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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Powerhouse Energy Group Plc | LSE:PHE | London | Ordinary Share | GB00B4WQVY43 | ORD 0.5P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.975 | 0.95 | 1.00 | 0.975 | 0.975 | 0.975 | 2,942,673 | 08:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Scrap & Waste Materials-whsl | 380k | -46.2M | -0.0111 | -0.87 | 40.33M |
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PowerHouse Energy Group plc
("PowerHouse" or the "Company")
Final Results FOR THE YEARED
31 DECEMBER 2016
PowerHouse is pleased announce its audited results for the year ended 31
December 2016. A copy of the annual report and accounts will be posted to
shareholders shortly and will be available from the Company's website,
www.powerhouseenergy.net, together with a notice of the Company's annual
general meeting.
For more information, contact:
PowerHouse Energy Group plc Tel: +44 (0) 203 368
Keith Allaun, Executive Chairman 6399
WH Ireland Limited (Nominated Adviser) Tel: +44 (0) 207 220
James Joyce / James Bavister 1666
Turner Pope Investments Ltd (Joint Broker) Tel: +44 (0) 203 621
Ben Turner / James Pope 4120
Smaller Company Capital Limited (Joint Broker) Tel: +44 (0) 203 651
Jeremy Woodgate 2910
IFC Advisory (Financial PR & IR) Tel: +44 (0) 203 053
Tim Metcalfe / Miles Nolan 8671
The information contained within this announcement is deemed by the Company to
constitute inside information under the Market Abuse Regulation (EU) No. 596/
2014.
Chairman's Report
Engineering is an exacting, demanding, and precise science. Designing from
first principles, constructing from scratch, and commissioning the only modular
ultra-high temperature gasification reactor system available is a
time-consuming process. For our company 2016 was taken up almost exclusively by
this effort.
I am therefore pleased to report success with both product development and
funding in the year under review. This momentum has continued into the first
few months of 2017 leaving our Company stronger, commercially and financially,
than it has been in the past 5 years.
Waste market Background
According to a World Bank study, it is anticipated that the amount of waste we
generate will double from 2013 to 2025. The MacArthur Foundation reports that
by 2050 the plastic waste in our Oceans will weigh more than all of the fish
combined. We are beginning to do a better job at managing that waste through
rigorous recycling and reuse efforts. But more must be done in order to avert
an ecological crisis in our children's lifetimes.
Energy recovery has been a major objective of waste management for over 50
years. PowerHouse is taking energy recovery to the next level. We believe that
with traditionally difficult-to-manage or hazardous waste, and certainly with
non-recyclable plastics - the plastics ending up in our Oceans - our
Distributed Modular Gasification© ("DMG") technology allows us to recover the
energy value of the waste stream in the most efficient, and environmentally
rigorous, manner available.
We do not pretend to be all things to all people and DMG is part of a waste
management ecosystem with numerous components, each playing a valuable role.
For example, there is anaerobic digestion, composting combined with methane
recovery, other thermal conversion technologies, and of course, recycling and
re-use wherever possible. We applaud all innovators who are, like us, doing
their part to make waste management as green as possible. DMG is however, in
our opinion, the best option in many cases.
The waste-to-energy landscape continues to be an evolving and growing market.
According to a just-released report by Global Market Insights, it is expected
that the waste-to-energy market will grow from $20.6bn in 2015 to over $35.5bn
in 2024. Demand in the market for alternatives to incineration and landfill is
increasing significantly.
In addition to the EU landfill directive, 18 countries are implementing
stringent landfill taxes immediately. These taxes are already high (cGBP85 per
tonne in the UK) and are expected to continue to grow making alternatives like
ultra high temperature DMG very attractive. While incinerators are still being
approved in some geographies, deployment of that aging technology is slowing as
more environmentally friendly alternatives (such as the G3-UHt unit) are coming
to market.
Our opportunity
Distributed Modular Gasification© is, in our estimation, a truly disruptive
technology - philosophy even - that will fundamentally change the
waste-to-energy market.
Local waste, local energy...
DMG enables the thermal molecular conversion of waste into an energy-rich,
non-polluting, synthesis gas ("syngas"). The syngas is used immediately to
generate emission-free energy which can be utilised locally, thereby leveraging
private line or micro-grid connections on-site. If appropriate, it can be sold
into the National Grid.
Importantly, not only can DMG utilise a range of waste - including that which
would normally head to landfill - by siting a G3-UHt unit where the waste is
located, it removes the need to transport it over long distances to either a
processing plant (or to landfill).
...and clean energy with a lower CO2 footprint
The advantages of DMG are multiple. In addition to a reduced carbon dioxide
footprint compared to incineration, ultra high temperature DMG can result in no
leachable residue or ash - a significant problem faced by pyrolysis and lower
temperature combustion-based systems. Low temperature alternatives produce
significant levels of highly toxic and potentially carcinogenic cyclic
molecules. Those toxins are imbued in the residues and ashes of lower
temperature systems and require that the ash and residue be land-filled for
hygiene and safety.
Our ultra high temperature DMG is designed to completely decompose the complex
molecules in the waste-stream, capture the vast majority of the calorific value
therein, detoxify or sequester the residue, and allow us to capture and recycle
components of the waste-stream like sulphur, zinc, or other minerals or metals
Local hydrogen "on tap" is a game changer
The conversion of waste to hydrogen is a cornerstone for any future hydrogen
economy. Some think this is "blue sky thinking", however, we have already
demonstrated our ability to generate a syngas that is nearly 70% hydrogen.
This nearly pure hydrogen can be diverted from the syngas with existing,
off-the-shelf technology, compressed, stored at site and delivered to
appropriate infrastructure in what is perhaps the single most economical, and
environmentally responsible manner possible. For example, by generating
hydrogen in multiple locations, from a feedstock for which we are paid, we can
use it to recharge fuel cells and become the road fuel of the future in fuel
cell vehicles.
With this in mind, we announced earlier in 2017 that we expected the delivery
of an AFC Fuel Cell unit to our Thornton Facility. We are confident that our
G3-UHt unit will perform as it has in the past, and that our unique ability to
generate a hydrogen-rich gas will lead to a successful trial of the fuel cell.
Major energy and transportation companies have made public commitments to
significantly expanding the hydrogen infrastructure, with Shell stating
recently that they expect 400 hydrogen filling stations in the UK by 2023.
Toyota - which has developed the Mirai - has opened its hydrogen-filling
related patent portfolio to all comers in its commitment to driving forward the
nascent hydrogen economy. Fuel cell vehicles are proven to be more robust than
current battery powered vehicles; they can travel much greater distances
between refuellings, and are not simply shifting the CO2 impact from the
vehicle back to the ultimate source of electrical generation.
We are convinced that DMG will be able to play a role, and possibly a major
role, in the creation of ubiquitous Hydrogen filling stations across the
nation.
We believe this is the future and is the pinnacle for which we are striving.
Our technology's progress
During 2016, the Company successfully completed the development of the
Company's G3-UHt unit and undertook its initial testing program in Brisbane,
Australia. The work was carried out through the work-for-hire program by OrePro
pty Ltd ("OrePro"), a company associated with one of our shareholders
Hillgrove.
Consistent with research and market analysis it became clear during 2016 that
due to a variety of competitive and political reasons, the Company's ideal
initial target markets are located in the UK and Europe. In continuing our
engineering and R&D efforts exclusively in Australia, too great a stress was
placed on the limited resources of the Company. After assessing the most
appropriate course of action we determined to relocate the preponderance of our
R&D, engineering, development, design, and Corporate operations to the UK.
I am pleased to report - in April 2017 - the safe arrival, reassembly, and
initial phase of re-commissioning of the G3-UHt reactor at the prestigious
Thornton Science Park, in Chester, in the North West of England. This will be
the new base of technical operations and process demonstration for PowerHouse.
The PowerHouse team has been working diligently to build a gasification system
from first principals; one that could stand up to the rigors of real-world
operation, and one that could be easily, and modularly deployed.
While the demonstration G3-UHt unit is a nominal 1-3 tonne per day ("tpd")
system, scaling it up is, to a large degree, a linear step function.
The benefits of scale
Historically, scaling a system from demonstration and pilot size has posed
significant risks for technology developers. However, we have actual
experience with our previous 25tpd unit. In dismantling the G3-UHt unit, we
were able to clearly identify the specific components that made it non-viable
as a commercial unit.
The G3-UHt unit was designed with expansion in mind. Effectively interlocking
and leveraging both front-end and back-end balance of plant components, the
latest designs of the G3-UHt system allow us to scale with reduced risk. We
know that the 25tpd redesign works, and we are in the process of initiating the
engineering work for our first commercial DMG system, based on the success of
the G3-UHt.
With the advent of significant advances in material science, our revised
heating design is substantially more efficient - improving the thermal efficacy
of the system as a whole. The specially formulated and manufactured reactor
chambers are immune to the corrosive threats previous technologies faced- thus
increasing the lifespan of a reactor vessel.
The simplification of the control systems, using advances in programmable logic
controller knowledge, and the understanding of total system operation, has led
to a dramatic reduction in manufacturing expense. This has also led to an
increased ease of operation, the elimination of potential points of failure,
and enhanced safety features for the system as a whole.
The modular G3UHt units, with smaller footprints than other commercial
technologies, remain ideally suited for local, or neighbourhood, transfer
stations, and are appropriately sized for integration into the community and
the expansion of the distributed Grid, and the unlocking of the hydrogen
economy.
The Directors are enthusiastic about the DMG technology and recognize that the
G3-UHt system has the potential to be one of the most robust, cost-effective,
operationally efficient, and flexible gasification systems on the market.
Project Development
PowerHouse is not only a technology company - we have developed a technology
that we believe is superior to others in the market. However, we are project
developers and it is our intent to develop long-term projects in partnership
with others, like Waste2tricity, and to build annuity streams of income, year
on year. Our intent is not to sell or license our technology, but to integrate
it into a partnership that continues to deliver revenue streams for years to
come. Unique opportunities may present themselves over time in which we may
consider a unit-sales model, however, our latest economic models have convinced
us that owning and operating the facility is the most lucrative option in both
the near and long-term.
Upon completion of the UK certification process we will be ready for launch. We
are confident that the demonstrations which we intend to undertake will lead to
significant commercial opportunities for PowerHouse.
