PPG.L Regulatory News (PPG)

Plutus PowerGen Plc / Ticker: PPG / Index: AIM

28 August 2015

Plutus PowerGen plc ('PPG' or 'the Company')

Final Results

Plutus PowerGen plc, the AIM listed power company focused on the development construction and operation of flexible stand-by electricity generation in the UK, announces its results for the year ended 30 April 2015.

Financial

· Raised £800,000 equity before expenses on re-admission to AIM

· Raised a further £500,000 equity before expenses

· £200,000 8% convertible loan note issued to accelerate the connections process and for working capital

· Rockpool awarded 30,075,207 warrants in PPG at an exercise price of 1.15p

· Rockpool Investments LLP raised £17.8 million for the first five investee companies

· PPG awarded five management contracts, each generating £150,000 a year of fee income to the Company, and in which PPG has a carried interest of 45%

· Negotiation of two offers for £2.5 million of asset finance on behalf of Attune Energy, the first 20MW flexible power company to have received equity funding from Rockpool

· Heads of terms signed with Reliance Energy Ltd to finance sites introduced by us where we will have 70% and we will receive 30% in sites introduced by Reliance Energy Ltd

Operational

· Strong demand for flexible energy generation due to constrained power generation environment in the UK

· Consolidated revenues will be from multiple sources: delivered through the sale of power to large energy supply companies by way of a Power Purchase Agreement; STOR revenue; Triad avoidance revenue and potentially, from 2019, the capacity mechanism together with fee income in the holding company

· Agreement with independent property developer London & Devonshire Trust to source land with connection capacity suitable for the construction of 20MW flexible energy generation projects

· Secured connection offers to Grid at locations in the south of England with a combined capacity of 260MW

· Planning in various stages for 100MW of energy

Commenting on the results, Charles Tatnall, Executive Chairman, said: "We are delighted with significant progress made towards building a leading flexible electricity generation company in the UK since our re-Admission in August 2014. This year we have exceeded the progress we expected to make towards our target to build 200MW of power by August 2017, having won contracts to construct and operate 100MW from five 20MW sites in the UK funded by Rockpool Investments LLP for 17.8 million. In addition we have connection agreements for 260MW of capacity and an agreement with Reliance Energy Limited which has enabled us to increase our pipeline which already stands at 500MW.

"Whilst we have enjoyed our first revenues of £750,000 generated from the management contracts for each flexible energy site, we look forward to developing and building these projects so that we can strengthen this income. In tandem with this we will continue to pursue multiple opportunities to develop and expand our business plan during 2016 and beyond to increase our portfolio size and enhance shareholder value."

For further information, please visit www.plutuspowergen.com, or contact:

Chairman's Statement

This year has been transformational for PPG, with our re-admission to AIM in August and commencement of trading as a developer and operator of flexible power generation facilities. The management team has made considerable progress since then, going a long way towards achieving our initial 200MW plan. Further, the Company now has an extended pipeline of projects beyond that plan.

We have made considerable progress in each of the four crucial pre-construction phases for establishing a 20MW flexible generation project:

1. Identify suitable sites

2. Establish an economic connection to the grid

3. Obtain planning

4. Achieve satisfactory funding

Our current pipeline of over 500MW, with connection offers for 260MW of capacity, equivalent to thirteen 20MW sites, has the potential to take us well beyond that initial target. We have agreed Heads of Terms with Reliance Energy Limited, which potentially gives us access to, and the finance for, the development for up to 200MW of connections jointly with solar farms across the UK and to finance further flexible generation opportunities identified by us.

The relationship with Reliance Energy Limited will provide us with additional finance to expand our site portfolio whilst not in conflict with our Rockpool Investments LLP arrangements. This relationship will be in addition to our existing pipeline where joint solar and other flexible power generation projects are identified.

The capacity in the site pipeline will change from time to time as we identify new sites, whilst others may become impractical for reasons such as being unable to connect the site within a reasonable timeframe. Of the sites where we have already secured connection offers, we continue to progress towards achieving planning permission, and have already done so at Plymouth.

Rockpool Investments LLP, through our exclusivity arrangement with them, have raised £17.8 million of funding for the first five investee companies. These investee companies have awarded us five management contracts, each generating £150,000 of fee income a year, and in which we have a carried interest of 45%. We continue to look at multiple sources for funding our pipeline of sites beyond those companies financed by Rockpool Investments LLP.

PPG has been through two major stages of development, both successful during the year under review. Firstly, restructuring and financing sufficient to ensure limited further dilution. And secondly, commencing operations as developers and operators of flexible stand-by electricity generation in the UK.

1. RESTRUCTURING AND FINANCING

The Company, formerly Plutus Resources PLC, was suspended on AIM at the beginning of the year to enable the restructuring, reverse takeover and placing to be completed in August 2014. On 5 August 2014, the Company completed the acquisition of 75% of the issued share capital of Plutus Energy that it did not already own, for £485,000, satisfied by the issue of new ordinary shares in the Company, and changed its name to Plutus PowerGen PLC (PPG). It changed the composition of the Board, converted past Loan Notes and was re-admitted to trading on AIM. Simultaneously, the Company raised £800,000 (before expenses) by the issue of ordinary shares to fund working capital for the enlarged Group. Furthermore, in January 2015, the Company raised £500,000 (before expenses) through the issue of new ordinary shares to new and existing investors. This additional placing is to assist in securing the Grid connections and to help accelerate the business plan. The Company also issued a £200,000 8% Convertible Loan Note to assist in obtaining connections and for working capital purposes.

