POWERHOUSE ENERGY GROUP PLC
COMPANY NUMBER: 03934451
Annual Report and Financial Statements
For The Year Ended 31 December 2021
COMPANY INFORMATION
Directors
Keith Riley
Paul Drennan-Durose
Paul Emmitt
Myles Kitcher
Gill Weeks
Hugh McAlister
James Greenstreet
Interim Non-Executive Chairman
Chief Executive Officer
Chief Technical Officer
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Company secretary
Delgany Corporate Services Limited
Company number
03934451
Registered office
Website
Bankers
Nominated Adviser
Registrar
Auditor
15 Victoria Mews
Mill Field Road
Cottingley Business Park
Bingley, UK
BD16 1PY
www.powerhouseenergy.co.uk
HSBC
79 Piccadilly
London W1J 8EU
WH Ireland
24 Martin Lane
London EC4R 0DR
Neville Registrars Limited
Neville House, Steelpark Road
Halesowen B62 8HD
Jeffreys Henry LLP
Finsgate 5-7
Cranwood Street
London EC1V 9EE
Forward-looking statements
This report includes forward-looking statements. Whilst these forward-looking statements are made in good faith, they are
based upon the information available to Powerhouse Energy Group PLC at the date of this report and upon current
expectations, projections, market conditions and assumptions about future events. These forward-looking statements are
subject to risks, uncertainties and assumptions about the Company and should be treated with an appropriate degree of
caution.
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CONTENTS
INTERIM CHAIRMAN’S STATEMENT ......................................................................................... 4
CHIEF EXECUTIVE OFFICER’S REPORT .................................................................................. 5
STRATEGIC REPORT ................................................................................................................. 8
DIRECTORS’ REPORT .............................................................................................................. 21
CORPORATE GOVERNANCE REPORT ................................................................................... 27
REMUNERATION COMMITTEE REPORT ................................................................................. 34
REPORT OF THE AUDIT COMMITTEE ..................................................................................... 36
REPORT OF THE ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) COMMITTEE .... 38
STATEMENT OF DIRECTORS’ RESPONSIBILITIES ............................................................... 40
INDEPENDENT AUDITOR’S REPORT ...................................................................................... 41
STATEMENT OF COMPREHENSIVE INCOME ......................................................................... 47
STATEMENT OF FINANCIAL POSITION .................................................................................. 48
STATEMENT OF CASHFLOWS ................................................................................................ 49
STATEMENT OF CHANGES IN EQUITY ................................................................................... 50
NOTES TO THE ACCOUNTS .................................................................................................... 51
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Chairman’s Statement
INTERIM CHAIRMAN’S STATEMENT
At time of writing this statement, I have been in the Chair at Powerhouse Energy Group for a very short time, but having been
involved with the first application of its plastics-to-hydrogen DMG technology since October 2020, and a non-executive
director since September 2021, I feel more than qualified to present this statement in support of our results for the year ending
31 December 2021.
Despite the difficulties caused by the Covid pandemic that impacted a good part of the year and some major changes in
Board members, including the Chairmanship, the focus of the Powerhouse executive team was almost exclusively in support
of Peel NRE on the development at their Protos Plastics Park in Cheshire, UK. The pathway of development of complex capital
projects, is rarely smooth, and Protos Plastics-to-Hydrogen has been no exception. A change of project management and a
realignment of the contracting strategy meant that earlier target dates were not achieved,
Late 2021 saw a major reorganisation of the Peel project team, which substantially increased its level of experience and
professionalism. The fact is that it took the project team most of the year to complete the restructuring and prepare for
engaging with the construction contractor market. Powerhouse provided its full support to the team, as well as strengthening
its own engineering capability by the acquisition of 48% of the share capital of Engsolve Ltd.
There is much more work involved in specifying the technical requirements, tendering and contract negotiation, and putting
into place the myriad of items required for a project to proceed than most people realise. Powerhouse was, and is, a key
contributor to Peel NRE’s Protos development, but is only one of a number of organisations involved. To carry out these tasks
and deliver them comprehensively takes time and effort, and whilst there is disappointment in missed targets, doing this
properly also lays down a solid foundation for the future. Once done, it can be reproduced and used again. The Powerhouse
engineering team has done its very best in supporting the Protos project, which has now obtained robust, contractable offers
for the construction of the project from some very substantial contractors. It has been difficult reporting to shareholders on
this phase of the development, particularly due to the sensitive commercial nature of the process being led by Peel NRE and
its project team.
The need to concentrate on Protos meant that development of Powerhouse’s business in other areas took a back seat. Even
so, the Company continued to work with its development partners and entered into a collaboration agreement with Hydrogen
Utopia International Plc (“HUI”). An application for approval of an environmental impact assessment of a project in Konin,
Poland was submitted to the Polish authorities by HUI, response to which is still pending.
With the arrival of Paul Drennan-Durose as Chief Executive Officer, the Company is now looking to expand its capabilities
and activities. We welcome Paul to the Company at a time when a transformation of the world’s behaviour towards the
environment is being openly demanded by the people, placed at the heart of the public agenda and economic players
throughout the world. Powerhouse has developed a technology that can make a significant contribution to achieving net zero.
This contribution will only be achieved, however, if we build and develop the competence and capability of the Company to
create a high-performance, purpose-led culture. Paul outlines in his statement to this Annual Report the measures he is taking
to achieve that.
I look forward to the next stage of the evolution of the Company that will see Powerhouse technology implemented and the
business of the Company being able to grow.
We would also like to take this opportunity to thank all our staff for their continued efforts and hard work as well as all our
investors and stakeholders for their continued support.
Keith Riley
Interim Non-Executive Chairman
28 June 2022
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Chief Executive Officer’s Report
CHIEF EXECUTIVE OFFICER’S REPORT
This is my first report as Chief Executive Officer of Powerhouse Energy Group, having been appointed in February 2022.
In the period since my appointment as Chief Executive Officer, much has already been started, completed and achieved. As
set out in the Strategic Report which follows this statement, this work will provide a foundation for the establishment of a clear
set of imperatives and direction for the Company.
Discovery, Engagement and Direction
My initial approach was to embark upon an intense discovery phase to fully evaluate our business. Time has been invested
with a wide and deep cross section of stakeholders, starting with existing and potential partners and players in our markets.
Engagement with key collaboration partners during the first weeks of appointment was a high priority. Meetings with Peel
NRE’s leadership commenced on day two and have resulted in a refresh of previous plans aimed at supporting Peel NRE
delivering what could be the first commercial project utilising Powerhouse’s technology. Naturally, the Company is supporting
Peel NRE, and doing what it can to mitigate any risk of delay Peel NRE has on this first project.
During this initial period, a comprehensive 360-degree understanding has been developed by the team, and key imperatives
and collaboration positions have been re-established and prioritised. Many of these imperatives have already been completed
or initiated and included within a plan for relevant periods in the near, mid, and longer terms. These are set out in the Strategic
Report.
In parallel, we have also taken time to form a new strategy team, made up by the nucleus of the leadership team, and a set
of trusted advisors, including the cementing of relationships with our Nominated Adviser, brokers, lawyers and accountants.
This new strategic team will be tasked to ensure that the Company continues to deliver its stated objectives whilst also
delivering better communications and engagement with the Company’s shareholders and the market.
Evolving Strategy
In 2022, the new leadership team and the Board has started to build a robust, flexible business model and three-year strategy,
designed to meet the challenges of each phase of the Company’s evolution. The Company will elaborate on this further later
this year as the strategy is developed.
The Company must build trust from its key stakeholders. Relationships with our customers and partners remain core to the
Company’s growth strategy. Our plan is to launch in developed markets close to our operational base, developing and testing
repetitively and with rigor, cultivating close and strong relationships with our customers and partners. As the dynamic of
change is so fast flowing in economies, Powerhouse has embarked on a process to reassess its purpose, its values, its
structure, its processes, and its markets.
Powerhouse understands that it must create value for all its stakeholders, and it intends to deliver this through a refreshed
strategy. Reducing energy dependency, providing more effective solutions for increasing levels of non-recyclable waste,
creating more sources of newer non-fossil fuel energy are all unmistakably of ever-increasing relevance. Powerhouse intends
to play a role in this transition.
The Strategic Report outlines the challenges met, and the progress made by the team last year. Although early days for the
new team, this is a good opportunity to share some early assessments:
•
Technology and Innovation – a renewed focus on improving the technology readiness level and ensuring it is
process capable.
• Commercial Development – support development of the first of a kind commercial project, commit fully to early
users and reduce dependencies by building quality of choice in developer/channel partner pipeline and project
pipeline.
• Business Model Evolution – ensure the target business model of being a prominent leader of technology
innovation and an attractive licensing partner is enabled.
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Chief Executive Officer’s Report
• Go-to-market engagement
o Creation of a combined Marketing Centre & Global Technology and Innovation Centre – to support the
development of technology readiness levels, expand the range of products the Company can offer, and
lessen the risk of impact to growth from delays the Company has experienced at its first of a kind
commercial site in the UK.
o Marketing Pillars - investing in developing a marketing pathway which will underpin and support the
commercialisation and scale up of the Company.
•
Invest in Talent – enrich, invest and engage partners and talent at all levels of the enterprise.
Board
The Board of Powerhouse has been through a period of significant change. We are delighted to have welcomed some high
calibre individuals to the board including Gill Weeks OBE, Hugh McAlister and Paul Emmitt as well as Keith Riley and myself.
A brief biography on each is outlined below, and biographies of all Directors are contained within the Directors Report within
this document.
Gill Weeks joined the Powerhouse in Board in January 2022 as a Non-Executive Director and is a leader of compliance and
regulatory teams in global environmental business, advising on environmental law changes. Over the course of her career
Gill has developed expertise in public policy, environmental law, stakeholder management, governance and risk,
environmental science and regulatory compliance and enforcement.
Hugh McAlister was appointed to the Powerhouse Board in February 2022 as a Non-Executive Director and has over 40
years’ stockbroking experience in the City of London. Hugh has been the executive chairman of Novum Securities Limited
since 2018, having been its Chief Executive Officer for the previous nine years. Prior to this, Hugh was a founding partner
and head of trading a Kaupthing Singer & Friedlander Capital Markets and Head of Pan European Equities at Dresdner
Kleinwort Benson.
Paul Emmitt joined Powerhouse in July 2021 and was appointed to the Board as an Executive Director in March 2022. He
will continue as CTO, leading the management, planning, development, and operation of the DMG technology. Paul is a
Chartered Engineer, has an MBA in Engineering Management, and has over twenty years of multi-sector engineering and
operational management experience. He is also the Managing Director of Engsolve Limited, the engineering consultancy in
which Powerhouse has a 48% stake.
I recently joined the Board of Powerhouse as Chief Executive Officer. I have just spent over three years as the investor
appointed Chief Executive Officer of Heliex Power Limited, a private equity backed cleantech energy business. Whilst there,
I led the transformation of the start-up new technology company, leading the roll-out of its technical development, and
commercial market recovery.
Keith Riley joined the Board as a Non-Executive Director in 2021 and stepped in as Interim Non-Executive Chair on 27 June
2022. Mr Riley is also the proprietor and Chief Executive Officer of Vismundi Limited, a consultancy company providing
services to the resources and waste management industry. Prior to that, between 1993 and 2012 he worked for what is now
known as Veolia Environmental Services plc in a number of senior roles.
It is the intention of the Board for the interim Chair and myself, to evaluate and re-assess the composition, scale and relevance
of the Board ensuring its alignment with the strategy being created and deployed in this phase of the Company’s evolution.
The outcome of these evaluations will include options for the Board to consider and implement where appropriate.
It is intended that a permanent Chair will be recruited in quarter three of 2022.
Once this process is complete, the Board’s focus will be on continuity, stability, cost, and effectiveness.
Financial Results
The Company increased revenues in the year ended 31 December 2021 to £701k (2020: £100k) primarily due to further
engineering support works provided to the Protos SPV. Once the project enters construction, it is currently intended that
Powerhouse enters an agreement with the Protos SPV for provision of owner’s engineer services.
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Chief Executive Officer’s Report
The total loss for the year is £1.87m (2020: £15.83m). This substantial reduction is due to a reduction in the impairment of
goodwill to £nil (2020: £14.2m). The carrying value of goodwill, which arose on the acquisition of the Waste2Tricity Limited,
is independently assessed on an annual basis, with no impairment deemed to have arisen in 2021.
The loss per share for the year is 0.05p (2020: 0.57p) with the change reflecting the reduction in the total loss detailed above.
Cash at year end amounted to £9.64m (2020: £3.46m). The Company raised an additional £10m pre-expenses from the
market during the year. The Company also provided a loan facility to the Protos SPV of £3.8m of which £1.15m had been
advanced by the year end.
Market Outlook
There is no question that most stakeholders now expect companies to embrace reducing waste effectively, and to play an
active role in decarbonising the economy. This shift in expectations represents significant opportunities for Powerhouse. The
transition to net zero continues to evolve, with different economies moving at different speeds. The pace of change, and the
level of available capital to support decarbonisation, is vastly different in developing and developed countries. Being quoted
on the London Stock Exchange means Powerhouse can benefit from a widely available pool of public capital, in a market
where investors have a proven track record of supporting companies involved in the energy transition.
Russia’s invasion of Ukraine, and the on-going appalling war, has seen the launch of an economic conflict too. Western
countries’ dependence on Russian energy is in the spotlight, and it is anticipated that companies and governments will also
be looking more broadly at their energy dependencies and energy security strategies, as well as on their fossil fuel
consumption.
This would suggest that a focus by Powerhouse on countries within closer proximity to its UK base, would be an appropriate
scalable market in terms of available capital, motivation, and attractiveness for dealing with unrecyclable waste and
decarbonisation in those regions, and would avoid the company overreaching in its commercialisation phases. However, we
are committed to serving all markets should the right opportunity present itself.
Engaging and Communicating with Shareholders
We must share that it is not lost on the new leadership team that the engagement the Company has with its investor
community is not where it needs to be. As explained in the Chairman’s Statement, much of the reason has been the
commercially delicate stage the Protos project has been in. The project will shortly be through that stage and working with
the Chairman, one of my aims is to maintain more regular communications with shareholders without overburdening them.
The new implemented structure will foster strong, balanced coordination of the Company’s image and messaging to investors,
and to other key stakeholders. This is intended to help drive valuation, sales, and overall image. Our investor community will
be updated on this in short order.
Thank you
I would also like to take this opportunity to thank all the Powerhouse staff and our associates at Engsolve for their continued
efforts and hard work, and our investors and stakeholders for their continued support. The Board believe that Powerhouse is
well placed and that we are implementing a strategy that is not only appropriate but will enable the Company to take full
advantage of the significant opportunities that are available to deliver long term value.
Paul Drennan-Durose
Chief Executive Officer
28 June 2022
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Strategic Report
STRATEGIC REPORT
This Strategic Report addresses the Directors’ management of the Company and contains certain forward-looking
statements. These statements are made by the Directors in good faith based on the information available to them up to the
time of the report preparation and approval and such statements should be treated with caution as they address uncertainties.
Business Descriptor
Powerhouse develops, designs, co-designs, integrates, delivers and licenses technology and its know-how, its DMG solution.
This has an advanced thermal conversion technology at its centre, which converts calorific waste streams into synthetic gas
(syn-gas), a valuable product that can be used as an intermediary for producing new high-value products such as hydrogen,
or as a fuel in its own right for power generation.
Powerhouse’s central capability is its know-how in the integration of the processes and technology, the application of the
pyrolysis and gasification processes involved, and the research and development of the complex variables, which make it
operationally and financially viable. This includes development and testing of equipment, but also testing of assorted feedstock
materials and mixes, and in the process, calibration, and programming of control systems, which maximise yield and process
productivity.
The process can convert a wide range of end-of-life and other feedstocks, including the Company’s initial focus of end-of-life,
non-recyclable waste plastic, to produce a range of ‘end of waste’ products, including:
• Hydrogen
• Electrical power
• Thermal Energy
• Natural gas replacement
• Chemical feedstocks
• Biochar
Business Strategy
To position Powerhouse’s technology as a converter of waste to wellness, and to support its growth and scale-up, the
Company has centred its main focus on several key strategic imperatives:
1. Technology and Innovation
A successful year of tests, trials and development using the Company’s test unit at its Thornton site in the northwest of
England, was completed in 2021.
Several developments are worthy of highlighting in this report:
The team has made noteworthy progress in enhancing the Hydrogen output of the system, and there has been a tangible
increase in evidence-based confidence from the systematic testing of feedstocks in 2021 and in 2022, in the generation of
optimum levels of Hydrogen.
More understanding and control of the technology has been achieved which has allowed in certain cases, optimized carbon
retention in the residue (biochar). This is a form of carbon sequestration.
The 2021 period is being followed by a doubling down on the Company’s efforts in 2022 and 2023.
In 2022, the new leadership team and the Board intend to have a robust three-year strategy for technology development and
a solid detailed level plan every year. This is designed to meet the challenges of each phase of the Company’s evolution, truly
generate continuous improvement, and maintain relevance to its target markets.
Technology and System Readiness and Capability
The thrust of focus in 2022 is on the Company setting about applying more rigour and scrutiny to delivering the technology
and system readiness level of the core technologies it is developing and adopting and ensuring that the technology the
Company is forming and integrating is process capable. This is a critical foundation, necessary for minimising risk and
optimising potential when the Company rolls-out a full-scale commercial operation.
In quarter two of 2022, the Company initiated the formation of effective engineering leadership structures for this next phase
in its evolution. This structuring includes, but is not restricted to, Powerhouse’s CTO Paul Emmitt being appointed to the
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Strategic Report
Board to generate more positional authority and to position technology and innovation at main Board level, given its criticality.
The Company has also embarked on a process of partnering meaningfully with technologists, engineers, universities, and
industrial partners for this next phase.
The technological developments will be underpinned and supported by the creation of a Global Technology & Innovation
Centre. This will have pyrolysis and gasification technology at its core, and the £1.3m turnkey supply, installation and
commissioning contract announced and awarded in June 2022 is intended to see the centre operational by Q2 2023. Funded
by the Company from current reserves, the Company is at the same time underway with a search for a site for this in the UK.
Doing so simultaneously with launching the award for the long lead time equipment build is designed to reduce the total
operational completion timeframe.
The location profile brief has been defined and includes the environment it will be situated in, its proximity to supply and
manufacturing networks as well as being located within reach of relevant technology and research networks, and of course
being easily accessible for customers in near to-door as well as near to shore markets.
The centre will house up-scaled R&D facilities for testing capabilities in a live environment. This will be the pre-commercial
plant core and will provide an environment to support the improvement of the technology readiness level and demonstrate
the process capability. At the same time, of course, it will generate visibility and proof of scalability for the Company, and its
stakeholders.
Quarter two 2022 has already seen a new relevant relationship forged with the Department of Mechanical, Aerospace and
Civil Engineering at Manchester University, which is collaborating with Powerhouse and one of the Company’s key vendors.
This first venture together is to develop further the understanding of the thermal transfer and fluid dynamic flows associated
with the reactions within the Thermal Combustion Chamber in the gasification process. This project will have several phases
extending throughout 2022.
Business Acquisition – Engsolve
In Q3 2021, the Company acquired a 48% stake in Engsolve Limited, a privately owned engineering solutions company with
significant experience in undertaking engineering design and support, cost estimating and control, project management and
safety risk assessments across a range of industries including energy from waste, renewables, and green energy. The shares
were acquired for a consideration of £99,990.
