NOTES TO THE ACCOUNTS  

For The Year Ended 31 December 2023

 

1.             Accounting Policies

 

Powerhouse Energy Group Plc is a company incorporated in England and Wales. The Group is a public limited company quoted on the AIM market of the London Stock Exchange. The address of the registered office is Unit 3/3a Garth Drive, Brackla Industrial Estate, Bridgend, Wales, CF31 2AQ. The principal activity of the Group is to continue the development of its technology and to support its customers in order to achieve its full commercial roll-out. The Principal acativity of the group also includes the provision of Engineering services by a subsidiary company. 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  consolidation

The consolidated and parent company financial statements for the year ended 31 December 2023 have been prepared in accordance with International Financial Reporting Standards ("IFRS") issued by the International Accounting Standards Board (IASB), as adopted for use in the United Kingdom (UK) and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS (except as otherwise stated). These accounting policies and methods of computation are consistent with the prior year, unless otherwise stated.

 

The consolidated group financial statements consist of the financial statements of the parent company Powerhouse Energy Group PLC together with all other entities controlled by the parent company (its subsidiaries) and the groups share of its interests in joint ventures and associates. Control is achieved where the Group is exposed to, or has the rights to, variable returns from its investments with the entity and has the ability to affect those returns through its power over the entity. The Group obtains and exercised control through voting rights.

 

All financial statements are made up to 31 December 2023. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.

 

All intra group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provided evidence of an impairment of the asset transferred.

 

Subsidiaries are consolidated in the Groups financial statements from the date the control commences until the date that control ceases. Acquisitions of subsidiaries are dealt with using the acquisition method. The acquisition method involves the recognition at fair value of all identifiable assets and liabilities, including contingent liabilities of the subsidiary, at the acquisition date, regardless of whether or not they were recorded in the financial statements of the subsidiary prior to acquisition. On initial recognition, the assets and liabilities of the subsidiary are included in the Consolidated Statement of Financial Position at their fair values, which are also used as the cost bases for subsequent measurement in accordance with the Group accounting policies.

 

Goodwill is stated after separating out identifiable intangible assets. Goodwill represents the excess of acquisition costs over the fair value of the Group's share of the identifiable net assets of the acquired subsidiary at the date of acquisition.

 

Entities in which the group holds an interest and which are jointly controlled by the Group and one or more other ventures under a contractual arrangement are treated as joint ventures. Entities other than subsidiary undertakings or joint ventures, in which the group has a participating interest and over whose operating and financial policies the Group exercises a significant influence, are treated as associates.

 

Investments in joint ventures and associates are carried in the group statement of financial position at cost plus post acquisition changes in the Groups share of the net assets of the entity, less any impairment in value. The carrying value of investments in joint ventures and associates include acquired goodwill.

 

If the Groups share of losses in a joint venture or associate equals or exceeds its investment in the joint venture or associate, the group does not recognise further loses unless it has incurred obligations to do so or has made payments on behalf of the joint venture or associate.

 

Unrealised gains arising from transactions with joint ventures and associates are eliminated to the extent of the groups interest in the entity.

 

The Group's UK subsidiaries are both trading and non-trading. There are long-term restrictions on the operations of the Group's subsidiaries in the US and Switzerland. With these restrictions in place, the Group is also unable to exert control over the subsidiaries. As such the Group has claimed exemptions applicable to it under Companies Act section 405 (2) and 405 (3b) and IFRS 10 to not include these subsidiaries located in the US and Switzerland in the  Consolidated Financial statements for the year ended 31 December 2023. Investments in subsidiaries that are not consolidated are carried at cost less any provision for impairment.

 

The acquisition of Waste2Tricity Limited during 2020 was transacted by way of a share for share exchange and qualifies for merger relief, meaning that no share premium is recorded on the issue of the consideration shares. The excess of the fair value of consideration shares over their nominal value has been recorded in a merger relief reserve.

 

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

 

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

 

Accounting policies of the equity accounted investees are changed where necessary to ensure consistency with the policies adopted by the Group. The carrying value of equity accounted investments is tested for impairment in accordance with the policy described in Note 1.20 (ii).

 

As of 31 December 2023 the Group has two subsidiaries included in the Groups consolidated accounts, Engsolve Limited, the balance of the interest in which was acquired on 20 June 2023 and Protos Plastics to Hydrogen No.1 Limited that was acquired on 30 April 2023.

 

Other investments, which are not publicly traded, are initially measured at cost and subsequently measured at cost less accumulated losses.

 

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 exercise to assess the fair value of goodwill, 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. The Directors' views are based upon working capital projections which take into account the intended use of the funds in hand over the next 12 months.

 

As at 31 December 2023 the Group is pursuing a business strategy of selling licences for use of its technology. As at 31 December 2023, the Group had one project under development - Protos in Cheshire  -  with others still in prospect.

 

In looking forward to determine the Going Concern status, the business planning of the Group post the current reporting period, is based on the following:

 

·      The acquisition of Engsolve, giving the Group the ability to earn revenues from engineering services. Engsolve had an existing client base, a history of providing such services and was integrated into the Group with an existing bank balance.  This provides an immediate and ongoing revenue stream to the Group, extending its positive cash position;

 

·      The development of a series of capital projects addressing contamination, pollution and climate change mitigation and deploying where possible, but not exclusively, the Group's proprietary technology. The Group will focus on a business strategy of selling licences and receiving royalty fees for the use of its technology.

 

Adopting this approach:

 

·      The Group will have an ongoing revenue stream;

·      Investment in the development of the capital projects will be via shareholder loans to the SPV, repayable at financial close; and

·      In the event development of the project does not look viable (for example, failing to obtain the necessary permissions), expenditure will be curtailed and a replacement project identified.

 

The Directors consider therefore that other than fixed costs, the cash spend looking forward can be managed within the 13-month cashflow projection (May 2024 - May 2025)

 

A cash inflow of £0.5m is also anticipated following securing asset financing (although this is not guaranteed) of the Feedstock Testing Unit and associated equipment to be installed in the Powerhouse Technology Centre at Bridgend later in 2024, offsetting this capital purchase. In the event that the Group does not receive the asset finance it will need to reduce expenditure on capital projects, offset by income from Engsolve activities.

 

It was noted in the prior year's accounts that there were loans totalling £3.34m due from the Protos SPV, a company now under PHE's control. On review of the projects at acquisition it was determined that the projects were not expected to progress and as a result the amounts capitalised relating to these projects were fair valued to £330k - being materials transferred to stock for either sale or use in future projects - and the corresponding loan amounts which had been used to fund the project development and were repayable on the success of the projects were fair valued to £nil. This aligns with PHE's assessment of the recoverability of the loan in FY22 where it was deemed irrecoverable and written down to £nil also.

 

It is the view of the Directors, however, that should Protos generate future cash inflows from similar projects that they reserve the right to reinstate the loans and demand repayment.

 

1.4.  Foreign currency translation

The financial information is presented in sterling which is the Group'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

(i)   Engineering services

The Group has provided engineering services to various third party customers. 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 Group 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 Group has a right to invoice.

 

(ii)  Exclusivity fees

Where the Group grants a developer exclusive rights to utilise its technology in a particular territory for an exclusivity fee, the fee is recognised in the income statement over the agreed exclusivity period.

