Half-yearly Report

24 September 2013 PowerHouse Energy Group plc ("PowerHouse", the "Group" or the "Company") Interim results for the six months ended 30 June 2013 PowerHouse Energy Group plc, (AIM: PHE) announces its unaudited results for the six months ended 30 June 2013. Chairman's Statement I am pleased to report that PowerHouse has continued to take positive action in the recovery and expansion of the Group. During the first six months of 2013, PowerHouse made significant progress towards its goal of becoming a global force in the Waste-to-Energy (WtE) market. This time was marked by a tremendous effort on the parts of both of the PowerHouse and the Pyromex teams in achieving the completion of the PowerHouse acquisition of Pyromex AG, and on the part of the engineering, manufacturing, and commercial teams to finalize the Pyromex Ultra High Temperature Reactor (UHTR) development. The efficiency of the Pyromex UHTR system is such that it is extremely favourable when compared with other renewable options on the market. This efficiency, coupled with the economic advantages of diverting waste from landfills, and cleanly generating electricity makes the PowerHouse /Pyromex solution very compelling to our potential customers. Waste-to-Energy is a growing, vibrant market in which demand is clearly outpacing supply. There are lucrative, long-term, rewards for companies with economical solutions to an ever-growing waste stream with which we are faced. The problem of waste continues to grow as first-world economies grapple with the reality that one can only achieve so much by reducing, reusing, and recycling. The time has come to "recover." Recover the huge deposit of renewable energy that lies trapped within our organic municipal and industrial waste. By diverting appropriate waste streams from landfill, and engaging the Powerhouse process, we can recover as much as 90% of the energy that was being "thrown away", cleanly, economically and sustainably. With the acquisition of Pyromex successfully completed in August 2013 we are only beginning to fully realise the commercial potential of the Pyromex UHTR gasification technology. We are positioning ourselves, with prudent planning, targeted hiring, and determined customer acquisition, to become a global player in this field. During the final few months of 2013, we will continue working on the finalization of commercialisation of the technology, stress-testing, commissioning, and customer demonstrations. We continue to aim at first unit deliveries by early 2014 and are pushing aggressively to achieve that goal. During the six months to 30 June 2013, loss after taxation was US$403,707 (30 June 2012: US$2,942,899). Operational costs during the period were tightly controlled and amount to US$208,626. These will increase as we assume the operations of Pyromex, however we will maintain our strict and responsible cost controls to ensure all available resources are focused towards commercial success and shareholder value. At the Annual General Meeting and the General Meeting held on 6 September 2013, all resolutions were passed unanimously. We are excited about the integration of Pyromex and are thankful to the Pyromex team for their continued hard work. As always the Board thank our extended team, our suppliers, and our shareholders who have continued to support PowerHouse Energy Group. Keith Allaun Chairman 24 September 2013 For additional information please contact: PowerHouse Energy Group plc Keith Allaun - Executive Chairman Phone: +44 (0)20 7079 4407 Email: inquire@powerhousegroup.co.uk Sanlam Securities UK Limited (Nomad and Broker) David Worlidge Phone: +44 (0)20 7628 2200 Statement of Comprehensive Income (Unaudited) (Unaudited) (Audited) Six months Six months Year ended ended ended 30 June 30 June 31 cember Note 2013 2012 2012 US$ US$ US$ Revenue - 15,805 19,756 Administrative expenses (208,626) (1,511,949) (594,520) Operating loss (208,626) (1,496,144) (574,764) Finance income - 4 4 Other income - - 352,322 (Loss of control) / Fair value gain on step - (1,309,296) (1,309,296) acquisition Equity accounted loss - (129,600) (475,646) Finance costs (195,081) (7,863) (210,272) Loss before taxation (403,707) (2,942,899) (2,217,652) Income tax benefit - 10,942 10,942 Loss after taxation (403,707) (2,931,957) (2,206,710) Foreign exchange arising on 73,310 56,321 (36,462) consolidation Foreign exchange included in profit and - 1,095,440 1,095,440 loss arising from loss of control Total comprehensive expense (330,397) (1,780,196) (1,147,732) Total comprehensive expense attributable to: Owners of the Company (330,397) (1,224,542) (592,078) Non-controlling interests - (555,654) (555,654) Loss per share (US$) 3 (0.01) (0.01) <(0.01) The notes numbered 1 to 6 are an integral part of the interim financial information. Statement of Changes in Equity Shares and Accumulated Other Non- stock losses Reserves controlling Total US$ US$ US$ interests US$ US$ Balance at 1 January 80,050,893 (18,090,906) (63,781,669) 1,665,494 (156,188) 2012 (audited) Transactions with equity participants: * Exercise of warrants 67,876 - - - 67,876 * Pyromex, loss of - - - (1,109,840) (1,109,840) control