2. OPERATIONS

Following re-admission to AIM, PPG is no longer an investment company, but a group of companies involved in developing, constructing and operating flexible stand-by electricity generation (flexgen) in the UK. The operating companies will have four primary revenue streams: Triad avoidance, STOR, power sales and the Capacity Mechanism as explained

later in the Business Model Section.

We take an equity interest in, and receive fees for the management of, the entities established to manage each flexible power generation project. We may also receive third party fees for other consultancy projects in connection with flexible power generation. While our business model is not unique, and there are already companies providing Triad avoidance and STOR services using proven and reliable generation technologies, we believe the time is well suited to a new entrant into the market. Please see the section marked The Investment Case.

OUTLOOK

Over the coming year, the Board of Directors will continue to build on the rapid achievements accomplished since the Company's re-admission to AIM in August last year. We have already met and exceeded our principal short-term objectives. We enjoyed our first revenues in the year under review and we now have five management contracts generating £750,000 of fees annually for the group. This is likely to increase materially during the forthcoming year.

We are well advanced in our plans to achieve a minimum of 200MW of flexible power-generating capacity in the UK over the next three years and the Heads of Terms, recently signed, with Reliance Energy Limited has the prospect to materially increase our pipeline and improve our ability to fund multiple sites. The year has started very well and the Directors continue to be very confident of the company's future.

Charles Tatnall

Executive Chairman

28 August 2015

Market Overview

Rapid progress made beyond initial targets

· An AIM-listed power company - Developing, constructing and operating an initial 200MW of flexible UK energy generation.

· Multiple potential revenue sources - Triad avoidance revenue; STOR revenue; power sales; and from 2019, the capacity mechanism

· Pipeline of potential sites - For over 500MW plus a further potential 200MW of solar sites on which we, subject to planning, will have the ability to develop flexgen in conjunction with solar operators.

· Offers of Grid connections to date - Secured for a combined capacity of 260MW.

· Planning granted for first site - In Plymouth, and construction process underway.

· 100MW of capacity - In various stages of planning.

· Bottom up investment strategy - To limit medium-term dilution to existing shareholders together with optimum use of asset finance.

At a Glance

A market environment placing a premium on access to flexible generation capacity

The energy generation mix in the UK is changing, with a target of 15% of energy consumption to be from renewable sources by 2020. This includes electricity as well as transport and other energy demand. The government expects renewable electricity to contribute about half of the renewable energy required by 2020. To encourage the transition to renewable energy, the government is using a range of policies that will bring about the early closure of much oil and coal power generation. They are also placing limits on generators' polluting activity or operational time.

With older generating capacity coming offline, and new gas generation and renewable capacity being slow to come online, the safety margin between supply and maximum demand is narrowing - from 17% three years ago to an Ofgem forecast of just 5% in 2015/16 - and that's without unplanned outages, maintenance and closures.

Renewable energy sources in the UK are largely made up of wind and solar and, while new capacity is being added, wind is an intermittent source of generation. Solar is also more likely to generate in the summer months when it is less needed. The renewable capacity displacing higher carbon sources of generation is increasing the volatility of energy supply, and despite growing government and consumer focus on energy saving, demand for power continues to grow. This places a premium on access to flexgen capacity.

Business Model

Reliable and recurring revenues, projected to grow well beyond inflation

Our principal sources of income will relate to the electricity market's demand management mechanisms: Triad avoidance payments and the STOR scheme, both regulated by Ofgem. We will also sell power, usually under a Power Purchase Arrangement (PPA) and from 2019 expect revenue through the new Capacity Mechanism.

COMPANY STRUCTURE

To date, the Company has a 45% interest in the companies it manages. This carried interest is likely to vary in the future depending on the investment structure of each investee company and the desire of the Company to seek investment partners where we are able to consolidate the assets and liabilities and the profit and loss of the Investee Company fully in the consolidated accounts.

ESTABLISHING AN OPERATIONAL BUSINESS

Initially, PPG was aiming for a total development of 200 MW of electricity generating capacity from a series of 20MW containerised generator sites. This target has been surpassed in most of the critical pre-build stages. Before becoming operational and generating revenue, PPG needs to progress through four crucial pre-construction phases:

1. Identifying appropriate sites - Here the considerations are proximity to suitable Grid connections, economic viability and potential planning issues.

2. Establishing a viable Grid connection - Through making connection agreements with power distribution companies.

3. Obtaining planning permission - No work or funding can start without this.

4. Securing funding - With finance obtained from a variety of sources, the site construction phase can begin.

THE INVESTMENT CASE

The PPG business model creates a number of favourable factors for investors:

"Bottom-up" investment model and limited dilution

Good After Tax Return on Capital per average site

· Typically, each site will cost in the region of £5-6 million to develop and construct

· The exact cost of establishing a 20MW plant will depend on the specific characteristics of each site; costs can be broken down as follows:

A typical site will have the following typical EBITDA return on capital employed in a full year of operations

Favourable Market outlook

· Existing, reliable nuclear and coal power generation is being replaced, in part, by less predictable renewable power generation, creating the need for flexible power generation. The impending UK Electricity Market Reform (EMR) will probably mean electricity generators will face greater penalties than at present if they cannot supply their contracted electricity. Utility companies have indicated they may look to secure a reserve of flexible generation power plants due to this.

· OFGEM has warned that capacity margin will fall to below 5%, increasing price volatility and the risk for energy supply companies to balance their own energy book. This places a premium on access to flexible generation capacity.

