Final Results

RNS Number : 6481R

Powerhouse Energy Group PLC

30 June 2015

PowerHouse Energy Group plc

("PowerHouse" or the "Company")

Final results

PowerHouse announces its audited results for the year ended 31 December 2014. A copy of the annual report and accounts will be posted to shareholders today and will be available shortly from the Company's website, www.powerhouseenergy.net. A notice of the Company's annual general meeting will be sent to shareholders in due course.

PowerHouse also announces changes to the terms of the convertible loan agreement signed on 8 October 2012 (the "Convertible Loan Agreement") by which Hillgrove Investments Pty Limited ("Hillgrove) has been providing adequate financial support to the Company to meet its legitimate obligations as and when they fall due, and to ensure PowerHouse operates as a going concern for the twelve months from 30 June 2015, pending any unforeseen or material changes to the Company's current circumstances. The changes to the Convertible Loan Agreement constitute a Related Party Transaction under the AIM Rules for Companies as Hillgrove (including its Associates) is a Substantial Shareholder of the Company. The Board (excluding Mr Allaun, who is not considered independent for this purpose) consider, having consulted with Allenby Capital Limited, the Company's Nominated Adviser, the changes to the Convertible Loan Agreement are fair and reasonable insofar as shareholders of the Company are concerned. Further details of the changes to the Convertible Loan Agreement can be found below.

For additional information please contact:

PowerHouse Energy Group plc

Keith Allaun +44 (0) 7887 588 941

Allenby Capital Limited (Nominated Adviser and Broker)

Nick Harriss/David Hart +44 (0) 20 3328 5656

CHAIRMAN'S STATEMENT

Thank you for supporting PowerHouse Energy Group plc for another year. As you are well aware, 2014 proved to be as disruptive and challenging as any year the Company has faced.

Our expectation upon acquiring the Pyromex technology was that we would have full cooperation from its technical and management teams, as well as operational partners, in Switzerland and Germany. Unfortunately, that was not the case. After exhaustive efforts to recover relationships already severely damaged by the previous management of Pyromex, and upon having full and complete access, for the first time, to the technology, historical and testing data, and the Eiting facility, the Board of PowerHouse made the difficult decision to abandon further development of the Pyromex technology and focus on its in-house proprietary technology for ultra-high temperature gasification with a new team based on a new approach.

As highlighted in various announcements the Company made in late 2014, the Board was still confident that we could overcome the difficult technical challenges with the acquired technology and create a long-term relationship with our partners in Munich. Unfortunately, by early 2015, it became evident that those relationships were irreparable, the technology was seriously flawed, and it became obvious that it was in the best interests of the shareholders of PowerHouse to wind-down both the Swiss and German operations. The Company issued an announcement on 6 February 2015 about the closing of its Pyromex division in Switzerland and the demonstration facility and small testing unit in Munich.

The decision to close down Pyromex and focus on newly engineered Australian Technology, the G3-UHt System, is expected to benefit the Company greatly. It has allowed us to develop a more robust and reliable technology, based on the latest science of ultra-high temperature gasification, and incorporates significant improvements and efficiencies. Equally as importantly, the new technology represents a truly commercial Waste Gasification Technology which has a much lower cost base.

Questions that had plagued the Pyromex technology since the day we purchased it were answered and eliminated as risk-factors. Additionally, with the elimination of the Pyromex issues we gained complete control of every component of the engineering life-cycle: the science, the development, the engineering, the testing regimes, and the ultimate deployment of the G3- UHt technology.

The closing of Pyromex has allowed the Company to focus on completing the development process in a reliable (and documented) manner which we know will afford PowerHouse the opportunity to expand its market approach and secure opportunities in the Waste-to-Energy market in Asia and the Middle East.

It is my role for the immediate future to focus upon ushering in our newly developed technology and building out the commercial marketing and sales efforts.

As has been demonstrated by newly derived taxation schemes in the UK, the EU, and more often these days, within the ASEAN markets, landfill will no longer be considered an acceptable solution to the challenges of waste disposal. Waste products that are not recyclable are imbued with a tremendous amount of recoverable energy. Waste that is land-filled, or incinerated, today can be gasified, reducing the impact on the land, and the potential threat to groundwater supplies. The energy recovered can produce thousands of megawatts to heat and power our homes. It can be recovered in a manner that is far superior in efficiency and far more environmentally friendly than incineration.

Depending on the calorific value of the waste-stream ("feedstock") available to PowerHouse, the G3- UHt technology can potentially convert each tonne of municipal solid waste into one megawatt of electricity. Every 24 tonnes of waste will generate one megawatt of electricity per day. If we process 1,000 tonnes of waste per day, we can potentially produce 42 Mw of saleable, renewable, green power.