Total comprehensive income: * Loss after taxation - (2,331,486) - (600,471) (2,931,957) * Foreign exchange - - 1,095,441 - 1,095,441 included in profit and loss arising from loss of control * Foreign exchange - - 11,504 44,817 56,321 arising on consolidation Balance at 30 June 2012 80,118,769 (20,422,392) (62,674,724) - (2,978,347) (unaudited) Transactions with equity participants: * Shares issued to 43,850 - - - 43,850 settle liabilities Total comprehensive income: * Profit after - 725,247 - - 725,247 taxation * Foreign exchange - - (92,783) - (92,783) arising on consolidation Balance at 31 December 80,162,619 (19,697,145) (62,767,508) - (2,302,034) 2012 (audited) Total comprehensive expense: * Loss after taxation - (403,707) - (403,707) * Foreign exchange - - 73,310 73,310 arising on consolidation Balance at 30 June 2013 80,162,619 (20,100,852) (62,694,198) - (2,632,431) (unaudited) The notes numbered 1 to 6 are an integral part of the interim financial information. Statement of Financial Position (Unaudited) (Unaudited) (Audited) As at As at As at 30 June 30 June 31 December Note 2013 2012 2012 US$ US$ US$ ASSETS Non-current assets Property, plant and equipment 486 2,910 957 Investment in associate - 346,036 - Total non-current assets 486 348,946 957 Current Assets Trade and other receivables 6,690 28,118 3,790 Cash and cash equivalents 31,867 68,317 11,492 Total current assets 38,557 96,435 15,282 Total assets 39,043 445,381 16,239 LIABILITIES Non-current liabilities Loans 4 (549,463) (207,022) (313,399) Trade and other payables 5 - (582,750) - Total non-current liabilities (549,463) (789,772) (313,399) Current liabilities Loans 4 (551,231) (366,906) (401,400) Trade and other payables 5 (1,570,780) (2,267,050) (1,603,474) Total current liabilities (2,122,011) (2,633,956) (2,004,874) Total liabilities (2,671,474) (3,423,728) (2,318,273) Net liabilities (2,632,431) (2,978,347) (2,302,034) EQUITY Shares and stock 2 80,162,619 80,118,769 80,162,619 Other reserves (62,694,198) (62,674,724) (62,767,508) Accumulated losses (20,100,852) (20,422,392) (19,697,145) Total deficit (2,632,431) (2,978,347) (2,302,034) The notes numbered 1 to 6 are an integral part of the interim financial information. Statement of Cash Flows (Unaudited) (Unaudited) (Audited) Six months Six months Year ended ended ended 31 Note 30 June 30 June December 2013 2012 2012 US$ US$ US$ Cash flows from operating activities Loss before taxation (403,707) (2,942,899) (2,217,652) Adjustments for: * Finance income - (4) (4) * Finance costs 195,081 7,862 210,272 * Loss of control on step - 1,309,296 1,309,296 acquisition * Equity accounted loss - 129,600 475,646 * Loan waivers - - (352,322) * Depreciation and amortisation 448 123,467 124,049 * Foreign exchange revaluations - (18,330) (99,327) Changes in working capital: * (Increase) / Decrease in trade (3,033) 202,097 226,580 and other receivables * Increase / (Decrease) in trade 15,044 685,174 (569,617) and other payables * Taxation paid - (800) (800) Net cash used in operations (196,167) (504,535) (893,876) Cash flows from investing activities Purchase of other non-current assets - 1,356 - Purchase of tangible and intangible - - 2,846 assets Loss of control / reverse - (11,010) (11,010) acquisition Net cash flows used in investing - (9,654) (8,164) activities Cash flows from financing activities Share/stock issues (net of issue - 67,876 111,726 costs) Finance income - 4 4 Finance costs (195,081) (7,862) (210,272) Loans received 412,651 138,959 627,197 Net cash flows from financing 217,570 198,977 528,655 activities Net increase in cash and cash 21,403 (315,212) (373,385) equivalents Cash and cash equivalents at 11,492 382,455 382,445 beginning of period Foreign exchange on cash balances (1,028) 1,074 2,432 Cash and cash equivalents at end of 31,867 68,317 11,492 period The notes numbered 1 to 6 are an integral part of the interim financial information. Notes (forming part of the interim financial information) 1. Summary of significant accounting policies The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the financial information. 1.1 Basis of preparation This interim consolidated financial information is for the six months ended 30 June 2013 and has been prepared in accordance with International Accounting Standard 34 "Interim Financial Statements". The accounting policies applied are consistent with International Financial Reporting Standards ("IFRS") adopted for use by the European Union. The accounting policies and methods of computation used in the interim consolidated financial information are consistent with those expected to be applied for the year ending 31 December 2013. The financial information set out above does not constitute the company's statutory accounts for the year ended 31 December 2012, but is derived from those accounts. Statutory accounts for 2012 have been delivered to the Registrar of Companies. The auditors have reported on those accounts: their report was qualified and contained a disclaimer of opinion and contained statements under section 498(2) or (3) of the Companies Act 2006. 