PowerHouse Energy
Group plc
("PowerHouse" or
the "Company")
Audited results
for the year ended 31 December
2017
PowerHouse Energy Group plc (AIM: PHE), the UK technology
company pioneering hydrogen production from waste plastic and
end-of-life tyres, announces its audited results for the year ended
31 December 2017.
Highlights
For Year ended 31 December 2017
Operational
- DMG® process demonstrator re-sited and
re-commissioned at Thornton Science Park and initial testing phase
successfully completed.
- Capture and utilisation of the data from our on-going testing
programme to support the initiation of the commercial design.
- EngSolve Ltd appointed as principal engineering partner to
PowerHouse.
- Board and management team strengthened and Advisory Panel
established to underpin the capability of the proprietary
DMG® technology and to drive its commercial
exploitation.
Commercial
- Project development agreement signed with Waste2tricity.
- First operational DMG® site identified at Ellesmere
Port with Peel Environmental Ltd.
- Funding commitment from a party involved in the development of
energy and waste projects to cover cost of planning and
environmental permits for first five DMG® systems.
Financial
- £4.6m raised during the year to repay Hillgrove Convertible
Loan Note for a combination of cash and shares and to fund
engineering design and company operations.
- Net cash balance at end of December
2017 of £750K.
Post year end
- Final engineering design followed by independent verification
of DMG® on track for completion.
- International distribution agreement reached with Tresoil
Biofuels SRL to provide a solution for hydrogen bus projects in
Bulgaria and Romania.
- MOU signed with Wrightbus, a leading manufacturer of hydrogen
powered buses, to offer a turnkey solution for hydrogen powered
buses to local authorities and public transport providers.
- Elimination of Hillgrove Convertible Loan Note by way of a
placing.
- £576K raised in oversubscribed placing in April 2018 to support the commercial development
of PowerHouse's proprietary DMG® technology
platform.
Commenting on these results and the outlook for the Company,
Keith Allaun, Chief Executive
Officer of PowerHouse, said: “2017 was transformative for
PowerHouse as we re-sited our demonstration system for creating
clean energy from waste, successfully carried out a significant
amount of critical testing and, importantly, signed a number of
initial strategic partnerships.
“Our enabling technology platform is now ideally positioned to
become embedded within the future energy infrastructure - one in
which high efficiency, clean energy, impeccable environmental
credentials and economic viability will be at a social, political
and commercial premium.
“We are now shifting the balance of our efforts onto the
commercialisation path, which we are already actively engaged in
and making positive progress, to ensure our technology becomes a
profitable and sustainable reality.”
The annual report and accounts for the year ended 31 December 2017 will be sent to shareholders
shortly and will be available to view on the Company’s website:
www.powerhouseenergy.net
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014.
For more information, contact:
PowerHouse Energy Group plc
Tel: +44 (0) 203 368 6399
Keith Allaun, Executive Chairman
WH Ireland Limited (Nominated Adviser)
Tel: +44 (0) 207 220 1666
James Joyce / James Bavister
Turner Pope Investments Ltd (Joint
Broker)
Tel: +44 (0) 203 621 4120
Ben Turner / James Pope
Ikon Associates(Media enquiries)
Tel: +44 (0) 1483
271291
Adrian
Shaw
Mob: +44 (0) 7979 900733
About PowerHouse Energy
PowerHouse Energy has developed a proprietary process technology
called DMG® which can use waste plastic
end-of-life-tyres and other waste streams to convert them into cost
efficient energy in the form of electricity and ultra clean
hydrogen gas fuel for use in cars and commercial vehicles (FCEV:
Fuel Cell Electric Vehicles) and other industrial uses. The
PowerHouse technology is the world’s first proven, modular hydrogen
from waste (HfW) process.
The PowerHouse DMG® process can convert 25 tonnes of waste
plastic into 1 tonne H2 per day and 28 MWh per day of
electricity.
The PHE process produces low levels of safe residues and
requires a small operating footprint, making it suitable for
deployment at enterprise and community level.
PowerHouse is quoted on the London Stock Exchange's AIM Market.
The Company is incorporated in the United
Kingdom.
For more information see www.powerhouseenergy.net
Chairman’s Report
I am pleased to report to shareholders in respect of the year
ended 31 December 2017.
During the year under review PowerHouse Energy Group PLC
(“PowerHouse” or the ‘Company’) saw a transformation in its
technical capabilities and an increase in activity in terms of
partnership establishment, organisational development and financial
restructuring. For the two years prior to January 2017, the Company had been exclusively
focused on the development and initial testing of the G3-UHt Unit,
our process demonstrator, from first principles in conjunction with
OrePro engineering in Australia.
The end of 2016 saw the recommitment to the building of the
Company’s commercial operations headquartered in the UK.
The delivery of the Company’s process demonstrator to the UK in
early 2017 and its re-siting and re-commissioning at the Thornton
Science Park Energy Centre successfully concluded the initial
testing phase of our proprietary technology.
The confirmation of the demonstrator’s ability to operate within
target temperature envelopes and its re-commissioning were
completed in accordance with stringent UK Health, Safety, and
Environmental regulations and standards. A regular programme of
demonstration, testing, enhancement, and consistent operation has
been underway at the Thornton Science Park Energy Centre. Recent
developments including the expansion of testing of mixed plastics
as a feedstock, the independent verification of our gas by
third-party laboratories, and positive validation by external
hydrogen purification equipment vendors that our gas can be
purified to a 99.9995% (road-fuel quality) hydrogen stream.
Of greatest importance for the year was the capture and
utilisation of the data from our on-going testing programme to
support the initiation of the commercial design, completion of the
Pre-FEED (front-end design and engineering,) the identification of
our first commercial site, the start of the planning and permitting
process for that site, and the establishment of a robust technical
and management team for the intended delivery of our first DMG®
(Distributed Modular Gasification) System by the end of 2018.
The Board maintains its belief that the DMG® System and the
hydrogen-from-waste process that we have created is well on its way
to becoming a significant part of the hydrogen economy and the
distributed electrical grid.
I would like to take this opportunity to thank our talented team
who work tirelessly to drive forward our exciting technology as
well as the shareholders whose ongoing support is greatly
appreciated.
We are confident in our ability to continue to increase both our
capabilities and shareholder value.
Dr Cameron
Davies
Non-Executive Chairman
Chief Executive Officer’s
Statement
A number of the items that follow were initially discussed in
our interim Accounts on 27 September 2017. What the
team has accomplished this year is worthy of note. However, the
retrospective is far more understandable in the context of the key
drivers for the Company’s future success:
- The global requirement for
energy is growing every day and together with having to address the
monumental environmental issues created by traditional forms of
energy production, delivering such a quantum of clean energy is
both challenging and disruptive. The result is that a number of new
and pioneering modalities for energy generation and distribution
will be embraced and established. PHE’s DMG® technology is
one such platform which is suited to both enable, and deliver, such
solutions.