Engsolve has worked closely with the Company for more than four years and the acquisition is intended to maintain Engsolve’s
continued support of the Company’s projects and developments and will ensure that their expertise remains available going
forward. This follows the appointment of Paul Emmitt, Engsolve’s Managing Director, to the position of Chief Technical Officer
of the Company.
Engsolve is a profit generating business and, as an associate of the Company, its post-acquisition results are reflected in
these accounts.
Technology Endorsement
The international consultancy DNV completed the assessment and updated report on the enhanced technology design
against their standards and provided a positive technology endorsement in the third quarter of 2021. In addition to this, as
part of the Protos development work, an independent red flag review was undertaken by GHD Engineering for Peel NRE
which raised no technical red flags.
The Company continues to actively ensure that the process is enhanced to be compliant with established and emerging
legislation.
Intellectual Property Management
The Company has initiated the development and formation of IP and has filed patents pending in 2021 the operational
conditions within the Powerhouse Thermal Conversion Chamber at their centre. The leadership team have assessed this as
being low in value for the short term until patents are market assessed and granted. However, it has identified that the
Company can also supplement this with the highly valuable technical, market and commercial knowhow it has, and continues
to create. This can be incorporated in new future IP development and generation where possible.
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Strategic Report
The most important IP remains the chemical engineering model of the process to create the clean gas – and Powerhouse
maintain strict protocols to ensure this information is protected, including limited access and isolated control over the design
documents, calculations, and process development models for the process.
Through last year and into 2022, the technical development team of Powerhouse has continued to assess and develop the
DMG control system. This work was further enhanced during the basic engineering phase where third party control vendors
and the Thermal Combustion Chamber (TCC) supplier engaged in the progression of the system.
Further works on the development of patent protection had been undertaken in the period, with patents now filed in Europe,
Australia, Japan, Brazil, Canada, USA, Indonesia, South Korea, GCC, Hong Kong and the United Kingdom.
Future Product Developments
In addition to developing the core technologies, the Directors recognise that the evolving hydrogen and associated energy
transition market offers opportunities to develop other advanced complimentary technologies and applications in future. The
decision to invest in a Global Technology and Innovation Centre, will permit the technical team to optimise the technology
development, and provide the platform to advance complimentary processes and technologies in supporting this, and future
value. This will ultimately enhance the Powerhouse offering.
2. Commercial Development
UK - Planned first of a kind
In 2020’s strategic report, the business model and arrangements of the Company’s potential first of a kind commercial project
and pipeline for the UK were the dominant feature and the subsequent focus of shareholders and stakeholders.
Peel NRE is part of the Peel Group, one of the leading infrastructure, transport, and real estate investors in the UK, with
collective investments owned and under management of more than c£5 billion.
The business model agreed by Powerhouse Energy with Peel NRE is unchanged, in so much as that it will derive revenues in
the UK principally from annual licence fees payable by the plant owner in respect of each process application of the
Powerhouse technology. Under the UK Exclusivity Option Agreement Peel NRE, on payment of £500,000 to Powerhouse,
can also acquire the exclusive rights to develop Powerhouse’s technology in the UK.
In addition, Powerhouse can generate revenues in the project development stage from the engineering services and technical
assurance services for specific client feedstock analysis and laboratory services, from engineering during project
development, and then from operational support services when plants are in operation.
The first commercial scale application of Powerhouse technology is under development at the Protos Energy Park, Ellesmere
Port, Cheshire, UK by Peel NRE, who owns that site. Peel NRE completing the construction of this first commercial scale plant
remains a key milestone and priority for the Company. In 2021 these experienced delays to financial close which continued
into 2022. This was related to a combination of factors experienced by Peel NRE and the Protos SPV which included
contractor and vendor engagement, an amended procurement strategy and planning delays associated with the development
of the engineering design.
A competitive tender process, including pre-qualification of potential tenderers, was commenced by Peel NRE midway
through February 2022 and Peel NRE indicates that this is expected to complete in September 2022.
UK - Pipeline Development
Peel NRE’s plan is that it will replicate the development model at the Protos site, incorporating its ‘Plastic Parks’ vision where
there is scope, coupled with the community-based provision of hydrogen at various sites across the UK. Each park/site is
intended to have Powerhouse technology to divert non-recyclable plastic from landfill and produce hydrogen and clean power.
Recently, Powerhouse introduced the concept of having two process streams at future pipeline sites, doubling capacity and
capability - which improved the return on investment, sweated the land asset, and provided future system redundancy for the
plant operators and owners. Peel NRE has introduced this into its rollout considerations, with the size of sites and local waste
volumes influencing the mix of sites between single and twin processes. It is not planned to have twin processes until the
single process configurations are established and delivering repeatable performance and reliability.
Under the CA Business Planning, Peel NRE is maintaining a long-term plan of more than seventy sites. These sites will be a
mixture of Peel NRE developed sites together with a pipeline of third-party sites enacted by Peel NRE on tolling commercial
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Strategic Report
terms or by capital sales on waste processing sites around the UK. Each application of DMG will carry the Powerhouse licence
fee.
The development counterparties vary and current interest in the pipeline arises from waste management companies, councils,
companies in the plastics and consumer goods production sectors and developers.
In 2021 Peel NRE announced that it had submitted planning applications for the second of its eleven primary target sites for
a waste to hydrogen plant in the UK. The second site is in Scotland, at Rothesay Dock on the north side of the Clyde River,
opposite Glasgow Airport. Peel NRE announced in June 2022 that West Dunbartonshire council’s planning board has
approved planning consent for that site.
International Development
Development activities by the Company in territories outside of the UK have focused on developing project, regional and
territory-by-territory partnership agreements to roll out Powerhouse’s technology.
The Company has previously stated that the pipeline from these activities was embodied in collaboration or project
agreements, country agreements and memoranda of understanding. And that the project or collaboration agreements allow
developers access to initial limited information to undertake project screening. The work in these phases has included
supporting the review of feedstock alternatives, offtake, and environmental constraints.
This process had not developed consistent traction. The recruitment of a UK based Business Development Manager was
completed in late 2021. The appointment of a new CEO in February 2022 has generated a new sense of direction and
purpose for this resource. Pipeline opportunities are being qualified, with in-person visits to perspective clients in close to
door/shore markets such as UK and Ireland, and in far from shore markets such as Australia completed in Quarter two 2022.
These are aimed at understanding client needs, perspective project status, and assessing the probability and prospects from
the existing pipeline.
A modification of the go-to-market approach will be implemented in quarter three.
Why? The transition to net zero is already uneven with different parts of the world economy moving at different tempos. The
pace of change will be vastly different between developing and developed countries. But all markets will require
unprecedented investment in decarbonisation technology. In response to the energy shock caused by the war in Ukraine,
many European countries are looking more urgently for new sources of energy and more broadly at their dependencies on
other nations. This is a market where the offtakes from the technology Powerhouse is developing are of increasing relevance.
The Company will of course develop relationships with existing partners in other territories and cultivate these for more mid
to longer term pipeline conversion. It will naturally continue to centre its initial focus on the UK’s first of a kind commercial site,
which will generate validation and consensus with Peel NRE, supporting the conversion of their pipeline with the next site
being the Rothesay Dock site in West Dunbartonshire, Scotland. This first commercial site will also provide supportive
validation and consensus as Powerhouse builds pipeline elsewhere.
The progress of our go-to-market approach includes a reliance on growing an effective, relevant network of license
distributors, developers, contractors, and other partners across target geographies.
The intent is that each of these markets will ultimately have its own, growing pipeline of opportunities, developed, and
managed by a professional team and with a growing, local network of partners to support development, construction, and
operations & maintenance.
3. Business Model Evolution
Through its arrangement with Peel in the UK, PHE extracts its share of value primarily from delivered projects through licence
fees per system delivered and operational.
This follows an early establishment of roles with Peel acting as Developer and PHE as technology provider. This was also a
reflection of the relative strengths of the two businesses at the time the arrangements were made, when PHE had limited
funding and accordingly a limited ability to resource and deliver multiple projects through development.
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Strategic Report
In last year’s report, it was explained that just as it has under the arrangements with its UK development partner, Powerhouse
intends to license the use of its technology to project owner companies which will operate plants using technology it provides
and integrates. The Company held this out as its business model.
The Company’s new CEO’s focus has been on how best to maximise shareholder value. A range of evaluations conducted
included one of the business models.
This demonstrated that the type of model that had been adopted by the Company has relevance and value, but conversely,
that it can create a prominent level of dependency on developer partners, or even sole dependency where exclusivity rights
to, for example, a territory, have been granted. It can generate a loss of traction where delays develop and can confine
Powerhouse to a smaller-part player, with a low influence level over the pace of progression of the project, its financing or
achieving key value points within the gated process.
These assessments have also shown clearly that Powerhouse’s technology value to a project is represented in the value of
the outputs the technology can produce (i.e., hydrogen, syngas, power, heat) or, to a lesser extent, the costs that can be
avoided (e.g., waste disposal to landfill or incineration). Fresh financial modelling revealed the level of, for example, potential
development revenues, project management incomes, as well as build and technical support revenues the Company could
generate if it adopted a more flexible business model, including considering being, for example, co-developer, developer, or
project lead.
In doing so, these assessments have established that the target business model of being a prominent leader of technology
innovation and an attractive licensing partner, is likely to be more effectively realised and achieved by a more flexible model
in the initial stages of commercialisation and scale-up by the company. Naturally, this would include Powerhouse creating an
investor grade, qualified and well-integrated group of partners, who could deliver a deep and wide range of roles and activities
essential to the integration of Powerhouse’s technologies into its plants of the future.
The Board is currently exploring this evolution of its current business model for its effectiveness and how best to structure
this, to serve as part of a market entry strategy, validating and demonstrating with clients and markets the value and credibility
of the plants and the technology, generating consensus and subsequently further pipeline opportunities.
It is envisaged that that this could see a switch to development and operational fees dominating revenue streams, and as
scale-up evolves that Powerhouse subsequently migrates more to generating revenues from its technology, integration, and
engineering know-how, as client’s take-over operations or fund the project pipeline.
4. Go-to-market engagement
Marketing Centre
Within the Commercial development imperative referred to earlier in this report, the Company has outlined how it will enrich
its global network of partners and clients, and the Company has also outlined how it is considering adapting its current
business model. The Company is clear that there is a strong market, and that scale-up will be supported by a range of
imperatives, which includes proof of operation and scalability.
As reported above, in Q2 of 2022, the Company deployed its own capital to invest up to £1.3 million in the supply, installation,
and commissioning of equipment, which has a pre-commercial scale thermal gasification technology at its centre. This will
form the nucleus of a Global Innovation and Technology Centre.
This is designed to achieve several outcomes. Firstly, as mentioned earlier, it will support a doubling down on the development
of the readiness of the technologies the Company is leading the development of, and to deliver and demonstrate process
capability.
It is also intended to mitigate any risk of impact to growth. Specifically, from interruptions the Company may experience with
in-operation development on a commercial scale facility at its first of a kind site, until a repetitive consistent performance and
reliability is established and assured consistently. At the same time, it will lessen any impact on growth from risks of delays
the Company has experienced on reaching Financial Close at its first of a kind commercial site in the UK. The Company has
the quality of using the centre as a market reference site when operational.
Importantly, however, it as well as supporting the development and further proving Powerhouse’s proposition and offering, it
will also be a marketing centre, serving as a focal point to grow the pipeline with prospective partners and clients, providing
proof that a larger scale technology operation can perform, and is scalable.
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Strategic Report
Marketing Pillars
Finally, we are commencing investing in developing a marketing pathway which will underpin and support the
commercialisation and scale up of the Company. This will include investment in appropriate professional marketing resources
and collateral.
5. Invest in Talent
As well as enriching its network of partners, the Company also intends to enrich and invest in its talent. 2021 saw growth in
our technical team, and the addition of a business development manager. In 2022, we are restructuring and investing in
replacing two engineering personnel with more seasoned engineering talent. This will underpin the Technology and Innovation
imperative.
The Company will also be recruiting a Financial Controller by the end of 2022; will see migration from outsourced functions,
providing the Company with greater control over financial functions including accounting records and timely production of
financial and management information, to enable more accurate decision making, governance and reporting to investor
markets.
Board Strengthening
There has been a high level of attrition at Board level historically and up to present day. The Board’s strategy has been to
keep the composition of the Board and related corporate governance issues under constant review. The aim is to ensure that
the Directors have the right mix of skills, experience, and qualifications to carry out their duties in a way which ensures the
Company’s future success. The appointment of a new Non-executive Chairman in Q3, to replace Russell Ward, will continue
with the work he had started on supporting the CEO in the aim of ensuring that the relevance, composition, and scale of the
Board is appropriate for the forthcoming stage of its evolution.
Financial Strategy
At 31 December 2021, the Company had £9.6m of available cash with commitments forward, outside of normal operational
spend, only in respect of the Protos short term loan facility. The Company considers the impacts of forward plans by producing
regular forecasts, considering forward running costs of the business.
Under the Protos short term loan facility of £3.8m, the Company had lent £1.15m as at 31 December 2021, excluding accrued
loan interest. During 2022, the amount drawn down under the facility has increased to £1.89m.
In 2022, the Company has committed £1.3m for the supply, installation, and commissioning of equipment in respect of its
planned Global Technology and Innovation Centre.
The Company will consider alternative financing routes for project initiatives and will explore appropriate ways to invest funds
in the development of projects internationally. The Company is prepared to function as developer or as co-developer in key
markets, where appropriate, to accelerate progress. Whilst the use of future fund raises where appropriate will also be
considered, there are no firm plans to do so at this time.
2022 Key Performance Indicators
The Board of Powerhouse remains focused on the first application for DMG. The principal Key Performance Indicator for 2022
is to support Peel NRE, and its SPV team to complete the procurement and construction phase, generate investment
committee sign off at Peel NRE and reach financial close, leading to proving the process in operation.
The Company intends to build the Global Technology and Innovation Centre in early 2023, and the technical team will
complete the key imperatives within the Technology and Innovation detailed plan for the year.
The Company puts safety to the fore in our activities and for 2022 our target will be to operate without harm and to ensure
that our operating systems and process are developed with safety of all as the prime concern. Continued incident free activity
is a key performance indicator for 2022.
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Strategic Report
CORPORATE SOCIAL RESPONSIBILITY
Our Commitment
The Company cares profoundly about the environment and is committed to addressing two of the world’s current challenges
in the eradication of unrecyclable plastic waste and the production of hydrogen energy to replace diesel in heavy goods
vehicle use improving air quality around our communities.
The Company is committed to operating with an inclusive, transparent, and respectful culture and places particular emphasis
on operating to the highest ethical and environmental standards and our applications target the best achievable energy
efficiency.
The Directors take personal ownership of the policies and maintenance of the necessary exacting standards of business
conduct throughout the organisation and for delivering these Corporate Social Responsibilities.
Health and Safety
Powerhouse cares profoundly about the health and safety of our employees, customers and the communities who could be
affected by our activities and aims to protect them from any foreseeable hazard or danger arising from our activities or our
products. To this end in 2020 and 2021 the Company completed a series of safety related studies and reviews, including
hazard and operability studies, quantified risk assessments and layer of protection analysis using external experts to review
the product risk and the application on sites such as Protos. In all instances the findings of the safety risk assessments have
demonstrated that the risk arising from the DMG technology is well within acceptable tolerable risk levels. In 2022 and 2023
the Company will revisit these assessments to identify any changes that have been introduced which may represent new or
variants of risk.
The Directors recognise that the key to successful health and safety management requires an effective policy, organisation,
and arrangements which reflect the commitment of senior management. The Chief Executive Officer will implement the
Company’s health and safety policy and ensure that the Company Health and Safety (HSE) management system and safety
standards are all maintained, monitored, and improved where necessary.
The Company’s research and development activities and activities at Protos were delivered HSE incident free in 2021.
Environment Policies
The Company’s Environmental Policy recognises the importance of our technology from a global challenge perspective. The
Company will regularly evaluate the environmental impact of its activities, products, and services, taking all actions necessary
to continually improve the Company’s and its products’ environmental performance.
Product Emissions in Operation
The Company is committed to providing a solution for utilising problem waste streams with its current UK focus being to use
non-recyclable plastics within its technology to produce hydrogen as a clean fuel for buses and trucks which minimise
emissions and to comply with all relevant environmental legislation, regulations, and other environmental requirements. The
Company passionately believes that its process is a far better alternative to incineration and / or landfill.
The application of the Company’s technology in waste to hydrogen plants produces residues in two forms, a char like solid
residue and waters with hydrocarbon content. During the last period progress has been made on the characterisation and
utilisation of the residue (Biochar) and we are confident that we can develop it into a saleable product for a given feedstock
mix. This work will continue through 2022. Similarly, once the Protos plant is in operation, the technical development team is
looking to implement further cleaning processes to treat and use the emitted water to return into the process.
Under the Powerhouse Environmental Policy, Powerhouse has committed to improving the product emission performance,
and Directors are confident that the technology performance in this area will be improved, and we will report annually on this
matter.
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Strategic Report
Stakeholder Engagement
Recruitment and employee management are undertaken in line with the Company Employment Policy which has committed
to a working environment with equal opportunities for all, without discrimination and regardless of sex, sexual orientation,
age, race, ethnicity, nationality, religion, or disability.
Furthermore, the Company has committed to continuous development schemes and will support employees to attain the best
for themselves and the Company through personal assessment, training, and mentoring.
Powerhouse recruited a Chief Executive Officer in February 2022. During 2021, the Company recruited a Chief Technical
Officer and a Business Development Executive.
The Board is mindful of the duties of Directors under S.172 of the Companies Act 2006. The Directors believe strongly in the
importance of solid and exemplary corporate governance to help achieve our corporate goals. The Board takes its
accountability to each of Powerhouse’s stakeholder groups very seriously.
The Directors have committed to promoting a company culture that treats everyone fairly and with respect and this
commitment extends to all principal stakeholders including shareholders, employees, consultants, suppliers, customers, and
the communities where it is active.
All Directors are encouraged to act in a way they consider, in good faith, to be most likely to promote the success of the
Company for the benefit of its shareholders. In doing so, they each have regard to a range of matters when making decisions
for the long-term success of the Company.
PRINCIPAL RISKS AND UNCERTAINTIES
The Company is subject to various operational risks and the following issues are particularly relevant to the Company’s
business activities:
Business Risk
Technology Risk
The Company continues to manage technology risks within the detailed Technology Management Program. The risks are
identified from our test and design activities, tests on potential waste materials and the residues arising. The strategy of
selecting proven components with extensive operating hours in similar service in other plants significantly reduces the risk
profile for its DMG system. The Directors’ objective is to reduce technology risk wherever practical, however the risk of the
first application will remain with the project SPV until the Protos plant is commissioned.
Throughout 2021 and the current year, engineering design contractors and independent experts including DNV have
reviewed the design. The feedback from these reviews has allowed the removal of some of the risk issues completely and the
refinement of other matters. The design has been validated by commissioning experiences that Powerhouse and our specialist
suppliers have experienced, and further challenged by the independent reviews that have been undertaken by the FEED
contractor, specialist consultants such as DNV and GHD addressing the chemical engineering, gas, and hydrogen activities.
A key aspect in risk reduction is process development. The inception of the Global Technical and Innovation Centre (“GTIC”)
will focus on improving the technology readiness level of the technologies Powerhouse is developing and adopting and allow
the development and integration of technologies to further enhance its offering whilst reducing overall risk.
The GTIC will allow the technical team to focus on specific aspects arising from risk assessments and an active technical risk
register. It will also commence development of in-house technologies to reduce any risks posed by third party systems within
the process.