It is likely that as commercial engineering and business development continues
we will choose to pursue additional funding options including equity, debt, or
possible project financing models.
Strategic alliances
Hillgrove
Hillgrove Investments Pty Ltd ("Hillgrove") has been a key partner to the
Company since 2010. Hillgrove was responsible for funding all Company
operations for over a three-year period from mid-2012 to 2016 and providing
personnel for the design, development, engineering, construction, and testing
of the system in Brisbane, Australia. In addition, much of the development work
on the G3-UHt system was undertaken by OrePro pty Ltd, an associate of
Hillgrove.
Inevitably that reliance on Hillgrove's financial and operational support
resulted in a substantial financial commitment on the part of the Company,
which was threatening to become inappropriate in the context of a publicly
quoted entity.
We were therefore delighted to announce the restructuring of these arrangements
in February 2017, with the assistance of Hillgrove, as detailed below under
Funding. We look forward to working together with Hillgrove in the future
development of the Company.
Peel Environmental
The Company remains in active discussions with Peel Environmental regarding
potentially siting our first commercial facility at Protos, their energy park
adjacent to the Thornton Science Park.
Waste2tricity
PowerHouse stands today upon a wealth of information that is being put to good
use by world-class professionals in a growing team. Our partnership with
Waste2tricity has led to tremendous opportunities, several of which are at a
scale never before envisaged by the Company. The synergy present across the
team is beginning to generate the results that we've been predicting for years
- and it all starts with Distributed Modular Gasification©.
Yady
Yady Worldwide, S.A. ("Yady"), an investor in the Company, has further
supported PowerHouse with the contribution of GBP500,000 in the fundraise
announced in February 2017. Yady also agreed to a 12 month lock-in period with
the Company.
AFC Energy
In March 2017, PowerHouse confirmed its order of a small-scale fuel cell system
originally ordered in 2014 from AFC Energy plc ("AFC") but delayed awaiting the
completion of the construction and testing of the G3-UHt Unit. Upon delivery
of the fuel cell, expected in Q4 2017, PowerHouse anticipates having a high
quality hydrogen stream (a component of the syngas produced) from the G3-UHt to
successfully integrate with the fuel cell, to provide production of electrical
power. Receipt of the fuel cell is contingent upon the G3-UHt unit being
capable of producing a hydrogen stream compatible with the fuel cell.
Having seen AFC's commitment to developing the "Hydrogen Economy" in Germany
and elsewhere, PowerHouse is delighted to work closely with AFC in the
development of DMG to deliver hydrogen where, and when, it is needed. The
successful integration of these two technologies could create significant new
markets in clean distributed power generation and continue to grow the
increasing prominence of the hydrogen economy in the UK and overseas.
Nominated Advisor
In March of 2016, WH Ireland was appointed the Company's new Nominated
Advisor. The Company continues to work closely and cooperatively with WHI to
ensure the highest standards of Corporate Governance and AIM Regulation
Compliance.
Board appointments
Executive Directors / Management
One is a lonely number. I was therefore delighted in February 2017 to be joined
by David Ryan as Executive Director for Programme Development.
David has over 30 years of increasingly complex engineering, business
development, and project management experience. He is an expert in
sophisticated design engineering and will bring a breadth of project delivery,
international business management, and general engineering acumen to the
management team.
Previously David was the CEO and Managing Director of Thyssenkrupp Industrial
Solutions' Oil & Gas Business Unit for the UK. Prior to his employment with
Thyssenkrupp, he founded and built a successful engineering consulting
organisation, Energy & Power Limited, which was acquired by Thyssenkrupp in
2012.
In March 2017 Chris Vanezis joined the management team as Chief Financial
Officer. Chris trained with Deloitte and Coopers & Lybrand, qualifying as a
chartered accountant in 1990. He has over 15 years' experience in the energy
sector, with a strong track record in Waste-to-Energy, and major infrastructure
projects both in the UK and internationally.
Prior to joining PowerHouse, Chris worked as an independent consultant,
providing his expertise to a number of companies in renewable energy. Chris
will take the lead in implementing strong financial controls at a time of
planned growth.
Together this team is driving the UK Health, Safety and Environmental
certification process as well as initiating the commercial development and
engineering process for the building of our first 25 tonne per day unit at a
site currently being negotiated.
Additionally we have begun the recruitment and interviewing process for our
first team hires to fully staff our Thornton Science Park offices.
Non-executive directors
In May 2016 Clive Carver, was appointed to the board as a non-executive
director. Clive is a Chairman / non-executive director of a number of AIM
companies and has spent many years advising and fund raising in the AIM market.
Clive completed his service with the Company in May of 2017 to pursue other
endeavours. We appreciate the contribution he made during his time on the
Board.
As always, Brent Fitzpatrick, MBE and James Greenstreet have continued to guide
the Company's development as non-executives throughout the year under review
and subsequently providing wise and timely advice to the board.
To raise the profile of the Company, help maintain the pace of development and
in keeping with the best principles of Corporate Governance, the Board has
decided to separate the role of Chairman and CEO at an appropriate time. We
expect to announce the appointment of a leading figure in the Waste-to-Energy
sector in the coming months.
Recently, the Company announced the formation of a Commercial, Scientific, and
Engineering Advisory Panel. The Advisory Panel currently consists of industry
stalwarts Peter Jones OBE, Keith Riley, Miles Kitcher, Howard White, and Rudi
Baroudi. It should be noted that none of the Advisory Panellists are Directors
of the Company, and while Management, and the Board, may well seek their
counsel on particular matters pertaining to their individual expertise, the
governance and decision making authority for the Company rests solely with the
Board of Directors.
Funding
During 2016 and to date in 2017 the Company has raised a total of GBP3.3 million.
In February 2017, the Company raised GBP2.5 million through the issue of
312,500,000 new ordinary shares. The placing was completed at a price of 0.8p
per Share and was in conjunction with the partial conversion of the loan note
signed between the Company in Hillgrove in October 2012 (the "Note").
The terms of the Hillgrove Note were such that the Company was accruing 15%
interest against the loan. Hillgrove had extended a total of GBP3,402,155 to the
Company, including accrued interest, and accepted a GBP2 million cash pay-out,
and conversion of the remaining GBP1,402,155 into newly issued share capital of
the Company at the previously agreed 0.5p conversion price, amounting to
280,430,920 shares. Hillgrove now holds a total of 300,430,920 ordinary shares
in the Company. Hillgrove has committed to a 12 month lock-in period for its
newly issued shares.
The proceeds have been used principally to repay the balance of the Note not
otherwise converted to shares, and for operating capital. By virtue of the
conversion and pay-out, the Company will eliminate the Hillgrove Note, and the
Debenture over the Company's assets, held by Hillgrove, will be released,
pending receipt by Hillgrove of GBP2m and 280,430,920 Shares. A further
announcement regarding the elimination of the Hillgrove Note and release of the
debenture is expected in due course.
Yady Worldwide, SA also invested GBP500,000 to the equity fundraise in February
2017, having previously invested GBP250,000 in January 2017.
Other fundraisings in 2016 amounted to GBP700,512.
Financial results
The Company financial statements for the year ended 31 December 2016 are set
out on pages 18 to 29. The Company loss for the year after taxation amounted to
GBP1,334,009 (2015: Loss of GBP781,647).
Current Trading
The Company is on a firm footing for the foreseeable future. Cash-on-hand as at
the date of this report is approximately GBP235,000, with an additional
approximate GBP60,000 in VAT and Customs Duties recovery. This represents
sufficient resources to enable the Company to meet its obligations as they fall
due. Our relationship with Waste2tricity is based on payment converted to
equity and is therefore not a drain on the Company's cash resources. Similarly,
no member of the Advisory Panel is receiving any cash compensation for their
participation with the company.
Outlook
Through the creation of DMG, PowerHouse is not only on the cusp of redefining
the waste-to-energy industry - we believe we also hold one of the keys to
unlocking the hydrogen economy.
The Company has been making tremendous strides as a newly minted, commercial,
entity. The G3-UHt technology is, in our opinion, unparalleled in its
capability, its efficiency, its economy, and its environmental contribution.
We now have the technology, we are building the team necessary to achieve our
commercial endeavours and we are eager to begin growing our office at Thornton,
and demonstrating our technology, with the conversion and repayment of the
Hillgrove convertible note, the Company is now fully focused on moving forward
aggressively with its commercialisation phase.
DMG is a disruptive philosophy - PowerHouse has created it, and now is the time
to disrupt.
As always, we are grateful for your continued support.
Keith Allaun
Chairman
15 June 2017
Directors' Report
The Directors present their annual report along with the Company's financial
statements and the consolidated financial statements for the year ended 31
December 2016. The financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by the European
Union and will be laid before the shareholders of the Company at the Annual
General Meeting.
The subsidiary companies owned by the Company are in the process of being
liquidated. Although the subsidiary companies had all ceased operating by the
end of 2014, consolidated accounts are required to be prepared as the Company
still owns them at the year end prior to their liquidation. The Company's
investments in the subsidiary companies were written down prior to the start of
the financial year and there is no financial recourse to the Company expected
as a result of their future liquidation.
Principal activities
The principal activity of the Group is to continue the development of the newly
developed PHE G3-UHt Waste-to-Energy System in order to achieve its full
commercial roll-out. The system's gasification reactor converts waste
materials such as non-recyclable plastic, biomass, and other waste streams into
a high-quality, clean, synthesis gas composed primarily of hydrogen and carbon
monoxide. The newly engineered, designed, and constructed, PHE G3-UHt
demonstration system is completed and operational. Demand for our technology
is increasing, with Europe and the UK considered ideal markets given the focus
on reducing waste to landfill.
A more thorough review of the development of the business together with an
indication of future proposed developments is included in the Chairman's Report
set out on pages 4 to 9.
The Company financial statements for the year ended 31 December 2016 are set
out on pages 18 to 29. The Company loss for the year after taxation amounted to
GBP1,334,009 (2015: Loss of GBP781,647). The Group financial statements are set
out on pages 32 to 44. The Group loss for the year after taxation amounted to GBP
1,334,009 (2015: Profit of GBP315,780). The net liabilities of the Company are GBP
3,226,564 (2015: GBP2,960,219) with the movement in the year set out on page 18.
The net liabilities of the Group are GBP3,226,564 (2015: GBP2,960,219) with the
movement in the year set out on page 33.
The Directors do not recommend the payment of a dividend (2015: GBPnil).
