PowerHouse Energy
Group plc
(“PowerHouse” or
the “Company”)
Final Results FOR
THE YEAR ENDED
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
Keith Allaun, Executive Chairman |
Tel: +44 (0) 203 368 6399 |
WH Ireland Limited (Nominated
Adviser)
James Joyce / James Bavister |
Tel: +44 (0) 207 220 1666 |
Turner Pope Investments Ltd (Joint
Broker)
Ben Turner / James Pope |
Tel: +44 (0) 203 621 4120 |
Smaller Company Capital Limited
(Joint Broker)
Jeremy Woodgate |
Tel: +44 (0) 203 651 2910 |
IFC Advisory (Financial PR &
IR)
Tim Metcalfe / Miles Nolan |
Tel: +44 (0) 203 053 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 (c£85 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 £500,000 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 £3.3 million.
In February 2017, the Company
raised £2.5 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 £3,402,155 to the Company, including accrued interest, and
accepted a £2 million cash pay-out, and conversion of the remaining
£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. 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 £2m 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 £500,000 to the equity
fundraise in February 2017, having
previously invested £250,000 in January
2017.
Other fundraisings in 2016 amounted to £700,512.
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 £1,334,009
(2015: Loss of £781,647).
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
£235,000, with an additional approximate £60,000 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 £1,334,009
(2015: Loss of £781,647). The Group financial statements are
set out on pages 32 to 44. The Group loss for the year after
taxation amounted to £1,334,009 (2015: Profit of £315,780).
The net liabilities of the Company are £3,226,564 (2015:
£2,960,219) with the movement in the year set out on page 18.
The net liabilities of the Group are £3,226,564 (2015: £2,960,219)
with the movement in the year set out on page 33.
The Directors do not recommend the payment of a dividend (2015:
£nil).
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: £nil).
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 ordinary shares of 0.5p
each |
Percentage of voting rights |
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 £148,151 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
£ |
|
|
|
|
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
capital
£ |
Share
premium
£ |
Deferred shares
(0.5p)
£ |
Deferred shares
(4.0p)
£ |
Deferred shares
(4.5p)
£ |
Retained earnings
£ |
Total
£ |
|
|
|
|
|
|
|
|
Balance at 1 January
2015 |
3,884,965 |
46,898,113 |
- |
781,808 |
389,494 |
(54,364,352) |
(2,409,972) |
Transactions with
equity participants: |
|
|
|
|
|
|
|
|
(1,942,483) |
- |
1,942,483 |
- |
- |
- |
- |
|
208,333 |
23,067 |
|
|
|
|
231,400 |
|
|
|
|
|
|
(781,647) |
(781,647) |
|
|
|
|
|
|
|
|
Balance at 31 December
2015 |
2,150,815 |
46,921,180 |
1,942,483 |
781,808 |
389,494 |
(55,145,999) |
(2,960,219) |
Transactions with
equity participants: |
|
|
|
|
|
|
|
|
45,455 |
4,545 |
|
|
- |
|
50,000 |
|
178,571 |
56,429 |
|
|
- |
|
235,000 |
|
17,857 |
7,143 |
|
|
- |
|
25,000 |
|
192,308 |
42,692 |
- |
|
- |
|
235,000 |
|
454,664 |
- |
- |
|
- |
|
454,664 |
|
- |
|
|
|
- |
68,000 |
68,000 |
|
|
- |
|
|
- |
(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) |
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
£ |
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
£ |
Cash flows from operating
activities |
|
|
|
|
Operating Loss |
|
|
(851,903) |
(397,022) |
Adjustments for: |
|
|
|
|
|
68,000 |
- |
|
299,152 |
- |
Changes in working capital: |
|
|
|
|
- (Increase)/Decrease in trade and other receivables
|
|
|
(4,885) |
4,390 |
- (Decrease) in trade and other payables
|
|
|
(147,601) |
(36,050) |
|
|
|
|
|
Net cash used in
operations |
|
|
(637,237) |
(428,682) |
|
|
|
|
|
Cash flows from
investing activities |
|
|
|
|
|
|
|
(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
Loans repaid |
|
|
577,567
(183,911) |
757,632
- |
|
|
|
|
|
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 £148,151 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
£ |
|
|
|
|
|
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
£ |
Fees payable to the
company’s auditor for the audit of the company’s annual financial
statements |
|
12,000 |
10,000 |
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
£ |
|
|
|
|
|
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:
£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 £6,213,344 (2015: £5,178,487). The tax charge is
lower (2015: lower) than the standard rate of tax. Differences are
explained below.
