TIDMPHE
RNS Number : 4461R
Powerhouse Energy Group PLC
30 June 2020
Powerhouse Energy Group plc
("Powerhouse" or the "Company")
Final results for the year ended 31 December 2019
Powerhouse Energy Group plc (AIM: PHE), the UK technology
company pioneering hydrogen production from waste plastic and used
tyres, is pleased to announce its audited results for the year
ended 31 December 2019.
The annual report and accounts have been posted to shareholders
and are also available from the Company's website
www.powerhousenergy.net
HIGHLIGHTS
Commercial Activities
-- Collaboration contract signed with Peel to develop
Distributed Modular Generation (DMG(R) ) at Protos and ten further
sites. Peel have committed that the DMG process will be the key
component and a cornerstone of their "Plastic Parks".
-- The relationship with Peel for the development of multiple
sites across the UK has added to the value proposition for end
customers of the DMG Technology.
-- In December 2019 a heads of terms was entered into for an all
paper acquisition based on a 60:40 valuation premise of the UK
development partner Waste2Tricity Limited (W2T). Post year end, in
June 2020, Company entered into a binding agreement and issued the
Circular to shareholders setting out the logic behind the
acquisition of W2T.
-- Financing for pipeline of projects led by Peel Environmental and Waste2Tricity (W2T).
-- Initiated tenders for the project engineering definition
phase and potential EPC execution with a number of quality assured
delivery contractors for the first application project at
Protos.
-- Continued negotiation with major overseas energy and
engineering companies for exclusive regional representation in a
number of international regions.
Progress to First Commercial Operation
-- Contract announced for initial engineering programme for
first DMG application enacted by W2T.
-- Contracts were signed introducing Peel into the development
at a site on Peel's Protos Energy Park in Cheshire as a waste
plastic processing facility generating electricity and
hydrogen.
-- Engineering scope for Protos increased to accommodate
production of up to 2 tpd of hydrogen from 35 tonnes of regenerated
plastic waste feedstock.
-- Planning submission completed by Peel for Protos Energy Park
in Cheshire, followed by successful community engagement meetings
and council briefings.
-- Post year-end, in March 2020 grant of planning permission by
Cheshire West and Cheshire Council.
-- Post year-end saw the announcement of the commercial terms
for Protos and future projects under the Peel Collaboration
Agreement resulting in Peel agreeing to act as the developer of
Protos and ten further DMG sites in the UK.
-- Company will receive an annual license fee of GBP500,000 for
each DMG plant that Peel develops.
-- Post year-end Peel agreed an Option to enter into an
exclusive agreement for the development of DMG Technology in the
UK, once W2T has been acquired by the Company. On exercise of the
option, the Company will be due GBP500,000 as a one-off fee.
Technology Development
-- Engineering development continued and the DMG waste
regeneration design capacity of generic equipment increased to 40
tonnes per day.
-- Continued activity in technology risk management allowing
removal of significant technology risk items through engineering
activities with component suppliers.
-- The laboratory scale unit became operational and added to
Research Demonstrator capability with the Company broadening
capability of third party feedstock trialing, laboratory services
and consulting services.
Organisation and Growth
-- Appointment of David Ryan as CEO, with strategic focus on
activities associated with first application and necessary early
commercial priorities.
-- Post year end Powerhouse announced the appointment of Myles
Kitcher from Peel, as a non-executive director of the Company.
Financial Performance
-- Company has continued its focus on prudent cash management
during the year with a strategy to avoid dilution via new equity
raises.
-- Aligned to this strategy the Company undertook a wide
operational review to reduce monthly overheads by more than 25% and
primarily focus on the immediate development programme.
-- All Directors waived salary payments from April 2019 to
extend the Company's cash through the entire first application
project period.
-- Engineering contractors and service providers demonstrated
their commitment to Powerhouse though accepting fees in equity.
-- Research and Development grants and VAT refunds helped keep
cash flow positive during the year.
-- Post year end, Powerhouse has received GBP100,000 from
engineering work and expects income arising from contracts in hand
to be of the order of GBP60,000, related to Protos project
work.
-- Post year end, the exercise of warrants issued in 2018 has
enhanced cash by circa GBP285,000.
Dr. Cameron Davies, Chairman of Powerhouse Energy PLC, said
"2019 has been a transformative year for Powerhouse with the
first commercial plant using our DMG technology now under
development. It is gratifying to see a British technology company
with a truly global application move into its commercial phase
while helping to resolve a major problem in today's world, namely
the need to reduce the volume of waste plastic and simultaneously
producing hydrogen in the community to progress the expansion of
the hydrogen economy.
The Board is enthusiastic about the prospects for the business
as we move forward with Peel, our exclusive development partner in
the UK, and also create a robust sustainable base of international
licensing revenue through the establishment of similar
relationships with blue-chip industrial partners across multiple
overseas markets."
For more information, contact:
Powerhouse Energy Group plc Tel: +44 (0) 203
368 6399
David Ryan, Chief Executive
Officer
WH Ireland Limited (Nominated Tel: +44 (0) 207
Adviser) 220 1666
James Joyce / Lydia Zychowska
Turner Pope Investments Ltd Tel: +44 (0) 203
(Joint Broker) 657 0050
Andrew Thacker / Zoe Alexander
Ikon Associates (Media enquiries) Tel: +44 (0) 1483
271291
Adrian Shaw Mob: +44 (0) 7979
900733
Notes for editors:
About Powerhouse Energy Group plc
Powerhouse has developed a proprietary process technology -
DMG(R) - which can utilise waste plastic, end-of-life-tyres, and
other waste streams to efficiently and economically convert them
into syngas from which valuable products such as chemical
precursors, hydrogen, electricity and other industrial products may
be derived. The Powerhouse technology is one of the world's first
proven, modular, hydrogen from waste (HfW) process.
The Powerhouse DMG(R) process can generate up to 2 tonnes of
road-fuel quality H2, and more than 58MWh of exportable electricity
per day.
The Powerhouse 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.net
CHAIRMAN'S STATEMENT
I am pleased to present Powerhouse Energy Group's 2019 Annual
Report, which demonstrates the significant progress we have made
under the leadership of our new Chief Executive Officer, David
Ryan.
Our team has focused its efforts on getting the first commercial
scale distributed modular generation (DMG(R) ) plant built in the
recently established low carbon energy and hydrogen cluster in the
North West of England. The plant will use Powerhouse's
groundbreaking DMG technology to produce syngas, electricity and
hydrogen from unrecyclable plastic waste. This plant will, subject
to financing, be built at PeeI L&P Environmental's Protos
Energy Park where, in March 2020, Cheshire West and Chester Council
granted planning permission for Powerhouse's first plastics to
hydrogen facility.
Post year end, Peel Environmental agreed to enter an exclusive
agreement for the roll out of DMG technology in the UK with a
ten-site pipeline to follow Protos. As a condition of this
arrangement, Powerhouse has to acquire Waste2Tricity Limited (W2T)
which had the exclusive rights to the distribution of DMG
technology in the UK. Powerhouse will then have the rights to
licence and develop plants which will make important contributions
to the efforts by wider society to reverse the damage being caused
to the oceans and rivers by unrecyclable plastic waste. At this
time of global uncertainty, we believe an important role of
business is to seek innovative solutions and create opportunities
to reduce environmental harm profitably.
Our relationship with Peel and its associated contracts gives
clarity of the delivery of the DMG process to it's end customers in
the energy, waste management and financial communities. Peel's
strategy for "Plastic Parks" across the UK is aligned to our own
ambitions and we look forward to delivering this exciting vision
together.
Our DMG technology has seen continuing and substantial interest
internationally and we are carefully filtering potential
opportunities to engage exclusively with experienced project
developers and maximize our future licensing revenues.
I would like to thank our CEO and our team for their hard work
during the year paving the way for future rapid growth of the
Company as new plants are rolled out to meet the increasing demand
for Powerhouse's plastic waste to energy technology, engineering
services and licensing.
I would also like to thank our shareholders who have been very
supportive of our efforts to keep expenditure on a tight rein in
order to concentrate on building the first of many DMG plants.
In conclusion, 2019 was a year of significant progress for the
Company against a background where the role of hydrogen, in the UK
Government's ambition to achieve net zero carbon emissions by 2050,
has been emphasised as one important step towards fuel cell powered
heavy goods transport.
Dr Cameron Davies
Non-Executive Chairman
29 June 2020
STRATEGIC REPORT
The strategic report section addresses the Directors' management
of the Company and contains certain forward-looking statements.
These statements are made by the Directors in good faith based on
the information available to them up to the time of the report
preparation and approval and such statements should be treated with
caution as they address uncertainties.
Business Strategy
Powerhouse Energy Group PLC ("Powerhouse" or 'the Company")
designs, delivers and licenses Distributed Modular Generation
(DMG(R) ) technology, a proprietary design which converts calorific
waste streams into synthetic gas (syn-gas), a valuable intermediate
product a that can be used for power generation and as a source of
hydrogen for fuel cell vehicles.
The process converts non-recyclable waste plastic or end of life
tyres to produce clean syn-gas into these 'end of waste'
products:
-- Hydrogen
-- Electrical power and heat
-- Natural gas replacement
-- Chemical feedstocks.
Powerhouse Energy will license the proprietary control systems
with associated paid services for specific client feedstock
analysis and laboratory services, engineering during project
development, and then operational support services when projects
are in operation.
Growth Through Partnership
In the United Kingdom Powerhouse Energy will be partnered by
Peel Environmental as the exclusive development partner and
revenues will be principally from operating licenses, with project
services paid for under contracted fees arrangements.
For international sales, Powerhouse anticipates securing
international exclusivity contracts with major energy and waste
management companies resulting in license fees and sales revenues
being paid on a country-by-country basis.
In the longer term, Powerhouse will endeavour to increase its
portion of project revenues potentially expanding licensing,
engineering and management services into manufacturing and delivery
with local partners, such expansion will be prudent in line with
financial capability.
Testing, Laboratory and Customer Field Trial Services
At our Thornton Energy Park facility, the Company carries out
feedstock testing on the Research Demonstrator and associated
laboratory equipment to undertake analytical services for potential
customers. The results can be used in chemical engineering
modelling carried out by Powerhouse. In the longer term and
appropriate to the Company's growth, the testing capability will be
extended to use a broader range of waste feedstocks and of
potential products from the process.
Acquisition of Waste2Tricity
On 26 June 2020 Powerhouse issued a Circular describing the
proposed acquisition of Waste2Tricity. The non-cash transaction
uses Powerhouse shares to acquire the whole of the issued share
capital of W2T, which has been Powerhouse's project developer and
marketing company both in the UK and internationally. The all paper
acquisition is based on a valuation ratio of 60% Powerhouse to 40%
W2T, with the vast majority of Powerhouse shares issued in exchange
for W2T shares locked into a no-sale agreement for a minimum of a
year. The acquisition is subject to approval of a waiver of the
obligation of the Concert Party to make a Rule 9 offer under the
Takeover Code and is described in the Circular and is to be voted
on at the EGM to be held on 14 July 2020.
The Board's Independent Directors unanimously recommended that
the acquisition be approved by Shareholders. David Ryan, the
Company's CEO, has a conflict of interest in this deal and has been
absented from the Board's decision making and voting on this.
Post the acquisition of W2T, 87.5% of the Powerhouse shares
issued to W2T shareholders will be locked down against sale for one
year and, post completion, with an Orderly Market Agreement in
place for two more years. A relationship agreement with the largest
incoming shareholding family will be signed as part of the
deal.
Following completion of the Acquisition, W2T will commence the
winding up of its international subsidiary in Thailand and will
itself be fully subsumed into Powerhouse with the intention that
wind up proceedings for W2T can commenced by the end of 2020 or
soon thereafter.
OUR PRODUCT
The commercial DMG unit is currently marketed in nominal 25
tonnes per day (tpd) and 40 tpd waste plastic processing sizes, to
generate up to 3.8MW of electricity, export 3.4MW of electricity
and produce up to 2 tonnes of hydrogen. DMG takes waste plastics
that cannot be recycled and regenerates them into clean energy that
can be separated into hydrogen for delivery either as clean fuel
for fuel cell transport or as a feedstock in other applications in
the chemicals and plastics industries.