- Waste elimination – particularly
for unrecyclable plastics and end of life tyres (two of the biggest
challenges faced by the waste management sector) - is also a major
global challenge that PHE’s technology platform is ideally
positioned to address. The DMG® technology platform efficiently
converts such waste into an environmentally friendly and
commercially viable source of clean energy thus making it a highly
attractive energy feedstock. Consequently, waste then becomes
our friend rather than an enemy.
- Our objective is to harness the
true power of waste by having our enabling technology platform
embedded within the future energy infrastructure - one in which
high efficiency, clean energy, environmental credentials and
economically viable operation will be at a social, political and
commercial premium. Putting it simply, we believe that PHE
meets all four of these demanding criteria and we have now embarked
on the commercialisation path to ensure our technology becomes a
reality.
- Our core DMG® technology is in
its final stages of engineering validation in advance of scheduled
independent third party verification and testing by a leading
global player in the field. This work is due to be completed by the
end of the third quarter.
- We are now shifting the balance
of our efforts onto the commercialisation phase, in which we are
already actively engaged, and through which we are making positive
progress by taking a customer-led approach, involving a combination
of strategic alliances, commercial partnering and working directly
with potential customers. Our flexibility combined with the modular
design of our DMG® system allows us to tailor our technology to
meet the most specific of partner and customer requirements.
It is within the above context that I am delighted to report on
an exciting year that has seen the Company delivering against its
strategic objectives. Developing its technology, securing funding,
eliminating the Hillgrove Investments Pty. Ltd (“Hillgrove”) note
and debenture and identifying early-stage, commercially viable,
opportunities for the sale of our DMG® System.
Our technology
The focus for PowerHouse in recent years has concentrated on the
efficient generation of energy from waste, but increasingly we see
exciting prospects for the ability to convert waste, particularly
waste plastics and end-of-life tyres, into hydrogen. Our small
footprint, our thermal conversion process, and our ability to
generate a concentrated volume of hydrogen on a distributed basis
sets us apart from others. This process, DMG®, has led to one of
the world’s first distributed hydrogen from waste (HfW) system
designs.
DMG® enables the molecular conversion of waste into an
energy-rich syngas. The syngas can be used immediately to generate
low emission electrical energy that can be used locally, thereby
leveraging private line or micro-grid connections on-site. If
appropriate, it can be sold directly into the National Grid. There
is growing awareness of, and demand for, a “distributed grid” which
ensures reduced transmission losses and enhanced availability where
and when electricity is needed. Additionally, DMG® has been
designed to produce road-fuel quality hydrogen as and when
necessary.
Our process is not dependent upon the sun shining, or the wind
blowing, but rather on the engagement of wastes that are poorly
managed, over-produced, and ubiquitous in our society. End-of-life
plastics and tyres represent extremely valuable energy sources, if
managed properly. The unfortunate combustion and incineration of
these extremely valuable resources is the least effective mechanism
for deriving energy from them. DMG® represents a more
environmentally responsible and profitable vehicle for the
extraction of energy from these, and other, materials. Our
hydrogen-from-waste process allows us to extract well over double
the energy from these materials compared to conventional processes.
We do this with a dramatically reduced greenhouse gas footprint,
and when the hydrogen we produce displaces fossil fuels, we help
eliminate over 21,000 kg of CO2 per tonne of hydrogen used.
We believe that DMG® is a quantum shift in technology that can
fundamentally enhance the waste-to-energy market. DMG® is a
mechanism for the appropriate destruction of waste streams, the
generation of distributed electricity, and, most importantly, the
production of distributed hydrogen - which we believe will help
unleash the hydrogen economy by providing hydrogen as a road-fuel
as the demand for Fuel Cell Vehicles (FCVs) ramps up – particularly
in industrial and public transportation.
The adoption of hydrogen powered FCV technology in industrial
transport is accelerating with the announcement of major fleets
adopting the fuel cell as its motive power of choice. Marine
ferries, the Alstom hydrogen train, and major initiatives by the EU
for the decarbonisation of public transport – leading to the
adoption of hydrogen powered buses, are clear evidence that
hydrogen in transport, particularly industrial transport, is
beginning to gain momentum. Our DMG® process can allow for the
efficient processing of non-recyclable waste plastics, the
conversion of end-of-life tyres, and the diversion of these and
other materials from land-fill; all while producing distributed
hydrogen at a cost at, or below, that of petrol and diesel.
2017 was the year that Sir David
Attenborough launched Blue Planet 2 on BBC TV. Perhaps more
than any event of the past decade, this series highlighted the
blight of plastics, the degradation of marine ecosystems, and the
pollution of our oceans and beaches that our planet is facing.
Subsequent to the airing of the series, most major newspapers in
the UK have followed up with on-going coverage of the crisis of
plastic in our Oceans. Additionally, Sky TV produced a multi-part
documentary regarding the state of plastic recycling, and the
significant failings therein. The UK, Australia, the EU and the United States have all been negatively
impacted by the recent ban of waste and recycling imports by
China.
More virgin plastics will be produced next year than the
combined weight of every man, woman, and child on our planet.
Plastics have revolutionised our lives in many ways. In healthcare,
in food safety, in automobile manufacturing, and mobile devices to
name a few. We needn’t declare war on plastics. We need to declare
war on the mis-management of end-of-life, non-recyclable, or waste
plastics. What was once our enemy can now become our friend.
Plastics are a tremendous store of clean energy potential.
PowerHouse has the ability to figuratively squeeze every
hydrogen molecule from the stream of plastics while reducing waste
plastic from our planet. Less than 50 per cent of recyclable
plastic is actually able to be recycled economically, or in an
environmentally sound manner. Our DMG® System, can, however,
recover the energy value contained within the plastics and convert
it into an ultra clean road fuel - hydrogen. Emissions from an FCV
contain zero CO2 (Carbon Dioxide), zero NOx (Nitrogen Oxides), and
zero Sox (Sulfur Oxides). The only emission from a fuel cell
vehicle is water vapour.
Operations
The arrival of our process demonstrator, the G3-UHt Unit in the
UK in March 2017 saw the start of a
programme of engineering activity to ensure that the unit would
safely and securely operate in accordance with UK Health, Safety,
and Environmental guidelines. The work followed a comprehensive
knowledge transfer from the Ore-Pro team (our prior external
engineering partners) to our UK based engineering staff and
included extensive upgrading of components, the installation of
advanced automation, and the integration of appropriate safety
controls for the system. The unit was completely deconstructed,
examined, tested, and reconstructed to ensure its optimal
operational condition.
