Half-year Report

RNS Number : 1442X

Powerhouse Energy Group PLC

25 August 2022

 

 25 August 2022

Powerhouse Energy Group plc

("Powerhouse" or the "Company")

Half Year Report

Powerhouse Energy Group plc (AIM: PHE), the UK technology company commercialising hydrogen production from plastic, is pleased to announce its unaudited interim results for the six months ended 30 June 2022.

Highlights

Commercial Development

·	Continued support of Peel NRE's development of the proposed first commercial scale application of Powerhouse's technology at the Protos Energy Park in Cheshire, UK. Peel NRE has shortlisted two potential contractors for the construction works and is currently seeking the necessary finance. Identifying potential contractors took significantly longer than expected due in part to the impact of the Covid pandemic. Further work is yet required to finalise the cost of construction, which is also being impacted by the high rates of inflation. A revised estimate of the construction programme and targeted time for commercial deployment will be made as soon as it can be established.
·	Secured exclusivity and a supply chain with a Thermal Conversion Chamber manufacturer in the UK.
·	Post period end signed a non-binding term sheet setting out the heads of terms for Powerhouse to take a 50% shareholding in the Peel NRE Ltd special purpose vehicle, Protos Plastics-to Hydrogen No 1 Ltd.
·	Post period end agreed heads of terms ("HoTs") with Hydrogen Utopia International Plc (AQSE: HUI) ("HUI") for the proposed joint development of a site at Lanespark in Co. Tipperary in the Rep of Ireland.
·	Post period end agreed HoTs with HUI for the proposed joint development of a site in Konin, within the Wielkopolska province of Poland.

Technology and Innovation

·	Unveiled plans for a £1.3m investment to create a Global Technology & Innovation Centre by Q2 2023, to support the development of the technology coupled with serving as a sales development centre. Initial pre-payment of £193k made to the supplier for the design and supply of the test pyrolysis reactor.
·	Evolution and adoption of a more flexible business model to provide a pipeline of opportunities to implement PHE's DMG technology.

Financial Performance

·	Revenues for the half year of £352k (H1 2021: £373k).
·	Gross Profit for period increased to £79.9k (2021: £16.7k).
·	£7.54m cash at bank at 30 June 2022.

Organisation and Growth

·	Completion of a strategic review of the business with a clear path to commerciality and technical roadmap completed by our CEO and embraced by the Company.
·	Post period end changes to the Board of Directors, including the resignation of Paul Drennan-Durose as CEO and of two Non-Executive Directors.
·	Post period end appointment of Paul Emmitt to Chief Operating Officer.

Statement from Keith Riley, Interim non-executive Chairman and acting CEO of Powerhouse Energy Group Plc

"Progress has been made in the first half of 2022 as we developed our business model to be more flexible and retain more control over our proprietary technology. We continue with our plans to develop a global technology and innovation centre to develop our knowhow and breadth of application.

"With the refocusing of our strategy and additional flexibility of our business model implemented, we are encouraged to see increased levels of interest on an international level in the Powerhouse proposition. Post period end we have announced that we have signed two Heads of Terms with Hydrogen Utopia, for two projects outside of the UK; one in Ireland and the other in Poland. Both of these territories are key markets for Powerhouse as they give the company positioning within the EU from where further business expansion can be made.; Poland is a European leader in revitalising its economy towards net zero carbon emissions, while Ireland is in the process of establishing its hydrogen strategy with view to becoming a major player in the emerging hydrogen economy.

"There have been additional changes to the management team post period end, however at working level, the business continues to grow in strength and advance the commercial implementation of its technology. I would like to thank Paul Drennan-Durose, Gill Weeks, Myles Kitcher and James Greenstreet for their contribution to the business and wish them will in their future endeavors. Paul Emmitt has been appointed to Chief Operating Officer. He has been Chief Technical Officer since July 2021 and has over twenty years of engineering and operational management experience both in the UK and overseas in the oil, gas, energy-from-waste and chemical industries, he is well placed to progress the Company's strategy. Chief Financial Officer, Chris Vanezis, is on paternity leave and Ben Brier is acting CFO during Chris' absence,

"There is much work to be done in the development of our projects as we continue on our path to commercial implementation. The changes implemented in our commercial relationships made during the first half of this year will create the foundation for the growth of the Company in the years to come. We look forward to updating investors on our progress as we move through the financial year."