Design Development
The design of the DMG generic process that had been completed in
2018 was further refined and updated to meet customer needs through
2019. These activities resulted in a further update of the already
announced 25 tpd model of the DMG and increased to allow Powerhouse
to offer 25 tpd and 40 tpd plants.
The increased throughput to 40 tpd of mixed non-recyclable
feedstock will typically generate up to 3.8MWe of electrical power,
exporting 3.4 MWe or alternatively export 2 tonnes of road-fuel
vehicle quality hydrogen per day whilst also exporting at least
2MWe of electricity.
The design development will continue in response to customer
requests for alternative waste feedstock models and alternatives
recovering materials from residue from specific feedstocks.
Technology Risk Management
Powerhouse Energy has instigated a detailed and comprehensive
engineering and technology risk management programme that has
continued through the design phase since completion of the generic
design and the DNV- GL technology review. The programme, termed the
Technology Risk Management Programme includes review items
suggested by DNV-GL and Powerhouse's internally generated technical
risk assessments - each of which have specific activities planned
to address the risk and will be resolved in the upcoming Protos
development.
During the summer of 2019 as part of the Technology Risk
Management Programme, at the instigation of one of the key
component manufacturers, Powerhouse acted as a consultant to an
analogous biomass plant enduring some start-up difficulties related
to gas processing to help it optimise its bio-waste pyrolysis
operation. As a result of this specific operating experience,
Powerhouse has acquired additional physical data to build into the
chemical engineering models developed for the process.
These research, engineering and operational experiences have
helped in the assessment, removal, mitigation and reduction of the
level of risk and, as a result of the knowledge and experience
gained, particular risks have been mitigated or removed risk items.
The work programme in 2019 removed major risks and provided
mitigation measures for the significant risk items and DNV-GL
queries. The Technology Risk Management Programme will be further
validated by engineering contractors and DNV-GL through 2020.
As the Company proceeds through the Protos development, the
Technology Risk Management Programme will be reviewed by the
Powerhouse board, and individual risks addressed through
engineering studies allowing the register to be continuously
updated. In parallel, DNV GL will be engaged to assess any risks in
the Engineering Definition arising from the Engineering Procurement
and Construction Management Contractors work programme. The
Technology Risk Management Programme has a contingent/fallback
suite of actions and these are costed and built into the Company
business plan.
Intellectual Property Management
The first stage of patent work has been filed and the family of
patent work completed, and statements of invention and claims
initiated that are under scrutiny. These current patents under
review cover the novel configuration of the equipment, and the
operating parameters of this equipment. Further patent applications
will arise from the detailed design and control system definition
in hand for the first application of the DMG technology.
The most important IP remains the chemical engineering model of
the process to create the clean gas - and Powerhouse maintain
strict protocols to ensure this information is protected as secret,
including limited access to process control on the system.
The key programming, control and maintenance of the systems will
be maintained within a non-accessible black box which is updated by
Powerhouse, under licence, under strict access protocols using
firmware and programmes that have been demonstrated proven to
resistance from remote access in accordance with military standard
specifications. The control algorithms will be retained with
control equipment that remain under the ownership of the Company.
In the longer term the control system manufacture is planned to be
undertaken by Powerhouse providing additional means of protecting
the functional and operational knowledge.
A further stage of IP protection work in terms of extending
patent suite aligned to the engineering design is planned through
2020 and budgeted within the Company Business Plan.
The Company has registered DMG(R) as a registered Brand name,
for the Distributed Modular Generation technology.
Regulatory & Planning Landscape
The DMG system is compatible with carbon capture and storage
(capture from flue gas and the gas engine exhaust) which will allow
further incremental carbon dioxide reductions in future. This
potential add-on feature will 'future proof' the low emissions
nature of DMG as the offset emissions from electricity generation
are forecast to decline as the carbon intensity of the electricity
grid falls.
The premise for the application of DMG in the UK is that all
process plants are able to be regulated outside the specific
conditions of the Industrial Emissions Directive (IED) Chapter IV
'Incineration and Co-Incineration' and as such meet the IED Article
42(1) requirements that allow all advanced thermal conversion
processes to be regulated under the Medium Combustion Plant
Directive (MCPD) should they be able to demonstrate that the
impacts arising from the combustion of cleaned syn-gas are 'as
clean as natural gas'.
It is assumed that the first DMG project will be considered as
an EPR S5.1a Schedule 13A activity and is regulated as a Small
Waste Incineration Process by the local authority. This will
continue until the process can be demonstrated to produce syngas
that has been cleaned to the extent that it can meet the IED
Article 42(1) requirements.
For the first DMG development at the Protos site, the intent is
that until the gas has been proven to meet the quality criteria the
plant will be considered as an EPR S5.1a Schedule 13A activity and
permits will be applied for to the local authority.
Future Product Developments
The Company will develop a product development catalogue and the
best opportunities will be identified from the initial new product
screening programme and development programmes tabled and included
in future plans. The current strategic route of hydrogen economy
related technologies, equipment and services will be followed.
Customer's Value Proposition
Powerhouse customers will have differing internal drivers for
the application of DMG. Most customers procuring DMG systems,
whether operators or developers will require favourable commercial
returns for their investment.
Powerhouse maintains several commercial revenue models for
customers that provide robust demonstration of the monetization
benefits of DMG facilities over their 25 year lifecycle. These
financial models are adapted and shared with customers during the
pre-sales studies and we also present the key aspects of a typical
revenue model for a UK application of DMG technology.
Customer's Waste Plastics Revenues
The market for waste plastics in the UK demands a price for
processing waste plastic that is not recycled, this represents more
than 70% of the plastic currently in the waste streams. The
alternative end destinations for these plastics is either
incineration at costs up to GBP100 per tonne, or landfill at
c.GBP130 per tonne. Operators of the DMG facilities accepting
non-recyclable plastic is diverted from incineration or landfill
can therefore expect to receive a gate fee for plastic received in
the region of c.GBP80 per tonne and the Company and Peel will
undertake further evaluation of these customer revenues in future
months.
Customer's Hydrogen Sales
The hydrogen market in the UK is not well developed, hydrogen
supplies are scarce and thus the current price of distributed
hydrogen is high at GBP10-GBP12/kg. The UK government, via its
Department for Business, Energy and Industrial Strategy ("BEIS"),
is targeting a "production cost" for hydrogen below GBP5/kg, but
distribution costs could add significantly to this. Peel undertook
its own detailed studies with consultants on the potential of the
hydrogen market concluding that a sale price of GBP7-8/kg can be
assumed for DMG hydrogen, with the expectation that this could be
higher in the earlier years and falling in real terms over time as
the technology is refined. Powerhouse will undertake further
independent research into this market position through 2020.
Customer's Electricity Sales
Current and forecast wholesale and retail electricity prices
vary tremendously with many industries paying variable rates with
supply demands. Electrical power from DMG facilities can be used on
site by customers or sold directly to local businesses saving costs
on relatively expensive national grid pricing. A flat wholesale
price of GBP50/MWh is an indicative assumption for the 25-year
lifecycle period.
Customer's Heat Sales
Where the customer or neighbouring businesses have a need for
heat or cooling, then heat recovery and heat export systems from
the DMG plant may be included providing another potential revenue
stream.
License Fees to Powerhouse
Along with these customer benefits assumptions above, these
customer financial models include an annual license fee to
Powerhouse of GBP500,000.
MARKET CONTEXT
Hydrogen Market
The Company is committed to supporting the development of a
hydrogen economy, primarily through the product development
strategy to produce low cost hydrogen through its new proprietary
technology. Powerhouse's DMG hydrogen technology is the first move
in this strategy to facilitate the adoption of fuel cell heavy
goods transportation, and in the longer term, flexing of the
national grid gas specifications to enable DMG produced gasses as
well as bio-gas to be added.
Hydrogen for Fuel Cell Electric Vehicles
Hydrogen will play an increasing role in moving the global
economy away from a hydrocarbon centered one and towards the
planned electric vehicle transport future, particularly for heavy
goods vehicles and public service vehicles such as trains and
buses. Many experts and government departments expect that hydrogen
will become one of the major sources of energy consumption and
storage over the coming decades. The DMG technology development has
been focused on a solution to the lack of availability of
distributed hydrogen.
Peel L&P, who have the Option to become the UK exclusive
project developer of waste plastic to hydrogen units, are committed
to developing the nascent UK hydrogen for fuel cell electric
vehicle ("FCEV") market specifically for truck and bus fleets.
The UK, EU and the UK, Japan, South Korea, have introduced
statutory legislation and regulations aimed at decarbonising road
transport and there are various initiatives in place to build a
hydrogen refueling infrastructure to support fuel cell electric
vehicles. The UK government has identified hydrogen fuel cell
electric vehicles as a key component to meet net zero emissions
targets by 2050.
Powerhouse and Peel will endeavour to make sure that the UK
Government understands that the DMG waste to hydrogen offers an
alternative method of hydrogen production and that as the minimum,
hydrogen from plastics has parity with distributed electrolysis in
terms of any plans for subsidy and tax loading. Energy from Waste
facilities in UK are exempt from Carbon Taxes, probably as they
have a public health function. The DMG technology is an Energy from
Waste process and therefore our customers would be treated in the
same manner as conventional Energy from Waste operations. The
companies also stress the beneficial impact of DMG technology as a
solution to end of life, unrecyclable plastics
Hydrogen for Industrial Feedstocks
Hydrogen is used as a feedstock in several large industries such
as the refining and chemicals. Powerhouse's technology for hydrogen
production does not support major refinery consumers but is
suitable for medium sized facilities. DMG plants are able to meet a
nascent demand for a technology that can produce power and hydrogen
on a local scale while cleaning up non-recyclable waste plastic and
reducing landfill volumes simultaneously.
Interest has been shown from the developing world, most notably
Asia and Africa, where waste to power solutions such as DMG will
not only help clean up contaminated plastic waste but substitute
for diesel power generation in creating a source of distributed
electricity for off grid communities.
Powerhouse is an active member of the UK Hydrogen and Fuel Cell
association and Peel is a leading member of the North West Hydrogen
Alliance.
Waste Plastic Market
Powerhouse's DMG technology is an innovative method for handling
end of life plastics and the Company has continued to experience
significant interest in the product to handle this waste
plastic.
UK Waste Plastic Market
In the domestic market, the 2019 'WRAP' report estimates that
2.4Mtonnes of plastic packaging was placed on the UK market. The
amount of plastic packaging collected by UK local authorities is
estimated to have increased by 10% since 2014 and almost all local
authorities collect plastic bottles, with around four out of five
collecting at least some types of pots, tubs and trays (PTTs), but
only 10% accepting all types of plastic film. All the
non-recyclable plastic materials can be regenerated to energy and
hydrogen in DMG plants.
The route for 'recycling' by export has been closed as China and
other governments have banned the import of plastics and other
waste materials The loss of these historic export markets mean that
domestic recycling must increase significantly in order to meet
Government set stretched targets.
Investment in increased plastics recycling infrastructure must
be able to weather economic volatility and be adaptable to changes
in market need.
Peel estimates in the locale of Protos that 800,000 tonnes per
annum of non-recyclable plastics arising from the residual waste
stream is going to either landfill disposal or inefficient
incineration facilities. This is sufficient feedstock for 60 DMG
units within two hours of the Protos site alone, if material is
redirected from landfill. Powerhouse and Peel are engaging in
discussions with major consumer goods producers, all of whom are
following developments on Protos with interest.
International Waste Plastic Markets
There is a global consensus towards reducing waste and
increasing sustainable energy sources. Powerhouse has reviewed
several international market practices and while all have their own
not dissimilar approaches to the UK, the single theme that they
have in common is that non-recyclable plastic waste is a growing
problem for all. So, Powerhouse expects similar customer uptake in
those markets. Powerhouse's engagement in international markets
will rely on experienced local partners either as project
developers and asset owners, or alternatively, through industrial
partners engaging with Powerhouse in the design, delivery and
operation of DMG plants.
As an example, Powerhouse is currently engaged in a feasibility
study with a utility company for applications in Spain. There is
currently less than a 20% recycling rate in Spain with no gate fee
for plastic, so the market is not yet established for the recycling
of plastics. Thus, plastic in the waste stream is going direct to
landfill or in some instances to incinerators, yet the government
is moving to ban incineration. There is evidence of some of the
waste being exported and this route will be banned in the future.