· Whilst the new energy market design intends to encourage new technologies and services into the balancing market, there is limited clarity for investors; as a result, while such services are emerging, they remain relatively unproven or not yet at scale

Established technology with asset finance available

'Genset' technology is well-established simple, proven and widely available and in which there are a number of manufacturers and there is a good second hand market. There is a good availability of parts and technical know-how, and operations and maintenance are minimal and low risk. We have, to date, negotiated two offers of finance for Attune Energy Limited for £2.5 million each of asset finance for the Gensets.

Management contracts

All sites will have a management contract whereby PPG manages the asset, from identifying the site, planning, and negotiation of the connection, construction and operations, of the associated company or subsidiary.

This will typically be £625 to £1000 per MW per month.

This income to the holding company defrays the holding company costs.

Risks

The Board has outlined the following risks investors need to be aware of.

Operating history

With a limited operating history, it is not possible to evaluate the Company's prospects based on past performance.

Availability of suitable sites

Building and operating flexible power generation projects depends on our being able to find suitable sites and secure them on appropriate commercial terms.

Planning permission

There is no guarantee the necessary permits, consents or approvals will be issued or granted. In addition, the planning process can be lengthy and cause delays.

Ability to tender and win contracts

The strategy depends on our ability to win contracts to build, supply and manage flexible power generation plants. If competition increases or for any other reason we don't win contracts, this would have an adverse effect on operations and profitability.

Volatility of electricity prices

Energy prices fluctuate widely and are affected by many unpredictable factors beyond our control: global supply and demand, political and economic conditions, speculation, inflation, interest rates and exchange rates. The effect of these factors on the price of energy cannot accurately be predicted.

Changes in Government policy

Changes in Government policy on flexible power generation could become more or less restrictive and affect the return on any investment, or change tax rates or reliefs thereon.

Directors

Charles Tatnall

Executive Chairman

Charles Tatnall is primarily involved in advising and raising funds for small and medium sized enterprises. Until 2005 he was consultant to Bolton Group, identifying potential investment and acquisition opportunities in a broad range of industry sectors. Previously he held a number of positions with public companies in North America and Canada, where he was responsible for corporate governance and finance. Charles was a co-founder and principal of BioProgress Technology, quoted on the NASD-regulated OTC market, and later migrated to AIM.

Philip Stephens

Chief Executive Officer

Phil Stephens was Head of Commercial at British Energy Group plc, where he led the development of their pure nuclear, low carbon product to industry. This has gone on to form the basis of EdF's Blue+ product to residential customers following the acquisition. He was Group Commercial Director of Mears Group plc, a listed social housing and domiciliary care business with revenues in excess of £650m. In this role, Phil signed an exclusive agreement with British Gas to provide energy and low carbon services to social housing. He was previously a partner in global consulting firms within the Energy & Utilities sector. His projects included main Board and Operational strategy development, including assessment of diversification opportunities, the development of the worlds first nodal electricity market in Singapore and advice on asset management plans to energy regulators.

Paul Lazarevic

Chief Operating Officer

Paul Lazarevic has a long record in the electricity sector, including most recently as the CEO of Grid balancing technology company, RLtec. He was formerly head of corporate sales at RWE, responsible for a £1.5bn operation, which included sales and operations to the UK's major industrial and commercial users such as J Sainsbury, BT Group and Lafarge. Paul also spent eight years at Exxon Mobil where his experience varied from project-managing the design and construction of embedded refinery power generation projects in the USA and Far East, to setting up a gas trading operation in the UK and running a risk management team.

James Longley

Chief Financial Officer and Company Secretary

James Longley is a chartered accountant whose career has focused on venture capital, private equity and building growth companies. His earlier career was with Arthur Andersen, Creditanstalt- Bankverein Merchant Banking and Touche Ross Corporate Finance. In 1990 he co-led the £10.5m management buy-in of The Wilcox Group. He was also co-founder, Director and CFO of BioProgress Technology International, formerly a NASDAQ quoted company which subsequently listed on AIM. He was also a co-founder, Director and CFO of PhotoBox Limited from 2000 to 2006, a company that then merged with its French counterparts, Photoways and acquired Moonpig in 2011 for approximately £120 million.

Josephine Dixon

Non-Executive Director and Independent Director

Jo Dixon, a qualified chartered accountant, has over ten years' experience as a Non-Executive Director of listed companies and is currently a Non-Executive and senior independent Director of Worldwide HealthcareTrust, Non-Executive Director and audit committee Chairman of Baring Emerging Europe, Standard Life Equity Income Trust and JP Morgan European Investment Trust. She is also a Non-Executive Director of Strategic Equity Capita. Jo Dixon previously worked at Natwest where she held a number of senior roles, working directly for the CEO. In 1995 she became FD of Newcastle United and played a key role in its successful London Stock Exchange flotation.

Corporate Governance

The Company is not required to comply with the Corporate Governance Code or QCA Code. However, the Directors recognise the importance of sound corporate governance. The Board intends, so far as is practicable for a company of its size, to implement certain corporate governance recommendations. Details are provided below.

The Board meets regularly and is responsible for formulating, reviewing and approving the Group's strategy, budgets, performance, major capital expenditure and corporate actions. The Company has in place an audit committee, a remuneration committee and an AIM Rules Compliance Committee with formally delegated rules and responsibilities.

AUDIT COMMITTEE

The Audit Committee has the primary responsibility of monitoring the quality of internal controls and ensuring that the financial performance of the Group is properly measured and reported on. It receives and reviews reports from the Group's management and external auditors relating to the interim and annual accounts and the accounting and internal control systems in use throughout the Group. The Audit Committee meets not less than twice in each financial year and has unrestricted access to the Group's external auditors. The Audit Committee comprises of Josephine Dixon, James Longley and Philip Stephens; Josephine Dixon chairs the committee.