In conjunction with the development of the GTIC, we will continue to build on the initial work with Manchester University by
taking the initial computational fluid dynamic output and begin a program of works with the University to optimize the internals
of the TCC. The aim of this works will be to gain a better understanding of the intricacies of gas flow but also allow us to build
additional IP relating directly to the TCC design.
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Strategic Report
The Protos final contractor selection to be made in 2022 by Peel NRE’s SPV for the Protos site, will allow the final detailed
design to be completed and the control system logarithm functionality to be defined. This design detail, and the commissioning
and testing program will allow the closure, or mitigation, of detail design related risks noted as outstanding against the risk
management program that was assessed by DNV during the second stage of their Technology Validation process.
Research and Development Activity Risk
Throughout 2021 and into 2022, research and development has continued using the demonstration unit at Powerhouse's
Thornton, Cheshire site. The test time has been utilised to further refine the feedstock/output model along with allowing the
testing of numerous potential feedstock sources. All testing, maintenance and modifications to the unit are undertaken after
formal design and functional safety reviews with all activities being subject to risk assessments in accordance with the
Company Health & Safety Management processes.
Powerhouse operates its research and development laboratory equipment and testing programme in accordance with the
Company Health and Safety Management system.
The Research and Demonstrator rig has been optimised further during the year and has resulted in a design package that
has allowed the placement of the order for a larger feedstock testing unit to be sited at the new Global Testing and Innovation
Centre, as reported above. The design, fabrication, construction, and commissioning of the new equipment will follow all
required external and internal Health, Safety and Environmental guidelines.
Competition Risk
In quarter two 2022, the Company commenced an in-depth re-assessment of competitive technologies to maintain a current
and forward-looking vision of the landscape it operates within.
Powerhouse remains well-placed to address current and future waste market potential. As an innovator at the leading edge
of integrating associated technologies and advanced gasification technologies, Powerhouse can pursue and deliver on UK
and international opportunities in line with the Company’s focused strategy.
Market Adoption Risk
In the UK, Peel NRE, as our main collaboration partner, has been leading the commercial engagement for waste plastic and
hydrogen, and contract negotiations with waste suppliers available to the first of a kind plant they are developing plant.
The Company acknowledges that once this facility at the Protos Park is operating successfully, commercial scale-up can be
achieved.
The Company also has a collaboration with Hydrogen Utopia International Plc (HUI). It is pursuing a project at Konin in Poland.
To date, the project is reported to be on programme, but is at risk of delay and other negative impacts due to the situation
regarding Ukraine.
Reliance on client parties
The Company depends on key developers and counterparties for its business pipeline. The failure of a key business partner,
supplier, subcontractor, financer, or other provider could materially affect the operational and financial effectiveness of the
Company. Ensuring ongoing professional collaborative relationships with our early-stage clients is mission critical.
Central to achieving our strategy is winning and successfully delivering projects and supplying our technology services, and
the product ecosystem.
Winning new, and retaining and converting, existing client pipeline continues to be critical for the future success of the
business.
To mitigate some of this risk, the Company has also signalled and recently launched several imperatives to begin to limit
dependency on any one or similar number of projects and development partners. The Company aims to build and create a
quality of pipeline choice, whilst having a professional supportive collaborative position with key partners.
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Strategic Report
Intellectual Property and Know-How Risk
The Company undertakes reasonable endeavours to protect its know-how and has filed patents in 2021 to generate IP.
However, any patents and other IP may not prevent competitors from independently developing or selling products and
services like or duplicative of those filed.
If the Company can generate and protect IP, the value of the brand and other intangible assets may be increased, and our
business positively affected. In addition to the IP patents, the Company possesses a wide-ranging level and breadth of
proprietary know-how that drives our capabilities and excellence.
The Directors are aware of the risks of IP leakage and, through our IP attorneys, are maintaining and monitoring compliance
of any potentially conflicting technologies as well as maintaining protection around the freedom to operate worldwide. The
Company follows a dual route of IP protection via a suite of patents and maintaining control of disclosure over the design
documents, calculations, and chemical engineering models for the process through systems management.
All contracts robustly define the IP and Employees are trained to limit data made available to third parties
Finally, the GTIC and material partner collaborations are designed to form a platform which will support building further know-
how and IP potential for the Company.
Employee Risk
Attracting and retaining the best, skilled people at all levels of the business is critical. This is particularly the case in ensuring
the Company has access to a diverse range of views and relevant experience, and in attracting specific expertise at both
board, managerial and operational levels where the market may be highly competitive.
As the Company evolves, this risk will take more prominent focus with the Board. Employees should not become a hurdle to
progress for the Company.
The Board is also aware that the value of the Company is inherently embedded in its employees and the remuneration
committee has made commitments to make Powerhouse an attractive workplace, both in terms of suitably attractive
packages but also commitment to development through training and compliance and other Employees benefits.
As part of the Covid-19 measures all employees were supported to ensure that their home working facilities were compliant
and, as the Directors are also aware of the pressures on employees, that well-being support and instruments were introduced.
Supply Chain Risk
As a hangover from the pandemic, global shortages in raw material shortages, supplier capacity constraints, supplier
production disruptions, supplier quality and sourcing issues or price increases are widespread and touching a wide range of
industries.
It is not beyond the realms of possibility that this could increase aspects of the technology, or development and operating
costs, and adversely impact the competitive positions of the Company’s products or service. The reliance on its development
partners, and their reliance on contractors, third-party suppliers and manufacturers, and raw material markets exposes
enterprises like Powerhouse to volatility in the prices and availability of such items. A disruption in deliveries, including as a
result of catastrophic events or war, could have an adverse effect on our ability to meet our development partner’s
commitments to customers or increase operating costs.
It is however also anticipated that the prices of offtakes such as gas, power, heat, and hydrogen produced by Powerhouse
will see increases in the same environment.
Financial Risk
Capital management
In January 2021, the Company raised £10 million before expenses by way of a fund raise. This was primarily intended to
support the delivery of the Protos project, evidenced by the provision of the £3.8m loan facility to the Protos SPV.
Due to changes in the Protos contracting strategy, the facility was not fully utilised during 2021 and has been made available
until August 2022 in keeping with updated cashflows for the project development phase. Powerhouse had a cash balance of
£9.6 million at 31 December 2021.
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Strategic Report
Whilst this is a healthy position, until the Company can secure forward revenues in excess of its running costs, this amount
will deplete over time. The Company produces regular cashflows to assess plans forward and the use of its cash resources
based on business strategy. The Company assesses investment opportunities, either in its technology development or in
project engagement, on their individual merits but also in terms of how funds can be used to generate future revenues in line
with Business Strategy.
To enhance financial control procedures and to strengthen the oversight and monitoring and control of financial performance
and cash, the Company will bring activities which are outsourced currently, in-house and will recruit a Financial Controller
who will report to the CFO. The Company will also invest in an upgraded finance software system appropriate for this current
and immediate stage in its evolution.
The Company manages its capital according to budgets with the aim of ensuring it can continue as a going concern. Capital
sources include debt and equity instruments.
Board members review cash balances available for ongoing spend on a weekly basis against budget and income forecasts
in assessing needs forward and timing for any future equity raises.
Other financial risks are considered as follows:
Foreign Currency Risk
The execution of the first project does not expose the Company to any foreign currency risk and the Company does not hold
any cash in foreign currencies. Foreign currency value fluctuations are therefore insignificant. In future, as international
contracts are signed, the Board will examine the currency risk exposure of each project and protect any revenues and
expenses against currency volatility.
Interest Rate Risk
The Company does not have any corporate or project related debt outstanding, so the Board considers that there is currently
no material risk of any exposure to interest rate variations.
Credit risk
The Company has provided a loan facility and billed for engineering services to the Protos SPV during the year and into 2022.
Amounts due will be dealt with as part of the funding arrangements for the project during 2022. The Company has exposure
on these amounts should the project fail to reach a financial close, although security is in place in the event of a default in
repayment.
Other Financial Risk
The Company considers price risk and liquidity risk to be negligible in relation to their performance and financial position at
this early stage of its development, except as referenced elsewhere in this report.
Before entering any contract, partnership, or collaboration arrangements for service providers to Powerhouse, the Board
ensures that steps are taken to confirm the ability to deliver of any contractor or partner to avoid business disruption.
External Risks
The Company is subject to various risks originating from external events including political, economic, legal, business, and
financial conditions. The assessment of these risks, their evaluation and mitigation are essential parts of the Company’s
planning and internal control system.
Projects that utilise the Company’s technology are subject to price risk in respect of project build and operational costs and
market risks in respect of commodity pricing relating to project outputs. As the Company’s ability to generate revenues is
dependent upon projects materialising, the Company is indirectly exposed to these risks. The Company is actively involved
with its customers in assisting management of these risks.
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Strategic Report
The following risk factors, which are not exhaustive, are particularly relevant to our current business activities:
COVID-19
Since 2020, the engineering development work avoided significant interruption.
In 2022, as the different regions of the UK moved more into the phases of ‘living with Covid-19’, more normalised operations
were established within society, and in our business environment. Despite this, the flow through impact of Covid-19 on global
supply chain is still prevailing. The Company and its collaboration partner in the UK, Peel NRE, and the SPV team on the
Protos project, monitor the supply chain related effects of the pandemic on the project (including cost volatility), and on the
business. They deploy appropriate risk mitigation strategies where possible.
The Company continues to closely monitor the coronavirus situation, are following health authority and government
guidelines. The Company is prepared to take further action to deal with any situational changes.
Implications of the war in Ukraine
The Company does not consider there to be a direct impact on its assets and liabilities as a result of the war in Ukraine. The
Company notes that the situation is impacting commodity pricing, exchange rates and the supply chain, as well as the
possibility of an economic downturn. The Company will continue to monitor events and potential impacts on the business and
relating projects, mitigating where appropriate and possible.
Regulatory and Compliance Risk
The international markets available to Powerhouse expose the Company to risk across a spectrum of different political and
regulatory regimes with different risk profiles.
The steps being taken to adopt a more strategic and tactical development of territories and markets by the Company of late
reduces this risk and allows the Company to focus on aligning with relevant markets where there is existing or potential market
fit and attractiveness, which includes the political, regulatory and compliance elements.
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Strategic Report
Statement of Directors’ Duties to Stakeholders under s.172 Companies Act 2006
Promoting the success of the Company
The Directors are aware of their duty under section 172 of the Companies Act 2006 to act in the way which they consider, in
good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole and, in
doing so, to have regards (amongst other matters) to:
•
•
•
•
•
•
The likely consequences of any decision in the long term;
The interests of the Company’s employees;
The need to foster the Company’s business relationships with suppliers, customers and others;
The impact of the Company’s operations on the community and the environment;
The desirability of the Company maintaining a reputation for high standards of business conduct; and
The need to act fairly between members of the Company.
The Board recognises that the long-term success of the Company requires positive interaction with its stakeholders. Positive
engagement with stakeholders will enable our stakeholders to better understand the activities, needs and challenges of the
business and enable the Board to better understand and address relevant stakeholder views which will assist the Board in its
decision making and to discharge its duties under Section 172 of the Companies Act 2006.
Key stakeholders are discussed in more detail in the Corporate Social Responsibility section of this report.
Paul Drennan-Durose
Chief Executive Officer
28 June 2022
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Directors’ Report
DIRECTORS’ REPORT
The Directors present their report together with the audited financial statements for the year ended 31 December 2021 for
Powerhouse Energy Group Plc (“Powerhouse” or the “Company”). The financial statements 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.
Principal Activities
Powerhouse is a company incorporated in England and Wales with company number 03934451. The Company is a public
limited company which trades on the AIM market of the London Stock Exchange. The address of the registered office is 15
Victoria Mews, Mill Field Road, Cottingley Business Park, Bingley BD16 1PY.
The Company has a Distributed Modular Generation (“DMG”) product platform for the regeneration of plastic to power and
hydrogen. The Company engineers, sells, licenses and supports operations of the DMG process for applications in UK and
throughout the world.
Business Strategy
The Company Business strategy is described in the Strategic Report.
Business Review
The review of the year and the Directors’ strategy are set out in the Strategic Report and the Chairman & CEO’s Reports.
Key Performance Indicators
For the year ended 31 December 2021, the Directors consider that performance is measured against the commercialisation
and business development milestone activities reported in the Strategic Report.
Future Developments
Expected future developments and the Company’s corporate development strategies are reported in the Chairman & CEO’s
Report and the Strategic Report.
Management of Capital
Matters related to the management of capital are set out in the Strategic Report.
Subsidiaries, associates and other investments
The Company’s only UK subsidiaries are non-trading and not material. There are also long-term restrictions on the operations
of the Company’s subsidiaries in the US and Switzerland. With these restrictions in place, the Company is also unable to exert
control over the subsidiaries. As such the Company has claimed exemptions applicable to it under Companies Act section
405 (2) and 405 (3b) and IFRS 10 to not present any Consolidated financial statements for the year ended 31 December
2021.
The Company has one associate, Engsolve Limited, in which a 48.39% interest was acquired on 12 August 2021 for a cash
consideration of £99,990. Engsolve Limited is incorporated and operates in the UK. The accounts include the Company’s
share of Engsolve’s profits made after the acquisition. The rationale for the acquisition is detailed in the Strategic Report.
During 2021, the Company’s investment in Waste2Tricity International (Thailand) Limited was transferred into a new Thailand
based entity, Altec Energy Limited (‘Altec”). The Company has not taken part in fund raises investment made by Altec
subsequent to its formation such that the Company’s interest has reduced to 33.8% as at 31 December 2021 and to 30.4%
since year end. Due to the passive nature of the Company’s involvement, the interest is held in other investments.
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Directors’ Report
Results and Dividends for the Year
The Company financial statements for the year ended 31 December 2021 are set out in this annual report. The Company
loss for the year after taxation amounted to £1,870,496 (2020: loss of £15,837,741). The net assets of the Company are
£55,085,971 (2020: £46,857,836) with the movement in the year set out in the Statement of Changes in Equity.
The Company has not paid a dividend during the year ended 31 December 2021 (2020: £nil) and the Directors do not
recommend the payment of a dividend at 31 December 2021 (2020: £nil).
Research and Development
Research and development related costs incurred during the year, relating to the DMG product, amounted to £585,195
(2020: £407,071). This excludes amounts expended on client projects that are expected to be recovered.
Financial Risk
Financial risk management and exposure are set out in the Strategic Report.
Events after the Reporting Period
There have been no significant events since the balance sheet date other than those discussed in the Strategic Report and
note 29 to the Company financial statements.
Directors
The Directors who held office during the period and up to the date of the Annual Report are as follows:
Current Board Members:
Paul Drennan-Durose (appointed 14 February 2022)
Paul Emmitt (appointed 2 March 2022)
James Greenstreet (resigning on 30 June 2022)
Myles Kitcher
Hugh McAlister (appointed 4 February 2022)
Keith Riley (appointed 27 September 2021)
Gillian Weeks (appointed 18 January 2022)
Board Members who served and left during period:
Mark Berry (resigned 29 July 2021)
Dr William Cameron Davies (resigned 31 March 2021)
Kirsten Gogan (resigned 12 October 2021)
David Ryan (resigned 30 June 2021)
Allan Vlah (resigned 31 December 2021)
Russell Ward (appointed 4 February 2022, resigned 10 June 2022)
Tim Yeo (resigned 20 August 2021)
Company Secretary
Delgany Corporate Services Limited
A brief biography of the current Directors can be found below:
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Directors’ Report
Executive Directors:
Paul Drennan-Durose, Chief Executive Officer
Paul Drennan-Durose recently joined (14 Feb 2022) the Board of Powerhouse, having spent over three years as the investor
appointed Chief Executive Officer of Heliex Power Limited, a private equity backed cleantech energy business. Whilst there,
he led the transformation of the start-up new technology company, leading the roll-out of its technical development, and
commercial market recovery.
Paul has many years of Board level experience in complex, new technology, distribution, engineering services, and
manufacturing companies. He has PLC, SME, PE, and VC business experience internationally, and has extensive experience
in a range of sectors, including cleantech energy, oil & gas, waste to energy, marine, automotive and process manufacturing
industries.
Paul Emmitt, Chief Technical Officer
Paul Emmitt was appointed as Chief Technical Officer in June 2021 and joined the Board as an Executive Director on 2 March
2022. Mr Emmitt is a Chartered Materials Engineer and Chartered Environmental Engineer with over twenty years engineering
and operational management experience both in the UK and overseas.
Paul holds an MBA in Engineering Management. His experience encompasses work in the oil, gas, energy-from-waste and
chemical industries as well as periods with major international companies at levels from Engineer to Director. In all sectors he
has been a designer as well as a project and HSE manager.
Non-Executive Directors:
Keith Riley, Interim Non-Executive Chair
Keith Riley joined the Board as a Non-Executive Director in 2021 and stepped in as Interim Non-Executive Chair on 27 June
2022. Mr Riley is also the proprietor and Chief Executive Officer of Vismundi Limited, a consultancy company providing
services to the resources and waste management industry. Prior to that, between 2005 and 2012 he worked for Veolia
Environmental Services plc as Group Managing Director for Technology and as Managing Director for Group Technical
Services.
Over the course of his career Mr Riley has worked with several specialist waste and resource management companies and
was a Non-Executive Director of Waste2tricity Limited. He continues to be a Partner of BH Energy Gap LLP on behalf of
Vismundi, which develops projects in the renewables sector and raises the finance to implement them.
James Greenstreet, Non-Executive Director
James Greenstreet has over 20 years of corporate and structured finance experience. Having started his career at Arthur
Andersen, he joined BAE Systems in 1994 to work in the corporate finance team.
After leaving BAE, Mr Greenstreet held corporate finance positions at IBM and XL Capital, once more focusing on asset and
lease finance. James has been a non-executive director of Powerhouse since 2011 and is a founder of aircraft lessor, Falko
Regional Aircraft. He also sits on the board of regional airline, CityJet DAC and Electric Aviation Group Ltd an early-stage
company developing hydrogen electric commercial aircraft.
Myles Kitcher, Non-Executive Director
Myles Kitcher is Managing Director of Powerhouse’s development partner for Protos, Peel NRE and the leading force behind
Protos, – Peel NRE's flagship destination for energy, innovation and industry where the first application of Powerhouse DMG
technology is to be built. Myles is a Chartered Surveyor with extensive experience in both the public and private sectors
managing the development process for several large waste infrastructure projects.
Prior to joining the Peel Group, Mr Kitcher worked for Lancashire County Council where he held senior positions within the
planning and waste management functions of the authority.
23
Directors’ Report
Gill Weeks, Non-Executive Director
Gill Weeks OBE joined the Board as a Non-Executive Director in January 2022. With a scientific and legal background and
widely considered to be an industry expert within the field of waste, environment and resource management, Ms Weeks has
chaired key government, trade body and Environment Agency committees and has served on the Environment Agency Board.
As a leader of compliance and regulatory teams in global environmental business, advising on environmental law changes,
over the course of her career Ms Weeks has developed expertise in public policy, environmental law, stakeholder
management, governance and risk, environmental science and regulatory compliance and enforcement. Ms Weeks was a
board member at the Environment Agency for seven years until 2021 where she was chair of the Environment and Business
Committee. She is currently the chair of Trustees at the Welcome Charity.
Hugh McAlister Non-Executive Director
Hugh McAlister joined the Board in February 2022. Mr McAlister has over 40 years’ stockbroking experience in the city and
has been the executive chairman of Novum Securities Limited since 2018, having been its Chief Executive Officer for the
previous nine years.