 

1.6.  Leases

For any new contracts entered into, the Group considers whether a contract is, or contains, a lease. A lease is defined as 'a contract, or part of a contract, that conveys the right to use an asset for a period of time in exchange for consideration'. To apply this definition the Group assesses whether the contract meets three key evaluations which are whether:

 

(i)   the contract contains an identified asset which is either explicitly defined in the contract or implicitly specified by being identified at the time the asset is made available to the Group;

 

(ii)  the Group has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use, considering its rights within the defined scope of the contract;

 

(iii) the Group has the right to direct the use of the identified asset throughout the period of use.

 

Where the above evaluations are met, at lease commencement date, the Group recognises a right of use asset and a lease liability on the balance sheet. The right of use asset is measured at cost, which is made up of the measurement of the initial lease liability, any direct initial costs incurred by the Group, an estimate of any costs to dismantle and remove the asset at the end of the lease, and any lease payments made in advance of the lease commencement date.

 

The Group depreciates right of use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right of use asset or the end of the lease term. The Group assesses the right of use asset for impairment when such indicators exist.

 

At the commencement date the Group measured the lease liability at the present value of the lease payments unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily available or the Group's incremental borrowing rate. For the assessment of the lease entered into in 2020 the Group applied a rate of 7.5%.

 

Subsequent to initial measurement the liability will be reduced for payments and increased for interest. It is remeasured to reflect any reassessment or modification or if there are any changes to the repayment schedule.

 

1.7.  Finance income and expenses

(i)   Income

Interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for financial assets that subsequently become credit impaired. For credit impaired financial assets, the effective interest rate is applied to the net carrying amount of the financial asset (after deduction of the loss allowance).

 

(ii)  Expense

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 Group'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.      Assets under construction

Assets under construction are stated at cost. 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 is not  charged until the asset is complete and bought into use at which point it is transferred into a distinct category of property plant and equipment.

 

1.11.   Right of Use Assets

 

At inception, the Group assesses whether a contract is, or contains a lease within the scope of IFRS 16. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Where a tangible asset is acquired through a lease, the group recognises a right-of-use asset and lease liability at the lease commencement date. Right of use assets are included within property, plant and equipment, apart from those that meet the definition of investment property.

 

A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the commencement date net of any lease incentives received and any initial direct costs incurred.

 

Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of the asset, whichever is the shorter. Where the Group expects to obtain ownership of the leased asset at the end of the lease term, the depreciation is over its estimated useful life. Right-of use assets are subject to impairment or adjusted for any remeasurement of lease liabilities.

 

The group has elected not to recognise right-of-use assets and lease liabilities for short term leases of machinery that have a lease term of 12 months or less, or for leases of low value assets including IT equipment. The payments associated with these leases are recognised in profit or loss on a straight line basis over a lease term.

 

 

1.12.   Intangible assets

Goodwill represents the future economic benefits arising from a business combination that are not individually identified and separately recognised. Goodwill is carried at cost less accumulated impairment losses. Refer to note 1.20 for impairment testing procedures. Goodwill impairment losses are not reversible as explained in note 1.20 (iii).

 

Goodwill on acquisitions has been calculated by taking the cost less the fair value of the assets and liabilities at acquisition. The Group will review the value of goodwill on their financial statements at least once a year and record any impairments. Where the goodwill generated results on a gain on bargain purchase this is credited to the Statement of Comprehensive Income in the year of recognition.

 

Exclusivity rights acquired in a business combination that qualify for separate recognition are recognised as intangible assets at their fair value and subsequently assessed for impairment loss.

 

Costs associated with patent applications are capitalised in the year of spend and amortised over their estimated useful lives of 20 years on a straight-line basis commencing from the date of patent application. Any cost associated with the upkeep of a patent is amortised over the remaining useful life of that patent.

 

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.

 

Research and 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.

 

1.13.   Other non-current assets

Other non-current assets represent investments in subsidiaries. The investments are carried at cost less accumulated impairment. Where a step acquisition occurs and control of a subsidiary company is achieved in stages the initial investment in associate is treated as being disposed of and reacquired at the considered fair value with any gain or loss arising being allocated to the Statement of Comprehensive Income. This is then treated as the deemed cost. Subsequently the Investment is held at deemed cost less impairment.

 

Financial assets

The Group 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.

 

1.14.   Contract costs

The Group 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.

 

1.15.   Trade and other receivables

Trade receivables are initially recognised at fair value. Subsequently they are carried at amortised cost less any provision for impairment.

 

1.16.   Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits and are recognised and subsequently carried at fair value. For the purpose of presentation in the statement of cashflows, cash and cash equivalents include cash on hand, deposits held at call with financial institutions, other short term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.

 

1.17.   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.

 

1.18.   Financial assets and liabilities

i)    Financial assets

Loans receivable, where forward receivables comprise solely of payments of principal and interest, are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method.

 

ii)   Financial liabilities

Loans payable are financial obligations arising from funding received and used to support the operational costs of the Group. These are initially recognised at fair value. Loans are subsequently carried at amortised cost using the effective interest method.

 

1.19.   Adoption of new and revised standards

i)    New and amended standards adopted by the Group

New and amended standards for the current period and effective from 1 January 2023 have been applied by the Group, including:

 

IFRS 17 Insurance Contracts

IAS1 & IFRS practice statement 2

Definition of Accounting Estimates - Amendments to IAS 8

IAS 12 - Deferred Tax related to Assets and Liabilities arising from a single transaction

IAS 12 International Tax reform - pillar two Model Rules

 

There are no transitional adjustments relating to the adoption of these standards.

 

ii)   Standards issued but not yet effective

Certain new accounting standards and interpretations have been published that are not mandatory for 31 December 2023 reporting periods and have not been adopted early by the Group. These standards are not expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.

 

1.20.   Impairment

(i)   Goodwill

Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. This is detailed in note 1.12 above.

 

(ii)  Other assets

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.

 

(iii) 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.

 

1.21.   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 Group 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 Scholes valuation model. At each reporting date the Group 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 Group 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 Group 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 Group are credited to share capital and share premium when the share entitlements are exercised.

 

1.22.   Employee benefits

Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees' services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are included within creditors in the balance sheet.

 

For defined contribution pension plans, the Group pays contributions to publicly or privatley administered pension insurance plans on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

 

The Group does not contribute to any defined benefit pension plans.

 

1.23.   Segmental reporting

 

An operating segment is a component of the Group:

•    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 Group);

•    whose operating results are reviewed regularly by the Group'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.

 

The Group considers it has two business segments, being a UK based technology company intending to license its technology to projects in the UK and internationally and a UK based multi disciplined Engineering Consultancy with significant experience in undertaking engineering design and support for third party customers.

 

 

The Engineering segment, Engsolve Limited, generated all of the Group £180,959 Revenue in 2023. Engsolve became part of the Group in June 2023. This revenue was generated through Engsolve providing Engineering Services to third party customers. The Group will be looking to continue providing  third party Engineering Services through Engsolve Limited and to further develop this revenue stream, both through internal and external work.

 

The Technology/Licensing segment (The Company), did not generate any licence income in 2023. The Group is focusing on developing this license revenue stream in future years.

 

2.     Revenue

			Group		Company
			2023 £	2022                     £	2023 £	2022                              £
Engineering and related services			180,959	341,293	-	341,293
Exclusivity fees			-	38,984	-	38,984
Other			-	-	-	-
			180,959	380,277	-	380,277

 

During the year, the Group billed for engineering work carried out on projects. All revenue generated has arisen in the UK.

