REG - Powerhouse Enrgy Grp - Half-year Report
25/08/2022 07:00
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RNS Number : 1442X Powerhouse Energy Group PLC 25 August 2022
25 August 2022
Powerhouse Energy Group plc
("Powerhouse" or the "Company")
Half Year Report
Powerhouse Energy Group plc (AIM: PHE), the UK technology company
commercialising hydrogen production from plastic, is pleased to announce its
unaudited interim results for the six months ended 30 June 2022.
Highlights
Commercial Development
· Continued support of Peel NRE's development of the proposed first commercial
scale application of Powerhouse's technology at the Protos Energy Park in
Cheshire, UK. Peel NRE has shortlisted two potential contractors for the
construction works and is currently seeking the necessary finance. Identifying
potential contractors took significantly longer than expected due in part to
the impact of the Covid pandemic. Further work is yet required to finalise the
cost of construction, which is also being impacted by the high rates of
inflation. A revised estimate of the construction programme and targeted time
for commercial deployment will be made as soon as it can be established.
· Secured exclusivity and a supply chain with a Thermal Conversion Chamber
manufacturer in the UK.
· Post period end signed a non-binding term sheet setting out the heads of terms
for Powerhouse to take a 50% shareholding in the Peel NRE Ltd special purpose
vehicle, Protos Plastics-to Hydrogen No 1 Ltd.
· Post period end agreed heads of terms ("HoTs") with Hydrogen Utopia
International Plc (AQSE: HUI) ("HUI") for the proposed joint development of a
site at Lanespark in Co. Tipperary in the Rep of Ireland.
· Post period end agreed HoTs with HUI for the proposed joint development of a
site in Konin, within the Wielkopolska province of Poland.
Technology and Innovation
· Unveiled plans for a £1.3m investment to create a Global Technology &
Innovation Centre by Q2 2023, to support the development of the technology
coupled with serving as a sales development centre. Initial pre-payment of
£193k made to the supplier for the design and supply of the test pyrolysis
reactor.
· Evolution and adoption of a more flexible business model to provide a pipeline
of opportunities to implement PHE's DMG technology.
Financial Performance
· Revenues for the half year of £352k (H1 2021: £373k).
· Gross Profit for period increased to £79.9k (2021: £16.7k).
· £7.54m cash at bank at 30 June 2022.
Organisation and Growth
· Completion of a strategic review of the business with a clear path to
commerciality and technical roadmap completed by our CEO and embraced by the
Company.
· Post period end changes to the Board of Directors, including the resignation
of Paul Drennan-Durose as CEO and of two Non-Executive Directors.
· Post period end appointment of Paul Emmitt to Chief Operating Officer.
Statement from Keith Riley, Interim non-executive Chairman and acting CEO of
Powerhouse Energy Group Plc
"Progress has been made in the first half of 2022 as we developed our business
model to be more flexible and retain more control over our proprietary
technology. We continue with our plans to develop a global technology and
innovation centre to develop our knowhow and breadth of application.
"With the refocusing of our strategy and additional flexibility of our
business model implemented, we are encouraged to see increased levels of
interest on an international level in the Powerhouse proposition. Post period
end we have announced that we have signed two Heads of Terms with Hydrogen
Utopia, for two projects outside of the UK; one in Ireland and the other in
Poland. Both of these territories are key markets for Powerhouse as they give
the company positioning within the EU from where further business expansion
can be made.; Poland is a European leader in revitalising its economy towards
net zero carbon emissions, while Ireland is in the process of establishing its
hydrogen strategy with view to becoming a major player in the emerging
hydrogen economy.
"There have been additional changes to the management team post period end,
however at working level, the business continues to grow in strength and
advance the commercial implementation of its technology. I would like to thank
Paul Drennan-Durose, Gill Weeks, Myles Kitcher and James Greenstreet for their
contribution to the business and wish them will in their future endeavors.
Paul Emmitt has been appointed to Chief Operating Officer. He has been Chief
Technical Officer since July 2021 and has over twenty years of engineering and
operational management experience both in the UK and overseas in the oil, gas,
energy-from-waste and chemical industries, he is well placed to progress the
Company's strategy. Chief Financial Officer, Chris Vanezis, is on paternity
leave and Ben Brier is acting CFO during Chris' absence,
"There is much work to be done in the development of our projects as we
continue on our path to commercial implementation. The changes implemented in
our commercial relationships made during the first half of this year will
create the foundation for the growth of the Company in the years to come. We
look forward to updating investors on our progress as we move through the
financial year."