This represents an opportunity for our Spanish partner and
Powerhouse to become part of a recycling revolution in waste
treatment using the DMG technology.
SALES
Peel Partnership for UK
Strategic Setting
At an early stage, the Powerhouse board identified that a key
success factor for DMG technology would be the development of
partnerships with suitably resourced companies which share its
vision for clean energy from previously untreatable plastic waste.
In 2019, Powerhouse successfully completed its alignment with a
major development partner for the UK in Peel Environmental (
www.peelenvironmental.co.uk) . The belief shown by Peel in not just
our technology but also in how it could transform the provision of
clean energy and power at its industrial sites across the UK has
greatly encouraged the Company as it had to clearly meet the
exacting quality, technical and commercial thresholds that Peel
requires of its partners.
The Board believes that this collaboration with Peel will be
significantly beneficial as Peel's size and standing will help move
Powerhouse away from any perceptions of being a small standalone
technical IP business and towards a business with enabling and
innovative green technology that one of the largest industrial site
landowners and developers in the UK is keen to develop projects
with. Under the terms of the agreements, Peel will seek the project
funding for the already announced 11 projects and for the pipeline
of projects to follow.
Background to Peel Partnership
The Peel Group is one of the leading infrastructure, transport
and real estate investors in the UK, with collective investments
owned and under management of more than GBP5 billion. Established
by the current chairman, John Whittaker, the Peel Group has grown
through an ethos of long-term investment in visionary regeneration
projects, primarily in the North of England. The Group is
family-owned, and its principal investments encompass land and
property, transport and logistics, energy, retail and leisure.
Peel has a corporate commitment to sustainable targets and was
the first property company to achieve Net Zero Carbon status using
the UK Green Building Council's 2019 definition for buildings in
the UK.
Peel L&P Environmental, a division of Peel L&P, is an
experienced partner for Powerhouse in the waste and energy sectors
and the Board concluded that a collaboration with the Peel group
offered a significant strategic advantage compared to seeking
project developers.
Peel has spent the last three years working closely with
Powerhouse, reviewing the technology in parallel with its
industrial and local authority client base. In 2019 they engaged an
internationally recognised independent engineering consultancy, to
formally undertake a due diligence review of the technology and
subsequently the independent consultancy undertook a study to
demonstrate that the DMG process is fully compliant with the
legislative emission levels for operation in UK and throughout the
European Union.
Peel plans to replicate the Protos development model throughout
the UK and other sites are already in pre-planning for application
later in 2020. Peel will incorporate the DMG application into its"
Plastic Parks" vision and will develop the process for the local
provision of hydrogen.
Peel's targets for shared facilities are local authorities with
their waste management pressures and also blue-chip
industrials.
Peel's 'Plastic Parks' vision foresees a nationwide
implementation of developments where non-recyclable waste plastics
are recycled and regenerated. These parks are intended to each have
a Powerhouse DMG plant to divert plastic from landfill and produce
hydrogen and clean power. Peel's plans involve bringing together
potential counterparties for waste management, power generation and
hydrogen production with a net negative CO2 contribution for each
site.
The two companies' relationship was strengthened post year end
when the Peel L&P Environmental Managing Director, Myles
Kitcher, joined the Powerhouse board of directors.
Peel Collaboration Agreement
In the second half of 2019, Powerhouse announced that it had
entered into a Collaboration Agreement ("CA") with Peel
Environmental to develop an initial minimum of eleven sites in the
UK for DMG facilities, including the first full scale commercial
site application at Protos Energy Park in Cheshire. Subject to the
W2T acquisition, the collaboration will see Peel initially develop
the Protos Energy Park followed by at least ten further DMG
sites.
Post year end, the specific commercial terms for the Protos
project and subsequent projects were defined in a supplemental
commercial agreement, under which the Company will receive
engineering fees during the delivery of each project and,
subsequent to successful commissioning, will also receive
GBP500,000 per annum license fee per project.
Peel Option for Exclusivity for DMG In Plastics to Hydrogen
Applications
Post year-end in March 2020, Powerhouse and Peel agreed an
Option to enter into an exclusive agreement for the development of
DMG Technology in the UK, once W2T has been acquired by the
Company. On exercise of the option, the Company will be due
GBP500,000 as a one-off fee for granting Peel exclusive rights to
develop the DMG plants in the UK and Peel will lead the development
and the funding strategy for all future UK projects. Peel will
establish special purpose investment vehicles to fund each project
with an anticipated total capital commitment of circa, GBP200m, to
meet the agreed pipeline of 11 initial projects.
The UK exclusivity deal is dependent on the Powerhouse
acquisition of Waste2Tricity Limited.
After the proposed acquisition, and when Peel exercise the
option, Powerhouse will receive a one-off fee of GBP500,000. This
arrangement will allow Peel to lead the consultation with various
potential clients for UK based DMG plants. Powerhouse will receive
an annual license fee of GBP500,000 for each DMG plant developed,
payable when the unit becomes operational with potential additional
fees earned by the Company from engineering services that may be
delivered on the projects.
The Board believes that the positive engagement between
Powerhouse and Peel and their close strategic fit will result in an
effective and sustainable roll out of DMG technology across the
UK.
Pipeline of UK Prospects
The pipeline of prospects developed by Powerhouse over the last
twelve months has now been transferred to Peel which is integrating
these potential clients into the roll out programme. These
prospective clients include international waste companies, local
authorities, and companies in the plastics and consumer goods
production sectors. These are now being further developed by Peel
with pre-project planning activities on the next intended sites
already underway.
International Sales
The international business development activities will focus on
developing regional and territory-by-territory partnership
agreements to roll out DMG technology. Powerhouse will continue
these international business development activities by marketing
DMG to potential industrial partners, by building relationships,
reviewing project opportunities and signing exclusive marketing
agreements.
Strong interest has been expressed in DMG development
partnerships internationally.
In Europe commercial feasibility assessments are being
undertaken for the Iberian peninsula and project specific studies
are underway in Greece.
In Australia the Company has a target project pipeline and
Oceania Engineering Services are targeting the initiation of
engineering studies for the first Australian project.
In Thailand where considerable prior work has been carried out,
Powerhouse proposes to negotiate a new marketing agreement with a
local entity paying for exclusivity of delivery in Thailand and
focused on rolling out DMG technology in that country.
In Japan a series of potential partner Memorandums of
Understanding have been developed and specific technical due
diligence undertaken, with Toyota Tsusho and Itochu completing
their exploratory due diligence in 2020. However potential Japanese
partners have indicated that investment decisions will only be made
subsequent to the commissioning of the first operational plant.
Noting this, the Company has focused through 2019 on the
delivery of the first operational project. Wider business
development activities will be initiated through second half of
2020 to secure partners for developments internationally and enable
rapid roll out to meet the expected demand.
PROJECT PROGRESS
Protos Project - Ellesmere Port
The first application of the Powerhouse DMG technology is to be
built at the Protos Site, a Peel L&P energy park development on
a 54-hectare site known as 'Protos' near Ellesmere Port, Cheshire,
England. The site is the first development by Peel L&P under
the Collaboration Agreement.
The planning permission for the application was submitted in
September 2019 and, on 3 March 2020, the Cheshire West and Chester
planning committee approved the planning application for the DMG
Technology to be utilised on the Protos Site.
Contractor Selection Process
Powerhouse spent much of 2019 engaging with the contractor
community with a view to identifying interested Engineering
Procurement and Construction (EPC) Contractors who could deliver
the DMG facilities, in the UK and internationally.
The contracts familiarisation included various contractors
undertaking their own technical due diligence of the DMG technology
and ultimately a tender for the Protos Engineering Definition and
outline execution consideration for Protos.
The final contractor selection list of six quality assured,
financially capable and experienced contractors was transferred to
Peel. Relationships with contractors who are not selected by Peel
will continue to be developed for international projects.
Protos Engineering Progress
In the second half of 2019, Peel engaged project development
consultants to deliver the development of the DMG plant at Protos
on Peel's behalf. The consultants will oversee the overall site and
engineering works including civil engineering design, groundworks
and buildings as well as being the contracting party on behalf of
Peel.
As part of this scope they have appointed an engineering
contractor, with extensive international experience, to undertake
the engineering definition for the Protos site to address all
aspects of the facility design, seek equipment costs and hence
allow all contract costs to be finalised. Formal announcement of
consultancies and contractors will be made by Peel in due course.
the energy and infrastructure sectors.
Through the first half of 2020 Powerhouse has been working
extensively with Peel their appointed project management
consultants and the plant engineering contractor on the engineering
definition stage. Powerhouse is responsible for validation and
direction of the design to ensure the Protos project meets the
design criteria. At the end of the engineering definition phase
Peel will be in a position to place costed execution contracts,
allowing funders and investors to complete their activities to
financial close.
Protos Execution Through to Operation
The execution phase of the project is currently being planned
with specific roles and responsibilities for all aspects of the
construction, commissioning and operation to be finalized.
Powerhouse expects to receive fees from its involvement in
commissioning including overseeing the training of the operational
staff during this phase.
Powerhouse expects to undertake an ongoing remote and onsite
monitoring and periodic servicing role in operations with the
expectation that this will be an inbuilt requirement of the license
agreement with Peel's special purpose vehicle (SPV) for which
Powerhouse will receive GBP500,000 in annual fees.
FINANCE
Financial Strategy
The Company chose to follow a strategy to minimise new equity
raises for 2019, wherever practical, and to closely manage cash and
activities with the primary focus being placed on securing the
delivery of the first DMG plant. In order to achieve this, the
Company undertook an operational review to reduce monthly overhead
by over 25%.
As part of this strategy and in order to progress the necessary
technology risk management activities, as well as the pre-contract
projects work, engineering contractors and service providers were
asked and agreed to take some of their payments in Powerhouse
equity. This demonstration of faith in the Company by service
consultants engendered a shared belief in the technology and
garnered a collegiate team structure. To underline their support of
this strategy, the Powerhouse directors deferred any salary
payments due from April 2019 to extend finances through the entire
first application project period.
Financial Position
The Company ended the financial year with a cash balance of
GBP103,580. The prudent management of cash as is required in such a
nascent technology company will continue throughout 2020 in
managing expenditure against income and available cash.
Post year end, Powerhouse expects income arising from contracts
to be of the order of GBP160,000, related to Protos project work,
research and development services, and the exercise of warrants
issued in 2018 which will bring in an additional circa
GBP285,000.
The Company has carefully managed its research and development
activities and in 2019 applied for GBP195,708 in R&D tax
credits for its 2018 activities. These amounts have been received
post year end.
Financial Performance
The Company entered its first commercial contract for revenues
in 2019, with invoices raised, and settled, in 2020 for GBP100,000
after performance obligations were completed.
Post year end the Company can look forward to executing further
engineering services on the Protos development thus generating
revenues and, subject to the successful completion of the
acquisition of W2T, Powerhouse and Peel should complete the
exclusivity Agreement with Peel securing the associated fee
arrangements presented in the revenue model to be followed in
future years.
Fundraises
The Company chose to minimise new cash raises while finalizing
the Peel situation and the first project, and hence no fundraises
were made in 2019. The Company raised GBP3.4M in 2018.
ORGANISATIONAL DEVELOPMENT
Organisational Development Strategy
The Company intends to expand its operational teams in a phased
manner, aligned to project progress including the Protos project
development and other subsequent projects, with teams set up to
maintain and develop the delivery and supply chain relationships
necessary to enable it to deliver and provide licensing support to
multiple projects simultaneously. Powerhouse plans to invest
prudently in operational personnel, management systems and
equipment to ensure the required delivery of the services but will
not look to increase staffing levels until demonstrably necessary
for the growth of the business.
Board Strengthening
In February 2019, the Group's Chief Executive Officer, Keith
Allaun, resigned from his role and we were pleased to appoint David
Ryan as Chief Executive Officer. We thank Keith for his service and
wish him well in his new endeavours.
David brings 39 years of experience in energy and international
capital-intensive project delivery, together with successfully
leading the founding, growth, and ultimately sale of an engineering
business to an international contracting buyer. He is committed to
delivering Powerhouse's high-quality waste to hydrogen DMG
technology to meet customer requirements in a way that will
maximise shareholder value. He is setting up business management
systems aligned to the development of Powerhouse as a customer
focused, revenue generating company delivering quality services
that will lead to Powerhouse becoming a profitable technical
delivery organisation.