Prior to this, Mr McAlister was a founding partner and head of trading a Kaupthing Singer & Friedlander Capital Markets and
Head of Pan European Equities at Dresdner Kleinwort Benson.
Directors’ Service Contracts
Details of the Directors’ service contracts and their respective notice terms are detailed in the Remuneration Committee
report.
Directors’ Interests
The interests of the Directors who held office at 13 June 2022, being the latest practicable
date before the publication of the Annual Report and at 31 December 2021, in the ordinary
shares of the Company, were as follows:
James Greenstreet
Myles Kitcher
Keith Riley
Paul Drennan-Durose
Paul Emmitt
Gill Weeks
Hugh McAlister
Number of ordinary shares
13 June 2022
31 December 2021
1,840,000
1,840,000
-
-
12,128,986
12,128,986
-
-
-
-
N/A
N/A
N/A
N/A
24
Directors’ Report
Significant Shareholders
As at 13 June 2022, being the latest practicable date before the publication of the Annual Report, the Company is aware of
the following significant interests in its ordinary, voting share capital:
Holder
Amount
Percentage
White Family* consisting of: -
* Josh White
* Ben White
* Serena White-Reyes
* Howard White
Jarvis Investment Management Limited A/C Jarvis
Vidacos Nominees Limited A/C CLRLUX
Hargreaves Lansdown (Nominees) Limited A/C 15942
Hargreaves Lansdown (Nominees) Limited A/C HLNOM
Hargreaves Lansdown (Nominees) Limited A/C VRA
Interactive Investor Services Nominees A/C SMKTISAS
Interactive Investor Services Nominees A/C SMKTNOMS
Barclays Direct Investing Nominees Limited A/C CLIENT1
Corporate Governance
994,461,055
377,746,610
224,065,330
214,584,086
178,065,029
665,345,487
539,957,293
290,900,668
199,380,589
183,664,418
180,291,605
157,235,756
122,579,893
25.13%
9.55%
5.66%
5.42%
4.50%
16.81%
13.64%
7.35%
5.04%
4.64%
4.56%
3.97%
3.10%
The Company complies with the AIM Rules for Companies, including AIM Rule 26, concerning the disclosure of information.
It also complies with the provisions of the Quoted Companies Alliance Corporate Governance Code (“QCA Code”). More
details are provided in the Corporate Governance Report in this document.
Payment to Suppliers
The Company does not have a standard or code which deals specifically with the payment of suppliers. Total creditor days
for the Company for the year ended 31 December 2021 were 24 days (2020: 22 days).
Risk Management and Principal Risks
The principal risks to the Company, including financial risks and exposures and descriptions of how they are managed is
explained in detail in the Strategic Report and in Note 26 to the financial statements.
Going Concern Basis
The financial statements have been prepared on a going concern basis and is explained in Note 1.3 to the financial
statements.
Political Donations
The Company has not made any political donations in the year ended 31 December 2021 (2020: nil).
Auditors
Jeffreys Henry LLP were re-appointed as auditors at the Company’s 2021 AGM. A resolution is to be proposed at the 2022
AGM for the re-appointment of Jeffreys Henry LLP as auditors to the Company, at a rate of remuneration to be determined
by the Audit Committee.
25
Directors’ Report
Each of the persons being a Director at the date of approval of this report confirms that:
•
•
So far as the Director is aware there is no relevant audit information of which the Company’s auditor is unaware;
and
The Director has taken all the steps that he ought to have taken as a Director in order to make himself aware of any
relevant audit information and to establish that the Company’s auditor is aware of that information.
This confirmation is given, and should be interpreted, in accordance with the provisions of s.418 of the Companies Act 2006.
Approved by the Board of Directors and signed on behalf of the Board on 28 June 2022.
Paul Drennan-Durose
Director
26
Corporate Governance Report
CORPORATE GOVERNANCE REPORT
Introduction
The Directors attach great importance to maintaining high standards of corporate governance to help achieve the Company’s
goals. To that end they have adopted the principles set out in the Quoted Companies Alliance Corporate Governance Code
for Small and Mid-Size Quoted Companies (the ‘QCA Code’) 2018. The QCA Code, which is constructed around 10 broad
principles, sets out a standard of minimum best practice for small and mid-size quoted companies, including AIM companies.
Companies are required to disclose how the implementation of the QCA Code has been applied or, to the extent not done
so, to explain any areas of departure from its requirements.
We have considered how we apply each principle to the extent that the Board judges these to be appropriate for our
circumstances, and below we provide an explanation of the approach taken in relation to each. Our compliance with the QCA
Code is based on the Company’s current practices and the improvements in its governance made since the last Annual
General Meeting.
The QCA Code makes clear it is the prime responsibility of the Chairman to ensure the Company applies the QCA Code for
the benefit of all the Company’s stakeholders. The Chairman and the Board accept their responsibility for setting the
Company’s corporate culture, its values and for the behaviour of all its employees.
This report sets out our approach to the QCA Code and governance. Our compliance with the 10 principles is also available
to view on the Company’s website: www.powerhouseenergy.co.uk
We have identified three principal areas where we are not in full compliance:
The first relates to the position of the Company’s Chair. Since the recent resignation of the Chair, other Directors assumed
the Chair’s responsibilities until Keith Riley, existing Non-Executive Director, was elected by the Board as Interim Chair. The
Company is in the process of searching for a permanent Chair with a view to making a relevant appointment as soon as
practicable. See Principle 5 for further details.
Secondly, due to changes on the board during 2021, there were no formal meetings of the Remuneration Committee in the
year under review. See Principle 5 for further details. New members have been appointed and there has been a
recommencement of the meetings of the Remuneration Committee in 2022.
The third is that Powerhouse allows non-executive Directors to participate in the Company’s share options schemes. See
Principle 5 for further details.
The QCA Code allows cross reference to disclosures made on the website rather than repeating them all in this Report. The
principal disclosures such as the Remuneration Committee and Directors’ Report will continue to be included in the Annual
Report. However, for a full assessment of the Company, shareholders are encouraged to review the Company’s website for
regulatory disclosures and for up-to-date information on activities.
QCA Principles
Principle 1 - Establish a strategy and business model which promote long-term value for shareholders
Powerhouse has a clear business model and growth strategy. Our objective is to be a leading sustainable technology provider
and to enable the rapid deployment of modular distributed hydrogen production, distributed electricity generation and the
provision of heat. This will be done using non-recyclable and end-of-life waste material, including plastic. Powerhouse’s
proprietary process technology is one of the world's first proven, distributed, modular, hydrogen from waste (HfW) processes.
Details of the Company’s strategy and business model are set out in the Strategic Report. This describes progress to date,
our commercial partnerships, our DMG development programme and our plans. Key challenges facing the Company and
how they will be addressed are set out in the Strategic Report in the section headed Principal Risks and Uncertainties.
27
Corporate Governance Report
Principle 2 - Seek to understand and meet shareholder needs and expectations
Powerhouse is committed to open communication with all its shareholders. The Company believes it is important to explain
business development and financial results to its shareholders and to ensure that suitable arrangements allow the issues and
concerns of shareholders to be heard and understood.
The Chair is normally primarily responsible for shareholder liaison. However, with the recent changes to the Board, the Chief
Executive Officer has assumed this role on a temporary basis in conjunction with the Interim Chair appointed on 27 June 2022
until the appointment of a new permanent Chair is made. Since joining Powerhouse in February 2022, the Chief Executive
Officer and the former Chair made it a priority to meet the Company’s largest shareholders and held discussions with the
Company’s broker to understand shareholders needs and expectations. The Chief Executive Officer, together with the new
Chair when appointed and the Interim Chair in the meantime, intends to make presentations to shareholder events from time
to time where investors can discuss the Company’s progress and performance. Trading updates and press releases are
issued as appropriate.
Hard copies of the Annual Report and Accounts are issued to all shareholders who have requested them and these, together
with the interim results are also published on the Company’s website at www.powerhouseenergy.co.uk. The Company makes
full use of its website to provide information to shareholders, other stakeholders, potential customers, and other interested
parties.
Shareholders are given the opportunity to raise questions at the Annual General Meeting (“AGM”) and the Directors are
normally available both before and after the meeting for further discussion with shareholders. As a matter of policy, the level
of proxy votes (for, against and votes withheld) lodged on each resolution is declared at the meeting. In the event there were
a significant number of votes against a resolution, the Directors would seek to communicate with the shareholder(s)
concerned to discuss their issues.
The Board receives regular share register analysis reports to monitor the Company’s shareholder base and help identify the
types of investors on the register.
Principle 3 - Take into account wider stakeholder and social responsibilities and their implications for long- term
success
The Company regards its shareholders, employees, customers, contractors, consultants and advisors, business partners and
suppliers as forming part of the wider stakeholder group. The Company recognises the contribution of each of these
stakeholder groups and seeks to build meaningful and mutually beneficial relationships with them all.
As the needs and growth of the business evolves, management identifies key relationships and aims to ensure they are
managed appropriately.
The Company’s internal stakeholders are its employees and its consultants. The Company is fully committed to promoting a
working environment of equal opportunities for all without discrimination or harassment and regardless of part-time working,
gender, sexual orientation, age, race, ethnicity, nationality, religion, or disability. The Company will report against this
commitment in future annual reports.
The Company proactively seeks feedback to enable the management to make improvements and changes to products and
processes. All stakeholders have access to contact information for communication with the Company. Feedback is
respectfully acknowledged by the Company and appropriately dealt with.
The Board believes that investment in the wider stakeholder network assists the achievement of its long-term goals and helps
create an environment of trust which will promote the long-term success of the Company.
There are further details of the Company’s approach to corporate social responsibility in the Strategic Report of this Annual
Report and Financial Statements.
28
Corporate Governance Report
Principle 4 - Embed effective risk management, considering both opportunities and threats, throughout the
organisation
Risk assessment and evaluation is an essential part of the Company’s planning and an important aspect of the Company’s
internal control system.
The Board had established a comprehensive risk register relating to significant aspects of the Company’s business. Given the
level of Board changes in the period 2021 to current, the Board will complete a comprehensive revalidation and reassessment
of the risks and mitigations within the register in quarter three and continue to review regularly thereafter.
Standards and policies
The Board is committed to maintaining appropriate standards for all the Group’s business activities and ensuring that these
standards are set out in written policies. Key examples of such standards and policies include:
Policy for Authorities and Approvals
Share Dealing Code
Social Media Policy
Terms of Reference for the Board Committees
Business Ethics Policy
Environmental Policy
Health and Safety Policy
Employment Policy
Approval process
All significant contracts are required to be reviewed and signed by a Director of the Company.
For further details of the Company’s approach to risk and its management, please refer to the Principal Risks and Uncertainties
section of the Strategic Report in this Annual Report and Financial Statements.
Principle 5 – Maintain the board as a well-functioning, balanced team led by the chair
The Board comprises two executive and five non-executive Directors and it oversees and implements the Company’s
corporate governance programme.
James Greenstreet is stepping down from his role as Non-Executive Director on 30 June 2022, having served on the Board
since 2011. James acted as interim Non-Executive Chair following the resignation of previous chair, Tim Yeo, until the
appointment of Russell Ward on 1 March 2022. Russell Ward recently resigned and left the Company on 10 June 2022. The
Company is actively searching to appoint a new Chair and, in the meantime, has appointed existing non-executive Director,
Keith Riley, as Interim Chair.
The executive Directors are Paul Drennan-Durose and Paul Emmitt. The non-executive Directors are Keith Riley, James
Greenstreet, Myles Kitcher, Gill Weeks and Hugh McAlister.
The Chair is responsible for the Company’s approach to corporate governance and the application of the principles of the
QCA Code. Myles Kitcher, James Greenstreet, and Gill Weeks are the Company’s independent Directors and, as such, are
independent of management and any business or other relationships which would interfere with the exercise of their
independent judgement.
James Greenstreet does not meet the strict criteria for independence set out in the QCA Code, due to his length of service,
ownership of ordinary shares and/or his participation in the Company’s share option arrangements, as part of his remuneration
arrangements. Mr Greenstreet has been a non-executive Director since 2011, having served as non-executive Chair from 20
August 2021 until 1 March 2002. However, there has been no concurrent tenure with management which could otherwise
hinder his ability to be independent.
29
Corporate Governance Report
The Board considers that the ownership of shares and participation in the Company’s share option scheme by certain non-
executive Directors encourages the alignment of their interests with those of the Company’s shareholders and not material
enough to compromise their independence, character and judgement. Therefore, the Company considers Mr Greenstreet to
be independent for the purposes of the QCA Code.
Each Board member commits sufficient time to fulfil their duties and obligations to the Board and the Company. They attend
board meetings, join ad hoc board calls and are available for consultation when needed. The contractual arrangements
between the Directors and the Company specify the minimum time commitments which are considered sufficient for the
proper discharge of their duties. When exceptional circumstances arise all Board members understand the need to commit
additional time.
Board packs include information on business developments, progress and risks faced as well as financial performance and
are circulated ahead of board meetings. Key issues are highlighted and explained, providing board members with sufficient
information to enable full discussion in the board meeting. From time to time, members of the Company’s senior management
present to the Board to update them on issues and developments.
The Board is supported by its Audit Committee, its Remuneration Committee and its Environmental, Social and Governance
(ESG) Committee.
Board and committee meetings
Attendances of Directors at Board and committee meetings convened in 2021, and which they were eligible to attend, are
set out below:
Director
Number of meetings in year
Tim Yeo*
Dr Cameron Davies*
David Ryan*
James Greenstreet
Myles Kitcher
Allan Vlah*
Kirsty Gogan*
Mark Berry*
Keith Riley*
*Notes:
Board Meetings
Attended
Remuneration
Committee
Attended
Audit Committee
Attended
ESG Committee
Attended
7
5/5
3/3
4/4
7/7
7/7
5/7
4/5
4/4
2/2
0
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
1
N/A
N/A
N/A
0/1
1/1
1/1
N/A
N/A
N/A
2
2/2
N/A
2/2
N/A
N/A
0/2
2/2
2/2
N/A
Tim Yeo resigned from the Board on 20 August 2021.
Allan Vlah resigned from the Board on 31 December 2021.
Kirsty Gogan resigned from the Board on 12 October 2021.
Mark Berry resigned from the Board on 29 July 2021.
Dr Cameron Davies resigned from the Board on 31 March 2021.
David Ryan resigned from the Board on 30 June 2021.
Keith Riley joined the Board on 27 September 2021.
2021 was a year of many Board changes. Two of the non-executive directors of the Remuneration Committee resigned from
the Board during the year and the remaining non-executive Director managed matters in conjunction with other Board
members.
There was only one formal meeting of the Audit Committee in 2021 in which the audit of the financial statements for the year
ended 31 December 2020 was discussed. The same financial statements were discussed by the full Board with the auditors
before being approved by the Directors of the Company in June 2021.
30
Corporate Governance Report
Appointment and tenure
The Board makes decisions regarding the appointment and removal of Directors. There is a formal, rigorous and transparent
procedure for appointments, some of which have been delegated to the Remuneration Committee which, when needed, also
acts as Nomination Committee, to make recommendations to the Board about the appointment of Directors and senior
executives. Appointments are made on merit, taking account of the balance of skills, experience and knowledge required.
As part of its commitment to improve accountability to shareholders, the Board has decided that, in future, any director who
is over the age of 70 or has been on the board for eight years at the date of the Annual General Meeting will submit themselves
for re-election annually, in addition to those Directors retiring by rotation in accordance with our Articles of Association.
Principle 6 – Ensure that between them the Directors have the necessary up-to-date experience, skills and
capabilities.
The Board comprises two executive Directors and five non-executive Directors, three of whom are independent. Details of
the Directors are set out in the Directors’ Report of this Annual Report and Financial Statements.
The Chair believes that the Board should always have a suitable mix of skills and competencies covering all essential
disciplines bringing a balanced perspective that is beneficial both operationally and strategically.
The nature of the Company’s business requires the Directors to keep their skillset up to date. Periodic advice on regulatory
matters is given by the Company’s professional advisers. Directors joining the Board and new employees are offered full
familiarisation briefings with the Company’s technology, the development programme and the current status of technology
risk. During the period of Covid-19 restrictions in parts of 2021, the opportunity for Directors to visit the R&D facilities was
limited but since restrictions have been lifted, familiarisation visits to the Company’s facilities have been resumed. In addition,
the Company periodically holds board meetings at the site of the facilities.
The Board is supported by senior management and by its key partners and professional advisers. The advice provided to the
Board is often commercially sensitive. It is used by the Board to inform their decisions but typically will not be disclosed.
The Company Secretary supports the Board and reports directly to the Chair on governance matters.
The Board is supported and advised by a Chief Financial Officer, a chartered accountant with extensive experience, who
works closely with the Board and is managing financial procedures and controls.
Principle 7 - Evaluate board performance based on clear and relevant objectives, seeking continuous
improvement
Board performance effectiveness process
The assessment of the Board’s performance has to date been largely focused on its contribution to the achievement of the
Company’s financial and strategic goals. As the Company moves towards full commercial operation the Board intends to
consider how to make the evaluation of its own performance more formal and rigorous.
Each Board member is subject to a review by the Remuneration Committee based on their professional contribution as well
as their contribution to the performance of the Company.
The terms and conditions of the arrangements, including remuneration are set by the Remuneration Committee.
Board appointments
The Remuneration Committee, which acts as Nomination Committee as needed, meets when necessary to consider the
appointment of new Directors. Board members all have appropriate notice periods so that if a board member indicates his or
her intention to step down, there is sufficient time to appoint a replacement, whether internal or external.
Board appointments are made after consultation with advisers in all cases. The Nomad undertakes due diligence on all new
potential board candidates.
31
Corporate Governance Report
Each Director is required to offer themselves for re-election at least once every three years as per the Company’s articles of
association. In addition, any Director who is over the age of 70 or has been on the board for eight years at the date of the
Annual General Meeting will submit themselves for re-election annually, in addition to those Directors retiring by rotation in
accordance with our Articles of Association.
Succession planning
Succession planning was undertaken by the Chairman in consultation with the Board in 2021. However, with recent Board
changes, succession planning is to be a responsibility of the Remuneration Committee which acts as a Nominations
Committee as needed.
Principle 8 – Promote a corporate culture that is based on ethical values and behaviours
Consistent with Principle 3 above, the Company operates an inclusive, transparent and respectful culture.
The Board places particular emphasis on operating to the highest ethical and environmental standards. HS&E is a specific
agenda item at every board meeting. In December 2020, the Board established a new Environmental Social and Governance
(ESG) Committee with the aim of placing sustainability at the heart of all decision-making and business activities. The
Company’s objectives include observing the highest level of health and safety standards, developing our Employees to their
highest potential and being a good corporate citizen in all the countries where we operate. A health and safety management
system has been developed for operation in 2021 with policies for healthy and safety, environment and quality in place.
Management engages with independent environmental and safety engineering specialists to review the Company’s product
and demonstrate that it will have minimal environmental and safety impact on the communities in which the Company
operates.
The Company’s employment policies follow best practice, based on equal opportunities for all employees, irrespective of
ethnic origin, religion, political opinion, gender, marital status, disability, age or sexual orientation.
The Company strives to create a diverse and inclusive working environment where every employee feels welcome and can
do their best work. Powerhouse believes in the benefits of diversity and the importance of bringing a wide range of skills,
experience and perspectives into our business. The Directors continually work with senior management to promote the
Company’s values and to monitor attitudes and behaviours to ensure that they are consistent with its culture.
Principle 9 – Maintain governance structures and processes that are fit for purpose and support good
decision- making by the board.