During this period the system was moved from its initial
commissioning site in Runcorn to
its current location at Unit 99 of the Energy Centre at the
Thornton Science Park, operated by the University of Chester. Unit
99 had been purpose-built as an emissions test facility for Shell
Research and is an ideal location for the continuous operation,
demonstration, and improvement of the DMG® System design. The
Company has established an active engineering programme at the
Centre and has taken a two year lease on its facilities there.
In April 2017 the Company
announced that the first phase of the re-commissioning of the
G3-UHt process demonstrator had been completed, with the successful
production of syngas from the system. The PHE unit has consistently
operated at temperatures of over 1000 degrees Celsius,
demonstrating its capacity to successfully gasify many historically
difficult waste materials and generate an extremely useful
synthesis gas.
The second phase of re-commissioning saw additional improvements
and modifications made to the system, ahead of the scaling up
design necessary for commercial deployment. These included the
enhancement of the gas-handling systems, refurbishment of the feed
and oxidant systems and the complete redesign and introduction of
programmable safety and control systems. During testing, the
Company has regularly recorded a maximum peak flow rate of over 50
cubic metres per hour of syngas.
Following a robust programme of testing and technical data
collection, the Company announced the completion of its first
extended technical trial of the DMG® gasification process at the
Energy Centre at Thornton Science Park on 31
July 2017.
Operating on a feedstock of tyre crumb, PowerHouse engineers
were able to demonstrate control of the process within defined
temperature envelopes that generated a syngas that, according to
onsite, in-line, analytical instrumentation, was greater than 50
per cent hydrogen by volume. The remaining, measurable, constituent
elements of the syngas were CO (carbon monoxide) and CH4 (methane.)
Importantly, the in-line gas analysis equipment detected absolutely
no CO2 in the gas stream generated by the demonstration unit.
Subsequently, a substantially more rigorous analysis of syngas
samples produced in the process demonstrator has been conducted by
off-site, third-party, independent laboratories. These tests have
validated our initial findings, including minimal CO2, and continue
to reinforce our ability to create target syngas constituent ratios
for both electricity production and hydrogen extraction.
Strategic alliances and
Relationships
The accomplishments achieved in 2017 were underpinned by a
number of strategic alliances with influential partners.
In January 2017 PowerHouse entered
into a 24 month project development relationship with Waste2tricity
Ltd (“Waste2tricity”). The initial results of that relationship
have led to a substantive expansion of our UK capabilities,
relationships with other industrial partners, and a pipeline of
commercial opportunities, in the UK and elsewhere, under
consideration.
Among the introductions made by Waste2tricity on behalf of
PowerHouse was to Peel Environmental Limited (“Peel”). Our
relationship with Peel continues to grow and develop and has led to
the siting of our G3-UHt demonstration unit at the Energy Centre at
the Thornton Science Park. This base is the hub of our continuing
R&D activities in co-operation with the University
of Chester, including the sponsorship of a PhD program to
further the science behind the PowerHouse process and the expansion
of DMG®. Additionally, Peel has identified the site of our first
intended commercial operation in the North West near Ellesmere
Port.
Of tremendous importance, the appointment of EngSolve Ltd
(“EngSolve”) as our principal engineering partner, announced in
March 2017, to assist in the
re-commissioning of the process demonstrator, has proven to be
extremely productive and valuable. Their experience with novel
waste to energy technologies has helped us accelerate our
Commercial Design for which they are ideally suited. We look
forward to a long-standing and successful relationship with their
multi-talented engineering team.
The test data acquired through our robust programme at Thornton
Science Park has been key to the effective engagement of the
EngSolve team for the commercial design efforts. That testing
program continues to inform design and procurement decisions we are
making today.
In June 2017, the Company
announced a collaboration agreement with a significant UK partner
involved in the development of energy and waste projects. The
partner has committed two tranches of funding of up to £500,000 in
aggregate to meet the cost of preparing and funding applications
for planning permission and environmental permits of the first five
PowerHouse DMG® systems.
The agreement will require PowerHouse to supply five systems at
locations of the partners' choosing on a prioritised basis.
£100,000 of this commitment was released in July 2017 to fund the planning development of the
Company’s first commercial sites.
Risk Reduction and Funding
Hillgrove
Convertible Loan Note
The Board made the strategic decision to negotiate the
retirement of the Hillgrove Convertible Loan note (Note) with a
combination of cash and shares. The retirement of the Note was a
significant milestone, and a major accomplishment, for the Company
as there is no longer a financial impediment to its growth and
operation.
The Note was accruing interest at a rate of 15 per cent per
annum and had reached a value of £3.4M. The coupon on the Note
would have added approximately a half-million pounds of fully
secured debt to the Company each year.
In February 2017 the decision was
taken to raise £2.5 million in a private placement and to repay the
Note with £2 million in cash, and issue £1.4 million worth of
shares at the conversion price of 0.5p per share. Hillgrove agreed
to release its debenture over the Company’s assets and IP upon the
final settlement of the share issuance. This settlement has now
occurred and the debenture has been released and all IP assigned to
the Company per our agreement with Hillgrove.
Other funding
In January 2017, Yady Worldwide SA
made an investment of £250,000 into the Company, showing an early
commitment to the Company and the continued development and
roll-out of DMG®. Yady further contributed £500,000 as the
cornerstone investor to the £2.5 million placing in February 2017.
In August 2017 the Company raised
a further £1.6 million through a placing of new ordinary shares at
1.0p to fund the acceleration of our on-going commercial
engineering design and Company operations.
The PowerHouse Team
The Company has made a number of significant appointments to
strengthen the board and management team.
David Ryan was appointed as a Non-Executive Director in
late February 2017, and on 20 March
2017, began acting in the role of Executive Director of
Programme Development, overseeing the technical operations of the
Company. Introduced to PowerHouse by Waste2tricity, David was the
former CEO and Managing Director of Thyssenkrupp Industrial
Solutions’ Oil & Gas Business Unit for the UK.
With over 35 years of complex engineering, business development,
and project management experience in the energy sector, David is an
expert in sophisticated design engineering and brings a breadth of
project delivery, international business management, and general
engineering acumen to the management team. David was instrumental
in the successful siting and re-commissioning of the G3-UHt process
demonstrator at Thornton Science Park and continues to lead the
engineering work on the design and development of the Company’s
commercial platform, DMG®. Additionally, David has plays a key role
in the defining of the Company’s Commercial and Operational
Strategies.
The Company was delighted to announce the appointment of Dr.