Principal risks and uncertainties are discussed in note 13 to the Company
financial statements.
There have been no significant events since the balance sheet date other than
those discussed in this Directors' Report, the Strategic Report and note 16 to
the Company financial statements.
Research and development
The Group and Company incurred no research and development related costs during
the year (2015: GBPnil).
Substantial shareholdings
Shareholders holding in excess of 3 per cent of the issued share capital of the
Company as at 12 April 2017, which the Company was aware of were as follows;
Number of Percentage of
ordinary voting rights
shares of 0.5p
each
Hargreaves Landsdown (Nominees) Limited 145,276,094 23.9
Pershing Nominees Limited 103,281,141 17.0
Ferlim Nominees Limited 59,682,961 9.8
Linc Energy Limited (in liquidation) 28,350,000 4.7
TD Direct Investing Nominees (Europe) Limited 21,561,862 3.5
Vidacos Nominees Limited 21,455,447 3.5
Hillgrove Investments Pty Limited 20,000,000 3.3
Investor Nominees Limited 19,220,192 3.2
Directors
The Directors, who served during the year, and subsequently, were as follows:
Robert Keith Allaun Executive Chairman
Nigel Brent Fitzpatrick Non-Executive Director
James John Pryn Greenstreet Non-Executive Director
Clive Nathan Carver Non-Executive Director (appointed 17 May 2016, resigned
22 May 2017)
David Ryan Executive Director (appointed 21 February 2017)
Corporate Governance
The Company complies with the AIM Rules for Companies, including AIM Rule 26,
concerning the disclosure of information. More details are available on the
Company website.
Payment to suppliers
The Group does not have a standard or code which deals specifically with the
payment of suppliers. Total creditor days for the Company for the year ended
31 December 2016 were 19 days (2015: 82 days) and for the Group 19 days (2015:
82 days).
Going concern basis
The Directors have considered all available information about the future events
when considering going concern including their review of cash flow forecasts
for 12 months following the date of these Financial Statements.
The cash balance held at 31 December 2016 of GBP148,151 together with fund raises
completed after year end is considered sufficient to ensure the company can pay
its debts as they fall due over the forthcoming 12 month period Based on this,
the Directors believe it is appropriate to continue to adopt the going concern
basis of accounting for the preparation of the annual financial statements.
Additionally, Hillgrove Investments Pty Limited, as the holder of Convertible
Loan Agreement, has agreed full and final settlement of its loan by way of a
share and cash settlement. This was approved and agreed after the balance sheet
date.
Auditor
Each of the persons being a Director at the date of approval of this report
confirms that:
* So far as the director is aware there is no relevant audit information of
which the Company's auditor is unaware; and
* The Director has taken all the steps that he ought to have taken as a
Director in order to make himself aware of any relevant audit information
and to establish that the Company's auditor is aware of that information.
This confirmation is given, and should be interpreted, in accordance with the
provisions of s.418 of the Companies Act 2006.
Approved by the Board of Directors and signed on behalf of the Board on 15 June
2017.
Keith Allaun
Director
Strategic Report
The Directors present their strategic report on the Group for the year ended 31
December 2016.
This strategic report comprises: the Group's objectives; the Group's strategy;
the Group's business model; and a review of the Group's business using key
performance indicators.
The Chairman's statement, which also forms the main part of the strategic
review, contains a review of the development and performance of the Group's
business during the financial year, and the position of the Group's business at
the end of that year.
Additionally, a summary of the principal risks and uncertainties facing the
business is set out in note 13 to the Company's financial statements..
Objectives
The Group's primary objective is to create shareholder value from the
development of projects to convert waste to energy (Syngas, Hydrogen, and
Electricity) using proprietary gasification technology and processes as well as
the potential sale of gasification reactors, or the licence of our technology
to third parties.
The Group has a number of secondary objectives, including promoting the highest
level of health and safety standards, developing our staff to their highest
potential and being a good corporate citizen in our chosen countries of
operations.
Strategy
The Group's long-term strategy is to build an attractive portfolio of
profitable waste eradication, energy recovery, and distributed electrical and
hydrogen production operations utilising the Company's proprietary gasification
technology in conjunction with a variety of industry partners, including
Material Recovery Facilities, landfill operators, additional technology
providers, and other project development partners.
Additionally, the Group will seek to exploit associated opportunities where the
board believes it can add significant value and contribute towards the success
of the Group as a whole.
At present the Group's principal asset is its development G3-UHt prototype,
currently located at the University of Chester Thornton Science Park.
Business Model
PowerHouse intends to further develop the Company's G3-UHt prototype into a
fully operational commercial unit capable of processing a nominal 25 tonnes per
day of waste. It is expected that activities will commence in the UK in
partnership with Waste2tricity, Ltd, an experienced Waste-to-Energy project
development organization. The Company has entered into an MOU with Peel
Environmental to negotiate the siting of its first commercial facility at
Protos - the large Energy Park being developed by Peel near Chester and
adjacent to the Thornton Science Park.
Over the longer term the Company will look to exploit its proprietary know-how,
technology developments and other processes to develop economical,
environmentally sound, and efficient solutions to capture even more energy from
the growing waste-steam generated by humanity. Operations will be rolled-out
beyond the UK as opportunities present themselves.
Key performance indicators
Review of the Group's business using key performance indicators
The Directors consider the following to be the key performance indicators:
- Operational
o Full commissioning of the G3-UHt demonstration unit at the
Thornton Science Park with the ability to operate the unit on an on-going
basis.
o Pre-Feasibility study developed regarding the roll-out of G3-UHt
systems with a minimum nominal capacity of 25 tonnes per day throughput,
coupled with the generation of electricity through any mechanism: steam boiler/
turbine, reciprocal gas engines, gas turbine, or fuel cell.
o Demonstration of the ability to sequester adequately pure
Hydrogen for use in either road fuel or other fuel cell applications.
- Financial
o Adequate working capital measured in number of months available
for the Company's needs.
o Achievement of cash-flow to meet company operational needs
o Profitability when successfully and fully commercialized
o Growing Return on capital
o Growing market capitalisation
The principal and other risks and uncertainties facing the business
The Company and the Group are subject to various risks relating to political,
economic, legal, social, industry, business and financial conditions. Risk
assessment and evaluation is an essential part of the Group's planning and an
important aspect of the Group's internal control system. The following risk
factors, which are not exhaustive, are particularly relevant to the Company and
the Group's business activities:
Financing risks
The Group continually monitors its financial position to ensure the
continuation of the operational activities and expects to fund the costs of its
planned development programme over the next 12 months from existing funds in
addition to, when appropriate, from the acquisition of new equity capital,
project financing, or the assumption of alternative debt.
Environmental and other regulatory risks
While there is always the possibility of a changing regulatory landscape, the
Company is confident that it will achieve both regulatory and environmental
certification for the operation of its zero-emission gasification systems, as
similar thermal conversion technologies have previously achieved such
certification. Additionally, the Company had previously achieved both CE
Certification and Environmental permissions to operate in Munich, Germany and
California, USA with previous generations of its systems. To date, there have
been no adverse environmental incidents, or any adverse regulatory action taken
against the Company.
Operational risks
The thermal conversion technology employed by PowerHouse utilises ultra-high
temperature heating elements in the operation of its G3-UHt unit. The G3 has
been subjected to a robust Hazard and Operability study and a Hazard
Identification study, both of which will inform the development of the
Company's Health & Safety protocols. To date, there have been no adverse
Health or Safety incidents involving the G3 platform.
Political risk
The regulatory landscape may be subject to change with a new government and in
differing geographies. PowerHouse actively monitors and keeps up to date with
the regulatory schemes of all geographies in which it anticipates developing
projects to be in a position to adapt to any, and all, emerging regulations as
required.
Competitive risk
There are a number of thermal conversion and waste management technology
operators world-wide. Another company may launch a less costly or more
efficient analogue to PowerHouse's technology. At present the Company is not
aware of any such technology currently under development, however, the Company
is protected by years of specialized know-how, processes, and intellectual
property. Given the robust manner in which the company has developed its
design and engineering philosophies over the past 10 years, it is unlikely that
a more economical and efficient process than that of the Company will be
developed in the near-term. Additionally, the Company's intended business model
of the development of multiple projects in multiple locations, each generating
revenue, will provide a greater level of protection than if the Company was
relying on the sale of individual units into the market.
Take-Over Risk
The Company may become the target of a take-over bid by any number of larger
entities in the waste management, energy recovery, or energy production
industries. It is expected that any take-over bid or attempted acquisition
would be to the benefit of shareholders and the Board would work diligently to
ensure that would be the case. The Board believes that this risk will be
mitigated by successfully growing our commercial operations and increasing the
market capitalisation.
Other Risks
The Company may be subject to other risks of which it is not currently aware.
The Board and Management operate to ensure that the Company is able to react to
any unforeseen risks rapidly and appropriately. Through regular communication
with industry bodies, peers, attending conferences and other industry events,
the Board and Management work to maintain awareness of any potential threats or
risks the Company might encounter and take appropriate action in a timely
manner.
Approved by the Board of Directors and signed on behalf of the Board on 15 June
2017.
Keith Allaun
Director
Directors Responsibilities Statement
The directors are responsible for preparing the Annual Report and the financial
statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each
financial year. Under that law the directors are required to prepare the group
financial statements in accordance with International Financial Reporting
Standards (IFRSs) as adopted by the European Union (EU) and have also chosen to
prepare the parent company financial statements under IFRSs as adopted by the
EU. Under company law the directors must not approve the accounts unless they
are satisfied that they give a true and fair view of the state of affairs of
the company and of the profit or loss of the company for that period. In
preparing these financial statements, International Accounting Standard 1
requires that directors:
· properly select and apply accounting policies;
· present information, including accounting policies, in a manner that
provides relevant, reliable, comparable and understandable information;
· provide additional disclosures when compliance with the specific
requirements in IFRSs are insufficient to enable users to understand the impact
of particular transactions, other events and conditions on the entity's
financial position and financial performance; and
· make an assessment of the company's ability to continue as a going
concern.
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.
The directors are responsible for the maintenance and integrity of the
corporate and financial information included on the company's website.
Legislation in the United Kingdom governing the preparation and dissemination
of financial statements may differ from legislation in other jurisdictions.