REMUNERATION COMMITTEE

The Remuneration Committee reviews the performance of the executive directors and makes recommendations to the Board on matters relating to their remuneration and terms of service. The Remuneration Committee also makes recommendations to the Board on proposals for the granting of share options and other equity incentives pursuant to any employee share option scheme or equity incentive plans in operation from time to time. The Remuneration Committee meets as and when is necessary. In exercising this role, the members of the Remuneration Committee regards to the recommendations put forward in the QCA Code and, where appropriate, the UK Corporate Governance Code guidelines. The Remuneration Committee is comprised of Josephine Dixon, Paul Lazarevic and Philip Stephens; Josephine Dixon chairs the committee.

NOMINATIONS COMMITTEE

In view of the size of the Board, the responsibility for proposing and considering candidates for appointment to the Board is retained by the Board.

AIM RULES COMPLIANCE COMMITTEE

An AIM Rules Compliance Committee has been established. The committee ensures that procedures, resources and controls are in place with a view to ensuring the Company's compliance with the AIM Rules. The committee also ensures that each meeting of the Board includes a discussion of AIM matters and assess (with the assistance of the Company's Nominated Adviser and other advisors) whether the Directors are aware of their responsibilities under the AIM Rules from time to time.

The committee seeks to ensure that all announcements made have been verified and approved by the Company's Nominated Adviser. The committee has particular responsibility for questioning the Directors in the event of any unusual, substantial movement in the Company's share price.

The committee monitors the Company's compliance with the AIM Rules and seek to ensure that the Company's Nominated Adviser is maintaining contact with the Company on a regular basis.

The AIM Rules Compliance Committee comprises of Josephine Dixon, Paul Lazarevic and Charles Tatnall; Josephine Dixon chairs the committee.

SHARE DEALING CODE

The Board complies with Rule 21 of the AIM Rules for Companies relating to dealings in the Company's securities by the Directors and other Applicable Employees. To this end, the Company has adopted a code for directors' dealings appropriate for a company whose shares are admitted to trading on AIM and takes all reasonable steps to ensure compliance by the directors and any relevant employees.

ANTI-CORRUPTION AND BRIBERY POLICY

The Board adopts an anti-corruption and bribery policy (the "Bribery Policy"). The Bribery Policy applies to all directors and employees of the Company (and the Group) and sets out their responsibilities in observing and upholding a zero tolerance position on bribery and corruption as well as providing guidance to those working for the Company on how to recognise and deal with bribery and corruption issues and the potential consequences. The Bribery Policy details a zero tolerance approach, which must be communicated to all contractors and business partners in all business dealings. Training on the Bribery Policy forms part of the induction process for all new employees.

Strategic Report

The Directors present their Report on the Company for the year ended 30 April 2015.

RESULTS

The Group made a loss after taxation of £1,311,427 (2014: £338,727).

THE BUSINESS

On 5 August 2014, the Company completed the acquisition of 75% of the issued share capital of Plutus Energy Limited ("Plutus Energy") that it did not already own ("Acquisition") by way of a reverse takeover. Contemporaneously, the Company changed its name to Plutus PowerGen PLC and was re-admitted to trading on AIM. Accordingly, the Company is now established with human and financial capital for the purpose of generating power from flexible stand-by power generation sites and generating revenues through the sale of this power to large energy supply companies during periods of peak electricity demand or Grid instability. Therefore the Company is no longer an investment company and is now a holding company for a group of companies involved in the development, construction and operation of flexible stand-by electricity generation in the UK.

The Company commenced trading as a Group involved in the development, construction and operation of flexible stand-by electricity generation in the UK immediately post re-admission to AIM and the results reflect the costs of this, the placing costs and the non cash directors fees and bonuses together with the ongoing costs of running the business post flotation and the costs of the investment business prior to re-admission. Losses for the year include placing costs and costs of re-admission to AIM of £300,190, detailed as Other Operating Expenses in the Group Statement of Comprehensive Income. It also includes non-cash consideration of £280,000 paid to certain Directors in respect of fees and bonuses.

The Group enjoyed posting its first revenues in the second half of the year being £87,500 of fees (2014: Nil) generated from investee companies in which we have a 45% interest. We currently have five such companies generating fees of £750,000 per annum in total and we expect to add materially to that by the end of the financial year ended 30 April 2016. Such fees currently defray substantially all our operating costs.

During the year under review, the Group raised £800,000 (before expenses) by the issue of ordinary shares to fund working capital for the enlarged group. Further, in January 2015, the Company raised £500,000 (before expenses) through the issue of new ordinary shares to new and existing investors. This additional placing is to assist in securing the Grid connections and to help accelerate the business plan. The company also issued a £200,000 8% Convertible Loan Note in December 2014 to assist in obtaining connections and for working capital purposes.

The Group and Company statements of financial position include £485,000 of Goodwill, which represents the amount paid for Plutus Energy Limited. This is in the Company balance sheet as an investment together with the Group's investments in associated companies as disclosed in note 10 to the financial statements. Due to the change of business from an investment company to a trading business most figures in the balance sheet are materially different compared year-on-year. The balance sheet of the group has been materially strengthened by the change of business and the acquisition of Plutus Energy Limited, the investment in Attune Energy Limited and the fund raising exercises undertaken. Accordingly Net assets at the year end were £758,795 (2014: (219,676). Cash balances were substantially higher at the year end at £320,485 (2014: £6,897).