The newly established goal of PowerHouse is to lead the development of power generation infrastructure for our cities. Our aim is to build a minimum of 1000 megawatts of power generation capacity in conjunction with waste-sites, transfer stations, and biomass producers over the next five years. This represents a significant evolution of our recent business objectives. However, it is a vision worth outlining and pursuing.

Recycling is increasing everywhere. However, waste will neither be eliminated in this, nor the coming generation. The Board hopes that PowerHouse can help to solve the problem of waste-elimination and become a key provider of power infrastructure.

The worlds' population continues to grow. More and more of our population is moving to the middle class and consuming more electricity than ever. Electrical demand is outstripping electrical generation throughout the ASEAN region and India. The two key issues of how to produce clean, green and renewable, power and what to do with the waste of billions of people in an environmentally accepted manner, will become ever more important as time goes on.

Our approach is an expansion of the plan we have been developing over the past three years: working to not only develop the technology to use in partnership and joint-ventures with existing waste facilities, but to also acquire, own, and manage waste facilities on which we will operate our technology.

We are currently in the process of identifying locations which will allow us to build waste driven (municipal solid waste, tyres, biomass) power stations sites using the PowerHouse Gasification processes and systems like the G3-UHt.

Obviously the Company will require significant restructuring and build-out to achieve this vision. The first step of that restructuring was the winding-down of the Pyromex entities. This allows us to move forward with a fresh start and jettison the baggage inherited from prior management. This is the first of several steps that will allow us to achieve our vision, and it will require tremendous effort on the part of the team and our partners, but I know that I speak for all when I say that the near-term sacrifice will be worth the achievement of our larger vision.

This larger vision is in complete accord with our previously stated goals. However the execution has yet to meet our expectations. As a management team and as a Board, we believe in the potential of our technology.

We are within 30 days of completion of the commissioning of the newly designed PHE G3-UHt Gasification System in Australia. This unit will demonstrate the complete process: from feedstock injection, to the gasification of waste, to the cleanup of the synthesis gas, and finally, to generation of electricity. A complete, well-tested and proven technology model that we can rollout commercially.

Our intention is to secure several waste sites through various contracts and to commence low-volume pilot operations. Additionally we will continue to test multiple feed-stocks and provide on-going data for continuous development and improvement of our entire system.

We hope that within the coming year, we will commence construction of our first large-scale, commercial, waste-to-energy electrical generation site. Each site will be secured by a third party power-purchase agreement (PPA,) effectively monetizing all electricity produced on site.

The above model will be enhanced in many markets by acquiring, or splitting the "tip fee" for the acquisition of feed-stock. However in some Asian markets the tip-fee is negligible, but the PPA, alone, will generate a tremendous return on investment given our innovative technology, low-cost of manufacturing, and modular design.

As shareholders will be aware, PowerHouse has for some time been relying exclusively on the continuing financial support provided of Hillgrove Investments Pty Limited ("Hillgrove"). This support has been provided by advances under a convertible loan note facility dated 19 June 2012 (the Convertible Loan Agreement"). As at 31 December 2014, the amount owing to Hillgrove under the convertible loan note was £2,181,004. Subsequent to the financial year end, a further £90,000 of advances have been provided under the facility. On 26 June 2015, Hillgrove provided a letter of comfort to the Company confirming that it is willing to continue to provide adequate financial support to PowerHouse to ensure the Company may meet its legitimate obligations as and when they fall due, and to ensure it operates as a going concern for a period of at least twelve months from 30 June 2015, pending any unforeseeable or material changes to the Company's current circumstances.

In order to provide the on-going financial support outlined above, it is a requirement of Hillgrove that the Company agrees to the following new conditions to the Convertible Loan Agreement:

· Hillgrove may convert notes issued under the Convertible Loan Agreement at its sole discretion, with the Company being required to act on a notice of conversion within 14 days of receipt of such notice;

· The conversion price for all current and future amounts issued and to be issued under the Convertible Loan Agreement is changed from 1.0 pence per ordinary share to 0.5 pence per ordinary share; and

· Powerhouse must complete relevant commercial negotiations, demonstrated by signed contracts, so as at least one commercial Waste-to-Energy project is commenced within the next 12 months.

If Hillgrove deems that a breach of these conditions or a material change has been made, it will give PowerHouse 30 days notice for the breach to be remedied. If the breach is not remedied within 30 days then Hillgrove reserves its rights under the Convertible Loan Agreement to call for immediate repayment of all outstanding amounts under the Convertible Loan Agreement.

As the proposed conversion price of 0.5 pence per ordinary share is below the nominal value of the Company's existing ordinary shares, the change to the conversion price outlined above will require the approval of PowerHouse shareholders at general meeting. The Company intends to seek shareholder approval for this change at its Annual General Meeting to be held in September 2015. Notice of this meeting will be sent to shareholders in due course.