For more information, contact:

Powerhouse Energy Group Plc Paul Drennan-Durose and Keith Riley	[e-mail]
WH Ireland Limited (Nominated Adviser) James Joyce and Megan Liddell	[phone]
Turner Pope Investments (TPI) Ltd (Joint Broker) Andrew Thacker and James Pope	[phone]
Tavistock (Financial PR) Simon Hudson, Nick Elwes and Heather Armstrong	[e-mail]

About Powerhouse Energy Group plc

Powerhouse Energy has developed a proprietary process technology - DMG® - which can utilise waste plastic, end-of-life-tyres, and other waste streams to convert them efficiently and economically into syngas from which valuable products such as chemical precursors, hydrogen, electricity, and other industrial products may be derived. Powerhouse's technology is one of the world's first proven, distributed, modular, hydrogen from waste process.

Powerhouse's process produces low levels of safe residues and requires a small operating footprint, making it suitable for deployment at enterprise and community level.

Powerhouse is quoted on the London Stock Exchange's AIM Market under the ticker: PHE and is incorporated in the United Kingdom.

For more information see www.powerhouseenergy.co.uk

Statement of Comprehensive Income

		(Unaudited) Six months	(Unaudited) Six months	(Audited) Year
		ended	ended	Ended
		30 June	30 June	31 Dec
	Note	2022	2021 £	2021 £
Revenue	1	352,713	373,306	701,435
Cost of sales		(272,808)	(356,530)	(599,914)
Gross profit		79,905	16,776	101,521
Administrative expenses		(1,050,400)	(1,115,481)	(2,147,476)
Acquisition costs		-	-	(11,735)
Share of associate		49,694	-	50,062
Operating loss		(920,801)	(1,098,705)	(2,007,628)
Net finance revenues		21,434	403	10,987
Loss before taxation		(899,367)	(1,098,302)	(1,996,641)
Income tax credit/(charge)		(9,273)	-	126,145
Loss after taxation		(908,640)	(1,098,302)	(1,870,496)
Total comprehensive loss		(908,640)	(1,098,302)	(1,870,496)
Total comprehensive loss attributable to:
Owners of the Company		(908,640)	(1,098,302)	(1,870,496)
Non-controlling interests		-	-	-
Loss per share from continuing operations (pence)	3	(0.02)	(0.03)	(0.05)

The notes numbered 1 to 5 are an integral part of the interim financial information.

Statement of Financial Position

		(Unaudited) As at 30 June	(Unaudited) As at 30 June	(Audited) As at 31 December
	Note	2022 £	2021 £	2021 £
ASSETS
Non-current assets
Intangible fixed assets		43,654,220	43,543,569	43,554,498
Tangible fixed assets		23,901	46,237	33,092
Investments in subsidiary undertakings		1	1	1
Investments in associated undertakings		179,026	49	140,540
Total non-current assets		43,857,148	43,589,856	43,728,131
Current Assets
Loans receivable		1,925,112	1,152,928	1,165,286
Trade and other receivables		1,441,287	529,699	963,648
Corporation tax recoverable		-	19,571	155,227
Cash and cash equivalents		7,536,341	10,983,386	9,637,460
Total current assets		10,902,740	12,685,584	11,921,621
Total assets		54,759,888	56,275,440	55,649,752
LIABILITIES
Current liabilities
Creditors: amounts falling due within one year		(601,186)	(636,923)	(563,781)
Total current liabilities		(601,186)	(636,923)	(563,781)
Total assets less current liabilities		54,158,702	55,638,517	55,085,971
Creditors: amounts falling due after more than one year		-	(10,853)	-
Net assets/(liabilities)		54,158,702	55,627,664	55,085,971
EQUITY
Shares and stock	2	22,900,856	22,723,355	22,900,856
Share premium		61,291,710	61,143,215	61,291,710
Merger relief reserve		36,117,711	36,117,711	36,117,711
Accumulated deficit		(66,151,575)	(64,356,617)	(65,224,306)
Total surplus		54,158,702	55,627,664	55,085,971

The notes numbered 1 to 5 are an integral part of the interim financial information.