 

3.     Employee costs

			Group		Company
			2023 £	2022 £	2023 £	2022 £
Directors' fees			474,671	581,072	419,671	581,072
Wages and salaries			316,128	174,769	135,625	174,769
Social security costs			50,012	75,609	31,990	75,609
Pensions			71,655	16,817	23,207	16,817
			912,466	848,267	610,493	848,267

 

Highest Paid Director - refer to note 29

 

The number of average monthly employees (including Directors) are as follows:          

		Group		Company
		2023	2022	2023	2022
Management		7	6	6	6
Operations		4	3	1	3
		11	9	7	9

The figures in the table above includes the average number of employees throughout the year based on the acquisition of Engsolve in June 2023. The total number of employees as at 31 December 2023 (including Directors) was 15 (2022: 9) comprising 7 in management and 8 in operations (2022: 6 in management, 3 in operations). All Directors are classed as management

 

 

 

 

4.     Administrative expenses

Included in administrative expenses are:				2023 £			2022 £
Research and development costs				561,474			431,185
Amortisation				16,997			10,263
Depreciation				11,732			5,397
Depreciation - right of use asset				30,153			22,573
Gain on bargain purchase (see note 27)				(712,751)			-
Share based payments				40,000			(18,629)
Foreign exchange (gains)/losses				-			162
Auditor's remuneration for audit services:
Fees payable to the group's auditor for the audit of the group's annual financial statements					43,500	25,000
Fees payable to the group's auditor and their associates for other services:						1,000
Non-audit fees paid to auditors
R & D Taxation advisory and compliance services					-	10,000

 

5.     Share of associate

			2023 £	2022                                 £
Share of profits			76,206	60,326
			76,206	60,326

 

The Group acquired a 48.39% stake in Engsolve on 12 August 2021 as explained in note 13. The Group acquired the balance of 51.61% stake in Engsolve on 20 June 2023. The above result represents both the Group and Companies share of the associate's profits arising post acquisition.

 

6.        Goodwill & Exclusivity impairment

			2023 £	2022 £
Goodwill Impairment			-	40,660,000
Exclusivity impairment			-	500,000
			-	41,160,000

 

In 2020, Goodwill of £57,152,699 was recognised on the acquisition and hive up of Waste2tricity Limited. An independent fair value assessment is commissioned by the Directors on the carrying value at each balance sheet date as explained in note 11. Impairments are made based upon the results of those assessments plus input from the Board. No impairment was made in relation to the goodwill carrying value ad 31 December 2023

 

7.     Loan & Revenue impairment

			2023 £	2022 £
Loan Impairment/(write off)			-	2,159,274
Revenue impairment			-	986,392
			-	3,145,666

 

The 2022 write off is a Company only write off. Further description on the impairment of the Loan impairment ("loan debtor") and Revenue impairment ("trade debtor") is disclosed in Note 14.

 

In 2020, Exclusivity of £500,000 was recognised on the acquisition and hive up of Waste2tricity Limited. An independent fair value assessment is commissioned by the Directors on the carrying value at each balance sheet date as explained in note 11. Impairments are made based upon the results of those assessments.

 

 

8.     Net finance income/(cost)

 

			Group			Company
			2023 £	2022                                 £	2023 £			2022 £
Loan interest receivable			-	66,388		-	66,388
Lease Interest			(10,867)	-		(10,867)	-
Other interest receivable			6,184	251		-	251
Bank and other interest payable			(1,517)	(1,191)		(1,065)	(1,191)
			(6,200)	65,448		(11,932)	65,448

 

9.     Income tax and deferred tax

As the Group incurred a loss, no current tax is payable (2022: £nil). 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 Group submitted a claim for research and development tax credits (relating to financial year 2022) during the year amounting to £168,527 (2022: £166,318, relating to financial year 2021) which has been recognised in the accounts. The Group has not submitted a claim for research and development tax credits for financial year 2023. This claim will be submitted during 2024. Accumulated tax losses in the Group amount to an estimated £24.6 million, and Group £24.3 million (2022: £22.0 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 (2022: lower) than the standard rate of tax. Differences are explained below.

 

Group

Current tax	2023 £	2022 £
Loss before taxation	1,537,464	46,353,704
Tax credit at standard UK corporation tax rate of 23.5% (2022: 19%)	361,304	8,807,204
Effects of:
Goodwill impairment not deductible for tax purposes	-	(7,820,400)
Expenses not deductible for tax purposes	(14,411)	2,429
Capital allowances in excess of depreciation	350,121	-
Allowable deduction on exercise of share options	-	-
Research and development tax credits claimed	(146,681)	166,318
Deferred tax asset not recognised	(440,516)	(1,000,526)
Income tax credit	109,817	155,025

 

Company

Current tax	2023 £	2022 £
Loss before taxation	2,398,469	46,353,704
Tax credit at standard UK corporation tax rate of 23.5% (2022: 19%)	563,640	8,807,204
Effects of:
Goodwill impairment not deductible for tax purposes	-	(7,820,400)
Expenses not deductible for tax purposes	(13,845)	2,429
Additions	211,628	-
Allowable deduction on exercise of share options	-	-
Research and development tax credits claimed	(146,681)	166,318
Deferred tax asset not recognised	(446,215)	(1,000,526)
Income tax credit	168,527	155,025

  

 

 

 

 

10.   Loss per share

 

	Group		Company
	2023	2022	2023	2022
Total comprehensive loss (£)	(1,427,648)	(46,198,679)	(2,229,942)	(46,198,679)
Weighted average number of shares	4,025,227,834	3,957,414,135	4,025,227,834	3,957,414,135
Loss per share in pence	(0.04)	(1.17)	(0.06)	(1.17)
Diluted loss per share in pence	(0.04)	(1.17)	(0.06)	(1.17)

 

For the year ended 31 December 2022, 3,581,355 of the options in issue and 381,100,979 of the warrants in issue were excluded from the diluted loss per share calculation due to being anti-dilutive.

 

There were 208,000,000 new ordinary shares issued in the year to 31 December 2023. A total of 200,000,000 new ordinary shares of 0.5p were placed on 4 September 2023 at an issue price of 0.5p. Additionally, 8,000,000 new ordinary shares were issued at the issue price to the Group's broker on 4 September 2023.  

 

 

 

 

11.    Intangible fixed assets

 

Group	Goodwill	Exclusivity rights	Patent costs	Website	Total
	£	£	£	£	£
Cost
At 1 January 2022	57,152,699	500,000	101,717	-	57,754,416
Additions	-	-	117,838	-	117,838
At 31 December 2022	57,152,699	500,000	219,555	-	57,872,254
Accumulated amortisation & impairment
At 1 January 2022	14,192,699	-	7,219	-	14,199,918
Amortisation charge for the year	-	-	10,263	-	10,263
Impairment charge for the year	40,660,000	500,000	-	-	41,160,000
At 31 December 2022	54,852,699	500,000	17,482	-	55,370,181
Carrying amount
At 31 December 2022	2,300,000	-	202,073	-	2,502,073
Cost
At 1 January 2023	57,152,699	500,000	219,555	-	57,872,254
Additions Disposals	573,581	- (500,000)	31,574 -	16,634 -	621,789 (500,000)
At 31 December 2023	57,726,280	-	251,129	16,634	57,994,043
Accumulated amortisation & impairment
At 1 January 2023	54,852,699	500,000	17,482	-	55,370,181
Amortisation charge for the year Disposals	- -	- (500,000)	13,130 -	3,867 -	16,997 (500,000)
At 31 December 2023	54,852,699	-	30,612	3,867	54,887,178
Carrying amount
At 31 December 2023	2,873,581	-	220,517	12,767	3,106,865

 

