Last checked at 9 Oct 2012 07:05
9October2012 PowerHouse Energy Group plc ("PowerHouse", the "Group" or the "Company") Interim results for the six months ended 30 June 2012
PowerHouse Energy Group plc, (AIM: PHE) announces its unaudited results for the six months ended 30 June 2012.
Chairman's Statement
These Interim Results are being announced immediately following the announcement of the results for the year ended 31 December 2011 and represent the first six months of trading of 2012 - a very difficult time for the company. The 2011 Annual Results includes a detailed Chairman's Report and I ask that you review that statement to avoid repetition in this statement.
As you are aware, trading in the company's ordinary share were suspended on 12 April 2012 pending clarification of the company's financial position. I am pleased to advise that following the publication of the 2011 Annual Results and this announcement of the Interim Results, the company expects that the suspension of trading will be lifted and trading its shares will resume.
On 8 May 2012, the company announced that the option to acquire the remaining 70% interest in Pyromex had lapsed. Due to the expiry of the option, Pyromex is no longer accounted for as a subsidiary of the group. These results show the impact of the "loss of control" of Pyromex.
In the last four months since my appointment, we have made every effort to reorganise the company and to begin building in a direction of success. Certain of the Directors and the former directors released all claims to accrued salaries and fees, and we have worked closely with our creditors to reduce and resolve nearly all outstanding debts. We were also able to settle the lawsuit that been pending against the company on satisfactory terms.
As we prepare to launch into the final few months of 2012, we are poised with secure funding, developing strategic relationships, a more agile management structure, specific projects under evaluation and an environment which is in even greater need of the Pyromex Waste-to-Energy solutions.
The Board and I look forward to continuing to work through the challenges which face the company with optimism for the future of PowerHouse Energy Group.
Keith AllaunChairman9 October 2012
For additional information please contact:
PowerHouse Energy Group plcKeith AllaunLevel 3, 8 Cavendish Square | London | W1G OPDPhone: +44 (0)20 7079 4407Email: inquire@powerhousegroup.co.uk
Merchant Securities Limited (Nominated Adviser & Broker) David Worlidge/Simon Clements Phone: +44 (0) 20 7628 2200
Statement of Comprehensive Income
(unaudited) (unaudited) (Audited) Six months Six months Year ended ended ended 30 June 30 June 31 December Note 2012 2011 2011 US$ US$ US$ Revenue 15,805 - 62,379 Cost of sales - (13,319) (73,416) Gross profit / (loss) 15,805 (13,319) (11,037) Administrative expenses (1,511,949) (1,748,270) (7,790,179) Operating loss (1,496,144) (1,761,589) (7,801,216) Finance income 4 - 848 Other income - - - (Loss of control) / Fair value (1,309,296) 6,209,876 6,209,876 gain on step acquisition Equity accounted loss (129,600) - - Finance costs (7,862) (292,307) (310,231) Impairment of non-current assets - (35,000) (33,387,720)
(Loss) / Profit before taxation (2,942,899) 4,120,980 (35,288,443)
Income tax benefit 10,942 - 3,028,883 (Loss) / Profit after taxation (2,931,957) 4,120,980 (32,259,560) Foreign exchange arising on 56,321 - (3,621,791) consolidation Foreign exchange included in 1,095,440 profit and loss arising from loss of control Total comprehensive (expense)/ (1,780,196) 4,120,980 (35,881,351)income Total comprehensive (expense)/ income attributable to: Owners of the Company (1,224,542) 4,120,980 (13,588,143) Non-controlling interests (555,654) - (22,293,208) Earnings per share (US$) 3 (0.01) 0.03 (0.05)
Diluted earnings per share (US$) 3 (0.01) 0.02 (0.05)
The notes numbered 1 to 6 are an integral part of the interim financial information.