Cameron Davies as Non-Executive
Chairman of the Board of Directors. Dr. Davies’ many
accomplishments, his extensive experience, and his steady hand have
been serving the Company well since his Chairmanship took effect on
3 October of 2017.
Keith Allaun relinquished his
role as Executive Chairman at the time of Dr Davies’ appointment
and has assumed the role of Chief Executive Officer for PowerHouse.
In early 2018, Keith and his wife relocated to the UK for the
foreseeable future.
Clive Carver stepped down from
his role as Non-Executive Director of the Company in May 2017.
Chris Vanezis joined the
PowerHouse management team as Chief Financial Officer, bringing an
extensive background in financial accounting and waste-to-energy
finance management.
In 2017, the first site personnel in the UK were hired, based at
Thornton Science Park. Additionally, the Company has embarked
upon the sponsorship of a Ph.D. program in advanced thermal
conversion technology in conjunction with the University of
Chester. That program has led to the seconding of two
graduate students to PowerHouse.
2017 also saw the creation of an experienced, knowledgeable, and
well-connected Advisory Panel consisting of Peter Jones OBE,
Keith Riley, Myles Kitcher, Roudi
Baroudi and Howard White. The
Advisory Panel has been very influential in terms of our commercial
planning and development activities.
Post period events
Elimination of
Hillgrove loan note
Since the year end the Company has successfully placed shares
issued to settle the Hillgrove outstanding loan balance
(280,430,920 shares) in two tranches, the second being in
conjunction with an additional private placement which also raised
approximately £580,000 for Company operations.
The Hillgrove Debenture has been fully released and removed.
Commercial
developments
The Company announced a partnership Memorandum of Understanding
(“MOU”) with Wrightbus Ltd (“Wrightbus”), a leading bus
manufacturer whose products include innovative hydrogen powered
buses, in February 2018. This MOU,
negotiated in collaboration with Waste2tricity, is non binding and
although there can be no certainty a binding agreement will be
entered into, the Board of PowerHouse expects this to lead to a
definitive agreement which is currently under review by both
Companies. This agreement will allow Wrightbus to supply hydrogen
fuel powered buses while PowerHouse provide its DMG® system for the
low cost and environmentally responsible production of hydrogen- in
a turn-key solution to the Decarbonisation of Public Transport; a
major EU Directive.
It is expected that this first-of-its-kind turnkey solution will
be marketed to local authorities and public transport providers in
the UK and internationally with a particular focus on city centres,
where the lack of emissions generated by hydrogen fuel cell buses
bring important environmental and quality-of-life benefits.
PowerHouse’s DMG® system has the capacity to process a nominal 25
tonnes of plastic per day, and has the potential to provide
hydrogen to fuel buses while also providing electricity for sale to
either the national grid or private clients.
In April 2018, PowerHouse
announced its first international distribution agreement for its
proprietary DMG® hydrogen from waste process targeting the supply
into hydrogen bus projects in Bulgaria and Romania with Tresoil Biofuels SRL (“Tresoil”)
and Waste2tricity, PowerHouse’s projects development partner. The
three-way agreement between PowerHouse, Tresoil and PowerHouse’s
partner, Wrightbus, provides a cost-effective turnkey solution to
bus operators in Romania and
Bulgaria who are actively seeking
to replace aging fleets of highly polluting public transport buses,
with the region encouraged by the EU to deploy low carbon
alternatives. Tresoil is a well established company in Bucharest and has been actively, and
successfully, involved in seeking grants for alternative
energy.
PowerHouse
team
The PowerHouse management team was strengthened by the addition
of Bruce Nicholson as Commercial
Operations Manager in April 2018.
Bruce has a proven track record of delivering complex energy
projects built over 30 years of project management, asset
management and business development. Bruce’s role is to drive and
accelerate progress of the Company’s commercial operations,
business development, and partner identification.
Current trading and Outlook
The year under review saw the Company make encouraging progress
to its longer-term objective of being a leading provider of
distributed electricity and distributed hydrogen produced from
waste.
2017 was focused on acquiring the empirical data necessary to
effect the commercial design of the DMG® System. It was clear that
the G3-UHt unit was an excellent process demonstrator, in that it
performed as designed, as planned, and as needed. It was, however,
only a process demonstrator and has required significant, and
sophisticated, engineering enhancement to execute the design for
the Commercial PowerHouse DMG® System.
We have created what we believe to be a distinct and
evolutionary philosophy with DMG®: distributed waste destruction;
distributed electrical generation; distributed hydrogen production.
We have taken a contrarian approach to the megaliths of the past
and believe in bringing the solution to where the problem
lies.
We are positioned to do something powerful for communities
across the UK and throughout the world. We believe that DMG® today
is but a ripple in the pond but that in time it will help redefine
how our environment is managed and play a key role in the evolution
of transport - as the ripple turns into a wave of opportunity for
positive change in our world.
The Company is gaining traction in developing commercial
interest in the DMG® System with inquiries arriving on a weekly
basis. We believe, and have substantial evidence to this
effect, that the completion of our first commercial system will
lead to significant demand for our systems.
PowerHouse Energy Group plc no longer sees itself solely in the
Waste to Energy category of companies, but now as a player in the
hydrogen from waste (HfW) sector. We are convinced that DMG® will
help fuel our future, cleanly and profitably.
We look forward to an even more exciting 2018. The year
when the power of DMG® is finally unleashed.
As always, we appreciate your continued support.
Keith
Allaun
Chief Executive Officer
Statement of Comprehensive Income
for the year ended 31 december
2017
|
|
31 December |
31 December |
|
Note |
2017
£ |
2016
£ |
|
|
|
|
Revenue |
|
- |
- |
Administrative expenses |
3 |
(1,804,829) |
(851,903) |
|
|
|
|
|
|
|
|
Operating
loss |
|
(1,804,829) |
(851,903) |
|
|
|
|
Finance costs |
4 |
(69,863) |
(482,106) |
|
|
|
|
Loss before
taxation |
|
(1,874,692) |
(1,334,009) |
|
|
|
|
Income tax expense |
5 |
- |
- |
|
|
|
|
Total comprehensive
loss |
|
(1,874,692) |
(1,334,009) |
|
|
|
|
Loss per share from
continuing operations (pence) |
6 |
(0.19) |
(0.24) |
Diluted loss per share
from continuing operations (pence) |
6 |
(0.19) |
(0.24) |
The notes numbered 1 to 22 are an integral part of the financial
information.