Statement of Cash Flows

			(Unaudited)	(Unaudited)	(Audited)
			Six months	Six months	Year ended
			ended	ended	31
	Note		30 June	30 June	December
			2022 £	2021 £	2021 £
Cash flows from operating activities
Operating loss			(920,801)	(1,098,705)	(2,007,628)
Adjustments for:
-  Share based payments			(18,629)	17,329	34,829
-  Amortisation			4,810	2,216	5,049
-  Depreciation			11,021	13,747	28,824
-  Goodwill impairment			-	-	-
-  Share of associate result			(49,694)	-	(50,062)
-  Provision against investments			-	-	49
Changes in working capital:
-  Decrease/(increase) in contract costs -  Decrease/(increase) in trade and other receivables			- (477,639)	14,550 (329,389)	14,550 (763,338)
-  Increase/(decrease) in trade and other payables			50,007	126,854	55,015
Tax credits received			155,227	118,926	118,927
Net cash used in operations			(1,245,698)	(1,134,472)	(2,563,785)
Cash flows from investing activities
Loans advanced			(737,520)	(1,150,000)	(1,150,000)
Purchase of interest in associate			-	-	(99,990)
Dividends received from associate			1,935	-	-
Purchase of intangible fixed assets			(104,532)	(26,203)	(39,965)
Purchase of tangible fixed assets			(1,830)	(6,964)	(8,896)
Net cash from investing activities			(841,947)	(1,183,167)	(1,298,851)
Cash flows from financing activities
Proceeds from issue of shares			-	9,850,801	10,063,802
Payments of principal under leases			(12,602)	(11,726)	(23,882)
Net finance costs			(872)	(2,525)	(4,299)
Net cash flows from financing activities			(13,474)	9,836,550	10,035,621
Net increase/(decrease) in cash and cash equivalents			(2,101,119)	7,518,911	6,172,985
Cash and cash equivalents at beginning of period			9,637,460	3,464,475	3,464,475
Cash and cash equivalents at end of period			7,536,341	10,983,386	9,637,460

The notes numbered 1 to 5 are an integral part of the interim financial information.

Statement of Changes in Equity

	Ordinary Share capital £	Deferred shares £	Share premium account £		Merger relief reserve £		Accumulated deficit £		Total £
Balance at 1 Jan 2021 (audited)	18,575,503	3,113,785	52,594,934		36,117,711		(63,544,097)		46,857,836
Transactions with equity participants:
-  Shares issued on exercise options	24,477	-	174,603		-		-		199,080
-  Shares issued on exercise warrants	100,500	-	105,487		-		-		205,987
-  Other share issues	909,091	-	9,090,909		-		-		10,000,000
Share based payment	-	-	-		-		285,782		285,782
Share issue costs	-	-	(822,718)		-		-		(822,718)
Total comprehensive loss	-	-	-		-		(1,098,302)		(1,098,302)
Balance at 30 June 2021 (unaudited)	19,609,571	3,113,785	61,143,215		36,117,711		(64,356,617)		55,627,665
Transactions with equity participants:
-  Shares issued on exercise options	177,500	-	148,495		-		-		325,995
Share based payment	-	-	-		-		(95,495)		(95,495)
Total comprehensive loss	-	-	-		-		(772,194)		(772,194)
Balance at 31 Dec 2021 (audited)	19,787,071	3,113,785	61,291,710		36,117,711		(65,224,306)		55,085,971
Share based payment	-	-	-		-		(18,629)		(18,629)
Total comprehensive loss	-	-	-		-		(908,640)		(908,640)
Balance at 30 June 2022 (unaudited)	19,787,071	3,113,785	61,291,710		36,117,711		(66,151,575)		54,158,702

The following describes the nature and purpose of each reserve within equity:

Share capital :  Deferred shares:   Represents the combined total of all deferred shares (0.5p, 4p and 4.5p)

Share premium:  Amount subscribed for share capital in excess of nominal value

Merger relief reserve:  Amount subscribed for share capital in excess of nominal value where merger relief applies

Accumulated deficit:   Accumulated deficit represents the cumulative losses of the company and all other net gains and losses and transactions with shareholders not recognised elsewhere

The notes numbered 1 to 5 are an integral part of the interim financial information.

Notes (forming part of the interim financial information)

1.  Summary of significant accounting policies

The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the financial information.

1.1.  Basis of preparation

This interim financial information is for the six months ended 30 June 2022 and has been prepared in accordance with International Accounting Standard 34 "Interim Financial Statements". The accounting policies applied are consistent with International Financial Reporting Standards ("IFRS") issued by the International Accounting Standards Board (IASB) as adopted for use in the United Kingdom and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS (except as otherwise stated). The accounting policies and methods of computation used in the interim financial information are consistent with those of the previous financial year and corresponding interim reporting period and with those expected to be applied for the year ending 31 December 2022.

The Company does not consider any new and amended standards that became applicable for the current reporting period to have any impact on the Company's results.

The unaudited results for period ended 30 June 2022 do not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006. The comparative figures for the period ended 31 December 2021 for the Company are extracted from the audited financial statements which contained an unqualified audit report and did not contain statements under Sections 498 to 502 of the Companies Act 2006.

This interim financial statement will be, in accordance with the AIM Rules for Companies, available shortly on the Company's website.