KEY PERFORMANCE INDICATORS

The key performance indicators are set out below:

PRINCIPAL RISKS AND UNCERTAINTIES

The Board regularly reviews the risks facing the Company and seeks to exploit, avoid or mitigate those risks as appropriate.

FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

Financial risk management objectives and policies of the Company are set out in note 23 to the financial statements.

GOING CONCERN

The Directors consider the Company can continue in operational existence for the foreseeable future with its existing resources.

James Longley

Director

28 August 2015

Group Statement of Comprehensive Income

For the year ended 30 April 2015

Group Statement of Changes in Equity

For the year ended 30 April 2015

Company Statement of Changes in Equity

For the year ended 30 April 2015

Group and Company Statement of Financial Position

For the year ended 30 April 2015

The financial statements of Plutus PowerGen plc, registered number 5859612, were approved by the Board of Directors and authorised for issue on 28 August 2015. They were signed on its behalf by:

James Longley

Director

Group and Company Statements of Cash Flow

For the year ended 30 April 2015

Notes to the Financial Statements

For the year ended 30 April 2015

1. GENERAL INFORMATION

Plutus PowerGen plc is a Company incorporated in the United Kingdom under the Companies Act 2006. The address of the registered office is given on page 41. The nature of the Group's operations and its principal activities are set out in the Strategic Report on pages 13 to 14 and in the Chairman's Statement on pages 2 to 3.

These financial statements are presented in pounds sterling which is the currency of the primary economic environment in which the Group operates.

2. STATEMENT OF COMPLIANCE

The financial statements comply with International Financial Reporting Standards as adopted by the European Union. At the date of authorisation of these financial statements, the following Standards and Interpretations affecting the Company, which have not been applied in these financial statements, were in issue, but not yet effective (and in some cases had not been adopted by the EU):

· IFRS 9 Financial Instruments

· IFRS 15 Revenue from Contracts with Customers

· IFRS 11 (amendments) Accounting for Acquisitions of Interests in Joint Operations

· IAS 16 and IAS 38 (amendments) Clarification of Acceptable Methods of Depreciation and Amortisation

· IAS 19 (amendments) Defined Benefit Plans: Employee Contributions

· IAS 27 (amendments) Equity Method in Separate Financial Statements

· IFRS 10 and IAS 28 (amendments) Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

· Annual Improvements to IFRSs: 2010-2012 Amendments to: IFRS 2 Share-based Payment, IFRS 3 Business Combinations, IFRS 8 Operating Segments, IFRS 13 Fair Value Measurement, IAS 16 Property, Plant and Equipment, IAS 24 Related Party Disclosures and IAS 38 Intangible Assets

· Annual Improvements to IFRSs: 2011-2013 Amendments to: IFRS 3 Business Combinations, IFRS 13 Fair Value Measurement and IAS 40 Investment Property

· Annual Improvements to IFRSs: 2012-2014 Cycle Amendments to: IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, IFRS 7 Financial Instruments: Disclosures, IAS 19 Employee Benefits and IAS 34 Interim Financial Reporting

The Directors anticipate that the adoption of the above Standards and Interpretations in future periods will have little or no impact on the financial statements of the Group when the relevant Standards come into effect for future reporting periods.

3. SIGNIFICANT ACCOUNTING POLICIES

Basis of accounting

The Group's consolidated financial statements incorporate the financial statements of Plutus PowerGen plc (the "Company") and entities controlled by the Company (its subsidiaries). Subsidiaries are entities over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Profits and losses resulting from inter-company transactions that are recognised in assets are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Going concern

In determining the appropriate basis of preparation of the financial statements, the Directors are required to consider whether the Company can continue in operational existence for the foreseeable future. The Group had cash and cash equivalents of £320,485 and net current assets of £439,423 as at 30 April 2015, and incurred a loss of £1,311,427 for the twelve months then ended.

The Directors have based their opinions on a cash flow forecast, which assumes that sufficient revenue will be generated for working capital purposes and that operating costs will be kept to a minimum until adequate revenue streams are secured. For this reason, the Directors continue to adopt the going concern basis in preparing the financial statements. The financial statements do not include the adjustments that would result if the Company was unable to continue as a going concern.

Basis of consolidation

The Group's consolidated financial statements incorporate the financial statements of Plutus PowerGen plc (the "Company") and entities controlled by the Company (its subsidiaries). Subsidiaries are entities over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Profits and losses resulting from inter-company transactions that are recognised in assets are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the year end date.

Deferred tax is the tax expected to be payable or recoverable on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each year end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and where they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

Revenue

Revenue is derived from the provision of management services which are invoiced on a monthly basis and are recognised in the period to which they relate.

Financial instruments

Financial assets and financial liabilities are recognised in the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument.

Financial assets

Financial assets are classified into the following specified categories: 'available for sale investments', 'loans and receivables' and 'cash and cash equivalents'. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

Available for sale investments

Investments are initially measured at fair value plus incidental acquisition costs. Subsequently, they are measured at fair value in accordance with IAS 39. In respect of quoted investments, this is either the bid price at the period end date or the last traded price, depending on the convention of the exchange on which the investment is quoted, with no deduction for any estimated future selling cost. Unquoted investments are valued by the directors using primary valuation techniques such as recent transactions, last price or net asset value.