The Board has undergone significant change in the last year and is now working to ensure that its processes and culture are
appropriate for the Company’s current size and complexity. It continues to review its practices as the Company evolves and
grows as part of its commitment to improve accountability to stakeholders.
The Chief Executive Officer has overall responsibility for managing the day-to-day operations of the Company and has
assumed responsibility for investor relations, PR and business development. The Board as a whole is responsible for
implementing the Company’s strategy. Management systems and procedures implemented in 2020 were followed in 2021 in
parallel with project execution and licencing readiness activities.
The Company has established an Audit Committee, a Remuneration Committee and an Environmental Social and Governance
Committee with formally delegated duties and responsibilities.
Audit Committee
The duties of the Audit Committee include reviewing, in draft, form the Company’s annual and half-yearly report and accounts
and providing advice to the Board. Members of the Audit Committee are also responsible for reviewing and supervising the
financial reporting process and internal control systems of Powerhouse. The Audit Committee is comprised of two non-
executive Directors.
32
Corporate Governance Report
Remuneration Committee
The Remuneration Committee is responsible for determining the policy for Directors’ remuneration and setting remuneration
for the Company’s chair, executive Directors and senior management including share option schemes and any bonus
arrangements. The Remuneration Committee also acts as a Nomination Committee as needed. No director plays any role in
determining his or her own remuneration.
2021 was a year of many Board changes. Two of the non-executive Directors of the Remuneration Committee resigned from
the Board during the year and the remaining non-executive Director managed matters in conjunction with other Board
members. In 2022, two new non-executive Directors have been appointed to the Remuneration Committee and normal
Committee activities have resumed.
Environmental Social and Governance (ESG) Committee
The ESG Committee was established in December 2020 with the aim of integrating sustainability best practice into all decision
making and business activities as part of the Company’s commitment to ensuring sustainable and ethical best practice in all
its work. Powerhouse is pioneering clean fuel technology and the ESG Committee supports the Board in developing the
technology that could help accelerate the UK’s clean energy transition. The Committee ensures that Powerhouse promotes
achievement of the UN Sustainable Development Goals throughout its business.
Furthermore, the ESG Committee monitors the Company’s recruitment policies and its progress towards employing a fully
diverse work force and engagements with stakeholders.
The appropriateness of the Company’s governance structures will be reviewed annually in light of further developments of
accepted best practice and the development of the Company.
Principle 10 – Communicate how the company is governed and is performing by maintaining a dialogue
with shareholders and other relevant stakeholders
The Company maintains a regular dialogue with stakeholders including shareholders to enable interested parties to make
informed decisions about the Company and its performance. Regular communication enables the Board to receive
shareholders’ views by various means as set out in Principle 2 above.
The Company regularly releases appropriate price sensitive information regarding its activities and progress to the market. In
2022, the Company intends to foster strong, balanced co-ordination of messaging to investors and to other key stakeholders.
The Board discloses the result of general meetings by way of announcement and discloses the proxy voting numbers to those
attending the meetings. In order to improve transparency, the Board has committed to announcing proxy voting results in
future and disclosing them on the Company’s website. In the event that a significant portion of voters have voted against a
resolution, an explanation of what actions it intends to take to understand the reasons behind the vote will be included.
Keith Riley
On behalf of the Board
28 June 2022
33
Remuneration Committee Report
REMUNERATION COMMITTEE REPORT
I am pleased to present the Committee’s report for the year ended 31 December 2021. The following pages provide an insight
into how the Committee discharged its responsibilities during the year and the key topics that it considered in doing so. The
composition and terms of reference for the Remuneration Committee were updated in the final quarter of 2020 to reflect the
Company’s renewed commitment to corporate governance and enhanced practices. Following several changes to the Board
during 2021, the Remuneration Committee membership was refreshed in 2022 and terms of reference reviewed and
approved by the Board.
Due to the timing of the various changes to the Board in 2021 and the Remuneration Committee’s membership, there were
no formal meetings of the Remuneration Committee in 2021. However, the remaining member of the Committee took
responsibility for its affairs, supported by the wider Board of Directors.
Composition
The membership of the Remuneration Committee was renewed in 2020 and in part of 2021 comprised Kirsty Gogan and Tim
Yeo and was chaired by Myles Kitcher. Further to the Board changes in 2022 mentioned above, the Remuneration Committee
is now chaired by Gill Weeks with Myles Kitcher and Hugh McAlister being the other members and normal activities have
resumed.
The Remuneration Committee is responsible for determining the policy for Directors’ remuneration and setting remuneration
for the Company’s chair, executive Directors and senior management including share option schemes and any bonus
arrangements. The Remuneration Committee also acts as a Nomination Committee as needed.
Remuneration Policy
The Remuneration Committee is aware that the remuneration package should be sufficiently competitive to attract, retain and
motivate individuals capable of achieving the Group’s objectives and thereby enhancing shareholder value without paying
more than is necessary, having regard to views of shareholders and other stakeholders. In determining remuneration policy, the
Remuneration Committee considers all other factors which it deems necessary including relevant legal and regulatory
requirements. No director or senior manager is involved in any decisions as to their own remuneration outcome.
Service Contracts
Paul Drennan-Durose and Paul Emmitt have service contracts which can be terminated by providing six months’ written
notice. James John Pryn Greenstreet, Gill Weeks, Hugh McAlister and Keith Riley have service contracts which can be
terminated by providing three months’ written notice. Myles Kitcher has a service contract which can be terminated without
provision of notice.
Prior to his resignation, David Ryan had a service contract which could be terminated by providing six months’ written notice.
Mr Ryan resigned on 30 June 2021.
Prior to their resignations, Russell Ward, Tim Yeo, William Cameron Davies Allan Vlah, Kirsty Gogan and Mark Berry held
service contracts which could be terminated by providing three months’ written notice.
Tim Yeo’s remuneration includes amounts paid to Rivermill Partners Limited, a company wholly owned by Tim Yeo and Mrs
Diane Yeo, for executive corporate management services provided during the year. These services are contracted for to
September 2022.
34
Remuneration Committee Report
Basic Salary and Benefits
The remuneration of the Directors of the Company paid for the year or since date of appointment, if later, to 31 December
2021 is set out below:
2021
£
Salary/Fee
2021
£
Pension
2021
£
Share based
payments
2021
£
Other
2021
£
Total
2020
£
Total
Tim Yeo
David Ryan
William Cameron Davies
Nigel Brent Fitzpatrick
James Greenstreet
Allan Vlah
Kirsten Gogan
Keith Riley
Mark Berry
Total
92,444
97,996
7,500
-
30,000
15,000
23,468
8,167
-
274,575
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
22,500
-
-
17,500
40,000
35,500
127,944
-
-
-
-
-
-
-
-
97,996
7,500
-
30,000
37,500
23,468
8,167
17,500
35,500
350,075
27,004
196,856
54,421
26,868
31,061
13,306
7,500
-
1,129
358,145
Notes:
David Ryan resigned from the Board on 30 June 2021.
Mr Yeo resigned from the Board on 20 August 2021.
Allan Vlah resigned from the Board on 31 December 2021.
Mr Davies resigned from the Board on 31 March 2021.
Kirsty Gogan resigned from the Board on 12 October 2021.
Mark Berry resigned from the Board on 29 July 2021.
Keith Riley joined the Board on 27 September 2021.
Share options held by the Directors are detailed in note 27 in the Notes to the Accounts. Total remuneration includes share-
based payments arising from the issue of options amounting to £40,000 (2020: £8,399) and details are set out in note 27 in
the Notes to the Accounts. There have been no awards of shares to Directors under long term incentive plans.
Bonus Schemes
There was no bonus scheme in place for 2021 and therefore no bonuses are payable in respect of the year ended 31
December 2021 (2020: nil).
Share Options
In April 2021, non-executive Directors were granted options under the Company’s Non-Employee Share Option Plan in lieu
of part or all of the fees to which they were entitled.
Tim Yeo 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.
For details of the total number of options outstanding at 31 December 2021 please refer to Note 27 to the Accounts.
Remuneration Committee Meetings and Attendance
Please see the table in the Corporate Governance Report in this document for attendance by the members of the
Remuneration Committee.
On behalf of the Directors of Powerhouse Energy Group plc
Gill Weeks
Chair of Remuneration Committee
28 June 2022
35
Audit Committee Report
REPORT OF THE AUDIT COMMITTEE
I am pleased to present the Committee’s report for the year ended 31 December 2021. The following pages provide an insight
into how the Committee discharged its responsibilities during the year and the key topics that it considered in doing so. The
composition and terms of reference for the Audit Committee were updated in the final quarter of 2021 to reflect the Company’s
renewed commitment to corporate governance and enhanced practices.
Composition
The Audit Committee is comprised of two non-executive Directors, currently Myles Kitcher and Keith Riley, with Myles Kitcher
acting as Chair. The Chair is considered by the Board to have recent and relevant financial experience and the other members
have competence relevant to the Company’s sector of operation.
Other members of the Board, the Chief Financial Officer and other members of senior management may also be invited to
attend the meetings as guests.
Role and Responsibilities
The Audit Committee determines and examines any matters relating to the financial affairs of the Group including the terms
of engagement of the Group’s auditors and, in consultation with the auditors, the scope of the audit. In 2021 and onwards,
the Audit Committee intends to meet at least twice in each financial year.
The Audit Committee is responsible for monitoring the integrity of the Company’s financial statements, reviewing significant
financial reporting issues, reviewing the effectiveness of the Group’s internal control and risk management systems. In
addition, it considers the financial performance, position and prospects of the Group and the Company and ensures they are
properly monitored and reported on. It oversees the relationship with the Auditor (including advising on their appointment,
agreeing the scope of the audit and reviewing the audit findings).
The Board and the Audit Committee do not consider it appropriate for the current size of the Group to establish an internal
audit function. However, this will be kept under review.
Principal activities during the year
The Committee held one meeting during the year under review and considered the following:
• An overview of the planned work by the external auditors on the 2020 audit including the scope and regulatory
requirements of the audit and the fees; and
The Committee’s Terms of Reference.
•
A further review of the audit and the financial statements for the year ended 31 December 2020 was undertaken by the full
Board.
The Committee’s planned activities during 2022 include:
•
•
•
•
•
Review and approve the FY21 and FY22 external Auditor’s plan, including the proposed materiality threshold, the
scope of the audit, the significant audit risks and fees;
Review the Company’s procedures, systems and controls for the prevention of bribery or fraud;
Review the adequacy and security of the Company’s arrangements for its employees to raise concerns, in
confidence, about possible wrongdoing in financial reporting or other matters. The Committee shall ensure that
these arrangements allow proportionate and independent investigation of such matters and appropriate follow up
action;
Review the Committee’s internal audit role, in the absence of an external provider of an internal audit service;
Risk – review and challenge the Risk Register and consider the risk appetite of the business.
36
Audit Committee Report
External Auditor
Jeffreys Henry has been the external Auditor of the Group since 2018. The continued appointment of Jeffreys Henry is to be
reviewed by the Committee each year, taking into account the relevant legislation, guidance and best practice appropriate
for a Company of Powerhouse’s size, nature and stage of development.
The Committee will consider a number of areas when reviewing the external Auditor appointment, namely its performance in
discharging the audit, the scope of the audit and terms of engagement, its independence and objectivity, and its
reappointment and remuneration.
The breakdown of fees between audit and non-audit services paid to Jeffreys Henry during the financial year is set out in Note
4 to the Financial Statements. The non-audit fees relate to taxation advisory and compliance services.
Attendance at Audit Committee Meetings
Please see the table in the Corporate Governance Report in this document for attendance by the members of the Audit
Committee.
Myles Kitcher
Chair of the Audit Committee
28 June 2022
37
ESG Committee Report
REPORT OF THE ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG)
COMMITTEE
I am pleased to present the Committee’s report for the year ended 31 December 2021. The Committee was established in
December 2020 with the aim of integrating sustainability best practice into all decision making and business activities as part
of the Company’s commitment to ensuring sustainable and ethical best practice in all decision-making and business activities.
Composition
In 2021 the ESG Committee was comprised of three non-executive Directors, Kirsty Gogan, Allan Vlah and Mark Berry, with
Kirsty Gogan acting as Chair. Two executive Directors, Tim Yeo and David Ryan, were also part of the Committee. The Chair
was considered by the Board to have recent and relevant experience with more than 15 years’ experience as a senior advisor
to Government on climate and energy policy.
Further to multiple changes to the Board during 2021, the membership of this Committee was refreshed in April 2022. The
Committee comprises Keith Riley and Gill Weeks, with Keith acting as Chair.
Role and Responsibilities
The overall mission of the ESG Committee is to support the Board in ensuring that Powerhouse attaches the highest priority
to environmental, social and governance issues and managing the associated ESG risks.
As a sustainable hydrogen company, Powerhouse is pioneering clean fuel technology and the ESG Committee supports the
Board in developing the technology that could help accelerate the UK’s clean energy transition along with helping to clean
up unrecyclable plastic and improving air quality. The Committee ensures that Powerhouse promotes achievement of the UN
Sustainable Development Goals throughout its business.
The ESG Committee will monitor Powerhouse's performance in relation to its stated aims of providing a solution to the global
problem of plastic waste and producing a sustainable low carbon alternative to fossil fuels whose adoption will accelerate the
world's progress to net zero emissions. Where appropriate it will make recommendations to the Board to ensure these aims
are achieved.
Powerhouse technology aims to be used at a local level providing a closed loop solution within the community for non-
recyclable plastic waste, cleaning up our oceans and helping to accelerate the clean energy transition to reach the target of
net zero emissions by 2030. Importantly the ESG Committee will scrutinise particularly closely the greenhouse gas emissions
caused by Powerhouse's own activities as well as those of its suppliers and customers with the aim of achieving continuous
improvement in performance.
As a business which is helping accelerate the clean energy transition, the welfare of the environment and the impact of climate
change are key issues for the business. Powerhouse technology aims to work at a local level, therefore engaging with
communities will be a vital part of this Committee’s work.
The ESG Committee will monitor Powerhouse's recruitment policies and its progress towards employing a fully diverse work
force at all levels, including consultants.
The ESG Committee will keep all aspects of Powerhouse's governance under continuous review and make recommendations
to the Board for improvements where necessary.
during the year.
Principal activities during the year
The Committee held two meetings in the first half of 2021, and considered the following:
Engaging with research consultancies
•
• Options for plastic waste sites
38
ESG Committee Report
• An overview of the potential activities under consideration including scrutinising greenhouse gas emissions,
engaging with agencies who could undertake an ongoing assessment of the environmental impact of Powerhouse’s
processes and the Company’s approach to recruitment bearing in mind the aims of the ESG Committee.
Attendance at ESG Committee Meetings
Please see the table in the Corporate Governance Report in this document for attendance by the members of the ESG
Committee.
Keith Riley
Chair of the ESG Committee
28 June 2022
39
Statement of Directors’ Responsibilities
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law
and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have
elected to prepare the financial statements in accordance with International Financial Reporting Standards (IFRSs) as
adopted for use in the United Kingdom. Under company law the Directors must not approve the accounts unless they are
satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for
that period. In preparing these financial statements, International Accounting Standard 1 requires that Directors:
•
•
•
•
properly select and apply accounting policies;
present information, including accounting policies, in a manner that provides relevant, reliable, comparable and
understandable information;
prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the company
will continue in business;
provide additional disclosures when compliance with the specific requirements in IFRS Standards is insufficient to
enable users to understand the impact of particular transactions, other events and conditions on the entity’s financial
position and financial performance.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s
transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to
ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the
assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the
company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
Responsibility Statement
We confirm that to the best of our knowledge that:
•
•
•
the financial statements, prepared in accordance with International Financial Reporting Standards, give a true and
fair view of the assets, liabilities, financial position and profit or loss of the Company;
the strategic report includes a fair review of the development and performance of the business and the position of
the Company together with a description of the principal risks and uncertainties that it faces; and
the annual report and financial statements, taken as a whole, are fair, balanced and understandable and provide
the information necessary for shareholders to assess the Company’s performance, business model and strategy.
Paul Drennan-Durose
Director
On behalf of the Board
28 June 2022
40
Independent Auditor’s Report
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF POWERHOUSE ENERGY GROUP PLC
Opinion
We have audited the financial statements of Powerhouse Energy Group Plc (the ‘Company’) for the year ended 31 December
2021 which comprise the statement of comprehensive income, the statement of financial position, the statement of cash
flows, the statement of changes in equity and notes to the financial statements, including a summary of significant accounting
policies. The financial reporting framework that has been applied in the preparation of the financial statements is applicable
law and International Financial Reporting Standards (IFRSs) as adopted by the United Kingdom as applied in accordance
with the provisions of the Companies Act 2006.
In our opinion, the financial statements:
•
•
•
give a true and fair view of the state of the Company’s affairs as at 31 December 2021 and of its loss for the year
then ended;
have been properly prepared in accordance with IFRSs as adopted by the United Kingdom; and,
the financial statement has been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial
statements section of our report. We are independent of the company in accordance with the ethical requirements that are
relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities,
and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in
the preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the entity’s ability to
continue to adopt the going concern basis of accounting included, as part of our risk assessment, review of the nature of the
business of the company, its business model and related risks including where relevant the impact of the COVID-19 pandemic
and Brexit, the requirements of the applicable financial reporting framework and the system of internal control. We evaluated
the directors’ assessment of the Company’s ability to continue as a going concern, including challenging the underlying data
and key assumptions used to make the assessment, and evaluated the directors’ plans for future actions in relation to their
going concern assessment.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the Company’s ability to continue as a going concern for a period of
at least twelve months from the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant
sections of this report.
Our approach to the audit
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due
to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources
in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of
the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these
matters. This is not a complete list of all risk identified by our audit.
41
Independent Auditor’s Report
Carrying value of intangible assets
Our audit procedures:
A key balance on the statement of financial position is
intangible fixed assets of £43,554,498 (2020: £43,519,582)
at 31 December 2021 as detailed in Note 10.
In the prior year the Company acquired and hived up
Waste2Tricity Limited. This transaction was a share for share
exchange and qualified for merger relief as described further
in Note 1.1. The treatment of the merger reserve resulted in
a large goodwill and intangible asset increase as is described
in Note 10.
Like the previous year, the Company obtained a third-party
opinion of the Goodwill value that was accounted for as a
result of the hive up of the Waste2Tricity Limited acquisition.
The report of the third-party valuer concluded that no
impairment of the Goodwill value was necessary this year
(2020: included an initial impairment of £14,192,699)
leaving a residual value for Goodwill at 31 December 2021
of £42,960,000 (2020: £42,960,000). Note, in the prior year,
the Goodwill impairment had been accounted for in the
statement of comprehensive income. The Group’s policy in
1.18(iii) is that impairment losses on Goodwill are not
reversed.
On initial acquisition of Waste2Tricity Limited, the Company
identified £500,000 exclusivity rights as intangible assets.
This balance is being held at fair value and assessed each
year for impairment as described in Note 1.10. In the same
review as Goodwill, the third-party valuer concluded that
there was no impairment of the exclusivity rights (2020:
£Nil).
Correct calculation of share-based payments
The share-based payment charge recognised in profit or loss
for the year is £34,829 (2020: 40,634).
The Company used the same third-party valuer as in the
prior year. We reviewed the scope of his work and attended
meetings with the valuer and the client to discuss our
findings in our review of the model prepared for us. We went
through the assumptions and corroborated the information
to our understanding of the business and information that
was provided by the management of the Company.
We discussed the model and its assumptions internally to
determine whether the valuation model and assumptions
used were still appropriate.