Post year end, and in recognition of their strategic importance
of Peel L&P to the development of Powerhouse in UK, we were
pleased to welcome Myles Kitcher, Managing Director, Natural
Resources & Energy, Peel L&P Holdings, to the Board in a
non-executive role. Myles brings his extensive experience from
sustainable industrial property development and management to lead
the Protos project roll-out in the UK.
Following the proposed acquisition of W2T, it is anticipated
that current chairman of W2T, Timothy Yeo, will join the Powerhouse
board as a non- executive director. Mr. Yeo has wide experience in
government, serving in the Environment and Health Departments, and
subsequently as Shadow Secretary of State for Trade and Industry in
the Shadow Cabinet. He is currently the chairman of the New Nuclear
Watch Institute, Honorary Ambassador of Foreign Investment
Promotion for South Korea and since 2007 has been a non-executive
director of Getlink SE, operator of the Channel Tunnel.
Advisory Panel
Powerhouse also announces it has dissolved its Advisory Panel,
established in May 2017, with immediate effect and the Company
would like to thank each panel member for offering their input
pro-bono during its existence. It is anticipated that a Technical
Advisory Committee with a focus on reclaimed hydrogen energy
technology will be established in due course, made up of staff and
industry specialists. In the meantime, with the Company in project
focus, staff and expert external consultant input is directed at
project management and technology risk management as described
above.
Personnel
The management of Powerhouse is conscious that the Company's
plans will demand a staffing plan to grow the business. Powerhouse
operates with a close team made up of specialist experts and
consultancy personnel to address specific activities. The team has
shown dedication to the Company strategy by deferring fees and
payments.
This staffing strategy has enabled the Company to professionally
manage its necessary functions without incurring large fixed costs
at this stage.
The staffing plan to be implemented will address the timely
recruitment of well qualified younger professionals into
engineering, business development, operations and finance roles.
The individuals will only be recruited as budget allows and, in a
fashion, that the individuals can be provided with a corporate
alignment and training programme in order for them to become part
of the future operational management team.
Management Systems
In the coming months the Company's management and IT systems
will be enhanced as they begin to address the delivery of
engineering and operational support for projects. Powerhouse
anticipates it will achieve ISO 9001 and 14001 for these systems as
part of the requirement to have repeatable quality assured process
systems.
Offices & Research Facilities
Powerhouse currently operates out of the Thornton Energy Centre,
near Chester in North West England where the laboratory facilities
and research demonstrator, the principal test-bed for the
underlying engineering and testing, are located. The Thornton
office will also serve as a project support office for Protos. At
the appropriate time, the Company will consider moving to dedicated
business premises, however, such a move will only be initiated when
the demands of budget, personnel, systems and customer interfaces
can all be satisfied by a single location, and will not be as a
result of any decision based around image perception.
CORPORATE SOCIAL RESPONSIBILITY
Our Commitment
The strategy of Powerhouse is based on sound ethical and
environmental principles by addressing two of society's most
pressing problems, the eradication of unrecyclable plastic waste
and the production of clean hydrogen energy for fuel cell vehicles
such as buses and trucks with the resultant improved air quality
around our communities.
Consistent with the Company's commitment to operating with an
inclusive, transparent and respectful culture. Powerhouse places
particular emphasis on operating to the highest ethical and
environmental standards.
The Company's objectives include observing the highest level of
health and safety standards, developing its staff to their highest
potential and being a good corporate citizen in the countries of
operations.
The Company directors take personal ownership of maintaining
high standards of business conduct throughout the organisation and
for delivering these Corporate Social Responsibilities.
Stakeholder Engagement
The Board is mindful of the duties of directors under S.172 of
the Companies Act 2006. The directors act in a way they consider,
in good faith, to be most likely to promote the success of the
Company for the benefit of its shareholders. In doing so, they each
have regard to a range of matters when making decisions for the
long-term success of the Company. The directors promote a culture
within Powerhouse of treating everyone fairly and with respect and
this extends to all principal stakeholders including shareholders,
employees, consultants, suppliers, customers and the communities
where it is active.
Environment Policies
As it moves into an operating environment the Company will
redefine its commitments to the environment and to sustainable
growth in new policies to be issued in the near future.
Staff
Powerhouse will commence strengthening its operational
engineering and administration team through 2020. It is fully
committed to promoting a working environment of equal opportunities
for all without discrimination or harassment and regardless of
part-time working, gender, sexual orientation, age, race,
ethnicity, nationality, religion or disability.
The Company will report against this commitment in future annual
reports.
Health Safety and Environment
The health and wellbeing of its staff and associates is
considered in the evolving working practices as the Company grows.
Our commitment covers the ways in which work is carried out from
offices, home, laboratories, R&D facilities and operational
sites.
The Company's research and development activities were delivered
HSE incident free through 2019 and continued incident free
performance is a key performance indicator for 2020.
The Product Emissions in Operation
The Company is committed to developing technology for projects
with as emissions that are safe and low meeting all environmental
and regulatory requirements.
The application of the Company's technology in waste to hydrogen
plants produces residues are in two forms, solids and hydrocarbon
paste. The ash like residue is generally inert material and proven
as such on Protos and will be sold for use in road fill. Typically,
the output is around 3-4 tonnes per day from 40 tonnes but varies
with the type of customer feedstock. The gas clean up residue is a
hydrocarbon rich paste that is generally taken by road tarmac type
producers and, specifically for the first project may be directed
to nearby Stanlow refinery and added to its processing
capability.
Local Community Engagement
In 2019 Powerhouse supported Peel with involvement in the local
community forums for the Protos plant as well as the planning
permission consultation process.
Throughout the planned site works at Protos, and other projects
as they come to fruition, Powerhouse will fully engage with local
communities to inform and educate them on the DMG technology and
listen to their concerns.
Industry and Educational Engagement
Our close relationship with the University of Chester has
included our ongoing student sponsorship, involvement in mentoring
and career events.
Wider afield Powerhouse demonstrates commitment to future
engineers and technical specialists providing support and
presentation to students at universities and professional
bodies.
PRINCIPAL RISKS AND UNCERTANTIES
The Company is subject to various operational risks and the
following issues are particularly relevant to the Company's
business activities:
Business Risk
Technology Risk
The Company is running a detailed Technology Risk Management
Programme derived from its own test and design activities and
informed by the DNV GL Technical Assurance process. The strategy of
selecting mainly proven components with extensive operating hours
in similar service in other plants significantly reduces the risk
profile for its DMG system.
As described in the Product section above, through 2019
Powerhouse continued to address the remaining identified technical
risks. These will be worked through under the detailed design and
commissioning period of the DMG at Protos. Powerhouse will also
engage DNV-GL to provide independent technical assurance validation
in accordance with the second stage of the DNV-GL Technology
Validation process.
Research and Development Activity Risks
The Powerhouse research and development equipment has been
subject to formal design and functional safety reviews with all
activities being subject to risk assessments in accordance with the
Company Health & Safety Management processes.
Powerhouse operates its research and development laboratory
equipment and testing programmes to the best industry standards and
in line with the high demands expected by the Company Health &
Safety Management procedures. The Company's operating systems will
be revised as it moves towards construction, commissioning and
operation.
Manufacturing
The current execution route for the delivery of DMG plant and
componentry in the UK will rely on proven delivery contractors
undertaking procurement through their quality assured vendor
selection systems. These systems will monitor all vendors including
any specific vendors selected by Powerhouse. All equipment and
components will be subject to detailed technical validation in the
engineering phase and factory acceptance test programmes prior to
release with detailed component proving pre-commissioning and
commissioning phases to fall under the control of the Engineering
Procurement and Construction Management contractor.
Execution Risk
The DMG design has been completed to minimise construction risk
by the use of skidded components with limited hook up demands.
The execution strategy for Protos is reliant on experienced
design and construction contractors delivering the process, under
guidance of an experienced management team. The quality will
further be assured to meet specification by Powerhouse validating
and undertaking quality assurance surveillance through the
execution.
The Company has undertaken a contractor familiarisation exercise
to be able to align contractors with the other DMG processes as and
when new orders arise.
Regulatory Risks
The Company aided Peel in its preparation of planning permission
material. The rapid and uncontroversial approval of the planning
application provides comfort that planning permission for other DMG
plants, with their low visual and environmental impacts, will be
forthcoming. Powerhouse is already engaged with developing the
planning and permits for two further sites in Ellesmere Port.
In the UK, the application of the DMG once on a dedicated site
does not require an Environment Agency permit, but instead a permit
granted by the relevant Local Authority.
In undertaking the various air quality assessments necessary for
permit application, the international independent consultancy
Fichtner has demonstrated that the DMG process is fully compliant
with the appropriate legislative emission levels for operation in
the UK and throughout the European Union.
From the overseas project screening and feasibility studies the
Company has gained confidence that planning and permitting for
projects can be achieved in a timely fashion and specific locations
will be desktop tested through 2020 arising from studies for Spain
and Australia.
Competition Risk
There are a number of large scale waste gasification companies
in operation, however few are active in or able to cope with
black/grey plastics and rubber, or are targeting the market of
smaller throughput, distributed, multiple sites where Powerhouse is
active. The Company considers that, for a competitor to achieve the
operating parameters and accumulated data that require considerable
trial and error over many thousands of hours of operation and as
such represents a significant barrier to entry.
There are also a number of active plastics to liquid companies,
many using specific feedstocks, and the application of these
processes is currently seen as complementary to the DMG process as
this technology can accept the waste plastics rejected by these
plants, incinerators or plastics recyclers.
Market Adoption Risk
The Company acknowledges that it currently does not have the
depth of operation to deliver multiple projects on a worldwide
basis and is mitigating this risk by engaging in these current
markets through regional industrial partnerships.
There is significant interest in the DMG process worldwide, and
the Company considers that the adoption of the technology is wholly
dependent on Powerhouse demonstrating successful operation in the
early plants.
Potential waste operator customers are being pushed into
technologies such as DMG by the regulatory drive of international
authorities to reduce landfilling via taxes and charges resulting
in the waste feedstock having an inherent cost.
The DMG cost of production of hydrogen is attractive for
hydrogen customers and market adoption will be dependent on the
international take-up of hydrogen, mainly in the HGV FCEV
market.
IP Protection Risk
As described in the Product section above, Powerhouse is
adopting a dual route of IP protection via a family of patents and
maintaining secrecy over the control algorithms and chemical
engineering models for the process. The Company has undertaken the
necessary checks to ensure freedom to operate within the process
areas addressed by the DMG technology.
Staffing Risks
The Company has put in place staff retention measures including
training, employee share option schemes and other measures. The
management has extensive links into the UK and international energy
professional community and will use these links to secure staff
through coming growth period.
Financial Risk
- Cashflow risk
The Company manages its cash to ensure creditors are paid in a
timely way and in avoiding, where possible, long term spend
commitments. Cashflow forecasts are produced regularly to monitor
planned forward spend and to assess funding needs in the short, mid
and long term. The Company has managed, and will continue to
manage, outgoings and operating costs within budget and during 2019
project engineering operating costs have been covered by revenues
ultimately received for engineering services.
The Company's current cash balances are aligned with contracted
service and post year end cash inflows from R&D tax credits,
warrant exercises and Peel's Exclusivity fees are expected to meet
all outstanding costs associated with the proposed acquisition of
W2T and also the Company's planned expenditure and ongoing costs
into the fourth quarter of 2020. Further revenues are expected
through the year from operations.
When appropriate, the Company will consider the introduction of
new equity capital or other sources of funding.
Other financial risks are considered as follows:
- Foreign Currency Risk
The execution of the first project does not expose the company
to any foreign currency risk. The Company does not hold any cash in
foreign currencies and there are not yet any planned international
projects, therefore foreign currency value fluctuations are
insignificant. When international contracts begin to be considered,
the Board would examine the likely exposures of each such situation
and determine what action to take to mitigate such risks.
- Interest Rate Risk
The Company does not have any corporate or project related debt
outstanding and deposit rates are currently negligible, so the
Board considers that there is currently no significant risk of any
exposure to interest rate variations.