Statement of Changes in Equity
Shares and Accumulated Other Non-controlling Total stock losses reserves interests US$ US$ US$ US$ US$ Balance at 1 January 2011 6,218,365 (5,516,668) - - 701,697 (unaudited) Transactions with equity participants: * Issue of common stock 10,199,941 - - - 10,199,941 * Costs related to issue (1,486,802) - - - (1,486,802) of common stock * Common stock issued for 206,250 - - - 206,250 services received * Equity issued for - - 2,019,736 - 2,019,736 acquisition * Equity reclassification 64,780,459 - (64,780,459) - - arising from reverse takeover * Shares issued for 48,054 - - - 48,054 services received * Acquisition of Pyromex - - - 23,951,661 23,951,661 Total comprehensive income: * Profit after taxation - 4,120,980 - - 4,120,980 Balance at 30 June 2011 79,966,267 (1,395,688) (62,760,723) 23,951,661 39,761,517 (unaudited) Transactions with equity participants: * Costs related to issue (35,000) - - - (35,000) of common stock * Shares issued for 119,438 - - - 119,438 services received * Exercise of warrants 188 - - - 188 Total comprehensive income: * Loss after taxation - (16,695,218) - (19,685,322) (36,380,540) * Foreign exchange arising (1,020,946) (2,600,845) (3,621,791) on consolidation Balance at 31 December 2011 80,050,893 (18,090,906) (63,781,669) 1,665,494 (156,188) (audited) Transactions with equity participants: * Exercise of warrants 67,876 - - - 67,876 * Pyromex, loss of control (1,109,840) (1,109,840) Total comprehensive income: * Loss after taxation - (2,331,486) - (600,471) (2,931,957) * Foreign exchange - - 1,095,441 - 1,095,441 included in profit and loss arising from loss of control * Foreign exchange arising - - 11,504 44,817 56,321 on consolidation Balance at 30 June 2011 80,118,769 (20,422,392) (62,674,724) - (2,978,347) unaudited)
The notes numbered 1 to 6 are an integral part of the interim financial information.
Statement of Financial Position
(unaudited) (unaudited) (audited) As at As at As at 30 June 30 June 31 December Note 2012 2011 2011 US$ US$ US$ ASSETS Non-current assets Intangible assets - 31,247,927 2,062,838 Property, plant and equipment 2,910 7,916,033 1,825,636 Investment in associate 346,046 - - Total non-current assets 348,946 43,232,289 3,888,474 Current Assets Inventory - 719,279 637,601 Trade and other receivables 28,118 237,265 278,384 Cash and cash equivalents 68,317 2,948,543 382,455 Total current assets 96,435 3,905,087 1,298,440 Total assets 445,381 47,137,376 5,186,914 LIABILITIES Non-current liabilities Deferred taxation - (3,822,980) (372,277) Loans 4 (207,022) (420,045) (376,973) Trade and other payables 5 (582,750) (608,692) (777,000) Total non-current liabilities (789,772) (4,851,717) (1,526,250) Current liabilities Loans 4 (366,906) (66,000) (57,996) Trade and other payables 5 (2,267,050) (2,458,142) (3,758,856) Total current liabilities (2,633,956) (2,524,142) (3,816,852) Total liabilities (3,423,728) (7,375,859) (5,343,102) Net assets (2,978,347) 39,761,517 (156,188) EQUITY Shares and stock 80,118,769 79,957,267 80,050,893 Other reserves (62,674,724) (62,760,723) (63,781,669) Non-controlling interests - 23,951,661 1,665,494 Accumulated losses (20,422,392) (1,395,688) (18,090,906) Total equity (2,978,347) 39,761,517 (156,188) The notes numbered 1 to 6 are an integral part of the interim financialinformation.Statement of Cash Flows (unaudited) (unaudited) (audited) Six months Six months Year ended ended ended 31 Note 30 June 30 June December 2012 2011 2011 US$ US$ US$ Cash flows from operating activities (Loss)/Profit before taxation (2,942,899) 4,120,980 (35,288,443) Adjustments for: * Finance income (4) - (848) * Finance costs 7,862 292,307 310,231 * Loss of control / (fair value 1,309,296 (6,209,876) (6,209,876) gain on step acquisition) * Equity accounted loss 129,600 - - * Impairment of non-current - 35,000 33,387,720 assets * Depreciation and amortisation 123,467 100,212 1,824,241 * Common stock and shares issued - 254,304 373,742 for services * Foreign exchange revaluations (18,330) 140,581 Changes in working capital: * Decrease / (Increase) in trade 202,097 (230,611) (178,542) and other receivables * Increase / (Decrease) in trade 685,174 (182,306) 1,588,261 and other payables * Taxation paid (800) - (800) Net cash used in operations (504,535) (1,819,990) (4,053,733) Cash flows from investing activities Purchase of other non-current 1,356 (85,000) (85,000) assets Purchase of intangible assets - (490,840) (494,429) Loss of control / reverse 1.2 (11,010) (779,243) (949,660) acquisition Net cash flows used in investing (9,654) (1,355,083) (1,529,089) activities Cash flows from financing activities Common stock purchase advance - - received Share/stock issues (net of issue 67,876 8,713,139 8,678,326 costs) Finance income 4 - 848 Finance costs (7,862) (292,307) (310,231) Loans (repaid) / received 138,959 (2,494,386) (2,596,592) Net cash flows from financing 198,977 5,926,446 5,772,351activities
Net increase in cash and cash equivalents (315,212) 38,969 189,529
Cash and cash equivalents at 382,455 197,170 197,170 beginning of period Foreign exchange on cash balances 1,074 - (4,244)
Cash and cash equivalents at end of 68,317 2,948,543 382,455 period
The notes numbered 1 to 6 are an integral part of the interim financial information.