Company	Goodwill	Exclusivity rights	Patent costs	Website	Total
	£	£	£	£	£
Cost
At 1 January 2022	57,152,699	500,000	101,717	-	57,754,416
Additions	-	-	117,838	-	117,838
At 31 December 2022	57,152,699	500,000	219,555	-	57,872,254
Accumulated amortisation & impairment
At 1 January 2022	14,192,699	-	7,219	-	14,199,918
Amortisation charge for the year	-	-	10,263	-	10,263
Impairment charge for the year	40,660,000	500,000	-	-	41,160,000
At 31 December 2022	54,852,699	500,000	17,482	-	55,370,181
Carrying amount
At 31 December 2022	2,300,000	-	202,073	-	2,502,073
Cost
At 1 January 2023	57,152,699	500,000	219,555	-	57,872,254
Additions Disposals	- -	- (500,000)	31,574 -	16,634 -	48,208 (500,000)
At 31 December 2023	57,152,699	-	251,129	16,634	57,420,462
Accumulated amortisation & impairment
At 1 January 2023	54,852,699	500,000	17,482	-	55,370,181
Amortisation charge for the year Disposals	- -	- (500,000)	13,130 -	3,867 -	16,997 (500,000)
At 31 December 2023	54,852,699	-	30,612	3,867	54,887,178
Carrying amount
At 31 December 2023	2,300,000	-	220,517	12,767	2,533,284

 

Goodwill acquired by the Group in 2020 arose on the acquisition and hive up of Waste2Tricity Limited. It was considered attributable to the Group's DMG™ technology, which is intended to be licensed on a project-by-project basis to generate income to the Group over the lifetime of each project.

 

The recoverable amount of goodwill at the balance sheet date was assessed as a directors' valuation (2022: directors' valuation). The directors (2022: directors) assessed impairment of £nil to goodwill (2022 assessed impairment of £40.66m to goodwill). The directors (2022: directors) took note of the ICAEW Corporate Finance Faculty Best Practice Guideline April 2008 and applied a discounted cashflow approach, supported by the International Private Equity and Venture Capital Guidelines of December 2018.

 

Goodwill additions in the Group in the year relates entirely to the acquisitions of Engsolve Limited and Protos Limited as set out in Note 13 and Note 27. The goodwill generated on the acquisition of Protos Plastics to Hydrogen No 1 Ltd was calculated as a Gain on Bargain Purchase which has been expensed to the Statement of Comprehensive Income in accordance with the Group's accounting policies.

 

The key assumptions made by the directors in both years were:

 

·      the expected roll out of the technology over 5 years following the delivery of the Protos project (2022: same assumption);

 

·      that the roll out will not be significantly impacted by competing technologies (2022: same assumption);

 

·      that the Group and roll out developer construct 5 projects (2022: same assumption);

 

·      the expected operating life of projects from which the Group will earn licence revenues (2022: same assumption);

 

·      the expected licence fees arising per project based upon agreements with Peel NRE (2022: same assumption);

 

·      the expected cost of services to support annual licence fee income estimated by the Group based upon current draft project agreements (2022: same assumption);

 

·      applying a discount rate to cashflow of 35% (2022: 35%) assessed by review of market survey reports of discount rates for projects within similar and competing sectors which was considered to provide a reasonable estimate of a weighted average cost of capital for a group benefiting from the assumed roll out.

 

Changes to the above assumptions would impact the valuation assessment.

 

The Directors believe that key sensitivities in the 2023 and 2022 valuation are as follows:

 

(i)       The Directors have assumed a fixed number of 5 projects and 6 systems to be rolled out. Sensitivity workings with the roll out of 3 projects and 3 systems would decrease the valuation by c£0.8m to £1.5m.

 

(ii)      The discount rate applied to the cashflows. Sensitivity workings with a discount rate 5% higher at 40% would decrease the valuation by c£0.5m to £1.8m.

 

(iii)     Inflation - an increase in the inflation assumption above that assumed in the Directors model would result in adjustment to the licence fees and result in an increase the Director's valuation.

 

The Directors have not accounted for the possibility of any onerous obligations arising within the service contracts from which licence fees will be earnt as there is no reason to expect that these will arise at this stage in the business life cycle.

 

The Group completed an impairment review and fair value review of Engsolve Limited as part of our year end Accounts FY 2023. As part of the exercise we reviewed fixed and current assets, liabilities and the future forecast of the business. The outcome of this impairment review was that we believe the Goodwill valuation at £573k should not be impaired at the year-end Dec 23.

 

As explained in note 27, the Group acquired the full ownership of Protos Plastics to Hydrogen No. 1 Ltd (also known as "Protos SPV") as an indirect subsidiary into Powerhouse Energy UK Limited from Peel NRE Ltd for a nominal payment of £1 on 28  April 2023. During the year to 31 December 2022, the Group had been in discussions with Peel NRE to enter into a 50/50 Joint Venture arrangement with Peel NRE. However, this did not materialise and Peel NRE continued to own 100% of Protos SPV until the Group finally purchased 100% of the share capital of Protos SPV on 28 April 2023. The purchase agreement by the Group secures full control of Protos SPV with an option to lease on the site at Protos.

 

Refer to the CEO section of the Annual Report for further details.

 

12.           Tangible fixed assets

 

Group

	Right of use asset Land and buildings	Property, plant and equipment	Fixtures and fittings	Assets under construction	Total
	£	£	£	£	£
Cost
At 1 January 2022	49,250	20,413	1,203	-	70,866
Additions	-	-	673	-	673
At 31 December 2022	49,250	20,413	1,876	-	71,539
Accumulated depreciation
At 1 January 2022	26,677	10,705	392	-	37,774
Charge for the year	22,573	4,865	532	-	27,970
At 31 December 2022	49,250	15,570	924	-	65,744
Carrying amount
At 31 December 2022	-	4,843	952	-	5,795
Cost
At 1 January 2023	49,250	20,413	1,876	-	71,539
Additions	180,919	32,349	10,726	958,340	1,182,334
Additions on acquisition	-	16,959	15,839	-	32,798
Disposals	(49,250)	-	-	-	(49,250)
At 31 December 2023	180,919	69,721	28,441	958,340	1,237,421
Accumulated depreciation
At 1 January 2023	49,250	15,570	924	-	65,744
Charge for the year	30,153	9,614	2,118	-	41,885
Charges on aquisition		13,464	5,942		19,406
Disposals	(49,250)			-	(49,250)
At 31 December 2023	30,153	38,648	8,984	-	77,785
Carrying amount
At 31 December 2023	150,766	31,073	19,457	958,340	1,159,636

 

 

Company

 

	Right of use asset Land and buildings	Property, plant and equipment	Fixtures and fittings	Assets under construction	Total
	£	£	£	£	£
Cost
At 1 January 2022	49,250	20,413	1,203	-	70,866
Additions	-	-	673	-	673
At 31 December 2022	49,250	20,413	1,876	-	71,539
Accumulated depreciation
At 1 January 2022	26,677	10,705	392	-	37,774
Charge for the year	22,573	4,865	532	-	27,970
At 31 December 2022	49,250	15,570	924	-	65,744
Carrying amount
At 31 December 2022	-	4,843	952	-	5,795
Cost
At 1 January 2023	49,250	20,413	1,876	-	71,539
Additions	180,919	32,349	10,726	*628,340	852,334
Disposals	(49,250)	-	-	-	(49,250)
At 31 December 2023	180,919	52,762	12,602	628,340	874,623
Accumulated depreciation
At 1 January 2023	49,250	15,570	924	-	65,744
Charge for the year	30,153	9,614	2,118	-	41,885
Disposals	(49,250)	-	-	-	(49,250)
At 31 December 2023	30,153	25,184	3,042	-	58,379
Carrying amount
At 31 December 2023	150,766	27,578	9,560	628,340	816,244

 

*Included with fixed assets is the amount of £628,340 relating to assets under construction. As per the accounting policy, no depreciation will be charged until such a time as the asset is in use.