- Other Financial Risks
The Company considers price risk, liquidity risk and credit risk
to be negligible in relation to their performance and financial
position at this early stage of its development. Prior to entering
into collaboration arrangements with the likes of Peel, or
outsourced service providers to Powerhouse, the Board are cognisant
of the fact that, prior to agreeing to allow the Company to enter
into such arrangements, it is incumbent on them to ensure that they
take a view on the standing and ability to deliver of any such
partners and associates so as to avoid business disruption.
External Risks
The Company is subject to various risks originating from
external events including political, economic, legal, business and
financial conditions. The assessment of these risks, their
evaluation and mitigation are essential parts of the Company's
planning and internal control system.
The following risk factors, which are not exhaustive, are
particularly relevant to our current business activities:
COVID-19
The Company has not been significantly affected by the global
pandemic to date as the majority of work planned has been desk
engineering.
The R&D facilities at Thornton Science Park were temporarily
closed in March 2020 in line with government guidelines.
Fortunately, Powerhouse did not have any pressing activities and
the Company has moved its research activities, feedstock testing
and customer trialing services into the third quarter 2020 under
revised operating protocols.
The Protos project has been largely unaffected by the pandemic
as the majority of ongoing work is desktop-based Engineering.
However, it is expected that construction working practices will
need to be updated to reflect government guidelines.
The company and contractor staff have undertaken certificated
training on Coronavirus Covid-19 measures to follow and social
distancing requirements.
The Contractors will be building into their delivery programmes
the necessary safety precautions inherent in their Covid-19 safe
operating practices to deliver Protos and these will be confirmed
at contract award.
Political Risk - Brexit
The Company is not subject to the various serious implications
as a result of Brexit. The main risk the Company may face as a
result of Brexit is the increase in potential tariffs when trying
to obtain equipment or licenses.
Regulatory Risk
The Company observes various changes in new governments'
regulations within different geographies diligently to ensure that
any regulatory changes are followed to mitigate any significant
risks. This puts the Company in a position to adapt developing
projects to keep up to date with the different necessary
regulations.
I look forward to the next exciting year in the development of
Powerhouse as it grows to become a profitable and growing
Company.
David Ryan
Chief Executive Officer
29 June 2020
STATEMENT OF COMPREHENSIVE INCOME
For The Year Ended 31 December 2019
31 December 31 December
Note 2019 2018
GBP GBP
Revenue 2 - -
Administrative expenses 4 (1,705,184) (2,495,256)
Operating loss (1,705,184) (2,495,256)
Net finance costs 5 (750) (178)
Loss before taxation (1,705,934) (2,495,434)
Income tax credit 6 195,708 144,796
Total comprehensive loss (1,510,226) (2,350,638)
-------------- --------------
Loss per share from continuing operations
(pence) 7 (0.08) (0.15)
Diluted loss per share from continuing 7 not applicable not applicable
operations (pence)
The notes numbered 1 to 26 are an integral part of the financial
information.
STATEMENT OF FINANCIAL POSITION
As At 31 December 2019
Note 2019 2018
GBP GBP
ASSETS
Non-current assets
Intangible fixed assets 8 16,514 -
Tangible fixed assets 9 229 1,679
Investments 10 1 1
Total non-current assets 16,744 1,680
Current Assets
Contract costs 11 114,418 -
Trade and other receivables 12 46,244 63,996
Corporation tax recoverable 6 195,708 144,796
Cash and cash equivalents 13 103,580 840,692
------------ ------------
Total current assets 459,950 1,049,484
Total assets 476,694 1,051,164
------------ ------------
LIABILITIES
Current liabilities
Trade and other payables 14 (489,676) (247,062)
Loans 17 - -
Total current liabilities (489,676) (247,062)
Net (liabilities)/assets (12,982) 804,102
------------ ------------
EQUITY
Share capital 18 12,922,727 12,395,943
Share premium 18 48,778,651 48,773,510
Accumulated deficit 19 (61,714,360) (60,365,351)
Total (deficit)/surplus (12,982) 804,102
------------ ------------
The financial statements of Powerhouse Energy Group Plc, Company
number 03934451, were approved by the Board of Directors and
authorised for issue on 29 June 2020 and signed on its behalf
by:
David Ryan
Director
The notes numbered 1 to 26 are an integral part of the financial
information.
STATEMENT OF CASHFLOWS
For The Year Ended 31 December 2019
2019 2018
GBP GBP
Cash flows from operating activities
Operating Loss (1,705,184) (2,495,256)
Adjustments for:
Share based payments 693,142 553,959
Depreciation 1,450 1,179
Changes in working capital:
Decrease/(Increase) in contract costs (114,418) -
Decrease/(Increase) in trade and other
receivables 17,752 24,499
Increase/(Decrease) in trade and other
payables 242,614 6,206
Tax credits received 144,796 -
Net cash used in operations (719,848) (1,909,413)
----------- -----------
Cash flows from investing activities
Purchase of intangible fixed assets (16,514) -
Purchase of tangible fixed assets - (257)
----------- -----------
Net Cash flows from investing activities (16,514) (257)
----------- -----------
Cash flows from financing activities
Proceeds from issue of shares - 3,402,469
Net finance costs (750) (178)
Loans repaid - (1,402,155)
Net cash flows from financing activities (750) 2,000,136
----------- -----------
Net increase/(decrease) in cash and cash equivalents (737,112) 90,466
Cash and cash equivalents at beginning
of year 840,692 750,226
Cash and cash equivalents at end of year 103,580 840,692
----------- -----------
The notes numbered 1 to 26 are an integral part of the financial
information.
STATEMENT OF CHANGES IN EQUITY
For The Year Ended 31 December 2019
Ordinary Deferred Deferred Deferred
Share shares shares shares Accumulated
capital Share premium (0.5p) (4.5p) (4.0p) deficit Total
GBP GBP GBP GBP GBP GBP GBP
Balance at 1 January
2018 5,684,357 48,681,792 1,942,483 781,808 389,494 (58,281,622) (801,688)
Transactions with equity
parties:
- Share issue 1,078,432 - - - - - 1,078,432
- Share issue 323,723 - - - - - 323,723
- Share issue 576,277 - - - - - 576,277
- Share issue in lieu
of services 89,474 20,526 - - - - 110,000
- Share issue 494,035 - - - - - 494,035
- Share issue 100,000 - - - - - 100,000
- Share issue in lieu
of services 62,525 1,475 - - - - 64,000
- Share issue 30,000 - - - - - 30,000
- Share issue in lieu
of services 60,000 - - - - - 60,000
- Share issue - exercise
options 83,333 69,717 - - - - 153,050
- Share issue 650,000 - - - - - 650,000
- Share issue 50,000 - - - - - 50,000
- Roundings 2 - - - - - 2
- Share based payments - - - - - 266,909 266,909
Total comprehensive
loss - - - - - (2,350,638) (2,350,638)
Balance at 31 December
2018 9,282,158 48,773,510 1,942,483 781,808 389,494 (60,365,351) 804,102
Transactions with equity parties:
- Share issue in lieu
of services 145,695 1,874 - - - - 147,569
- Share issue in lieu
of services 192,408 3,267 - - - - 195,675
- Share issue in lieu
of services 188,681 - - - - - 188,681
Share based payments - - - - - 161,217 161,217
Total comprehensive
loss - - - - - (1,510,226) (1,510,226)
Balance at 31 December
2019 9,808,942 48,778,651 1,942,483 781,808 389,494 (61,714,360) (12,982)
========= ============= ========= ======== ======== ============ ===========
The following describes the nature and purpose of each reserve
within equity:
Share premium Amount subscribed for share capital in excess of nominal value
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 1 to 26 are an integral part of the financial
information.
NOTES TO THE ACCOUNTS
For The Year Ended 31 December 2019
1. accounting policies
Powerhouse Energy Group PLC is a Company incorporated in England
and Wales. The Company is a public limited company quoted on the
AIM market of the London Stock Exchange. The address of the
registered office is 15 Victoria Mews, Mill Field Road, Cottingley
Business Park, Bingley BD16 1PY. The principal activity of the
Company is to continue the development and commercial delivery of
the Distributed Modular Generation (DMG) technology, a proprietary
design which converts calorific waste streams into synthetic gas
(syn-gas). 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
2019 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, unless otherwise stated.
The Company's only UK subsidiary is non-trading and not
material. There are also long-term restrictions on the operations
of the Company's subsidiaries in the US and Switzerland. With these
restrictions in place, the Company is also unable to exert control
over the subsidiaries. As such the Company has claimed exemptions
applicable to it under Companies Act section 405 (2) and 405 (3b)
and IFRS 10 to not present any Consolidated financial statements
for the year ended 31 December 2019.
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.
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, share
based payments (share options and warrants) and going concern are
disclosed within the relevant notes.
1.3. Going concern
The financial statements have been prepared on a going concern
basis, notwithstanding the Company having a total comprehensive
loss of GBP1.51m (2018: GBP2.35m) and net operating cash outflows
of GBP0.72m (2018: 1.91m). However, the Directors believe the going
concern basis to be appropriate for the following reasons:
The Directors have prepared working capital projections which
show that, along with cash balances in hand at 31 December 2019,
the signed agreements for all Directors and certain contractors to
waive any future remuneration or fees for themselves, fees expected
to arise from the commercial contracts agreed or being negotiated,
and support from one of its shareholders, the Company will have
sufficient funding to be able to continue as a going concern.
In relation to the support of one of its shareholders, the
Directors have been provided with a letter of support, where the
said shareholder has indicated to the Directors that he intends,
for at least 12 months from the date of the approval of these
financial statements, to make available a maximum sum of
GBP700,000. In addition, the Directors are also of the opinion that
they can raise further funds as and when required.
The Directors consider that the above matters should enable the
Company to continue in operational existence for the foreseeable
future by meeting its liabilities as they fall due for payment. If
the support of shareholders ceased or the Company was unable to
raise further funds it would need to seek alternative finance in
order to be able to remain as a going concern.
The financial statements do not include the adjustments that
would result if the Company is unable to continue as a going
concern.
1.4. Foreign currency translation
The financial information is presented in sterling which is the
Company's functional currency.
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Monetary assets and liabilities denominated in
foreign currencies are revalued to the exchange rate at date of
settlement or at reporting dates (as appropriate). Exchange gains
and losses resulting from such revaluations are recognised in the
Statement of Comprehensive Income.
Foreign exchange gains and losses are presented in the Statement
of Comprehensive Income within administrative expenses.
1.5. Revenue
The Company provides engineering services for the application of
the DMG Technology, the intellectual property which 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 contract 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.
1.6. Leases
The Company leases property under rental contracts for a 12
month fixed period. Rentals payable under the leases are charged in
the profit and loss account on a straight line basis over the lease
term.
1.7. Finance expenses
The effective interest method is a method of calculating the
amortised cost of a financial liability and of allocating interest
expense over the relevant period. The effective interest rate is
the rate that exactly discounts estimated future cash payments
through the expected life of the financial liability, or, where
appropriate, a shorter period, to the net carrying amount on
initial recognition.
1.8. 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.
1.9. Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated
depreciation. Cost represents the cost of acquisition or
construction, including the direct cost of financing the
acquisition or construction until the asset comes into use.
Depreciation on property, plant and equipment is provided to
allocate the cost less the residual value by equal instalments over
their estimated useful economic lives of 3 years, once the asset is
complete.
The expected useful lives and residual values of property, plant
and equipment are reviewed on an annual basis and, if necessary,
changes in useful life or residual value are accounted for
prospectively.
1.10. Intangible assets
Costs associated with patent applications are capitalised in the
year of spend and amortised over their estimated useful lives
commencing from the date of patent approval.
1.11. Other non-current assets
Other non-current assets represent investments in subsidiaries.
The investments are carried at cost less accumulated impairment.
Cost was determined using the fair value of shares issued to
acquire the investment.
1.12. Financial assets
The Company classifies financial assets as loans and receivables
within current assets, except for maturities greater than 12 months
after the balance sheet date. These are classified as noncurrent
assets. Assets are initially recognised at fair value plus
transaction costs. Loans and receivables are subsequently carried
at amortised cost using the effective interest rate method.