If at any time Hillgrove was to withdraw its on-going financial support of PowerHouse, then it is likely that the Company would have insufficient funds to continue and the Company would no longer be a going concern. In addition, if PowerHouse shareholders do not approve the resolutions necessary to effect the change in conversion price outlined above, this may also lead to Hillgrove withdrawing its financial support.

The changes to the Convertible Loan Agreement constitute a Related Party Transaction under the AIM Rules for Companies as Hillgrove (including its Associates) is a Substantial Shareholder of the Company. The Board (excluding Mr Allaun, who is not considered independent for this purpose) consider, having consulted with Allenby Capital Limited, the Company's Nominated Adviser, the changes to the Convertible Loan Agreement are fair and reasonable insofar as shareholders of the Company are concerned.

The opportunities for the Company continue to grow with inquiries coming from many countries. The Board believes the Company is approaching a position when we can begin to take advantage of these opportunities for the first time and I look forward to reporting on developments in the coming year.

Additionally I'd like to express my thanks to the non-executive members of our Board of Directors: Mr. Brent Fitzpatrick and Mr. James Greenstreet. They have provided a solid and knowledgeable sounding board to our team.

As always I thank you for your continued support of the Company and hope to see many of you at the upcoming annual general meeting.

Sincerely,

Keith Allaun

Chairman

30 June 2015

Company Statement of Comprehensive IncomE

for the year ended 31 december 2014

		31 December	31 December
	Note	2014 £	2013 £

Revenue		-	-
Administrative expenses	2	(1,182,488)	(404,309)
Restructuring costs	7	(1,038,026)	-

Operating loss		(2,220,514)	(404,395)

Finance costs	3	(329,485)	(274,153)

Loss before taxation		(2,549,999)	(678,462)

Income tax expense	4	-	-

Total comprehensive loss		(2,549,999)	(678,462)

Loss per share (pence)	5	(0.65)	(0.22)
Diluted loss per share (pence)	5	(0.65)	(0.22)

Company Statement of Changes in Equity

	Share capital £	Share premium £	Deferred shares (4.0p) £	Deferred shares (4.5p) £	Retained earnings £	Total £

Balance at 1 January 2013	2,865,344	46,030,016	781,808	389,494	(51,191,891)	(1,125,229)
Transactions with equity participants:
- Shares issued as consideration	601,725		-	-	-	601,725
- Shares issued to settle liabilities	15,999	-	-	-	-	15,999
- Conversion of warrants	11	187	-	-	-	198
- - Credit to opening reserves					56,000	56,000
- Total comprehensive loss	-	-	-	-	(678,462)	(678,462)

Balance at 31 December 2013	3,483,079	46,030,203	781,808	389,494	(51,814,353)	(1,129,769)
Transactions with equity participants:
Shares issues to settle liabilities	183,319	365,459				548,778
- Shares issues to settle liabilities	115,000	288,898				403,898
- Shares issues to settle liabilities	79,567	183,553				263,120
- - Shares issues to settle liabilities	4,000					4,000
- - Shares issues to settle liabilities	20,000	30,000				50,000
- Total comprehensive loss					(2,549,999)	(2,549,999)

Balance at 31 December 2014	3,884,965	46,898,113	781,808	389,494	(54,364,352)	(2,409,972)

The notes numbered 1 to 16 are an integral part of the financial information.

Company Statement of Financial Position

As at 31 December 2014


	Note	2014 £	2013 £
ASSETS
Non-current assets
Property, plant and equipment	6	-	114
Investments	7	-	1,038,026
Total non-current assets		-	1,038,140

Current Assets
Trade and other receivables	8	5,841	169,086
Cash and cash equivalents		25	41,417
Total current assets		5,866	210,503

Total assets		5,866	1,248,643

LIABILITIES
Non-current liabilities
Loans	10	-	-

Current liabilities
Trade and other payables	9	(234,834)	(847,063)
Loans	10	(2,181,004)	(1,531,349)
Total current liabilities		(2,415,838)	(2,378,412)

Net liabilities		(2,409,972)	(1,129,769)

EQUITY
Share capital	11	3,884,965	3,483,079
Share premium		46,898,113	46,030,203
Deferred shares		1,171,302	1,171,302
Accumulated losses		(54,364,352)	(51,814,353)
Total deficit		(2,409,972)	(1,129,769)

The financial statements of PowerHouse Energy Group Plc, Company number 03934451, were approved by the board of Directors and authorised for issue on 30 June 2015 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 2014