Overall, we were satisfied that the Company remained
independent of the valuation process. The valuers’ model
was based on a discounted cash flow and their assumptions
are reflected in Note 10. The model remained broadly
similar to the prior year. We discussed with members of the
Board the implication of delays since our previous audit
report and concluded that the valuation assumptions were
appropriate given the information shared with us.
We corroborated the discount rates to check if they were
applicable. We also checked the income streams and the
number of expected projects based on a probability matrix
which we challenged and the outcome of which is very
much dependent on the roll out of UK sites over the next 5
years post-delivery of the Protos project.
Following discussions with us, the key sensitivities in the
assumptions made in the model were strengthened in Note
10. The key areas being: the number and roll out of systems
and sites; the discount rate used; and, the effect of inflation.
Valuations based on this methodology were both compliant
with IFRS and the International Private Equity and Venture
Capital Valuation (IPEV) guidelines. The assumptions and
workings in the goodwill model are UK specific and not
dependent on any other potential source of activity or
income outside the UK.
The valuation report acknowledged that the development of
revenues from international (non-UK) sources were not
sufficiently developed to be included within his valuation
model at the year-end but may have an impact following
delivery of the first project at Protos. The start date and
delivery of the first project is based on the system being
delivered by the Company’s agreement with Peel NRE and
subsequent roll out of additional sites. However, should the
agreement with Peel NRE be unfulfilled for any reason, the
Company may still be able to continue the delivery of
systems with a new partner. A new model would need to be
prepared and these assumptions and conclusions may be
different from those disclosed in Note 10.
Our audit procedures:
We have understood and assessed the methodology
utilised to estimate the Company’s share-based payment
charge calculations and checked that the calculation of the
provision was mathematically accurate.
42
Independent Auditor’s Report
All share-based payments are equity-settled and are made
up of share issues, share option issues and share warrant
issues.
These share-based payments have been reviewed for the
purpose of calculating an appropriate share-based payment
charge. The fair value of services was used to value share-
based payments where the fair value of services may be
directly calculated. Where the fair value of services may not
be directly calculated, the Black-Scholes model was used.
The vesting period of share options and warrants are fixed.
Exemption from preparing consolidated financial
statements
Our audit procedures:
The Company has claimed exemptions applicable to it under
Companies Act section 405 (2) and 405 (3b) and IFRS 10 to
not present any Consolidated financial statements for the
year ended 31 December 2021. This is on the basis that the
Company’s only UK subsidiary is non-trading and not
material and there being long-term restrictions on the
operations of the Company’s subsidiaries in the US and
Switzerland.
We have reviewed and discussed with the Directors
applicable
legislation and accounting standard and
assessed that based on the Directors’ explanation, the
Company satisfies the conditions under Companies Act
section 405 (2) and 405 (3b) and IFRS 10 to not present
any Consolidated financial statements for the year.
Our application of materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality.
These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and
extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of
misstatements, both individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined a materiality of £430,000 (2020: £470,000) for the review of the
goodwill and its impairment. In respect of other balances, we considered that a level of £100,000 (2020: £80,000) was more
appropriate for our review. A benchmark of 1% of the net book value of Goodwill (2020: 1% of gross assets of the company)
was used to calculate the materiality when reviewing goodwill and its impairment. A benchmark of 5% of net losses (excluding
goodwill impairment) was used for other areas (2020: 5% of net losses (excluding Goodwill impairment)). We believe that net
losses are a primary measure used by the shareholders in assessing the performance of the company and are a generally
accepted auditing benchmark.
We agreed with management that we would report to them misstatements identified during our audit above £5,000 (2020:
£4,000) as well as misstatements below those amounts that, in our view, warranted reporting for qualitative reasons.
An overview of the scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial
statements. In particular, we looked at where the Directors made subjective judgments, for example in respect of significant
accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all
of our audits we also addressed the risk of management override of internal controls, including evaluating whether there was
evidence of bias by the Directors that represented a risk of material misstatement due to fraud.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the Company, the accounting processes and controls, and the
industry in which they operate.
We performed an audit of the financial information of Powerhouse Energy Group Plc. Our engagement team performed all
audit procedures.
43
Independent Auditor’s Report
Other information
The other information comprises the information included in the annual report other than the financial statements and our
auditor’s report thereon. The directors are responsible for the other information contained within the annual report. Our
opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated
in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial statements, or our
knowledge obtained during the audit or otherwise appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material
misstatement in the financial statements or a material misstatement in the financial statements themselves. If, based on the
work we have performed, we conclude that there is a material misstatement of this other information, we are required to
report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
•
the information given in the strategic report and the Directors’ report for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
the strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we
have not identified material misstatements in the strategic report or the Directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to
report to you if, in our opinion:
•
•
•
adequate accounting records have not been kept by the company, or returns adequate for our audit have not been
received from branches not visited by us; or
the company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of Directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of Directors
As explained more fully in the Directors’ responsibilities statement set out on page 40, the Directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control
as the Directors determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless
the Directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of
these financial statements.
44
Independent Auditor’s Report
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with
our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud.
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and
non-compliance with laws and regulations, was as follows:
•
the senior statutory auditor ensured the engagement team collectively had the appropriate competence, capabilities
and skills to identify or recognise non-compliance with applicable laws and regulations;
• We focused on specific laws and regulations which we considered may have a direct material effect on the financial
statements or the operations of the company;
• we assessed the extent of compliance with the laws and regulations identified above through making enquiries of
•
management and inspecting legal correspondence; and
identified laws and regulations were communicated within the audit team regularly and the team remained alert to
instances of non-compliance throughout the audit.
We assessed the susceptibility of the Company’s financial statements to material misstatement, including obtaining an
understanding of how fraud might occur, by:
• making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of
actual, suspected and alleged fraud;
considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
•
To address the risk of fraud through management bias and override of controls, we:
•
•
•
•
performed analytical procedures to identify any unusual or unexpected relationships;
tested journal entries to identify unusual transactions;
assessed whether judgements and assumptions made in determining the accounting estimates set out in Note 1.2
of the Company financial statements were indicative of potential bias; and,
investigated the rationale behind significant or unusual transactions.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which
included, but were not limited to:
•
•
•
•
agreeing financial statement disclosures to underlying supporting documentation;
reading the minutes of meetings of those charged with governance;
enquiring of management as to actual and potential litigation and claims; and,
reviewing correspondence from local authorities and the company’s legal advisor.
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from
financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the
audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other
management and the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve
deliberate concealment or collusion.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting
Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Other matters which we are required to address
We were reappointed as auditors by the company at the Annual General Meeting on 29 July 2021 to audit the financial
statements for the period ending 31 December 2021. Our total uninterrupted period of engagement is 5 years, covering the
periods ending 31 December 2017 to 31 December 2021.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Company and we remain
independent of the company in conducting our audit.
In addition to the audit, the firm provides tax compliance services to Powerhouse Energy Group Plc.
45
Independent Auditor’s Report
Our audit opinion is consistent with the additional report to the audit committee.
Use of this report
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies
Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are
required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit
work, for this report, or for the opinions we have formed.
Sachin Ramaiya (Senior Statutory Auditor)
For and on behalf of Jeffreys Henry LLP
Chartered Accountants
Statutory Auditor
Finsgate
5-7 Cranwood Street
London EC1V 9EE
28 June 2022
46
Statement of Comprehensive Income
STATEMENT OF COMPREHENSIVE INCOME
For The Year Ended 31 December 2021
Revenue
Cost of sales
Gross Profit
Administrative expenses
Acquisition costs
Share of associate
Goodwill impairment
Operating loss
Net finance income/(cost)
Loss before taxation
Income tax credit
Total comprehensive loss
Loss per share (pence)
Diluted loss per share (pence)
Note
31 December
2021
£
31 December
2020
£
2
4
5
6
7
8
9
9
701,435
(599,914)
101,521
(2,147,476)
(11,735)
50,062
-
100,000
(99,868)
132
(1,477,415)
(303,224)
-
(14,192,699)
(2,007,628)
(15,973,206)
10,987
(3,032)
(1,996,641)
(15,976,238)
126,145
138,497
(1,870,496)
(15,837,741)
(0.05)
(0.05)
(0.57)
(0.57)
All activities are in respect of continuing operations and there are no other items of comprehensive income.
The notes numbered 1 to 30 are an integral part of the financial information.
47
Statement of Financial Position
STATEMENT OF FINANCIAL POSITION
As At 31 December 2021
ASSETS
Non-current assets
Intangible fixed assets
Tangible fixed assets
Investments in subsidiary undertakings
Investments in associated undertakings
Total non-current assets
Current Assets
Loans receivable
Contract costs
Trade and other receivables
Corporation tax recoverable
Cash and cash equivalents
Total current assets
Total assets
LIABILITIES
Current liabilities
Creditors: amounts falling due within one year
Total current liabilities
Total assets less current liabilities
Creditors: amounts falling due after more than one year
Net assets
EQUITY
Share capital
Share premium
Merger relief reserve
Accumulated deficit
Total surplus
Note
2021
£
2020
£
10
11
12
12
13
14
15
16
17
18
19
22
23
23
24
43,554,498
33,092
1
140,540
43,519,582
53,020
2
49
43,728,131
43,572,653
1,165,286
-
963,648
155,227
9,637,460
-
14,550
200,310
138,497
3,464,475
11,921,621
3,817,832
55,649,752
47,390,485
(563,781)
(563,781)
(509,194)
(509,194)
55,085,971
46,881,291
-
(23,455)
55,085,971
46,857,836
22,900,856
61,291,710
36,117,711
21,689,288
52,594,934
36,117,711
(65,224,306)
(63,544,097)
55,085,971
46,857,836
The financial statements of Powerhouse Energy Group Plc, Company number 03934451, were approved by the Board of Directors and
authorised for issue on 28 June 2022 and signed on its behalf by:
Paul Drennan-Durose
Director
The notes numbered 1 to 30 are an integral part of the financial information.
48
Statement of Cashflows
STATEMENT OF CASHFLOWS
For The Year Ended 31 December 2021
Cash flows from operating activities
Operating Loss
Adjustments for:
Share based payments
Amortisation
Depreciation
Goodwill impairment
Share of associate result
Provision against investments
Changes in working capital:
Decrease/(Increase) in contract costs
Decrease/(Increase) in trade and other receivables
Increase/(Decrease) in trade and other payables
Tax credits received
Note
2021
£
2020
£
(2,007,628)
(15,973,206)
34,829
5,049
28,824
-
(50,062)
49
14,550
(763,338)
55,015
118,927
40,634
2,170
2,311
14,192,699
-
-
99,868
(143,504)
(171,998)
195,708
Net cash used in operations
(2,563,785)
(1,755,318)
Cash flows from investing activities
Purchase and hive up of subsidiary
Purchase of interest in associate
Loans advanced
Purchase of intangible fixed assets
Purchase of tangible fixed assets
12
13
10
11
-
(99,990)
(1,150,000)
(39,965)
(8,896)
1,934
-
-
(45,238)
(5,852)
Net cash flows from investing activities
(1,298,851)
(49,156)
Cash flows from financing activities
Proceeds from issue of shares
Payments of principal under leases
Net finance costs
21.3
7
10,063,802
(23,882)
(4,299)
5,170,314
(1,913)
(3,032)
Net cash flows from financing activities
10,035,621
5,165,369
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
6,172,985
3,464,475
3,360,895
103,580
Cash and cash equivalents at end of year
9,637,460
3,464,475
The notes numbered 1 to 30 are an integral part of the financial information.
49
Statement of Changes in Equity
STATEMENT OF CHANGES IN EQUITY
For The Year Ended 31 December 2021
Balance at 1 January 2020
Transactions with equity parties:
- Share issues in lieu of services
- Share issues on exercise warrants
- Share issues to acquire W2T
- Share issues in year
Share based payments
Share issue costs
Reserve transfer- goodwill impairment
Total comprehensive loss
Balance at 31 December 2020
Transactions with equity parties:
- Share issues on exercise warrants
- Share issues to exercise options
- Share issues in year
Share based payments
Share issue costs
Total comprehensive loss
Ordinary share
capital
£
Deferred
shares
£
Share
premium
£
Merger
relief
reserve
£
Accumulated
deficit
£
Total
£
9,808,942
3,113,785
48,778,651
-
(61,714,360)
(12,982)
261,141
318,219
7,187,201
1,000,000
-
-
-
-
-
-
-
-
-
-
-
-
9,757
38,963
-
4,000,000
-
(232,437)
-
-
-
-
50,310,410
-
-
-
(14,192,699)
-
-
-
-
-
(184,695)
-
14,192,699
(15,837,741)
270,898
357,182
57,497,611
5,000,000
(184,695)
(232,437)
-
(15,837,741)
18,575,503
3,113,785
52,594,934
36,117,711
(63,544,097)
46,857,836
24,477
278,000
909,091
-
-
-
-
-
-
-
-
-
174,603
253,982
9,090,909
-
(822,718)
-
-
-
-
-
-
-
-
-
-
190,287
-
(1,870,496)
199,080
531,982
10,000,000
190,287
(822,718)
(1,870,496)
Balance at 31 December 2021
19,787,071
3,113,785
61,291,710
36,117,711
(65,224,306)
55,085,971
The following describes the nature and purpose of each reserve within equity:
Deferred shares:
Represents the combined total of all deferred shares (0.5p, 4p and 4.5p)
Share premium:
Amount subscribed for share capital in excess of nominal value
Merger relief reserve: Amount subscribed for share capital in excess of nominal value where merger relief applies (Note 1.1)
Accumulated deficit: Accumulated deficit represents the cumulative losses of the company and all other net gains and losses and
transactions with shareholders not recognised elsewhere
The notes 1 to 30 are an integral part of the financial information.
50
Notes to the Accounts for the Year Ended 31 December 2021
NOTES TO THE ACCOUNTS
For The Year Ended 31 December 2021
1. ACCOUNTING POLICIES
Powerhouse Energy Group Plc is a company incorporated in England and Wales. The Company is a public limited company
quoted on the AIM market of the London Stock Exchange. The address of the registered office is 15 Victoria Mews, Mill Field
Road, Cottingley Business Park, Bingley BD16 1PY. The principal activity of the Company is to continue the development of its
technology and to support its customers in order to achieve its full commercial roll-out. The following accounting policies have
been applied consistently in dealing with items which are considered material in relation to the financial information.
1.1. Basis of preparation
This financial information is for the year ended 31 December 2021 and has 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. There were no retrospective adjustments required either on 1 January 2020 or in the
corresponding amounts for the period ended 31 December 2020 due to the transition to UK-adopted IFRS.
The Company’s only UK subsidiaries are non-trading and not material. There are also long-term restrictions on the
operations of the Company’s subsidiaries in the US and Switzerland. With these restrictions in place, the Company is also
unable to exert control over the subsidiaries. As such the Company has claimed exemptions applicable to it under
Companies Act section 405 (2) and 405 (3b) and IFRS 10 to not present any Consolidated financial statements for the
year ended 31 December 2021. 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 which the Company has significant influence but not control or joint control as defined under IAS
28. This is generally the case where the Company 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 Company’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.
When the Company’s share of losses in an equity-accounted investment exceeds or equals its interest in the equity, the
Company does not recognise further losses, unless it has incurred obligations or made payments on behalf of the other
entity. Unrealised gains on transactions between the Company and its associates and joint ventures are eliminated to the
extent of the Company’s interest in these entities. Unrealised losses are also eliminated unless the transaction provides
evidence of an impairment in the asset transferred.
Accounting policies of the equity accounted investees are changed where necessary to ensure consistency with the
policies adopted by the Company. The carrying value of equity accounted investments is tested for impairment in
accordance with the policy described in Note 1.18 (ii).
The Company has one associate, Engsolve Limited, the interest in which was acquired during the year.
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.
51
Notes to the Accounts for the Year Ended 31 December 2021
1.3. Going concern
The financial statements have been prepared on a going concern basis. The Company has a total comprehensive loss of
£1.87m (2020: £1.65m after excluding £14.19m of goodwill impairment) and net operating cash outflows of £2.56m
(2020: 1.76m). However, the Directors believe the going concern basis to be appropriate for the following reasons.
As at the balance sheet date, the Company has available cash of £9.64m (2020: £3.46m) which is considered by the
Directors to be sufficient to enable the Company to continue in operational existence for the foreseeable future by meeting
its liabilities as they fall due for payment.
The Directors’ views are based upon working capital projections which take into account the intended uses of the funds
in hand over the next 12 months.
In the event that the Protos project did not proceed then the Company would need to consider alternative ways to
commercialise the DMG technology, including the potential introduction of third-party developers. However, the Directors
do not see that this would impact the going concern basis on which these accounts are drawn up.
The Directors have assessed the effects on the business arising from Covid-19 and from Brexit in respect of potential
tariff charges and do not consider these to impact the going concern basis on which these accounts are drawn up.
1.4. Foreign currency translation
The financial information is presented in sterling which is the Company’s functional currency.
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates
of the transactions. Monetary assets and liabilities denominated in foreign currencies are revalued to the exchange rate
at date of settlement or at reporting dates (as appropriate). Exchange gains and losses resulting from such revaluations
are recognised in the Statement of Comprehensive Income.
Foreign exchange gains and losses are presented in the Statement of Comprehensive Income within administrative
expenses.
1.5. Revenue
(i) Engineering services
The Company provides engineering services for the application of the DMG Technology, the intellectual property
which the Company owns. Revenue from providing services is recognised in the accounting period in which services
are rendered. For fixed-price contracts, revenue is recognised based on the actual service provided to the end of the
reporting period as a proportion of the total services to be provided to the extent to which the customer receives the
benefits. This is determined based on the actual labour hours spent relative to the total expected labour hours.
Where contracts include multiple performance obligations as specified by the work scope, the transaction price will
be allocated to each performance obligation based on estimated expected cost-plus margin.
Estimates of revenues, costs or extent of progress toward completion of services are revised if circumstances change.
Any resulting increases or decreases in estimated revenues or costs are reflected in profit or loss in the period in
which the circumstances that give rise to the revision become known by management.
In case of fixed-price contracts, the customer pays the fixed amount based on a payment schedule. If the services
rendered by the Company exceed the payment, a contract asset is recognised. If the payments exceed the services
rendered, a contract liability is recognised.
If a contract includes an hourly fee, revenue is recognised in the amount to which the Company has a right to invoice.
(ii) Exclusivity fees
Where the Company 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 Company 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 Company 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 Company;
52
Notes to the Accounts for the Year Ended 31 December 2021
(ii) the Company 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 Company 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 Company recognizes 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 Company, 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 Company 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 Company assesses the right of use
asset for impairment when such indicators exist.
At the commencement date the Company 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 Company’s
incremental borrowing rate. For the assessment of the lease entered into in 2020 the Company 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 is 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 Company’s
taxable profits and its results as stated in the financial statements that arise from the inclusion of gains and losses in tax
assessments in periods different from those in which they are recognised in the financial statements.
A net deferred tax asset is regarded as recoverable and therefore recognised only to the extent that, on the basis of all
available evidence, it can be regarded as more likely than not that there will be suitable taxable profits from which the
future reversal of the underlying temporary differences can be deducted.
Deferred tax is measured at the average tax rates that are expected to apply in the periods in which the temporary
differences are expected to reverse, based on tax rates and laws that have been enacted or substantively enacted by the
balance sheet date. Deferred tax is measured on a non-discounted basis.
1.9. Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation. Cost represents the cost of acquisition or
construction, including the direct cost of financing the acquisition or construction until the asset comes into use.
Depreciation on property, plant and equipment is provided to allocate the cost less the residual value by equal instalments
over their estimated useful economic lives of 3 years, once the asset is complete.