Investments are recognised as available-for-sale financial assets. Gains and losses on measurement are recognised in other comprehensive income except for impairment losses and foreign exchange gains and losses on monetary items denominated in a foreign currency, which are recognised directly in profit or loss. Where the investment is disposed of or is determined to be impaired the cumulative gain or loss previously recognised in other comprehensive income is reclassified to profit or loss.

The Group assesses at each period end date whether there is any objective evidence that a financial asset or group of financial assets classified as available-for-sale has been impaired. An impairment loss is recognised if there is objective evidence that an event or events since initial recognition of the asset have adversely affected the amount or timing of future cash flows from the asset. A significant or prolonged decline in the fair value of a security below its cost shall be considered in determining whether the asset is impaired.

When a decline in the fair value of a financial asset classified as available-for-sale has been previously recognised in other comprehensive income and there is objective evidence that the asset is impaired, the cumulative loss is removed from other comprehensive income and recognised in profit or loss. The loss is measured as the difference between the cost of the financial asset and its current fair value less any previous impairment.

Fair Value Measurements:

The Company holds investments that are measured at fair value at the end of each reporting period using the IFRS 7 fair value hierarchy as set out below.

Level 1 - valued using quoted prices in active markets for identical assets.

Level 2 - valued by reference to valuation techniques using observable inputs other than quoted prices included within Level 1.

Level 3 - valued by reference to valuation techniques using inputs that are not based on observable market data.

Investments in associated undertakings

The Group has shareholdings exceeding 20% in three operating companies that are accounted for as Available for Sale Investments. These investments are not equity accounted for as the Group has no representation on the boards of these companies and does not meet the criteria for exerting significant influence as set out in IAS 28.

Loans and receivables

Trade receivables, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Loans and receivables are initially measured at fair value and subsequently measured at amortised cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

Derecognition of financial assets

The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire; or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equity instruments issued by the Group are recorded at the proceeds received net of direct issue costs.

The share capital account represents the amount subscribed for shares at nominal value.

The share premium account represents premiums received on the initial issuing of the share capital. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits.

The share option reserve represents the fair value, calculated at the date of grant, of options unexercised at the balance sheet date.

The loan note equity reserve represents the fair value, calculated at issuance of the loan notes.

Retained losses include all current and prior period results as disclosed in the statement of comprehensive income.

Financial liabilities

Financial liabilities are recognised in the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument. All interest related charges are recognised as an expense in finance cost in the income statement using the effective interest rate method.

The Group's financial liabilities comprise trade and other payables and borrowings.

Trade payables are recognised initially at their fair value and subsequently measured at amortised cost less settlement payments.

Borrowings represent convertible loans that are accounted for as compound instruments. The fair value of the liability portion of the convertible loan notes is determined using a market interest rate for an equivalent non-convertible loan note. This amount is recorded as a liability on an amortised cost basis until extinguished on conversion or maturity of the loan notes. The remainder of the proceeds is allocated to the conversion option, which is recognised and included in shareholders' equity, net of tax effects, and is not subsequently re-measured.

Provisions

Provisions are recognised when the Group has a present obligation as a result of a past event and it is probable that the Group will be required to settle that obligation. Provisions are measured at the Directors' best estimate of the expenditure required to settle the obligation at the balance sheet date, and are discounted to present value where the effect is material.

Share-based payments

The Group has applied the requirements of IFRS 2 'Share-based Payments'.

The Group issues equity-settled share based payments to certain employees. Equity settled share based payments are measured at fair value at the date of grant. The fair value determined at the grant date of the equity settled share based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of shares that will eventually vest and adjusted for the effect of non-market based vesting conditions.

Fair value is measured by use of the Black Scholes model. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

4. Critical accounting judgements and key sources of estimation uncertainty

Critical judgements in applying the Group's accounting policies

In the application of the Group's accounting policies, which are described in note 3, the Directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period; or in the period of the revision and future periods if the revision affects both current and future periods.

Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are set out below.

(i) Share options

In order to calculate the charge for share-options as required by IFRS 2, the Group makes estimates principally relating to the assumptions used in its Black-Scholes option pricing model as set out in note 20.

5. Business segments

In accordance with IFRS 8, the Group is required to define its operating segments based on the internal reports presented to its Chief Operating decision maker in order to allocate resources and assess performance. The Chief Operating decision maker is the Chief Executive. There is only one continuing class of business, being the investment in the natural resources sector.

Given that there is only one continuing class of business, operating within the UK, no further segmental information has been provided.

6. Loss for the year

Loss for the year from continuing operations has been arrived at after charging:

The analysis of auditors' remuneration is as follows:

7. Employee costs (including Directors)

The average monthly number of employees (including Executive Directors) employed by the Group during the year was 4, all of whom were involved in management and administration activities (2014: 3).

Details of Directors' remuneration and gains on the exercise of share options can be found in the section of the Directors' Remuneration Report on page 15.

8. Tax

Corporation tax is calculated at 20% (2014: 20%) of the estimated assessable loss for the year. Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions. The charge for the year can be reconciled to the profit per the statement of comprehensive income as follows:

Tax reconciliation

Deferred tax assets of approximately £388,000 (2014: £195,000) have not been recognised as the Directors consider there to be insufficient evidence that the assets will be recovered.

9. Loss per share

Basic loss per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year.

In order to calculate diluted loss per share, the weighted average number of ordinary shares in issue was adjusted to assume conversion of all dilutive potential ordinary shares according to IAS 33. Dilutive potential ordinary shares include share options granted to employees and Directors where the exercise price (adjusted according to IAS 33) is less than the average market price of the Company's ordinary shares during the year.