|
2016
£ |
2015
£ |
Current tax |
|
|
Loss before taxation |
1,334,009 |
781,647 |
|
|
|
Tax credit at standard UK
corporation tax rate of 20% (2015 – 20.25%) |
266,802 |
158,284 |
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 (£) |
|
|
(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 per option
Directors’ share options – exercisable at 0.75p per option
Hillgrove Loans convertible at 0.5p |
|
|
11,000,000
15,000,000
£3,332,292 |
11,000,000
15,000,000
£2,938,636 |
6. Property, plant and equipment
|
|
|
|
Office
equipment |
|
|
|
|
£ |
|
|
|
|
|
Opening carrying
value |
|
|
|
- |
Additions in year |
|
|
|
2,424 |
-
Depreciation |
|
|
|
- |
- Net
carrying value |
|
|
|
2,424 |
The cost value of fixed assets is £5,626 (2015: £3,202; 2014:
£3,202).
Accumulated depreciation is £3,202 (2015: £3,202; 2014:
£3,202).
Net book value is £2,424 (2015: £nil, 2014: £nil).
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
£ |
|
|
|
|
|
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
£ |
|
|
|
|
|
Other receivables |
|
|
6,336 |
1,451 |
|
|
|
6,336 |
1,451 |
9. Trade and other payables
|
|
|
2016
£ |
2015
£ |
|
|
|
|
|
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 €211,000 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
£nil (2015: £Nil).
10.
Loans
|
|
|
2016
£ |
2015
£ |
|
|
|
|
|
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 £2 million cash pay-out, and 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. 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
Ordinary shares |
0.5 p
Ordinary
shares |
0.5 p
Deferred shares |
4.5 p
Deferred shares |
4.0 p
Deferred 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 2015 |
|
- |
430,163,261 |
388,496,594 |
17,373,523 |
9,737,353 |
Share
reorganisation |
|
|
|
|
|
|
Issue of shares |
|
- |
177,771,275 |
- |
- |
- |
|
|
|
|
|
|
|
Shares at 31
December 2016 |
|
- |
607,934,536 |
388,496,594 |
17,373,523 |
9,737,353 |
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 £100 has been paid in respect of each ordinary share. The
Company will be authorised at any time to affect a transfer of the
deferred shares without reference to the holders thereof and for no
consideration.
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. 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
£3,332,292 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 £68,000 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 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 2016 is:
|
2016
£
Salary/Fee |
2016
£
Pension |
2016
£
Benefits |
2016
£
Total |
2015
£
Total |
|
|
|
|
|
|
Nigel Brent Fitzpatrick |
15,275 |
- |
- |
15,275 |
8,250 |
James John Pryn
Greenstreet |
9,000 |
- |
- |
9,000 |
- |
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 £393,656 and £482,106 of loan interest was
settled by way of further loans. The balance outstanding at
the year-end was £3,332,292 (2015: £2,938,636).
Transactions with other related parties were conducted on an
arms’ length basis and totalled £NIL (2015: £NIL).
