdrawn and the company and its subsidiary
released from all obligations to the employees. The case was withdrawn on 1
October 2012. Post balance sheet salary and wage accruals were cleared to nil.
5.2. 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 Euro 200,000 annually beginning
30 June 2011. All amounts due under the contract have been recognised as a
liability on the balance sheet for 30 June 2012 The Directors are currently in
productive 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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