Responsibility statement
We confirm that to the best of our knowledge:
· the financial statements, prepared in accordance with International
Financial Reporting Standards, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the company and the
undertakings included in the consolidation taken as a whole;
· the strategic report includes a fair review of the development and
performance of the business and the position of the company and the
undertakings included in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that they face; and
· the annual report and financial statements, taken as a whole, are
fair, balanced and understandable and provide the information necessary for
shareholders to assess the company's performance, business model and
strategy.
BY ORDER OF THE BOARD
Keith Allaun
Director
15 June 2017
Independent Auditor's Report to the Members of PowerHouse Energy Group PLC
We have audited the financial statements of PowerHouse Energy Group Plc for the
year ended 31 December 2016 which comprise the Company Statement of
Comprehensive Income, Company Statement of Changes in Equity and Company
Statement of Financial Position, Company Statement of Cash flows and the
related notes 1 to 16. The financial reporting framework that has been applied
in their preparation is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union.
This report is made solely to the company's members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the company's members those matters we are
required to state to them in an auditor's report and for no other purpose. To
the fullest extent permitted by law, we do not accept or assume responsibility
to anyone other than the company and the company's members as a body, for our
audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditor
As explained more fully in the Directors' Responsibilities Statement, the
directors are responsible for the preparation of the financial statements and
for being satisfied that they give a true and fair view. Our responsibility is
to audit and express an opinion on the financial statements in accordance with
applicable law and International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Auditing Practices Board's Ethical
Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the
financial statements sufficient to give reasonable assurance that the financial
statements are free from material misstatement, whether caused by fraud or
error. This includes an assessment of: whether the accounting policies are
appropriate to the parent company's circumstances and have been consistently
applied and adequately disclosed; the reasonableness of significant accounting
estimates made by the directors; and the overall presentation of the financial
statements. In addition, we read all the financial and non-financial
information in the annual report to identify material inconsistencies with the
audited financial statements and to identify any information that is apparently
materially incorrect based on, or materially inconsistent with, the knowledge
acquired by us in the course of performing the audit. If we become aware of
any apparent material misstatements or inconsistencies we consider the
implications for our report.
Opinion on financial statements
In our opinion the financial statements:
· give a true and fair view of the company's affairs as at 31 December
2016 and the company's loss for the year then ended;
· have been properly prepared in accordance with IFRSs as adopted by the
European Union; and
· have been prepared in accordance with the requirements of the Companies
Act 2006.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion, 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.
In our opinion the information given in the Strategic Report and the Directors'
Report for the financial year for which the financial statements are prepared
is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the
Companies Act 2006 requires us to report to you if, in our opinion:
· 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.
Kate Darlison (Senior statutory auditor)
for and on behalf of Deloitte LLP
Statutory Auditor
Leeds
15 June 2017
Company Statement of Comprehensive Income
for the year ended 31 december 2016
31 December 31 December
Note 2016 2015
GBP GBP
Revenue - -
Administrative expenses 2 (851,903) (397,022)
Operating loss (851,903) (397,022)
Finance costs 3 (482,106) (384,625)
Loss before taxation (1,334,009) (781,647)
Income tax expense 4 - -
Total comprehensive loss (1,334,009) (781,647)
Loss per share (pence) 5 (0.24) (0.20)
Diluted loss per share (pence) 5 (0.24)
(0.20)
Company Statement of Changes in Equity
Share Share Deferred Deferred Deferred Retained
capital premium shares shares shares earnings Total
GBP GBP (0.5p) (4.0p) (4.5p) GBP GBP
GBP GBP GBP
Balance at 1 January 3,884,965 46,898,113 - 781,808 389,494 (54,364,352) (2,409,972)
2015
Transactions with
equity participants:
* Shares (1,942,483) - 1,942,483 - - - -
reorganisation
* Shares issued 208,333 23,067 231,400
* Total comprehensive (781,647) (781,647)
loss
Balance at 31 December 2,150,815 46,921,180 1,942,483 781,808 389,494 (55,145,999) (2,960,219)
2015
Transactions with
equity participants:
* - Shares issue 45,455 4,545 - 50,000
* - Share issue 178,571 56,429 - 235,000
* - Share issue 17,857 7,143 - 25,000
* - Share issue 192,308 42,692 - - 235,000
* - Share issue 454,664 - - - 454,664
* - Share based - - 68,000 68,000
payment
* Total comprehensive - - (1,334,009) (1,334,009)
loss
Balance at 31 December 3,039,670 47,031,989 1,942,483 781,808 389,494 (56,412,008) (3,226,564)
2016
The notes 1 to 16 are an integral part of the financial information.
COmpany Statement of Financial Position
As at 31 December 2016
Note 2016 2015
GBP GBP
ASSETS
Non-current assets
Property, plant and equipment 6 2,424 -
Investments 7 - -
Total non-current assets 2,424 -
Current Assets
Trade and other receivables 8 6,336 1,451
Cash and cash equivalents 148,151 175,750
Total current assets 154,487 177,201
Total assets 156,911 177,201
LIABILITIES
Non-current liabilities
Loans 10 - (2,938,636)
Current liabilities
Trade and other payables 9 (51,183) (198,784)
Loans 10 (3,332,292) -
Total current liabilities (3,383,475) (198,784)
Net liabilities (3,226,564) (2,960,219)
EQUITY
Share capital 11 3,039,670 2,150,815
Share premium 47,031,989 46,921,180
Deferred shares 3,113,785 3,113,785
Accumulated losses (56,412,008) (55,145,999)
Total deficit (3,226,564) (2,960,219)
The financial statements of PowerHouse Energy Group Plc, Company number
03934451, were approved by the board of Directors and authorised for issue on
15 June 2017 and signed on its behalf by:
Keith Allaun
Director
The notes numbered 1 to 16 are an integral part of the financial information.
Company Statement of Cash Flows
For the year ended 31 december 2016
2016 2015
GBP GBP
Cash flows from operating activities
Operating Loss (851,903) (397,022)
Adjustments for:
* Share based payment 68,000 -
* Renewme settlement 299,152 -
Changes in working capital:
* (Increase)/Decrease in trade and other (4,885) 4,390
receivables
* (Decrease) in trade and other payables (147,601) (36,050)
Net cash used in operations (637,237) (428,682)
Cash flows from investing activities
* Purchase of fixed assets (2,424) -
Cash flows from financing activities
Proceeds on issue of shares 700,512 231,400
Finance costs (482,106) (384,625)
New loans raised 577,567 757,632
Loans repaid (183,911) -
Net cash flows from financing activities 612,062 604,407
Net (decrease)/increase in cash and cash equivalents (27,599) 175,725
Cash and cash equivalents at beginning of year 175,750 25
Cash and cash equivalents at end of year 148,151 175,750
The notes numbered 1 to 16 are an integral part of the financial information.
Notes to the Company Accounts
1. 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 financial information is for the year ended 31 December 2016 and has been
prepared in accordance with International Financial Reporting Standards
("IFRS") adopted for use by the European Union and the Companies Act 2006.
These accounting policies and methods of computation are consistent with the
prior year.
1.2. Judgements and estimates
The preparation of financial statements in conformity with IFRS requires
management to make judgements, estimates and assumptions that affect the
application of policies and reported amounts in the financial statements.
The component parts of compound instruments (convertible bonds) have a high
degree of complexity. At the date of issue, the fair value of the liability
component is estimated using the prevailing market interest rate for a similar
non-convertible instrument, the residual equity component is determined by
deducting the amount of the liability component from the fair value of the
compound instrument as a whole. These are classified separately as financial
liabilities and equity in accordance with the substance of the contractual
arrangement. In classifying the instruments it has been assessed that there is
no equity element in relation to the convertible loan notes.
Other areas involving a higher degree of judgements or complexity, or areas
where assumptions or estimates are significant to the financial statements such
as the impairment of investments and going concern are disclosed within the
relevant notes
1.3. Going concern
The Directors have considered all available information about the future events
when considering going concern including their review of cash flow forecasts
for 12 months following the date of these Financial Statements.
The cash balance held at 31 December 2016 of GBP148,151 together with fund raises
completed after year end is considered sufficient to ensure the company can pay
its debts as they fall due over the forthcoming 12 month period. Based on
this, the Directors believe it is appropriate to continue to adopt the going
concern basis of accounting for the preparation of the annual financial
statements.
Additionally, Hillgrove Investments Pty Limited, as the holder of Convertible
Loan Agreement, has agreed full and final settlement of its loan by way of a
share and cash settlement. This was approved and agreed after the balance sheet
date.
1.4. Foreign currency translation
The financial information is presented in sterling which is the Company's
functional currency.
Foreign currency transactions are translated into the functional currency using
the exchange rates prevailing at the dates of the transactions. Monetary assets
and liabilities denominated in foreign currencies are revalued to the exchange
rate at date of settlement or at reporting dates (as appropriate). Exchange
gains and losses resulting from such revaluations are recognised in the
Statement of Comprehensive Income.
Foreign exchange gains and losses are presented in the Statement of
Comprehensive Income within administrative expenses.
1.5. Revenue
Revenue represents the amounts (excluding VAT) derived from the supply of
goods.
1.6. Employee costs
The Company has no employees (2015: nil).
1.7. Operating Leases
The Company has no operating leases (2015: nil).
1.8. Finance expenses
The effective interest method is a method of calculating the amortised cost of
a financial liability and of allocating interest expense over the relevant
period. The effective interest rate is the rate that exactly discounts
estimated future cash payments through the expected life of the financial
liability, or, where appropriate, a shorter period, to the net carrying amount
on initial recognition.
1.9. Income tax expense
The tax expense for the period comprises current and deferred tax.
UK corporation tax is provided at amounts expected to be paid (or recovered)
using the tax rates and laws that have been enacted or substantively enacted by
the balance sheet date.
Deferred tax is recognised in respect of all temporary differences that have
originated but not reversed at the balance sheet date where transactions or
events that result in an obligation to pay more tax in the future or a right to
pay less tax in the future have occurred at the balance sheet date. Temporary
differences are differences between the company's taxable profits and its
results as stated in the financial statements that arise from the inclusion of
gains and losses in tax assessments in periods different from those in which
they are recognised in the financial statements.
A net deferred tax asset is regarded as recoverable and therefore recognised
only to the extent that, on the basis of all available evidence, it can be
regarded as more likely than not that there will be suitable taxable profits
from which the future reversal of the underlying temporary differences can be
deducted.