	2014 £	2013 £
Cash flows from operating activities
Loss after taxation	(2,549,999)	(678,462)
Adjustments for:
- Depreciation of property, plant and equipment	114	229
- Finance costs	329,485	274,153
- Waiver of loan due from subsidiary	937,682	-
- Impairment of non-current assets	1,038,026	-
Changes in working capital:
- Decrease/(Increase) in trade and other receivables	3,582	(166,776)
- (Decrease)/Increase in trade and other payables	(612,229)	118,085
- Increase in loan to subsidiary	(778,019)	-

Net cash used in operations	(1,631,358)	(452,772)


Cash flows from financing activities
Proceeds on issue of shares	1,224,691	(455,975)
Finance costs	(329,485)	(274,153)
New loans raised	1,053,556	1,148,609
Repayment of borrowings	(358,794)	-

Net cash flows from financing activities	1,589,968	418,294

Net (decrease)/increase in cash and cash equivalents	(41,390)	34,290

Cash and cash equivalents at beginning of period	41,415	7,125

Cash and cash equivalents at end of period	25	41,415

The notes numbered 1 to 16 are an integral part of this 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 2014 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 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. The Directors have reviewed cash flow forecasts for 12 months following the date of these Financial Statements.

The convertible loan obtained from Hillgrove Investments Pty Limited (see note 10) is considered sufficient to settle outstanding creditors, maintain the Company's reduced overheads and other planned events for at least the next 12 months from the signing date of these Financial Statements. 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 for a period of at least 12 months. Based on this, the Directors acknowledge the uncertainties surrounding the availability of future funding but believe it is appropriate to continue to adopt the going concern basis of accounting for the preparation of the annual financial statements.

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 income statement.

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 management and administration services to the Company's subsidiary, PowerHouse Energy, Inc. Revenue is recognised when amounts fall due under the formalised contract.

1.6. Employee costs

The Company has no employees (2013: nil).

1.7. Operating Leases

The Company has no operating leases (2013: 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 (2013: nil).

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. Plant, property and equipment

Plant, property 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 plant, property and equipment is provided to allocate the cost less the residual value by equal instalments over their estimated useful economic lives of 3 years.

The expected useful lives and residual values of plant, property 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 the investment in PowerHouse Energy, Inc. The investment is 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 their initial recognition value 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 1.22 to the Group financial statements.

1.17. Impairment testing

Assets not subsequently carried at fair value are reviewed periodically for indications of impairment. On recognition of an impairment event, the book values of the assets are compared to their recoverable amount. In the event the recoverable amount is less that the book value, asset is reduced to the recoverable amount and the difference recognised as an expense.

2. Administrative expenses

Included in administrative expenses are:

	2014 £	2013 £

Directors' fees	100,000	106,047
Depreciation	114	229
Operating leases	-	-
Net foreign exchange (profit)/loss	(148)	2,966
Auditor's remuneration - Company's audit	10,000	10,000
Impairment loss recognised on loans receivable carried at amortised cost (note 10)	937,682	-

3. Finance costs

	2014 £	2013 £

Other loan interest	75,159	67,000
Shareholder loan interest	254,326	207,153
	329,485	274,153

4. Income tax expense

As the Company incurred a loss, no current tax is payable (2013: £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 £5,178,487 (2013: £2,709,420).

The tax charge is lower (2013: lower) than the standard rate of tax. Differences are explained below.

	2014 £	2013 £
Current tax
Loss before taxation	2,549,999	678,462

Tax credit at standard UK corporation tax rate of 21% (2013 - 23%)	535,500	156,046
Effects of:
Expenses not deductible for tax purposes	(414,938)	-
Deferred tax not recognised	(120,562)	(156,046)

Income tax expense	-	-

5. Loss per share

	2014	2013

Total comprehensive loss (£)	(2,549,999)	(678,275)

Weighted average number of shares	376,628,030	312,273,426
Weighted average number of dilutive shares	2,732,739	1,816,072

Loss per share in pence	(0.68)	(0.22)
Diluted loss per share in pence	(0.68)	(0.22)

6. Property, plant and equipment

				Office equipment
				£

Opening carrying value				114
- Depreciation				(114)
- Net carrying value				-

The cost value of fixed assets is £3,202 (2013: £3,202 and 2012: £3,431).

Accumulated depreciation is £3,202 (2013: £3,088 and 2012: £3,317).

7. Investments

Other non-current asset consists of the investment 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.

	2014 £	2013 £

Investment - Cost	48,947,154	48,947,154
Accumulated impairment	(47,909,128)	(47,909,128)
Impairment recognised in the period	( 1,038,026)	-
	-	1,038,026

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. During the period the investment in Pyromex AG was impaired to a nil carrying value due to the wind down of operations that commenced after the balance sheet date. The investment in Powerhouse Energy Inc was already impaired to nil value at 1 January 2014.