 

13.   Investments

 

	2023 £	2023 £	2023 £	2022 £	2022 £	2022 £
	Subsidiaries	Associates	Other	Subsidiaries	Associates	Other
Cost or carrying value at 1 January	48,947,155	187,638	-	48,947,155	140,540	-
Additions	846,145	-	-	-	-	-
Goodwill recognised	-	-	-	-	-	-
Dividends	-	-	-	-	(1,935)	-
Share of associate's net result	-	76,203	-	-	49,033	-
Transfers	263,841	(263,841)	-	-	-	-
Disposals	-	-	-	-	-	-
Cost or carrying value 31 December	50,057,141	-	-	48,947,155	187,638	-
Provision at 1 January	(48,947,154)	-	-	(48,947,154)	-	-
Additions	-	-	-	-	-	-
Disposals	-	-	-	-	-	-
Accumulated impairment	(48,947,154)	-		(48,947,154)	-
Carrying value	1,109,987	-	-	1	187,638	-

 

 

(i)   Subsidiaries

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 Group holds 100 per cent of the common stock and voting rights of the subsidiary. Pyromex AG is based in Zug, Switzerland and the Group 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.

 

The subsidiaries included in the consolidated accounts are Engsolve Ltd and Protos Plastics to Hydrogen No.1 Limited.

 

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, Powerhouse Energy International Limited, Engsolve Limited and Protos to Plastics Hydrogen No. 1 Limited is Unit 3/3A Garth Road, Brackla Industrial Estate, Bridgend CF31 2AQ.

 

(ii)  Acquisition of interest in Engsolve Limited

On 21 June 2023, the Group acquired the remaining 51.61% of the share capital of Engsolve Limited for cash consideration of £572,896. Engsolve Limited is incorporated and operates in the UK. Summary financial information of Engsolve Limited at acquisition and balance sheet dates is provided below:

 

		31 Dec 2023 £		21 June 2023 £		31 Dec 2022 £
Summarised balance sheet
Fixed assets		13,391		11,694		6,221
Cash and cash equivalents		570,693		466,793		400,073
Other current assets		141,788		150,492		86,632
Current liabilities		(135,564)		(106,419)		(109,457)
Net assets		590,308		522,560		383,469
Group share		100%		100%		48.39%
Share of net assets		590,308		522,560		185,550

 

Summarised Income statement - post acquisition
Revenue		1,120,144	596,860		976,182
Profit from continuing operations		206,840	152,936		101,334
Profit from discontinued operations		-			-
Other comprehensive income		-			-
Total comprehensive income		206,840	152,936		101,334
Group Share of pre-tax profit/(loss)		206,840	83,066		60,326
Group share of tax		(44,534)	(6,860)		(11,293)
Dividends received		-	-		1,935

 

The Group incurred advisory costs associated with the acquisition which were expensed in 2023.

 

(iii) Acquisition of interest in Protos Plastics Limited

On 21 June 2023, the Group acquired 100% of the share capital of Protos Plastics to Hydrogen No.1 Limited as an indirect subsidiary though Powerhouse Energy UK Limited for cash consideration of £1. Protos Plastics to Hydrogen No.1 Limited is incorporated and operates in the UK. Summary financial information of Protos Plastics to Hydrogen No.1 Limited at acquisition and balance sheet date is provided below:

 

		31 Dec 2023 £
Summarised balance sheet
Cash and cash equivalents		5
Other current assets		945,715
Current liabilities		(197,324)
Net assets		748,391
Group share		100%
Share of net assets		748,391

 

 

 

Summarised Income statement - post acquisition
Revenue		-
Profit/Loss from continuing operations		35,639
Profit from discontinued operations		-
Other comprehensive income		-
Total comprehensive income		35,639

 

The Group incurred advisory costs associated with the acquisition which were expensed in 2023.

 

(iv) Other investments

During 2021, the Group's investment in Waste2Tricity International (Thailand) Limited was transferred into a new Thailand based entity, Altec Energy Limited ("Altec"). The Group has not taken part in fund raises investment made by Altec subsequent to its formation. In the previous year's accounts the interest was identified as being reduced to 33.8% as at 31 December 2021 and to 30.4% since December 2021. We have been recently informed that the audit of Altec accounts picked up an error in these calculations. The share holding was in fact 33.5% as at December 2021 and 30.1% since December 2021 (a 0.3% error in the calculation). Due to the passive nature of the Group's involvement, the interest is held in other investments.

 

14.   Loans receivable

		2023 £	2022 £
Loans advanced		-	2,077,600
Accrued interest		-	81,674
Loan provision		-	(2,159,274)
		-	-

 

On 12 May 2021, the Group agreed to provide a loan facility for up to £3.8m to Protos Plastics to Hydrogen No 1 Limited, the Peel NRE special purpose vehicle and owner of the development of the Protos plant. The loan was to provide support to the plant construction and to secure long lead time items and project design services. The loan facility was made available for an initial 6-month period, accruing interest daily at the Bank of England base rate plus 2%. The availability period for the facility was subsequently extended until 28 April 2023 at which point Powerhouse Energy Group Plc acquired 100% of the share capital of Protos Plastics to Hydrogen No1 Limited for £1. From October 2022 to the year end, the directors were seeking a 50/50 JV with Peel NRE and there had been other indicators of a change in the risk profile. The directors in note 11 have assumed a discount rate of 35% for the project with Peel NRE, due to the change in the risk profile. Accordingly, the Directors impaired the loan in full as at December 31 2023. The Directors also applied the same approach to the trade debtor balance of £986,392 which existed between Powerhouse Energy Group Plc and Protos Plastics to Hydrogen No 1 Limited and subsequently impaired the trade debtor balance also to £Nil value at the year end 31 December 2022.

 

15.   Trade and other receivables

			Group		Company
			2023 £	2022 £	2023 £	2022 £
Trade receivables			79,078	-	-	-
Other receivables			157,094	342,021	375,864	342,021
Prepayments and accrued income			89,662	61,226	78,223	61,226
			325,834	403,247	454,087	403,247

 

16.    Corporation tax

			Group		Company
			2023 £	2022 £	2023 £	2022 £
Corporation tax recoverable			168,527	166,318	168,527	166,318
			168,527	166,318	168,527	166,318

 

 

17.    Cash and cash equivalents

			Group		Company
			2023 £	2022 £	2023 £	2022 £
Cash balances			4,348,887	5,882,897	3,775,250	5,882,897
			4,348,887	5,882,897	3,775,250	5,882,897

 

18.    Trade and other payables: amounts falling due within one year

			Group		Company
			2023 £	2022 £	2023 £	2022 £
Trade payables			110,673	116,560	79,308	116,560
Lease liability			32,921	-	32,921	-
Other creditors and accruals			341,202	148,563	922,582	148,563
Other taxes			19,774	10,677	19,684	10,677
Pensions payable			1,688	3,506	1,688	3,506
			506,258	279,306	1,056,183	279,306

 

19.    Trade and other payables: amounts falling due more than one year

 