Deferred tax is measured at the average tax rates that are expected to apply in
the periods in which the temporary differences are expected to reverse, based
on tax rates and laws that have been enacted or substantively enacted by the
balance sheet date. Deferred tax is measured on a non-discounted basis.
1.10. Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation.
Cost represents the cost of acquisition or construction, including the direct
cost of financing the acquisition or construction until the asset comes into
use.
Depreciation on property, plant and equipment is provided to allocate the cost
less the residual value by equal instalments over their estimated useful
economic lives of 3 years, once the asset is complete.
The expected useful lives and residual values of property, plant and equipment
are reviewed on an annual basis and, if necessary, changes in useful life or
residual value are accounted for prospectively.
1.11. Other non-current assets
Other non-current assets represent investments in subsidiaries. The investments
are carried at cost less accumulated impairment. Cost was determined using the
fair value of shares issued to acquire the investment.
1.12. Trade and other receivables
Trade receivables are recognised at fair value. Subsequently they are carried
at amortised cost less any impairment losses.
1.13. Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits and are
recognised and subsequently carried at fair value.
1.14. Trade and other payables
Trade payables are obligations to pay for goods or services that have been
acquired in the ordinary course of business from suppliers. Trade and other
payables are recognised initially at fair value and subsequently measured at
amortised cost using the effective interest method.
1.15. Loans
Loans are financial obligations arising from funding received and used to
support the operational costs of the Company. These are initially recognised at
fair value. Loans are subsequently carried at amortised cost using the
effective interest method.
1.16. Adoption of new and revised standards
New and revised standards adopted during the year and those standards and
interpretations in issue but not yet effective are shown in note 1.21 to the
Group financial statements.
1.17. Impairment
(i) Impairment review
At each balance sheet date, the carrying amounts of assets are reviewed to
determine whether there is any indication that those assets have suffered an
impairment loss. An impairment loss is recognised whenever the carrying amount
of an asset or its cash generating unit exceeds its recoverable amount.
Impairment losses recognised in respect of cash generating units are allocated
first to reduce the carrying amount of any goodwill allocated to cash
generating units and then to reduce the carrying amount of the other assets in
the unit on a pro-rata basis. A cash generating unit is the group of assets
identified on acquisition that generate cash inflows that are largely
independent of the cash inflows from other assets or groups of assets. The
recoverable amount of assets or cash generating units is the greater of their
fair value less costs to sell and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset. For an asset that does not
generate largely independent cash inflows, the recoverable amount is determined
for the cash generating unit to which the asset belongs.
(ii) Reversals of impairments
An impairment loss in respect of goodwill is not reversed. In respect of other
assets, an impairment loss is reversed if there has been a change in the
estimates used to determine the recoverable amount.
An impairment loss is reversed only to the extent that the asset's carrying
amount does not exceed the carrying amount that would have been determined, net
of depreciation or amortisation, if no impairment loss had been recognised.
2. Administrative expenses
Included in administrative expenses are:
2016 2015
GBP GBP
Directors' fees (note 14) 126,602 66,928
Net foreign exchange profit/(loss) - 15,934
Auditor's remuneration - Company's audit 12,000 10,000
Auditor's remuneration for audit services: 2016 2015
GBP GBP
Fees payable to the company's auditor for the audit 12,000 10,000
of the company's annual financial statements
Fees payable to the company's auditor and their - -
associates for other services to the group:
The audit of the company's subsidiaries pursuant to - -
legislation
Auditor's remuneration for non-audit services: - -
- -
There are no other fees paid to the Company's auditor other than in respect to
the statutory audit disclosed above.
3. Finance costs
2016 2015
GBP GBP
Shareholder loan interest 482,106 384,625
482,106 384,625
4. Income tax
As the Company incurred a loss, no current tax is payable (2015: GBPnil). In
addition, there is no certainty about future profits from which accumulated tax
losses could be utilised and accordingly no deferred tax asset has been
recognised. Accumulated tax losses amount to GBP6,213,344 (2015: GBP5,178,487).
The tax charge is lower (2015: lower) than the standard rate of tax.
Differences are explained below.
2016 2015
GBP GBP
Current tax
Loss before taxation 1,334,009 781,647
Tax credit at standard UK corporation tax rate of 20% 266,802 158,284
(2015 - 20.25%)
Effects of:
Expenses not deductible for tax purposes (73,430) -
Deferred tax not recognised (193,372) (158,284)
Income tax expense - -
5. Loss per share
2016 2015
Total comprehensive loss (GBP) (1,334,009) (781,647)
Weighted average number of shares 551,433,936 390,094,921
Loss per share in pence (0.24)
(0.20)
Diluted loss per share in pence (0.24)
(0.20)
The following instruments were excluded from the diluted loss per share
calculation due to being anti-dilutive but could be dilutive in the future and
are therefore disclosed in accordance with IAS 33.
Directors' share options - exercisable at 2.5p 11,000,000 11,000,000
per option 15,000,000 15,000,000
Directors' share options - exercisable at 0.75p GBP3,332,292 GBP2,938,636
per option
Hillgrove Loans convertible at 0.5p
6. Property, plant and equipment
Office
equipment
GBP
Opening carrying value -
Additions in year 2,424
- Depreciation -
- Net carrying value 2,424
The cost value of fixed assets is GBP5,626 (2015: GBP3,202; 2014: GBP3,202).
Accumulated depreciation is GBP3,202 (2015: GBP3,202; 2014: GBP3,202).
Net book value is GBP2,424 (2015: GBPnil, 2014: GBPnil).
The office equipment has not been depreciated in the year as it was not
available for use until after the year end.
7. Investments
Other non-current assets consist of the investments in PowerHouse Energy, Inc
and Pyromex AG. PowerHouse Energy, Inc. is incorporated in California in the
United States of America and the Company holds 100 per cent of the common stock
and voting rights of the subsidiary. Pyromex AG is based in Zug, Switzerland
and the Company holds 100 per cent of the shares and voting rights of the
subsidiary.
2016 2015
GBP GBP
Investment - Cost 48,947,154 48,947,154
Accumulated impairment (48,947,154) (48,947,154)
- -
The cost of the PowerHouse Energy Inc investment was determined using an issue
price of 17.5 pence (the price of the Company's shares on re-listing after the
reverse takeover) for the 273,766,456 shares issued to acquire PowerHouse
Energy, Inc.
The registered address of PowerHouse Energy Inc is 145 N Sierra Madre Blvd
Pasadena, CA 91107, USA.
The registered address of Pyromex AG is Chollerstrasse 3, CH-6300, Zug,
Switzerland.
8. Trade and other receivables
2016 2015
GBP GBP
Other receivables 6,336 1,451
6,336 1,451
9. Trade and other payables
2016 2015
GBP GBP
Trade payables 34,183 28,182
RenewMe Limited - 155,513
Other accruals 17,000 15,089
51,183 198,784
RenewMe Limited had been granted exclusive rights by Pyromex to use, own,
assemble and install and operate Pyromex AG systems in territories also
licensed to the Company's subsidiary PowerHouse Energy, Inc. The Company
entered into a settlement agreement with RenewMe whereby the parties agreed to
change the respective exclusive rights pertaining to the Pyromex technology.
Under the original settlement agreement PowerHouse Energy, Inc. had the
obligation to pay five instalments of EUR 200,000 annually beginning 30 June
2011. The Company guaranteed the obligations under the agreement of PowerHouse
Energy, Inc. As PowerHouse Energy, Inc was unable to meets its obligations, all
remaining amounts (EUR 800,000) due under the original settlement agreement
were recognised as a liability.
On 3 March 2014 the Company announced that a settlement had been reached with
RenewMe to release its claimed geographical licenses to use the Company's
technology under a disputed royalty agreement with Pyromex and other claims
against the Company in return for EUR211,000 and the issue of 18,331,996 new
Ordinary Shares in the Company.
On 29 April 2016 the Company announced that a full and final settlement had
been reached with RenewMe to settle the remaining balance in exchange for the
issue of 90,932,961 new Ordinary shares. This released the Company from any
and all previously disputed issues with RenewMe.
Capital commitments not accrued for at the year end amounted to GBPnil (2015: GBP
Nil).
10. Loans
2016 2015
GBP GBP
Shareholder loan 3,332,292 2,938,636
3,332,292 2,938,636
Classified as:
- Current 3,332,292
-
- Non-current - 2,938,636
Hillgrove Investments Pty Limited ("Hillgrove") has provided the Company with a
convertible loan agreement, the amount of which has increased from time to time
at Hillgrove's option and based upon Company needs. The loan is secured by a
debenture over the assets of the company, 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 0.5p per share.
After the year end Hillgrove has accepted a settlement of this loan for a GBP2
million cash pay-out, and conversion of the residual balance of GBP1,402,155 into
newly issued share capital of the Company at the previously agreed 0.5p
conversion price, amounting to 280,430,920 shares. These shares are yet to be
issued. Hillgrove will hold a total of 300,430,920 shares of the enlarged
issued share capital of the Company. Hillgrove has committed to a 12 month
lock-in period for its newly issued shares. Hillgrove is a related party as
defined by the Aim Rules for Companies and accordingly the Hillgrove Note
payout and share conversion is deemed a Related Party Transaction.
11. Share capital
1.0 p 0.5 p 0.5 p 4.5 p 4.0 p
Ordinary Ordinary Deferred Deferred Deferred
shares shares shares shares shares
Shares at 1 January 2015 388,496,594 - - 17,373,523 9,737,353
Share reorganisation (388,496,594) 388,496,594 388,496,594 - -
Issue of shares - 41,666,667 - - -
Shares at 31 December - 430,163,261 388,496,594 17,373,523 9,737,353
2015
Share reorganisation
Issue of shares - 177,771,275 - - -
Shares at 31 December - 607,934,536 388,496,594 17,373,523 9,737,353
2016
On 3 December 2015 the company approved a share reorganisation, whereby each of
the ordinary 1p shares would be subdivided into one new Ordinary 0.5p share and
one Deferred share of 0.5p. The new ordinary shares have the same rights as
are attached to the previous ordinary shares.
On 14 December 2015 the company issued 41,666,667 new ordinary 0.5p shares for
a consideration of 0.6p per share.
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 GBP100 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.
On 26 January 2016 the Company issued 9,090,909 ordinary shares of 0.5p each at
a price of 0.55p each, totalling GBP50,000.