8. Trade and other receivables

	2014 £	2013 £

Other receivables	5,841	9,423
Amounts due from subsidiary undertakings	-	159,663

	5,841	169,086

The receivable from Pyromex AG was written off in the year due to the wind down of operations.

9. Trade and other payables

	2014 £	2013 £

Trade payables	32,567	90,877
RenewMe	171,447	720,225
Other accruals	30,820	35,961

	234,834	847,063

RenewMe Limited had been granted exclusive rights by Pyromex to use, own, assemble and install and operate Pyromex 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 is unable to meets its obligations, all remaining amounts (EUR 800,000) due under the original settlement agreement have been 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 our 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. While the equity portion of that settlement has been satisfied, the cash payment has not been settled and the agreement has not been completed. The Company is in active discussion with Renewme to finalize an agreement.

Capital commitments not accrued for at the period end amounted to £100,000 (2013: £nil) and related to plant and machinery that had not yet been received.

10. Loans

	2014 £	2013 £

Other loan	-	328,739
Shareholder loan	2,181,004	1,202,609
	2,181,004	1,531,348

On 2 April 2014 the Company negotiated a settlement to repay the other loan in full by way of issue and allotment for 11,500,000 1 pence shares in the Company to Aspermont Limited.

Hillgrove Investments Pty Limited ("Hillgrove") has provided the Company with a convertible loan agreement amounting to £2,181,004 - which can be increased at Hillgrove's option. On 24 February 2014 the Company announced that it had entered into a debenture with Hillgrove. 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 1p per share. Hillgrove have provided a letter of support indicating they are willing to increase the loan amount pending any unforeseeable or material changes to the Company's current circumstances.

11. Share capital

	1.0 p Ordinary shares	4.5 p Deferred shares	4.0 p Deferred shares

Shares at 1 January 2013	286,534,426	17,373,523	9,737,353

Issue of shares for consideration	60,172,400
- Issue of shares to settle liabilities	1,599,994	-	-
- Exercise of Warrants	11	-	-

Shares at 31 December 2013	348,307,926	17,373,523	9,737,353
- Issue of shares to settle liabilities	40,188,668
Shares at 31 December 2014	388,496,594	17,373,523	9,737,353

At 31 December 2014 (£) 3,884,965 781,808 389,494

At 31 December 2013 (£) 3,483,079 781,808 389,494

12. Convertible instruments

		Average exercise price	Exercisable
	Notes	Average exercise price	Currently	Within 1 year	1 to 5 years	Total

Driftwood	12.4	£0.120	2,956,929	-	-	2,956,929
			2,956,929	-	-	2,956,929

12.1. Warrants

No warrants are held (2013:nil).

12.2. Hillgrove

Hillgrove has the option at any time to convert its loan of £2,181,004 in part or whole at a conversion price of 1p per share.

12.3. Driftwood

On 13 July 2011, PowerHouse Energy Group plc granted 2,956,929 options over ordinary shares to Driftwood Capital Pty Limited (as trustee for Driftwood Capital Unit Trust) exercisable as follows:

· 535,500 after 1 October 2013 at an exercise price of US$0.12 (£0.074) per share; and

· 2,421,429 after 1 April 2014 at an exercise price of US$0.21 (£0.130) per share.

12.4. 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. No charge has been included in the Statement on Comprehensive Income as it is not currently foreseen that the options will vest.

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

13. Material risks

13.1. 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 financial support provided by Hillgrove Investments Pty Limited is considered sufficient to maintain the Company's reduced overhead and other planned events. The Company is dependent on this continued support to cover it operational costs.

In the event the Company requires other equity financing, or the conversion option in the Hillgrove loan is exercised, remaining shareholders will be diluted.

14. Directors' Remuneration

The Directors who held office at 31 December 2014 had the following interests, including any interests of a connected person in the ordinary shares of the Company:

	Number of ordinary shares of 1.0p 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 2014 is:

	2014 £ Salary/Fee	2014 £ Pension	2014 £ Benefits	2014 £ Total	2013 £ Total

Nigel Brent Fitzpatrick	-	-	-	-	-
James John Pryn Greenstreet	-	-	-	-	-
Robert Keith Allaun	100,000	-	-	100,000	106,047

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 it's shareholding in the Company.

During the year Hillgrove Investments Pty Limited loaned the company a further £724,069 and charged £254,326 interest. The balance outstanding at the year end was £2,181,004 (2013: £1,202,609).

Other transactions with other related parties were conducted on an arms' length basis and totalled £15,074 (2013; £nil).