1.2 Going concern The Directors have considered all available information about the future events when considering going concern. The Directors have reviewed cash flow forecasts which assume a favourable settlement outcome to RenewMe liability and the Aspermont loan. The convertible loan obtained from Hillgrove Investments Pty Limited is considered sufficient to settle outstanding creditors, maintain the Group's overhead and other planned events. In addition, the Company is in receipt of a letter of intention of financial support from Hillgrove Investments Pty Limited to ensure the Company continues to meet its obligations as they fall due and to ensure it operates as a going concern. Based on this, the Directors continue to adopt the going concern basis of accounting for the preparation of the annual financial statements. 1.3 Functional and presentational currency This interim financial information is presented in US dollars which is the Group's functional currency. The principal rates used for translation are: 30 June 30 June 2013 2013 Closing Average British Pounds $1.540 $1.546 2. SHARE CAPITAL 1.0 p 4.5 p 4.0 p Ordinary Deferred Deferred shares shares shares Balance at 31 December 2012 and 286,534,426 17,373,523 9,737,353 30 June 2013 The deferred shares have no voting rights and do not carry any entitlement to attend general meetings of the Company. They will carry only a right to participate in any return of capital once an amount of £100 has been paid in respect of each ordinary share. The Company will be authorised at any time to affect a transfer of the deferred shares without reference to the holders thereof and for no consideration. 3. Loss per share (Unaudited) (Unaudited) (Audited) As at As at As at 30 June 30 June 31 December 2013 2012 2012 Total comprehensive expense (US$) (403,707) (2,331,486) (592,078) Weighted average number of shares 286,534,426 284,499,626 285,085,135 Loss per share (US$) (0.01) (0.01) <(0.01) 4. LOANS (Unaudited)(Unaudited) (Audited) As at As at As at 30 June 30 June 31 December 2013 2012 2012 US$ US$ US$ Accrued dividends on preferred 4.1 33,000 33,000 33,000 stock Management loans - 352,322 - Citi bank business loan 4.2 26,913 39,580 26,913 Aspermont loan 4.3 491,318 149,026 341,487 Hillgrove Investments Pty 4.4 549,463 - 313,399 Limited Total loans 1,100,694 573,928 714,799 Classified as: * Current 551,231 366,906 401,400 * Non-current 549,463 207,022 313,399 4.1 Accrued dividends on preferred stock The accrued dividends on the preferred stock became due on 31 March 2013. The Group is in negotiations to resolve the settlement of this liability. 4.2 Citi bank business loan Loan from Citi bank incurs interest at the prime rate as published by The Wall Street Journal plus 3% and is repayable in equal monthly installments of $2,083. 4.3 Aspermont loan On 18 April 2013 Aspermont Ltd, Dilato Holdings Pty Ltd and Tesla Nominees Pty Ltd collectively provided a facility of £100,000 to the Group. The facility is repayable on demand and incurs interest at 7 per cent. per month. The Group is currently in negotiations to revise the terms of the loan. 4.4 Hillgrove Loan Hillgrove Investments Pty Limited ("Hillgrove"), which holds 5.77 per cent. of the issued share capital of the Company, has provided the Company with a convertible loan facility which can be increased at Hillgrove's option. The loan is unsecured, repayable on 8 October 2014 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 1p per share. Hillgrove have provided a letter of support for the Company indicating it is willing to increase the loan amount pending any unforeseeable or material changes to the Company's current circumstances. 5. Trade and other payables (Unaudited) (Unaudited) (Audited) As at As at As at 30 June 30 June 31 December Trade creditors 240,369 263,474 227,104 Salary and wage accruals - 1,203,186 - RenewMe 1,011,120 1,036,000 1,036,000 Customer deposits 150,000 153,202 150,000 Other accruals 169,291 193,938 190,370 Total trade and other payables (1,570,780) 2,849,800 1,603,474 Classified as: * Current (1,570,780) 2,267,050 1,603,474 * Non-current - 582,750 - 5.1 RenewMe RenewMe Limited had been granted exclusive rights by Pyromex to use, own, assemble and install and operate Pyromex systems in territories also licensed to Powerhouse Energy, Inc. The Group entered into a settlement agreement with RenewMe whereby the parties agreed to change the respective exclusive rights pertaining to the Pyromex technology. Under the settlement agreement the Group has the obligation to pay five instalments of €200,000 annually from 30 June 2012. Following the non-payment of the instalment due on 30 June 2013, all amounts due under the contract have been recognised as a liability on the balance sheet as at 30 June 2013. The Directors are currently in negotiations with RenewMe regarding the existing licensing agreement. 6. AVAILABILITY OF THE INTERIM RESULTS A copy of this announcement will be available at the Company's registered office (16 Great Queen Street, London WC2B 5DG) 14 days from the date of this announcement and on its website - www.powerhouseenergy.net. A copy of the interim results will not be sent to shareholders.

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