1.13. Contract costs
The Company recognises costs incurred in fulfilling contracts
with customers that are directly associated with the contract as an
asset if those costs are expected to be recoverable. Contract costs
are amortised on a basis consistent with the transfer of goods and
services to which the asset relates.
1.14. Trade and other receivables
Trade receivables are initially recognised at fair value.
Subsequently they are carried at amortised cost less any provision
for impairment.
1.15. Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call
deposits and are recognised and subsequently carried at fair
value.
1.16. 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.
1.17. Financial liabilities
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.
1.18. Adoption of new and revised standards
(i ) New and amended standards adopted by the Company
New and amended standards for the current period and effective
from 1 January 2019 have been applied by the Company,
including:
-- Annual Improvements to IFRS Standards 2015-2017 Cycle
-- Prepayment Features with Negative Compensation (Amendments to IFRS 9)
-- Long-term Interests in Associates and Joint Ventures (Amendments to IAS 28)
-- Plan Amendment, Curtailment or Settlement (Amendments to IAS 19)
-- IFRS 16 'Leases'
There are no transition adjustments relating to the adoption of
these standards.
(ii) Standards issued but not yet effective
There were a number of standards and interpretations which were
in issue at 31 December 2019 but were not effective at 31 December
2019 and have not been adopted for these Financial Statements. The
Directors have assessed the full impact of these accounting changes
on the Company. To the extent that they may be applicable, the
Directors have concluded that none of these pronouncements will
cause material adjustments to the Company's financial statements.
They may result in consequential changes to the accounting policies
and other note disclosures. The new standards will not be early
adopted by the Company and will be incorporated in the preparation
of the Company financial statements from the effective dates noted
below.
Effective from 1 January 2020:
-- Definition of a Business (Amendments to IFRS 3)
-- Definition of Material (Amendments to IAS 1 and IAS 8)
-- Amendments to References to the Conceptual Framework in IFRS Standards
Effective from 1 January 2021:
-- IFRS 17 'Insurance Contracts'
There are no other IFRSs or IFRIC interpretations that are not
yet effective that would be expected to have a material impact on
the Company.
1.19. Impairment
(i) Impairment review
At each balance sheet date, the carrying amounts of assets are
reviewed to determine whether there is any indication that those
assets have suffered an impairment loss. An impairment loss is
recognised whenever the carrying amount of an asset or its cash
generating unit exceeds its recoverable amount. Impairment losses
recognised in respect of cash generating units are allocated first
to reduce the carrying amount of any goodwill allocated to cash
generating units and then to reduce the carrying amount of the
other assets in the unit on a pro-rata basis. A cash generating
unit is the group of assets identified on acquisition that generate
cash inflows that are largely independent of the cash inflows from
other assets or groups of assets. The recoverable amount of assets
or cash generating units is the greater of their fair value less
costs to sell and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to
the asset. For an asset that does not generate largely independent
cash inflows, the recoverable amount is determined for the cash
generating unit to which the asset belongs.
(ii) Reversals of impairments
An impairment loss in respect of goodwill is not reversed. In
respect of other assets, an impairment loss is reversed if there
has been a change in the estimates used to determine the
recoverable amount.
An impairment loss is reversed only to the extent that the
asset's carrying amount does not exceed the carrying amount that
would have been determined, net of depreciation or amortisation, if
no impairment loss had been recognised.
1.20. Share based payments
Share based payments are made to employees and third parties and
all are equity settled.
(i) Third party provision of services
a) Via issue of shares
Contractors receive remuneration in the form of share-based
payments, whereby services are provided and settled by the issue of
shares. The cost of equity settled transactions is determined at
the fair value of the services provided, based upon invoiced
amounts or formal agreements in place with suppliers.
b) Via issues of share warrants
The Company also issues share warrants to third parties in
relation to services provided by suppliers. The cost of equity
settled transactions is determined at the fair value of the
services provided, based upon invoiced amounts or formal agreements
in place with suppliers. Where no fair value of services can be
directly obtained, the fair value at the grant date is determined
using the Black and Scholes valuation model. At each reporting date
the Company revises its estimates of the number of options that are
likely to be exercised with any adjustment recognised in the income
statement.
(ii) Directors and employees
c) Via issues of share options
The Company has issued share options to Directors and employees
through approved and unapproved option plans. The fair value of
options issued is determined at the date of grant and is recognised
as an expense in the Income Statement. The fair value at the grant
date is determined using the Black and Scholes valuation model. At
each reporting date the Company revises its estimates of the number
of options that are likely to be exercised with any adjustment
recognised in the income statement.
Where share-based payments give rise to the issue of new share
capital, the proceeds received by the Company are credited to share
capital and share premium when the share entitlements are
exercised.
1.21. Segmental reporting
An operating segment is a component of the Company:
-- that engages in business activities from which it may earn
revenues and incur expenses (including revenues and expenses
relating to transactions with other components of the Company);
-- whose operating results are reviewed regularly by the
Company's chief decision maker to make decisions about resources to
be allocated to the segment and assess its performance; and
-- for which discrete financial information is available.
1.22. Research and development
An internally generated intangible asset arising from
development is only recognised where all of the following have been
demonstrated: (i) the technical feasibility of completing the
asset; (ii) the intention to complete the asset and the ability to
use or sell it; (iii) the availability of resources to complete the
asset; and (iv) the ability to reliably measure the cost
attributable to the asset during its development.
In all other instances research and development expenditure is
recognised as an expense as incurred. Development costs previously
recognised as an expense are not recognised as an asset in a
subsequent period.
2. Revenue
During the year, the Company has carried out work and incurred
costs on a customer contract. As at the year end, performance
obligations requisite for revenue recognition had not yet been
satisfied and hence no revenue has been recognized in these
financial statements. The costs associated with the contract are
recognized as a contract costs asset and held on the balance sheet
(see note 11).
3. Staff costs
2019 2018
GBP GBP
Directors' fees 313,500 289,711
Wages and salaries - 26,207
Social security costs 40,365 29,987
Pensions 12,750 1,026
Other staff costs - 7,081
------- -------
366,615 354,012
======= =======
The number of average monthly employees (including Directors not
paid via payroll) are as follows:
2019 2018
GBP GBP
Management 4 5
Research and development - 1
---- ----
Total 4 6
---- ----
The total number of employees as at 31 December 2019 (including
Directors not paid via payroll) was 4 (2018: 5).
4. Administrative expenses
Included in administrative expenses are: 2019 2018
GBP GBP
Lease charges 17,480 16,989
Research and development costs 419,333 673,299
Depreciation 1,450 1,179
Share issue fees - 116,218
Share based payments 693,142 553,959
Auditor's remuneration for audit services:
Fees payable to the Company's auditor for
the audit of the Company's annual financial
statements 20,000 20,000
Fees payable to the Company's auditor and
their associates for other services: 1,000 1,000
Non-audit fees paid to auditors
Taxation advisory and compliance services 19,571 14,480
There are no other fees paid to the Company's auditor other than
those disclosed above.
5. Net finance costs
2019 2018
GBP GBP
Bank and other interest payable 945 178
Interest receivable (195) -
------ ----
750 178
====== ====
6. Income tax and deferred tax
As the Company incurred a loss, no current tax is payable (2018:
GBPnil). In addition, as there is no certainty about future profits
from which accumulated tax losses could be utilised, accordingly no
deferred tax asset has been recognised. The Company has submitted a
claim for research and development tax credits relating to the 2019
tax year and amounting to GBP195,708 (2018: GBP144,796) which has
been recognised in the accounts. Accumulated tax losses amount to
an estimated GBP11 million (2018: GBP9.5 million) and reflect tax
losses submitted in tax returns and arising during the period less
any relief taken for research and development credits. The tax
credit rate is lower (2018: lower) than the standard rate of tax.
Differences are explained below.
2019 2018
GBP GBP
Current tax
Loss before taxation 1,705,934 2,495,434
Tax credit at standard UK corporation tax rate
of 19% (2018: 19%) 324,128 474,132
Effects of:
Expenses not deductible for tax purposes (7,644) -
Research and development tax credits claimed 195,708 144,796
Deferred tax asset not recognised (316,484) (474,132)
Income tax credit 195,708 144,796
7. Loss per share
2019 2018
Total comprehensive loss (GBP) (1,510,226) (2,350,638)
Weighted average number of shares 1,900,547,410 1,541,719,887
Loss per share in pence (0.08) (0.15)
Diluted loss per share in pence not applicable not applicable
As at 31 December 2019 and 2018, the share options and warrants
in issue are not considered to have any dilutive effect in
accordance with IAS 33.
Shares issued since the year end are disclosed in note 25.
8. Intangible fixed assets
Patent costs
GBP
Cost
At 1 January 2019 -
Additions 16,514
At 31 December 2019 16,514
-----------------
Accumulated amortisation
At 1 January 2019 -
Charge for the year -
At 31 December 2019 -
Carrying amount
At 31 December 2019 16,514
-----------------
At 31 December 2018 -
-----------------
9. Tangible fixed assets
Property,
plant and
equipment
GBP
Cost
At 1 January 2019 6,868
Additions -
At 31 December 2019 6,868
----------------
Accumulated depreciation
At 1 January 2019 5,189
Charge for the year 1,450
At 31 December 2019 6,639
Carrying amount
At 31 December 2019 229
----------------
At 31 December 2018 1,679
10. Investments
Investments relate to costs of investments in subsidiary
undertakings, namely in Powerhouse Energy, Inc, Pyromex AG and
Powerhouse Energy UK Limited. 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. Powerhouse Energy UK Limited is a wholly owned UK based
dormant company.
2019 2018
GBP GBP
Investment - Cost 48,947,155 48,947,155
Accumulated impairment (48,947,154) (48,947,154)
1 1
------------ ------------
The registered address of Powerhouse Energy Inc is 145 N Sierra
Madre Blvd Pasadena, CA 91107, USA.
The registered address of Pyromex AG is Chollerstrasse 3,
CH-6300, Zug, Switzerland.
The registered address of Powerhouse Energy UK Limited is 15
Victoria Mews, Mill Field Road, Cottingley Business Park, Bingley
BD16 1PY.
11. Contract costs
2019 2018
GBP GBP
Contract costs 114,418 -
114,418 -
------- ----
Contract costs assets relate to costs arising on engineering
contracts where the Company has not yet completed performance
obligations which are typically met by the submission of reports,
the transfer of data or on longer contracts via the completion of
milestones in accordance with the relevant contract.
Revenue is expected to be recognised and be settled in full in
relation to the contact costs assets during the next 12 months.
12. Trade and other receivables
2019 2018
GBP GBP
Other receivables 23,410 31,288
Prepayments and accrued income 22,834 32,708
46,244 63,996
------ ------
13. Cash and cash equivalents
2019 2018
GBP GBP
Cash balances 103,580 840,692
103,580 840,692
------- -------
14. Trade and other payables
2019 2018
GBP GBP
Trade payables 98,660 74,053
Other creditors and accruals 391,016 157,907
Other taxes - 15,102
489,676 247,062
------- -------
Capital commitments not accrued for at the year end amounted to
GBPnil (2018: GBPNil).
15. Financial assets and financial liabilities
Financial assets 2019 2018
GBP GBP
Financial assets at amortised cost:
- Other financial assets at amortised
cost 356,370 208,792
- Cash and cash equivalents 103,580 840,692
459,950 1,049,484
------- ---------
Financial liabilities 2019 2018
GBP GBP
Liabilities at amortised cost
- Trade and other payables 489,676 247,062
489,676 247,062
------- -------
16. Leases
Future minimum rentals payable under non-cancellable leases are
as follows:
2019 2018
GBP GBP
Amounts payable:
Within one year 1,429 1,429
1,429 1,429
----- -----
17. Loans
2019 2018
GBP GBP
At 1 January - 1,402,155
New loans raised - -
Loans repaid - (1,402,155)
Interest expense - -
Interest paid - -
---- -------------
- -
Loans classified as:
Current - -
Non-current - -
18. Share capital & share premium
(i) Number of shares
0.5 p Ordinary 0.5 p Deferred 4.5 p Deferred 4.0 p Deferred
shares shares shares shares
Shares at 1 January
2018 1,136,872,014 388,496,747 17,373,523 9,737,353
Issue of shares 719,559,607 - - -
Shares at 31 December
2018 1,856,431,621 388,496,747 17,373,523 9,737,353
-------------- -------------- -------------- --------------
Issue of shares 105,356,804 - - -
Shares at 31 December
2019 1,961,788,425 388,496,747 17,373,523 9,737,353
-------------- -------------- -------------- --------------
(ii) Value in GBP
0.5 p Ordinary 0.5 p Deferred 4.5 p Deferred 4.0 p Deferred Share Capital Share Premium
shares shares shares shares
GBP GBP GBP GBP GBP GBP
At 1 January 2018 5,684,357 1,942,483 781,808 389,494 8,798,142 48,681,792
Issue of shares 3,597,801 - - - 3,597,801 91,718
At 31 December
2018 9,282,158 1,942,483 781,808 389,494 12,395,943 48,773,510
-------------- -------------- -------------- -------------- ------------- -------------
Issue of shares 526,784 - - - 526,784 5,141
At 31 December
2019 9,808,942 1,942,483 781,808 389,494 12,922,727 48,778,651
-------------- -------------- -------------- -------------- ------------- -------------
All ordinary shares of the Company rank pari-passu in all
respects.