Consolidated Statement of Comprehensive Income

For the year ended 31 december 2014

	Note	Year ended 31 December 2014 US$	Year ended 31 December 2013 US$

Revenue		-	3,330
Cost of sales		-	(46,825)

Gross loss		-	(43,495)

Administrative expenses	2	(4,517,504)	(614,132)

Operating loss		(4,517,504)	(657,627)

Finance income		-	1
Finance expenses	4	(530,471)	(386,556)

Loss before taxation		(5,047,975)	(1,044,182)

Income tax credit	5	-	-

Loss after taxation		(5,047,975)	(1,044,182)

Foreign exchange arising on consolidation		142,995	(160,183)

Total comprehensive loss		(4,904,980)	(1,204,365)

Total comprehensive loss attributable to:
Owners of the Company		(4,904,980)	(1,204,365)
Non-controlling interests		-	-

Loss per share (US$)	6	<(0.01)	<(0.01)

The notes numbered 1 to 16 are an integral part of the financial information.

Consolidated Statement of Changes in Equity

Shares and stock

US$

Accumulated losses

US$

Other

reserves

US$

Non-control-ling interests

US$

Total

US$

Balance at 1 January 2013

80,162,619

(19,697,145)

(62,767,508)

(2,302,034)

Transactions with equity participants:

- Shares issued to settle liabilities

998,864

- Shares issues to settle liabilities

26,558

- Conversion of warrants

310

328

- Total comprehensive income:

- Loss after taxation

(1,204,365)

- Foreign exchange included in profit and loss arising from loss of control

1,095,440

- Foreign exchange arising on consolidation

(160,183)

Balance at 31 December 2013

81,188,059

(20,901,510)

(62,927,381)

(2,640,832)

Transactions with equity participants:

- Shares issued to settle liabilities

285,978

570,116

856,094

- Shares issues to settle liabilities

179,400

450,681

630,081

- Shares issued to settle liabilities

124,125

286,343

410,468

- Shares issues to settle liabilities

6,240

- Shares issued to settle liabilities

31,200

46,800

78,000

Total comprehensive income:

- Loss after taxation

(1,204,365)

(4,904,980)

- Foreign exchange arising on consolidation

142,195

Balance at 31 December 2014

81,815,002

(25,806,490)

(61,431,246)

(5,422,734)

The notes numbered 1 to 16 are an integral part of the financial information.

Consolidated Statement of Financial Position

As at 31 December 2014

	Note	31 December 2014 US$	31 December 2013 US$
ASSETS
Non-current assets
Intangible assets	7	-	2,087,081
Property, plant and equipment	8	2,455	665,160
Total non-current assets		2,455	2,752,241

Current Assets
Trade and other receivables	10	43,846	54,311
Cash and cash equivalents	11	816	69,617
Total current assets		44,662	123,928

Total assets		47,117	2,876,169

LIABILITIES
Non-current liabilities
Loans	13	-	-
Total non-current liabilities		-	-

Current liabilities
Loans	13	(3,402,366)	(2,542,038)
Trade and other payables	14	(2,067,485)	(2,974,963)
Total current liabilities		(5,469,851)	(5,517,001)

Total liabilities		(5,469,851)	(5,517,001)

Net liabilities		(5,422,734)	(2,640,832)

EQUITY
Shares and stocks		81,815,002	81,188,059
Other reserves		(61,431,246)	(62,927,381)
Accumulated losses		(25,806,490)	(20,901,510)
Non-controlling interests		-	-
Total deficit		(5,422,734)	(2,640,832)

The financial statements were approved by the board of Directors and authorised for issue on 30 June 2015 and signed on its behalf by:

Keith Allaun

Director

The notes numbered 1 to 16 are an integral part of the financial information.

Consolidated Statement of Cash Flows

For the year ended 31 december 2014

	Note	Year ended 31 December 2014 US$	Year ended 31 December 2013 US$
Cash flows from operating activities
Loss before taxation		(4,904,980)	(1,204,365)
Adjustments for:
- Finance income		-	(1)
- Finance costs		530,471	386,556
- Impairment of non-current assets		2,087,081	-
- Depreciation and amortisation		662,705	322
- Foreign exchange revaluations		142,195	(160,183)
Changes in working capital:
- Decrease/ (Increase) in trade and other receivables		10,465	(50,251)
- (Decrease)/ Increase in trade and other payables		(907,478)	1,371,489
- Taxation paid		-	-

Net cash used in operations		(2,379,542)	343,567

Cash flows from investing activities
Disposal (purchase) of tangible and intangible assets		-	-

Net cash flows used in investing activities		-	-

Cash flows from financing activities
Common stock issue (net of issue costs)		1,980,883	(756,919)
Finance income		-	1
Finance costs		(530,471)	(386,556)
Loans received/(repaid)		862,484	864,202

Net cash flows from financing activities		2,312,896	(282,272)

Net (decrease) / increase in cash and cash equivalents		(66,646)	61,295

Cash and cash equivalents at beginning of period		69,617	11,492
Foreign exchange on cash balances		(2,155)	(3,170)

Cash and cash equivalents at end of period		816	69,617

The notes numbered 1 to 16 are an integral part of the financial information.