On 23 February 2016 the Company issued 35,714,285 ordinary shares of 0.5p each
at a price of 0.7p each, totalling GBP250,000, before issue costs.
On 3 March 2016 the Company issued 3,571,419 ordinary shares of 0.5p each at a
price of 0.7p each, totalling GBP25,000.
On 15 July 2016 the Company issued 38,461,538 ordinary shares of 0.5p each at a
price of 0.65p each, totalling GBP250,000, before issue costs.
On 29 April 2016 the Company announced that a full and final settlement had
been reached with Renewme to settle the remaining balance in exchange for the
issue of 90,932,961 new Ordinary shares. This settlement released the Company
from any and all previously disputed issues with Renewme.
12. Convertible instruments
12.1 Warrants
No warrants are held (2015: nil).
12.2 Hillgrove
Hillgrove has the option at any time to convert its loan of GBP3,332,292 in part
or whole at a conversion price of 0.5p per share. After the year end Hillgrove
exercised the right to convert its loan to shares, further details are detailed
in note 16.
12.3 Directors
On 8 December 2014, PowerHouse Energy Group plc granted 11,000,000 options over
ordinary shares to the Board, under the PowerHouse Energy Group plc Unapproved
Share Option Plan 2011. The options may be exercised between the Grant date
and the tenth anniversary of the Grant date and will lapse if not exercised
during that period. The options have an exercise price of 2.5p per share.
The options were granted as follows:
Mr Keith Allaun - 5,000,000
Mr Brent Fitzpatrick - 3,000,000
Mr James Greenstreet - 3,000,000
On 7 March 2016, PowerHouse Energy Group plc granted 11,000,000 options over
ordinary shares to the Board, under the PowerHouse Energy Group plc Unapproved
Share Option Plan 2011. The options may be exercised between the Grant date
and the fifth anniversary of the Grant date and will lapse if not exercised
during that period. The options vested immediately. The fair value of the
options granted during the year was determined using the Black Scholes
valuation model. The model takes into account a volatility rate of 127.56%,
which has been derived from historical experience. A weighted average risk-free
interest rate of 2.0% has been applied. The share price was 0.55 pence and the
options have an exercise price of 0.75p per share.
The options were granted as follows:
Mr Keith Allaun - 6,000,000
Mr Brent Fitzpatrick - 5,000,000
Mr James Greenstreet - 4,000,000
These options have incurred a charge of GBP68,000 in the current year.
13. Material risks
Requirement for further funds
In assessing the going concern, the Directors have reviewed cash flow forecasts
for 12 months following the date of these accounts. The cash flow forecasts
assumed no further funding of PowerHouse Energy, Inc. and Pyromex. The current
cash reserves are considered sufficient to enable the Company to meet its
liabilities as they fall due.
In the event the Company requires other equity financing, or the conversion
option in the Hillgrove loan is exercised, remaining shareholders will be
diluted see note 16.
14. Directors' Remuneration
The Directors who held office at 31 December 2016 had the following interests,
including any interests of a connected person in the ordinary shares of the
Company:
Number of Percentage of
ordinary voting rights
shares of 0.5p
each
Nigel Brent Fitzpatrick 103,459 <0.1
The remuneration of the Directors of the Company paid for the year or since
date of appointment, if later, to 31 December 2016 is:
2016 2016 2016 2016 2015
GBP GBP GBP GBP GBP
Salary/Fee Pension Benefits Total Total
Nigel Brent Fitzpatrick 15,275 - - 15,275 8,250
James John Pryn 9,000 - - 9,000 -
Greenstreet
Robert Keith Allaun 66,327 - - 66,327 58,678
Clive Carver 36,000 - - 36,000 -
Share options held by the directors are detailed in note 12.3
Service contracts
Brent Fitzpatrick and James Greenstreet have service contracts which can be
terminated by providing three months' written notice.
15. Related Parties
Hillgrove Investments Pty Limited is a related party by virtue of its
shareholding in the Company.
During the year Hillgrove Investments Pty Limited loans increased by a net GBP
393,656 and GBP482,106 of loan interest was settled by way of further loans. The
balance outstanding at the year-end was GBP3,332,292 (2015: GBP2,938,636).
Transactions with other related parties were conducted on an arms' length basis
and totalled GBPNIL (2015: GBPNIL).
16. Post balance sheet event
After the year end Hillgrove has accepted a settlement of its outstanding loan
balance for a GBP2 million cash pay-out, and conversion of the residual balance
of GBP1,402,155 into newly issued share capital of the Company at the previously
agreed 0.5p conversion price, amounting to 280,430,920 shares. Hillgrove will
hold a total of 300,430,920 shares of the enlarged issued share capital of the
Company once the shares are issued. Hillgrove has committed to a 12 month
lock-in period for its newly issued shares. Hillgrove is a related party as
defined by the Aim Rules for Companies and accordingly the Hillgrove Note
payout and share conversion is deemed a Related Party Transaction.
After the year end the Company announced that it had entered into an agreement
to raise gross proceeds of GBP250,000 via a placing of 35,714,285 ordinary shares
of 0.5p each in the Company ("Ordinary Shares") at a price of 0.7p per share
("Placing"). The new Ordinary Shares will be placed with Yady Worldwide S.A.
After the year end the Company announced that it had entered into an agreement
to raise gross proceeds of GBP2,500,000 via a placing of 312,500,000 ordinary
shares of 0.5p each in the Company ("Ordinary Shares") at a price of 0.8p per
share ("Placing"). The new Ordinary Shares are to be issued in 2 tranches with
the first for 250,000,000 shares and the second for 62,500,000. Yady Worldwide
SA participated in the placing (GBP500,000) and has agreed to a 12 month lock in
for its shares.
Independent Auditor's Report to the Members of PowerHouse Energy Group plc
We were engaged to audit the Group financial statements of PowerHouse Energy
Group plc for the year ended 31 December 2016 which comprise the Consolidated
Statement of Comprehensive Income, the Consolidated Statement of Changes in
Equity, the Consolidated Statement of Financial Position, the Consolidated
Statement of Cash Flow and the related notes 1 to 14. The financial reporting
framework that has been applied in their preparation is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by the European
Union.
This report is made solely to the company's members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the company's members those matters we are
required to state to them in an auditor's report and for no other purpose. To
the fullest extent permitted by law, we do not accept or assume responsibility
to anyone other than the company and the company's members as a body, for our
audit work, for this report, or for the opinions we have formed.
Respective responsibilities of Directors and auditor
As explained more fully in the Directors' Responsibilities Statement, the
Directors are responsible for the preparation of the Group financial statements
and for being satisfied that they give a true and fair view. Our
responsibility is to audit and express an opinion on the Group financial
statements in accordance with applicable law and International Standards on
Auditing (UK and Ireland). Those standards require us to comply with the
Auditing Practices Board's Ethical Standards for Auditors. Because of the
matter described in the basis for disclaimer of opinion on financial statements
paragraph, however, we were not able to obtain sufficient appropriate audit
evidence to provide a basis for an audit opinion.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the
financial statements sufficient to give reasonable assurance that the financial
statements are free from material misstatement, whether caused by fraud or
error. This includes an assessment of: whether the accounting policies are
appropriate to the parent company's circumstances and have been consistently
applied and adequately disclosed; the reasonableness of significant accounting
estimates made by the directors; and the overall presentation of the financial
statements. In addition, we read all the financial and non-financial
information in the annual report to identify material inconsistencies with the
audited financial statements and to identify any information that is apparently
materially incorrect based on, or materially inconsistent with, the knowledge
acquired by us in the course of performing the audit. If we become aware of
any apparent material misstatements or inconsistencies we consider the
implications for our report.
The audit of financial statements includes the performance of procedures to
assess whether the revisions made by the directors are appropriate and have
been properly made.
Basis for disclaimer of opinion on financial statements
The audit evidence available to us was limited because we were unable to obtain
accounting records in respect of PowerHouse Energy, Inc. and Pyromex Holding
AG. As a result of this we have been unable to obtain sufficient appropriate
audit evidence concerning the state of the Group's affairs as at 31 December
2016 and of its loss of the year then ended.
Disclaimer of opinion on financial statements
Because of the significance of the matter described in the basis for disclaimer
of opinion on financial statements paragraph, we have not been able to obtain
sufficient appropriate audit evidence to provide a basis for an audit opinion.
Accordingly we do not express an opinion on the original and Group financial
statements.
Opinion on other matters prescribed by the Companies Act 2006
Notwithstanding our disclaimer of an opinion on the financial statements, in
our opinion:
* the information given in the Strategic Report and the Directors' Report for
the financial year for which the Group financial statements are prepared is
consistent with the Group financial statements.
Matters on which we are required to report by exception
Arising from the limitation of our work referred to above:
* we have not obtained all the information and explanations that we
considered necessary for the purpose of our audit.
We have nothing to report in respect of the following matters where the
Companies Act 2006 requires us to report to you if, in our opinion:
* certain disclosures of Directors' remuneration specified by law are not
made.
Other matter
We have reported separately on the parent Company financial statements of
PowerHouse Energy Group plc for the year ended 31 December 2016. The opinion in
that report is unmodified.
Kate Darlison (Senior Statutory Auditor)
for and on behalf of Deloitte LLP
Statutory Auditor
Leeds, United Kingdom
15 June 2017
Consolidated Statement of Comprehensive Income
For the year ended 31 december 2016
Note Year ended Year ended
31 December 31 December
2016 2015
GBP GBP
Revenue - -
Cost of sales - -
Gross loss - -
Administrative expenses 2 (851,903) (397,022)
Write down of subsidiary balances - 1,097,427
Operating (Loss) / Profit (851,903) 700,405
Finance income - -
Finance expenses 3 (482,106) (384,625)
(Loss) / Profit before taxation (1,334,009) 315,780
Income tax credit 4 - -
(Loss) / Profit after taxation (1,334,009) 315,780
Total comprehensive (Loss) / Profit (1,334,009) 315,780
Total comprehensive (Loss) / Profit
attributable to:
Owners of the Company (1,334,009) 315,780
Loss & diluted loss per share (GBP) 5 (0.24) <0.1
The notes numbered 1 to 14 are an integral part of the financial information.