Statement of Financial Position
As at 31 December 2017
|
|
|
|
|
Note |
2017
£ |
2016
£ |
ASSETS |
|
|
|
Non-current assets |
|
|
|
Property, plant and equipment |
7 |
2,601 |
2,424 |
Investments |
8 |
1 |
1 |
Total non-current
assets |
|
2,602 |
2,425 |
|
|
|
|
Current Assets |
|
|
|
Trade and other receivables |
9 |
88,495 |
6,336 |
Cash and cash equivalents |
10 |
750,226 |
148,151 |
Total current
assets |
|
838,721 |
154,487 |
|
|
|
|
Total
assets |
|
841,323 |
156,912 |
|
|
|
|
LIABILITIES |
|
|
|
Current liabilities |
|
|
|
Trade and other payables |
11 |
(240,856) |
(51,184) |
Loans |
12 |
(1,402,155) |
(3,332,292) |
Total current
liabilities |
|
(1,643,011) |
(3,383,476) |
|
|
|
|
Net
liabilities |
|
(801,688) |
(3,226,564) |
|
|
|
|
EQUITY |
|
|
|
Share capital |
14 |
8,798,142 |
6,153,455 |
Share premium |
14 |
48,681,792 |
47,031,989 |
Accumulated
deficit |
15 |
(58,281,622) |
(56,412,008) |
Total
deficit |
|
(801,688) |
(3,226,564) |
|
|
|
|
The financial statements of PowerHouse Energy Group Plc, Company
number 03934451, were approved by the Board of Directors and
authorised for issue on 28 June 2018
and signed on its behalf by:
Keith Allaun
Director
The notes numbered 1 to 22 are an integral part of the financial
information.
Statement of Cash Flows
For the year ended 31 December 2017
|
|
|
|
|
|
|
|
2017
£ |
2016
£ |
Cash flows from operating
activities |
|
|
|
|
Operating Loss |
|
|
(1,804,829) |
(851,903) |
Adjustments for: |
|
|
|
|
Share based payment |
5,078 |
68,000 |
Expenses settled by
shares |
190,000 |
- |
Renewme settlement |
- |
299,152 |
Depreciation |
808 |
- |
Changes in working capital: |
|
|
|
|
(Increase)/Decrease in trade and
other receivables |
|
|
(82,159) |
(4,885) |
(Decrease)/Increase in trade and
other payables |
|
|
189,672 |
(147,601) |
|
|
|
|
|
Net cash used in
operations |
|
|
(1,501,430) |
(637,237) |
|
|
|
|
|
Cash flows from
investing activities |
|
|
|
|
- Purchase of fixed
assets |
|
|
(985) |
(2,424) |
Net Cash flows from
investing activities |
|
|
(985) |
(2,424) |
|
|
|
|
|
|
|
|
|
|
Cash flows from financing
activities |
|
|
|
|
Proceeds on issue of shares |
|
|
4,294,490 |
700,512 |
Expenses settled by shares |
|
|
(190,000) |
- |
Finance costs |
|
|
(69,863) |
(482,106) |
New loans raised
Loans repaid |
|
|
69,863
(2,000,000) |
577,567
(183,911) |
|
|
|
|
|
Net cash flows from
financing activities |
|
|
2,104,490 |
612,062 |
|
|
|
|
|
Net
(decrease)/increase in cash and cash equivalents |
602,075 |
(27,599) |
|
|
|
|
|
Cash and cash equivalents at
beginning of year |
|
|
148,151 |
175,750 |
|
|
|
|
|
Cash and cash
equivalents at end of year |
|
|
750,226 |
148,151 |
|
|
|
|
|
The notes numbered 1 to 22 are an integral part of the financial
information.
Statement of Changes in Equity
For the year ended 31 december 2017
|
Ordinary Share capital
£ |
Share
premium
£ |
Deferred shares
(0.5p)
£ |
Deferred shares
(4.5p)
£ |
Deferred shares
(4.0p)
£ |
Accumulated deficit
£ |
Total
£ |
|
|
|
|
|
|
|
|
Balance at 1 January
2016 |
2,150,815 |
46,921,180 |
1,942,483 |
781,808 |
389,494 |
(55,145,999) |
(2,960,219) |
Transactions with
equity participants: |
|
|
|
|
|
|
|
-
Share 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 payment |
- |
- |
- |
- |
- |
68,000 |
68,000 |
-
Total comprehensive loss |
- |
- |
- |
- |
- |
(1,334,009) |
(1,334,009) |
Balance at 31 December
2016 |
3,039,670 |
47,031,989 |
1,942,483 |
781,808 |
389,494 |
(56,412,008) |
(3,226,564) |
Transactions with
equity participants: |
|
|
|
|
|
|
|
-
Share issue |
178,571 |
71,429 |
- |
- |
- |
- |
250,000 |
-
Share issue |
1,562,500 |
937,500 |
- |
- |
- |
- |
2,500,000 |
-
Share issue in lieu of services |
37,300 |
32,700 |
- |
- |
- |
- |
70,000 |
-
Share issue |
800,000 |
800,000 |
- |
- |
- |
- |
1,600,000 |
-
Share issue in lieu of services |
40,000 |
40,000 |
- |
- |
- |
- |
80,000 |
-
Share issue in lieu of services |
26,316 |
13,684 |
- |
- |
- |
- |
40,000 |
-
Share issue fees |
- |
(245,510) |
- |
- |
- |
- |
(245,510) |
-
Share based payment |
- |
- |
- |
- |
- |
5,078 |
5,078 |
-
Total comprehensive loss |
- |
- |
- |
- |
- |
(1,874,692) |
(1,874,692) |
Balance at 31 December
2017 |
5,684,357 |
48,681,792 |
1,942,483 |
781,808 |
389,494 |
(58,281,622) |
(801,688) |
The notes 1 to 22 are an integral part of the financial
information.
Notes to the Accounts for the year ended 31 December 2017
1. accounting policies
PowerHouse Energy Group PLC is a Company incorporated in
England and Wales. The Company is a public limited company
quoted on the AIM market of the London Stock Exchange. The address
of the registered office is 10b
Russell Court, Woolgate, Cottingley
Business Park, Bingley BD16 1PE. The principal activity of the
Company 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 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 2017 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.
The Company’s only UK subsidiary is non-trading and not
material. There are also long-term restrictions on the operations
of the Company’s subsidiaries in the US and Switzerland. As such the Company has claimed
exemptions applicable to it under Companies Act section 405 (2) and
405 (3b) to not present any
Consolidated financial statements for the year ended 31 December 2017.
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 financial statements have been prepared on a going concern
basis, notwithstanding the Company having net liabilities at
31 December 2017 of £802k (2016:
£3,227k). Those liabilities include the Hillgrove loan of £1.4m
which has been converted to equity since the year end (please refer
to Note 21). The Directors believe the going concern basis to be
appropriate for the following reasons:
The Company has been provided with a letter of support from one
of its shareholders, who has indicated to the Directors that he
intends, for at least 12 months from the date of the approval of
these financial statements, to make available a maximum sum of
£650,000. In addition, the Directors are also of the opinion that
they can raise further funds as and when required. Furthermore, the
Directors have also agreed to waive any salaries for themselves or
fees in the future if necessary so as for the Company to repay
debts as and when they fall due for the foreseeable
future.