			Group		Company
			2023 £	2022 £	2023 £	2022 £
Lease liability			122,475	-	122,475	-
			122,475	-	122,475	-

 

20.   Financial assets and financial liabilities

 

Financial assets			Group			Company
			2023	2022		2023	2022
			£	£		£	£
Financial assets at amortised cost:
- Trade receivables			79,078	-		79,078	-
- Other Debtors			157,094	342,021		375,864	342,021
- Cash and cash equivalents			4,348,887	5,882,897		3,775,250	5,882,897
			4,585,059	5,882,897		4,230,192	5,882,897
Financial liabilities			Group			Company
			2023	2022		2023	2022
Liabilities at amortised cost:			£	£		£	£
- Trade payables		110,673		116,560		79,308	116,560
-Other creditors		341,172		148,563		922,582	148,563
-Taxes - VAT & payroll		19,744		10,677		19,684	10,677
- Pensions payable		1,688		3,506		1,688	3,506
-Lease liabilities		32,981		-		32,921	-
		506,258		279,306		1,056,183	279,306

 

21.   Leases

The Group

 has leased offices at the location of its research facility for a duration less than one year. The lease is reflected in the accounts as an expense on the income statement.

 

21.1 Amounts recognised in the balance sheet

 

Right of use assets relate to leased properties that do not meet the definition of investment property and are presented within tangible fixed assets per Note 12.

			2023 £	2022 £
Right of use assets
Balance at 1 January			-	22,573
Additions to right of use assets			180,919	-
Depreciation charge for the year			(30,153)	(22,573)
Balance at 31 December			150,766	-

 

Future minimum rentals payable are as follows:			2023 £	2022 £
Amounts payable:
Within one year			46,000	-
Later than one year and not later than five years			135,570	-
Total gross payments			181,570	-
Impact of finance expenses			(26,174)	-
Carrying value of liability			155,396	-

21.2 Amounts recognised in income statement

			2023 £	2022 £
Depreciation charge			30,153	22,573
Interest on lease liabilities			10,867	855
Expenses relating to short term leases			3,844	120
			44,864	23,548

 

 

 

 

21.3 Amounts recognised in statement of cashflows

			2023 £	2022 £
Interest on lease liabilities			10,867	855
Repayment of lease principal			30,153	23,455
Total cash outflow for leases			41,020	24,310

 

22.   Share capital

 

Group and Company

(i) Number of shares

		0.5 p Ordinary shares	0.5 p Deferred shares	4.5 p Deferred shares	4.0 p Deferred shares
Shares at 1 January 2022		3,957,414,135	388,496,747	17,373,523	9,737,353
Issue of shares		-	-	-	-
Shares at 31 December 2022		3,957,414,135	388,496,747	17,373,523	9,737,353
Issue of shares		208,000,000	-	-	-
Shares at 31 December 2023		4,165,414,135	388,496,747	17,373,523	9,737,353

 

(ii) Value in £

		0.5 p Ordinary shares	0.5 p Deferred shares	4.5 p Deferred shares	4.0 p Deferred shares	Share Capital
		£	£	£	£	£
At 1 January 2022		19,787,071	1,942,483	781,808	389,494	22,900,856
Issue of shares		-	-	-	-	-
At 31 December 2022		19,787,071	1,942,483	781,808	389,494	22,900,856
Issue of shares		1,040,000	-	-	-	1,040,000
At 31 December 2023		20,827,071	1,942,483	781,808	389,494	23,940,856

 

All ordinary shares of the Company rank pari-passu in all respects.

 

The deferred shares do not 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 £100 has been paid in respect of each ordinary share.

 

On 22 August 2023, the Company issued 200,000,000 new ordinary shares of 0.5p each ("Ordinary shares") in the Company at a price of 0.5p each amounting to £1,000,000 before issue costs. The Company also paid its Broker, Turner Pope Investments Limited, 8,000,000 new ordinary shares ("Broker Fee Shares") at the issue price 0.5p each amounting to £40,000 instead of cash in respect of certain professional fees.

 

 

23.   Other reserves

 

Group

	Merger relief reserve £	Share premium account £
As at 1 January 2022	36,117,711	61,291,710
Reserve transfer - goodwill impairment	(36,117,711)	-
At 31 December 2022	-	61,291,710
Share based payments	-	(70,901)
Share issue costs	-	-
Reserve transfer - goodwill impairment	-	-
At 31 December 2023	-	61,220,809

 

Company

	Merger relief reserve £	Share premium account £
As at 1 January 2022	36,117,711	61,291,710
Reserve transfer - goodwill impairment	(36,117,711)	-
At 31 December 2022	-	61,291,710
Share based payments	-	(70,901)
Share issue costs	-	-
Reserve transfer - goodwill impairment	-	-
At 31 December 2023	-	61,220,809

 

24.   Accumulated deficit

 

Group

	2023 £	2022 £
As at 1 January	(75,323,903)	(65,224,306)
Loss for the year	(1,427,647)	(46,198,679)
Share based payments	70,901	(18,629)
Reserve transfer - goodwill impairment	-	36,117,711
At 31 December	(76,680,649)	(75,323,903)

 

Company

	2023 £	2022 £
As at 1 January	(75,323,903)	(65,224,306)
Loss for the year	(2,229,942)	(46,198,679)
Share based payments	70,901	(18,629)
Reserve transfer - goodwill impairment	-	36,117,711
At 31 December	(77,482,944)	(75,323,903)

  

 

 

25.   Share based payments

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

	2023 £	2022 £
Share based payment charge recognised in Income Statement
Expense arising from equity-settled share-based payment transactions:
- Share options for Directors and employees	-	-
- Shares issued for third party services	40,000	-
Total share-based payment charge in Income Statement	40,000	-
Share based payment charge recognised in Share Premium Account
Warrants for third party services in Sep 23	78,735	-
Warrants lapsed in Sep 23	(7,834)
Total share-based payment charge in Share Premium Account	70,901	-
Total share-based payment charges recognised	-	-
Other share-based payment movement
Exercise of share options by Directors and employees	-	-
Exercise of warrants for third party services	-	-
Shares option lapsed in Jan 22	-	(18,629)
Total share-based payment	-	(18,629)

 

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

 

25.1 Share options for Directors and employees

 

The Group has put in place various options schemes for Directors and employees as follows:

 

On 8 December 2014, the Group granted 11,000,000 options over ordinary shares to the Board. 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 6 March 2018, the Group 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 Group granted 60,000,000 options over ordinary shares to Board members 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.

 

On 23 April 2021, the Group granted 1,773,239 share options in ordinary shares of 0.5p each in the Group to two Directors of the Group in lieu of part or all of their fees to which they are entitled. The options have an exercise price of 6.3p each and lapse 3 years from the date of grant.

 

The movement of share options in the year are as follows:

 

	2023	2023	2022	2022
	Number	WAEP (pence)	Number	WAEP (pence)
Outstanding at 1 January	15,581,355	1.13	16,062,692	1.33
Granted during the year	-	-	-	-
Forfeited during the year			(481,337)	6.3
Exercised during the year	-	-	-	-
Outstanding at 31 December	15,581,355	1.13	15,581,355	1.13
Exercisable at 31 December	15,581,355	1.13	15,581,355	1.13

 

The weighted average remaining contractual life for the share options outstanding as at 31 December 2023 was 0.9 years (2022: 1.9 years).