Notes to the Consolidated Accounts

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 2014 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 and goodwill

Pyromex acquisition

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 the period the remaining 70% investment in Pyromex AG was impaired to a nil carrying value due to the wind down of operations that commenced after the balance sheet date.

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 US dollars which is the Group's functional currency.

1.4.1. Transactions and balances in foreign currency

Foreign exchange gains and losses are presented in the income statement within 'administration expenses'.

1.4.2. Consolidation

The results and financial position of Group entities with a different functional currency to the presentation currency are translated into the presentation currency as follows:

· Assets and liabilities are translated at the closing rate of 31 December 2014;

· Income and expenses for each income statement are translated at average exchange rates over the period of consolidation; and

· the resulting exchange differences are recognised in other comprehensive income.

The principal rates used for translation are:

2014

Closing

2014

Average

British Pounds

1.5586

1.6075

Swiss Francs

1.0072

1.0658

1.5. Going concern

1.6. Revenue

Revenue represents the amounts (excluding sales tax) derived from sales of power generation plus associated services.

Revenue from the sale of goods is recognised when the risk and rewards associated with the goods has been transferred to the purchaser. Revenue from services is recognised over the period of performance of the services.

1.7. Employee costs

The group has no employees (2013: nil).

1.8. Operating Leases

The Group has no operating leases (2013: nil).

1.9. Finance income and expenses

1.10. 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.

1.11. 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.

1.12. 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. During the period the investment in Pyromex AG was impaired to a nil carrying value due to the wind down of operations that commenced after the balance sheet date.

1.13. Property, plant and equipment

Plant, property 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 plant, property 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 plant, property 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.

1.14. 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.

1.15. Trade and other receivables

Trade receivables are recognised at fair value. Subsequently they are carried at their initial recognition value less any impairment losses.

1.16. Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits.

1.17. 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.

1.18. 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.

1.19. 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.

1.20. 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.

1.21. 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.

1.22. 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 9 Financial Instruments

IFRS 10 (amended) Consolidated Financial Statements

IFRS 11 (amended) Joint Arrangements

IFRS 12 (amended) Disclosure of Interests in Other Entities

IFRS 14 Regulatory Deferral Accounts

IFRS 15 Revenue from Contracts with Customers

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;

	2014 US$	2013 US$

Employee expenses	-	29,594
Impairment of Goodwill	1,874,735	-
Depreciation and amortisation	595,159	322
Professional fees	-	149,702

At 31 December 2014, the Group had no employees (2013: nil).

3. Employee benefits

	2014 US$	2013 US$

Wages and salaries	-	29,594

Total employee benefits	-	29,594

4. Finance expenses

	2014 US$	2013 US$

Shareholder loan interest	409,465	292,083
Other loan interest	121,006	94,470

Total finance expenses	530,471	386,556

5. Income tax credit

	2014 US$	2013 US$

Current taxation	-	-
Deferred taxation	-	-

Total taxation credit	-	-

The tax charge is lower (2013: lower) than the standard rate of tax. Differences are explained below.

	2014 US $	2013 US $
Current tax
Loss before taxation	5,047,975	1,044,182

Tax credit at standard UK corporation tax rate of 21% (2013 - 23%)	1,060,075	240,161
Effects of:
Expenses not deductible for tax purposes	(646,661)	-
Deferred tax not recognised	(413,414)	(240,161)

Income tax expense	-	-

6. Loss per share

	2014	2013

Loss after taxation-attributable to owners of the Company (US$)	(4,904,980)	(1,204,365)

Weighted average number of shares	285,425,948	285,425,948

Loss per share (US$)	<(0.01)	<(0.01)

As the Group incurred a loss, potential ordinary shares are anti-dilutive and accordingly no diluted earnings per share has been presented.

7. Intangible assets

	Goodwill	Pyromex technology	Licence agreements	Total

At 1 January 2013
Cost	4,035,356	2,087,081	990,840	7,113,277
Accumulated amortisation and impairment	(4,035,356)	-	(990,840)	(5,026,196)
Net carrying value	-	2,087,081	-	2,087,081
	-	-	-	-
Closing carrying value At 31 December 2013
Cost	4,035,356	2,087,081	990,840	7,113,277
Accumulated amortisation and impairment	(4,035,356)	-	(990,840)	(5,026,196)
At 1 January 2014	-	2,087,081	-	2,087,081
Net carrying value	-	-	-	-
Impairment recognised in period	-	(1,874,735)	-	(1,874,735)
Pyromex acquisition	-	-	-	-
Foreign exchange fluctuations	-	(212,346)	-	(212,346)
	-	-	-	-
Closing carrying value At 31 December 2014
Cost	-	-	-	-
Accumulated amortisation and impairment	-	-	-	-
	-	-	-	-

Goodwill was recognised as the excess of the fair value of the consideration determined in accordance with IFRS 3 accounting for reverse acquisitions over the fair value of the net liabilities acquired. Following the decision to wind down the Pyromex operation as discussed in the Directors' Report, the Goodwill has been impaired to a carrying value of nil.