None of the deferred shares carry any voting rights or 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 GBP100 has been paid in respect of each ordinary share.
On 5 February and 25 April 2018, the Company issued 215,686,275
and 64,744,645 ordinary shares of 0.5p respectively at the agreed
price of 0.5p in final settlement of the outstanding loan balance
due to Hillgrove of GBP1,402,155.
On 25 April 2018 the Company issued 115,255,355 ordinary shares
of 0.5p each at a price of 0.5p amounting to GBP576,277 before
issue costs.
On 23 May 2018 and 14 June 2018, the Company issued 10,000,000
and 7,894,737 ordinary shares of 0.5p each at a price of 0.5p and
0.76p respectively in settlement of services provided.
On 13 July 2018 the Company issued 98,907,004 ordinary shares of
0.5p each at a price of 0.5p each amounting to GBP494,035 before
issue costs.
On 3 August 2018 the Company issued 20,000,000 ordinary shares
of 0.5p each at a price of 0.5p each amounting to GBP100,000 before
issue costs.
On 14 August 2018 the Company issued 797,607 and 11,707,317
ordinary shares of 0.5p each at a price of 0.5015p and 0.5125p each
respectively in settlement of services provided.
On 17 August 2018 the Company issued 6,000,000 ordinary shares
of 0.5p each at a price of 0.5p each amounting to GBP30,000 before
issue costs.
On 22 October 2018 the Company issued 12,000,000 ordinary shares
of 0.5p each at a price of 0.5p each in settlement of services
provided.
On 26 October 2018 the Company issued 16,666,667 ordinary shares
of 0.5p each at a price of 0.6p each amounting to GBP100,000 before
issue costs.
On 10 December 2018 the Company issued 130,000,000 ordinary
shares of 0.5p each at a price of 0.5p each amounting to GBP650,000
before issue costs.
On 14 December 2018 the Company issued 10,000,000 ordinary
shares of 0.5p each at a price of 0.5p each amounting to GBP50,000
before issue costs.
On 1 April 2019 the Company issued 23,023,750, 4,306,802 and
1,808.333 ordinary shares of 0.5p each at prices of 0.5p, 0.5015p
and 0.6p each respectively in settlement of services provided.
On 15 July 2019 the Company issued 35,215,000 and 3,266,667
ordinary shares of 0.5p each at prices of 0.5p and 0.6p each
respectively in settlement of services provided.
On 21 November 2019 the Company issued 37,736,252 ordinary
shares of 0.5p each at a price of 0.5p each in settlement of
services provided.
19. Accumulated deficit
2019 2018
GBP GBP
As at 1 January (60,365,351) (58,281,622)
Loss for the year (1,510,226) (2,350,638)
Share based payments 161,217 266,909
At 31 December (61,714,360) (60,365,351)
------------ ------------
20. Share based payments
The expense recognized for share based payments during the year
is shown in the following table:
2019 2018
GBP GBP
Share based payment charge recognised in Profit
or Loss
Expense arising from equity-settled share-based
payment transactions:
- Share options for Directors and employees 40,229 168,399
- Warrants for third party services - 33,885
- Shares issued for third party services 652,913 351,675
Total share based payment charge in Income
Statement 693,142 553,959
Other share based payment movement
Exercise of share options for Directors and
employees - (53,050)
Shares issued for third party services (531,925) (234,000)
--------- ---------
Total share based payment 161,217 266,909
--------- ---------
The was one modification made in 2018 for an award of warrants
as disclosed in note 20.2. for the warrants awarded for third party
services on 4 July 2017.
The were no liabilities recognised in relation to share based
payment transactions.
20.1 Share options for Directors and employees
The Company has put in place various options schemes for
Directors and employees as follows:
On 8 December 2014, the Company 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.
On 7 March 2016, the Company granted 15,000,000 options over
ordinary shares to the Board, under the Powerhouse Energy Group plc
Unapproved Share Option Plan 2011. The options may be exercised
between the grant date and the fifth anniversary of the grant date
and will lapse if not exercised during that period.
On 6 March 2018, the Company granted 32,100,000 options over
ordinary shares to employees, including a Board member, under the
Powerhouse Energy Group PLC 2018 EMI Option Scheme. The options
vest to the employees over a period of 24 months and are
exercisable between the relevant vesting dates and the tenth
anniversary of the grant date and will lapse if not exercised
during that period. These options had all been exercised or
forfeited by 31 December 2019.
On 6 March 2018, the Company granted 60,000,000 options over
ordinary shares to Board members (apart from Robert Keith Allaun
who was awarded share options under the Powerhouse Energy Group PLC
2018 EMI Option Scheme as explained above), under the Powerhouse
Energy Group PLC 2018 non-employee Share Option Plan. The options
vest to the Board members over a period of 24 months and are
exercisable between the relevant vesting dates and the tenth
anniversary of the grant date and will lapse if not exercised
during that period.
The movement of share options in the year are as follows:
2019 2019 2018 2018
Number WAEP(pence Number WAEP (pence)
)
Outstanding at 1
January 99,333,333 0.83 26,000,000 1.49
Granted during the
year - - 92,100,000 0.6
Forfeited during
the year (24,333,333) 1.03 (2,100,000) 0.6
Exercised during
the year - - (16,666,667)* 0.6
------------- ----------- -------------- -------------
Outstanding at 31
December 75,000,000 0.77 99,333,333 0.83
------------- ----------- -------------- -------------
Exercisable at 31
December 67,083,333 0.79 60,583,329 0.98
*The weighted average share price at the date of exercise of
these options was 0.44p.
The weighted average remaining contractual life for the share
options outstanding as at 31 December 2019 was 7.1 years (2018: 7.8
years)
No share options were granted during the year. The weighted
average fair value of share options granted in 2018 was 0.32p.
The range of exercise prices for options outstanding at the year
end was 0.6p to 2.5p (2018: 0.6p to 2.5p).
The number of options outstanding at 31 December 2019 are as
follows:
Date Granted Share Exercised Forfeited At 31 Dec Exercise Exercise
of grant price 2019 price period
on grant
9 Dec 2014
8 Dec until 8
2014 11,000,000 1.875p - (5,000,000) 6,000,000 2.5p Dec 2024
8 Mar 2016
7 Mar until
2016 15,000,000 0.55p - (6,000,000) 9,000,000 0.75p 7 Mar 2021
7 Mar 2018
6 Mar until
2018 32,100,000 0.57p (16,666,667) (15,433,333) - 0.6p 6 Mar 2028
7 Mar 2018
6 Mar until
2018 60,000,000 0.57p - - 60,000,000 0.6p 6 Mar 2028
Total 118,100,000 (16,666,667) (26,433,333) 75,000,000
No share options expired in the year.
The estimated fair value of the options issued was calculated by
applying the Black-Scholes option pricing model. The assumptions
used in the calculation were as follows:
8 December 2014 7 March 2016 6 March 2018
Options in issue 31
December 2019 6,000,000 9,000,000 60,000,000
Exercise price 2.5p 0.55p 0.6p
Expected volatility 127.56% 127.56% 70.00%**
Contractual life 10 years 5 years 10 years
Risk free rate 2% 2% 1.49%
Estimated fair value
of each option 1.79p 0.45p 0.32p*
* the calculation applies a 25% discount for small companies
** expected future volatility of 70% based on historic
volatility and the volatilities of similar sized companies.
20.2 Warrants for third party services
The Company has issued warrants in respect of services provided
by consultants as part of their service arrangements. It has also
issued warrants to participating shareholders in respect of certain
fund raises. No share based payment charge is recognised for
warrants issued to participating shareholders as they are outside
of the scope of IFRS 2.
Details of warrants which have been issued are as follows:
On 4 July 2017, the Company granted 5,000,000 warrants to a
consultant. The options may be exercised between the grant date and
the third anniversary of the grant date and will lapse if not
exercised during that period. At the date of grant the share price
was 0.85p and the warrants have an exercise price of 1p per share.
During 2018, the Board approved a reduction in the exercise price
to 0.5p. The impact of the modification of the exercise price has
been recognised in the share based payment charge for the year. The
incremental fair value resulting from this was GBP14,268 as
measured using the Black-Scholes model. They adjusted inputs are as
disclosed below.
On 13 July 2018 and 3 August 2018, the Company granted one
warrant for every two shares subscribed for to subscribers in fund
raises confirmed on those dates. The July grant also included
warrants granted to the Company's broker as part of its service
arrangement in relation to the fund raise. Warrants of 54,343,852
(of which 4,940,350 were granted to the company's broker) and
10,000,000 respectively were granted. The options may be exercised
between the grant date and the second anniversary of the grant date
and will lapse if not exercised during that period. At the date of
grant the share price was 0.44p and 0.31p respectively, and the
warrants have an exercise price of 0.5p per share.
On 10 December 2018, the Company granted 7,800,000 to the
Company's broker as part of its service arrangement in relation to
the fund raise arising on that date. The options may be exercised
between the grant date and the second anniversary of the grant date
and will lapse if not exercised during that period. At the date of
grant the share price was 0.57p and the warrants have an exercise
price of 0.5p per share.
Warrants in respect of services provided:
The movement of warrants issued for share based payments in the
year are as follows:
2019 2019 2018 2018
Number WAEP (pence) Number WAEP (pence)
Outstanding at 1 January 17,740,350 0.5 5,000,000 1*
Granted during the year - - 12,740,350 0.5
Forfeited during the - - - -
year
Exercised during the - - - -
year
----------- ------------- ----------- -------------
Outstanding at 31 December 17,740,350 0.5 17,740,350 0.5
----------- ------------- ----------- -------------
Exercisable at 31 December 17,740,350 0.5 17,740,350 0.5
* The exercise price of all the outstanding warrants outstanding
at 1 January 2018 was modified in the year as explained above.
The weighted average remaining contractual life for the share
warrants outstanding as at 31 December 2019 was 0.7 years (2018:
1.7 years)
No share warrants were granted during the year. The weighted
average fair value of share warrants granted in 2018 was 0.15p.
The exercise price for warrants outstanding at the year end was
0.5p (2018: 0.5p).
The number of warrants, which have been included for share based
payment purposes, outstanding at 31 December 2019 are as
follows:
Date of Granted Share Exercised Forfeited At 31 Dec Exercise Exercise period
grant price 2018 price
on grant
5 July 2017
until
4 July 2017 5,000,000 0.85p - - 5,000,000 0.5p 4 July 2020
14 July 2018
13 July until
2018 4,940,350 0.44p - - 4,940,350 0.5p 13 July 2020
11 Dec 2018
until 10 Dec
10 Dec 2018 7,800,000 0.57p - - 7,800,000 0.5p 2020
Total 17,740,350 - - 17,740,350
The Company is required to assess the fair value of instruments
issued in respect of services received, with such value charged to
the Income Statement. The estimated fair value of the warrants
issued during the year was calculated by applying the Black-Scholes
option pricing model. The assumptions used in the calculation were
as follows:
Warrants issued for 4 July 2017 13 July 2018 10 Dec 2018
services
In issue 31 December
2019 5,000,000 4,940,350 7,800,000
Exercise price 0.5p** 0.5p 0.5p
Expected volatility*** 70.00% 70.00% 70.00%
Contractual life 3 years 2 years 2 years
Risk free rate 1.31% 1.27% 1.27%
Estimated fair value
of each option* 0.39p** 0.11p 0.18p
* the calculation applies a 25% reduction for small
companies
** after modification of exercise price as explained above
*** expected future volatility of 70% based on historic
volatility and the volatilities of similar sized companies
Warrants issued to participating shareholders
Warrants issued to participating shareholders are outside the
scope of IFRS 2 and no share based payment charges have been
recognised on them. On initial recognition the warrants' cost was
deducted from equity as it represents the cost of shares issued to
investors. As the agreements had a fixed-for-fixed requirement,
they are also recognised as equity at the same time. As such, there
is nil net impact on equity and has not been included in the
statement of changes in equity.