IAS 33 'Earnings per share' requires presentation of diluted earnings per share when a company could be called upon to issue shares that would decrease net profit or increase net loss per share. Only options that are 'in the money' are treated as dilutive and net loss per share would not be increased by the exercise of such options.

10. INVESTMENTS IN SUBSIDIARY AND ASSOCIATED UNDERTAKINGS

Subsidiary undertakings

The Company held the following investments in subsidiary undertakings:

On 22 August 2014 the Group completed the acquisition of the remaining 75% of the equity of Plutus Energy Limited ("PEL") for a consideration of £360,000, satisfied by the issue of 60,000,000 ordinary shares at 0.6p per share (see note 11 for further details).

In addition, Deferred Consideration of up to 50,000,000 Ordinary Shares for each of the Vendors at 0.6p per Ordinary Share, may become payable depending upon the occurrence prior to the fourth anniversary of Admission of either (a) the Earnings Per Share exceeding (i) 0.1575 pence in respect of 25,000,000 Deferred Consideration Shares for each of the Vendors or (ii) 0.297 pence in respect of 50,000,000 Deferred Consideration Shares (less any Deferred Consideration Shares allotted and issued pursuant to (i)) for each of the Vendors, or (b) a takeover bid is made for the entire issued and unissued share capital of the Company and is declared unconditional in all respects at a price per Ordinary Share of 1.5 pence or more.

PEL is the sole subsidiary undertaking in the Group. It is incorporated in England and Wales, is 100% directly owned by the Company and provides management services to the associated entities.

Associated entities

The Company held the following investments in associated entities:

During the year the Group acquired 45% shareholdings in Attune Energy Limited, Balance Power Limited and Flexible Generation Limited, all three of which are companies set up to supply stand-by electricity to the National Grid. The total cost of these shareholdings was £47 and these investments are not equity accounted for as the Group has no representation on the boards of these companies and does not meet the criteria for exerting significant influence as set out in IAS 28.

All investments are held as Available for Sale, were designated as such upon initial recognition, and are classified as Level 3 under the IFRS 7 fair value hierarchy as set out under Fair Value Measurements on page 27.

The Group's associated entities during the year were as follows:

11. Acquisition of subsidiary undertaking

On 22 August 2014 the Group completed the acquisition of the remaining 75% of the equity of Plutus Energy Limited ("PEL") for a consideration of £360,000, satisfied by the issue of 60,000,000 ordinary shares at 0.6p per share. The Group acquired its original 25% shareholding in PEL for £125,000 in January 2014. At the date of acquisition PEL had net assets of £nil and the full consideration of £485,000 was accounted for as goodwill.

12. Trade and other receivables

The Directors consider the carrying amount of trade and other receivables approximates to their fair value.

13. Cash and cash equivalents

Group and Company

Cash and cash equivalents comprise cash held by the Group and short-term bank deposits with an original maturity of three months or less. The carrying amount of these assets approximates their fair value.

14. Trade and other payables

Trade payables and accruals principally comprise amounts outstanding for trade purchases and on-going costs. The Directors consider that the carrying amount of trade and other payables approximates to their fair value.

No trade payables were older than 90 days.

15. Borrowings

Group and Company

Convertible loans

On 23 October 2013 the Company issued £137,000 unsecured convertible loan notes. The loan notes bear interest at 10% per annum with the interest payable quarterly in arrears. The redemption date is 23 April 2015. The loan notes are convertible at 0.5p per share. On 22 August 2014, these loan notes together with £100,000 loan notes, issued on 13 January 2013, and all accrued interest were converted into shares.

On 22 December 2014 the Company issued £200,000 convertible loan notes, repayable on 18 December 2016 if not converted into shares prior to that date, and bearing interest at 8% p.a, payable quarterly in arrears.

The net proceeds from the issue of the loan notes have been split between the liability element and an equity component, representing the fair value of the embedded option to convert the liability into equity of the Company as follows:

The interest charged during the period is calculated by applying an effective average interest rate of 15% to the liability component for the period since the loan notes were issued.

The Directors estimate the fair value of the liability component of the loan notes at 30 April 2015 to be approximately £181,675 (2014: £245,767). This fair value has been calculated by discounting the future cash flows at the market rate of 15%.

Other loans

On 25 April 2014 the Group received a loan of £35,000 from a shareholder and in July 2014 the loan was increased to £42,500. The loan was interest bearing at 10% per annum, payable quarterly in arrears, and was converted into shares on 22 August 2014.

16. Share capital

Share issues

On 22 August 2014 the following share issues took place:

· 46,000,000 shares were issued at 0.25p per share in accordance with the terms of the convertible loan from Paternoster Resources plc.

· 29,558,334 shares were issued at 0.5 p per share in accordance with the terms of the October 2013 convertible loan.

· 8,500,000 shares were issued at 0.5p per share in settlement of a loan of £42,500.

· 46,666,666 shares were issued to Directors at 0.6p per share in settlement of fees and bonuses.

· 8,333,333 shares were issued at 0.6p per share to a professional advisor in settlement of fees.

· 60,000,000 share were issued at 0.6p per share as consideration for the acquisition of the remaining 75% of the issued share capital of Plutus Energy Limited, not already owned by the Company.

· 125,000,002 share were issued at 0.6p per share for cash in a private placing.

On 15 January 2015 the following share issues took place:

· 6,192,308 shares were issued at 0.65p per share in settlement of amounts due to certain advisers and creditors.

· 76,923,077 shares were issued at 0.65p per share for cash in a private placing.