For more information, contact:
Powerhouse Energy Group Plc powerhouse@tavistock.co.uk (mailto:powerhouse@tavistock.co.uk)
Paul Drennan-Durose and Keith Riley
WH Ireland Limited (Nominated Adviser) +44 (0) 207 220 1666
James Joyce and Megan Liddell
Turner Pope Investments (TPI) Ltd (Joint Broker) +44 (0) 203 657 0050
Andrew Thacker and James Pope
Tavistock (Financial PR) powerhouse@tavistock.co.uk (mailto:powerhouse@tavistock.co.uk)
Simon Hudson, Nick Elwes and Heather Armstrong
About Powerhouse Energy Group plc
Powerhouse Energy has developed a proprietary process technology - DMG® -
which can utilise waste plastic, end-of-life-tyres, and other waste streams to
convert them efficiently and economically into syngas from which valuable
products such as chemical precursors, hydrogen, electricity, and other
industrial products may be derived. Powerhouse's technology is one of the
world's first proven, distributed, modular, hydrogen from waste process.
Powerhouse's 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 under the
ticker: PHE and is incorporated in the United Kingdom.
For more information see www.powerhouseenergy.co.uk
(http://www.powerhouseenergy.co.uk)
Statement of Comprehensive Income
(Unaudited) (Unaudited) (Audited)
Six months Six months Year
ended ended Ended
30 June 30 June 31 Dec
Note 2022 2021 2021
£ £ £
Revenue 1 352,713 373,306 701,435
Cost of sales (272,808) (356,530) (599,914)
Gross profit 79,905 16,776 101,521
Administrative expenses (1,050,400) (1,115,481) (2,147,476)
Acquisition costs - - (11,735)
Share of associate 49,694 - 50,062
Operating loss (920,801) (1,098,705) (2,007,628)
Net finance revenues 21,434 403 10,987
Loss before taxation (899,367) (1,098,302) (1,996,641)
Income tax credit/(charge) (9,273) - 126,145
Loss after taxation (908,640) (1,098,302) (1,870,496)
Total comprehensive loss (908,640) (1,098,302) (1,870,496)
Total comprehensive loss attributable to:
Owners of the Company (908,640) (1,098,302) (1,870,496)
Non-controlling interests - - -
Loss per share from continuing operations (pence) 3 (0.02) (0.03) (0.05)
The notes numbered 1 to 5 are an integral part of the interim financial
information.
Statement of Financial Position
(Unaudited) (Unaudited) (Audited)
As at As at As at
30 June 30 June 31 December
Note 2022 2021 2021
£ £ £
ASSETS
Non-current assets
Intangible fixed assets 43,654,220 43,543,569 43,554,498
Tangible fixed assets 23,901 46,237 33,092
Investments in subsidiary undertakings 1 1 1
Investments in associated undertakings 179,026 49 140,540
Total non-current assets 43,857,148 43,589,856 43,728,131
Current Assets
Loans receivable 1,925,112 1,152,928 1,165,286
Trade and other receivables 1,441,287 529,699 963,648
Corporation tax recoverable - 19,571 155,227
Cash and cash equivalents 7,536,341 10,983,386 9,637,460
Total current assets 10,902,740 12,685,584 11,921,621
Total assets 54,759,888 56,275,440 55,649,752
LIABILITIES
Current liabilities
Creditors: amounts falling due within one year (601,186) (636,923) (563,781)
Total current liabilities (601,186) (636,923) (563,781)
Total assets less current liabilities 54,158,702 55,638,517 55,085,971
Creditors: amounts falling due after more than one year - (10,853) -
Net assets/(liabilities) 54,158,702 55,627,664 55,085,971
EQUITY
Shares and stock 2 22,900,856 22,723,355 22,900,856
Share premium 61,291,710 61,143,215 61,291,710
Merger relief reserve 36,117,711 36,117,711 36,117,711
Accumulated deficit (66,151,575) (64,356,617) (65,224,306)
Total surplus 54,158,702 55,627,664 55,085,971
The notes numbered 1 to 5 are an integral part of the interim financial
information.