The number of warrants issued to participating shareholders,
which have not been included for share based payment purposes,
outstanding at 31 December 2019 are as follows:
Date of Granted Share Exercised Forfeited At 31 Dec Exercise Exercise
grant price 2019 price period
on grant
14 July
2018 until
13 July 13 July
2018 49,403,502 0.44p - - 49,403,502 0.5p 2020
3 Aug 2018 10,000,000 0.31p (10,000,000) - - 0.5p -
Total 59,403,502 (10,000,000) - 49,403,502
The estimated fair value of the warrants issued was calculated
by applying the Black-Scholes option pricing model. The assumptions
used in the calculation were as follows:
Warrants issued to participating 13 July 2018
shareholders
In issue 31 December
2019 49,403,502
Exercise price 0.5p
Expected volatility** 70.00%
Contractual life 2 years
Risk free rate 1.27%
Estimated fair value
of each option* 0.11p
* the calculation applies a 25% reduction for small
companies
** expected future volatility of 70% based on historic
volatility and the volatilities of similar sized companies
All warrants
The number of all warrants outstanding at 31 December 2019 are
as follows:
Date of Granted Share Exercised Forfeited At 31 Dec Exercise Exercise
grant price 2019 price period
on grant
5 July 2017
until
4 July 2017 5,000,000 0.85p - - 5,000,000 0.5p 4 July 2020
14 July 2018
13 July until
2018 54,343,852 0.44p - - 54,343,852 0.5p 13 July 2020
3 Aug 2018 10,000,000 0.31p (10,000,000) - - 0.5p -
11 Dec 2018
until 10
10 Dec 2018 7,800,000 0.57p - - 7,800,000 0.5p Dec 2020
Total 77,143,852 (10,000,000) - 67,143,852
20.3 Share issue third party services
The Company issued shares to settle services to some of its
service providers. The fair value of the share based payments
charge were based on invoiced amounts or amounts agreed to be paid
under a formal agreement of the Company.
21. Material risks
The Company is subject to various risks relating to political,
economic, legal, social, industry, business and financial
conditions. Risk assessment and evaluation is an essential part of
the Company's planning and an important aspect of the Company's
internal control system. The Company's approach to these risks is
detailed in the Strategic Report.
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 current cash reserves and funding plans forward are considered
sufficient to enable the Company to meet its liabilities as they
fall due. Please refer to note 1.3 for further information
regarding going concern.
22. Directors' remuneration and share interests
The Directors who held office at 31 December 2019 had the
following interests, including any interests of a connected party
in the ordinary shares of the Company:
Number of ordinary Percentage
shares of 0.5p each of voting rights
---------------------------- ---------------------- -----------------
William Cameron Davies 1,200,000 <0.1
David John Ryan 11,075,000 0.56
James John Pryn Greenstreet 1,000,000 <0.1
Nigel Brent Fitzpatrick 103,459 <0.1
The remuneration of the Directors of the Company paid or payable
for the year or since date of appointment, if later, to 31 December
2019 is:
2019 2019 2019 2019 2019 2018
GBP GBP GBP GBP GBP GBP
Salary/Fee Pension Share based Other Total Total
payments Benefits
----------------------------- ----------- -------- ------------ --------- ------- -------
William Cameron Davies* 50,000* - 12,378 - 62,378 80,945
Robert Keith Allaun 70,000 - - - 70,000 239,842
Nigel Brent Fitzpatrick* 30,000* - 7,426 - 37,426 59,708
James John Pryn Greenstreet* 30,000* - 7,426 - 37,426 59,708
David John Ryan* 133,500* 12,750 12,997 - 159,247 51,988
*The Directors implemented a fee waiver for their services from
1 April 2019 with compensation applying once certain conditions are
met. These are expected to materialize during 2020 and as such the
amounts disclosed above include provision for the expected
compensation.
Total remuneration includes share based payments arising from
the issue of options amounting to GBP40,229 (2018: GBP195,398).
There have been no awards of shares to Directors under long term
incentive plans during the year.
William Cameron Davies, Nigel Brent Fitzpatrick and James John
Pryn Greenstreet have service contracts which can be terminated by
providing three months' written notice. David John Ryan has a
service contract which can be terminated by providing six months'
written notice. Prior to his resignation, Robert Keith Allaun held
a service contract which could be terminated by providing six
months' written notice.
Robert Keith Allaun's services amounting to GBPNil (2018:
GBP11,250) were provided via Critical Point Solutions Limited and
relate wholly to his services as a Director of the Company. He was
employed directly by the Company for his 2019 services and for the
remainder of his 2018 services. Mr Allaun resigned from the Company
on 1 February 2019.
David John Ryan's service contract commenced on 1 February 2019
with payments applying from 1 April 2019. His services to 31 March
2019 were provided via Nayr Consultants Limited, an engineering
consultancy. Details of amounts paid are provided in Note 23
Related Parties. This does not include any amount for services as a
Director of the Company.
Share options held by the Directors who served during the year
are as follows:
Options at Forfeited Exercised Options Exercise Earliest and
1/1/19 at 31/12/19 price latest date of
exercise
---------------------------- ---------- ------------ --------- ------------ -------- -----------------
Options granted 8
Dec 2014
William Cameron Davies - - - - - -
Robert Keith Allaun 5,000,000 (5,000,000) - - 2.5p 9/12/14 - 8/12/24
Nigel Brent Fitzpatrick 3,000,000 - - 3,000,000 2.5p 9/12/14 - 8/12/24
James John Pryn Greenstreet 3,000,000 - - 3,000,000 2.5p 9/12/14 - 8/12/24
David John Ryan - - - - - -
Options at Forfeited Exercised Options Exercise Earliest and
1/1/19 at 31/12/19 price latest date of
exercise
---------------------------- ---------- ------------ --------- ------------ -------- -----------------
Options granted 7
March 2016
William Cameron Davies - - - - - -
Robert Keith Allaun 6,000,000 (6,000,000) - - 0.75p 8/3/16 - 7/3/21
Nigel Brent Fitzpatrick 5,000,000 - - 5,000,000 0.75p 8/3/16 - 7/3/21
James John Pryn Greenstreet 4,000,000 - - 4,000,000 0.75p 8/3/16 - 7/3/21
David John Ryan - - - - - -
Options Forfeited Exercised Options Exercise Earliest and
at at 31/12/19 price latest date of
1/1/19 exercise
---------------------------- ---------- ------------ --------- ------------ -------- -----------------
Options granted 6
March 2018
William Cameron Davies 15,000,000 - - 15,000,000 0.6p 1/10/18 - 6/3/28
Robert Keith Allaun 13,333,333 (13,333,333) - - 0.6p 7/3/18 - 6/3/28
Nigel Brent Fitzpatrick 12,000,000 - - 12,000,000 0.6p 7/3/18 - 6/3/28
James John Pryn Greenstreet 12,000,000 - - 12,000,000 0.6p 7/3/18 - 6/3/28
David John Ryan 21,000,000 - - 21,000,000 0.6p 7/3/18 - 6/3/28
Highest Paid Director
David John Ryan was the highest paid Director in the year. There
were no shares received or receivable by him in respect of
qualifying services under long term incentive schemes.
23. Related parties
Nayr Consultants Limited, an engineering consultancy services
company, wholly owned by David John Ryan and his associates,
provided engineering services to the Company during the year
amounting to GBP56,000 (2018: GBP154,133). Amounts outstanding at
year end for services provided and included in creditors and
accruals amounted to GBPNil (2018: GBP31,000).
Engsolve Limited, an engineering solutions company, is a related
party due to a Director's family member being part of its key
management personnel. Engsolve provided engineering services to the
Company during the year amounting to GBP239,137 (2018: GBP361,187).
Amounts outstanding at year end for services provided and included
in these accounts amounted to GBP26,449 (2018: GBP6,614).
Transactions with other related parties were conducted on an
arms' length basis and amounted to GBPnil (2018: GBPnil).
24. Segmental reporting
The Company comprises a single operating segment being a
development company operating solely within the United Kingdom. As
such the statement of comprehensive income and the statement of
financial position may be used as a report on the segment. No
revenue has been generated up to the reporting date of these
accounts as the equipment was being developed and tested.
25. Events after the reporting period
On 29 January 2020, the Company issued 52,228,139 ordinary
shares of 0.5p each in the Company ("Ordinary Shares") to various
service providers for the settlement of fees. Of these new Ordinary
Shares, 47,732,518 were issued at 0.5p and 4,495,621 were issued at
0.717p in accordance with terms agreed.
On 29 January 2020, the Company issued 5,500,000 ordinary shares
of 0.5p each in the Company ("Ordinary Shares") further to the
exercise of warrants for proceeds amounting to GBP27,500.
On 28 February 2020, the Company issued 25,440,350 ordinary
shares of 0.5p each in the Company ("Ordinary Shares") further to
the exercise of warrants for proceeds amounting to GBP127,202.
On 19 March 2020, the Company issued 3,750,000 ordinary shares
of 0.5p each in the Company ("Ordinary Shares") further to the
exercise of warrants for proceeds amounting to GBP18,750.
On 7 April 2020, the Company issued 7,800,000 ordinary shares of
0.5p each in the Company ("Ordinary Shares") further to the
exercise of warrants for proceeds amounting to GBP39,000.
On 16 April 2020, the Company issued 2,500,000 ordinary shares
of 0.5p each in the Company ("Ordinary Shares") further to the
exercise of warrants for proceeds amounting to GBP12,500.
On 22 April 2020, the Company issued 5,500,000 ordinary shares
of 0.5p each in the Company ("Ordinary Shares") further to the
exercise of warrants for proceeds amounting to GBP27,500.
On 27 May 2020, the Company issued 4,100,000 ordinary shares of
0.5p each in the Company ("Ordinary Shares") further to the
exercise of warrants for proceeds amounting to GBP20,500.
On 9 June 2020, the Company issued 2,003,502 ordinary shares of
0.5p each in the Company ("Ordinary Shares") further to the
exercise of warrants for proceeds amounting to GBP10,017.
On 23 June 2020, the Company issued 1,750,000 ordinary shares of
0.5p each in the Company ("Ordinary Shares") further to the
exercise of warrants for proceeds amounting to GBP8,750.
On 26 June 2020, the Directors of the Company issued a circular
to shareholders detailing the proposed acquisition of the whole of
the share capital of Waste2tricity Limited on a share for share
basis. The acquisition is subject to approval of a waiver of the
obligation of the Concert Party to make a Rule 9 offer under the
Takeover Code. The issue is planned to be voted on at a General
Meeting to be held on 14 July 2020.
If approved, the transaction would result in the issue of
1,437,440,277 shares in the Company to Waste2tricity Limited
shareholders. Waste2tricity Limited has operated as the project
developer of the Company's technology and holds certain UK
development rights. Following discussions with commercial and
funding parties, the Directors consider the acquisition in the
interest of the Company in order to facilitate the commercial roll
out of the Company technology.
As the two companies have been working closely together for a
number of years, the transaction is not expected to significantly
impact how Powerhouse operates going forward except in respect of
the positive impact the transaction is expected to have on forward
roll out of the technology.
In March 2020, an outbreak of Covid-19 caused widespread
disruption to the global economy. We have not yet seen a material
disruption to our business as a result of the Covid-19 outbreak,
however events are rapidly evolving and the Company is closely
monitoring the situation as it develops.
26. Ultimate controlling party
There is no controlling party of the Company.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR EANKNADNEEFA
(END) Dow Jones Newswires
June 30, 2020 02:00 ET (06:00 GMT)
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