The expected useful lives and residual values of property, plant and equipment are reviewed on an annual basis and, if
necessary, changes in useful life or residual value are accounted for prospectively.
53
Notes to the Accounts for the Year Ended 31 December 2021
1.10. 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 1.18 for
impairment testing procedures. Goodwill impairment losses are not reversible as explained in note 1.18 (ii).
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.
1.11. Other non-current assets
Other non-current assets represent investments in subsidiaries. The investments are carried at cost less accumulated
impairment. Cost was determined using the fair value of shares issued to acquire the investment.
Financial assets
The Company classifies financial assets as loans and receivables within current assets, except for maturities greater
than 12 months after the balance sheet date. These are classified as noncurrent assets. Assets are initially recognised
at fair value plus transaction costs. Loans and receivables are subsequently carried at amortised cost using the effective
interest rate method.
1.12. Contract costs
The Company recognises costs incurred in fulfilling contracts with customers that are directly associated with the
contract as an asset if those costs are expected to be recoverable. Contract costs are amortised on a basis consistent
with the transfer of goods and services to which the asset relates.
1.13. Trade and other receivables
Trade receivables are initially recognised at fair value. Subsequently they are carried at amortised cost less any provision
for impairment.
1.14. 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.
1.15. 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.
1.16. 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 Company. These are initially recognised at fair value. Loans are subsequently carried at amortised cost using
the effective interest method.
54
Notes to the Accounts for the Year Ended 31 December 2021
1.17. Adoption of new and revised standards
i) New and amended standards adopted by the Company
New and amended standards for the current period and effective from 1 January 2021 have been applied by the
Company, including:
Covid-19 Related Rent Concessions (Amendment to IFRS 16)
Interest Rate Benchmark Reform – Phase 2 (Amendments to IFRS 9, IAS 39 and IFRS 7)
There are no transition 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 2021 reporting periods and have not been adopted early by the Company. 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.
1.18. 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.
(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.
1.19. Share based payments
Share based payments are made to employees and third parties and all are equity settled.
(i) Third party provision of services
a)
Via issue of shares
Contractors receive remuneration in the form of share-based payments, whereby services are provided and
settled by the issue of shares. The cost of equity settled transactions is determined at the fair value of the
services provided, based upon invoiced amounts or formal agreements in place with suppliers.
b) Via issues of share warrants
The Company also issues share warrants to third parties in relation to services provided by suppliers. The
cost of equity settled transactions is determined at the fair value of the services provided, based upon
invoiced amounts or formal agreements in place with suppliers. Where no fair value of services can be directly
obtained, the fair value at the grant date is determined using the Black and Scholes valuation model. At each
reporting date the Company revises its estimates of the number of options that are likely to be exercised with
any adjustment recognised in the income statement.
(ii) Directors and employees
c)
Via issues of share options
The Company has issued share options to Directors and employees through approved and unapproved
option plans. The fair value of options issued is determined at the date of grant and is recognised as an
55
Notes to the Accounts for the Year Ended 31 December 2021
expense in the Income Statement. The fair value at the grant date is determined using the Black and Scholes
valuation model. At each reporting date the Company revises its estimates of the number of options that are
likely to be exercised with any adjustment recognised in the income statement.
Where share-based payments give rise to the issue of new share capital, the proceeds received by the Company are
credited to share capital and share premium when the share entitlements are exercised.
1.20. 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 company pays contributions to publicly or private administered pension
insurance plans on a mandatory, contractual or voluntary basis. The Company 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 recognized as an asset to the extent that a cash refund or a reduction in the future payments
is available.
The Company does not contribute to any defined benefit pension plans.
1.21. Segmental reporting
An operating segment is a component of the Company:
•
that engages in business activities from which it may earn revenues and incur expenses (including revenues and
expenses relating to transactions with other components of the Company);
• whose operating results are reviewed regularly by the Company’s chief decision maker to make decisions about
resources to be allocated to the segment and assess its performance; and
for which discrete financial information is available.
•
The Company considers it has one business segment, being a UK based development company intending to license its
technology to projects in the UK and internationally.
2. Revenue
Engineering and related services
Exclusivity fees
Other
2021
£
628,859
71,829
747
701,435
2020
£
100,000
-
-
100,000
During the year, the Company billed for engineering work carried out on projects. All revenue generated has arisen in the UK.
3. Employee costs
Directors’ fees
Wages and salaries
Social security costs
Pensions
The number of average monthly employees (including Directors) are as follows:
Management
Operations
Total
2021
£
274,575
178,710
48,835
3,960
2020
£
332,746
11,473
35,659
17,000
506,080
396,878
2021
7
3
10
2020
6
-
6
The total number of employees as at 31 December 2021 (including Directors) was 9 (2020: 11) comprising 5 in management
and 4 in operations (2020: 8 in management, 3 in operations). All Directors are classed as management.
56
Notes to the Accounts for the Year Ended 31 December 2021
4. Administrative expenses
Included in administrative expenses are:
Lease charges
Research and development costs
Amortisation
Depreciation
Depreciation – right of use asset
Share based payments
Foreign exchange (gains)/losses
Auditor’s remuneration for audit services:
Fees payable to the Company’s auditor for the audit of the Company’s annual
financial statements
Fees payable to the Company’s auditor and their associates for other services:
Non-audit fees paid to auditors
Taxation advisory and compliance services
Other services
There are no other fees paid to the Company’s auditor other than those disclosed above.
5. Share of associate
Share of profits
2021
£
-
585,195
5,049
4,199
24,625
34,829
(429)
25,000
1,000
10,000
-
2021
£
50,062
50,062
2020
£
14,250
407,071
2,170
259
2,052
40,634
-
20,000
1,000
13,850
5,000
2020
£
-
-
The Company acquired a 48.39% stake in Engsolve on 12 August 2021 as explained in note 12. The above result represents
the Company’s share of the associate’s profits arising since acquisition. The Company’s share of the associate’s tax is included
in the tax charge (see note 8).
6. Goodwill impairment
Goodwill impairment
2021
£
-
-
2020
£
14,192,699
14,192,699
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 10.
Impairments are made based upon the results of those assessments.
7. Net finance income/(cost)
Loan interest receivable
Other interest receivable
Bank and other interest payable
8.
Income tax and deferred tax
2021
£
15,286
47
(4,346)
10,987
2020
£
-
83
(3,115)
(3,032)
As the Company incurred a loss, no current tax is payable (2020: £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 Company
submitted a claim for research and development tax credits during the year amounting to £135,657 (2020: £138,497) which
57
Notes to the Accounts for the Year Ended 31 December 2021
has been recognised in the accounts. Accumulated tax losses amount to an estimated £17.0 million (2020: £12.9 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 (2020: lower) than the standard rate of tax. Differences are explained below.
Current tax
Loss before taxation
Tax credit at standard UK corporation tax rate of 19% (2019: 19%)
Effects of:
Goodwill impairment not deductible for tax purposes
Expenses not deductible for tax purposes
Allowable deduction on exercise of share options
Research and development tax credits claimed
Deferred tax asset not recognised
Income tax credit
9.
Loss per share
Total comprehensive loss (£)
Weighted average number of shares
Loss per share in pence
Diluted loss per share in pence
2021
£
1,996,641
2020
£
15,976,238
379,362
3,035,485
-
(9,837)
445,750
135,657
(824,787)
(2,696,613)
(63,003)
-
138,497
(275,869)
126,145
138,497
2021
2020
(1,870,496)
(15,837,741)
3,918,497,299
2,782,088,358
(0.05)
(0.05)
(0.57)
(0.57)
For the year ended 31 December 2021, 1,062,692 of the options in issue and 9,090,910 of the warrants in issue were excluded
from the diluted loss per share calculation due to being anti-dilutive.
For the year ended 31 December 2020, 6,000,000 of the options in issue and 376,839,329 of the warrants in issue were excluded
from the diluted loss per share calculation due to being anti-dilutive.
There have been no shares issued since the year end.
10.
Intangible fixed assets
Cost
At 1 January 2020
Additions – hive up of W2T
Additions
At 31 December 2020
Accumulated amortisation & impairment
At 1 January 2020
Amortisation charge for the year
Impairment charge for the year
At 31 December 2020
Carrying amount
At 31 December 2020
Cost
At 1 January 2021
Additions
At 31 December 2021
Accumulated amortisation & impairment
At 1 January 2021
Amortisation charge for the year
At 31 December 2021
Carrying amount
At 31 December 2021
Goodwill
Exclusivity rights
Patent costs
£
-
57,152,699
-
57,152,699
-
-
14,192,699
14,192,699
£
-
500,000
-
500,000
-
-
-
-
£
16,514
-
45,238
61,752
-
2,170
-
2,170
Total
£
16,514
57,652,699
45,238
57,714,451
-
2,170
14,192,699
14,194,869
42,960,000
500,000
59,582
43,519,582
57,152,699
-
57,152,699
14,192,699
-
14,192,699
500,000
-
500,000
-
-
-
61,752
39,965
101,717
2,170
5,049
7,219
57,714,451
39,965
57,754,416
14,194,869
5,049
14,199,918
42,960,000
500,000
94,498
43,554,498
58
Notes to the Accounts for the Year Ended 31 December 2021
Goodwill acquired in 2020 arose on the acquisition and hive up of Waste2Tricity Limited. It was considered attributable to the
Company’s DMG technology, which is intended to be licensed on a project-by-project basis to generate income to the Company
over the lifetime of each project.
The recoverable amount of goodwill at the balance sheet date was assessed via independent third-party valuation. For 2021,
the Valuer assessed goodwill above its carrying value resulting in no impairment (2020: £14.2m). The valuer 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.
The key assumptions made by the valuer were:
the expected roll out of the technology over 5 years following the delivery of the Protos project based on probability adjusted
scenarios;
that the roll out will not be significantly impacted by competing technologies;
that the Company and roll out developer have the capability to scale up where necessary to deliver the assumed roll out pipeline;
the expected operating life of projects from which the Company will earn licence revenues;
the expected licence fees arising per project based upon agreements with Peel NRE;
the expected cost of services to support annual licence fee income estimated by the Company based upon current draft project
agreements;
applying a discount rate to cashflow of 10% 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 company benefiting from the assumed roll out.
Changes to the above assumptions would impact the valuation assessment.
The Directors believe that key sensitivities in the valuation are as follows:
(i)
The probability adjusted roll out scenario assumed by the valuer. The valuer attributes probabilities to different roll
out scenarios based upon a review of information provided by the Company and Peel NRE. This takes account of
expected timelines and the average number of systems expected to be deployed at each site. The rollout assumptions
made by the valuer averages out at 17.85 systems (2020: 16 systems). Based upon the valuer’s assumptions, an
incremental system would increase or decrease the valuation by c £2.3m.
(ii)
The discount rate applied to the cashflows. An increase in the discount rate of 1% would impact the Valuer’s valuation
assessment by £4.4m (2020: £4.1m).
(iii)
Inflation – an increase in the inflation assumption above that assumed in the valuer’s model would result in adjustment
to the licence fees and result in an increase the valuer’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.
Exclusivity rights arose on the acquisition and hive up of Waste2Tricity Limited. They are subject to an Option Agreement
between the Company and Peel NRE. No impairment is considered to have arisen.
59
Notes to the Accounts for the Year Ended 31 December 2021
11. Tangible fixed assets
Right of use asset
Land and buildings
£
Property, plant and
equipment
£
Fixtures and
fittings
£
Cost
At 1 January 2020
Additions
At 31 December 2020
Accumulated depreciation
At 1 January 2020
Charge for the year
At 31 December 2020
Carrying amount
At 31 December 2020
Cost
At 1 January 2021
Additions
At 31 December 2021
Accumulated depreciation
At 1 January 2021
Charge for the year
At 31 December 2021
Carrying amount
At 31 December 2021
-
49,250
49,250
-
2,052
2,052
47,198
49,250
-
49,250
2,052
24,625
26,677
6,868
5,852
12,720
6,639
259
6,898
5,822
12,720
7,693
20,413
6,898
3,807
10,705
22,573
9,708
-
-
-
-
-
-
-
-
1,203
1,203
-
392
392
811
Total
£
6,868
55,102
61,970
6,639
2,311
8,950
53,020
61,970
8,896
70,866
8,950
28,824
37,774
33,092
12.
Investments
2021
£
2021
£
Subsidiaries Associates
2021
£
Other
2020
£
Subsidiaries
2020
£
Associates
2020
£
Other
Cost or carrying value at 1 January
Additions
Goodwill recognised
Distributions
Share of associate’s net result
Transfers
Disposals
48,947,156
-
-
-
-
-
(1)
49
99,990
-
-
40,550
(49)
-
Cost or carrying value 31 December
48,947,155
140,540
Provision at 1 January
Additions
Disposals
Accumulated impairment
Carrying value
(i) Subsidiaries
(48,947,154)
-
-
(48,947,154)
-
-
-
-
1
140,540
-
-
-
-
-
49
-
49
-
(49)
-
(49)
-
48,947,155
57,497,611
(57,152,699)
(344,911)
-
-
-
48,947,156
(48,947,154)
-
-
(48,947,154)
2
-
49
-
-
-
-
-
49
-
-
-
-
49
-
-
-
-
-
-
-
-
-
-
-
-
-
Investments relate to costs of investments in subsidiary undertakings, namely in Powerhouse Energy, Inc, Pyromex AG and
Powerhouse Energy UK Limited. Powerhouse Energy, Inc is incorporated in California in the United States of America and
the Company holds 100 per cent of the common stock and voting rights of the subsidiary. Pyromex AG is based in Zug,
Switzerland and the Company holds 100 per cent of the shares and voting rights of the subsidiary. Powerhouse Energy UK
Limited is a wholly owned UK based dormant company.
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.
60
Notes to the Accounts for the Year Ended 31 December 2021
The registered address of Powerhouse Energy UK Limited is 15 Victoria Mews, Mill Field Road, Cottingley Business Park,
Bingley BD16 1PY.
Waste2Tricity Limited, which was acquired in 2020, was incorporated in the UK and on 1 January 2021 the Company owned
100 per cent of its common stock and voting rights. It was dissolved on 1 June 2021.
(ii) Acquisition of interest in Engsolve Limited
On 12 August 2021, the Company acquired 48.39% of the share capital of Engsolve Limited for cash consideration of
£99,990. Engsolve Limited is incorporated and operates in the UK. Summary financial information of Engsolve Limited at
acquisition and balance sheet dates is provided below:
12 Aug 2021
£
31 Dec 2021
£
Summarised balance sheet
Fixed assets
Cash and cash equivalents
Other current assets
Current liabilities
Net assets
Company share
Share of net assets
Summarised income statement – post acquisition
Revenue
Profit from continuing operations
Profit from discontinued operations
Other comprehensive income
Total comprehensive income
Company share of pre-tax profit
Company share of tax
Dividends received
6,965
221,037
117,268
(142,939)
202,331
48.39%
97,902
7,848
317,423
99,845
(138,981)
286,135
48.39%
138,452
402,122
83,804
-
-
83,804
50,062
(9,512)
-
The Company incurred advisory costs associated with the acquisition which have been expensed in the year.
(iii) Other investments
During 2021, the Company’s investment in Waste2Tricity International (Thailand) Limited was transferred into a new Thailand
based entity, Altec Energy Limited (“Altec”). The Company has not taken part in fund raises investment made by Altec
subsequent to its formation such that the Company’s interest has reduced to 33.8% as at 31 December 2021 and to 30.4%
since year end. Due to the passive nature of the Company’s involvement, the interest is held in other investments.
13. Loans receivable
Loans advanced
Accrued interest
2021
£
1,150,000
15,286
1,165,286
2020
£
-
-
-
On 12 May 2021, the Company 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 is provided to support the plant
construction and 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 has
subsequently been extended to 31 August 2022.
14. Contract costs
Contract costs
2021
£
-
-
2020
£
14,550
14,550
Contract costs assets relate to costs arising on engineering contracts where the company has not yet completed performance
obligations which are typically met by the submission of reports, the transfer of data or on longer contracts via the completion of
milestones in accordance with the relevant contract.
61
Notes to the Accounts for the Year Ended 31 December 2021
15. Trade and other receivables
Trade receivables
Other receivables
Prepayments and accrued income
16. Corporation tax
Corporation tax recoverable
17. Cash and cash equivalents
Cash balances
18. Trade and other payables: amounts falling due within one year
Trade payables
Lease liability
Other creditors and accruals
Other taxes
Pensions payable
19. Trade and other payables: amounts falling due after one year
Lease liability
20. Financial assets and financial liabilities
Financial assets
Financial assets at amortised cost:
- Trade receivables
- Other financial assets at amortised cost
- Cash and cash equivalents
62
2021
£
447,967
177,513
338,168
963,648
2020
£
-
158,126
42,184
200,310
2021
£
2020
£
155,227
138,497
155,227
138,497
2021
£
2020
£
9,637,460
3,464,475
9,637,460
3,464,475
2021
£
144,105
23,455
238,955
156,642
624
563,781
2021
£
-
-
2020
£
121,152
23,881
334,609
29,552
-
509,194
2020
£
23,455
23,455
2021
£
447,967
1,165,286
9,637,460
11,250,713
2020
£
-
-
3,464,475
3,464,475
Notes to the Accounts for the Year Ended 31 December 2021
Financial liabilities
Liabilities at amortised cost
- Trade payables
- Other creditors
- Payroll taxes
- Pensions payable
- Lease liabilities
2021
£
144,105
238,955
156,642
624
23,455
2020
£
121,152
334,609
29,552
-
47,336
563,781
532,649
21. Leases
The Company has leased offices at the location of its research facility with the lease reflected in the accounts as a right of use
asset and a lease liability. Payments are fixed and at the balance sheet date the lease has a further 11 months left to run.
Information about leases for which the Company is a lessee is presented below:
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 11.
2021
£
47,198
-
(24,625)
22,573
2021
£
24,310
-
24,310
(855)
23,455
2021
£
24,625
2,638
-
27,263
2021
£
2,638
23,882
-
26,520
2020
£
-
49,250
(2,052)
47,198
2020
£
26,520
24,310
50,830
(3,494)
47,336
2020
£
2,052
296
14,250
16,598
2020
£
296
1,913
14,250
16,459
Right of use assets
Balance at 1 January
Additions to right of use assets
Depreciation charge for the year
Balance at 31 December
Future minimum rentals payable are as follows:
Amounts payable:
Within one year
Later than one year and not later than five years
Total gross payments
Impact of finance expenses
Carrying value of liability
21.2 Amounts recognised in income statement
Depreciation charge
Interest on lease liabilities
Expenses relating to short term leases
21.3 Amounts recognised in statement of cashflows
Interest on lease liabilities
Repayment of lease principal
Expenses relating to short term leases
Total cash outflow for leases
63
Notes to the Accounts for the Year Ended 31 December 2021
22. Share capital
(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 2020
1,961,788,425
388,496,747
17,373,523
9,737,353
Issue of shares
1,753,312,268
-
-
-
Shares at 31 December 2020
3,715,100,693
388,496,747
17,373,523
9,737,353
Issue of shares
242,313,442
-
-
-
Shares at 31 December 2021
3,957,414,135
388,496,747
17,373,523
9,737,353
(ii) Value in £
At 1 January 2020
Issue of shares
At 31 December 2020
0.5 p Ordinary
shares
0.5 p Deferred
shares
4.5 p Deferred
shares
4.0 p Deferred
shares
Share Capital
£
£
£
£
£
9,808,942
1,942,483
781,808
389,494
12,922,727
8,766,561
-
-
-
8,766,561
18,575,503
1,942,483
781,808
389,494
21,689,288
Issue of shares
1,211,568
-
-
-
1,211,568
At 31 December 2021
19,787,071
1,942,483
781,808
389,494
22,900,856
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 29 January 2020, the Company issued 52,228,139 ordinary shares of 0.5p each in the Company (“Ordinary Shares”) to various
service providers for the settlement of fees. Of these new Ordinary Shares, 47,732,518 were issued at 0.5p and 4,495,621 were
issued at 0.717p in accordance with terms agreed.