Statement of Cash Flows
(Unaudited) (Unaudited) (Audited)
Six months Six months Year ended
ended ended 31
Note 30 June 30 June December
2022 2021 2021
£ £ £
Cash flows from operating activities
Operating loss (920,801) (1,098,705) (2,007,628)
Adjustments for:
- Share based payments (18,629) 17,329 34,829
- Amortisation 4,810 2,216 5,049
- Depreciation 11,021 13,747 28,824
- Goodwill impairment - - -
- Share of associate result (49,694) - (50,062)
- Provision against investments - - 49
Changes in working capital:
- Decrease/(increase) in contract costs - 14,550 14,550
- Decrease/(increase) in trade and other receivables (477,639) (329,389) (763,338)
- Increase/(decrease) in trade and other payables 50,007 126,854 55,015
Tax credits received 155,227 118,926 118,927
Net cash used in operations (1,245,698) (1,134,472) (2,563,785)
Cash flows from investing activities
Loans advanced (737,520) (1,150,000) (1,150,000)
Purchase of interest in associate - - (99,990)
Dividends received from associate 1,935 - -
Purchase of intangible fixed assets (104,532) (26,203) (39,965)
Purchase of tangible fixed assets (1,830) (6,964) (8,896)
Net cash from investing activities (841,947) (1,183,167) (1,298,851)
Cash flows from financing activities
Proceeds from issue of shares - 9,850,801 10,063,802
Payments of principal under leases (12,602) (11,726) (23,882)
Net finance costs (872) (2,525) (4,299)
Net cash flows from financing activities (13,474) 9,836,550 10,035,621
Net increase/(decrease) in cash and cash equivalents (2,101,119) 7,518,911 6,172,985
Cash and cash equivalents at beginning of period 9,637,460 3,464,475 3,464,475
Cash and cash equivalents at end of period 7,536,341 10,983,386 9,637,460
The notes numbered 1 to 5 are an integral part of the interim financial
information.
Statement of Changes in Equity
Ordinary Share capital Share premium Merger relief Accumulated
£ Deferred shares account reserve deficit Total
£ £ £ £ £
Balance at 1 Jan 2021 (audited) 18,575,503 3,113,785 52,594,934 36,117,711 (63,544,097) 46,857,836
Transactions with equity participants:
- Shares issued on exercise options 24,477 - 174,603 - - 199,080
- Shares issued on exercise warrants 100,500 - 105,487 - - 205,987
- Other share issues 909,091 - 9,090,909 - - 10,000,000
Share based payment - - - - 285,782 285,782
Share issue costs - - (822,718) - - (822,718)
Total comprehensive loss - - - - (1,098,302) (1,098,302)
Balance at 30 June 2021 (unaudited) 19,609,571 3,113,785 61,143,215 36,117,711 (64,356,617) 55,627,665
Transactions with equity participants:
- Shares issued on exercise options 177,500 - 148,495 - - 325,995
Share based payment - - - - (95,495) (95,495)
Total comprehensive loss - - - - (772,194) (772,194)
Balance at 31 Dec 2021 (audited) 19,787,071 3,113,785 61,291,710 36,117,711 (65,224,306) 55,085,971
Share based payment - - - - (18,629) (18,629)
Total comprehensive loss - - - - (908,640) (908,640)
Balance at 30 June 2022 (unaudited) 19,787,071 3,113,785 61,291,710 36,117,711 (66,151,575) 54,158,702
The following describes the nature and purpose of each reserve within equity:
Share capital: Deferred
shares: Represents the combined total of
all deferred shares (0.5p, 4p and 4.5p)
Share premium: Amount subscribed for
share capital in excess of nominal value
Merger relief reserve: Amount subscribed for share capital
in excess of nominal value where merger relief applies
Accumulated deficit: Accumulated deficit represents
the cumulative losses of the company and all other net gains and losses and
transactions with shareholders not recognised elsewhere
The notes numbered 1 to 5 are an integral part of the interim financial
information.
Notes (forming part of the interim financial information)
1. Summary of significant accounting policies
The following accounting policies have been applied consistently in dealing
with items which are considered material in relation to the financial
information.
1.1. Basis of preparation
This interim financial information is for the six months ended 30 June 2022
and has been prepared in accordance with International Accounting Standard 34
"Interim Financial Statements". The accounting policies applied are consistent
with International Financial Reporting Standards ("IFRS") issued by the
International Accounting Standards Board (IASB) as adopted for use in the
United Kingdom and with those parts of the Companies Act 2006 applicable to
companies reporting under IFRS (except as otherwise stated). The accounting
policies and methods of computation used in the interim financial information
are consistent with those of the previous financial year and corresponding
interim reporting period and with those expected to be applied for the year
ending 31 December 2022.
The Company does not consider any new and amended standards that became
applicable for the current reporting period to have any impact on the
Company's results.
The unaudited results for period ended 30 June 2022 do not constitute
statutory accounts within the meaning of Section 435 of the Companies Act
2006. The comparative figures for the period ended 31 December 2021 for the
Company are extracted from the audited financial statements which contained an
unqualified audit report and did not contain statements under Sections 498 to
502 of the Companies Act 2006.
This interim financial statement will be, in accordance with the AIM Rules for
Companies, available shortly on the Company's website.