Consolidated Statement of Changes in Equity
Shares and Accumulated Share Total
stock losses premium GBP
GBP GBP GBP
Balance at 1 January 5,056,267 (55,461,779) 46,898,113 (3,507,399)
2015
Transactions with
equity participants:
* Share issued 208,333 - 23,067 231,400
* Total
comprehensive
income:
* Profit after - 315,780 - 315,780
taxation
Balance at 31 December 5,264,600 (55,145,999) 46,921,180 (2,960,219)
2015
Transactions with
equity participants
* Share issued 45,455 - 4,545 50,000
* Share issued 178,571 - 56,429 235,000
* Share issued 17,857 - 7,143 25,000
* Share issued 192,308 - 42,692 235,000
* Share issued 454,664 - - 454,664
* Share based - 68,000 - 68,000
payments
Total comprehensive - (1,334,009) - (1,334,009)
loss
Balance at 31 December 6,153,455 (56,412,008) 47,031,989 (3,226,564)
2016
The notes numbered 1 to 14 are an integral part of the financial information.
Consolidated Statement of Financial Position
As at 31 December 2016
Note 31 December 31
2016 December
GBP 2015
GBP
ASSETS
Non-current assets
Intangible assets 6 - -
Property, plant and equipment 7 2,424 -
Total non-current assets 2,424 -
Current Assets
Trade and other receivables 8 6,336 1,451
Cash and cash equivalents 148,151 175,750
Total current assets 154,487 177,201
Total assets 156,911 177,201
LIABILITIES
Non-current liabilities
Loans 10 - (2,938,636)
Total non-current liabilities - (2,938,636)
Current liabilities
Loans 10 (3,332,292) -
Trade and other payables 11 (51,183) (198,784)
Total current liabilities (3,383,475) (198,784)
Total liabilities (3,383,475) (3,137,420)
Net liabilities (3,226,564) (2,960,219)
EQUITY
Share capital 3,039,670 2,150,815
Share premium 47,031,989 46,921,180
Deferred shares 3,113,785 3,113,785
Accumulated losses (56,412,008) (55,145,999)
Total deficit (3,226,564) (2,960,219)
The financial statements were approved by the board of Directors and authorised
for issue on 15 June 2017 and signed on its behalf by:
03934451
Keith Allaun
Director
The notes numbered 1 to 14 are an integral part of the financial information.
consolidated Statement of Cash Flows
For the year ended 31 december 2016
2016 2015
GBP GBP
Cash flows from operating activities
Operating loss (851,903) 700,405
Adjustments for:
* Share based payments 68,000 -
* Renewme settlement 299,152 -
* Write down of subsidiary balances - (1,097,427)
Changes in working capital:
* (Increase)/Decrease in trade and other (4,885) 4,390
receivables
* (Decrease) in trade and other payables (147,601) (36,050)
Net cash used in operations (637,237) (428,682)
Cash flows from investing activities
Purchase of fixed assets (2,424) -
Cash flows from financing activities
Proceeds on issue of shares 700,512 231,400
Finance costs (482,106) (384,625)
New loans raised 577,567 757,632
Loans repaid (183,911) -
Net cash flows from financing activities 612,062 604,407
Net (decrease)/increase in cash and cash equivalents (27,599) 175,725
Cash and cash equivalents at beginning of year 175,750 25
Cash and cash equivalents at end of year 148,151 175,750
The notes numbered 1 to 14 are an integral part of the financial information.
Notes to the Consolidated financial statements
1. accounting policies
The following accounting policies have been applied consistently in dealing
with items which are considered material in relation to the Group financial
information.
1.1. Basis of preparation
This consolidated financial information is for the year ended 31 December 2016
and has been prepared in accordance with International Financial Reporting
Standards ("IFRS") adopted for use by the European Union and the Companies Act
2006. These accounting policies and methods of computation are consistent with
those used in prior years.
1.2. Consolidation
Pyromex
On 8 August 2013, the Company acquired the remaining 70% interest in Pyromex.
Pyromex is accounted as a wholly owned subsidiary of the Group. The original 30
per cent was held as an investment which had been impaired to nil due to the
uncertainties surrounding the technology.
During 2015 the group started the process of liquidating its subsidiary
undertakings and any values have been impaired to nil. The winding up process
is in progress but as at the signing of these financial statements not fully
completed. No further costs are expected to arise to the Parent from the
liquidation process.
1.3. Judgements and estimates
The preparation of financial statements in conformity with IFRS requires
management to make judgements, estimates and assumptions that affect the
application of policies and reported amounts in the financial statements. The
areas involving a higher degree of judgements or complexity, or areas where
assumptions or estimates are significant to the financial statements such as
the impairment of assets and going concern are disclosed with the notes
1.4. Foreign currency translation
The financial information is presented in GBP.
1.5. Going concern
The Directors have considered all available information about the future events
when considering going concern. The Directors have including their review of
cash flow forecasts for 12 months following the date of these Financial
Statements.
The cash balance held at 31 December 2016 of GBP148,151 together with fund raises
completed after year end is considered sufficient to ensure the company can pay
its debts as they fall due over the forthcoming 12 month period. A further
fundraise has been completed post year end increasing cash reserves. Based on
this, the Directors believe it is appropriate to continue to adopt the going
concern basis of accounting for the preparation of the annual financial
statements.
Additionally, Hillgrove Investments Pty Limited, as the holder of Convertible
Loan Agreement, has agreed full and final settlement of its loan by way of a
share and cash settlement. This was approved and agreed after the balance sheet
date.
1.6. Employee costs
The group has no employees (2015: nil).
1.7. Operating Leases
The Group has no operating leases (2015: nil).
1.8. Finance income and expenses
Finance income and expenses are recognised as they are incurred or as a result
of financial assets or liabilities being measured at amortised cost using the
effective interest method. No finance expenses were incurred in the production
of a qualifying asset.
1.9. Income tax expense
The tax expense for the period comprises current and deferred tax.
UK corporation tax is provided at amounts expected to be paid (or recovered)
using the tax rates and laws that have been enacted or substantively enacted by
the balance sheet date.
Deferred tax is recognised in respect of all temporary differences that have
originated but not reversed at the balance sheet date where transactions or
events that result in an obligation to pay more tax in the future or a right to
pay less tax in the future have occurred at the balance sheet date. Temporary
differences are differences between the company's taxable profits and its
results as stated in the financial statements that arise from the inclusion of
gains and losses in tax assessments in periods different from those in which
they are recognised in the financial statements.
A net deferred tax asset is regarded as recoverable and therefore recognised
only to the extent that, on the basis of all available evidence, it can be
regarded as more likely than not that there will be suitable taxable profits
from which the future reversal of the underlying timing differences can be
deducted.
Deferred tax is measured at the average tax rates that are expected to apply in
the periods in which the temporary differences are expected to reverse, based
on tax rates and laws that have been enacted or substantively enacted by the
balance sheet date. Deferred tax is measured on a non-discounted basis.
1.10. Goodwill
Goodwill arose on the acquisition of Pyromex and represents the excess of the
consideration transferred over the fair value of the net identifiable assets,
liabilities and contingent liabilities acquired. Goodwill is stated at cost
less any impairment losses recognised.
1.11. Intangible assets
Intangible assets arose on the acquisition of Pyromex and include trademarks
and intellectual property related to the Pyromex technology. These were
recognised at fair value at the acquisition date and are carried at cost less
accumulated amortisation and impairment. Amortisation is calculated using the
straight-line method to allocate the fair value of the intangible assets over
their estimated useful lives of 3 years.
1.12. Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation.
Cost represents the cost of acquisition or construction, including the direct
cost of financing the acquisition or construction until the asset comes into
use.
Depreciation on property, plant and equipment is provided to allocate the cost
less the residual value by equal instalments over their estimated useful
economic lives of 3 to 7 years.
An item of property, plant and equipment is derecognised upon disposal or when
no future economic benefits are expected to arise from the continued use of the
asset. Any gain or loss is included in the Statement of Comprehensive Income.
The expected useful lives and residual values of property, plant and equipment
are reviewed on an annual basis and, if necessary, changes in useful life or
residual value are accounted for prospectively.
1.13. Inventories
Inventories are stated at the lower of cost and net realisable value. The cost
of finished goods and work in progress comprises design costs, raw materials,
direct labour, other direct costs and related production overheads. It excludes
borrowing costs.
1.14. Trade and other receivables
Trade receivables are recognised at fair value. Subsequently they are carried
at their initial recognition value less any impairment losses.
1.15. Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits.
1.16. Deferred taxation
Deferred tax is recognised without discounting, in respect of all timing
differences between the treatment of certain items for taxation and accounting
purposes which have arisen but not reversed by the balance sheet date except as
otherwise required by IAS 12.
A deferred tax asset is recognised where, having regard to all available
evidence, it can be regarded as more likely than not that there will be
suitable taxable profits from which the future reversal of the underlying
timing differences can be deducted.
Deferred income tax is recognised on temporary differences arising between the
tax bases of assets and liabilities and their carrying amounts in these
financial statements.
Deferred tax assets or liabilities are not recognised if they arise from the
initial recognition of goodwill or from initial recognition of an asset or
liability that at the time of the transaction affects neither accounting nor
taxable profit nor loss. Except, however, where an asset or a liability is
initially recognised from a business combination a deferred tax asset or
liability is recognised as appropriate.
Deferred income tax is determined using tax rates (and laws) that have been
enacted or substantively enacted by the balance sheet date and are expected to
apply when the related deferred income tax asset is realised or the deferred
income tax liability is settled.
Deferred income tax assets are recognised only to the extent that it is
probable that future taxable profit will be available against which the
temporary differences can be utilised.
1.17. Loans
Loans are financial obligations arising from funding received from financiers
and the founding stockholders. These were recognised at fair value, net of any
transaction costs incurred. Loans are subsequently carried at amortised cost
using the effective interest method.
1.18. Trade and other payables
Trade payables are obligations to pay for goods or services that have been
acquired in the ordinary course of business from suppliers. Trade payables and
other payables are recognised initially at fair value and subsequently measured
at amortised cost using the effective interest method.
1.19. Share capital and share premium
Proceeds from the issue of common stock or ordinary and deferred shares have
been classified as equity. Costs directly attributable to the issue of these
equity instruments are shown as a deduction, net of tax, from the proceeds.
1.20. Share based payments
The Group has used share-based compensation, whereby the Group receives
services from employees or service providers in exchange for consideration for
options in the share capital or shares of the Group. The fair value of the
services received in exchange for the grant of the options is recognised as an
expense. The total amount to be expensed is determined by reference to the fair
value of the services received, unless that fair value cannot be reliably
measured, in which case the fair value of the of the stock and shares issued is
used.