The Directors consider that these should enable the Company to
continue in operational existence for the foreseeable future by
meeting its liabilities as they fall due for payment.
If the support of shareholders ceased or the Company was unable
to raise further funds it would need to seek alternative finance in
order to be able to remain as a going concern. The financial
statements do not include the adjustments that would result if the
Company is unable to continue as a going concern.
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 derived from the supply of goods
and services in the normal course of business, net of discounts,
value added tax and other sales related taxes.
1.6. Operating
Leases
Rentals payable under operating leases are charged in the profit
and loss account on a straight line basis over the lease term.
1.7. 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.
1.8. 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.
1.9. 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.
1.10. 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.
1.11. Financial assets
The Company classifies financial assets as loans and receivables
within current assets, except for maturities greater than 12 months
after the balance sheet date. These are classified as noncurrent
assets. Assets are initially recognised at fair value plus
transaction costs. Loans and receivables are subsequently carried
at amortised cost using the effective interest rate method.
1.12. Trade and
other receivables
Trade receivables are initially recognised at fair value.
Subsequently they are carried at amortised cost less any provision
for impairment.
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. Financial
liabilities
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:
IFRS 2
Share based payment
IFRS
9
Financial instruments
IFRS 15
Revenue from contracts with customers
IFRS
16
Leases
IAS
19
Employee benefits (amendment)
IFRIC 22 Foreign Currency Transactions and advance
consideration
IFRIC 23 Uncertainty over income tax treatments
Improvements to IFRSs. Annual improvements 2014-2016 cycle:
Amendments to IFRS1 and IAS 28
Improvements to IFRSs. Annual improvements 2015-2017 cycle:
Amendments to 4 IFRSs
There are no other IFRSs or IFRIC interpretations that are not
yet effective that would be expected to have a material impact on
the Company.
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.
1.18. Share-based
payments
The Company grants options to Directors and employees through
approved and unapproved option plans. The fair value of options is
determined at the date of grant and is recognised as an expense in
the Income Statement. The fair value at the grant date is
determined using a Black and Scholes valuation model. At each
reporting date the Company revises its estimates of the number of
options that are likely to be exercised with any adjustment
recognised in the income statement.
Where share-based payments give rise to the issue of new share
capital, the proceeds received by the Company are credited to share
capital and share premium when the share entitlements are
exercised.
1.19. Segmental
reporting
An operating segment is a component of the Company:
• that engages in business activities from
which it may earn revenues and incur expenses (including revenues
and expenses relating to transactions with other components of the
Company);
• whose operating results are reviewed
regularly by the Company’s chief decision maker to make decisions
about resources to be allocated to the segment and assess its
performance; and
• for which discrete financial information is
available.
1.20. Research and
development
An internally generated intangible asset arising from
development is only recognised where all of the following have been
demonstrated: (i) the technical feasibility of completing the
asset; (ii) the intention to complete the asset and the ability to
use or sell it; (iii) the availability of resources to complete the
asset; and (iv) the ability to reliably measure the cost
attributable to the asset during its development.
In all other instances research and development expenditure is
recognised as an expense as incurred. Development costs previously
recognised as an expense are not recognised as an asset in a
subsequent period.
2. Staff costs
|
|
|
2017
£ |
2016
£ |
|
|
|
|
|
Directors’ fees |
|
|
207,772 |
194,602 |
Wages and salaries |
|
|
11,474 |
- |
Pensions |
|
|
230 |
- |
|
|
|
219,476 |
194,602 |
Including Directors, the Company had on average 5 employees
during the year (2016: 4) and 6 at year end (2016: 4).
No social security costs were incurred during the year or in the
prior year.
3. Administrative expenses
Included in administrative expenses are:
|
2017
£ |
2016
£ |
|
|
|
Property rentals |
10,399 |
- |
Depreciation |
808 |
- |
Auditor’s remuneration for audit
services: |
|
|
Fees payable to the
Company’s auditor for the audit of the Company’s annual financial
statements |
20,000 |
12,000 |
|
Fees payable to the
Company’s auditor and their associates for other services: |
1,000 |
- |
|
|
|
|
|
|
|
|
|
|
There are no other fees paid to the Company’s auditor other than
those disclosed above.
4. Finance costs
|
|
2017
£ |
2016
£ |
|
|
|
|
Shareholder loan interest |
|
69,863 |
482,106 |
|
|
69,863 |
482,106 |
5. Income tax and deferred
tax
As the Company incurred a loss, no current tax is payable (2016:
£nil). 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 £9,168,835 (2016: £7,294,143) and reflect tax losses
submitted in tax returns and arising during the period. The
tax credit is lower (2016: lower) than the standard rate of tax.
Differences are explained below.
|
2017
£ |
2016
£ |
Current tax |
|
|
Loss before taxation |
1,874,692 |
1,334,009 |
|
|
|
Tax credit at standard UK
corporation tax rate of 19.25% (2016: 20%) |
360,878 |
266,802 |
Effects of: |
|
|
Expenses not deductible for tax
purposes |
- |
(73,430) |
Deferred tax not recognised |
(360,878) |
(193,372) |
|
|
|
Income tax expense |
- |
- |
|
|
|
6. Loss per share
|
|
2017 |
2016 |
|
|
|
|
Total comprehensive loss (£) |
|
(1,874,692) |
(1,334,009) |
|
|
|
|
Weighted average number of
shares |
|
975,055,119 |
551,433,936 |
|
|
|
|
Loss per share in pence |
|
(0.19) |
(0.24) |
Diluted loss per share in pence |
|
(0.19) |
(0.24) |
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.
warrants – exercisable at 1p per warrant
Hillgrove Loans convertible at 0.5p |
|
|
5,000,000
£1,402,155 |
11,000,000
15,000,000
£3,332,292 |
Shares issued since the year end are disclosed in note 21.
7. Property, plant and equipment
|
|
|
Property, plant and equipment |
|
|
|
£ |
Cost |
|
|
|
At 1 January 2017 |
|
|
5,626 |
Additions |
|
|
985 |
Other adjustments |
|
|
- |
At 31 December
2017 |
|
|
6,611 |
|
|
|
|
Accumulated
depreciation |
|
|
|
At 1 January 2017 |
|
|
3,202 |
Charge for the
year |
|
|
808 |
Other adjustments |
|
|
- |
At 31 December
2017 |
|
|
4,010 |
Carrying
amount |
|
|
|
At 31 December
2017 |
|
|
2,601 |
At 31 December
2016 |
|
|
2,424 |
8. Investments
Investments relate to costs of investments in subsidiary
undertakings, namely in PowerHouse Energy, Inc, Pyromex AG and
PowerHouse Energy UK Limited. 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.