1.2. Going concern
The Directors have considered all available information about future events
when considering going concern. The Directors have prepared and reviewed cash
flow forecasts for 12 months following the date of these Financial Statements.
The projections show that the Company will have sufficient funding to be able
to continue as a going concern on the basis of its cash balances as at 30 June
2022.
The interim financial statements do not include the adjustments that would
result if the Company were unable to continue as a going concern.
1.3. Functional and presentational currency
This interim financial information is presented in £ sterling which is the
Group's functional currency.
1.4. Associated undertakings
Associates are entities which the Company has significant influence but not
control or joint control as defined under IAS 28. This is generally the case
where the Company holds between 20% and 50% of the voting rights. Investments
in associates are accounted for using the equity method of accounting.
Under the equity method of accounting, investments are initially recognised at
cost and adjusted thereafter to recognise the Company's share of the
post-acquisition profits or losses of the investee in the Income statement.
Dividends received or receivable from associates and joint ventures are
recognised as a reduction in the carrying value of the investment.
When the Company's share of losses in an equity-accounted investment exceeds
or equals its interest in the equity, the Company does not recognise further
losses, unless it has incurred obligations or made payments on behalf of the
other entity. Unrealised gains on transactions between the Company and its
associates and joint ventures are eliminated to the extent of the Company's
interest in these entities. Unrealised losses are also eliminated unless the
transaction provides evidence of an impairment in the asset transferred.
1.5. Revenue
The Company provides engineering services for the application of the DMG
technology, the intellectual property that the Company owns. Revenue from
providing services is recognised in the accounting period in which services
are rendered. For fixed-price contracts, revenue is recognised based on the
actual service provided to the end of the reporting period as a proportion of
the total services to be provided to the extent to which the customer receives
the benefits. This is determined based on the actual labour hours spent
relative to the total expected labour hours.
Where contracts include multiple performance obligations as specified by the
work scope, the transaction price will be allocated to each performance
obligation based on estimated expected cost-plus margin.
Estimates of revenues, costs, or extent of progress toward completion of
services are revised if circumstances change. Any resulting increases or
decreases in estimated revenues or costs are reflected in profit or loss in
the period in which the circumstances that give rise to the revision become
known by management.
In case of fixed-price contracts, the customer pays the fixed amount based on
a payment schedule. If the services rendered by the Company exceed the
payment, a contract asset is recognised. If the payments exceed the services
rendered, a contact liability is recognised.
If a contract includes an hourly fee, revenue is recognised in the amount to
which the Company has a right to invoice.
2. SHARE CAPITAL
0.5 p Ordinary shares 0.5p Deferred 4.5 p Deferred shares 4.0 p Deferred shares
shares
Balance at 1 January 2022 3,957,414,135 388,496,747 17,373,523 9,737,353
Shares issued - - - -
Balance at 30 June 2022 3,957,414,135 388,496,747 17,373,523 9,737,353
The deferred shares have no voting rights and do not carry 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. The Company is authorised at any time to affect a
transfer of the deferred shares without reference to the holders thereof and
for no consideration.
3. Loss per share
(Unaudited) (Unaudited) (Audited)
As at As at As at
30 June 30 June 31 December
2022 2021 2021
£ £ £
Total comprehensive loss (908,640) (1,098,302) (1,870,496)
Weighted average number of shares 3,957,414,135 3,893,534,880 3,918,497,299
Basic loss per share in pence (0.02) (0.03) (0.05)
Diluted loss per share in pence (0.02) (0.03) (0.05)
4. SHARE BASED PAYMENT
The expense recognised for share-based payments during the year is shown in
the following table:
(Unaudited) (Unaudited) (Audited)
As at As at As at
30 June 30 June 31 December
2022 2021 2021
£ £ £
Share based payment charge/(credit) recognised in Income Statement
Expense arising from equity-settled share-based payment transactions:
- Share options for Directors and employees (18,629) 17,329 34,829
Total share-based payment in Income Statement (18,629) 17,329 34,829
Share based payment charge recognised in Share Premium
- Warrants for third party services - 419,138 419,138
Total share-based payment in Share Premium Account - 419,138 419,138
Total share-based payment charges/(credits) recognised (18,629) 436,467 453,967
Other share-based payment movements
Exercise of options by Directors and employees - (73,987) (186,982)
Exercise of warrants for third party services - (76,698) (76,698)
Total share-based payment (18,629) 285,782 190,287
The were no liabilities recognised in relation to share based payment
transactions.
5. EVENTS AFTER THE REPORTING PERIOD
There are no events arising after the end of the reporting period to report in
respect of the interim financial information.
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