17. Share premium account

18. Share option and warrant reserve

19. loan note equity reserve

20. Retained losses

21. Share options and warrants

Options

On 8 March 2013, options over, in aggregate, 14,310,000 ordinary shares of 0.1 pence were granted to the directors of the Company. Each option carries the right to subscribe to one new Ordinary Share in the capital of the Company at a price of 0.675p per Ordinary Share, being the closing mid-market price of the Company's ordinary shares on 8 March 2013. These options vest over a period of three years from the date of the Grant, with a third of the options vesting on the first, second and third anniversaries of the Grant respectively. These options are exercisable for a period of ten years from the date of the Grant subject to the vesting conditions.

The fair value of the options was calculated using the Black-Scholes model and the Group recognised total expenses of £10,150 (2014: £20,717) related to the grant of these options during the year. The inputs to the Black-Scholes model were as follows:

Grant date share price 0.675p

Exercise share price 0.675p

Risk free rate 2.5%

Expected volatility 50%

Option life 10 years

Calculated fair value per share 0.420p

The table below summarises the share options extant during the year:

Warrants

On 22 August 2014, warrants over, in aggregate, 40,000,000 ordinary shares of 0.1 pence were issued to the directors of the Company. Each warrant carries the right to subscribe for one new Ordinary Share in the capital of the Company at a price of 0.9p per Ordinary at any time prior to 22 August 2016.

The fair value of the warrants was calculated using the Black-Scholes model and the Group recognised total expenses of £38,000 (2014: £nil) related to the issue of these warrants during the year. The inputs to the Black-Scholes model were as follows:

Grant date share price 0.6p

Exercise share price 0.9p

Risk free rate 2%

Expected volatility 50%

Option life 2 years

Calculated fair value per share 0.095p

The table below summarises the share warrants extant during the year:

22. Financial instruments

Categories of financial instruments

23. Risk management objectives and policies

The Group's finance function monitors and manages the financial risks relating to the operations of the Group. These risks include credit risk, liquidity risk and cash flow interest rate risk.

The Group seeks to minimise the effects of these risks, in accordance with the Group's policies approved by the Board of Directors, which provide written principles on interest rate risk, credit risk and the investment of excess liquidity. The Group does not enter into or trade financial instruments, including derivative financial instruments, for any purpose.

Capital risk management

The Group's objectives when managing capital are:

· to safeguard the Group's ability to continue as a going concern, so that it continues to provide returns and benefits for shareholders;

· to support the Group's growth; and

· to provide capital for the purpose of strengthening the Group's risk management capability.

The Group actively and regularly reviews and manages its capital structure to ensure an optimal capital structure and equity holder returns, taking into consideration the future capital requirements of the Group and capital efficiency, prevailing and projected profitability, projected operating cash flows, projected capital expenditures and projected strategic investment opportunities. The capital structure consists of capital and reserves and convertible loan notes, for capital management purposes.

Interest rate risk

The Group's exposure to interest rate risk is limited to the interest payable on the convertible unsecured loan notes, which are at fixed rates of interest.

Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group.

The Group's principal financial assets are bank balances and cash and other receivables.

The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings assigned by international credit rating agencies.

Liquidity risk

Ultimate responsibility for liquidity risk management rests with the Board of Directors. The Group manages liquidity risk by maintaining adequate reserves and banking facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.

24. Notes to the cash flow statement

Cash and cash equivalents (which are presented as a single class of assets on the face of the balance sheet) comprise cash at bank and other short-term highly liquid investments with a maturity of three months or less.

25. Operating lease arrangements

The Group and Company as lessee

26. Related party transactions

During the year ended 30 April 2015, fees of £107,334 (2014: £71,500) were paid to Yum Management Limited in respect of Charles Tatnall's services as Executive Chairman. £8,000 was owing at the year end to Yum Management Limited in respect of these fees.

During the year ended 30 April 2015, fees of £107,058 (2014: £43,950) were paid to Dearden Chapman Accountants Limited in respect of James Longley's services as Chief Financial Officer. £8,000 was owing at the year end to Dearden Chapman Accountants Limited in respect of these fees.

During the year ended 30 April 2015, fees of £87,668 (2014: £nil) were paid to PPT Capital Limited in respect of services rendered by Phil Stephens and Paul Lazarevic. Phil Stephens and Paul Lazarevic were both directors of PPT Capital Ltd during the year. £16,000 was owing at the year end to PPT Capital Limited in respect of these fees.

During the year ended 30 April 2015 £nil (2014: £12,000) was paid to James Longley Ltd, a company controlled by James Longley, in respect of rent of an office.

On 22 August 2014, 23,333,333 shares were issued at 0.6p per share to each of Charles Tatnall and James Longley in settlement of fees and bonuses.

Remuneration of key management personnel

The remuneration of the directors, who are the key management personnel of the Group, is set out below in aggregate for each of the categories specified in IAS 24 Related Party Disclosures. Further information about the remuneration of individual directors is provided in the Directors' Remuneration Report on page 15.

Transactions with subsidiary undertaking

The Company acquired its subsidiary undertaking Plutus Energy Limited ("PEL") during the year. Since the date of the acquisition the Company has made payments on behalf of PEL amounting to £233,630 and PEL has charged the Company £43,750 for consultancy services. At the year end there was an amount due by PEL to the Company of £189,880 as disclosed in note 11.

27. Events after the year end

On 28 May 2015 the Company granted a warrant to Rockpool Investments LLP ("Rockpool") to subscribe for 30,075,207 new ordinary shares of 0.1p each in the Company at an exercise price of 1.15p per share from 27 May 2018 to 27 May 2021.

**ENDS**