Licence agreements represented the capitalised licence fees paid by PowerHouse Energy, Inc. to Pyromex and RenewMe for rights associated with the Pyromex technology.

8. Property, plant and equipment

	Pyromex equipment	Office equipment	Total

At 1 January 2013
Cost	662,272	45,926	6,995,788
Accumulated depreciation	-	(9,566)	(5,170,152)
Opening carrying value	662,272	36,360	1,825,636
-
- Depreciation	-	(6,628)	(6,628)
- Pyromex loss of control	(1,842,079)	(26,965)	(1,869,044)
- Closing carrying value	-	957	(1,925,708)

At 31 December 2013
Cost	662,272	2,888	665,160
Accumulated depreciation	-	-	-
Net carrying value	-	2,888	665,160

Depreciation	(594,726)	(433)	(595,159)
Foreign exchange fluctuations	(67,546)	-	(67,546)
At 31 December 2014	-	2,455	2,455

9. Inventories

The Group has no inventories (2013: nil).

10. Trade and other receivables

	2014 US$	2013 US$

Other receivables	34,734	33,526
VAT receivable	9,112	20,785

Total trade and other receivables	43,846	54,311

11. Cash and cash equivalents

Cash and cash equivalents consist solely of cash balances in bank accounts.

12. Deferred taxation

Deferred income tax assets are recognised for tax loss carry-forwards to the extent that the realisation of the related tax benefit through future taxable profits is probable. The Group did not recognise deferred income tax assets in respect of losses.

13. Loans

	Notes	2014 US$	2013 US$

Other loan	13.1	-	550,036
Shareholder loan	13.2	3,402,366	1,992,002

Total loans		3,402,366	2,542,038
Classified as:
- Current		3,402,366	2,542,038
- Non-current		-	-

13.1. Other loan

On 2 April 2014 the Company negotiated a settlement to repay the Aspermont loan in full by way of issue and allotment for 11,500,000 1 pence shares in the Company.

13.2. Shareholder Loan

Hillgrove Investments Pty Limited ("Hillgrove") has provided the PowerHouse Energy Group plc with a convertible loan agreement amounting to $3,402,366 - which can be increased at Hillgrove's option. The loan is secured by a debenture over the assets of the company, repayable on 8 October 2014 and carries interest of 15 per cent per annum.

Hillgrove have provided a letter of support indicating they are willing to increase the loan amount pending any unforeseeable or material changes to the Group's current circumstances.

14. Trade and other payables

	2014 US$	2013 US$

Trade creditors	1,701,144	1,445,921
RenewMe	316,721	1,155,966
Other accruals	49,620	373,073

Total trade and other payables	2,067,485	2,974,963

14. Trade and other payables (continued) Trade and other payables are classified as:
- Current	2,067,485	2,974,963
- Non-current	-	-

14.1. 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 the Group's subsidiary 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 original settlement agreement Powerhouse Energy, Inc. had the obligation to pay five instalments of EUR 200,000 annually beginning 30 June 2011. The Group guaranteed the obligations under the agreement of PowerHouse Energy, Inc. As PowerHouse Energy, Inc is unable to meets its obligations, all remaining amounts (EUR 800,000) due under the original settlement agreement have been recognised as a liability.

On 3 March 2014 the Group announced that a settlement had been reached with Renewme to release its claimed geographical licenses to use our 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 Group. While the equity portion of that settlement has been satisfied, the cash payment has not been settled and the agreement has not been completed. The Group is in active discussion with Renewme to finalize an agreement.

Capital commitments not accrued for at the period end amounted to £100,000 (2013: £nil) and related to plant and machinery that had not yet been received.

15. Seasonality

The Group's business is not subject to any consistent seasonal fluctuations.

16. Directors' Remuneration and share interests

The Directors who held office at 31 December 2014 had the following interests, including any interests of a connected person in the ordinary shares of the Company:

	Number of ordinary shares of 1.0p 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 2013 is:

	2014 $ Salary/Fee	2014 $ Pension	2014 $ Benefits	2014 $ Total	2013 $ Total

Nigel Brent Fitzpatrick	-	-	-	-	-
James John Pryn Greenstreet	-	-	-	-	-
Robert Keith Allaun	161,000	-	-	161,000	161,000