1.2.  Going concern

The Directors have considered all available information about future events when considering going concern. The Directors have prepared and reviewed cash flow forecasts for 12 months following the date of these Financial Statements. The projections show that the Company will have sufficient funding to be able to continue as a going concern on the basis of its cash balances as at 30 June 2022. 

The interim financial statements do not include the adjustments that would result if the Company were unable to continue as a going concern.

1.3.  Functional and presentational currency

This interim financial information is presented in £ sterling which is the Group's functional currency.

1.4.  Associated undertakings

Associates are entities which the Company has significant influence but not control or joint control as defined under IAS 28. This is generally the case where the Company holds between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting.

Under the equity method of accounting, investments are initially recognised at cost and adjusted thereafter to recognise the Company's share of the post-acquisition profits or losses of the investee in the Income statement. Dividends received or receivable from associates and joint ventures are recognised as a reduction in the carrying value of the investment.

When the Company's share of losses in an equity-accounted investment exceeds or equals its interest in the equity, the Company does not recognise further losses, unless it has incurred obligations or made payments on behalf of the other entity. Unrealised gains on transactions between the Company and its associates and joint ventures are eliminated to the extent of the Company's interest in these entities. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment in the asset transferred.

1.5.  Revenue

The Company provides engineering services for the application of the DMG technology, the intellectual property that the Company owns. Revenue from providing services is recognised in the accounting period in which services are rendered. For fixed-price contracts, revenue is recognised based on the actual service provided to the end of the reporting period as a proportion of the total services to be provided to the extent to which the customer receives the benefits. This is determined based on the actual labour hours spent relative to the total expected labour hours.

Where contracts include multiple performance obligations as specified by the work scope, the transaction price will be allocated to each performance obligation based on estimated expected cost-plus margin.

Estimates of revenues, costs, or extent of progress toward completion of services are revised if circumstances change. Any resulting increases or decreases in estimated revenues or costs are reflected in profit or loss in the period in which the circumstances that give rise to the revision become known by management.

In case of fixed-price contracts, the customer pays the fixed amount based on a payment schedule. If the services rendered by the Company exceed the payment, a contract asset is recognised. If the payments exceed the services rendered, a contact liability is recognised.

If a contract includes an hourly fee, revenue is recognised in the amount to which the Company has a right to invoice. 

2.  SHARE CAPITAL

	0.5 p Ordinary shares	0.5p Deferred  shares	4.5 p Deferred shares	4.0 p Deferred shares
Balance at 1 January 2022	3,957,414,135	388,496,747	17,373,523	9,737,353
Shares issued	-	-	-	-
Balance at 30 June 2022	3,957,414,135	388,496,747	17,373,523	9,737,353

The deferred shares have no voting rights and do not carry any entitlement to attend general meetings of the Company. They carry only a right to participate in any return of capital once an amount of £100 has been paid in respect of each ordinary share. The Company is authorised at any time to affect a transfer of the deferred shares without reference to the holders thereof and for no consideration.

3.  Loss per share

		(Unaudited) As at 30 June	(Unaudited) As at 30 June	(Audited) As at 31 December
		2022 £	2021 £	2021 £
Total comprehensive loss		(908,640)	(1,098,302)	(1,870,496)
Weighted average number of shares		3,957,414,135	3,893,534,880	3,918,497,299
Basic loss per share in pence		(0.02)	(0.03)	(0.05)
Diluted loss per share in pence		(0.02)	(0.03)	(0.05)

4.  SHARE BASED PAYMENT

The expense recognised for share-based payments during the year is shown in the following table:

	(Unaudited) As at 30 June 2022 £	(Unaudited) As at 30 June 2021 £	(Audited) As at 31 December 2021 £
Share based payment charge/(credit) recognised in Income Statement
Expense arising from equity-settled share-based payment transactions:
- Share options for Directors and employees	(18,629)	17,329	34,829
Total share-based payment in Income Statement	(18,629)	17,329	34,829
Share based payment charge recognised in Share Premium
- Warrants for third party services	-	419,138	419,138
Total share-based payment in Share Premium Account	-	419,138	419,138
Total share-based payment charges/(credits) recognised	(18,629)	436,467	453,967
Other share-based payment movements
Exercise of options by Directors and employees	-	(73,987)	(186,982)
Exercise of warrants for third party services	-	(76,698)	(76,698)
Total share-based payment	(18,629)	285,782	190,287

The were no liabilities recognised in relation to share based payment transactions.

5.  EVENTS AFTER THE REPORTING PERIOD

There are no events arising after the end of the reporting period to report in respect of the interim financial information.

 

END

 

 

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