PowerHouse Energy UK Limited is a wholly owned UK based dormant
company.
|
|
2017
£ |
2016
£ |
|
|
|
|
Investment - Cost |
|
48,947,155 |
48,947,155 |
Accumulated impairment |
|
(48,947,154) |
(48,947,154) |
|
|
1 |
1 |
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.
The registered address of PowerHouse Energy UK Limited is
10b Russell
Court, Cottingley Business Park, Bingley, UK BD16 1PE
9. Trade and other receivables
|
|
2017
£ |
2016
£ |
|
|
|
|
Other receivables |
|
77,287 |
6,336 |
Prepayments and accrued income |
|
11,208 |
- |
|
|
88,495 |
6,336 |
10. Cash and cash
equivalents
|
|
2017
£ |
2016
£ |
|
|
|
|
Cash balances |
|
750,226 |
148,151 |
|
|
|
|
|
|
750,226 |
148,151 |
11. Trade and other payables
|
|
2017
£ |
2016
£ |
|
|
|
|
Trade payables |
|
125,141 |
34,183 |
Other creditors and accruals |
|
115,715 |
17,001 |
|
|
240,856 |
51,184 |
Capital commitments not accrued for at the year end amounted to
£nil (2016: £Nil).
12. Operating leases
Future minimum rentals payable under non-cancellable operating
leases are as follows:
|
|
2017
£ |
2016
£ |
Amounts payable: |
|
|
|
Within one year |
|
5,419 |
- |
|
|
|
|
|
|
5,419 |
- |
13. Loans
|
|
2017
£ |
2016
£ |
|
|
|
|
At 1 January |
|
3,332,292 |
2,938,636 |
New loans raised |
|
69,863 |
577,567 |
Loans repaid |
|
(2,000,000) |
(183,911) |
Interest expense |
|
69,863 |
482,106 |
Interest paid |
|
(69,863) |
(482,106) |
|
|
1,402,155 |
3,332,292 |
|
|
2017
£ |
2016
£ |
|
Loans classified as: |
|
|
|
|
- Current |
|
1,402,155 |
3,332,292 |
|
|
- Non-current |
|
- |
- |
|
|
|
|
|
|
|
|
|
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.
In February 2017 Hillgrove
accepted a settlement of this loan for a £2 million cash pay-out,
which was paid during the year, and the conversion of the residual
balance of £1,402,155 into newly issued share capital of the
Company at the previously agreed 0.5p conversion price, amounting
to 280,430,920 shares. The shares have been issued since the year
end and Hillgrove has released the debenture it held over the
assets of the Company.
14. Share capital & share
premium
|
|
|
0.5
p
Ordinary
shares |
0.5 p
Deferred shares |
4.5 p
Deferred shares |
4.0 p
Deferred shares |
|
|
|
|
|
|
|
Shares at 1 January
2016 |
|
|
430,163,261 |
388,496,747 |
17,373,523 |
9,737,353 |
|
|
|
|
|
|
|
Issue of shares |
|
|
177,771,275 |
- |
- |
- |
|
|
|
|
|
|
|
Shares at 31
December 2016 |
|
|
607,934,536 |
388,496,747 |
17,373,523 |
9,737,353 |
|
|
|
|
|
|
|
Issue of shares |
|
|
528,937,478 |
- |
- |
- |
|
|
|
|
|
|
|
Shares at 31
December 2017 |
|
|
1,136,872,014 |
388,496,747 |
17,373,523 |
9,737,353 |
|
0.5 p
Ordinary shares |
0.5 p
Deferred shares |
4.5 p
Deferred shares |
4.0 p
Deferred shares |
Share
Capital |
Share Premium |
|
£ |
£ |
£ |
£ |
£ |
£ |
|
|
|
|
|
|
|
At 1 January 2016 |
2,150,815 |
1,942,483 |
781,808 |
389,494 |
5,264,600 |
46,921,180 |
|
|
|
|
|
|
|
Issue of shares |
888,855 |
- |
- |
- |
888,855 |
110,809 |
|
|
|
|
|
|
|
At 31 December
2016 |
3,039,670 |
1,942,483 |
781,808 |
389,494 |
6,153,455 |
47,031,989 |
|
|
|
|
|
|
|
|
|
Issue of shares |
2,644,687 |
- |
- |
- |
2,644,687 |
1,895,313 |
|
Share issue costs |
- |
- |
- |
- |
- |
(245,510) |
|
|
|
|
|
|
|
|
|
At 31 December
2017 |
5,684,357 |
1,942,483 |
781,808 |
389,494 |
8,798,142 |
48,681,792 |
|
All types of deferred shares carry no voting right nor any
entitlement to attend general meetings of the Company. They carry
only a right to participate in any return of capital once an amount
of £100 has been paid in respect of each ordinary share.
On 26 January 2016 the Company
issued 9,090,909 ordinary shares of 0.5p each at a price of 0.55p
each, totalling £50,000.
On 23 February 2016 the Company
issued 35,714,285 ordinary shares of 0.5p each at a price of 0.7p
each, totalling £250,000, 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 £25,000.
On 15 July 2016 the Company issued
38,461,538 ordinary shares of 0.5p each at a price of 0.65p each,
totalling £250,000, 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.
On 19 January 2017 the Company
issued 35,714,285 ordinary shares of 0.5p each at a price of 0.7p
each, totaling £250,000, before issue costs.
On 15 February 2017 &
15 March 2017 the Company issued
250,000,000 and 62,500,000 ordinary shares of 0.5p each
respectively at a price of 0.8p each, totaling £2,500,000, before
issue costs.
On 27 June 2017 the Company issued
7,460,035 ordinary shares of 0.5p each at a price of 0.9p each,
totaling £70,000, before issue costs.
On 24 August 2017 the Company
issued 160,000,000 ordinary shares of 0.5p each at a price of 1.0p
each, totaling £1,600,000, before issue costs.
On 31 August 2017 the Company
issued 8,000,000 ordinary shares of 0.5p each at a price of 1.0p
each, totaling £80,000, before issue costs.
On 31 August 2017 the Company
issued 5,263,158 ordinary shares of 0.5p each at a price of 0.8p
each, totaling £40,000, before issue costs.