On 29 January 2020, the Company issued 5,500,000 ordinary shares of 0.5p each in the Company further to the exercise of
warrants for proceeds amounting to £27,500.
On 28 February 2020, the Company issued 25,440,350 ordinary shares of 0.5p each in the Company further to the exercise of
warrants for proceeds amounting to £127,202.
On 19 March 2020, the Company issued 3,750,000 ordinary shares of 0.5p each in the Company further to the exercise of warrants
for proceeds amounting to £18,750.
On 7 April 2020, the Company issued 7,800,000 ordinary shares of 0.5p each in the Company further to the exercise of warrants
for proceeds amounting to £39,000.
64
Notes to the Accounts for the Year Ended 31 December 2021
On 16 April 2020, the Company issued 2,500,000 ordinary shares of 0.5p each in the Company further to the exercise of warrants
for proceeds amounting to £12,500.
On 22 April 2020, the Company issued 5,500,000 ordinary shares of 0.5p each in the Company further to the exercise of warrants
for proceeds amounting to £27,500.
On 27 May 2020, the Company issued 4,100,000 ordinary shares of 0.5p each in the Company further to the exercise of warrants
for proceeds amounting to £20,500.
On 9 June 2020, the Company issued 2,003,502 ordinary shares of 0.5p each in the Company further to the exercise of warrants
for proceeds amounting to £10,017.
On 23 June 2020, the Company issued 1,750,000 ordinary shares of 0.5p each in the Company further to the exercise of warrants
for proceeds amounting to £8,750.
On 10 July 2020, the Company issued 5,300,000 ordinary shares of 0.5p each in the Company further to the exercise of warrants
for proceeds amounting to £26,500.
On 26 June 2020, the Directors of the Company issued a circular to shareholders detailing the proposed acquisition of the whole
of the share capital of Waste2Tricity Limited on a share for share basis. The acquisition was approved by shareholders at a General
Meeting held on 14 July 2020 and the Company issued 1,437,440,277 ordinary shares of 0.5p on 15 July 2020 to complete the
transaction.
On 15 September 2020, the Company issued 200,000,000 ordinary shares of 0.5p each in the Company at a price of 2.5p each,
totalling £5,000,000 before issue costs.
On 21 January 2021, the Company issued 181,818,182 ordinary shares of 0.5p each (“Ordinary shares”) in the Company at a
price of 5.5p each amounting to £10,000,000 before issue costs. The Company also granted 9,090,910 warrants to subscribe for
Ordinary Shares at the issue price of 5.5p to its broker.
On 26 January 2021, the Company issued 4,895,260 ordinary shares of 0.5p each in the Company further to the exercise of
warrants for proceeds amounting to £122,382.
On 9 February 2021, the Company issued 6,000,000 ordinary shares of 0.5p each in the Company further to the exercise of
options for proceeds amounting to £36,000.
On 24 February 2021, the Company issued 1,600,000 ordinary shares of 0.5p each in the Company further to the exercise of
options for proceeds amounting to £12,000.
On 4 March 2021, the Company issued 6,000,000 ordinary shares of 0.5p each in the Company further to the exercise of options
for proceeds amounting to £45,000.
On 17 March 2021, the Company issued 500,000 ordinary shares of 0.5p each in the Company further to the exercise of options
for proceeds amounting to £3,000.
On 19 April 2021, the Company issued 6,000,000 ordinary shares of 0.5p each in the Company further to the exercise of options
for proceeds amounting to £36,000.
On 22 July 2021, the Company issued 8,000,000 ordinary shares of 0.5p each in the Company further to the exercise of options
for proceeds amounting to £48,000.
On 19 August 2021, the Company issued 13,500,000 ordinary shares of 0.5p each in the Company further to the exercise of
options for proceeds amounting to £81,000.
On 7 October 2021, the Company issued 7,000,000 ordinary shares of 0.5p each in the Company further to the exercise of options
for proceeds amounting to £42,000.
On 9 December 2021, the Company issued 7,000,000 ordinary shares of 0.5p each in the Company further to the exercise of
options for proceeds amounting to £42,000.
65
Notes to the Accounts for the Year Ended 31 December 2021
23. Other reserves
As at 1 January 2020
Issue of shares
Share issue costs
Reserve transfer – goodwill impairment
At 31 December 2020
Issue of shares
Share issue costs
At 31 December 2021
24. Accumulated deficit
As at 1 January
Loss for the year
Share based payments
Reserve transfer – goodwill impairment
At 31 December
Merger relief
reserve
£
Share premium
account
£
-
50,310,410
-
(14,192,699)
48,778,651
4,048,720
(232,437)
-
36,117,711
52,592,934
-
-
9,519,495
(822,719)
36,117,711
61,291,710
2021
£
(63,544,097)
(1,870,496)
190,287
-
2020
£
(61,714,360)
(15,837,741)
(184,695)
14,192,699
(65,224,306)
(63,544,097)
25. Share based payments
The expense recognized for share-based payments during the year is shown in the following table:
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
Total share-based payment charge in Income Statement
Share based payment charge recognised in Share Premium Account
Warrants for third party services
Total share-based payment charge in Share Premium Account
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 issued for third party services
Total share-based payment
2021
£
34,829
-
34,829
419,138
419,138
453,967
(186,982)
(76,698)
-
190,287
2020
£
8,399
32,235
40,634
84,532
84,532
125,166
-
(38,963)
(270,898)
(184,695)
There were no liabilities recognised in relation to share based payment transactions.
25.1 Share options for Directors and employees
The Company has put in place various options schemes for Directors and employees as follows:
On 8 December 2014, the Company granted 11,000,000 options over ordinary shares to the Board. The options may be
exercised between the grant date and the tenth anniversary of the grant date and will lapse if not exercised during that period.
On 7 March 2016, the Company granted 15,000,000 options over ordinary shares to the Board. The options may be
exercised between the grant date and the fifth anniversary of the grant date and will lapse if not exercised during that period.
On 6 March 2018, the Company granted 32,100,000 options over ordinary shares to employees, including a Board member,
under the Powerhouse Energy Group PLC 2018 EMI Option Scheme. The options vest to the employees over a period of 24
months and are exercisable between the relevant vesting dates and the tenth anniversary of the grant date and will lapse if
not exercised during that period. These options had all been exercised or forfeited by 31 December 2019.
66
Notes to the Accounts for the Year Ended 31 December 2021
On 6 March 2018, the Company 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 Company granted 1,773,239 share options in ordinary shares of 0.5p each in the Company to two
Directors of the Company 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:
Outstanding at 1 January
Granted during the year
Forfeited during the year
Exercised during the year
Outstanding at 31 December
2021
Number
75,000,000
1,773,239
(5,110,547)
(55,600,000)
16,062,692
Exercisable at 31 December
16,062,692
2021
WAEP (pence)
0.77
6.3
2.55
0.62
1.33
1.33
2020
Number
75,000,000
-
-
-
75,000,000
75,000,000
2020
WAEP (pence)
0.77
-
-
-
0.77
0.77
The weighted average remaining contractual life for the share options outstanding as at 31 December 2021 was 5.3 years
(2020: 6.1 years)
1,773,239 share options were granted during the year (2020: Nil).
The range of exercise prices for options outstanding at the year-end was 0.6p to 6.3p (2020: 0.6p to 2.5p).
The number of options outstanding at 31 December 2021 and the movements in the year are as follows:
Date of
grant
Granted
Share price on
grant
Exercised
Forfeited
At 31 Dec
2021
Exercise
price
Exercise period
8 Dec
2014
7 Mar
2016
6 Mar
2018
22 Apr
2021
6,000,000
1.875p
-
(3,000,000)
3,000,000
2.5p
9,000,000
0.55p
(7,600,000)
(1,400,000)
-
0.75p
60,000,000
0.57p
(48,000,000)
-
12,000,000
0.6p
1,773,239
5.58p
-
(710,547)
1,062,692
6.3p
9 Dec 2014 until 8
Dec 2024
8 Mar 2016 until
7 Mar 2021
7 Mar 2018 until
6 Mar 2028
23 Apr 2021 until
22 Apr 2024
Total
76,773,239
(55,600,000)
(5,110,547)
16,062,692
Of the 1,062,692 options granted on 22 April 2021 which were outstanding on 31 December 2021, 481,337 have been
forfeited since the year end.
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:
Options in issue 31 December 2021
Exercise price
Expected volatility
Contractual life
Risk free rate
Estimated fair value of each option
8 December 2014
6 March 2018
22 April 2021
3,000,000
2.5p
127.56%
10 years
2%
1.79p
12,000,000
0.6p
70.00%**
10 years
1.49%
0.32p*
1,062,692
6.3p
214.8%**
3 years
0.15%
3.87p*
* the calculation applies a 25% discount for small companies
** expected volatility based on historic volatility at the point of grant.
67
Notes to the Accounts for the Year Ended 31 December 2021
25.2 Warrants for third party services
The Company has issued warrants in respect of services provided by consultants as part of their service arrangements. It
has also issued warrants to participating shareholders in respect of certain fund raises. No share-based payment charge is
recognised for warrants issued to participating shareholders as they are outside of the scope of IFRS 2.
Details of warrants which have been issued during the year are as follows:
On 15 September 2020, the Company granted 5,395,260 warrants to the Company’s broker as part of its service
arrangement in relation to the fund raise arising on that date. The options may be exercised between the grant date and the
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 Company granted 9,090,910 warrants to the Company’s broker as part of its service arrangement
in relation to the fund raise arising on that date. The options may be exercised between the grant date and the 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.
Warrants in respect of services provided:
The movement of warrants issued for share-based payments in the year are as follows:
Outstanding at 1 January
Granted during the year
Forfeited during the year
Exercised during the year
Outstanding at 31 December
2021
Number
5,395,260
9,090,910
-
(4,895,260)
9,590,910
2021
WAEP (pence)
2.5
5.5
-
2.5
5.3
2020
Number
17,740,350
5,395,260
-
(17,740,350)
5,395,260
2020
WAEP (pence)
0.5
2.5
-
0.5
2.5
Exercisable at 31 December
9,590,910
5.3
5,395,260
2.5
The weighted average remaining contractual life for the share warrants outstanding as at 31 December 2021 was 2.1 years
(2020: 2.7 years)
The weighted average fair value of share warrants granted in the year was 4.6p (2020: 1.57p).
The range of exercise prices for warrants outstanding at the year-end was 2.5p to 5.5p (2020: 2.5p).
The number of warrants, which have been included for share-based payment purposes, outstanding at 31 December 2021
and the movements in the year are as follows:
Date of grant
Granted
Share price
on grant
Exercised
Forfeited
At 31 Dec
2021
Exercise
price
Exercise
period
15 Sep 2020
5,395,260
3.3p
(4,895,260)
21 Jan 2021
9,090,910
8.6p
-
Total
14,486,170
(4,895,260)
-
-
-
500,000
2.5p
9,090,910
5.5p
9,590,910
16 Sep 2020 until
15 Sep 2023
22 Jan 2021 until
21 Jan 2024
The Company is required to assess the fair value of instruments issued in respect of services received, with such value
charged to the Income Statement. The estimated fair value of the warrants issued during the year was calculated by applying
the Black-Scholes option pricing model. The assumptions used in the calculation were as follows:
Warrants issued for services
15 Sep 2020
21 Jan 2021
In issue 31 December 2021
Exercise price
Expected volatility*
Contractual life
Risk free rate
Estimated fair value of each option
500,000
2.5p
92.10%
3 years
0.07%
1.57p
9,090,910
5.5p
161.6%
3 years
(0.07%)
4.6p
* expected volatility based on historic volatility at the point of grant.
68
Notes to the Accounts for the Year Ended 31 December 2021
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 2021 and the movements in the year are as follows:
Date of grant
Granted
Share price
on grant
Exercised Forfeited
At 31 Dec 2021
Exercise
price
Exercise period
15 Sep 2020
371,510,069
3.3p
Total
371,510,069
-
-
-
-
371,510,069
2.75p
16 Sep 2020 until 15
Sep 2022
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:
Warrants issued to participating shareholders
In issue 31 December 2021
Exercise price
Expected volatility*
Contractual life
Risk free rate
Estimated fair value of each option
15 Sep 2020
371,510,069
2.75p
106.20%
2 years
0.04%
1.46p
* expected volatility based on historic volatility at the point of grant.
All warrants
The number of all warrants outstanding at 31 December 2021 and the movements in the year are as follows:
Date of
grant
Granted
Share price
on grant
Exercised
Forfeited
At 31 Dec 2021
Exercise
price
Exercise period
15 Sep 2020
5,395,260
3.3p
(4,895,260)
15 Sep 2020
371,510,069
3.3p
21 Jan 2021
9,090,910
8.6p
-
-
Total
385,996,239
(4,895,260)
-
-
-
-
500,000
2.5p
371,510,069
2.75p
9,090,910
5.5p
16 Sep 2020 until
15 Sep 2023
16 Sep 2020 until 15
Sep 2022
22 Jan 2021 until
21 Jan 2024
381,100,979
25.3 Share issue third party services
In 2020, the Company issued shares to settle services to some of its service providers. The fair value of the share-based
payments charge was based on invoiced amounts or amounts agreed to be paid under a formal agreement of the Company.
26. Material risks
The Company is subject to various risks relating to political, economic, legal, social, industry, business and financial conditions.
Risk assessment and evaluation is an essential part of the Company’s planning and an important aspect of the Company’s internal
control system. The Company’s approach to these risks is detailed in the Strategic Report.
69
Notes to the Accounts for the Year Ended 31 December 2021
27. Directors’ remuneration and share interests
The Directors who held office at 31 December 2021 had the following interests, including any interests of a connected party in
the ordinary shares of the Company:
Keith Riley
James John Pryn Greenstreet
Number of ordinary shares
of 0.5p each
Percentage of
voting rights
12,128,986
1,840,000
<0.5
<0.1
The remuneration of the Directors of the Company paid or payable for the year or since date of appointment, if later, to 31
December 2021 is:
Tim Yeo
David Ryan
William Cameron Davies
Nigel Brent Fitzpatrick
James John Pryn Greenstreet
Allan Vlah
Kirsten Gogan
Keith Riley
Mark Berry
Total
2021
£
Salary/Fee
2021
£
Pension
2021
£
Share based
payments
92,444
97,996
7,500
-
30,000
15,000
23,468
8,167
-
274,575
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
22,500
-
-
17,500
40,000
2021
£
Other
35,500
-
-
-
-
-
-
-
-
35,500
2021
£
Total
127,944
97,996
7,500
-
30,000
37,500
23,468
8,167
17,500
350,075
2020
£
Total
27,004
196,856
54,421
26,868
31,061
13,306
7,500
-
1,129
358,145
Total remuneration includes share-based payments arising from the issue of options amounting to £40,000 (2020: £8,399). 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 £29,965 (2020: £34,282) resulting in a total remuneration expense
of £380,040 (2020: £392,427).
Prior to their resignations from the Board, Tim Yeo, William Cameron Davies, James John Pryn Greenstreet, Allan Vlah, Kirsten
Gogan and Mark Berry had service contracts that could be terminated by the provision of three months’ notice. David Ryan had
a service contract that could be terminated by the provision of six months’ notice.
James John Pryn Greenstreet and Keith Riley have service contracts which can be terminated by providing three months’ written
notice.
Rivermill Partners Limited, a company wholly owned by Tim Yeo and his associates, provided executive corporate management
services during the year the value of which is included in the above remuneration. These services are contracted for on an annual
basis as required.
70
Notes to the Accounts for the Year Ended 31 December 2021
Share options held by the Directors who served during the year are as follows:
Options granted 8 Dec 2014
Nigel Brent Fitzpatrick
James John Pryn Greenstreet
Options at
1/1/21
Forfeited
Exercised
Options at
31/12/21
Exercise
price
Earliest and latest
date of exercise
3,000,000
3,000,000
(3,000,000)
-
-
-
-
3,000,000
2.5p
2.5p
9/12/14 – 8/12/24
9/12/14 – 8/12/24
Options at
1/1/21
Forfeited
Exercised
Options at
31/12/21
Exercise
price
Earliest and latest
date of exercise
Options granted 7 March 2016
Nigel Brent Fitzpatrick
James John Pryn Greenstreet
5,000,000
4,000,000
-
(1,400,000)
(5,000,000)
(2,600,000)
-
-
0.75p
0.75p
8/3/16 – 7/3/21
8/3/16 – 7/3/21
Options granted 6 March 2018
William Cameron Davies
Nigel Brent Fitzpatrick
James John Pryn Greenstreet
David Ryan
Options at
1/1/21
15,000,000
12,000,000
12,000,000
21,000,000
Forfeited
Exercised
Options at
31/12/21
Exercise
price
Earliest and latest
date of exercise
-
-
-
-
(15,000,000)
(12,000,000)
-
(21,000,000)
-
-
12,000,000
-
0.6p
0.6p
0.6p
0.6p
1/10/18 – 6/3/28
7/3/18 – 6/3/28
7/3/18 – 6/3/28
7/3/18 – 6/3/28
Options granted 22 April 2021
Mark Berry
Allan Vlah
Options
granted
22/4/21
Forfeited or
not vested
998,098
775,141
(516,761)
(193,786)
Exercised
Options at
31/12/21
Exercise
price
Earliest and latest
date of exercise
-
-
481,377
581,355
6.3p
6.3p
23/4/21 – 22/4/24
23/4/21 – 22/4/24
Highest Paid Director
Tim Yeo 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.
28. Related parties
Rivermill Partners Limited, a corporate management services company, wholly owned by Tim Yeo and his associates, was a
related party for the period during which Tim Yeo was a Director of the Company. During that period, Rivermill provided executive
corporate management services amounting to £48,000 and the Company agreed a future termination settlement of £5,500
(2020: £7,800).
Engsolve Limited, an engineering solutions company, was a related party until 30 June 2021 due to a Director’s family member
being part of its key management personnel, and from 12 August 2021 when the Company acquired 48.39% of its share capital.
Engsolve provided engineering services to the Company during the year amounting to £621,968 (2020: £249,555). Amounts
outstanding at year end for services provided and included in these accounts amounted to £41,058 (2020: £43,841).
29. Events after the reporting period
On 28 February 2022, the Company announced that it had agreed to extend the availability period for the £3.8m Loan Facility it
had made available to Protos Plastics to Hydrogen No 1 Limited, the Peel NRE special purpose vehicle and owner of the
development of the Protos plant, the first proposed commercial application of the Company’s DMG technology. The loan facility,
provided to support the Protos plant development and construction and initially made available during 2021 for a 6-month period,
had been previously extended until 28 February 2022. Loans made under the facility amount to £1.89m (£1.15m at 31 December
2021) and accrue interest daily set at the Bank of England base rate plus 2%.
On 24 May 2022, the Company announced its plan to create a UK based Global Technology and Innovation Centre (GTIC) which
is expected to open in 2023. The Company has contracted £1.3m for the supply, installation and commissioning of equipment
for the facility amounting to £1.3m.
30. Ultimate controlling party
There is no controlling party of the Company.
71