Notes (forming part of the interim financial information)
1. Summary of significant accounting policies
The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the financial information.
1.1 Basis of preparation
This interim consolidated financial information is for the six months ended 30 June 2012 and has been prepared in accordance with International Accounting Standard 34 "Interim Financial Statements". The accounting policies applied are consistent with International Financial Reporting Standards ("IFRS") adopted for use by the European Union. The accounting policies and methods of computation used in the interim consolidated financial information are consistent with those expected to be applied for the year ending 31 December 2012.
The financial information set out above does not constitute the company's statutory accounts for the year ended 31 December 2011, but is derived from those accounts. Statutory accounts for 2011 have been delivered to the Registrar of Companies. The auditors have reported on those accounts: their report was qualified and contained a disclaimer of opinion and contained statements under section 498(2) or (3) of the Companies Act 2006.
1.2. Consolidation Pyromex loss of control US$ Intangible assets 2,005,446 Property, plant and equipment 1,869,045 Inventory 656,418 Trade and other receivables 55,642 Cash 11,012 Trade and other payables (2,424,114) Intercompany payables (216,527) Deferred taxation (371,437) Net assets disposed 1,585,485 Attributable to: * Non-controlling interests 1,109,839 * Owners of the Company - recognised as investment in 475,646 associate Investment in associate consists of: * Initial amount recognised after loss of control 475,646 * Equity accounted losses (129,600) 346,046
1.3. Judgements and estimates
The accounting for the Pyromex acquisition has been based on estimated values due to lack of access to its records accordingly, the Group has reported, in this interim financial information, its estimates for profit and loss, and balance sheet items related to Pyromex.
1.4 Going concern
The directors have considered all available information about the future events when considering going concern. The directors have reviewed cash flow forecasts for twelve months following the date of these accounts. The cash flow forecasts assume no further funding of Powerhouse Energy, Inc. and Pyromex. The £380,000 convertible loan obtained from Hill Grove Investments Pty Limited ("Hill Grove"), secured prior to these accounts being signed, together with the $250,000 convertible loan advanced by Linc Energy Limited on 19 June 2012 is considered sufficient to settle outstanding creditors of the company and maintain the company's reduced overhead and other limited unforeseen events for at least the next twelve months. In addition, the company is in receipt of a letter of intention of financial support from Hill Grove to ensure the company continues to meet its obligations as they fall due and to ensure it operates as a going concern for a period of at least 12 months. Based on this, the Directors continue to adopt the going concern basis of accounting for the preparation of these interim accounts.
1.5. Functional and presentational currency
This interim financial information is presented in US dollars which is the Group's functional currency. The principal rates used for translation are:
30 June 30 June 2012 2012 Closing Average British Pounds $1.554 $1.577 Swiss Franc $1.043 $1.077
2. MOVEMENT IN SHARE CAPITAL (company)
1.0 p 4.5 p 4.0 p Ordinary Deferred Deferred shares shares shares Balance at 31 284,271,197 17,373,523 9,737,353January 2012 * Exercise of 243,229 - - warrants
Balance at 30 June 283,514,426 17,373,523 9,737,353 2012
The deferred shares have no voting rights and do not carry any entitlement to attend general meetings of the Company. They will carry only a right to participate in any return of capital once an amount of £100 has been paid in respect of each ordinary share. The Company will be authorised at any time to affect a transfer of the deferred shares without reference to the holders thereof and for no consideration.