15. Accumulated deficit
|
|
2017
£ |
2016
£ |
|
|
|
|
As at 1 January |
|
(56,412,008) |
(55,145,999) |
Loss for the year |
|
(1,874,692) |
(1,334,009) |
Share based payment |
|
5,078 |
68,000 |
At 31 December |
|
(58,281,622) |
(56,412,008) |
16. Convertible Instruments
16.1 Warrants
On 4 July 2017, the Company
granted 5,000,000 warrants to a consultant (2016: nil). The options
may be exercised between the Grant date and the third anniversary
of the Grant date and will lapse if not exercised during that
period. At the date of grant the shares price was 0.85p and the
warrants have an exercise price of 1p per share. There were no
other warrants outstanding at year end. The valuation of the
warrants followed the same methodology as for share options as
disclosed in note 16.3 below. These warrants have incurred a charge
of £5,078 during the year (2016: £nil).
16.2 Hillgrove
In February 2017 Hillgrove
exercised the right to convert part of its loan to shares, further
details are detailed in note 13.
16.3 Share Options
On 8 December 2014, the Company
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.
On 7 March 2016, the Company
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 have an exercise price of 0.75p per
share.
No further options were issued in 2017.
The number of options outstanding at 31
December 2017:
Date of grant |
Granted |
Share price on
grant |
Exercised |
Forfeits |
At 31 December
2017 |
Exercise price |
Exercise
period |
|
|
|
|
|
|
|
|
8 December 2014 |
11,000,000 |
1.875p |
- |
- |
11,000,000 |
2.5p |
9 December
2014 until 8 December 2024 |
|
|
|
|
|
|
|
|
7 March 2016 |
15,000,000 |
0.55p |
- |
- |
15,000,000 |
0.75p |
8 March
2016 until 7 March 2021 |
Total |
26,000,000 |
|
- |
- |
26,000,000 |
|
|
|
|
|
|
|
|
|
|
|
The estimated fair value of the options issued during the year
was calculated by applying the Black-Scholes option pricing model.
The assumptions used in the calculation were as follows:
|
8 December 2014 |
7 March 2016 |
|
|
|
Options in issue 31 December
2017 |
11,000,000 |
15,000,000 |
Exercise price |
2.5p |
0.55p |
Expected volatility |
127.56% |
127.56% |
Contractual life |
10 years |
5 years |
Risk free rate |
2% |
2% |
Estimated fair value of each
option |
1.79p |
0.45p |
These options have incurred a charge of £nil (2016: £68,000) in
the current year.
17. Material
risks
The Company is 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 Company’s planning and an important aspect of the Company’s
internal control system. The Company’s approach to these risks is
detailed in the Strategic Report.
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 AG. The current cash reserves and funding
plans forward are considered sufficient to enable the Company to
meet its liabilities as they fall due.
18. Directors’ remuneration and
share interests
The Directors who held office at 31
December 2017 had the following interests, including any
interests of a connected person in the ordinary shares of the
Company:
|
Number of ordinary
shares of 0.5p each |
Percentage of
voting rights |
|
|
|
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 2017 is:
|
2017
£
Salary/Fee |
2017
£
Pension |
2017
£
Benefits |
2017
£
Total |
2016
£
Total |
|
|
|
|
|
|
William Cameron Davies |
12,500 |
- |
- |
12,500 |
- |
Robert Keith
Allaun |
163,772 |
- |
- |
163,772 |
93,527 |
Nigel Brent
Fitzpatrick |
15,000 |
- |
- |
15,000 |
37,942 |
James John Pryn
Greenstreet |
9,000 |
- |
- |
9,000 |
27,133 |
David Ryan |
- |
- |
- |
- |
- |
Clive Carver |
7,500 |
- |
- |
7,500 |
36,000 |
Share options held by the Directors are detailed in note 16.3.
No options have been exercised during the year. Total remuneration
includes share based payments arising from the issue of options
amounting to £nil (2016: £68,000). There have been no awards of
shares to Directors under long term incentive plans.
William Cameron Davies,
Nigel Brent Fitzpatrick and
James John Pryn Greenstreet have
service contracts which can be terminated by providing three
months’ written notice. Robert Keith
Allaun has a service contract which can be terminated by
providing six months’ written notice.
Robert Keith Allaun’s services amounting to £163,772 were
provided via Critical Point Solutions Limited and relate wholly to
his services as a Director of the Company.
Nigel Brent Fitzpatrick’s services amounting to £15,000 were
provided via Ocean Park Developments Limited and relate wholly to
his services as a Director of the Company.
David Ryan’s services were provided via Nayr Consultants
Limited, an engineering consultancy. Details of amounts paid are
provided in Note 19. Related Parties. This does not include any
amount for services as a Director of the Company.
Clive Carver’s services amounting to £7,500 were provided via
Elk Associates LLP and relate wholly to his services as a Director
of the Company.
19. 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 decreased by a net £1,930,137 and
£69,863 of loan interest was settled by way of further loans.
The balance outstanding at the year-end was £1,402,155 (2016:
£3,332,292).
Waste2tricity Limited is a related party due to common
directorships. During the year, Waste2tricity provided business
development services to the Company amounting to £230,000.
Nayr Consultants Limited, an engineering consultancy services
company, wholly owned by David Ryan
and his associates, provided engineering services to the Company
during the year amounting to £50,375.
Transactions with other related parties were conducted on an
arms’ length basis and totalled £nil (2016: £nil).
20. Segmental
reporting
The Company comprises a single operating segment being a
development Company operating solely within the United Kingdom. As such the statement of
comprehensive income and the statement of financial position may be
used as a report on the segment. No revenue is currently being
generated as the equipment is currently being developed and
tested.
21. Post balance
sheet events
On 1 February and 23 April 2018,
the Company issued 215,686,275 and 64,744,645 ordinary shares of
0.5p respectively at the agreed price of 0.5p in final settlement
of the outstanding loan balance due to Hillgrove of £1,402,155.
On 23 April 2018 the Company
issued a further 115,255,355 ordinary shares of 0.5p at a price of
0.5p raising gross proceeds of £576,277.
Additionally, in May 2018, the
Company has issued a further 10,000,000 and 7,894,737 ordinary
shares of 0.5p at a price of 0.5p and 0.76p respectively in
settlement of services provided.
Since the year end, Mr Allaun and Mr Greenstreet acquired
2,000,000 and 1,000,000 ordinary shares of 0.5p in the Company
respectively from the market
On 6 March 2018, the Company
granted share options to Directors under the Company’s Share Option
Schemes at an exercise price of 0.6p per share as follows:
Mr Robert Keith Allaun
30,000,000
Mr David
Ryan
21,000,000
Mr William Cameron
Davies
15,000,000
Mr Nigel Brent Fitzpatrick
12,000,000
Mr James John Pryn
Greenstreet
12,000,000
22. Ultimate controlling
party
There is no controlling party of the Company.