 

No share options were granted during the year (2022: nil). The range of exercise prices for options outstanding at the year-end was 0.6p to 6.3p (2022: 0.6p to 6.3p). The number of options outstanding at 31 December 2023 and the movements in the year are as follows:

 

Date of grant	Granted	Share price on grant	Exercised	Forfeited	At 31 Dec 2023	Exercise price	Exercise period
8 Dec 2014	6,000,000	1.875p	-	(3,000,000)	3,000,000	2.5p	9 Dec 2014 until 8 Dec 2024
6 Mar 2018	60,000,000	0.57p	(48,000,000)	-	12,000,000	0.6p	7 Mar 2018 until 8 Dec 24*
22 Apr 2021	1,773,239	5.58p	-	(1,191,884)	581,355	6.3p	23 Apr 2021 until 22 Apr 2024
Total	67,773,239		(48,000,000)	(4,191,884)	15,581,355

 

 

\* The expiry date of the option granted on 6 March 2018 was adjusted by the board due to a director leaving the Group in June 2022. On 29 September 2022 the board agreed to align the termination/expiry dates for both sets of options for James Greenstreet to 8 December 2024.

 

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	6 March 2018	22 April 2021
Options in issue 31 December 2023	3,000,000	12,000,000	581,355
Exercise price	2.5p	0.6p	6.3p
Expected volatility	127.56%	70.00%**	214.8%**
Contractual life	10 years	10 years	3 years
Risk free rate	2%	1.49%	0.15%
Estimated fair value of each option	1.79p	0.32p*	3.87p*

 

* the calculation applies a 25% discount for small companies

** expected volatility based on historic volatility at the point of grant.

 

25.2 Warrants for third party services

 

The Group 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 15 September 2020, the Group granted 5,395,260 warrants to the Group'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 third anniversary of the grant date and will lapse of not exercised during that period. At the date of grant the share price was 3.3p and the warrants have an exercise price of 2.5p per share.

 

On 21 January 2021, the Group granted 9,090,910 warrants to the Group'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 third anniversary of the grant date and will lapse of not exercised during that period. At the date of grant the share price was 8.6p and the warrants have an exercise price of 5.5p per share.

 

On 1 September 2023, the Group granted 16,000,000 warrants to the Group'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 third anniversary of the grant date and will lapse of not exercised during that period. At the date of grant the share price was 0.55p and the warrants have an exercise price of 0.5p per share.

 

Please see note 32 Events after the reporting period in relation to issuing warrants to Strand Hanson Limited.

 

Warrants in respect of services provided:

 

The movement of warrants issued for share-based payments in the year are as follows:

 

 

	2023	2023	2022	2022
	Number	WAEP (pence)	Number	WAEP (pence)
Outstanding at 1 January	9,590,910	5.3	9,590,910	5.3
Granted during the year	16,000,000	0.5		-
Forfeited during the year	(500,000)	2.5	-	-
Exercised during the year	-	-		-
Outstanding at 31 December	25,090,910	2.3	9,590,910	5.3
Exercisable at 31 December	25,090,910	2.3	9,590,910	5.3

 

The weighted average remaining contractual life for the share warrants outstanding as at 31 December 2023 was 1.7 years (2022: 1.0 years)

 

The range of exercise prices for warrants outstanding at the year-end was 0.5p to 5.5p (2022: 2.5p to 5.5p).

 

The number of warrants, which have been included for share-based payment purposes, outstanding at 31 December 2023 and the movements in the year are as follows:

 

Date of grant	Granted	Share price on grant	Exercised	Forfeited	At 31 Dec 2023	Exercise Price	Exercise period
15 Sep 2020	5,395,260	3.3p		(5,395,260)	-	2.5p	16 Sep 2020 until 15 Sep 2023
21 Jan 2021	9,090,910	8.6p	-	-	9,090,910	5.5p	22 Jan 2021 until 21 Jan 2024
01 Sep 2023	16,000,000	0.6p	-	-	16,000,000	0.5p	02 Sep 2023 until 01 Sep 2026
Total	30,486,170	-	-	(5,395,260)	25,090,910

 

The Group 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 services	21 Jan 2021		01 Sep 2023
In issue 31 December 2023	9,090,910		16,000,000
Exercise price	5.5p		0.5p
Expected volatility*	161.6%		275.58%
Contractual life	3 years		3 years
Risk free rate	(0.07%)		4.82%
Estimated fair value of each option	4.6p		0.49p

 

* expected volatility based on historic volatility at the point of grant.

 

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 2023 and the movements in the year are as follows:

 

Date of grant	Granted	Share price on grant	Exercised	Forfeited	At 31 Dec 2023	Exercise price	Exercise period
15 Sep 2020	371,510,069	3.3p	-	(371,510,069)	-	2.75p	16 Sep 2020 until 30 April 2023
Total	371,510,069		-	(371,510,069)	-

 

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:

 

 

All warrants

 

The number of all warrants outstanding at 31 December 2023 and the movements in the year are as follows:

 

Date of grant	Granted	Share price on grant	As at 1 Jan 2023	Exercised	Forfeited	At 31 Dec 2023	Exercise price	Exercise period
15 Sep 2020	5,395,260	3.3p	500,000	-	(500,000)	-	2.5p	16 Sep 2020 until 15 Sep 2023
15 Sep 2020	371,510,069	3.3p	371,510,069	-	(371,510,069)	-	2.75p	16 Sep 2020 until29 Apr 2023
21 Jan 2021	9,090,910	8.6p	9,090,910	-	-	9,090,910	5.5p	22 Jan 2021 until 21 Jan 2024
01 Sep 2023	16,000,000	0.6p	-	-	-	16,000,000	0.5p	01 Sep 2023 until 01 Sep 2026
Total	401,996,239		381,100,979	-	(372,010,069)	25,090,910

 

*Please see the Post Balance Sheet Event note on Strand Hanson Limited  warrants and Turner Pope warrants.

 

26.   Material risks

The Group 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 Group's planning and an important aspect of the Group's internal control system. The Group's approach to these risks is detailed in the Strategic Report.

 

27.   Business Combinations

 

In April 2023 the Group acquired Protos Plastics to Hydrogen No.1 Limited for £1 and on 20 June 2023 the Group acquired Engsolve Limited for a total consideration of £572,896 as set out in the notes below:

 

Acquisition of Protos Plastics to Hydrogen No.1 Limited

 

Recognised amounts of identifiable assets acquired and liabilities assumed:

 

			Book Value £	Adjustment £	Fair Value £
Fixed Assets
Tangible			2,362,649	(2,362,649)	-
Asset under Construction			330,000		330,000
Current Assets
Debtors			615,709	(209,015)	406,694
Cash at bank and in hand			5,787	-	5,787
Total Assets			3,314,145	(2,571,664)	742,481
Creditors
Due within one year			(3,361,853)	3,332,124	(29,729)
Total dentifiable net assets			(47,708)	760,460	712,752

 

Goodwill Total Purchase Consideration				(712,751) 1
Cash (Outflow)/Inflow on Acquisition				5,786

 

As part of the Fair Value adjustments it was identified that Fixed Assets held were impaired and had no sales value. In addition to this the Group took the decision that the loan between Powerhouse Energy Group PLC and Protos Plastics to Hydrogen No 1 Limited is not expected to be recovered and due to there being control the loan owed in the books of Protos Plastics to Hydrogen No 1 Limited was impaired to £nil.

 

The goodwill arising on acquisition is attributable to the acquisition of Protos Plastics to Hydrogen No.1 Limited. The goodwill generated from the Acquisition of Protos Plastice to Hydrogen No.1 Limited is included in the Group profit and loss account.The results of Protos Plastics to Hydrogen No.1 Limited since acquisition are as follows.