3. EARNINGS PER SHARE (unaudited) (unaudited) (audited) As at As at As at 30 June 30 June 31 December 2012 2011 2011 Total comprehensive income (2,331,486) 4,120,980 (2,384,162)(expense) (US$)
Weighted average number of shares 284,499,626 190,956,619 117,474,385
Weighted average number of - 4,322,980 - dilutive potential shares Earnings per share (US$) (0.01) 0.02 (0.02)
Diluted earnings per share (US$) (0.01) 0.02 (0.02)
4. LOANS (unaudited) (unaudited) (audited) As at As at As at 30 June 30 June 31 December Notes 2012 2011 2011 US$ US$ US$ Accrued dividends 4.1 33,000 66,000 33,000 on preferred stock Management loans 4.2 352,322 357,722 349,885 Citi bank business 4.3 39,580 62,323 52,084 loan Aspermont loan 4.4 149,026 - - Total loans 573,928 486,045 2,980,432 Classified as: * Current 207,022 66,000 57,996 * Non-current 366,906 420,045 376,973
4.1. Accrued dividends on preferred stock
The accrued dividends on the preferred stock became due on 31 March 2012.
4.2. Management loans
Loans from management incur interest at 5% per annum. The loans are repayable as PowerHouse Energy, Inc. generates gross profits or, if earlier, within 30 days of termination of management's employment contract. Subsequent to balance sheet date these loans have been settled through a Mutual release agreement.
4.3. Citi bank business loan
Loan from Citi bank incurs interest at the prime rate as published by The Wall Street Journal plus 3% and is repayable in equal monthly installments of $2,083.
4.4. Aspermont loan
On 18 April 2012 Aspermont Ltd, Dilato Holdings Pty Ltd and Tesla Nominees Pty Ltd collectively provided a facility of £100,000 to the group. The facility is repayable on demand and incurs interest at 1 per cent. per month. The group is currently in productive negotiations to revise the terms of the loan.
4.5. Hill Grove Loan
On 19 June 2012 the group entered into a convertible loan agreement with Linc Energy Limited under which Linc agreed to advance $250,000 to the Group. The loan is unsecured, repayable on 18 June 2014 and carries interest of 15 per cent. per annum. Linc has the option at any time to convert the loan in part or whole at a conversion price of 1p per share. On 8 October 2012, the group was advised that all rights under this agreement have been assigned to Hill Grove.
On 8 October 2012, the group entered into a further convertible loan agreement with Hill Grove under which Hill Grove has agreed to advance £380,000 to the group. The loan is unsecured, repayable on 5 October 2014 and carries interest of 15 per cent. per annum. Hill Grove has the option at any time to convert the loan in part or whole at a conversion price of 1p per share.
5. Trade and other payables (unaudited) (unaudited) (audited) As at As at As at 30 June 30 June 31 December Trade creditors 263,474 1,592,549 856,924 Salary and wage 1,203,186 821,619 1,445,926accruals RenewMe 1,036,000 - 1,036,000 Customer deposits 153,202 337,293 939,236 Other accruals 193,938 315,373 257,770 Total trade and other 2,849,800 3,066,834 4,535,856payables Classified as: * Current 2,267,050 2,458,142 3,758,856 * Non-current 582,750 608,692 777,000
5.1. Salary and wage accruals
The difference between salaries and wages paid and the amounts due under service agreements has been accrued. Certain of the US employees filed a lawsuit in the US District Court (Nevada) against Powerhouse Energy, Inc. and Powerhouse Energy Group plc for accrued salaries and amounts due to the end of their service contracts to the value of $1,961,938, plus interest, damages and legal costs. After the lawsuit was filed an agreement was reached with the employees whereby in exchange for a cash settlement of $25,000, 520,000 shares in the company and settlement of their legal fees incurred (approximately $12,000) the case would be withdrawn and the company and its subsidiary released from all obligations to the employees. The case was withdrawn on 1 October 2012. Post balance sheet salary and wage accruals were cleared to nil.
5.2. RenewMe
RenewMe Limited had been granted exclusive rights by Pyromex to use, own, assemble and install and operate Pyromex systems in territories also Licensed to Powerhouse Energy, Inc. The group entered into a settlement agreement with RenewMe whereby the parties agreed to change the respective exclusive rights pertaining to the Pyromex technology. Under the settlement agreement the group has the obligation to pay five instalments of Euro 200,000 annually beginning 30 June 2011. All amounts due under the contract have been recognised as a liability on the balance sheet for 30 June 2012 The Directors are currently in productive negotiations with RenewMe regarding the existing licensing agreement.
6. AVAILABILITY OF THE INTERIM RESULTS
A copy of this announcement will be available at the Company's registered office (16 Great Queen Street, London WC2B 5DG) 14 days from the date of this announcement and on its website - www.powerhouseenergy.net. A copy of the interim results will not be sent to shareholders.
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