16. Post balance sheet event
After the year end Hillgrove has accepted a settlement of its
outstanding loan balance for a £2 million cash pay-out, and
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. 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 £250,000 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 £2,500,000 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 (£500,000) 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 31
December 2016
£ |
Year ended
31 December
2015
£ |
|
|
|
|
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 (£) |
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 stock
£ |
Accumulated
losses
£ |
Share
premium
£ |
Total
£ |
|
|
|
|
|
Balance at 1 January
2015 |
5,056,267 |
(55,461,779) |
46,898,113 |
(3,507,399) |
Transactions with
equity participants: |
|
|
|
|
|
208,333 |
- |
23,067 |
231,400 |
|
|
|
|
|
- Total comprehensive income:
|
|
|
|
|
|
- |
315,780 |
- |
315,780 |
|
|
|
|
|
Balance at 31
December 2015 |
5,264,600 |
(55,145,999) |
46,921,180 |
(2,960,219) |
|
|
|
|
|
Transactions with
equity participants |
|
|
|
|
|
45,455 |
- |
4,545 |
50,000 |
|
178,571 |
- |
56,429 |
235,000 |
|
17,857 |
- |
7,143 |
25,000 |
|
192,308 |
- |
42,692 |
235,000 |
|
454,664 |
- |
- |
454,664 |
|
- |
68,000 |
- |
68,000 |
Total comprehensive
loss |
- |
(1,334,009) |
- |
(1,334,009) |
|
|
|
|
|
Balance at 31
December 2016 |
6,153,455 |
(56,412,008) |
47,031,989 |
(3,226,564) |
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
2016
£ |
31
December 2015
£ |
|
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
£ |
Cash flows from operating
activities |
|
|
|
|
Operating loss |
|
|
(851,903) |
700,405 |
Adjustments for: |
|
|
|
|
|
68,000 |
- |
|
299,152 |
- |
- Write down of subsidiary balances
|
|
|
- |
(1,097,427) |
Changes in working capital: |
|
|
|
|
- (Increase)/Decrease in trade and other receivables
|
|
|
(4,885) |
4,390 |
- (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 £148,151 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
£ |
|
|
|
|
|
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
£ |
fees payable to the
company’s auditor for the audit of the company’ annual financial
statements |
|
12,000 |
10,000 |
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
£ |
|
|
|
|
|
Shareholder loan interest |
|
|
482,106 |
384,625 |
|
|
|
|
|
Total finance
expenses |
|
|
482,106 |
384,625 |
4. Income tax
|
|
|
2016
£ |
2015
£ |
|
|
|
|
|
Current taxation |
|
|
- |
- |
Deferred taxation |
|
|
- |
- |
|
|
|
|
|
Total taxation
credit |
|
|
- |
- |
As the Company incurred a loss, no current tax is payable (2015:
£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. Tax losses amount to
£5,960,134 (2015: £5,178,487). The tax (credit)/charge is
lower (2015: lower) than the standard rate of tax. Differences are
explained below.
|
2016
£ |
2015
£ |
Current tax |
|
|
(Loss)/profit before taxation |
(1,334,009) |
315,780 |
|
|
|
Tax (credit)/charge at standard UK
corporation tax rate of 20% (2015 – 20.25%) |
(266,802) |
63,945 |
Effects of: |
|
|
Income not chargeable
for tax purposes
Expenses not deductible for tax purposes |
-
73,430 |
(222,229)
- |
Deferred tax not recognised |
193,372 |
158,284 |
|
|
|
Income tax expense |
- |
- |
|
|
|
5. Loss per share
|
|
|
2016 |
2015 |
|
|
|
|
|
Total comprehensive (loss)/profit
(£) |
|
|
(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 technology |
Licence agreements |
Total |
|
|
|
|
|
At 1 January 2015 |
|
|
|
|
|
Cost |
4,035,356 |
2,087,081 |
990,840 |
7,113,277 |
|
Accumulated
amortisation and impairment |
(4,035,356) |
(2,087,081) |
(990,840) |
(7,113,277) |
|
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 impairment |
(4,035,356) |
(2,087,081) |
(990,840) |
(7,113,277) |
|
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 |
|
|
|
|
£ |
|
|
|
|
|
Opening carrying
value |
|
|
|
- |
Additions in year |
|
|
|
2,424 |
-
Depreciation |
|
|
|
- |
- Net
carrying value |
|
|
|
- |
The cost value of fixed assets is £5,626 (2015: £3,202; 2014:
£3,202).
Accumulated depreciation is £3,202 (2015: £3,202; 2014:
£3,202).
Net book value is £2,424 (2015: £nil, 2014: £nil).
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
£ |
|
|
|
|
|
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
£ |
|
|
|
|
|
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 £2 million cash pay-out, and 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. 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
£ |
|
|
|
|
|
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
£nil (2015: £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 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 2016 is:
|
2016
£
Salary/Fee |
2016
£
Pension |
2016
£
Benefits |
2016
£
Total |
2015
£
Total |
|
|
|
|
|
|
Nigel Brent Fitzpatrick |
15,275 |
- |
- |
15,275 |
8,250 |
James John Pryn
Greenstreet |
9,000 |
- |
- |
9,000 |
- |
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 £2 million cash pay-out, and
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. 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 £250,000 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 £2,500,000 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 (£500,000) and has agreed
to a 12 month lock in for its shares.