 

				Current Period since acquisition £
Turnover				-
Profit for the period since acquisition				35,639

 

Acquisition of Engsolve Limited

 

Recognised amounts of identifiable assets acquired and liabilities assumed:

 

			Book Value £	Fair Value £
Fixed Assets
Tangible			11,694	11,694
Current Assets
Debtors			150,492	150,492
Cash at bank and in hand			466,793	466,793
Total Assets			628,979	628,979
Creditors
Due within one year			(106,419)	(106,419)
Total identifiable net assets			522,560	522,560

 

Goodwill (See note 11) Total Purchase Consideration				(573,581) 1,109,986
Cash (Outflow)/Inflow on Acquisition				(108,967)

The goodwill arising on acquisition is attributable to the acquisition of Engsolve Limited. The results of Engsolve Limited since acquisition are as follows:

 

				Current Period since acquisition £
Turnover				180,559
Profit for the period since acquisition				53,904

 

Cash Acquired on Aquisition					Cash acquired £	Cash Paid £	Cash (Outflow)/Inflow on Acquisition £
Protos Plastics to Hydrogen No.1 Limited					5,787	(1)	5,786
Engsolve Limited					466,793	(575,760)	(108,967)
Total					472,580	(575,761)	(103,181)

 

28.     Pension Costs

			*Group £	Company £
Pension Creditor Year end 2022			-	-
Pension liability in the year			71,655	23,207
Pension paid out in the year			67,496	21,520
Pension Creditor Year end 2023			4,159	1,687

*Please note the Group pension scheme figures includes Engsolve pension scheme after full acquisition on 21 June 2023

 

 

29.   Directors' remuneration and share interests

The Directors who held office at 31 December 2023 had the following interests, including any interests of a connected party in the ordinary shares of the Group:

 

	Number of ordinary shares of 0.5p each	Percentage of voting rights
Paul Emmitt	3,574,901	0.09
Ben Brier	6,533,007	0.15

 

 

The remuneration of the Directors of the Group paid or payable for the year or since date of appointment, if later, to 31 December 2023 is:

 

	2023 £ Salary/Fee	2023 £ Pension	2023 £ Share based payments	2023 £ Other	2023 £ Total	2022 £  Total
Antony Royston Gardner-Hillman	82,500	-	-	-	82,500
Anthony Clive Gale	30,000	-	-	-	30,000	-
Paul Emmitt	106,250	4,000	-	-	110,250	66,906
James John Pryn Greenstreet		-	-	-		15,000
Hugh McAlister	30,000	-	-	-	30,000	27,232
Paul Drennan-Durose			-	-		259,740
Gillian Weeks		-	-	-		24,296
Russell Ward		-	-	-		18,899
Myles Howard Kitcher		-	-	-		25,667
Allan Vlah		-	-	-		7,500
David John Hitchcock	32,500	-	-	-	32,500	-
Karol Kacprzak	26,518	-	-	-	26,518	-
Keith Riley	157,528	-	-	-	157,528	92,546
Ben Brier	9,375	750	-	-	10,125
Total	474,671	4,750	-		479,421	537,786

 

Total remuneration includes share-based payments arising from the issue of options amounting to nil in 2023 (2022: nil). There have been no awards of shares to Directors under long term incentive plans during the year.

 

The Directors' social security costs for the year amounted to £25,192 (2022: £54,026) resulting in a total remuneration expense of £504,613 (2022: £651,312).

 

Prior to their resignations from the Board, Tim Yeo, James John Pryn Greenstreet, Allan Vlah, Antony Royston Gardner-Hillman and Keith Riley had service contracts that could be terminated by the provision of three months' notice.

 

There are no share options for directors who served during the year.

 

Highest Paid Director

Keith Riley 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.

 

30.   Related parties

 

Engsolve Limited, an engineering solutions company, was a related party until 30 June 2021 due to a Paul Emmitt's family member being part of its key management personnel and Paul Emmitt being a controlling shareholder, and from 12 August 2021 when the Group acquired 48.39% of its share capital. On the 21  June 2023 the Group acquired the remaining 51.61% of shares of Engsolve Limited for a consideration of £572,896, the majority of the shares of which, came from Paul Emmitt who was COO of Powerhouse at the time. Engsolve provided engineering services to the Group during the year amounting to £666,739 (2022: £596,172). Amounts outstanding at year end for services provided and included in these accounts amounted to £51,269 (2022: £31,778). All amounts post acquisition have been eliminated in accordance with the accounting policies in the Consolidated Financial Statements

 

Keith Riley was appointed as a non-executive director of the Group on 27 September 2021. Mr Riley was Interim Chairman and acting Chief Executive Officer of the Group in 2023 and resigned on 5 September 2023. Mr Riley was also an active director in Engsolve Limited from 8 March 2023 to 5 September 2023. Keith Riley joined Hydrogen Utopia International PLC as Technical Director on 6 January 2022 and resigned on 26 May 2023. Keith Riley was also a director of HU2021 International UK Ltd from 18 January 2022 until 31 May 2023.

 

Howard White is a shareholder in the Group and also a strategic Consultant to the Group, having received £40,000 for his services in 2023. Howard White is also a Board Member and shareholder of Hydrogen Utopia International.

 

Hugh McAlister was a Non-Executive Director of the Group during 2023 and also owned shares in Hydrogen Utopia International.

 

31.   Events after the reporting period

 

On 21 January 2024 9,090,910 warrants held by Turner Pope at an exercise price of 5.5 pence expired.

 

On 31 January 2024 the Group announced the appointment of Strand Hanson Limited as the Group's Nominated and Financial Adviser.

 

On 31 January 2024 the Group entered into a warrant agreement with Strand Hanson Limited. The warrant agreement included 31,240,606 warrants over ordinary shares of 0.5 pence at a subscription price of 0.29 pence. The warrant agreement was signed on 31 January 2024 with a final exercise date of 31 January 2029.

 

On  22 February 2024 the Group announced the signing of an initial five year framework agreement with Australian based, National Hydrogen Ltd ("NH2"). The Agreement sets out the terms on which the Group's technology and engineering expertise would be provided, on a project-by-project exclusivity basis, to NH2 for its intended roll out of multiple hydrogen-based projects across Australia, Italy, Switzerland, and Hong Kong. Powerhouse will not be required to contribute any capital for these projects. Instead, the collaboration will be based on a license fee and royalties model.

 

On 11 March 2024 the Group announced the signing of the Longford Joint Venture with Hydrogen Utopia International. The Group had previously announced on 30 October 2023 the delaying of the signing. Initial financing is being provided by AFT and Powerhouse International by way of shareholder loans (for a maximum of €200,000 each) under separate loan agreements. Any future financing will be raised in accordance with the Subscription and Shareholder Agreement through further loans or (with the consent of the shareholders only) subscription for shares. Signing of the Subscription and Shareholder Agreement requires Powerhouse to make an immediate payment of £100,000 to HUI. This is in addition to the £100,000 already paid to HUI, as noted in the Group's announcement on 21 March 2023. A further payment of £100,000 in cash will also be made to HUI once planning permission has been granted for the Longford Project.

 

On 22 April 2024 581,355 of share options granted on 22 April 2021 to a Director lapsed.

 

On 21 May 2024 the Group's GB Patent Application No GB1910309.2 "Treatment of waste producing recirculated combustible" was granted.

 

32.   Ultimate controlling party

 

There is no single controlling party of the Group.