Non-market performance and service conditions are included in assumptions about
the number of options that are expected to vest. The total expense is
recognised over the vesting period, which is the period over which all of the
specified vesting conditions are to be satisfied.
1.21. Adoption of new and revised standards
There have been no standards or interpretations that have been adopted that
have affected the amounts reported in these financial statements. As at the
date of approval of the financial information, the following standards and
interpretations were in issue but not yet effective:
IFRS 2 (amended) Classification and Measurement of share based
payments
IFRS 9 Financial instruments
IFRS 10 (amended) Consolidated Financial Statements
IFRS 11 (amended) Joint Arrangements
IFRS 12 (amended) Disclosure of Interests in Other Entities
IFRS 15 Revenue from Contracts with
Customers
IFRS 16 Leases
IAS 1 (amended) Presentation of Items of Other
Comprehensive Income
IAS 16 (amended) Property, Plant and Equipment
IAS 19 (revised) Employee Benefits
IAS 27 (amended) Separate Financial Statements
IAS 28 (amended) Investments in Associates and Joint
Ventures
IAS 38 (amended) Intangible assets
In addition, there are certain requirements of Improvements to IFRSs which are
not yet effective.
The Directors are still assessing the impact of the adoption of these standards
on the Group's results but do not anticipate that there will be a material
impact on the Group's results.
2. Administrative expenses
Included in administrative expenses are;
2016 2015
GBP GBP
Directors' fees 126,602 66,928
Auditor's remuneration - Company's audit 12,000 10,000
Net foreign exchange - 15,934
At 31 December 2016, the Group had no employees (2015: nil).
Auditor's remuneration for audit services: 2016 2015
GBP GBP
fees payable to the company's auditor for the audit 12,000 10,000
of the company' annual financial statements
Fees payable to the company's auditor and their - -
associates for other services to the group:
The audit of the company's subsidiaries pursuant to - -
legislation
Auditor's remuneration for non-audit services: - -
- -
There are no other fees paid to the Company's auditor other than in respect to
the statutory audit disclosed above.
3. Finance expenses
2016 2015
GBP GBP
Shareholder loan interest 482,106 384,625
Total finance expenses 482,106 384,625
4. Income tax
2016 2015
GBP GBP
Current taxation - -
Deferred taxation - -
Total taxation credit - -
As the Company incurred a loss, no current tax is payable (2015: GBPnil). In
addition, there is no certainty about future profits from which accumulated tax
losses could be utilised and accordingly no deferred tax asset has been
recognised. Tax losses amount to GBP5,960,134 (2015: GBP5,178,487). The tax
(credit)/charge is lower (2015: lower) than the standard rate of tax.
Differences are explained below.
2016 2015
GBP GBP
Current tax
(Loss)/profit before taxation (1,334,009) 315,780
Tax (credit)/charge at standard UK corporation tax (266,802) 63,945
rate of 20% (2015 - 20.25%)
Effects of:
Income not chargeable for tax purposes - (222,229)
Expenses not deductible for tax purposes 73,430 -
Deferred tax not recognised 193,372 158,284
Income tax expense - -
5. Loss per share
2016 2015
Total comprehensive (loss)/profit (GBP) (1,334,009) 315,780
Weighted average number of shares 551,433,936 390,094,921
Loss per share in pence (0.24)
<0.1
Diluted loss per share in pence (0.24)
<0.1
The following instruments were excluded from the diluted loss per share
calculation due to being anti-dilutive but could be dilutive in the future and
are therefore disclosed in accordance with IAS 33.
6. Intangible assets
Goodwill Pyromex Licence Total
technology agreements
At 1 January 2015
Cost 4,035,356 2,087,081 990,840 7,113,277
Accumulated amortisation and (4,035,356) (2,087,081) (990,840) (7,113,277)
impairment
Net carrying value - - - -
- - - -
Closing carrying value
At 31 December 2015
Cost 4,035,356 2,087,081 990,840 7,113,277
Accumulated amortisation and (4,035,356) (2,087,081) (990,840) (7,113,277)
impairment
At 1 January 2016 - - - -
Closing carrying value
At 31 December 2016
Cost - - - -
Accumulated amortisation and - - - -
impairment
- - - -
Goodwill was recognised as the excess of the fair value of the consideration
paid over the fair value of the net liabilities acquired in accordance with
IFRS 3.
Licence agreements represented the capitalised licence fees paid by PowerHouse
Energy, Inc. to Pyromex and RenewMe for rights associated with the Pyromex
technology.
7. Property, plant and equipment
Office
equipment
GBP
Opening carrying value -
Additions in year 2,424
- Depreciation -
- Net carrying value -
The cost value of fixed assets is GBP5,626 (2015: GBP3,202; 2014: GBP3,202).
Accumulated depreciation is GBP3,202 (2015: GBP3,202; 2014: GBP3,202).
Net book value is GBP2,424 (2015: GBPnil, 2014: GBPnil).
The office equipment has not been depreciated in the year as it was not
available for use until after the year end.
8. Trade and other receivables
2016 2015
GBP GBP
Other receivables 6,336 1,451
Total trade and other receivables 6,336 1,451
9. Deferred taxation
Deferred income tax assets are recognized for tax loss carry-forwards to the
extent that the realization of the related tax benefit through future taxable
profits is probable. The Group did not recognize deferred income tax assets in
respect of losses.
10. Loans
2016 2015
GBP GBP
Shareholder loan 3,332,292 2,938,636
3,332,292 2,938,636
Classified as:
- Current 3,332,292 -
- Non-current - 2,938,636
Hillgrove Investments Pty Limited ("Hillgrove") has provided the Company with a
convertible loan agreement, the amount of which has increased from time to time
at Hillgrove's option and based upon Company needs. The loan is secured by a
debenture over the assets of the company, 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 0.5p per share.
After the year end Hillgrove has accepted a settlement of this loan for a GBP2
million cash pay-out, and conversion of the residual balance of GBP1,402,155 into
newly issued share capital of the Company at the previously agreed 0.5p
conversion price, amounting to 280,430,920 shares. These shares are yet to be
issued. Hillgrove will hold a total of 300,430,920 shares of the enlarged
issued share capital of the Company. Hillgrove has committed to a 12 month
lock-in period for its newly issued shares. Hillgrove is a related party as
defined by the Aim Rules for Companies and accordingly the Hillgrove Note
payout and share conversion is deemed a Related Party Transaction.
11. Trade and other payables
2016 2015
GBP GBP
Trade creditors 34,183 28,182
RenewMe - 155,513
Other accruals 17,000 15,089
Total trade and other payables 51,183 198,784
Trade and other payables are classified as:
- Current 51,183 198,784
- Non-current - -
RenewMe
RenewMe Limited had been granted exclusive rights by Pyromex to use, own,
assemble and install and operate Pyromex AG systems in territories also
licensed to the Company's subsidiary PowerHouse Energy, Inc. The Company
entered into a settlement agreement with RenewMe whereby the parties agreed to
change the respective exclusive rights pertaining to the Pyromex technology.
Under the original settlement agreement PowerHouse Energy, Inc. had the
obligation to pay five instalments of EUR 200,000 annually beginning 30 June
2011. The Company guaranteed the obligations under the agreement of PowerHouse
Energy, Inc. As PowerHouse Energy, Inc was unable to meets its obligations, all
remaining amounts (EUR 800,000) due under the original settlement agreement
were recognised as a liability.
On 29 April 2016 the Company announced that a full and final settlement had
been reached with RenewMe to settle the remaining balance in exchange for the
issue of 90,932,961 new Ordinary shares. This released the Company from any
and all previously disputed issues with RenewMe.
Capital commitments not accrued for at the year end amounted to GBPnil (2015: GBP
Nil).
12. Seasonality
The Group's business is not subject to any consistent seasonal fluctuations.
13. Directors' Remuneration and share interests
The Directors who held office at 31 December 2016 had the following interests,
including any interests of a connected person in the ordinary shares of the
Company:
Number of Percentage of
ordinary voting rights
shares of 0.5p
each
Nigel Brent Fitzpatrick 103,459 <0.1
The remuneration of the Directors of the Company paid for the year or since
date of appointment, if later, to 31 December 2016 is:
2016 2016 2016 2016 2015
GBP GBP GBP GBP GBP
Salary/Fee Pension Benefits Total Total
Nigel Brent Fitzpatrick 15,275 - - 15,275 8,250
James John Pryn 9,000 - - 9,000 -
Greenstreet
Robert Keith Allaun 66,327 - - 66,327 58,678
Clive Carver 36,000 - - 36,000 -
Service contracts
Brent Fitzpatrick and James Greenstreet have service contracts which can be
terminated by providing three months' written notice.
14. Post balance sheet event
After the year end Hillgrove has accepted a settlement of its outstanding loan
balance for a GBP2 million cash pay-out, and conversion of the residual balance
of GBP1,402,155 into newly issued share capital of the Company at the previously
agreed 0.5p conversion price, amounting to 280,430,920 shares. Hillgrove will
hold a total of 300,430,920 shares of the enlarged issued share capital of the
Company once the shares are issued. Hillgrove has committed to a 12-month
lock-in period for its newly issued shares. Hillgrove is a related party as
defined by the Aim Rules for Companies and accordingly the Hillgrove Note
payout and share conversion is deemed a Related Party Transaction.
After the year end the Company announced that it had entered into an agreement
to raise gross proceeds of GBP250,000 via a placing of 35,714,285 ordinary shares
of 0.5p each in the Company ("Ordinary Shares") at a price of 0.7p per share
("Placing"). The new Ordinary Shares will be placed with Yady Worldwide S.A.
After the year end the Company announced that it had entered into an agreement
to raise gross proceeds of GBP2,500,000 via a placing of 312,500,000 ordinary
shares of 0.5p each in the Company ("Ordinary Shares") at a price of 0.8p per
share ("Placing"). The new Ordinary Shares are to be issued in 2 tranches with
the first for 250,000,000 shares and the second for 62,500,000. Yady Worldwide
SA participated in the placing (GBP500,000) and has agreed to a 12 month lock in
for its shares.
END
(END) Dow Jones Newswires
June 16, 2017 02:00 ET (06:00 GMT)
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